UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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GNC HOLDINGS, INC. |
(Name of Registrant as Specified in Its Charter) |
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) |
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300 Sixth Avenue
April 10, 2018
Dear Stockholder,
You are cordially invited to attend the Annual Meeting of Stockholders of GNC Holdings, Inc. (the “Company”) to be held on Tuesday, May 22, 201821, 2019 at 8:00 a.m. Eastern Time at the Omni William Penn Hotel, 530 William Penn Place, Pittsburgh, Pennsylvania 15219.
The agenda for the Annual Meeting includes:
Our Board of Directors recommends that you vote FOR Proposals 1, 2, 3, and 4.
Your interest in the Company and your vote are very important to us. The enclosed proxy materials contain detailed information regarding the business that will be considered at the Annual Meeting. We encourage you to read the proxy materials and vote your shares as soon as possible. You may vote your proxy via the Internet or telephone or, if you received a paper copy of the proxy materials, by mail by completing and returning the proxy card.
On behalf of the Company,GNC, I would like to express our appreciation for your ongoing interestinvestment in the Company.
 | |
 | |
Kenneth A. Martindale | |
Chairman and Chief Executive Officer |
GNC HOLDINGS, INC.
NOTICE OF
2019 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 2018
DATE AND TIME | 8:00 a.m. on Tuesday, May | |
PLACE | Omni William Penn Hotel | |
530 William Penn Place | ||
Pittsburgh, Pennsylvania 15219 | ||
ITEMS OF BUSINESS | (1) | To elect |
(2) | To approve, by non-binding vote on an advisory basis, the compensation paid to our Named Executive Officers in | |
(3) | ||
To ratify the appointment of PricewaterhouseCoopers LLP as our independent | ||
(4) | To transact such other business as may properly be brought before the Annual Meeting or any adjournment or postponement thereof. | |
RECORD DATE | You are entitled to vote only if you were a stockholder of record at the close of business on March | |
PROXY VOTING | It is important that your shares be represented and voted at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, we urge you to vote online at www.proxyvote.com or via telephone by calling 1-800-690-6903, or to complete and return a proxy card (no postage is required). | |
REQUIRED VOTE | The affirmative vote of a majority of the votes cast by our stockholders in person or represented by proxy at the Annual Meeting is required to approve each of the Proposals described in these proxy materials. | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on May 22, 2018
April 11, 2019
 | |
Susan M. Canning | |
Secretary |
300 Sixth Avenue
Pittsburgh, Pennsylvania 15222
2019 ANNUAL MEETING OF STOCKHOLDERS
May
The Board of Directors (the “Board”) of GNC Holdings, Inc., a Delaware corporation (the “Company,” “we,” “us,” or “our”), has prepared this document to solicit your proxy to vote upon certain matters at our 20182019 annual meeting of stockholders (the “Annual Meeting”).
These proxy materials contain information regarding the Annual Meeting, to be held on Tuesday, May 22, 2018,21, 2019, beginning at 8:00 a.m. Eastern Time at the Omni William Penn Hotel, 530 William Penn Place, Pittsburgh, Pennsylvania 15219, and at any adjournment or postponement thereof. As permitted by the rules adopted by the Securities and Exchange Commission (the “SEC”), rather than mailing a full paper set of these proxy materials, we are mailing to many of our stockholders only a notice of Internet availability of proxy materials (the “Notice”) containing instructions on how to access and review these proxy materials and submit their respective proxy votes online. If you receive the Notice and would like to receive a paper copy of these proxy materials, you should follow the instructions for requesting such materials located at www.proxyvote.com.
QUESTIONS ABOUT THE ANNUAL MEETING AND THESE PROXY MATERIALS
It is anticipated that we will begin mailing this proxy statement, the proxy card, our Annual Report to Stockholderson Form 10-K for the year ended December 31, 20172018 (the “Annual Report”) and the Notice, and that these proxy materials will first be made available online to our stockholders, on or about April 10, 2018.11, 2019. The information regarding stock ownership and other matters in this proxy statement is as of March 26, 201825, 2019 (the “Record Date”), unless otherwise indicated.
What may I vote on?
You may vote on the following proposals:
THE BOARD RECOMMENDS A VOTE (1) FOR THE ELECTION OF EACH OF OUR NOMINEES FOR DIRECTORS (PROPOSAL 1), (2) FOR THE APPROVAL, BY NON-BINDING VOTE ON AN ADVISORY BASIS, OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS IN 2017 FOR 2018 (“SAY-ON-PAY”) (PROPOSAL 2), AND (3) FOR THE APPROVAL OF THE 2018 STOCK AND INCENTIVE PLAN (PROPOSAL 3), AND (4) FOR THE RATIFICATION OF THE APPOINTMENT OF PWC AS OUR INDEPENDENT AUDITORSREGISTERED PUBLIC ACCOUNTING FIRM (PROPOSAL 4)3).
Who may vote?
Stockholders of record, of our Class A common stock, par value $0.001 per share (“Common Stock”), at the close of business on the Record Date are entitled to receive the Notice and these proxy materials and to vote their respective shares at the Annual Meeting. Each share of our Class A common stock, par value $0.001 per share (“Common StockStock”) is entitled to one vote on each matter that is properly brought before the Annual Meeting. As of the Record Date, there were 83,661,96583,966,049 shares of Common Stock issued and outstanding.
Each share of our Series A Convertible Preferred Stock, par value $0.001 per share (“Preferred Stock”) is entitled to a number of votes equal to the number of shares of Common Stock that such Preferred Stock may convert into as of the
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Record Date, calculated by dividing (i) the applicable liquidation preference, which as of the Record Date is $1,000.00 per share, by $5.35 per share, and disregarding any fractional shares into which such aggregate number is convertible. As of the Record Date, there were 299,950 shares of Preferred Stock issued and outstanding, entitling the holder thereof to cast 56,065,420 votes.
Holders of our Common Stock and Preferred Stock vote together as a single class on all matters presented to the stockholders for their vote or approval, except as may otherwise be required by Delaware Law or the terms of our Certificate of Incorporation, as amended and restated. Under the terms of the Stockholders Agreement, entered into November 8, 2018 (the “Stockholders Agreement”) between the Company and Harbin Pharmaceutical Group Co., Ltd. (“Harbin”), the current holder of our Preferred Stock, Harbin has agreed for so long as it holds at least fifteen percent (15%) of the Company’s common stock (on an as-converted basis) to vote either in accordance with the recommendations of the Board or in accordance with the relative percentage votes of the Common Stock.
How do I vote?
We encourage you to vote your shares via the Internet. How you vote will depend on how you hold your shares of Common Stock.
Stockholders of Record
If your Common Stock is registered directly in your name with our transfer agent, American Stock, Transfer & Trust Company, LLC, you are considered a stockholder of record with respect to those shares, and a full paper set of these proxy materials is being sent directly to you. As a stockholder of record, you have the right to vote by proxy.
You may vote by proxy in any of the following three ways:
Internet. Go to www.proxyvote.com to use the Internet to transmit your voting instructions and for electronic delivery of information. Have your proxy card in hand when you access the website.
Phone. Call 1-800-690-6903 using any touch-tone telephone to transmit your voting instructions. Have your proxy card in hand when you call.
Mail. Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided, or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
Voting by any of these methods will not affect your right to attend the Annual Meeting and vote in person. However, for those who will not be voting in person at the Annual Meeting, your final voting instructions must be received by no later than 11:59 p.m. Eastern Time on May 21, 2018.
Beneficial Owners
Most of our stockholders hold their shares through a stockbroker, bank or other nominee, rather than directly in their own names. If you hold your shares in one of these ways, you are considered the beneficial owner of shares held in street name, and the Notice is being forwarded to you by your broker, bank or nominee who is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker, bank or nominee on how to vote. Your broker, bank or nominee has enclosed a voting instruction form for you to use in directing the broker, bank or
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Can I change my vote?
Yes. If you are the stockholder of record, you may revoke your proxy before it is exercised by doing any of the following:
Beneficial owners should contact their broker, bank or nominee for instructions on changing their votes.
How many votes must be present to hold the Annual Meeting?
A “quorum” is necessary to hold the Annual Meeting. A quorum is a majority of the votes entitled to be cast by the stockholders entitled to vote at the Annual Meeting. They may be present at the Annual Meeting or represented by proxy. Abstentions and broker “non-votes” are counted as present and entitled to vote for purposes of determining a quorum.
How many votes are needed to approve the proposals?
At the Annual Meeting, a “FOR” vote by a majority of votes cast is required for each of the proposals described in this proxy statement: Proposal 1 (the election of directors), Proposal 2 (the “say-on-pay” proposal), Proposal 3 (the approval of the 2018 Stock and Incentive Plan) and Proposal 43 (the ratification of PwC as independent auditorsregistered accounting firm for our 20182019 fiscal year).
For Proposals 1, 2 and 4,3, a “FOR” vote by a “majority of votes cast” means that the number of shares voted “FOR” exceeds the number of shares voted “AGAINST.” For Proposal 3, a “FOR” vote by a “majority of votes cast” means that the number of shares voted “FOR” exceeds the number of shares voted “AGAINST,” plus abstentions.
What is an abstention?
An abstention is a properly signed proxy card that is marked “ABSTAIN.” In the case of Proposals 1, 2 and 4,3, abstentions do not constitute votes “FOR” or votes “AGAINST” and, therefore, will have no effect on the outcome of any of those proposals. However, under NYSE rules abstentions will have the effect of a vote “AGAINST” Proposal 3.
What is a broker “non-vote?”
A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received timely instructions from the beneficial owner. Under current applicable rules,
However, NYSE member brokerage firms that hold shares as a nominee may not vote on behalf of the beneficial owners on Proposal 1 (the election of directors), or Proposal 2 (the “say-on-pay” proposal) or Proposal 3 (the approval of the 2018 Stock and Incentive Plan) unless you provide voting instructions. Therefore, if a NYSE member brokerage firm holds your Common Stock as a nominee, please instruct your broker how to vote your Common Stock on each of these proposals. This will ensure that your shares are counted with respect to each of these proposals. Broker “non-votes” do not constitute votes “FOR” or votes “AGAINST” and therefore will have no effect on the outcome of any of the proposals.
Will any other matters be acted on at the Annual Meeting?
If any other matters are properly presented at the Annual Meeting or any adjournment or postponement thereof, the persons named in the proxy will have discretion to vote on those matters. As of December 12, 2017,11, 2018, the date by which any proposal for consideration at the Annual Meeting submitted by a stockholder must have been received by us to be presented at the Annual Meeting, and as of the date of these proxy materials, we did not know of any other matters to be presented at the Annual Meeting.
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Who pays for this proxy solicitation?
We will pay the expenses of soliciting proxies. In addition to solicitation by mail, proxies may be solicited in person or by telephone or other means by our directors or associates for no additional compensation. We will reimburse brokerage firms and other nominees, custodians and fiduciaries for costs incurred by them in mailing these proxy materials to the beneficial owners of Common Stock held of record by such persons.
Whom should I call with other questions?
If you have additional questions about these proxy materials or the Annual Meeting, please contact: GNC Holdings, Inc., 300 Sixth Avenue, Pittsburgh, Pennsylvania, 15222, Attention: Kevin G. Nowe;Secretary; Telephone: (412) 288-4600.
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(PROPOSAL 1)
The Board proposes that each of the eightnine (9) director nominees described below (the “Nominees”), who currently are members of our Board, be re-elected for a one-year term expiring at our 20192020 Annual Meeting and to serve until the due election and qualification of his or her successor, or until his or her earlier resignation or removal.
In November of 2018, the Board adopted resolutions to increase the size of the Board to ten (10) members. In addition to the eight (8) then existing directors, upon designation by Harbin and based on the recommendation of the Board’s Nominating and Corporate Governance Committee, the Board appointed Hsing Chow and Yong Kai Wong to the Board, effective January 22, 2019, in accordance with the terms of the Stockholders Agreement. Messrs. Chow and Wong are included in the nominees for re-election below. In February 2019 the Board size was further increased to eleven (11) members, and in April 2019, upon designation by Harbin and based on the recommendation of the Board’s Nominating and Corporate Governance Committee, the Board appointed Michele S. Meyer to the Board, effective immediately, in accordance with the terms of the Stockholders Agreement. Ms. Meyer is included in the nominees for re-election below. Harbin has additional contractual rights to nominate up to two (2) additional directors to the Board, provided that each such additional nominee satisfies the requirements set forth in the Stockholders Agreement. As of the date of this Proxy Statement, Harbin has not yet exercised this optional right with respect to the final two positions.
Two of the Company’s current directors, Jeffrey Berger and Richard Wallace, have notified the Company of their intention to retire from the Board as of the date of the Annual Meeting, and as such are not included in this proxy statement as Nominees for re-election. The Company thanks them for their service. The Board’s Nominating and Corporate Governance Committee is working collaboratively with Harbin to fill the remaining board seats as soon as qualified candidates, as outlined in the Company’s governance documents and the Stockholders Agreement, are found.
All of the Nominees have indicated their willingness to serve if elected. If, at the time of the meeting, any Nominee is unable or unwilling to serve, shares represented by properly executed proxies will be voted at the discretion of the persons named therein for such other nominee as the Board (or Harbin pursuant to its existing designation rights) may designate, or the Board may elect to decrease the size of the Board.
Set forth below is information concerning each Nominee, and the key experience, qualifications and skills he or she brings to the Board.
Recommendation
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES AS DIRECTORS.
The Nominees
Kenneth A. Martindale, 59, became our Chief Executive Officer and a director on September 11, 2017. He was subsequently elected as Chairman of the Board in August, 2018. Mr. Martindale was previously CEO of Rite Aid Stores, a position held since August 3, 2015, and President of Rite Aid Corporation, a position held since June 2013. He previously served as Rite Aid’s Chief Operating Officer since June 2010. From December 2008 until June 2010, he served as Rite Aid’s Senior Executive Vice President and Chief Merchandising, Marketing and Logistics Officer. He served as co-President and Chief Merchandising and Marketing Officer for Pathmark Stores, Inc. from January 2006 until its acquisition by the Great Atlantic & Pacific Tea Company in December 2007. Mr. Martindale serves as a director of Fairway Group Holdings Corporation. Mr. Martindale’s years of executive leadership experience in retail operations led to the conclusion that he should serve as a director on the Board.
Robert F. Moran
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and its President and Chief Operating Officer from December 2001 to June 2009. Before joining PetSmart in 1999, Mr. Moran was President of Toys “R” Us Canada. Mr. Moran served on the boards of directors of Collective Brands, Inc. from March 2005 to October 2012 and of PetSmart from September 2009 to June 2013. He currently serves on the boards of directors of Hanesbrands, Inc., for which he chairs the audit committee, and the USA Track & Field Foundation. Mr. Moran’s more than 40 years of executive leadership experience, both domestically and internationally, and extensive retail experience and expertise led to the conclusion that he should serve as a director on the Board.
Hsing Chow, 52, became one of our directors in March 2011.January 2019, pursuant to the terms of the Stockholders Agreement with Harbin. Since 2015, Mr. Berger currently is a private investor. From 2008 until April 2013, Mr. BergerChow has served as a consultantGroup Vice President of Harbin. Prior to H. J. Heinz Company,his service at Harbin, Mr. Chow served as Regional General Manager at Flextronics Global OPS, a leading producerelectronics manufacturing services provider focused on delivering complete design, engineering and marketermanufacturing services to automotive, computing, consumer, industrial, infrastructure, medical and mobile OEMs. Mr. Chow holds both a Bachelor of healthyScience and convenient foods (“Heinz”). From 2007Master of Science degree from New Jersey Institute of Technology. Mr. Chow’s designation by Harbin pursuant to 2008, Mr. Berger was the Chairmanterms of Global Foodservice of Heinz. From 2005 to 2007, Mr. Berger was the Executive Vice President, Presidentour Stockholders Agreement, along with his business and Chief Executive Officer of Heinz Foodservice. From 1994 to 2005, Mr. Berger was President and Chief Executive Officer of Heinz North America Foodservice. Mr. Berger currently serves on the board of directors of Big Lots, Inc., a discount retailer (“Big Lots”), for which he chairs the nominating/corporate governance committee and serves as a member of the compensation committee. Mr. Berger’s years of experience as an executive officer at Heinz, in addition to his public company boardinternational experience, led to the conclusion that he should serve as a director on the Board.
Alan D. Feldman
,Michael F. Hines
,Amy B. Lane
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Philip E. Mallott, 60,61, became one of our directors in July 2012. Mr. Mallott retired as Vice President, Finance and Chief Financial Officer of Intimate Brands, Inc., a clothingan intimate apparel and personal care retailer and former subsidiary of Limited Brands, Inc., and is currently Mr. Mallott formerly served as a director of Big Lots, for which he served asInc., including non-executive chair for four years until May 2017, and currently serves as the chair of the audit committee. He most recently provided retail stock research as an independent consultantcommittee for fifteen years. In addition to Westminster Research Associates LLChis Board service at Big Lots, Mr. Mallott also serves on multiple board committees for Defiance College and prior to that, as an analyst for Coker & Palmer,United Church Homes, Inc. Mr. Mallott previously served as a director of Tween Brands, Inc. from 2000 to 2009. Mr. Mallott’s experience as a certified public accountant, his service on the boards of other public companies and charitable organizations, and his experience in leadership roles with other retailers led to the conclusion that he should serve as a director on the Board.
Michele S. Meyer, 66,54, became one of our directors in July 2010. Mr. Wallace servedApril 2019, pursuant to the terms of the Stockholders Agreement with Harbin. Ms. Meyer currently serves as aPresident and Senior Vice President for Research and Development at GlaxoSmithKline, a global pharmaceutical company (“GSK”), from 2004 until his retirement in 2008. Prior to that, he served in various executive capacities for GSK and its predecessor companies and their subsidiaries from 1992 to 2004. Mr. Wallace is also a director of ImmunoGen, Inc., for which he serves as a member of the auditsnacks operating unit, a $2 billion enterprise within General Mills, a Minneapolis, Minnesota based Fortune 500 global foods company. Ms. Meyer joined General Mills in 1988, and nominatinghas held key leadership roles during her 30 years of service, including as President and governance committees,Senior Vice President, and servedas Business Unit Director, Vice President, of other units within General Mills. In her current role, Ms. Meyer has driven sales growth, and has grown market share within her unit in key categories. Ms. Meyer possesses significant international experience, and is well versed in corporate restructuring and has acquisition integration experience, which combined with her business acumen and leadership skills, has led to the conclusion that she should serve as a director of Clinical Data Inc. from September 2007 to April 2011. Mr. Wallace’s years of experience at several large pharmaceutical and consumer products companies and his significant corporate governance experience through his service on the boardsBoard.
Yong Kai Wong, 42, became one of our directors in January 2019, pursuant to the terms of other companiesthe Stockholders Agreement with Harbin.Mr. Wong has served as Managing Director of CITIC Capital Holdings Limited, an affiliate of Harbin, since 2012. Mr. Wong holds a CSREP degree from Harvard University, a Masters of Business Administration from University of Chicago Booth School of Business and a Master of Laws (LLM) from the University of Cambridge. Mr. Wong’s designation by Harbin pursuant to the terms of our Stockholders Agreement, along with his business and international experience, led to the conclusion that he should serve as a director on the Board.
The affirmative vote of the holders of a majority of the votes cast by our stockholders in person or represented by proxy and entitled to vote at the Annual Meeting is required to approve this Proposal 1.
Board Composition
The Board is currently composed of Robert F. Moran, Kenneth A. Martindale, Jeffrey P. Berger, Hsing Chow, Alan D. Feldman, Michael F. Hines, Amy B. Lane, Philip E. Mallott, andMichele S. Meyer, Robert F. Moran, Richard J. Wallace.
In addition to the biographical information provided above for those Directors who are Nominees, set forth below is information concerning Messrs. Berger and Wallace, who currently serve on our Board, until their impending retirement at the Annual Meeting.
Jeffrey P. Berger, 69, became one of our directors in March 2011. Mr. Berger currently is a private investor. From 2008 until April 2013, Mr. Berger served as a consultant to H. J. Heinz Company, a leading producer and marketer of healthy and convenient foods (“Heinz”). From 2007 to 2008, Mr. Berger was the Chairman of Global Foodservice of Heinz. From 2005 to 2007, Mr. Berger was the Board.Executive Vice President, President and Chief Executive Officer of Heinz Foodservice. From 1994 to 2005, Mr. Berger was President and Chief Executive Officer of Heinz North America Foodservice. Mr. Berger currently serves on the board of directors of Big Lots, Inc., a discount retailer.
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Richard J. Wallace, 67, became one of our directors in July 2010. Mr. Wallace served as a Senior Vice President for Research and Development at GlaxoSmithKline, a global pharmaceutical company (“GSK”), from 2004 until his retirement in 2008. Prior to that, he served in various executive capacities for GSK and its predecessor companies and their subsidiaries from 1992 to 2004. Mr. Wallace is also a director of ImmunoGen, Inc., for which he serves as a member of the audit and nominating and governance committees.
Board Meetings in 2017
The Board held 12fifteen (15) meetings during our fiscal year ended December 31, 2017.
Director Attendance
During our fiscal year ended December 31, 2017,2018, each of our incumbent directors attended at least 75% of the total number ofall meetings of the Board and committees onof which he or she served during the period in which he or she served.was then a member. We encourage, but do not require, our directors to attend our annual meetings of stockholders. All of our current directors who were serving on the Board at the time of our 20172018 Annual Meeting attended the meeting.
Director Independence
Our Common Stock is listed for trading on the NYSE under the symbol “GNC”. The Board, upon the findings of the Nominating Committee, has determined as part of its annual review, that each of Ms. Lane, Ms. Meyer, and Messrs. Moran, Berger, Feldman, Hines Mallott, and WallaceMallott is “independent” within the meaning of Rule 303A.02 of the NYSE Listed Company Manual, and no family relationships exist among such Nominees and any of our executive officers.
Leadership Structure
The Board has adopted guidelines that provide the Board with the discretion and flexibility to decide if the roles of the Chief Executive Officer and Chairperson of the Board are to be separate or combined. Currently, the roles are separate,combined, with Mr. Martindale serving as both Chief Executive Officer and Mr. Moran, an independent director, serving as Non‑Executive Chairman of the Board. The Board has determined that this is currently the appropriate leadership structure due to the fact that Mr. Martindale possesses detailed insight of the separationissues, opportunities and challenges facing the Company and its business and thus is best positioned to develop agendas that ensure the Board’s time and attention are focused on the most critical matters. His combined role enables decisive leadership, ensures clear accountability and enhances the Company’s ability to develop a long-term strategy that best serves the interest of these positions allows for better independenceits stakeholders. Each director, other than Messrs. Martindale, Chow and accountability.
Our Board’s Role in Risk Oversight
The Board playsand its Committees play an active role in overseeing the identification, assessment and mitigation of risks that are material to the Company. In fulfilling this responsibility, the Board and its Committees, regularly consult with management to evaluate and, when appropriate, modify our risk management strategies. While certain categories of our risks. risk are allocated to a particular Board committee for oversight based on the committee’s respective areas of expertise, the entire Board is regularly informed about such risks through committee reports.
The Board regularly reviews information regarding our credit,primary areas of risk assessment- strategic, executional, competitive, economic, operational, financial (credit, liquidity, tax), legal, compliance, regulatory and operations,reputational, as well as the risks associated with each. The Audit Committee and the Finance Committee each havehas responsibilities related to the oversight and management of cybersecurity and financial risks.risks, including compliance matters, tax strategies, information security measures and the internal audit function. The Compensation and Organizational Development Committee of the Board (the “Compensation Committee”) is responsible for overseeing the management of risks relating to
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The Finance Committee oversees risks related to financial planning and strategies, including capital structure, investments, liquidity and cash management, insurance programs, hedging policies, and our stock ownership profile. The Nominating and Corporate Governance Committee of the Board (the “Nominating Committee”) is responsible for managing risks relating to our director compensation policies and arrangements, the independence of the Board, director candidates, board and committee composition, and other corporate governance matters. While each of the Committees is responsible for evaluating certain risks and overseeing the management of such risks, the Board as a whole is regularly informed of the conclusions of such evaluations through reports of the Committees. The risk oversight function does not impact the structure of the Board.
Company management is charged with adequately identifying material risks that the Company faces in a timely manner; implementing strategies that are responsive to the Company’s risk profile and specific material risk exposures; evaluating risk and risk management with respect to business decision-making throughout the Company; and efficiently and promptly transmitting relevant risk-related information to the Board or appropriate committee, so as to enable them to conduct appropriate risk management oversight. For example, the Audit Committee receives quarterly reports from the Internal Audit department on key risk indicators and the Compliance function on legal and regulatory compliance. The Legal Department provides a litigation report to the Board at least annually. The Chief Information Officer, with participation from the Chief Information Security Officer, reports quarterly to the Audit Committee on information security and compliance, including program maturity, data access control, security tests and training, key investments and security incident response.
Board Committees
Each of the followingbelow Committees is a standing committee of the Board. The Board has adopted written charters for the Audit Committee, the Compensation Committee, the Finance Committee and the Nominating Committee,each of these committees, each of which is available on the Corporate Governance page of the Investor Relations section of our website located at www.gnc.com and will be provided to any stockholder free of charge upon request. Further, each member of the Audit Committee, the Compensation Committee, the Finance Committee and the Nominating Committee has been determined by the Board to be independent under the NYSE’s current listed company standards.
Audit Committee | Compensation and Organizational Development Committee | Nominating and Corporate Governance Committee | Finance Committee | |
Jeffrey P. Berger* | X | X | ||
Hsing Chow | ||||
Alan D. Feldman | Chair | X | ||
Michael F. Hines* | Chair | X | ||
Amy B. Lane | X | Chair | ||
Philip E. Mallot* | X | Chair | ||
Kenneth A. Martindale | ||||
Michele S. Meyer | ||||
Robert F. Moran | ||||
Richard J. Wallace | X | X | ||
Yong Kai Wong | ||||
Number of Meetings | Nine (9) | Six (6) | Five (5) | Five (5) |
X = Member
Chair = Chairperson
* = Financial Expert
Audit Committee
The Audit Committee, which is established in accordance with Section 3(a)(58)(A) of the Exchange Act, held nine meetings during our fiscal year ended December 31, 2017consists entirely of directors who meet the independence requirements of the listing standards of the NYSE and currently consists of Jeffrey P. Berger, Michael F. Hines, and Philip E. Mallott, who acts as its chair. TheRule 10A-3 under the Exchange Act. Further, the Board has determined that each of Messrs. Berger, Hines and Mallott qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K and has the attributes set forth in such section. The Committee consists entirely of directors who meetsection, and they each have accounting and financial management expertise within the independence requirementsmeaning of the listing standards of the NYSE and Rule 10A-3 under the Exchange Act.NYSE.
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The principal duties and responsibilities of the Audit Committee are to:
The Audit Committee has the power to investigate any matter brought to its attention within the scope of its duties. It also has the authority to retain counsel and advisors to fulfill its responsibilities and duties.
Compensation Committee which held six meetings during our fiscal year ended December 31, 2017, currently consists
The Board has determined that each of Amy B. Lane, Philip E. Mallott, and Richard J. Wallace who actsqualify as its chair.
The principal duties and responsibilities of the Compensation Committee are to:
Compensation Committee Interlocks and Insider Participation
Finance Committee
The principal duties and responsibilities of the Finance Committee are to:
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Nominating and Corporate Governance Committee
The Nominating Committee, which held four meetings during our fiscal year ended December 31, 2017, currently consistsBoard has determined that each of Jeffrey P. Berger, Richard J. Wallace and Alan D. Feldman who actsqualify as its chair.
The principal duties and responsibilities of the Nominating and Corporate Governance Committee (the “Nominating Committee”) are as follows:
Director Qualifications; Nominating Committee Process
In accordance with the Company’s amended and restated by-laws, to be timely for consideration by the Nominating Committee, notice of a proposed nomination must be delivered to or mailed and received at the Company’s principal executive offices not earlier than the opening of business on the 120th day nor later than the close of business on the 90th day prior to the one year anniversary of the date of the preceding year’s annual meeting of its stockholders; provided, however, that if the date of the annual meeting is more than 30 days prior to or delayed by more than 70 days after the anniversary of the preceding year’s annual meeting, the nomination must be received not earlier than the opening of business on the 120th day prior to the date of such annual meeting nor later than the later of the close of business on the (i) 90th day prior to the date of such annual meeting or (ii) 10th day following the day on which public announcement of such meeting date is first made.
In addition to information regarding the nominating stockholder as set forth in the Company’s amended and restated by-laws, in accordance with the Company’s corporate governance guidelines, such stockholder’s notice must set forth as to each individual whom the stockholder proposes to nominate for election or reelection as a director:
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Any such submission must be accompanied by the written consent of the individual whom the stockholder proposes to nominate to being named in the proxy statement as a nominee and to serving as a director if elected.
The Nominating Committee may, but is not required to, consider nominations not properly submitted in accordance with the Company’s Corporate Governance Guidelines, and the Committee may request further information and documentation from any proposed nominee or from any stockholder proposing a nominee. All nominees properly submitted to the Company (or which the Nominating Committee otherwise elects to consider) will be evaluated and considered by members of the Nominating Committee using the same criteria as nominees identified by the Nominating Committee itself.
In addition to the above, under the terms of the Company’s current Stockholders Agreement entered into with Harbin, and pursuant to the terms of the current Sixth Amended and Restated Bylaws of the Company, so long as Harbin continues to hold at least fifteen percent (15%) of the Company’s Common Stock (calculated on an as-converted basis), Harbin has the right, but not the obligation, to designate up to two additional directors (each an “Investor Designee”) to the Board, in addition to the initial Investor Designees Messrs. Chow and Wong, and the third Investor Designee, Ms. Meyer.
In evaluating the suitability of individual candidates (both new candidates and current Board members), in recommending candidates for election, and in approving (and, in the case of vacancies, appointing) such candidates, the Nominating Committee considers, in addition to such other factors as it shall deem relevant, the desirability of selecting directors who:
In addition to the considerations set forth above, the Nominating Committee considers a candidate’s background and accomplishments and candidates are reviewed in the context of the current composition of the Board and the evolving needs of our businesses. The Nominating Committee conducts the appropriate and necessary inquiries (as determined by the Nominating Committee) with respect to the backgrounds and qualifications of any potential nominees, without regard to whether a potential nominee has been recommended by our stockholders, and, upon consideration of all relevant factors and circumstances, recommends to the Board for its approval the slate of director nominees to be nominated for election at our annual meeting of stockholders. The Nominating Committee considers potential nominees without regard to race, color, creed, religion, national origin, age, gender, sexual orientation or disability. The Although the
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Nominating Committee has not adopted a formal policy with respect to diversity.
2018 Director Compensation
The following table presents information regarding the compensation of our non-employee directors with respect to our fiscal year ended December 31, 20172018 and should be read in conjunction with “Narrative to the Director Compensation Table” below. No director who is or was at any time during 2017 an employeeEmployees of the Company receives or has ever receiveddo not receive any additional compensation for serving on2018 Board service. No information has been provided for Messrs. Chow or Wong or Ms. Meyer, as they did not join the Board during his or her time of employment. Compensation received by Mr. Moran, in his role as an employee of the Company is discussed under “Compensation DiscussionDirectors until January and Analysis” and “Named Executive Officer Compensation” below.April 2019, respectively.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) | All Other Compensation ($) | Total ($) | ||||||||
Jeffrey Berger | 102,500(3 | ) | 110,000 | — | 212,500 | |||||||
Alan Feldman | 112,500(4 | ) | 110,000 | — | 222,500 | |||||||
Michael Hines | 102,500(5 | ) | 110,000 | — | 212,500 | |||||||
Amy Lane | 112,500(6 | ) | 110,000 | — | 222,500 | |||||||
Philip Mallott | 120,000(7 | ) | 110,000 | — | 230,000 | |||||||
Robert Moran | 175,000(8 | ) | 110,000 | — | 285,000 | |||||||
Richard Wallace | 115,000(9 | ) | 110,000 | — | 225,000 | |||||||
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) (2) | All Other Compensation ($) | Total ($) | ||||||||||||
| Jeffrey Berger | 102,500 | (3) | 110,000 | — | 212,500 | |||||||||||
| Alan Feldman | 112,500 | (4) | 110,000 | — | 222,500 | |||||||||||
| Michael Hines | 171,731 | (5) | 110,000 | — | 281,731 | |||||||||||
| Amy Lane | 112,500 | (6) | 110,000 | — | 222,500 | |||||||||||
| Philip Mallott | 120,000 | (7) | 110,000 | — | 230,000 | |||||||||||
| Robert Moran (8) | 57,884 | (9) | — | — | 57,884 | |||||||||||
| Richard Wallace | 115,000 | (10) | 110,000 | — | 225,000 | |||||||||||
| (1) | Reflects the approximate aggregate grant date fair value of the |
| (2) | The table below sets forth the number of stock awards and the exercisable and unexercisable stock options received for services as a director and held by the listed directors as of December 31, |
Stock Awards Outstanding | Option Awards Outstanding | ||||||||
Name | Exercisable | Unexercisable | |||||||
Jeffrey Berger | 31,609 | 14,000 | — | ||||||
Alan Feldman | 31,609 | — | — | ||||||
Michael Hines | 31,609 | 11,920 | — | ||||||
Amy Lane | — | — | — | ||||||
Philip Mallott | 31,609 | — | — | ||||||
Robert Moran | 31,609 | — | — | ||||||
Richard Wallace | 31,609 | 35,000 | — | ||||||
| Option Awards Outstanding | ||||||||||||
| Name | Stock Awards Outstanding | Exercisable | Unexercisable | |||||||||
| Jeffrey Berger | 14,765 | 14,000 | — | |||||||||
| Alan Feldman | 14,765 | — | — | |||||||||
| Michael Hines | 14,765 | 36,920 | — | |||||||||
| Amy Lane | 14,765 | 30,500 | — | |||||||||
| Philip Mallott | 14,765 | — | — | |||||||||
| Robert Moran | — | — | — | |||||||||
| Richard Wallace | 14,765 | 35,000 | — | |||||||||
| (3) | Reflects aggregate annual retainers paid to Mr. Berger, including $80,000 for his service as a director, $10,000 for his service as a member of the Nominating Committee and $12,500 for his service as a member of the Audit Committee. |
| (4) | Reflects aggregate annual retainers paid to Mr. Feldman, including $80,000 for his service as a director, $10,000 for his service as a member of the Nominating Committee, $12,500 for his service as Chairperson of the Nominating Committee and $10,000 for his service as a member of the Finance Committee. |
| (5) | Reflects aggregate annual retainers paid to Mr. Hines, including $80,000 for his service as a director, $12,500 for his service as a member of the Audit Committee, and $10,000 for his service as a member of the Finance |
| (6) | Reflects aggregate annual retainers paid to Ms. Lane, including $80,000 for her service as a director, $10,000 for her service as a member of the Compensation Committee, $12,500 for her service as Chairperson of the Finance Committee and $10,000 for her service as a member of the Finance Committee. |
| (7) | Reflects aggregate annual retainers paid to Mr. Mallott, including $80,000 for his service as a director, $12,500 for his service as a member of the Audit Committee, $17,500 for his service as Chairperson of the Audit Committee, and $10,000 for his service as a member of the Compensation Committee. |
| (8) | Reflects aggregate annual retainers earned by Mr. Moran, including |
| (9) | Reflects aggregate annual retainers paid to Mr. Wallace including $80,000 for his service as a director, |
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Narrative to the Director Compensation Table. In July 2013, based in part on recommendations of Hay Group, a predecessor of Korn Ferry Hay Group, we adopted aOur current director compensation policy (the “Director Compensation Policy”) pursuant to which, adopted in 2013, provides that each non-employee director is entitled to receive an annual cash retainer for his or herBoard service, additional cash retainers service as a member of our Board, as well as additional cash retainers for his or her service as aCommittee member and/or Chairperson of one of the various Committees of the Board and an annual equity award. The Board believes that payments of retainer fees provide an appropriate balance of incentives for active participation and ease of administration, while the grant of annual equity awards aligns the long-term financial interests of our directors and our stockholders.
Specifically each offor 2018, our non-employee directors currently is entitled toreceived (i) an $80,000 annual cash retainer for his or her Board service, of $80,000, (ii) as applicable, an incremental annual cash retainer of $17,500, $15,000, $12,500 or $12,500 for service as Chairperson of the Audit Committee, Compensation Committee, Finance Committee or Nominating Committee, respectively, (iii) as applicable, an incremental annual cash retainer of $12,500 to the extent he or she otherwise serves as a member of$10,000 for service on the Audit Committee or $10,000 to the extent he or she otherwise serves as a member of the Compensationanother standing Committee, Finance Committee and/or Nominating Committee,respectively, and (iv) $110,000 in annual equity awards.award, in the form of restricted stock with one year cliff vesting, valued at $110,000 at the time of grant. For information regarding Compensation Committee Interlocks and Insider Participation, see Other“Other Board InformationInformation” above. In addition to the compensation paid for general membership on the Board and its various committees,noted above, the Chairman of the Board is entitled to receive an annual, incremental cash retainer. During 2017,retainer, which in 2018 was $110,000. Additionally, in August, 2018 the annual cash retainer for the Chairman of the BoardLead Independent Director was $100,000 until October 2017,established at which time it was increased to $110,000.
We also maintain a deferred compensation plan under which our non-employee directors may elect to defer all or a portion of their cash fees or restricted stock retainerscompensation until the earliest of separation from the Board, death, a specified future date or a change in control of the Company. Annual stockequity retainers are deferred in the form of RSUs with identical vesting schedules to the shares of restricted stock. No deferral elections were made forMs. Lane elected to defer her 2018 annual restricted stock award and will not be issued shares from the 2017 grants.
Director Stock Ownership Guidelines
Code of Ethics
We have adopted a Code of Ethics applicable to our Chief Executive Officer and senior financial officers and a Code of Business Conduct and Ethics that is applicable to all employees. Each document is available on the Corporate Governance page of the Investor Relations section of our website located at www.gnc.com, and will be provided to any stockholder free of charge upon request. Any amendments to or waivers from our Code of Ethics with respect to our Chief Executive Officer and senior financial officers will also be disclosed on our website. Employees generally receive annual training with respect to the expectations specified in the Code of Business Conduct and Ethics, and are required to acknowledge that they understand their responsibilities and will comply with all aspects of the Code of Business Conduct and Ethics.
Certain Relationships and Related Transactions
We recognize that transactions between the Company and related persons present a potential for actual or perceived conflicts of interest. Our general policies with respect to such transactions are included in our Code of Business Conduct and Ethics. All employees are required to follow the Code of Business Conduct and Ethics,
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and the Audit Committee of the Board, along with Corporate Compliance staff led by our Chief Legal Officer, oversee our Code of Business Conduct and Ethics, which provides that any actual or potential conflict of interest is to be disclosed.
Although we have not adopted formal written procedures for the review, approval or ratification of transactions with related persons, the Board reviews potential transactions with those parties we have identified as related parties prior to the consummation of the transaction, and we adhere to the general policy that such transactions should only be entered into if they are approved by the Board, in accordance with applicable law, and on terms that, on the whole, are no more or less favorable than those available from unaffiliated third parties.
Communications from Stockholders and Other Interested Parties
The Board welcomes communications from our stockholders and other interested parties. Stockholders and other interested parties wishing to communicate with the Board, our non-management directors or any particular director may send such communications to the following address: GNC Holdings, Inc., 300 Sixth Avenue, Pittsburgh, Pennsylvania, 15222, Attention: Secretary. Such communications should indicate clearly the director or directors to whom the communication is being sent so that each communication may be forwarded directly to the appropriate director(s).
Both the full Board, as well as each Board Committee discussed within this proxy statement, completes an annual self-assessment, which is a structured, confidential questionnaire prepared by the legal department. The results of the questionnaires are reviewed and discussed, as applicable, within executive session, and further used to develop action plans in response to comments provided in said questionnaires.
Policy on Hedging and Pledging of Company Stock
The Company currently has a policy in place that is applicable to all employees and non-employee directors, which prohibits such persons from (i) within six months after purchasing any Company securities, selling any Company securities of the same class, (ii) selling the Company’s securities short, (iii) buying or selling puts or calls or other derivative securities on the Company’s securities, (iv) holding Company securities in a margin account or pledging Company securities as collateral for a loan or (v) entering into hedging or monetization transactions or similar arrangements with respect to Company securities.
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Set forth below is information concerning our current executive officers.
Name | Age | Position |
Kenneth A. Martindale | 59 | Chief Executive Officer |
Tricia K. Tolivar | 50 | Executive Vice President, Chief Financial Officer |
Guru Ramanathan | 56 | Senior Vice President, |
Kevin G. Nowe | 66 | Senior Vice President, Chief Legal Officer and Secretary |
Steven Piano | 53 | Senior Vice President, |
Susan M. Canning | 49 | Vice President, |
The biography for Mr. Martindale is set forth above under “Election of Directors (Proposal 1).”
Tricia K. Tolivar
became our Executive Vice President and Chief Financial Officer in MarchGuru Ramanathan
, Ph.D. joined our Company in 1998 and became our Senior Vice President and Chief Innovation Officer in December 2009 having previously served as Senior Vice President of Product and Package Innovation since February 2008 and Senior Vice President of Scientific Affairs since April 2007. He served as Vice President of Scientific Affairs from December 2003 to April 2007. Prior to joining the Company, Dr. Ramanathan worked as Medical Director and Secretary for the Efamol subsidiary of Scotia Pharmaceuticals in Boston and, in his capacity as a pediatric dentist and dental surgeon, held various industry consulting and management roles, as well as clinical, research and teaching appointments in Madras, India, and Tufts University and New England Medical Center in Boston, Massachusetts. Dr. Ramanathan earned his Ph.D. in Innovation Management from Tufts University and his MBA from Duke University’s Fuqua School of Business.Kevin G. Nowe
became our Senior Vice President, Chief Legal Officer and Secretary in March 2018. Previously he served as our Senior Vice President and Chief Legal Officer from April 2017 to October 2017 and as our Senior Vice President, Chief Legal Officer and Chief Compliance Officer from October 2017 to March 2018. Mr. Nowe previously served in leadership positions at Kennametal, Inc., most recently as Vice President, Secretary and General Counsel from 2009 to 2016, with responsibility for management of the company’s legal and general corporate governance matters, and as Assistant Secretary and Assistant General Counsel from 1992 to 2009. Mr. Nowe is a graduate of the University of Pittsburgh and the Case Western University School of Law.Steven Piano
became our Senior Vice President and Chief Human Resources Officer in January 2018. Mr. Piano previously served in leadership positions with MoneyGram International, Inc. from 2009 to 2017, most recently as Executive Vice President, Human Resources, Real Estate and Communications with responsibility for MoneyGram International’s global human resources and facilities management. Mr. Piano previously served in a variety of human resources leadership positions for National Grid USA, First Data Corporation and Lehman Brothers, Inc. Mr. Piano is a graduate of Hofstra University.Susan M. Canning became our Vice President, Deputy General Counsel and Corporate Secretary in September 2018. Ms. Canning previously served as Senior Corporate Counsel and Assistant Secretary of Kellogg Company from 2017 to 2018, General Counsel - Europe of Kellogg Company from 2014 to 2017 and other legal roles since 2008. Ms. Canning previously served in a variety of legal positions for J.P. Morgan Chase & Co. from 1991 to 2008. She is a graduate of John Carroll University and the University of Detroit School of Law.
In addition to our current executive officers, below is biographical information for each of Joseph C. Gorman, age 48, and Gene Eddie Burt II,
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Joseph C. Gorman served as Executive Vice President, Operations, from March 2017 through March 2019. Prior to his appointment, Mr. Gorman served as Senior Vice President, Store Operations from January to March 2017 and Vice President, Western Division, from December 2015 to January 2017. Prior to joining the Company in 2015, Mr. Gorman was President of Anomaly Republic, a clothing retailer headquartered in Southern California from 2014 to 2015, with responsibility for the executive management and operational leadership of the company’s business. Prior to that, Mr. Gorman spent approximately six years at GameStop, an omni-channel video game and electronics retailer, where he held various field leadership positions from 2009 to 2014, and approximately sixteen years before that at The Home Depot, a home improvement retailer, where he held various operational roles in the field and headquarters.
Gene Eddie Burt II served as Executive Vice President, Chief Merchandising Officer and Chief Supply Chain Officer infrom January 2018.2018 through March 2019. He previously served as our Senior Vice President and Chief Supply Chain Officer from January 2017 to January 2018. He previously served as Senior Vice President, Supply Chain for Tuesday Morning Corporation from February through September 2016, with responsibility for the oversight of the company’s product distribution network, and prior to that in a variety of executive roles with PetsMart,PetSmart, Inc. from 2007 to 2015, most recently as Senior Vice President, Real Estate and Development with responsibility for the company’s facilities and development initiatives. Mr. Burt is a graduate of Morehouse College.
(PROPOSAL 2)
In accordance with Section 14A of the Exchange Act, we are providing our stockholders the opportunity to cast a non-binding advisory vote to approve the 20172018 compensation of our Named Executive Officers (defined below) as described in the Compensation Discussion and Analysis section of this proxy statement, the compensation tables that follow and narrative discussions set forth in these proxy materials. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on the compensation of our Named Executive Officers. Our Board recommended, and the stockholders approved at our 2017 annual meeting of stockholders, that such advisory vote would be conducted on an annual basis.
As described in the Compensation Discussion and Analysis section of this proxy statement, the primary objectives of our executive compensation program are to (i) align cash and stock-based rewards with individualCompany performance that creates long-term stockholder value, (ii) attract and retain high performing, results oriented employees, (iii) build an ownership and long-term growth mentality and interest among our key employees and (iv) provide cost effective cash and stock-based rewards that are competitive with other organizations, reinforce our pay for performance culture, and fairequitable to our stockholders and employees. The foregoing objectives are applicable to the compensation of our Named Executive Officers.
We believe that our executive compensation program achieves these objectives by emphasizing long-term stock-based incentive awards and performance-based compensation, is appropriate in light of our overall compensation philosophy and objectives, and will play an essential role in our current business environment and future success.
Therefore, the Board recommends a vote in favor of the following resolution:
“RESOLVED, that the compensation paid to the Company’s Named Executive Officers for fiscal year ended December 31, 2017,2018, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
As an advisory vote, this proposal is not binding upon us. Notwithstanding the advisory nature of this vote, the Compensation Committee values the opinions expressed by stockholders in their vote on this proposal, and will consider the outcome of the vote when making future compensation decisions for our Named Executive Officers. Currently, we expect to hold an advisory vote on the compensation paid to the Company’s Named Executive Officers each year and expect that the next such vote will occur at our 20192020 Annual Meeting.
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The affirmative vote of the holders of a majority of the votes cast by our stockholders in person or represented by proxy and entitled to vote is required to approve this Proposal 2.
Recommendation
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS FOR THE COMPANY’S FISCAL YEAR ENDED DECEMBER 31, 2017,2018, AS DISCLOSED IN THESE PROXY MATERIALS.
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This section discusses the material elements of compensation awarded to, earned by or paid to our principal executive officer, our principal financial officer, and our three other most highly compensated executive officers who were serving as such on December 31, 2017, our former principal executive officer who served as such for a portion of 2017, and two individuals who would have been included in our three other most highly compensated executive officers but for the fact that the individuals were not serving as executive officers as of December 31, 2017.2018. These individuals are referred to collectively as the “Named Executive Officers.”
For 2017,2018, the Named Executive Officers were:
Name | Title |
Kenneth A. Martindale | Chairman and Chief Executive Officer |
Tricia K. Tolivar | Executive Vice President, Chief Financial Officer |
Gene E. Burt | Former Executive Vice President, Chief Merchandising Officer and Chief Supply Chain Officer |
Joseph C. Gorman | |
Former Executive Vice President, Operations | |
Steven Piano | |
Senior Vice President, Chief |
The Company had a change in its Named Executive Officers from 20162017 to 2017. Mr. Moran ceased to serve as our Interim Chief Executive Officer effective on September 11, 2017. We have included information concerning Mr. Moran in the Summary Compensation Table and other related tables in accordance with SEC rules and regulations, and we discuss matters relating to his compensation in this Compensation Discussion and Analysis where relevant. Mr. Dzura, the former Executive Vice President, Operations, resigned from employment with the Company as of March 24, 2017. Mr. Hennion, the former Executive Vice President, Chief Marketing and e-Commerce Officer, resigned from his position with the Company, effective June 1, 2017. In addition,2018. Mr. Mantel, Executive Vice President and Chief Merchandising Officer, resigned from employment with the Company as of February 9, 2018. For purposes ofMr. Piano joined the stockholder advisory vote relatingCompany as Senior Vice President, Chief Human Resources Officer on January 22, 2018. Messrs. Gorman and Burt resigned from employment with the Company March 15, 2019.
Executive Summary
Our goal is to 2017 compensationcreate a consistent and satisfying experience for all of our Named Executive Officers and, unless otherwise indicated, for purposes of this Compensation Discussion and Analysis, Messrs. Moran, Dzura and Hennion, together with the other officers namedcustomers, whether they find us in the table above, are our Named Executive Officers. However, unless otherwise indicated, references to the Named Executive Officers in this Compensation Discussion and Analysis exclude (i) Mr. Martindale when the term is used in discussing periods of time prior to September 11, 2017, the date Mr. Martindale joined our Company, and (ii) Messrs. Moran, Dzura, and Hennion when the term is used in discussing periods of time after September 11, 2017, March 24, 2017, and June 1, 2017, respectively.
In addition to addressing traffic trends in our retail stores, our management team is seeking other substantial opportunities to reposition the Company and drive profitable growth, including expansion of our business internationally, increased brand penetration, loyalty memberships, leveraging our strength in product innovation, and delivering a compelling omnichannel experience. As our key efforts take time to produce results, the Company’s operational results in 20172018 were challenged, impacting our year-over-year share price, down from approximately $11$3.50 per share at the beginning of 20172018 to less than $4$3.00 per share by the end of the year.
On February 13, 2018, the Company announced it had reached an agreement regarding a strategic partnership and China joint venture agreement with Harbin Pharmaceutical Group (“Harbin”). Under the terms of the agreement, Harbin invested approximately $300 million in GNC. In conjunction with the final investment, the formation of the Hong Kong-based China e-commerce joint venture with Harbin was completed in February 2019. The Hong Kong-based China e-commerce joint venture includes the operations of the existing profitable, growing cross border China e-commerce business. We anticipate completing the formation of the second, retail-focused joint venture located in China in the second or third quarter of 2019 following the completion of certain routine regulatory and legal requirements.
In February 2019, we announced the formation of a strategic partnership with International Vitamin Corporation (“IVC”). Under the joint venture agreement, GNC quality and R&D teams will continue to support product development and innovation, while IVC will manage manufacturing and integrate with GNC's supply chain. Under the terms of the agreement, GNC will receive $176 million over the next four years from IVC as their ownership of the joint venture increases to 100%. This partnership will allow GNC to further focus on innovation while IVC drives increased efficiencies in manufacturing.
In light of this transforming and challenging business environment, the Compensation Committee made the following pay determinations in 20172018 for our Named Executive Officers:
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Our executive compensation program has been structured to generate and reward superior company performance by establishing compensation packages under which variable, or incentive, compensation is weighted more heavily than base salary. We have established compensation programs to motivate our executives to focus on both our short-term and long-term performance by providing a mix of short-term and long-term incentive compensation in the form of annual cash incentive compensation and long-term equity-based incentive compensation. We believe that our approach appropriately allocates more compensation toward non-cash equity compensation on average, and aligns the incentives of our executives with the interests of our stockholders.
Annual Cash Incentive Compensation
Name | EBIT | Retail and Web Sales Comparables | GMROI | |||||||||
| Kenneth A. Martindale | 50 | % | 50 | % | - | |||||||
| Tricia K. Tolivar | 50 | % | 50 | % | - | |||||||
| Timothy A. Mantel | 40 | % | 40 | % | 20 | % | ||||||
| Guru Ramanathan | 50 | % | 50 | % | - | |||||||
| Gene E. Burt | 40 | % | 40 | % | 20 | % | ||||||
| Michael D. Dzura | 50 | % | 50 | % | - | |||||||
| Jeffrey R. Hennion | 50 | % | 50 | % | - | |||||||
Additionally, considering the challenging business environment and then-pending Harbin deal, the Company moved from an annual to quarterly Adjusted EBITDA goals (which aligned with the budget) in order to provide a responsive and viable plan for participants during the year. Any quarterly incentives earned based on achievement of quarterly Adjusted EBITDA goals are not paid until after the close of the fiscal year, so as to support our retention and stabilization efforts with leadership. The Company’s performance for 20172018 resulted in nopartial payment of bonuses to the Named Executive Officers listed above under the annual cash incentive compensation program or, in the case of Mr. Martindale, under his employment agreement. In addition toThis is the above Named Executive Officers, Mr. Moran was eligible for and receivedfirst organization wide annual incentive bonus payments as determined by and atpayment since the discretion of the Board. For more information, see “ – Elements of Compensation – Annual Cash Incentive Compensation” below.
Long-term Incentive Compensation
In February 2017,2018, our executives, including certainall Named Executive Officers, specifically Ms. Tolivar, Dr. Ramanathan, and Messrs. Moran, Mantel, Burt, and Hennion, received long-term incentive grants for 2017.2018. The long-term incentive award grants in February 20172018 to these Named Executive Officers were received in the form of PSUs RSUs, and stock options.Restricted Cash. The specific proportions of total awards granted were delivered 50% in PSUs, with a performance metric aligned with the formsstabilization of PSUs, RSUsthe Company’s EBITDA, and stock options are provided50% in detail below and ranged from 37%-40%Restricted Cash, creating a long-term retention vehicle for PSUs, 27%-30% for RSUs and 30%-36% for stock options, except for Mr. Moran who received all of his award in the form of stock options.
Other 20172018 Compensation Highlights
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Compensation Policies and Objectives
The primary objectives of our executive compensation program, and the accordant Committee responsibilities, are to:
To facilitate the objectives, the Company provides base salary and related benefit plans, annual cash incentive compensation and long-term incentive compensation. The objectives apply to the compensation of the Named Executive Officers and to the elements of their respective executive compensation packages as follows:
Base Salary
. The objective in determining base salaries for the Named Executive Officers is to set base salaries at levels that are (i) sufficient to attract and retain high performing, qualified employees and (ii) considered fair to our stockholders and employees. The Compensation Committee seeks to set base salaries at levels that are competitive with a peer group of companies and benchmarks salaries at the median of the peer group. In addition, base salaries are influenced by the complexity, scope and level of the applicableOur Named Executive Officers did not receive routinereceived market competitive salary increases in 2017,2018, in order to align with exceptions for benchmarking adjustments. There were benchmarking increases to the salaries of Ms. Tolivar,external benchmark peers and Mr. Moran and Mr. Hennion.
Annual Cash Incentive Compensation
. We use annual cash incentive compensation to incentivize the Named Executive Officers to contribute to our growth and financial performance and to provide rewards based on achievement of predetermined goals that are intended to drive increases in stockholder value. As additional cash compensation that is contingent on our financial performance, annual cash incentive compensation augments the base salary component while being tied to our financial performance.The Company’s performance in 20172018 resulted in nopartial payment of bonusesthe annual cash incentive to the Named Executive Officers except for discretionary incentive bonus payments made to Mr. Moran for his service as our Interim Chief Executive Officer.aligned with performance against established financial metrics.
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Long-term Incentive Compensation. We believe that long-term and stock-based awards are important in building an ownershipa long-term growth mentality among our executives and aligning the long-term financial interests of our executives with those of our stockholders. Time- and performance-vested awards provide incentives to drive company performance, and have long-term horizons because value to our executives is dependent on continued employment, the achievement of pre-established performance goals (in the case of PSUs) and, ultimately, increases in the market value of our common stock.
Our 20172018 equity awards consisted of a significant portion of PSUs and restricted cash, as noted above, and stock options, which we believe focuses attention on building long-term stockholder value.
Benefits and Perquisites
. The Named Executive Officers are entitled to participate in, and to receive benefits under, the benefit plans, arrangements and policies available to our employees or executives generally.Executive Compensation Process
Role of the Compensation Committee
The Compensation Committee oversees the development and implementation of our executive compensation policies and objectives, determines the structure of our executive compensation packages generally, determines the actual compensation paid to each of our senior executives and evaluates the performance of our Chief Executive Officer. In addition, the Compensation Committee has the authority
Role of Management
The Compensation Committee considers the recommendations of management, principally our Chief Executive Officer or Interim Chief Executive Officer, as applicable, when determining the structure of our executive compensation packages generally and the actual compensation paid to each of our senior executives. The Compensation Committee does not delegate any of its functions to others in setting compensation, no Named Executive Officer is a member of the Compensation Committee and our Chief Executive Officer or Interim Chief Executive Officer, as applicable, does not provide recommendations with respect to his own compensation.
Role of Outside Advisors
The Compensation Committee has retained Korn Ferry Hay Group (US) (“Korn Ferry”) as an independent consultant to provide information, advice and recommendations regarding our executive compensation policies and design. In 2017,2018, Korn Ferry Hay Group was engaged to review and provide information, advice and recommendations regarding our executive compensation program generally, as well as the individual compensation packages of each of our senior executives, including the Named Executive Officers. Korn Ferry Hay Group was directed to benchmark executive salaries and other short-term and long-term compensation, including the mix of performance-based compensation. As discussed below under “–“—Use of Peer Group Data,” at the direction of the Compensation Committee, Korn Ferry Hay Group worked with our Interim Chief Executive Officer and our Human Resources personnel to compare our executive compensation packages to those of a group of comparable companies.
Korn Ferry Hay Group provides advice and recommendations to the Compensation Committee and reports to the Compensation Committee. Prior to its original engagement in 2011, Korn Ferry, Hay Group, except for executive search services performed by Korn Ferry prior to its acquisition of Hay Group and as set forth below, had not previously worked with the Company in any capacity, nor has it served us in any capacity, other than as a consultant to the Compensation Committee. The Compensation Committee has reviewed and considered information provided to it by Korn Ferry, Hay Group, the Compensation Committee members and our executive officers, and based on its review and the factors described in the NYSE listing standards and such other factors as it deemed
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relevant, the Compensation Committee has concluded that Korn Ferry Hay Group is independent, that the advice it receives from Korn Ferry Hay Group is objective and that Korn Ferry Hay Group’sFerry’s work has not raised any conflict of interest. In December 2015, Korn Ferry acquired Hay Group, which became a wholly owned subsidiary of Korn Ferry. The Company has engaged Korn Ferry Hay Group to provide executive search services in the past and may do so from time to time in the future.
Use of Peer Group Data
The Compensation Committee seeks to determine how our compensation programs compare to other publicly traded companies similar to us. The Compensation Committee seeks to set compensation for the Named Executive Officers at levels that are competitive with similar companies in our industry but consistent with our growth strategy and with an emphasis on variable compensation, rather than fixed compensation.
With the assistance of Korn Ferry, Hay Group, the Compensation Committee updatedreviewed its peer group in September 20162018 in order to appropriately reflect companies with revenue sizes, sectors and business models similar to our own, as well as those with which we compete for talent. Other than the removal of certain companies due to delisting resulting from an acquisition or going private, there were no adjustments to the peer group. The updated peer group (the “2017“2018 Peer Group”), which was used for comparative purposes in setting the levels of the 20172018 long-term equity awards and cash compensation levels for our Named Executive Officers (other than Mr. Moran and Mr. Martindale, whose 20172018 compensation levels were determined in connection with their respective appointments)his appointments and employment agreement), was comprised of the following 18fourteen companies:
American Eagle Outfitters, Inc. | Nu Skin Enterprises, Inc. | |
Village Super Market | ||
Big 5 Sporting Goods Corporation | ||
Pier 1 Imports, | Vitamin Shoppe, Inc. | |
Deckers Outdoor Corporation | Sally Beauty Holdings, Inc. | Weight Watchers International, Inc. |
Hain Celestial Group, Inc. | ||
Sprouts Farmers Markets, Inc. | Williams Sonoma, Inc. | |
Herbalife Ltd. | Ulta Beauty, Inc. |
After consultation with Korn Ferry Hay Group in July 2017, the Compensation Committee further updated the peer group by removing Cabela’s, Inc., Dick’s Sporting Goods, Inc., Lululemon Athletica, Inc., and Panera Bread Co. from the 2017 Peer Group, and adding Big 5 Sporting Goods Corp. and Nu Skin Enterprises, Inc. (the updated peer group, the “2018 Peer Group”).
In February 2018,2019, we used the 2018 Peer Group for comparative purposes in setting our most recent long-term equity awards and 20182019 cash compensation levels for our executives, including the Named Executive Officers, other than Mr. Martindale, for whom 20182019 compensation levels, including long-term equity awards, were determined under his employment agreement.
Elements of Compensation
Base Salary
With respect to 2017,2018, the Compensation Committee established the annual base salaries of the Named Executive Officers as follows:
Name | 2017 Base Salary ($) | 2018 Base Salary ($) | Percentage Increase (%) | ||||||
Kenneth A Martindale(1) | 975,000 | 975,000 | N/A | ||||||
Tricia K. Tolivar(2) | 510,000 | 520,000 | 2.0 | ||||||
Gene E. Burt(3) | 385,000 | 450,000 | 16.0 | ||||||
Joseph C. Gorman(4) | 400,000 | 420,000 | 5.0 | ||||||
Steven Piano(5) | N/A | 390,000 | N/A | ||||||
Name | 2016 Base Salary ($) | 2017 Base Salary ($) | Percentage Increase (%) | |||||||||
| Kenneth A Martindale (1) | N/A | 975,000 | N/A | |||||||||
| Tricia K. Tolivar (2) | 460,000 | 510,000 | 10.9 | |||||||||
| Timothy A. Mantel (3) | 500,000 | 500,000 | 0.0 | |||||||||
| Guru Ramanathan | 430,000 | 430,000 | 0.0 | |||||||||
| Gene E. Burt (4) | N/A | 385,000 | N/A | |||||||||
| Robert F. Moran (5) | 996,000 | 1,016,000 | 2.0 | |||||||||
| Michael D. Dzura (6) | 510,000 | 510,000 | 0.0 | |||||||||
| Jeffrey R. Hennion (7) | 500,000 | 510,000 | 2.0 |
| (1) | Mr. Martindale was appointed as the Chief Executive Officer of the Company effective on September 11, 2017 and base salary was paid commencing on his appointment. |
| (2) | Ms. Tolivar received a |
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| Mr. Burt was appointed as the |
| (4) | Mr. |
| Mr. Piano was appointed Senior Vice President, Chief Human Resources Officer of the Company |
Annual Cash Incentive Compensation
Annual cash incentive compensation is documented in an annual plan that is adopted by the Compensation Committee under the Company’s stock and incentive plan prior to or during the first quarter of the applicable year. The annual performance bonus for each Named Executive Officer has a threshold, target and maximum bonus amount expressed as a percentage of his or her annual base salary eligible earnings, which percentage is determined by the respective position and level of responsibility of such Named Executive Officer.
For 2018, the Company revised the design of the annual cash incentive plan to focus on strengthening the business foundation by providing a clear line of sight to financial performance metrics through individual and team efforts. The plan provided a flexible platform in goal setting to be responsive to actual financial and operational performance against plan during the year. Annual cash incentive payouts were measured and earned quarterly against Company Adjusted EBITDA goals, but payment was deferred until after the close of the fiscal year, ensuring the target remained a relevant and motivating metric throughout the year and providing a retentive element to the plan.
Quarterly Adjusted EBITDA threshold (90% of target), target, and maximum (110% of target) performance goals were reviewed and approved by the Committee prior to the beginning of each quarter. The Company’s quarterly Adjusted EBITDA incentive targets aligned with budget. Recipient’s annual cash incentive potential payout at target is split evenly over each quarter and earned payouts are determined based on achievement against quarterly metrics between threshold and maximum. Performance at threshold results in a payout of 33.3% of target, performance at target results in a payout of 100% of target, and performance at or above maximum results in a payout of 200% of target. Performance and related payments are interpolated between the various performance goals. Calculations prorate during each quarter based on changes in base salary eligible earnings, bonus target, and performance between threshold, target, and maximum performance goals. Quarterly earned payout amounts are deferred until Q1 of the following fiscal year and recipients must be actively employed on the date of payout to receive payment.
The annual cash incentive plan for 20172018 performance (the “2017“2018 Incentive Plan”) was adopted by the Compensation Committee in February 20172018 and provided the following threshold, target and maximum bonus amounts for our Named Executive Officers, expressed as a percentage of annual base salary:salary eligible earnings:
2018 Incentive Plan | |||||||||
Level | Threshold Amount | Target Amount | Maximum Amount | ||||||
Chief Executive Officer | 50 | % | 150 | % | 300 | % | |||
Chief Financial Officer | 25 | % | 75 | % | 150 | % | |||
Executive Vice President | 20 | % | 60 | % | 120 | % | |||
Senior Vice President | 15 | % | 45 | % | 90 | % | |||
| 2017 Incentive Plan | ||||||||||||
Level | Threshold Amount | Target Amount | Maximum Amount | |||||||||
| Chief Financial Officer | 20 | % | 60 | % | 120 | % | ||||||
| Executive Vice President | 20 | % | 60 | % | 120 | % | ||||||
| Senior Vice President | 15 | % | 45 | % | 90 | % | ||||||
Mr. Martindale’s annual cash incentive compensation was not established under the 20172018 Incentive Plan, as he was appointed as Chief Executive Officer in September 2017, and,but in connection with his appointment and employment agreement, the threshold, target, and maximum payout amounts were set at 50%, 150% and 300%, respectively. In connection with his appointment to Chief Executive Officer, Mr. Martindale was entitledeligible to receive an annual bonus opportunity of at least 150% of base salary, pro-rated with respect to the 2017 calendar year, which could be earned based on the Compensation Committee’s evaluation of performance objectives established for the applicable year, which were the same incentives established under the 2017 Incentive Plan.
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The following thresholds and related goals were established (i) for Ms. Tolivar, Dr. Ramanathan, and Messrs. Hennion and Dzuraall Named Executive Officers under the 20172018 Incentive Plan and (ii) for Mr. Martindale in connection with his appointment and employment agreement:Plan:
Performance Measure(1)(2) | Threshold ($) | Target ($) | Maximum ($) | Relative Weight | ||||||||
Q1 Adjusted EBITDA | 50,983,000 | 56,648,000 | 62,313,000 | 100 | % | |||||||
Q2 Adjusted EBITDA | 62,034,000 | 68,927,000 | 75,820,000 | 100 | % | |||||||
Q3 Adjusted EBITDA | 54,873,000 | 60,970,000 | 67,067,000 | 100 | % | |||||||
Q4 Adjusted EBITDA(3) | 39,125,000 | 46,029,000 | 52,933,000 | 100 | % | |||||||
| Performance Measure | Threshold | Target | Maximum | Relative Weight | ||||
EBIT (1) | $216,000,000 | $240,000,000 | $264,000,000 | 50% | ||||
| Retail and Web Sales Comparables | 1.50% | 4.40% | 6.40% | 50% |
| (1) | As this performance measure is a non-GAAP financial metric, please see Annex A for a presentation of the reconciliation between |
| Performance Measure | Threshold | Target | Maximum | Relative Weight | ||||
| EBIT | $216,000,000 | $240,000,000 | $264,000,000 | 40% | ||||
| Retail and Web Sales Comparables | 1.50% | 4.40% | 6.40% | 40% | ||||
GMROI (1) | 2.18 | 2.23 | 2.30 | 20% |
| The Company’s Adjusted EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) excludes legal settlements beyond budget and one-time operational items approved by the |
| (3) | For Q4 Adjusted EBITDA, the Compensation Committee agreed to expand the performance leverage to threshold (85% of target) and maximum (115% of target) in order to maintain challenging but achievable targets in the final quarter of the fiscal year, versus the budget, which had known risks. |
Results of the 20172018 Incentive Plan.
Performance Measure | Results | Achieved Results to Target | Payout Percentage (to Target) | ||||||
Q1 Adjusted EBITDA | $ | 59,300,000 | 104.8 | % | 147.8 | % | |||
Q2 Adjusted EBITDA | $ | 63,500,000 | 92.16 | % | 47.49 | % | |||
Q3 Adjusted EBITDA | $ | 50,100,000 | 82.18 | % | 0.0 | % | |||
Q4 Adjusted EBITDA | $ | 35,000,000 | (1) | 81.52 | %(1) | 0.0 | % | ||
| (1) | ||
Based on these results, under the terms of the 20172018 Incentive Plan or(or Mr. Martindale’s employment agreement, as applicable,applicable), our Named Executive Officers did not receivereceived partial cash incentive compensation payments for 2017.
Name | Q1 Earned Incentive ($) 147.8% of Target | Q2 Earned Incentive ($) 47.49% of Target | Q3 Earned Incentive ($) 0.00% of Target | Q4 Earned Incentive ($) 0.00% of Target | ||||||||
Kenneth A. Martindale | 540,233 | 173,632 | 0 | 0 | ||||||||
Tricia K. Tolivar | 152,585 | 47,192 | 0 | 0 | ||||||||
Gene E. Burt | 90,403 | 32,056 | 0 | 0 | ||||||||
Joseph C. Gorman | 88,995 | 29,918 | 0 | 0 | ||||||||
Steven Piano | 49,868 | 20,835 | 0 | 0 | ||||||||
Long-term Incentive Compensation
Annual Long-Term Incentive Awards
. In 2007, we adopted the GNC Acquisition Holdings Inc. 2007 Stock Incentive Plan (the “2007 Stock Plan”), in 2011, we adopted the GNC Holdings, Inc. 2011 Stock and Incentive Plan (the “2011 Stock Plan”), in 2015, we adopted the GNC Holdings, Inc. 2015 Stock and Incentive Plan (the “2015 Stock Plan”), and in 2018 we adopted the GNC Holdings, Inc. 2018 Stock and Incentive Plan (the “2018 Stock Plan”), under which plans awards are outstanding. Substantially all of our employees, and the employees of our direct and indirect subsidiaries and other affiliates, including the Named Executive Officers, are eligible for consideration of awards of stock options, restricted stock, RSUs (including PSUs) and other stock-based awards under the terms of the25
responsible for administering, selecting the individuals who are eligible to participate in and determining the types and amounts of stock-based awards granted under the 20152018 Stock Plan. ThePlan and at the recommendation of management. Additionally, the Compensation Committee has discretion to delegate all or a portion of its authority under the 2015 Stock Plan. In 2007, we adopted the GNC Acquisition Holdings Inc. 2007 Stock Incentive Plan (the “2007 Stock Plan”) and in 2011, we adopted the GNC Holdings, Inc. 2011 Stock and Incentive Plan (the “2011 Stock Plan”), under which plans awards are outstanding. Following the adoption of the 2015 Stock Plan, we have not granted and will not grant any additional awards under the 2007 Stock Plan or the 2011 Stock Plan.
Stock options granted under the various plans generally are subject to vesting in annual installments and have terms of seven to ten years. Options and other stock-based awards under the 2011 Stock Plan, and the 2015 Stock Plan, and 2018 Stock Plan are subject to clawback by the Company if the participant engages in any “detrimental activity” during the participant’s service or for one year after the participant’s service ends, which is generally defined to include disclosing confidential information about the Company, engaging in activities that result (or would result if known) in the termination of the participant’s service for cause, soliciting the Company’s employees on behalf of a competing employer, or materially breaching any agreement between the participant and the Company.
The Compensation Committee generally considers grants of long-term incentive compensation awards on an annual basis, except for certain new hires. The Compensation Committee grants equity-based awards to our executiveshires and promotions which are granted on both an annual and as-desired basis. We do not have any program, plan or practice to time annual or ad hoc grants of equity-based awards in coordination with the release of material non-public information or otherwise. For 2018, the Company revised the design of the long-term incentive plan to focus on strengthening the business foundation and long-term strategy by providing a clear line of sight to performance metrics through individual and team efforts, as well as, provide award vehicles that support retention efforts. The plan provided a suitable platform in goal setting to be responsive to actual financial and operational performance against plan during the performance period, allowing for consideration of the challenging environment during this period of transition. The Company did not make any adjustments to the annual long-term incentive performance target.
The plan utilized two vehicles to deliver the total long-term incentives: 50% in Performance Share Units (PSUs) and 50% in Restricted Cash (RC).
In February 2017, we2018, the Company granted long-term incentive awards to certain Named Executive Officers, including Mr. Moran, Ms. Tolivar, Dr. Ramanathan, and Messrs. Mantel, Burt, and Hennion,Martindale, outlined below, under the 2015 Stock Plan.Plan (the 2018 Stock Plan was not adopted until March 2018) in the form of 50% PSUs and 50% RC. Base award values for these long-term incentive grants were determined based in part on the results of Korn Ferry Hay Group’sFerry’s analysis of the compensation packages of top executives at companies in the 20172018 Peer Group, and were intended to be competitive compared to long-term incentive awards granted to executives with comparable titles and responsibilities within the 20172018 Peer Group. The long-term incentive award grant values to these Named Executive Officers were in the following proportions:
Name | Stock Options | Time-Vested RSUs | PSUs | |||||||||
| Tricia K. Tolivar | 35 | % | 28 | % | 37 | % | ||||||
| Timothy A. Mantel | 30 | % | 30 | % | 40 | % | ||||||
| Guru Ramanathan | 30 | % | 30 | % | 40 | % | ||||||
| Gene E. Burt | 36 | % | 27 | % | 37 | % | ||||||
| Robert F. Moran | 100 | % | - | - | ||||||||
For the February 20172018 awards, the portions of the total award50% value attributable to the RSUs and PSUs were determined by multiplyingdividing the numbertotal grant value of RSUs andthe PSUs in the award by $7.99,$4.20, which was the closing price per share of our common stock on February 22, 2017,21, 2018, the date of grant. For the February 2017 awards, theThe performance metric for grantsthe first tranche of the PSUs is relative total shareholder return (“TSR”).based 100% on achievement of pre-determined Company Adjusted EBITDA. The total numberportion of the first tranche of PSUs that will be earned by a grantee is based upon the Company’s TSRachieved Adjusted EBITDA relative to the TSRtarget Adjusted
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EBITDA which aligns with the budget. Annual Adjusted EBITDA threshold (85% of other companies reportedtarget), target, and maximum (115% of target) performance goals were reviewed and approved by the Committee during Q1 of 2018. Recipient’s annual long-term incentive potential vesting at target is split evenly over each performance year and earned shares are determined based on achievement against annual metrics between threshold and maximum. At the S&P Retail Select Industry Index (the “Index”) forthreshold level of performance, 50% of the Performance Period.PSUs are earned; at the target level, 100% of the PSUs are earned; and at or above the maximum level, 150% of the PSUs are earned, provided, in each case, that the executive has remained employed until the end of the three year period and vesting date. At the conclusion of the Performance Period,each performance year, the Compensation Committee will determine whether and the extent to which the performance criteria have been achieved for the purpose of determining the percentage of the target amount of PSUs that have vestedearned for the Performance Period.performance year. Any PSUs that have not vestedbeen earned as of the end of the Performance Period,performance year, based upon the Compensation Committee’s determination, will be forfeited. The earned shares will be treated as time-based restricted stock fort the balance of the three year period. The Compensation Committee may, in its sole discretion, reduce the amount to less than the amount that is determined to be vested in accordance with the agreements providing for the PSUs.
Grant to Ms. Tolivar.
Ms. Tolivar was granted a specialSummary of 20172018 Named Executive Officer Awards
Name | Total Award Value ($) | Target PSUs (#) | Restricted Cash ($) | ||||||
Kenneth A. Martindale | 4,387,500 | 522,321 | 2,193,750 | ||||||
Tricia K. Tolivar(1) | 1,000,000 | 119,048 | 500,000 | ||||||
Gene E. Burt | 750,000 | 89,286 | 375,000 | ||||||
Joseph C. Gorman | 750,000 | 89,286 | 375,000 | ||||||
Steven Piano | 250,000 | 29,762 | 125,000 | ||||||
Name | Total Award Value ($) | Number of Stock Options (#) | Number of RSUs or RSAs (#)(1) | Target Number of PSUs (#) | ||||||||||||
| Kenneth A. Martindale (2) | 6,550,027 | 519,126 | 519,556 | — | ||||||||||||
| Tricia K. Tolivar | 1,960,288 | 100,000 | 182,802 | 43,736 | ||||||||||||
| Timothy A. Mantel | 710,438 | 64,770 | 26,670 | 35,560 | ||||||||||||
| Guru Ramanathan | 291,448 | 26,571 | 10,941 | 14,588 | ||||||||||||
| Gene E. Burt | 319,011 | 35,000 | 10,941 | 14,588 | ||||||||||||
| Robert F. Moran | 2,807,998 | 753,773 | — | — | ||||||||||||
| Michael D. Dzura | — | — | — | — | ||||||||||||
| Jeffrey R. Hennion | 710,438 | 64,770 | 26,670 | 35,560 | ||||||||||||
| (1) |
Results of the 2018 Long-Term Incentive Plan: As described earlier, the performance metric for the first tranche of the PSU component of these long-term incentive awards is TSR.Adjusted EBITDA. The Compensation Committee established threshold, intermediate, target and maximum levels of achievement with respect to TSR.Adjusted EBITDA. Performance is measured as of the end of the three-year Performance Periodperformance year on December 31, 2019. At the threshold level of performance, 35% of the PSUs vest; at the intermediate level, 75% of the PSUs vest; at the target level, 100% of the PSUs vest; and at or above the maximum level, 200% of the PSUs vest, provided, in each case, that the executive has remained employed until the end of the Performance Period. The applicable portion of the PSUs is forfeited if performance is below the threshold level.
The threshold, target and maximum levels of Adjusted EBITDA performance for the first tranche of the February 2018 PSU grants are as follows:
Metric | Threshold ($) (50% payout) | Target ($) (100% payout) | Maximum ($) (150% payout) | Achieved ($) | ||||||||
Adjusted EBITDA(1) | 198,050,000 | 233,000,000 | 267,950,000 | 207,900,000 | (2) | |||||||
| (1) | The Company’s EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) excludes legal settlements beyond budget and one-time operational items approved by the Board. |
| (2) | The Adjusted EBITDA result of $210,500,000 (90.4% of target), resulting achieved performance percent, and earned PSU percent were presented and certified by the Compensation Committee prior to the February 2019 closing adjustments subsequently determined by the Company. |
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Based on these results, under the terms of the 2018 Incentive Plan (or Mr. Martindale’s employment agreement, as applicable), our Named Executive Officers will earn partial PSUs for 2018 totaling 67.8% of their target potential for the first tranche under the plan.
Name | 2018 Target PSUs (#) | Earned PSU Results | 2018 Earned PSUs (#) | ||||||
Kenneth A. Martindale | 174,107 | 67.8 | % | 118,045 | |||||
Tricia K. Tolivar | 39,683 | 67.8 | % | 26,905 | |||||
Gene E. Burt | 29,762 | 67.8 | % | 20,179 | |||||
Joseph C. Gorman | 29,762 | 67.8 | % | 20,179 | |||||
Steven Piano | 9,921 | 67.8 | % | 6,726 | |||||
Additionally, as part of the 2018 long-term incentive plan, our Named Executive Officers received one-third of their 2018 RC award after the award’s anniversary date (February 21, 2019).
Benefits and Perquisites
The Company does not have a practice of providing perquisites or make payment of perquisite allowances to any of its executives, other than the perquisitescertain run-out relocation benefits provided to Mr. Moran during his tenure as Interim Chief Executive Officer, for whom the Company provided reasonable use of the Company’s corporate aircraft for purposes of commutingMessrs. Burt and Gorman related to their 2017 relocations, and from Pittsburgh, Pennsylvania to conduct Company business and temporary housing benefits, certain relocation benefits provided to Messrs. Martindale, Burt and Mantel,Mr. Piano related to his 2018 relocation, and certain other minimal perquisite amounts each as identified in the Summary Compensation Table.
Non-qualified Deferred Compensation Plan
We maintain the GNC Live Well® Later Non-Qualified Deferred Compensation Plan for the benefit of a select group of our highly compensated employees. Under this plan, certain eligible employees may elect to defer a portion of their future compensation under the deferred compensation plan by electing such deferral prior to the beginning of the calendar year during which the deferral amount would be earned. Mr. Martindale Ms. Tolivar and Messrs. Burt and HennionMr. Gorman made contributions to the deferred compensation plan in 2017.2018. For 2017,2018, a dollar-for-dollar match with respect to the first three percent of a participant’s compensation deferred under the non-qualified deferred compensation plan was provided. For more information regarding the deferred compensation plan, please see “2017“2018 Non-Qualified Deferred Compensation Table” below.
Retention Agreements
In connection with the China joint venture partnership, the Company entered into retention agreements with certain key leaders and executives, including the Named Executive Officers. It is important for the Company to maintain leadership stability, focus, and execution at all times, but specifically in connection with the efforts required over the foreseeable future related to the transition and the successful implementation of the partnership. The agreements provide for four ratable payments to the participants over the course of two years from the announcement date (February, 2018), for which the recipients have to remain actively employed to receive the payment. The agreements also include confidentiality, non-competition, non-recruitment and non-solicitation provisions in exchange for the consideration provided. For more information regarding the retention payments, please see “Summary Compensation” table below.
Executive Severance Pay Policy
The Company maintains an Executive Severance Pay Policy (the “Executive Severance Policy”) for executive officers who are involuntarily terminated from employment and otherwise meet the requirements for benefits. Upon an involuntary termination other than for Cause, as defined in the Executive Severance Policy, eligible executives are entitled to receive cashreceive:
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Payments and benefits under the Executive Severance Policy are contingent upon the executive’s execution and non-revocation of a release of claims against the Company and compliance with covenants set forth in the Executive Severance Policy, which include confidentiality, non-competition and non-solicitation of the Company’s employees. In addition, if such executive obtains subsequent employment that is considered comparable to his or her previous employment with the Company, then the amount remaining to be paid to such executive, under the Executive Severance Policy, is offset by the annual gross base salary payable to such executive pursuant to such subsequent employment.
Mr. Martindale Employment Agreement
In connection with his appointment as Chief Executive Officer, we entered into a three-year employment agreement with Mr. Martindale in September 2017.
Mr. Martindale also agreed to the Company’s standard senior executive restrictive covenants including confidentiality of indefinite duration; nonsolicitation of customers; and Messrs. Mantelnoncompetition and Burt currently do not havenonsolicitation/no-hire of employees during his employment and for 24 months following his termination of employment for any reason. No other Named Executive Officer has or had employment agreements with the Company, and Messrs. Moran, Dzura and Hennion did not have employment agreements with the Company.
Impact of Accounting and Tax Considerations
As a general matter, the Compensation Committee reviews and considers the various tax and accounting implications of the compensation vehicles we utilize.
Prior to the enactment of the Tax Cuts and Jobs Act, Section 162(m) of the Internal Revenue Code generally disallowed public companies a tax deduction for compensation in excess of $1,000,000 paid to their chief executive officer and their three other most highly compensated executive officers (excluding the chief financial officer) unless certain performance and other requirements are met. As part of the Tax
For 2017,2018, the Compensation Committee factored in the potential loss of deductibility during the pay setting approval process. Our intent generally is to design and administer executive compensation programs in a manner that will preserve deductibility of compensation paid to our executives, and, prior to the enactment of the Tax Cuts and Jobs Act, we believed that a substantial portion of our current executive compensation program (including the annual incentive program and the long-term incentive awards that may be granted under the 2015 Stock Plan) would satisfy the requirements for exemption from the $1,000,000 deduction limitation. However, certain awards, such as the inducement awards granted to our Chief Executive Officer in connection with his appointment were not granted under a stockholder-approved plan as required for a deduction under Section 162(m). Also, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, including the uncertain scope of the transition relief for the exemption from the deduction limitation for performance based compensation provided by Section 162(m), there can be no assurance that any amounts paid under such compensation programs, even prior to the effectiveness of the legislative changes, will be deductible under Section 162(m), including, without limitation, in special circumstances related to other hirings and separations.
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Additionally, we reserve the right to design programs and to structure other compensation arrangements that recognize a full range of performance criteria important to our success or that contain different terms, even where the compensation paid under such programs may not be deductible. The Compensation Committee will, in the exercise of its business judgment, continue to monitor our executive compensation program as part of its primary objective of ensuring that compensation paid to our executives is reasonable, performance-based and consistent with our goals and the goals of our stockholders.
Executive Stock Ownership Guidelines
We believe that, to align the long-term financial interests of our executive officers with those of our stockholders, our executives should hold a financial stake in the Company. The Board adopted a policy in December 2011 (revised most recently in February 2015) requiring our Chief Executive Officer and other executive officers to own stock in the Company (our “Executive Stock Ownership Guidelines”). Specifically, our Executive Stock Ownership Guidelines specify that our (i) Chief Executive Officer should own Company stock with an aggregate value at least equal to six times his or her annual base salary, (ii) Executive Vice Presidents should own Company stock with an aggregate value at least equal to two times their base salaries and (iii) Senior Executive Officers subject to the Executive Stock Ownership Guidelines should own Company stock with an aggregate value at least equal to their annual base salaries. are outlined below:
Chief Executive Officer | Aggregate value of 6x his or her annual base salary |
Executive Vice Presidents | Aggregate value of 2x his or her annual base salary |
Senior Executive Officers | Aggregate value of 1x his or her annual base salary |
The Executive Stock Ownership Guidelines provide that our newly appointed executive officers have five years from the date of their appointment to comply with the Executive Stock Ownership Guidelines, and should retain at least 50% of all after-tax shares owned by or underlying equity awards granted to them after December 11, 2012 until the ownership thresholds are met. The Compensation Committee will evaluate whether exceptions should be made for any executive officer on whom this requirement would impose a financial hardship or for other appropriate reasons as determined by the Compensation Committee.Committee, and will work actively with officers or directors who are not in compliance as a result of stock price volatility. For the purposes of the Executive Stock Ownership Guidelines, Company stock includes (i) directly held shares of our common stock, (ii) shares of unvested restricted stock or RSUs (other than unvested shares of performance-vested restricted stock or unvested PSUs) and
Policy on Hedging and Pledging of Company Stock
We have a policy applicable to our directors and all of our employees, including our Named Executive Officers, that prohibits such persons from (i) within six months after purchasing any Company securities, selling any Company securities of the same class, (ii) selling the Company’s securities short, (iii) buying or selling puts or calls or other derivative securities on the Company’s securities, (iv) holding Company securities in a margin account or pledging Company securities as collateral for a loan or (v) entering into hedging or monetization transactions or similar arrangements with respect to Company securities.
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COMPENSATION COMMITTEE REPORT
The following Compensation Committee Report does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference therein.
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in these proxy materials. Based on the Compensation Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in these proxy materials and incorporated by reference in the Annual Report for filing with the SEC.
The foregoing report is provided by the following directors, who constitute the Compensation Committee:
COMPENSATION AND ORGANIZATIONAL DEVELOPMENT COMMITTEE | |
Philip E. Mallott (Chairperson) | |
Amy B. Lane | |
Richard J. Wallace | |
Summary Compensation Table
The following table sets forth information concerning the compensation we paid to the Named Executive Officers for services rendered in all capacities as employees to us during our last three fiscal years. In accordance with SEC rules, the compensation described in this table does not include the value of medical or group life insurance received by the Named Executive Officers that is available generally to all of our salaried employees. Only 2017 and 2018 compensation is presented for Mr. Martindale, because 2017 was his first year as an employee of the Company. Only 2017 and 20162018 compensation is presented for Mr. Moran and Mr. Mantel,Piano, because neither2018 was employed withhis first year as an employee of the Company during 2015.Company. A “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column is not presented because none of our Named Executive Officers participate in a pension plan or receive above-market or preferential earnings on nonqualified deferred compensation.
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||
Kenneth A. Martindale Chief Executive Officer | 2018 | 975,000 | 487,500 | 2,193,750 | — | 2,907,615 | 30,282 | 6,594,147 | ||||||||||||||
2017 | 262,500 | — | 4,650,026 | 1,900,001 | — | 105,625 | 6,918,152 | |||||||||||||||
Tricia K. Tolivar Executive Vice President, Chief Financial Officer | 2018 | 517,691 | 191,250 | 500,000 | — | 699,777 | 1,113 | 1,909,831 | ||||||||||||||
2017 | 514,033 | — | 1,633,288 | 327,000 | — | 15,446 | 2,489,767 | |||||||||||||||
2016 | 450,571 | — | 802,271 | 300,000 | — | 16,436 | 1,569,278 | |||||||||||||||
Gene E. Burt Former Executive Vice President, Chief Merchandising Officer and Chief Supply Chain Officer(6) | 2018 | 445,008 | 112,500 | 375,000 | — | 497,459 | 2,736 | 1,432,703 | ||||||||||||||
2017 | 354,616 | 75,000 | 204,561 | 114,450 | — | 31,595 | 780,222 | |||||||||||||||
Joseph C. Gorman Former Executive Vice President, Operations(6) | 2018 | 415,381 | 100,000 | 375,000 | — | 493,914 | 50,041 | 1,434,336 | ||||||||||||||
2017 | 378,850 | — | 179,039 | 114,450 | — | 52,267 | 724,606 | |||||||||||||||
Steven Piano Senior Vice President, Chief Human Resources Officer | 2018 | 367,500 | 147,500 | 125,000 | — | 195,703 | 28,569 | 864,272 | ||||||||||||||
| Name and Principal Position | Year | Salary ($) | Bonus ($) (1) | Stock Awards ($) (2) | Option Awards ($) (3) | Non-Equity Incentive Plan Compensation ($) (4) | All Other Compensation ($) (5) | Total ($) | ||||||||||||||||||||||
Kenneth Martindale Chief Executive Officer | 2017 | 262,500 | — | 4,650,026 | 1,900,001 | — | 105,625 | 6,918,152 | ||||||||||||||||||||||
Tricia Tolivar Executive Vice President, Chief Financial Officer and Interim Chief Marketing Officer | 2017 | 514,033 | — | 1,633,288 | 327,000 | — | 15,446 | 2,489,767 | ||||||||||||||||||||||
| 2016 | 450,571 | — | 802,271 | 300,000 | — | 16,436 | 1,569,278 | |||||||||||||||||||||||
| 2015 | 343,269 | 75,000 | 750,000 | — | 46,753 | 85,608 | 1,300,630 | |||||||||||||||||||||||
Tim Mantel Former Executive Vice President, Chief Merchandising Officer | 2017 | 499,990 | — | 498,640 | 211,798 | — | 5,031 | 1,215,459 | ||||||||||||||||||||||
Guru Ramanathan Senior Vice President and Chief Innovation Officer | 2017 | 429,998 | — | 204,561 | 86,887 | — | 1,002 | 722,448 | ||||||||||||||||||||||
| 2016 | 397,471 | — | 240,661 | 90,000 | — | 1,022 | 729,154 | |||||||||||||||||||||||
| 2015 | 372,618 | — | 350,000 | — | 37,806 | 11,650 | 772,074 | |||||||||||||||||||||||
Gene Burt Executive Vice President, Chief Merchandising Officer and Chief Supply Chain Officer | 2017 | 354,616 | 75,000 | 204,561 | 114,450 | — | 31,595 | 780,222 | ||||||||||||||||||||||
Robert Moran Former Interim Chief Executive Officer (6) | 2017 | 697,000 | 608,967 | — | 2,807,998 | — | 410,283 | 4,524,248 | ||||||||||||||||||||||
| 2016 | 415,000 | 450,000 | 1,000,000 | — | — | 290,455 | 2,155,455 | |||||||||||||||||||||||
Michael Dzura (7) Former Executive Vice President, Operations | 2017 | 137,306 | — | — | — | — | 417,645 | 554,951 | ||||||||||||||||||||||
| 2016 | 507,304 | — | 561,576 | 210,000 | — | 17,223 | 1,296,103 | |||||||||||||||||||||||
| 2015 | 442,307 | 30,000 | 625,000 | 375,000 | 60,242 | 40,797 | 1,573,346 | |||||||||||||||||||||||
Jeffrey Hennion (7) Former Executive Vice President, Chief Marketing and e-Commerce Officer | 2017 | 232,689 | — | 498,640 | 211,798 | — | 303,124 | 1,246,251 | ||||||||||||||||||||||
| 2016 | 495,713 | — | 681,923 | 255,000 | — | 15,843 | 1,448,479 | |||||||||||||||||||||||
| 2015 | 480,304 | — | 600,000 | — | 65,417 | 14,758 | 1,160,479 | |||||||||||||||||||||||
| (1) | For |
| (2) |
| (3) | The values set forth in this column reflect the aggregate grant date fair value of stock option awards granted during each fiscal year, computed in accordance with FASB ASC Topic 718. For the assumptions underlying the calculation of the aggregate grant date fair value, see Note 16, “Stock-Based Compensation,” to our audited consolidated financial statements included in the 2019 Annual Report. The amounts may not correspond to the actual value that may be realized by such persons with respect to these awards. |
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| (4) | Reflects the non-discretionary component of cash incentive compensation. For 2018, also includes the RC award value to Mr. Martindale, Ms. Tolivar, and Messrs. Burt, Gorman, and Piano of $2,193,750, $500,000, $375,000, $375,000, and $125,000, respectively. |
| (5) | The components of “All Other Compensation” for our fiscal year ended December 31, 2018 are set forth in the following table: |
Named Executive Officer | Perquisites ($)(a) | Imputed Value for Life Insurance Premiums ($) | Company Contributions to Deferred Compensation Plan ($)(b) | Total ($) | ||||||||
Kenneth A. Martindale | 1,032 | 29,250 | 30,282 | |||||||||
Tricia K. Tolivar | 540 | 573 | — | 1,113 | ||||||||
Gene E. Burt | 2,184 | 552 | — | 2,736 | ||||||||
Joseph C. Gorman | 37,243 | 360 | 12,438 | 50,041 | ||||||||
Steven Piano | 28,187 | 382 | — | 28,569 | ||||||||
| (a) | For Messrs. Burt, Gorman, and Piano, this column includes $1,643, $34,221, and $27,587, respectively, of relocation expenses, which reflects the actual cost incurred by each in relocating. For Mr. Gorman, amounts also reflect $3,000 for tuition reimbursement. For Ms. Tolivar, the column only includes taxable parking benefits. For Messrs. Burt, Gorman, and Piano, this column also includes $540, $22, and $600 in taxable parking benefits, respectively. During 2018, Mr. Martindale was provided with access to a parking space to use at our corporate headquarters in Pittsburgh, which was provided as a perquisite at no incremental cost to the Company. |
| (b) | Reflects matching contributions by the Company with respect to compensation deferred by each executive pursuant to the Company’s Non-Qualified Deferred Compensation Plan. For more information, see the “2018 Non-Qualified Deferred Compensation Table” below. |
| (6) | Resigned from the Company effective March 15, 2019. |
2018 Grants of Plan Based Awards Table
The following table sets forth information concerning awards under the 2015 Stock Plan and the 2018 Incentive Plan granted to each of the Named Executive Officers during our fiscal year ended December 31, 2018. Assumptions used in the calculation of certain dollar amounts are included in Note 16 “Stock-Based Compensation,” to our audited consolidated financial statements included in the 2019 Annual Report. The amounts shown in the table may not correspond to the actual value that may be realized by such persons with respect to these awards.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares (#) | All Other Option Awards: Number of Shares (#) | Exercise Price of Options ($) | Grant Date Fair Value of Stock and Option Awards ($)(3) | ||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||
Kenneth A. Martindale | 2/21/18 | 487,500 | 1,462,500 | 2,925,000 | 261,161 | 522,321 | 783,482 | 2,193,750 | |||||||||||||||||||||||
2/21/18 | 2,193,750 | ||||||||||||||||||||||||||||||
Tricia K. Tolivar | 2/21/18 | 130,000 | 390,000 | 780,000 | 59,524 | 119,048 | 178,572 | 500,000 | |||||||||||||||||||||||
2/21/18 | 500,000 | ||||||||||||||||||||||||||||||
Gene E. Burt(4) | 2/21/18 | 90,000 | 270,000 | 540,000 | 44,643 | 89,286 | 133,929 | 375,000 | |||||||||||||||||||||||
2/21/18 | 375,000 | ||||||||||||||||||||||||||||||
Joseph C. Gorman(4) | 2/21/18 | 84,000 | 252,000 | 504,000 | 44,643 | 89,286 | 133,929 | 375,000 | |||||||||||||||||||||||
2/21/18 | 375,000 | ||||||||||||||||||||||||||||||
Steven Piano | 2/21/18 | 58,500 | 175,500 | 351,000 | 14,881 | 29,762 | 44,643 | 125,000 | |||||||||||||||||||||||
2/21/18 | 125,000 | ||||||||||||||||||||||||||||||
| (1) | The amounts for Mr. Martindale represent threshold, target and maximum payout amounts under the terms of his employment agreement for the 2018 Incentive Plan. The amounts for the other Named Executive Officers represent the threshold, target and maximum payout amounts under the 2018 Incentive Plan. See “Compensation Discussion and Analysis – Elements of Compensation – Annual Cash Incentive Compensation” above for more information regarding the 2018 Incentive Plan. The additional amounts included for all Named Executive Officers represent the value of the Restricted Stock Cash Award granted in 2018. |
| (2) | The amounts represent the threshold, target and maximum number of shares of our common stock that may be earned under the 2018 PSU awards. The PSUs are scheduled to vest on December 31, 2020 subject to company performance and each officer’s continued employment. See “Compensation Discussion and Analysis – Elements of Compensation – Long Term Incentive Compensation” above for more information regarding the PSUs. |
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| (3) |
Named Executive Officer | Perquisites ($) (a) | Imputed Value for Life Insurance Premiums ($) | Company Contributions to Deferred Compensation Plan ($) (b) | Severance ($) (c) | Consulting Fees ($) (d) | Total ($) | ||||||||||||||||||
| Kenneth Martindale | 100,000 | — | 5,625 | — | — | 105,625 | ||||||||||||||||||
| Tricia Tolivar | 190 | 360 | 14,896 | — | — | 15,446 | ||||||||||||||||||
| Tim Mantel | 4,671 | 360 | — | — | — | 5,031 | ||||||||||||||||||
| Guru Ramanathan | 450 | 552 | — | — | — | 1,002 | ||||||||||||||||||
| Gene Burt | 22,805 | 349 | 8,441 | — | — | 31,595 | ||||||||||||||||||
| Robert Moran | 408,173 | 2,110 | — | — | — | 410,283 | ||||||||||||||||||
| Michael Dzura | 175 | 426 | — | 417,044 | — | 417,645 | ||||||||||||||||||
| Jeffrey Hennion | 175 | 255 | 6,981 | — | 295,713 | 303,124 | ||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of | All Other Option Awards: Number of | Exercise Price of | Grant Date Fair Value of Stock and Option | |||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Shares (#) | Shares (#) | Options ($) | Awards ($) (3) | |||||||||||||||||||||||||||||||
| Kenneth Martindale | 9/11/2017 | 482,625 | 1,462,500 | 2,925,000 | — | — | — | 519,556 | 519,126 | 8.95 | 6,550,027 | |||||||||||||||||||||||||||||||
| Tricia Tolivar | 2/22/2017 5/11/2017 | 100,980 — | 306,000 — | 612,000 — | 15,308 — | 43,736 — | 87,472 — | 32,802 150,000 | 100,000 — | 7.99 — | 940,288 1,020,000 | |||||||||||||||||||||||||||||||
| Tim Mantel | 2/22/2017 | 99,000 | 300,000 | 600,000 | 12,446 | 35,560 | 71,120 | 26,670 | 64,770 | 7.99 | 710,438 | |||||||||||||||||||||||||||||||
| Guru Ramanathan | 2/22/2017 | 63,855 | 193,500 | 387,000 | 5,106 | 14,588 | 29,176 | 10,941 | 26,571 | 7.99 | 291,448 | |||||||||||||||||||||||||||||||
| Gene Burt | 2/22/2017 | 57,173 | 173,250 | 346,500 | 5,106 | 14,588 | 29,176 | 10,941 | 35,000 | 7.99 | 319,011 | |||||||||||||||||||||||||||||||
| Robert Moran (4) | 2/22/2017 7/28/2017 | — — | 498,000 — | — — | — — | — — | — — | — — | 400,000 353,773 | 7.99 10.17 | 1,308,000 1,499,998 | |||||||||||||||||||||||||||||||
| Michael Dzura | 2/22/2017 | 100,980 | 306,000 | 612,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
| Jeffrey Hennion | 2/22/2017 | 100,980 | 306,000 | 612,000 | 12,446 | 35,560 | 71,120 | 26,670 | 64,770 | 7.99 | 710,438 | |||||||||||||||||||||||||||||||
| (4) |
Outstanding Equity Awards as of December 31, 2017
The following table sets forth information regarding outstanding equity awards held by the Named Executive Officers under the 2007 Stock Plan, the 2011 Stock Plan and the 2015 Stock Plan as of December 31, 20172018 and, for Mr. Martindale, equity awards granted in September 2017 as make-whole and inducement awards in connection with the commencement of his employment which were not issued under any stockholder approved plan.
Option Awards(1) | Stock Awards | ||||||||||||||||||||||||
Name | Date of Grant | Exercisable | Unexercisable | Option Exercise Price($) | Option Expiration Date | Number of Restricted Shares and RSUs That Have Not Yet Vested (#)(2) | Market Value of Restricted Shares and RSUs That Have Not Yet Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned PSUs (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned PSUs ($)(3) | ||||||||||||||||
Kenneth A. Martindale | 9/11/2017 | 173,042 | 346,084 | 8.95 | 9/11/2027 | 187,876 | 445,266 | ||||||||||||||||||
2/21/2018 | 261,161 | 618,950 | |||||||||||||||||||||||
Tricia K. Tolivar | 2/16/2016 | 24,875 | 24,876 | 27.30 | 2/16/2026 | 3,663 | 8,681 | ||||||||||||||||||
2/22/2017 | 25,000 | 75,000 | 7.99 | 2/22/2027 | 21,868 | 51,827 | 15,308 | 36,279 | |||||||||||||||||
5/11/2017 | 150,000 | 355,500 | |||||||||||||||||||||||
2/21/2018 | 44,643 | 105,804 | |||||||||||||||||||||||
2/21/2018 | 14,881 | 35,268 | |||||||||||||||||||||||
Gene E. Burt | 2/22/2017 | 8,750 | 26,250 | 7.99 | 2/22/2027 | 7,294 | 17,287 | 5,106 | 12,101 | ||||||||||||||||
2/21/2018 | 44,643 | 105,804 | |||||||||||||||||||||||
Joseph C. Gorman | 12/7/2015 | 6,001 | 2,001 | 30.91 | 12/7/2025 | ||||||||||||||||||||
2/22/2017 | 8,750 | 26,250 | 7.99 | 2/22/2027 | 6,384 | 15,130 | 4,469 | 10,591 | |||||||||||||||||
2/21/2018 | 44,643 | 105,804 | |||||||||||||||||||||||
Steven Piano | 2/21/2018 | 14,881 | 35,268 | ||||||||||||||||||||||
Option Awards (1) | Stock Awards | |||||||||||||||||||||||||||||||||
| Name | Date of Grant | Exercisable | Unexercisable | Option Exercise Price($) | Option Expiration Date | Number of Restricted Shares and RSUs That Have Not Yet Vested (#) (2) | Market Value of Restricted Shares and RSUs That Have Not Yet Vested ($) (3) | Equity Incentive Plan Awards: Number of Unearned PSUs (#) (4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned PSUs ($) (3) | |||||||||||||||||||||||||
| Kenneth Martindale | 9/11/2017 | — | 519,126 | 8.95 | 9/11/2027 | 281,815 | 1,039,897 | — | — | |||||||||||||||||||||||||
| Tricia Tolivar | 3/2/2015 | — | — | — | — | 2,571 | 9,487 | — | — | |||||||||||||||||||||||||
| 2/16/2016 | 12,437 | 37,314 | 27.30 | 2/16/2026 | 7,326 | 27,033 | 5,128 | 18,923 | ||||||||||||||||||||||||||
| 2/22/2017 | — | 100,000 | 7.99 | 2/22/2027 | 32,802 | 121,039 | 15,308 | 56,487 | ||||||||||||||||||||||||||
| 5/11/2017 | — | — | — | — | 150,000 | 553,500 | — | — | ||||||||||||||||||||||||||
| Tim Mantel | 2/8/2016 | 16,652 | 49,955 | 26.11 | 2/8/2026 | 9,574 | 35,328 | — | — | |||||||||||||||||||||||||
| 2/16/2016 | — | — | — | — | — | — | 3,205 | 11,826 | ||||||||||||||||||||||||||
| 2/22/2017 | — | 64,770 | 7.99 | 2/22/2027 | 26,670 | 98,412 | 12,446 | 45,926 | ||||||||||||||||||||||||||
| Guru Ramanathan | 2/4/2010 | 15,000 | — | 13.18 | 2/4/2020 | — | — | — | — | |||||||||||||||||||||||||
| 2/4/2010 | 15,000 | — | 8.79 | 2/4/2020 | — | — | — | — | ||||||||||||||||||||||||||
| 4/21/2011 | 30,000 | — | 18.82 | 4/21/2018 | — | — | — | — | ||||||||||||||||||||||||||
| 12/12/2011 | 18,238 | — | 27.70 | 12/12/2018 | — | — | — | — | ||||||||||||||||||||||||||
| 11/5/2012 | 6,679 | — | 36.16 | 11/5/2019 | — | — | — | — | ||||||||||||||||||||||||||
| 2/18/2015 | — | — | — | — | 1,187 | 4,380 | — | — | ||||||||||||||||||||||||||
| 2/16/2016 | 3,731 | 11,194 | 27.30 | 2/16/2026 | 2,197 | 8,107 | 1,538 | 5,676 | ||||||||||||||||||||||||||
| 2/22/2017 | — | 26,571 | 7.99 | 2/22/2027 | 10,941 | 40,372 | 5,106 | 18,841 | ||||||||||||||||||||||||||
| Gene Burt | 2/22/2017 | — | 35,000 | 7.99 | 2/22/2027 | 10,941 | 40,372 | 5,106 | 18,841 | |||||||||||||||||||||||||
| Robert Moran | 8/1/2016 | — | — | — | — | 33,383 | 123,183 | — | — | |||||||||||||||||||||||||
| 2/22/2017 | — | 400,000 | 7.99 | 2/22/2027 | — | — | — | — | ||||||||||||||||||||||||||
| 7/28/2017 | — | 353,773 | 10.17 | 7/28/2027 | — | — | — | — | ||||||||||||||||||||||||||
| Michael Dzura | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Jeffrey Hennion | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| (1) | Time-vested stock option awards made under |
| (2) | Includes time-vested restricted stock and RSUs awarded under |
| (3) | Market value is based on the closing price of our Common Stock of |
| (4) | Represents the threshold number of the total PSUs granted in 2017 and |
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2018 Option Exercises and Stock Vested Table
The following table sets forth information regarding the vesting of RSUs and restricted stock and exercise of options by the Named Executive Officers during our fiscal year ended December 31, 2017.2018.
Option Awards | Stock Awards | |||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired Upon Vesting (#)(1) | Value Realized Upon Vesting ($)(2) | ||||||||
Kenneth A. Martindale | — | — | 93,939 | 272,423 | ||||||||
Tricia K. Tolivar | — | — | 17,168 | 71,823 | ||||||||
Gene E. Burt | — | — | 3,647 | 14,770 | ||||||||
Joseph C. Gorman | — | — | 3,866 | 14,720 | ||||||||
Steven Piano | — | — | — | — | ||||||||
| Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired Upon Vesting (#) (1) | Value Realized Upon Vesting ($) (2) | ||||||||||||
| Kenneth Martindale | — | — | 237,741 | 2,127,782 | ||||||||||||
| Tricia Tolivar | — | — | 6,234 | 48,744 | ||||||||||||
| Tim Mantel | — | — | 4,788 | 38,639 | ||||||||||||
| Guru Ramanathan | — | — | 3,217 | 24,666 | ||||||||||||
| Gene Burt | — | — | — | — | ||||||||||||
| Robert Moran | — | — | 21,140 | 194,238 | ||||||||||||
| Michael Dzura | — | — | 5,412 | 44,372 | ||||||||||||
| Jeffrey Hennion | — | — | 5,149 | 39,587 | ||||||||||||
| (1) | For Mr. Martindale, reflects the gross number of shares acquired upon vesting of the first tranche of his September 2017 restricted stock |
| (2) | Market value is based on the average of the high and low trading prices for our Common Stock on the NYSE on the date of vesting. |
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2018 Non-Qualified Deferred Compensation Table
We maintain the GNC Live Well® Later Non-Qualified Deferred Compensation Plan for the benefit of a select group of our highly compensated executives. Under this plan, certain eligible employees may elect to defer a portion of their future salary and bonus compensation up to a maximum of 80% of salary and 100% of bonus, or such other specified limit established by the Company, until a specified future year, or until retirement. We may in our discretion elect to make a matching contribution to the plan for a calendar year, based on amounts deferred by participants for that year. Participants may select the investment fund or funds in which such deferred amounts are deemed to be invested for the purpose of crediting deferrals with earnings, and investment gains and losses. The Company’s contributions to the Non-Qualified Deferred Compensation Plan become fully vested after three years from the start of the year of deferral. Participants receive vested distributions on elected scheduled withdrawal dates or upon separation from service.
Mr. Martindale, Ms. Tolivar, and Messrs. Burt and HennionMr. Gorman each elected to make contributions to the deferred compensation plan in 2017.2018. The following table identifies, for each Named Executive Officer, his or her contributions, our contributions, the aggregate earnings and withdrawals in 20172018 and the aggregate balance as of December 31, 2017:2018:
Name | Executive Contributions in Last Fiscal Year(1) | Registrant Contributions in Last Fiscal Year (2) | Aggregate Earnings in Last Fiscal Year (3) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last Fiscal Year End(4) | ||||||||||
Kenneth Martindale | $ | 29,250 | $ | 29,250 | $ | (6,574 | ) | $ | 0 | $ | 69,012 | ||||
Tricia Tolivar | $ | 0 | $ | 0 | $ | (6,883 | ) | $ | 0 | $ | 120,689 | ||||
Gene E. Burt | $ | 0 | $ | 0 | $ | 366 | $ | 0 | $ | 25,749 | |||||
Joseph C. Gorman | $ | 12,438 | $ | 12,438 | $ | (46 | ) | $ | 0 | $ | 42,830 | ||||
Steve Piano | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||
| Name | Executive Contributions in Last Fiscal Year (1) | Registrant Contributions in Last Fiscal Year (2) | Aggregate Earnings in Last Fiscal Year (3) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last Fiscal Year End (4) | |||||||||||||||
| Kenneth Martindale | $ | 11,250 | $ | 5,625 | $ | 211 | $ | 0 | $ | 17,086 | ||||||||||
| Tricia Tolivar | $ | 29,792 | $ | 14,896 | $ | 13,058 | $ | 0 | $ | 127,573 | ||||||||||
| Tim Mantel | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
| Guru Ramanathan | $ | 0 | $ | 0 | $ | 53,298 | $ | 0 | $ | 309,036 | ||||||||||
| Gene Burt | $ | 16,881 | $ | 8,441 | $ | 61 | $ | 0 | $ | 25,383 | ||||||||||
| Robert Moran | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
| Michael Dzura (5) | $ | 0 | $ | (31,532 | ) | $ | 8,454 | $ | 63,063 | $ | 0 | |||||||||
| Jeffrey Hennion | $ | 13,961 | $ | 6,981 | $ | 13,647 | $ | 0 | $ | 111,584 | ||||||||||
| (1) | Amounts reflected are included in the “Salary” column of the Summary Compensation Table above. |
| (2) | Amounts reflected are included in the “All Other Compensation” column of the Summary Compensation Table above. |
| (3) | Amounts reflected are not included as compensation for the relevant Named Executive Officers in the Summary Compensation Table above. |
| (4) | For Mr. Martindale, Ms. Tolivar, |
Potential Payments Upon Termination or a Change in Control
The termination and change in control arrangements for the Named Executive Officers (other than Mr. Martindale and Dr. Ramanathan who had employment agreements with the Company during 2017) are generally governed by Company policy.policy, other than Mr. Martindale whose terms are governed by his employment agreement with the Company. As such, these arrangements generally are uniform and not highly negotiated. The Compensation Committee does not generally consider the amounts payable in connection with termination and change in control events when establishing the compensation of the Named Executive Officers. The Compensation Committee, together with the Board, established the termination and change of control arrangements described herein to address and conformthe following considerations:
Such policies and arrangements are evidenced by the Company’s Executive Severance Policy, as described in the Compensation Discussion and Analysis section of this proxy statement. Under the Executive Severance Policy, a “Change in Control” occurs if or upon:when: (i) any person or entity becomes the beneficial owner of securities representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities; (ii) the majority of the Board is no longer made up of continuing directors as described in the Executive Severance Policy;
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(iii) the consummation of certain mergers or consolidations of the Company; or (iv) stockholder approval of certain plans of complete liquidation or dissolution or the consummation of agreements for the sale or disposition of all or substantially all of the Company’s assets.
The following is a summary of the termination and change of control provisions in the employment agreements for each of Mr. Martindale and Dr. Ramanathan and the policies and arrangements otherwise applicable to the Named Executive Officers as of December 31, 2017. Dr. Ramanathan continues to be employed by the Company, although his employment agreement with the Company expired as of February 2018.
Mr. Martindale
Mr. Martindale’s employment agreement provides for certain benefits upon termination of employment. Upon Mr. Martindale’s death or disability, he (or his estate) is entitled to to:
Also, in such cases, Mr. Martindale’s time-vesting equity awards would immediately vest; and any performance-vesting awards would become vested at a prorated actual amount, based on the actual period of employment and actualassuming “target’ level of achievement of the performance objectives.
Upon termination of employment by us without cause, including a non-renewal of the employment term, or voluntarily by Mr. Martindale for good reason, subject to the execution of a written release, he is also entitled to:
| ○ | base salary; and |
| ○ | either (i) the average of the actual annual bonus paid in the two years immediately preceding the date of termination (or, for any of the first two years where an annual bonus had not yet been determined the target bonus) where termination occurs prior to or more than 24 months following a change in control (as defined in the employment agreement), or (ii) target bonus (if termination occurs on or within 24 months following a change in control), which amounts are payable in installments over a 24-month period or in a lump sum cash payment, depending on whether the termination occurred under the timeframe provided in (i) or (ii) above; |
Also, in such cases, Mr. Martindale’s “sign-on” equity awards would immediately vest;vest (to the extent any remained unvested); any time-vesting equity awards (other than sign-on awards) to the extent that that would have become vested within 24 months following the date of termination shall immediately vest;vest (with respect to said amount); and any performance-vesting awards shall become vested at a prorated actual amount, based on the actual period of employment and calculated based on the actual level of achievement of the performance objectives.objectives, such that payment would be received following the end of the relevant performance period. The total amount payable may be subject to reduction to the extent Mr. Martindale would be subject to an excise tax as an excess parachute amount.
For purposes of Mr. Martindale’s employment agreement, “cause” generally means his:
| • | being convicted (including a plea of nolo contendere) of a misdemeanor that causes substantial economic harm to us, or a felony; |
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For purposes of Mr. Martindale’s employment agreement, “good reason” generally means, without Mr. Martindale’s prior written consent and unless we timely cure the good reason:
For purposes of Mr. Martindale’s employment agreement, “change in control” is as defined in the Company’s 2015 Stock and Incentive Plan, which is generally the same as the definition provided in the Executive Severance Policy.
Tabular Presentation
. The following table quantifies the estimated payments and benefits that the Named Executive Officers would have received if their employment had terminated on December 31,Where applicable, the information in the table uses a fair market value per share of $3.69$2.37 for our Common Stock, which is equal to the closing price of our Common Stock on December 29, 2017.31, 2018.
Named Executive Officer | Resignation for Good Reason(1) | Retirement(1) | By Company Without Cause | Termination Without Cause / Good Reason Following a Change of Control | Death or Disability | ||||||||||
Kenneth A. Martindale(2) | |||||||||||||||
Cash Severance(3) | $ | 1,950,000 | $ | 1,950,000 | $ | 1,950,000 | $ | 1,950,000 | — | ||||||
Pro-rated Bonus(3) | $ | 1,088,183 | $ | 1,088,183 | $ | 1,088,183 | $ | 1,088,183 | $ | 713,865 | |||||
Health and Welfare Benefits(4) | $ | 20,520 | — | $ | 20,520 | $ | 20,520 | $ | 250,000 | ||||||
Additional Stock Award Vesting(5) | $ | 813,611 | $ | 813,611 | $ | 813,611 | $ | 857,900 | $ | 857,900 | |||||
Retention Award(6) | $ | 1,462,500 | $ | 1,462,500 | $ | 1,462,500 | $ | 1,462,500 | $ | 1,462,500 | |||||
Total | $ | 5,334,814 | $ | 4,939,975 | $ | 5,334,814 | $ | 5,379,103 | $ | 3,284,265 | |||||
Tricia Tolivar | |||||||||||||||
Cash Severance(3) | — | — | $ | 520,000 | $ | 1,040,000 | — | ||||||||
Pro-rated Bonus(3) | — | — | $ | 199,777 | $ | 199,777 | — | ||||||||
Health and Welfare Benefits(4) | — | — | — | — | $ | 250,000 | |||||||||
Additional Stock Award Vesting(5) | — | — | — | $ | 702,420 | — | |||||||||
Retention Award(6) | $ | 573,750 | — | $ | 573,750 | $ | 573,750 | $ | 573,750 | ||||||
Total | $ | 573,750 | — | $ | 1,293,527 | $ | 2,515,947 | $ | 823,750 | ||||||
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Named Executive Officer | Resignation for Good Reason(1) | Retirement(1) | By Company Without Cause | Termination Without Cause / Good Reason Following a Change of Control | Death or Disability | ||||||||||
Gene E. Burt | |||||||||||||||
Cash Severance(3) | — | — | $ | 450,000 | $ | 900,000 | — | ||||||||
Pro-rated Bonus(3) | — | — | $ | 122,459 | $ | 122,459 | — | ||||||||
Health and Welfare Benefits(4) | — | — | — | — | $ | 250,000 | |||||||||
Additional Stock Award Vesting(5) | — | — | — | $ | 217,707 | — | |||||||||
Retention Award(6) | $ | 337,500 | — | $ | 337,500 | $ | 337,500 | $ | 337,500 | ||||||
Total | $ | 337,500 | — | $ | 909,959 | $ | 1,577,666 | $ | 587,500 | ||||||
Joseph C. Gorman | |||||||||||||||
Cash Severance(3) | — | — | $ | 420,000 | $ | 840,000 | — | ||||||||
Pro-rated Bonus(3) | — | — | $ | 118,914 | $ | 118,914 | — | ||||||||
Health and Welfare Benefits(4) | — | — | — | — | $ | 250,000 | |||||||||
Additional Stock Award Vesting(5) | — | — | — | $ | 214,113 | — | |||||||||
Retention Award(6) | $ | 300,000 | — | $ | 300,000 | $ | 300,000 | $ | 300,000 | ||||||
Total | $ | 300,000 | — | $ | 838,914 | $ | 1,473,027 | $ | 550,000 | ||||||
Steven Piano | |||||||||||||||
Cash Severance(3) | — | — | $ | 390,000 | $ | 780,000 | — | ||||||||
Pro-rated Bonus(3) | — | — | $ | 70,703 | $ | 70,703 | — | ||||||||
Health and Welfare Benefits(4) | — | — | — | — | $ | 250,000 | |||||||||
Additional Stock Award Vesting(5) | — | — | — | $ | 62,964 | — | |||||||||
Retention Award(6) | $ | 292,500 | — | $ | 292,500 | $ | 292,500 | $ | 292,500 | ||||||
Total | $ | 292,500 | — | $ | 753,203 | $ | 1,206,167 | $ | 542,500 | ||||||
| Named Executive Officer | Resignation for Good Reason (1) | Retirement | By Company Without Cause | Termination Without Cause or for Good Reason Following a Change of Control | Death | |||||||||||||||
| Kenneth A. Martindale (2) | ||||||||||||||||||||
| Cash Severance (3) | $ | 1,950,000 | $ | 1,950,000 | $ | 1,950,000 | $ | 1,950,000 | — | |||||||||||
| Pro-rated Bonus (3) | $ | 2,925,000 | $ | 2,925,000 | $ | 2,925,000 | $ | 2,925,000 | — | |||||||||||
| Health and Welfare Benefits (4) | $ | 23,572 | — | $ | 23,572 | $ | 23,572 | $ | 250,000 | |||||||||||
| Additional Stock Award Vesting (5) | $ | 1,039,897 | $ | 1,039,897 | $ | 1,039,897 | $ | 1,039,897 | $ | 1,039,897 | ||||||||||
| Total | $ | 5,938,469 | $ | 5,914,897 | $ | 5,938,469 | $ | 5,938,469 | $ | 1,289,897 | ||||||||||
| Tricia Tolivar | ||||||||||||||||||||
| Cash Severance (3) | — | — | $ | 510,000 | $ | 1,020,000 | — | |||||||||||||
| Pro-rated Bonus (3) | — | — | — | — | — | |||||||||||||||
| Health and Welfare Benefits | — | — | — | — | $ | 250,000 | ||||||||||||||
| Additional Stock Award Vesting (5) | — | — | — | $ | 829,363 | — | ||||||||||||||
| Total | — | — | $ | 510,000 | $ | 1,849,363 | $ | 250,000 | ||||||||||||
| Tim Mantel | ||||||||||||||||||||
| Cash Severance (3) | — | — | $ | 500,000 | $ | 1,000,000 | — | |||||||||||||
| Pro-rated Bonus (3) | — | — | — | — | — | |||||||||||||||
| Health and Welfare Benefits | — | — | — | — | $ | 250,000 | ||||||||||||||
| Additional Stock Award Vesting (5) | — | — | — | $ | 200,005 | — | ||||||||||||||
| Total | — | — | $ | 500,000 | $ | 1,200,005 | $ | 250,000 | ||||||||||||
| Guru Ramanathan | ||||||||||||||||||||
| Cash Severance (3) | — | — | $ | 430,000 | $ | 860,000 | $ | 72,111 | ||||||||||||
| Pro-rated Bonus (3) | — | — | — | — | — | |||||||||||||||
| Health and Welfare Benefits (4) | $ | 1,430 | — | $ | 1,430 | $ | 36,894 | $ | 250,000 | |||||||||||
| Additional Stock Award Vesting (5) | — | — | — | $ | 94,754 | — | ||||||||||||||
| Total | $ | 1,430 | — | $ | 431,430 | $ | 991,649 | $ | 322,111 | |||||||||||
| Gene Burt | ||||||||||||||||||||
| Cash Severance (3) | — | — | $ | 385,000 | $ | 770,000 | — | |||||||||||||
| Pro-rated Bonus (3) | — | — | — | — | — | |||||||||||||||
| Health and Welfare Benefits | — | — | — | — | $ | 250,000 | ||||||||||||||
| Additional Stock Award Vesting (5) | — | — | — | $ | 58,315 | — | ||||||||||||||
| Total | — | — | $ | 385,000 | $ | 828,315 | $ | 250,000 | ||||||||||||
| (1) | No amount is payable to any Named Executive Officer upon any termination for cause or voluntary resignation from service to the Company other than in the case of a resignation for good reason. Mr. Martindale’s employment contract is silent on payments at retirement. Further, the Company does not maintain a stand-alone retirement policy. As such, for purposes of this table, amounts included reflect assumed payments coinciding with a termination without cause, excluding health and welfare benefits. |
| (2) | For Mr. Martindale, termination by the Company without cause includes termination by nonrenewal of his employment agreement. |
| (3) |
| (4) | Amounts reflect value of basic life insurance payable upon separation due to Death; these amounts are not payable in the event of separation due to Disability. For Mr. Martindale, payment includes an eighteen month COBRA payment in the following circumstances: Resignation for Good Reason, Termination by Company Without Cause, and Termination Without Cause or for Good Reason Following a Change of Control. |
| (5) | The value of Additional Stock Award Vesting represents the value at December |
| (6) | The value of the outstanding balance of the Retention Awards issued to our Named Executive Officers in connection with the Harbin transaction. Per the agreement, outstanding balances are accelerated in the case involuntary separation without cause, due to good reason, death, or disability. The balance of the Retention Awards would also be paid in the event of a Change in Control. |
The 2007 Stock Plan, the 2011 Stock Plan andchange in control definitions used in each of the 2015 and 2018 Stock Plan provide that,Plans aligns with the change in control definition included in the Company’s executive severance policy, established in 2015. In the event of a change in control, unvested stock-based awards generally may bewould accelerate and become fully vested, cancelledor would be subject to cancellation for fair value or substituted for awards that substantially preserve the applicable terms of such stock-based awards, and with respect to the 2015 and 2018 Stock Plan, may provide for a limited time tail period for awards to be exercised.exercised following the change in control event. We have assumed for purposes of the above tables that upon a change in control, equity-based awards would not be accelerated, and instead would be substituted for awards that substantially preserve the applicable terms of the stock-based awards.
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Pay-Ratio Disclosure
For 2017,2018, the median of the annual total compensation for all our employees, within the United States and Canada, other than Mr. Martindale, was $16,901. Since we had more than one non-concurrent Chief Executive Officers serving during 2017, we chose to annualize the compensation paid to Mr. Martindale, as he was serving as Chief Executive Officer on the date used for determining the median employee.
Mr. Martindale’s annualized Annual Total Compensation for 20172018 was $7,654,277$6,594,147 (see Paragraph 3 below for additional detail). The ratio of the Annual Total Compensation of our Chief Executive Officer to the median of the annual total compensation of the other employees included in this calculation is 453415 to 1, which is a reasonable estimate calculated consistent with applicable rules.
In order to (1) identify the total number of the Company’s employees, (2) determine the annual total compensation of our median employee, and (3) determine the Annual Total Compensation of our Chief Executive Officer, we did the following:
| 1. | We selected November 1, |
| 2. | To determine the median of the annual total compensation of all of these employees, excluding Mr. Martindale, we used the amount of wages, salary, bonuses, and other taxable compensation from the payroll records for |
| a. | In order to most accurately reflect the pay-ratio, the Company annualized the compensation of approximately |
| b. | Next, we ranked the compensation for the applicable employees from highest to lowest. The median employee was a part-time sales associate located in the United States with taxable compensation of |
| c. | With respect to our Median Employee, we added together all of the elements of such employee’s compensation for |
| 3. | In calculating the “Annual Total Compensation” of Mr. Martindale, we |
Additional Information
. The40
| Dilution: | # Shares as of 2/28/18 | % of CSO as of 2/28/18 |
| New Share Reserve Proposal | 8,720,000 | 10.4% |
| Shares Remaining Available for Future Issuance Under Prior Plans | 1,602,543 | 1.9% |
Stock Options/SARs Outstanding(1) | 3,003,264 | 3.6% |
| Full-Value Awards Outstanding | 2,697,023 | 3.2% |
Total Dilution(2) | 16,022,830 | 19.2% |
| Common Shares Outstanding (CSO) as of February 28, 2018 | 83,663,403 | - |
| Dollar value ($) | Number of units | |||||||
| Executive Group | 9,458,633 | 1,584,098 | ||||||
| Non-Executive Director Group | 3,467,993 | 842,363 | ||||||
| Non-Executive Officer Employee Group | 8,449,279 | 1,531,239 | ||||||
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||
| Equity compensation plans approved by security holders (1) | ||||||||||||
| 2007 Stock Plan | 107,220 | $ | 12.17 | — | ||||||||
| 2015 Stock Plan | 1,978,821 | $ | 12.51 | 4,627,292 | (2)(3) | |||||||
| Subtotal | 2,086,041 | $ | 12.50 | 4,627,292 | (2)(3) | |||||||
| Equity compensation plans not approved by security holders (4) | 519,126 | $ | 8.95 | — | (5) | |||||||
| Total (6) | 2,605,167 | $ | 11.79 | 4,627,292 | ||||||||
In accordance with the Audit Committee’s charter, the Audit Committee is responsible for the appointment and retention of our independent auditors.registered accounting firm. In our fiscal years ended December 31, 20172018 and 2016,2017, all audit and non-audit services were pre-approved by the Audit Committee in accordance with the Audit Committee’s charter.
The Audit Committee has appointed PricewaterhouseCoopers LLP (“PwC”) to serve as our independent auditorsregistered public accounting firm for our fiscal year ending December 31, 2018,2019, subject to ratification by our stockholders. Representatives of PwC will be present at the Annual Meeting to answer questions and will also have the opportunity to make a statement if they desire to do so. For fiscal 2018, PwC rendered professional services in connection with the audit of our financial statements, including review of quarterly reports and other filings with the SEC, and also provided tax and other services. PwC is knowledgeable about our operations and accounting practices and well qualified to act as our independent registered public accounting firm, and the Audit Committee has appointed PwC as such for fiscal 2019. If the proposal to ratify PwC’s appointment is not approved, other certified public accountants will be considered by the Audit Committee. Even if the proposal is approved, the Audit Committee, in its discretion, may direct the appointment of new independent auditors at any time during the year if it believes that such a change would be in the best interest of the Company and its stockholders.
Fees Paid to PricewaterhouseCoopers LLP
Fees disclosed below include fees incurred by usbilled and expected to be billed for professional services rendered by PwC for our fiscal years ended December 31, 20172018 and 20162017. Amounts disclosed for 2018 may be adjusted in future filings to reflect actual amounts that were ultimately approved and paid, as follows:appropriate.
Audit Fees, Audit Related Fees, Tax Fees and All Other Fees | ||||||
2018 ($) | 2017 ($) | |||||
Audit Fees(1) | 1,622,570 | 1,432,100 | ||||
Audit Related Fees(2) | 10,000 | 80,000 | ||||
Tax Fees(3) | 157,000 | 15,000 | ||||
All Other Fees(4) | 2,700 | 1,800 | ||||
1,792,270 | 1,528,900 | |||||
| Audit Fees, Audit Related Fees, Tax Fees and All Other Fees | ||||||||
| 2017 ($) | 2016 ($) | |||||||
| Audit Fees (1) | 1,432,100 | 1,302,300 | ||||||
| Audit Related Fees (2) | 80,000 | 5,000 | ||||||
| Tax Fees (3) | 15,000 | 110,000 | ||||||
| All Other Fees (4) | 1,800 | 1,800 | ||||||
| 1,528,900 | 1,419,100 | |||||||
| (1) | Includes services related to the audit of the Company’s financial statements and internal controls over financial reporting, statutory audits of subsidiaries, and various other filings with the SEC. |
| (2) | Principally includes review of implementation of new accounting pronouncements and franchise disclosure documents. |
| (3) | Includes services related to Federal tax planning and advice, and certain individual tax compliance services. |
| (4) | Represents license fees for access to technical accounting information. |
The Audit Committee has concluded that the provision of the foregoing services is compatible with maintaining PwC’s independence.
The affirmative vote of the holders of a majority of the votes cast by our stockholders in person or represented by proxy at the Annual Meeting and entitled to vote is required to approve this Proposal 4.
Pre-Approval Policies and Procedures
All of the services performed for us by PwC during 20172018 were pre-approved by the Audit Committee. The Audit Committee’s policy, as reflected in its charter, requires that the Audit Committee pre-approve on an engagement-by-engagement basis all audit and non-audit services to be performed by our independent auditors,registered accounting firm, provided that the Audit Committee may delegate the authority to pre-approve such services to a subcommittee of the Audit Committee.
Recommendation
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF PWC AS THE COMPANY’S INDEPENDENT AUDITORSREGISTERED PUBLIC ACCOUNTING FIRM FOR OUR FISCAL YEAR ENDING DECEMBER 31, 2018.
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The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference therein.
The Board has determined that each member of the Audit Committee meets the SEC and the NYSE independence and financial literacy requirements. The Board has also determined that each of Messrs. Berger, Hines and Mallott qualifies as an “audit committee financial expert.”
The Audit Committee has reviewed and discussed our audited financial statements for the year ended December 31, 20172018 with both management and the independent auditors. The Audit Committee discussed the auditors’ review of our quarterly financial information with the auditors prior to the release of such information and the filing of our quarterly reports with the SEC.
Further, the Audit Committee discussed with the independent auditors the matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 1301 (Communications with Audit Committees), received the written disclosures and the letter from the independent auditors required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence and discussed with the auditors the auditors’ independence. The Audit Committee also discussed with the auditors financial management matters related to our internal control over financial reporting.
Based on these discussions, the Audit Committee’s review of our audited financial statements for the year ended December 31, 20172018 and the written disclosures received from the independent auditors, the Audit Committee recommended that the Board includeapprove the inclusion of the Company’s audited financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 20172018 for filing with the SEC.
AUDIT COMMITTEE
Michael F. Hines (Chairperson)
Philip E. Mallott
Jeffrey P. Berger
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The following table below sets forth information regarding the beneficial ownership of our Common Stock as of the Record Date by: (i) each person, or group of affiliated persons, known by us to beneficially own more than five percent of our Common Stock; (ii) the Named Executive Officers; (iii) each of our directors and nominees for director; and (iv) all of our current directors and executive officers as a group, based on information furnished by each person.
Beneficial ownership is determined in accordance with the Exchange Act and includes voting and investment power with respect to our Common Stock. The following table includes Common Stock issuable within 60 days of the Record Date upon the exercise of all options and other rights beneficially owned by the indicated stockholders on that date. Percentage of beneficial ownership is based on 83,661,96583,966,049 shares of Common Stock outstanding as of March 26, 2018.25, 2019. Except as otherwise noted below, each person or entity named in the following table has sole voting and investment power with respect to all shares of our Common Stock that he, she or it beneficially owns.
Unless otherwise indicated, the address of each beneficial owner listed below is c/o GNC Holdings, Inc., 300 Sixth Avenue, Pittsburgh, PA 15222.
Name of Beneficial Owner | Position | Shares | Percentage | ||||
Kenneth A. Martindale | Chief Executive Officer and Director | 606,467 | (1) | * | |||
Tricia K. Tolivar | Executive Vice President, Chief Financial Officer | 114,676 | (2) | * | |||
Gene E. Burt | Former Executive Vice President, Chief Merchandising Officer and Chief Supply Chain Officer | 22,182 | (3) | * | |||
Joseph Gorman | Former Executive Vice President of Operations | 29,066 | (4) | * | |||
Steven Piano | Senior Vice President, Chief Human Resources Officer | 5,750 | (5) | ||||
Robert F. Moran | Director | 1,256,631 | (6) | 1.50 | % | ||
Jeffrey P. Berger | Director | 128,038 | (7) | * | |||
Hsing Chow | Director | 0 | * | ||||
Alan D. Feldman | Director | 93,711 | (8) | * | |||
Michael F. Hines | Director | 227,283 | (9) | * | |||
Amy B. Lane | Director | 63,363 | (10) | * | |||
Philip E. Mallott | Director | 83,446 | (11) | * | |||
Michele S. Meyer | Director | 0 | |||||
Richard J. Wallace | Director | 95,363 | (12) | * | |||
Yong Kai Wong | Director | 0 | * | ||||
All directors and executive officers as a group (16 persons) | 2,905,806 | 3.41 | % | ||||
| * | ||||||
| Alan D. Feldman | Director | 62,102 (9) | * | |||
| Michael F. Hines | Director | 220,674 (10) | * | |||
| Amy B. Lane | Director | 62,254 (11) | * | |||
| Philip E. Mallott | Director | 51,837 (12) | * | |||
| Richard J. Wallace | Director | 63,754 (13) | * | |||
| All directors and executive officers as a group (14 persons) | 2,298,275 | 2.75% |
| (1) | Consists of (i) |
| (2) | Consists of (i) 27,363 shares directly held and (ii) |
| (3) | Consists of (i) 4,682 shares directly held and (ii) 17,500 shares issuable upon the exercise of options that are currently exercisable or will become exercisable within 60 days following the Record Date. Does not include 20,179 shares underlying performance based RSUs for which performance results have been certified, that will be settled in stock on December 31, 2020. Mr. Burt resigned from the Company effective March 15, 2019. |
| (4) | Consists of (i) 5,565 shares directly held and (ii) 23,501 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days following the Record Date. Does not include 20,179 shares underlying performance based RSUs for which performance results have been certified, that will be settled in stock on December 31, 2020. Mr. Gorman resigned from the Company effective March 15, 2019. |
| (5) | Does not include 6,726 shares underlying performance based RSUs for which performance results have been certified, that will be settled in stock on December 31, 2020, provided Mr. Piano remains employed by the Company on such date. |
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| (6) | Consists of (i) 936,579 shares directly held, (ii) 31,609 shares of time-vested restricted |
| (7) | Consists of (i) |
| (8) | Consists of (i) |
| (9) | Consists of (i) |
| (10) | Consists of (i) |
| (11) | Consists of (i) |
| (12) | Consists of (i) 28,754 shares directly held, (ii) |
Based on filings made under Section 13(d) and 13(g) of the Exchange Act reporting ownership of shares and percent of beneficial ownership, as of December 31, 2017, as of March 26, 201825, 2019 the only persons known by us to be beneficial owners of more than 5% of our Common Stock were as follows:
Beneficial Owners of 5% or More of Our Outstanding Common Stock | Shares | Percentage | ||||
Harbin Pharmaceutical Group Co., Ltd. No. 68, Limin West Fourth Street Limin Development Zone Harbin, People’s Republic of China | 56,065,420 | (1) | 40.1 | % | ||
FMR LLC and certain affiliated parties 245 Summer Street Boston, MA 02210 | 7,877,006 | (2) | 9.390 | % | ||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 6,124,028 | (3) | 7.3 | % | ||
| (1) | Based on the Schedule 13D filed with the SEC on November 19, 2018 by Harbin Pharmaceutical Group Co., Ltd., (“Harbin”) in which Harbin reports it has sole voting power and sole dispositive power over 56,065,420 shares. On February 13, 2018, the Company entered into a Securities Purchase Agreement (the “Original Purchase Agreement”) with Harbin Pharmaceutical Group Holdings Co., Ltd., whose rights and obligations under the Original Purchase Agreement were subsequently assigned to Harbin. On November 7, 2018, the Company and Harbin entered into an amendment to the Original Purchase Agreement (the “Amendment to the Purchase Agreement” and, together with the Original Purchase Agreement, the “Purchase Agreement”). Pursuant to the terms of the Purchase Agreement, Harbin purchased 100,000 shares of the Issuer’s Series A Convertible Preferred Stock, par value $0.001 per share (the “Convertible Preferred Stock”) from the Company on November 8, 2018 at a purchase price per share equal to $1,000.00 for a total purchase price of $100,000,000 (the “Initial Issuance”). Furthermore, pursuant to the terms of the Purchase Agreement, Harbin agreed to purchase (i) 50,000 shares of Convertible Preferred Stock from the Issuer on, or, at the election of Harbin, prior to, December 28, 2018 at a purchase price per share equal to $1,000.00 for a total purchase price of $50,000,000 (the “First Subsequent Issuance”) and (ii) 149,950 shares of Convertible Preferred Stock from the Issuer on, or, at the election of Harbin, prior to, February 13, 2019 at a purchase price per share equal to $1,000.00 for a total purchase price of $149,950,000 (the “Second Subsequent Issuance”). The Convertible Preferred Stock may at any time and from time to time be converted into a number of shares of Common Stock calculated in accordance with the formula contained in the Certificate of Designation. |
| (2) | Based on Amendment No. |
| (3) | Based on |
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Our directors, executive officers and holders of more than 10% of our Common Stock are subject to the reporting requirements of Section 16(a) of the Exchange Act, which requires them to file reports with the SEC on Forms 3, 4 and 5 with respect to their ownership and change of ownership of our Common Stock.
Based solely upon a review of the copies of these forms or written representations, which we have received from such persons or entities for transactions in our Common Stock and their Common Stock holdings for our fiscal year ended December 31, 2017,2018, we believe that all reporting requirements under Section 16(a) for such fiscal year were met in a timely manner by our directors, executive officers and holders of more than 10% of our Common Stock, except that there was a failure to timely file Forms 4 by
Stockholder proposals submitted pursuant to Rule 14a-8 of the Exchange Act for our 20192020 Annual Meeting must be received by us no later than December 11, 201810, 2019 to be presented at the 20192020 Annual Meeting or to be eligible for inclusion in the proxy materials related thereto under the SEC’s proxy rules. Such proposals can be sent to us at GNC Holdings, Inc., 300 Sixth Avenue, Pittsburgh, Pennsylvania 15222, Attention: Secretary.
Our FifthSixth Amended and Restated Bylaws (the “Bylaws”) prescribe the procedures that a record stockholder must follow to nominate directors for election at an annual meeting or to bring other business before an annual meeting (other than matters submitted pursuant to Rule 14a-8 under the Exchange Act). The following summary of these procedures is qualified by reference to our Bylaws, a copy of which can be obtained, without charge, upon written request to GNC Holdings, Inc., 300 Sixth Avenue, Pittsburgh, Pennsylvania 15222, Attention: Secretary.
Pursuant to Article II, Section 5(b) of our Bylaws, a record stockholder must provide timely notice of any stockholder proposal (including director nomination(s)) other than those submitted pursuant to Rule 14a-8 of the Exchange Act to be properly brought before the 20192020 Annual Meeting. To be timely, such notice must be received by our secretary at our principal executive offices at 300 Sixth Avenue, Pittsburgh, Pennsylvania 15222 between the opening of business on January 22, 201921, 2020 and the close of business on February 21, 2019.20, 2020. The notice must contain the information specified in our Bylaws regarding the stockholder giving the notice and the business proposed to be brought before the meeting. For director nominations, the notice must also contain the information specified in our Bylaws regarding each person whom the stockholder wishes to nominate for election as director and be accompanied by the written consent of each proposed nominee to serve as director if elected. Such stockholder proposals must also be in compliance with the additional requirements set forth in the Bylaws. However, if the date of the 20192020 Annual Meeting is more than 30 days before or more than 70 days after May 22, 2019,21, 2020, to be timely, such notice must be received no earlier than the 120th day prior to the date of the 20192020 Annual Meeting and not later than (i) the close of business on the 90th day prior to the date of the 20192020 Annual Meeting or (ii) the tenth day following the day on which the public announcement of the date of the 2019 Annual Meeting iswas first made.
With respect to stockholder proposals not included in our proxy statement for the 20182019 Annual Meeting, the persons named in the Board’s proxy for the 20192020 Annual Meeting will be entitled to exercise the discretionary voting power conferred by such proxy under the circumstances specified in Rule 14a-4(c) under the Exchange Act.
Annual Report on Form 10-K
Copies of our Annual Report on Form 10-K can be obtained free of charge upon request to GNC Holdings, Inc., 300 Sixth Avenue, Pittsburgh, Pennsylvania, 15222, Attention: Secretary.
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ANNEX A
Calculation of Non-GAAP to GAAP financial metric
Operating income (EBIT) including certain specified adjustments disclosed in our quarterly earnings reports, was used as a performance metric under the 2017 Incentive2018 Stock Plan. Below we have set forth a reconciliation of the adjusted EBIT to the GAAP financial metric. This reconciliationmetric, which is based upon the Reportedreported EBIT from the Company’s audited financial statements.
GNC HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Operating LossIncome to Adjusted Operating Income
(in thousands, except per share data)
Year ended December 31, 2018 | |||
Reported | $ | (112,353 | ) |
Gains on refranchising | (513 | ) | |
Long-lived asset impairments | 438,236 | ||
Joint Venture start-up costs | 1,624 | ||
Retention | 6,971 | ||
Selling, general and administrative(1) | 2,162 | ||
Adjusted | $ | 160,833 | |
| Year ended December 31, | ||||
| 2017 | ||||
| Reported | $ | (260,413 | ) | |
| Gains on refranchising | (384 | ) | ||
| Long-lived asset impairments | 457,794 | |||
| Loss on sale of Lucky Vitamin | 1,696 | |||
Selling, general and administrative(1) | 7,730 | |||
| Adjusted | $ | 206,423 | ||
| (1) | Includes |
A-1
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND INCENTIVE PLAN
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: