The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
| Year | Year-End Fair Value
of Equity Awards
Granted During
Year That Remained
Unvested as of
Last Day of Year for
Yemin
($) | Change in Fair
Value from Last
Day of Prior Year
to Last Day of Year
of Unvested Equity
Awards for Yemin
($) | Vesting-Date
Fair Value of
Equity Awards
Granted During
Year that Vested
During Year for
Yemin
($) | Change in Fair Value
from Last Day of
Prior Year to Vesting
Date of Unvested
Equity Awards that
Vested During Year
for Yemin
($) | Fair Value at
Last Day of Prior
Year of Equity
Awards Forfeited
During Year for
Yemin
($) | Value of
Dividends or
Other Earnings
Paid on Equity
Awards Not
Otherwise
Included for
Yemin
($) | Total -
Inclusion
of Equity
Values for
Yemin
($) |
| 2022 | 9,439,604 | 808,521 | 1,243,607 | 1,583,525 | (1,595,250) | — | 11,480,007 |
| 2021 | 3,878,601 | (4,026,079) | 680,348 | 485,818 | (1,506,246) | — | (487,558) |
| 2020 | 8,669,061 | (1,838,207) | 915,204 | (2,926,314) | — | — | 4,819,744 |
| Year | Year-End Fair Value
of Equity Awards
Granted During
Year That Remained
Unvested as of
Last Day of Year for
Soreq
($) | Change in Fair
Value from Last
Day of Prior Year
to Last Day of Year
of Unvested Equity
Awards for Soreq
($) | Vesting-Date
Fair Value of
Equity Awards
Granted During
Year that Vested
During Year for
Soreq
($) | Change in Fair Value
from Last Day of
Prior Year to Vesting
Date of Unvested
Equity Awards that
Vested During Year
for Soreq
($) | Fair Value at
Last Day of Prior
Year of Equity
Awards Forfeited
During Year for
Soreq
($) | Value of
Dividends or
Other Earnings
Paid on Equity
Awards Not
Otherwise
Included for
Soreq
($) | Total -
Inclusion
of Equity
Values for
Soreq
($) |
| 2022 | 2,223,364 | — | 515,325 | — | — | — | 2,738,689 |
| Year | Average Year End
Fair Value of Equity
Awards Granted
During Year That
Remained Unvested
as of Last Day of
Year for Non PEO
NEOs
($) | Average Change
in Fair Value from
Last Day of Prior
Year to Last Day of
Year of Unvested
Equity Awards for
Non-PEO NEOs
($) | Average Vest-
ing-Date Fair
Value of Equity
Awards Granted
During Year that
Vested During
Year for Non-
PEO NEOs
($) | Average Change in
Fair Value from Last
Day of Prior Year
to Vesting Date of
Unvested Equity
Awards that Vested
During Year for Non
PEO NEOs
($) | Average Fair
Value at Last
Day of Prior Year
of Equity Awards
Forfeited During
Year for Non-
PEO NEOs
($) | Average Value
of Dividends or
Other Earnings
Paid on Equity
Awards Not
Otherwise
Included for
Non-PEO
NEOs
($) | Total -
Average
Inclusion
of Equity
Values for
Non-PEO
NEOs
($) |
| 2022 | 1,000,212 | 83,344 | 174,406 | 73,792 | — | — | 1,331,754 |
| 2021 | 309,356 | — | 70,977 | 25,497 | — | — | 405,830 (i) |
| 2020 | 359,280 | (68,301) | 58,429 | (100,361) | (329,609) | — | (80,562) |
| | (i) Includes $167,357 (1/4 of $669,428) related to accelerated vesting of equity upon death of one NEO in 2021. |
DELEK US HOLDINGS, INC.
| 2023 PROXY STATEMENT | 63
|
| | | | | | | | | | | | | | |
| Year | | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Soreq ($) | | Change in
Fair Value
from Last
Day of Prior
Year to Last
Day of Year
of Unvested
Equity
Awards for
Soreq
($) | | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Soreq ($) | | Change in Fair
Value from
Last Day of
Prior Year to
Vesting Date of
Unvested
Equity Awards
that Vested
During Year for
Soreq
($) | | Fair Value at
Last Day of
Prior Year of
Equity
Awards
Forfeited
During Year
for Soreq
($) | | Value of
Dividends or
Other
Earnings
Paid on
Equity
Awards Not
Otherwise
Included for
Soreq
($) | | Total -
Inclusion of
Equity
Values for
Soreq
($) |
| | | | | | | |
| 2023 | | 2,896,423 | | (445,542) | | 474,530 | | 15,183 | | (366,493) | | — | | 2,574,101 |
| | | | | | | |
| Year | | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs ($) | | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs ($) | | Average Vesting- Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEOs ($) | | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs ($) | | Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non-PEO NEOs ($) | | Average Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for Non-PEO NEOs ($) | | Total - Average Inclusion of Equity Values for Non-PEO NEOs ($) |
| | | | | | | |
| 2023 | | 573,572 | | (739,811) | | 237,339 | | 10,311 | | (961,238) | | — | | (879,827) |
| (4) | (4) | The Peer Group TSR set forth in this table utilizes a custom group of peer companies, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report on Form 10-K for the year ended December 31, 2022.2023. The comparison assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year in the Company and in the Peer Group, respectively. Historical stock performance is not necessarily indicative of future stock performance. The peer group is comprised of Calumet Specialty Products Partners, L.P. (NASDAQ: CMLT), CVR Energy, Inc. (NYSE: CVI), HF Sinclair Corporation (NYSE: DINO) (formerly HollyFrontier Corporation (NYSE: HCF)), Marathon Petroleum Corporation (NYSE: MPC), PBF Energy, Inc. (NYSE: PBF), Phillips 66 (NYSE: PSX), Par Pacific Holdings (NYSE: PARR), and Valero Energy Corporation (NYSE: VLO) (the “Peer Group”). For 2023, to better align our10-K Performance Graph with our custom TSR peer group and to ensure the use of a comparable group of companies operating in a consolidating industry, we added CLMT and PARR to our peer group. The peer group TSR performance for the peer group disclosed in our 2023 Proxy filing, absent these additions, would have been, for the years ending 12/31/2020, 12/31/2021, 12/31/2022, and 12/31/2023, respectively: $65.62, $85.42, $144.40, and $176.94. |
| (5) | (5) | We determined Adjusted Earnings Per ShareEBITDA to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEOs and Non-PEO NEOs in 2022.2023. This performance measure may not have been the most important financial performance measure for years 2022, 2021, and 2020 and we may determine a different financial performance measure to be the most important financial performance measure in future years. Adjusted Earnings Per Share (or “adjusted net income (loss) per share”) is net income adjusted for certain identified infrequently occurring items, non-cash items, and items that are not attributable to or indicative of our on-going operations or that may obscure our underlying results and trends, divided by weighted average shares outstanding, assuming dilution, as adjusted for any anti-dilutive instruments that may not be permitted for consideration in GAAP earnings per share calculations but that nonetheless favorably impact dilution. For details regarding the reconciliation of U.S. GAAP to our Adjusted Earnings Per Share,EBITDA, refer to the Adjusted net income (loss) per share reconciliation in the press release announcing our financial results for the quarter ended December 31, 20222023 furnished as Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on February 28, 202327, 2024 (the “2022“2023 Earnings Release”). |
| | |
| | (6) | The 2021 Adjusted Earnings Per Share amount represents the adjusted measure disclosed in our 2022 Earnings Release, to account for a retrospective change in accounting principle. Additional information can be found in note 8 to our consolidated financial statements included in our 2022 Annual Report. |
| 2023
| 2024 PROXY STATEMENT | 6469 |
Description of Relationship Between PEO and
Non-PEO
NEO Compensation Actually Paid,
and Company Total Shareholder Return (“TSR”)
, and Peer Group TSR
The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our
Non-PEOother NEOs, and the Company’s cumulative TSR over the
threefour most recently completed fiscal years.
| | |
| |
| 2023
| 2024 PROXY STATEMENT | 6570 |
Description of Relationship Between PEO and
Non-PEO
NEO Compensation Actually Paid and Net Income
The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our
Non-PEOother NEOs, and our Net Income during the
threefour most recently completed fiscal years.
| | |
| |
| 2023
| 2024 PROXY STATEMENT | 6671 |
Description of Relationship Between PEO and
Non-PEO
NEO Compensation Actually Paid and Adjusted
Earnings Per ShareEBITDA
The following chart sets forth the relationship between Compensation Actually Paid to our
PEO,PEOs, the average of Compensation Actually Paid to our
Non-PEOother NEOs, and our Adjusted
Earnings Per ShareEBITDA during the
threefour most recently completed fiscal years.
Adjusted Earnings Per Share is calculated as GAAP Net income (loss) attributable to the Company adjusted for certain identified infrequently occurring items, non-cash items, and items that are not attributable to or indicative of our on-going operations or that may obscure our underlying results and trends, divided by weighted average shares outstanding, assuming dilution, as adjusted for any anti dilutive instruments that may not be permitted for consideration in GAAP earnings per share calculations but that nonetheless favorably impact dilution.
DELEK US HOLDINGS, INC.
| 2023 PROXY STATEMENT | 67
|
Description of Relationship Between Company TSR and Peer Group TSR
The following chart compares our cumulative TSR over the three most recently completed fiscal years to that of the Peer Group over the same period.
Tabular List of Most Important Financial Performance Measures
The following table presents the financial performance measures that the Company considers to have been the most important in linking Compensation Actually Paid to our PEOs and other NEOs for 20222023 to Company performance. The measures in this table are not ranked.
|
Adjusted Earnings Per ShareEBITDA |
Adjusted EBITDA |
| 2023
| 2024 PROXY STATEMENT | 6872 |
PROPOSAL 2:ADVISORY RESOLUTION APPROVING OUR EXECUTIVE
COMPENSATION PROGRAM FOR OUR NAMED EXECUTIVE OFFICERS
The Dodd-Frank Act enables our stockholders to vote to approve on an advisory (non-binding) basis, the compensation of our NEOs as disclosed in this Proxy Statement in accordance with the SEC’s rules. Stockholders may also abstain from voting.
We are asking our stockholders to indicate their support for the compensation of our NEOs as disclosed in this Proxy Statement. This Proposal, commonly known as a “say-on-pay”“say-on-pay” proposal, gives stockholders the opportunity to express their views on the compensation paid to our NEOs. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we ask the stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the stockholders approve, on an advisory basis, the executive compensation program for the Company’s named executive officers, as disclosed in the Company’s Proxy Statement for the 20232024 Annual Meeting of Stockholders, pursuant to the compensation disclosure rules of the United States
Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, other related tables and disclosure, and narrative discussion, all as set forth under the caption “Executive Compensation” in the Proxy Statement.”
Vote Required
The affirmative vote of holders of a majority of the shares of Common Stock present or represented at the meeting and entitled to vote thereon is required for the adoption of this Proposal. Abstentions have the same effect as a vote “against” the Proposal. Broker non-votes have no effect on the outcome of the vote on this Proposal.
The “say-on-pay”“say-on-pay” vote is advisory, and therefore is not binding on us, the Human Capital and Compensation Committee or the Board. However, the Board and its committees value the opinions of the stockholders and, to the extent there is any significant vote against the NEO compensation as disclosed in this Proxy Statement, will consider the stockholders’ concerns and the Board and its committees will evaluate whether any actions are necessary to address those concerns.
The Board of Directors recommends a vote “FOR” the approval of the above resolution.
| | |
| |
DELEK US HOLDINGS, INC. | 2023
| 2024 PROXY STATEMENT | 6973 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 23, 2023,21, 2024, (i) the beneficial ownership of our Common Stock and common units representing common limited partnership interests in Delek Logistics Partners, LP (“Delek Logistics” or “DKL”) by all of our directors and director nominees, the executive officers named in the Summary Compensation Table (the “NEOs”), and all directors, director nominees, NEOs and executive officers as a group; and (ii) the beneficial ownership of our Common Stock by each person known by us to own more than five percent of our Common Stock. The amounts and percentage of units beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. Except as indicated by footnote, the persons named in the table below have sole voting and investment power with respect to all securities shown as beneficially owned by them, subject to community property laws where applicable. Unless otherwise indicated below, each person or entity has an address in care of our principal executive offices at 310 Seven Springs Way, Suite 500, Brentwood, Tennessee 37027.
| | | Amount and Nature of
Beneficial Ownership of
Common Stock (1) | | Percent of
Common
Stock (2) | | Amount and
Nature of Beneficial
Ownership of
Delek Logistics
Common Units (1) | | Percent of
Common
Units (2) |
| The Vanguard Group (3) | | 7,994,948 | | 11.47% | | n/a | | n/a |
| BlackRock, Inc. (4) | | 5,490,113 | | 7.90% | | n/a | | n/a |
| State Street Corporation (5) | | 4,974,180 | | 7.14% | | n/a | | n/a |
| Dimensional Fund Advisors LP (6) | | 3,849,839 | | 5.5% | | n/a | | n/a |
| Norges Bank (The Central Bank of Norway) (7) | | 3,380,497 | | 4.85% | | n/a | | n/a |
| Directors and NEOs: | | | | | | | | |
| Avigal Soreq | | 19,738 | | * | | 1,953 | | * |
| Ezra Uzi Yemin (8) | | 983,020 | | 1.5% | | 227,013 | | * |
| William J. Finnerty | | 31,570 | | * | | — | | n/a |
| Richard J. Marcogliese | | 27,316 | | * | | — | | n/a |
| Leonardo Moreno | | 2,807 | | * | | — | | n/a |
| Gary M. Sullivan, Jr. | | 35,565 | | * | | — | | n/a |
| Vicky Sutil | | 17,806 | | * | | — | | n/a |
| Laurie Z. Tolson | | 8,070 | | * | | — | | n/a |
| Shlomo Zohar | | 28,170 | | * | | — | | n/a |
| Reuven Spiegel | | 11,491 | | * | | 5,368 | | * |
| Denise McWatters | | 7,578 | | * | | 2,371 | | * |
| Todd O’Malley | | 11,801 | | * | | 3,876 | | * |
| Nithia Thaver | | 3,789 | | * | | — | | n/a |
| All directors and executive officers as a group (12 persons) | | 1,188,721 | | 1.8% | | 240,581 | | * |
| | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Amount and Nature
of Beneficial
Ownership of
Common Stock (1) | | | Percent of
Common
Stock (2) | | | Amount and
Nature of
Beneficial
Ownership of
Delek Logistics
Common Units
(1) | | | Percent of
Common Units
(2) | |
| | | | |
The Vanguard Group (3) | | | 6,724,376 | | | | 10.5% | | | | n/a | | | | n/a | |
| | | | |
BlackRock, Inc. (4) | | | 6,833,893 | | | | 10.7% | | | | n/a | | | | n/a | |
| | | | |
State Street Corporation (5) | | | 3,761,846 | | | | 5.9% | | | | n/a | | | | n/a | |
| | | | |
River Road Asset Management, LLC (6) | | | 3,747,111 | | | | 5.9% | | | | n/a | | | | n/a | |
| | | | |
Dimensional Fund Advisors LP (7) | | | 4,139,141 | | | | 6.5% | | | | n/a | | | | n/a | |
| | | | |
Norges Bank (The Central Bank of Norway) (8) | | | 3,380,497 | | | | 5.3% | | | | n/a | | | | n/a | |
| | | | |
Directors and NEOs: | | | | | | | | | | | | | | | | |
| | | | |
Avigal Soreq | | | 50,254 | | | | * | | | | 10,372 | | | | * | |
| | | | |
Ezra Uzi Yemin (9) | | | 957,837 | | | | 1.5% | | | | 198,670 | | | | * | |
| | | | |
Christine Benson Schwartzstein | | | — | | | | n/a | | | | — | | | | n/a | |
| | | | |
William J. Finnerty | | | 35,523 | | | | * | | | | — | | | | n/a | |
| | | | |
Richard J. Marcogliese | | | 31,269 | | | | * | | | | — | | | | n/a | |
| | | | |
Leonardo Moreno | | | 6,760 | | | | * | | | | — | | | | n/a | |
| | | | |
Gary M. Sullivan, Jr. | | | 39,518 | | | | * | | | | — | | | | n/a | |
| | | | |
Vasiliki (Vicky) Sutil | | | 21,759 | | | | * | | | | — | | | | n/a | |
| | | | |
Laurie Z. Tolson | | | 8,116 | | | | * | | | | — | | | | n/a | |
| | | | |
Shlomo Zohar | | | 32,123 | | | | * | | | | — | | | | n/a | |
| | | | |
Reuven Spiegel | | | 20,473 | | | | * | | | | 8,088 | | | | * | |
| | | | |
Denise McWatters | | | 14,965 | | | | * | | | | 4,514 | | | | * | |
| | | | |
Joseph Israel | | | 2,250 | | | | * | | | | 1,069 | | | | * | |
| | | | |
All directors and executive officers as a group (13 persons) | | | 1,220,847 | | | | 1.9% | | | | 222,713 | | | | * | |
| | | | | | | | | | | | | | | | | |
| * | Less than 1% of the issued and outstanding shares of our Common Stock or issued and outstanding common units of Delek Logistics, as applicable. |
| | |
| |
DELEK US HOLDINGS, INC. | 2023
| 2024 PROXY STATEMENT | 7074 |
| (1) | For purposes of this table, a person is deemed to have “beneficial ownership” of any securities when such person has the right to acquire them within 60 days after February 23, 2023.21, 2024. For stock options and time-vested RSUs, we report shares equal to the number of options or RSUs that are vested or that will vest within 60 days of February 23, 2023.21, 2024. For SARs, we report the shares that would be delivered upon exercise of SARs that are vested or that will vest within 60 days of February 23, 202321, 2024 (which is calculated by multiplying the number of SARs by the difference between $26.80,$27.78, the closing price of our Common Stock on February 23, 2023,21, 2024, and the exercise price divided by $26.80)$27.78). For units under the Delek Logistics LTIP, we report the units that are vested or that will vest within 60 days of February 23, 2023.21, 2024. For purposes of computing the percentage of outstanding securities held by each person named above, any securities which such person has the right to acquire within 60 days after February 23, 202321, 2024 are deemed to be outstanding but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. |
| (2) | Percentage of our Common Stock is based upon 66,941,87164,019,267 issued and outstanding shares on February 23, 202321, 2024 (excluding securities held by, or for the account of, the registrant or its subsidiaries). Percentage of Delek Logistics common units is based upon 43,568,58343,616,811 common limited partner units issued and outstanding on February 23, 2023.21, 2024. |
| (3) | Beneficial ownership information is based on a Schedule 13G/A filed with the SEC on February 9, 202313, 2024 by The Vanguard Group with an address of 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. The Vanguard Group has sole voting power with respect to 0 shares, sole dispositive power with respect to 7,792,9636,610,575 shares, shared voting power with respect to 141,66153,780 shares and shared dispositive power with respect to 201,985113,801 shares. |
| (4) | Beneficial ownership information is based on a Schedule 13G/A filed with the SEC on February 3, 2023January 24, 2024 by BlackRock, Inc. with an address of 55 East 52nd Street,50 Hudson Yards, New York, New York 10055.10001. BlackRock, Inc. has sole voting power with respect to 5,299,0616,479,513 shares and sole dispositive power with respect to all shares. |
| (5) | Beneficial ownership information is based on a Schedule 13G13G/A filed with the SEC on February 3, 2023January 25, 2024 by State Street Corporation with an address of State Street Financial Center, One LincolnCongress Street, Suite 1, Boston, Massachusetts 02111. State Street Corporation has sole voting power with respect to 0 shares, sole dispositive power with respect to 0 shares, shared voting power with respect to 4,822,1363,552,504 shares and shared dispositive power with respect to all shares. |
| (6) | Beneficial ownership information is based on a Schedule 13G13G/A filed with the SEC on January 30, 2024 by River Road Asset Management, LLC with an address of 462 South 4th Street, Suite 2000, Louisville, Kentucky 40202. River Road Asset Management, LLC has sole voting power with respect to 3,593,959 shares and sole dispositive power with respect to all shares. |
| (7) | Beneficial ownership information is based on a Schedule 13G/A filed with the SEC on February 10, 20239, 2024 by Dimensional Fund Advisors LP with an address of 6300 Bee Cave Road, Building One, Austin, Texas 78746. Dimensional Fund Advisors LP has sole voting power with respect to 3,791,7384,062,896 shares and sole dispositive power with respect to all shares. |
| (8) | (7) | Beneficial ownership information is based on a Schedule 13G/A filed with the SEC on February 14, 2023 by Norges Bank (The Central Bank of Norway) with an address of Bankplassen 2, PO Box 1179 Sentrum, NO 0107 Oslo, Norway. Norges Bank (The Central Bank of Norway) has sole voting power with respect to 3,138,270 shares, sole dispositive power with respect to 3,138,270 shares, shared voting power with respect to 0 shares and shared dispositive power with respect to 242,227 shares. |
| (9) | (8) | 691,945 shares of our Common Stock and 206,684158,467 of Delek Logistics Partners, LP’s units are held of record by Yemin Investments, L.P., a limited partnership of which Mr. Yemin is the sole general partner. |
| | |
| |
DELEK US HOLDINGS, INC. | 2023
| 2024 PROXY STATEMENT | 7175 |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Approval Policy for Related Party Transactions
The Board has adopted a written related party transactions policy to document procedures pursuant to which “related party transactions” are reviewed, approved or ratified. Under Item 404 of Regulation S-K, a “related party transaction” means any transaction or series of transactions in which the Company or a subsidiary is a participant, the amount involved exceeds $120,000, and any related person has a direct or indirect material interest, subject to certain exceptions. The policy covers all related party transactions between us and any related party requiring disclosure under Item 404.
The policy states that, in most instances, the Audit Committee is best suited to review and approve related
party transactions that may arise within the Company. However, the policy permits the disinterested members of the Board to exercise any authority otherwise assigned to the Audit Committee by the policy. In particular, the Board believes that any related party transaction in which any director is interested should typically be reviewed and approved by all disinterested members of the Board. An interested director is not allowed to vote upon a transaction in which he or she is involved. Depending upon the issue presented, the disinterested members of the Board may request to hear from the interested director during the course of their deliberations, but the interested director does not vote upon the matter and is not present during the vote on such matter. A related party transaction may be consummated only if it is ratified or approved by the Audit Committee or disinterested members of the Board.
Since January 1, 2022, the Company has not participated in any such related party transactions except that on March 7, 2022, the Company entered into a stock purchase and cooperation agreement (the “Icahn Agreement”) with IEP Energy Holding LLC, a Delaware limited liability company, American Entertainment Properties Corp., a Delaware corporation, Icahn Enterprises Holdings L.P., a Delaware limited partnership, Icahn Enterprises G.P. Inc., a Delaware corporation, Beckton Corp., a Delaware corporation, and Carl C. Icahn (collectively, the “Icahn Group”), pursuant to which the Company purchased an aggregate of 3,497,268 shares of Common Stock for $64 million, which equals a price per share of $18.30, the closing price of a share of Company Common Stock on the New York Stock Exchange (the “NYSE”) on March 4, 2022, the last trading day prior to the execution of the Icahn Agreement. Prior to entering the Icahn Agreement, the Icahn Group beneficially owned more than five percent of the shares of our Common Stock, making it a related party. In addition to the stock purchase, under the terms of the Icahn Agreement, the Icahn Group withdrew its nomination notice for the nomination of nominees for election to the Company’s Board of Directors for the Company’s 2022 Annual Meeting of Stockholders. Further, under the terms of the Icahn Agreement, the Icahn Group agreed to standstill restrictions, which require, among other things, that until the completion of the Company’s 2023 Annual Meeting of Stockholders, the Icahn Group will refrain from nominating directors or proposing other business for consideration at a meeting of the Company’s stockholders and acquiring additional shares of the Company Common Stock. The parties also agreed to customary non-disparagement restrictions.
| | |
| |
DELEK US HOLDINGS, INC. | 2023
| 2024 PROXY STATEMENT | 7276 |
PROPOSAL 3: ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE ON OUR EXECUTIVE COMPENSATION PROGRAM FOR NAMED EXECUTIVE OFFICERS
The Dodd-Frank Act also enables our stockholders to indicate how frequently we should seek an advisory (non-binding) vote on the executive compensation program for our NEOs as disclosed pursuant to the SEC’s compensation disclosure rules. By voting on this Proposal, stockholders may indicate whether they would prefer an advisory vote on our executive compensation program for our NEOs every year, once every two years, or once every three years. After careful consideration of this Proposal, the Board of Directors has determined that an advisory vote on our executive compensation program for our NEOs that occurs every year is the most appropriate alternative for the Company. The Board of Directors believes that holding an annual advisory vote on executive compensation allows our stockholders to provide us with their direct and immediate input on our compensation philosophy, policies and practices as disclosed in the proxy statement every year. While this is an advisory vote and, as such, is nonbinding, the Board of Directors will carefully consider the results of the vote when considering the frequency of advisory votes on named executive officer compensation. The Board understands that our stockholders may have different views as to what is the best approach for the Company and looks forward to hearing from stockholders as to their preferences on the frequency of an advisory vote on compensation of our NEOs.
Vote Required
The proxy card provides the stockholders with the opportunity to choose among four alternatives with respect to this Proposal (holding the vote every one, two, or three years, or abstaining) and, therefore, stockholders will not be simply voting to approve or disapprove the Board’s recommendation.
This Proposal will be determined by plurality of votes cast by holders of shares entitled to vote, meaning the alternative that receives the greatest number of votes (holding the vote every one, two, or three years) will be the frequency that stockholders choose. Abstentions will not be taken into account in determining the outcome of the vote. Brokers do not have discretion to vote uninstructed shares with respect to this Proposal. Accordingly, if brokers do not receive voting instructions from beneficial owners of the shares, they will not be able to vote the shares and broker non-votes may occur with respect to this Proposal. However, broker non-votes will not affect the outcome of the vote.
Although the vote on the frequency of the “say on pay” vote is advisory and nonbinding, the Board of Directors and its committees will take into account the outcome of the vote when considering the frequency of future advisory votes on compensation of our NEOs.
The Board of Directors recommends a vote to hold an advisory vote on our executive compensation program for named executive officers “EVERY YEAR”.
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PROPOSAL 4: TO APPROVE AN AMENDMENT TO OUR 2016 LONG-TERM INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE THEREUNDER
In 2016, the Board adopted and our stockholders approved the 2016 Plan. The 2016 Plan initially authorized the issuance of up to 4,400,000 shares of Common Stock. In 2018, our stockholders approved an amendment to the 2016 Plan authorizing the issuance of an additional 4,500,000 shares of Common Stock. In 2020, our stockholders approved an amendment to the 2016 Plan authorizing the issuance of an additional 2,120,000 shares of Common Stock. In 2021, our stockholders approved an amendment to the 2016 Plan authorizing the issuance of an additional 3,215,000 shares of Common Stock. In 2022, our stockholders approved an amendment to the 2016 Plan authorizing the issuance of an additional 760,000 shares of Common Stock. At the Annual Meeting, we are seeking stockholder approval in order to further amend the 2016 Plan to increase the number of shares of our Common Stock available for issuance thereunder by 2,015,000 shares and to reduce the fungible ratio from 2.28 to 1.74. Capitalized terms used in this Proposal 4 but not defined herein shall have the meaning ascribed to such terms in the 2016 Plan.
Purpose of the Plan and Reasons for the Proposed Amendment
We are seeking stockholder approval of an amendment to increase the number of shares of Common Stock issuable pursuant to the 2016 Plan by 2,015,000 shares and to reduce the fungible ratio from 2.28 to 1.74. As of March 16, 2023, there were approximately 2,559,350 shares remaining available for issuance under the 2016 Plan, 1,509,645 total stock options and SARs outstanding (with associated weighted average exercise price of $35.21 and weighted average remaining term of 4.9 years), and 1,245,951 total full value awards outstanding. In determining to propose this increase in shares, the Board has taken into consideration that the proposed increase would represent only a small percentage of the total shares of Common Stock outstanding and the desirability and importance of being able to continue to grant awards that are comparable to those of our peer companies.
The 2016 Plan is designed to attract and retain nonemployee directors, employees, and consultants and reward them for making contributions to the success of the Company and its subsidiaries. These objectives are to be accomplished by making awards under the 2016 Plan and thereby providing Participants with a proprietary interest in the growth and performance of the Company. Stockholder approval of this Proposal will enable us to continue to grant equity awards to our employees, non-employee directors, and consultants at levels determined by the Board to be necessary to attract, retain and motivate the individuals who will be critical to our success in achieving our business objectives and thereby creating greater value for our stockholders. In addition to the crucial role we believe such grants play in attracting and retaining talented individuals, we believe that the equity compensation granted under the 2016 Plan also serves the important function of aligning the interests of Participants with our other stockholders and focusing such Participants on the long-term growth of the Company.
The terms of the 2016 Plan are summarized below, and the full text of the 2016 Plan is set forth as Exhibit 99.1 to our Registration Statement on Form S-8 filed with the SEC on June 1, 2016. The full text of the proposed amendment to the 2016 Plan is set forth as Appendix A to this Proxy Statement. It is intended that awards under the 2016 Plan will comply with or are exempt from Section 409(a) of the Internal Revenue Code of 1986, as amended (the “Code”). It is further intended that any incentive stock options awarded under the 2016 Plan will comply with Section 422 of the Code.
Summary of the 2016 Plan
Eligibility
Our employees, non-employee directors, and consultants are eligible to receive awards under the 2016 Plan at the discretion of the Board or its designated committee. As of December 31, 2022, we had six executive officers, approximately 3,600 employees, and seven non employee directors eligible to receive awards under the 2016 Plan.
Administration and Authority
The 2016 Plan as it affects Employee Awards and Consultant Awards is administered by a committee designated by the Board to administer the 2016 Plan, currently the Human Capital and Compensation Committee (the “Committee”). The Committee has authority to, among other things:
| • | Interpret the 2016 Plan and adopt the rules, regulations and guidelines it deems necessary to carry out the 2016 Plan pursuant to its terms; |
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| • | Determine the exercise price of awards and the dates on which they become exercisable; |
| • | Provide for the extension of the exercisability of an Employee Award or Consultant Award; |
| • | Accelerate the vesting or exercisability of an Employee Award or Consultant Award; |
| • | Eliminate or make less restrictive any restrictions applicable to an Employee Award or Consultant Award; |
| • | Waive any restriction or other provision of the 2016 Plan applicable to an Employee Award or Consultant Award or otherwise amend or modify an Employee Award or Consultant Award, subject to limitations; and |
| • | Correct any defect, supply any reconciliation or reconcile any inconsistency in the 2016 Plan or applicable Award in the manner and to the extent the Committee deems necessary or desirable to further the purposes of the 2016 Plan. |
The Board has the same power, duties and authority to administer the 2016 Plan with respect to Director Awards as the Committee has with respect to Employee Awards and Consultant Awards, and in the discussion that follows, references to the “Committee” shall mean the Board with respect to Director Awards. Plan-related functions may be delegated by the Board or by the Committee, subject to the requirements of applicable law.
Shares Available Under the 2016 Plan
Awards settled in shares other than through stock options or SARs (such as restricted stock and RSUs) are currently counted against the 2016 Plan’s overall share limit as 2.28 shares for each share subject to such award. Under the proposed amendment, the fungible ratio would decrease to 1.74. Stock options and SARs count against the overall share limit as one share. The shares reserved under the 2016 Plan are subject to adjustment to reflect certain transactions and events specified in the 2016 Plan. Shares covered by the unexercised portion of an award that terminates, expires or is canceled or settled in cash, and shares forfeited or repurchased under the 2016 Plan will again become available for issuance under the 2016 Plan, on the same basis as such shares counted against the overall number of shares available for grant. Additionally, only the net number of shares of Common Stock issued in settlement of a SAR or net settlement of a Stock Option count against the 2016 Plan’s overall share limit. Shares withheld or surrendered in order to satisfy the exercise price of an option or the tax withholding obligations associated with the exercise, vesting or settlement of an option or SAR award are not available for issuance under the 2016 Plan. The number of shares that count against the 2016 Plan’s overall share limit is not adjusted to the net number of shares of Common Stock issued in settlement of a SAR or net settlement of a Stock Option. Only shares covered by the unexercised portion of an award that terminates, expires or is canceled or settled in cash, and shares forfeited or repurchased under the 2016 Plan, again become available for issuance under the 2016 Plan, in each case on the same basis as such shares counted against the overall number of shares available for grant.
Awards
At the discretion of the Committee, participants may be granted awards under the 2016 Plan in the form of options to purchase shares of Common Stock, SARs, restricted stock awards, RSU awards, PSU awards, and other forms of stock-based awards.
Stock Options. A stock option is a right to purchase shares of our Common Stock at a price fixed on the grant date, subject to vesting and other restrictions and conditions as determined by the Committee. Options granted under the 2016 Plan may be “incentive stock options” (“ISOs”) or non-qualified stock options under the Code, depending upon the terms of the options and their designation by the Committee. The option exercise price per share may not be less than the fair market value per share of our Common Stock on the option grant date. The exercise price of any stock option must be paid in full at or before the time the stock is delivered to the optionee. The price may be paid in cash or, if permitted by the Committee and elected by the optionee, by means of tendering (either by actual delivery or by attestation) previously owned shares of Common Stock or shares issued pursuant to an award under the 2016 Plan. No dividends or dividend equivalents will be paid with respect to any stock options. No option may be exercisable after the tenth anniversary of the option grant date.
SARs. A stock appreciation right, or SAR, entitles a participant to receive upon exercise a payment equal to the difference between the base price of the SAR and the market price of our Common Stock on the date of exercise. The settlement of a SAR may be in the form of cash, shares, or a combination of cash and shares. A SAR may be granted to the holder of a stock option with respect to all or a portion of the shares of Common Stock subject to such stock option (a “tandem” SAR) or may be granted separately. The holder of a tandem SAR may elect to exercise either the stock option or the SAR, but not both. The base price of a SAR may not be less than the fair market value of our Common Stock on the grant date. No dividends or dividend equivalents will be paid with respect to any stock options. No SARs may be exercised after the tenth anniversary of the grant date. SARs are generally less dilutive than stock options because the SAR holder is not entitled to purchase the underlying shares. While a stock option holder typically realizes the appreciation in stock value by purchasing each underlying share at the fixed price and selling each underlying share at the market price, a SAR holder realizes the same appreciation without purchasing the underlying shares. As a result, a SAR is typically settled by issuing a quantity of shares that is significantly less than the quantity of shares covered by the SAR. We believe the anti-dilutive nature of SARs make them an attractive alternative to stock options. Also, unlike stock options, we can reserve the right to settle SARs in cash.
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Restricted Stock. Restricted stock is Common Stock that is issued subject to transfer restrictions and vesting, forfeiture and other conditions, as determined by the Committee. Shares of restricted stock generally vest upon satisfaction of specified performance conditions established by the Committee and/or the participant’s continuing employment or other service for a specified period of time. Unless otherwise determined by the Committee, the holder of a restricted stock award is entitled to vote the shares of restricted stock covered by the award and to receive the dividends paid on the shares (which may also be subject to vesting and other conditions). To date, we have not granted any restricted stock awards under the 2016 Plan.
RSUs. An RSU award consists of the right to receive shares of our Common Stock in the future, subject to vesting, forfeiture and other conditions, as determined by the Committee. An RSU will generally vest upon satisfaction of specified performance conditions established by the Committee and/or the participant’s continuing employment or other service for a specified period of time. The holder of an RSU has no rights as a stockholder with respect to the underlying shares unless and until the award vests and the award is settled in shares. However, the Committee may provide for the payment of dividend equivalents in the form of cash or shares in an amount equal to the dividends that would have been payable if the shares were outstanding (which may also be subject to vesting and other conditions). RSUs have been our preferred form of full value award since the adoption of the 2016 Plan.
Other Stock-Based Awards. The Committee may grant other forms of awards denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of our Common Stock. These awards may include, for example, stock bonuses, dividend equivalents (either alone or in conjunction with other awards), convertible or exchangeable debt securities, and other rights convertible or exchangeable into shares.
Cash Awards. The 2016 Plan also provides for the granting of cash awards to employees, consultants, and non-employee directors. The terms, conditions and limitations applicable to any cash awards granted pursuant to the 2016 Plan will be determined by the Committee.
Performance Awards. Under the 2016 Plan, we are permitted to condition the grant, exercise, vesting or settlement of equity-based awards and the grant, vesting or payment of annual and long-term cash incentive awards on the achievement of specified performance goals. The applicable performance period for measuring achievement of specified performance goals may be any period designated by the Committee. A performance goal established in connection with an award must be (1) objective, so that a third party having knowledge of the relevant facts could determine whether the goal is met, (2) prescribed in writing by the Committee before the beginning of the applicable performance period or at such later date when fulfillment is substantially uncertain, but not later than 90 days after the commencement of the performance period and in any event before completion of 25% of the performance period, and (3) based on business criteria such as total revenue, operating income, and cash flow, among other things.
Performance goals may be applied to a participant, one or more business units, divisions or geographic regions of the Company, the Company as a whole, or by comparison to a peer group of companies, and will include one or more of the following:
| • | total revenue or any key component thereof; |
| • | operating income, pre-tax or after-tax income from continuing operations; earnings before interest, taxes and amortization (i.e., EBITA); earnings before interest, taxes, depreciation and amortization (i.e., EBITDA); or net income; |
| • | cash flow (including, without limitation, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations or cash flow in excess of cost of capital); |
| • | earnings per share or earnings per share from continuing operations (basic or diluted); |
| • | return on capital employed, return on invested capital, return on assets or net assets; |
| • | after-tax return on stockholders’ equity; |
| • | economic value created; |
| • | operating margins or operating expenses; |
| • | value of the Common Stock or total return to stockholders; |
| • | value of an investment in the Common Stock assuming the reinvestment of dividends; |
| • | strategic business criteria, consisting of one or more objectives based on meeting specified market penetration goals, geographic business expansion goals, cost targets, environmental goals, safety goals, asset utilization goals, ethics and compliance goals, management of employment practices and employee benefits, supervision of litigation, information technology goals, or goals relating to acquisitions or divestitures of subsidiaries, affiliates or joint ventures. |
Performance goals need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses. The Committee may provide that any such performance award may include or exclude any of the following events that occurs during a performance period: (a) asset write-downs, (b) litigation or claim judgments or settlements,
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(c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) any reorganization and restructuring programs, (e) extraordinary items and/or nonrecurring, unusual or special items as described in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders, Form 10-K, or Form 10-Q for the applicable period, (f) acquisitions or divestitures, (g) foreign exchange gains and losses, and (h) hedging activities.
Award Limitations
Employee Awards. Under the 2016 Plan, no employee may be granted, during any calendar year: (a) stock options and/or SARs covering more than 2,500,000 shares of Common Stock; (b) stock awards covering more than 1,000,000 shares of Common Stock; or (c) cash awards (including performance awards) in respect of any calendar year having a value determined on the grant date in excess of $5,000,000.
Nonemployee Director Awards. The aggregate grant value of awards to any individual nonemployee director may not exceed $500,000 in any calendar year. For a description of the equity awards we have made and expect to make to our nonemployee directors, please see the narrative discussion under the caption “Director Compensation” in this Proxy Statement.
Deferred Payment
At the discretion of the Committee, amounts payable in respect of awards granted under the 2016 Plan may be deferred. Any deferred payment may be forfeited if and to the extent that the terms of the applicable award so provide.
Timing and Pricing of Equity Awards
Our practice under the 2016 Plan has been to make initial grants of equity awards quarterly to newly-hired eligible employees and annual grants of equity awards to existing employees, usually in March and June of each year. The initial equity awards are designed to assist in recruitment and retention, and the annual grants of equity awards are designed to assist in retention. All equity awards provide participants with a stake in our performance and are intended to align the interests of our directors, employees, and stockholders by providing a direct incentive for directors and employees to focus on stockholder value and regulatory compliance.
Equity awards under the 2016 Plan are subject to exercise or base prices equal to (or greater than) the fair market value of our Common Stock on the grant date. We define the fair market value of our Common Stock as the NYSE closing price on the date of the grant, or the last previous NYSE closing price if the grant date occurs on a day when the NYSE is not open for trading.
We intend to continue our practices with respect to the timing and pricing of equity awards under the 2016 Plan with respect to participants, including our NEOs. The Committee does not currently consider gains or losses from prior equity awards in setting other elements of compensation.
Minimum Vesting
All awards of options and SARs under the 2016 Plan must have a minimum vesting period of one year from the grant date, except that up to 5% of the shares authorized for grant pursuant to the 2016 Plan may be used for awards of options and SARs that have a vesting period of less than one year.
Change in Control
The 2016 Plan includes a double-trigger acceleration and vesting provision. Upon the occurrence of a change in control (as defined in the 2016 Plan), outstanding awards will be adjusted or substituted in accordance with the terms of the 2016 Plan. If the participant does not receive a replacement award with respect to any outstanding award as of the change in control, then each such outstanding award will become fully vested and, if applicable, exercisable and any restrictions applicable to such award will lapse. For awards subject to performance goals, payout at a change in control will be based upon the greater of (i) a pro rata portion of the amount payable based upon “target” performance under the applicable performance goals or (ii) the amount payable based on actual performance level had the performance period ended on the date of the change in control. If a participant terminates his or her employment for Good Reason (as defined in the 2016 Plan), the participant is involuntarily terminated for reasons other than for cause, or the participant’s employment terminates due to the participant’s death or disability during the two-year period commencing on the date of a change in control, then (A) all replacement awards held by the participant will become fully vested and, if applicable, exercisable and free of restrictions (with any applicable performance goals deemed to have been achieved at a target level as of the date of such vesting), and (B) all stock options held by the participant immediately before such termination of employment that the participant also held as of the date of the change in control or that constitute replacement awards will remain exercisable for not less than two years following such termination of employment or until the expiration of the stated term of such stock option, whichever period is shorter (provided, however, that if the applicable award agreement provides for a longer period of exercisability, that provision will control).
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Adjustments, Amendment and Termination
The 2016 Plan provides for appropriate adjustments in the number of shares of our Common Stock subject to awards and available for future awards, as well as the employee award limitations under the 2016 Plan, in the event of changes in our outstanding Common Stock by reason of a merger, stock split or certain other events. The Board may amend, modify, suspend, or terminate the 2016 Plan at any time for the purpose of addressing changes in legal requirements or for other purposes permitted by law. However, no amendment will be effective prior to approval by our stockholders if such approval is required by law or the requirements of the stock exchange on which the Common Stock is listed. Furthermore, stock options and SARs issued under the 2016 Plan will not be repriced without the prior approval of our stockholders.
Transferability
No award or any other benefit under the 2016 Plan shall be assignable or otherwise transferable except by will, by beneficiary designation or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder.
Clawback
Awards are subject to clawback to the extent required by law or any applicable securities exchange listing standards, or as otherwise determined by the Committee.
Stock Ownership Requirements
Executive officers and non-employee directors are subject to stock ownership and retention guidelines as described above under “Compensation Discussion and Analysis - Stock Ownership Guidelines.”
Federal Income Tax Consequences
The following is a summary of the principal U.S. federal income tax consequences generally applicable to awards under the 2016 Plan. This summary does not purport to consider all of the possible U.S. federal tax consequences of the awards and is not intended to reflect the particular tax position of any award recipient. This summary is based upon the U.S. federal tax laws and regulations now in effect and as currently interpreted and does not take into account possible changes in such tax laws or such interpretations, any of which may be applied retroactively. Award recipients are strongly advised to consult their own tax advisors for additional information.
Stock Options. The grant of a stock option is not a taxable event. In general, a participant who receives an option that does not qualify as an ISO under Section 422 of the Code will realize ordinary income at the time the option is exercised equal to the difference between the then value of the shares acquired by the exercise of the option over the option exercise price paid for the shares, and we will be entitled to a corresponding deduction, subject to the potentially applicable deduction limitations under Section 162(m) of the Code. The participant’s tax basis for the shares will be equal to the value of the shares on the date ordinary income is realized and the participant’s tax holding period for the shares will begin on that date. Gain or loss on a subsequent sale of the shares will be long- or short-term capital gain or loss, depending on whether the sale occurs more than one year after the participant’s holding period begins. If a participant receives a stock option that qualifies as an ISO under Section 422 of the Code, the participant will not realize income at the time the option is exercised (although the difference between the value of the shares and the exercise price will be taken into account as income for alternative income tax purposes), but will realize taxable income when the option shares are subsequently sold. If the participant sells the option shares more than two years after the date the option is granted and more than one year after the date the option is exercised, any gain or loss realized on the sale will be long-term capital gain or loss, and we will not be entitled to a deduction. If the participant sells the option shares before the end of either of those periods, any gain realized on the sale will be taxable as ordinary income to the extent of the difference between the value of the shares on the date the option was exercised and the exercise price paid for the shares, and any remaining gain will be capital gain. In general, we will be entitled to a deduction only if and to the extent ordinary income is realized by the participant upon the sale of the option shares, subject to the potentially applicable deduction limitations under Section 162(m) of the Code.
SARs. The grant of a SAR will not result in any immediate tax consequence to us or to the participant. Generally, the participant will realize ordinary income upon the exercise of a SAR, equal to the value of the shares or the cash payment issued or made in settlement of the award, and we will be entitled to a corresponding deduction, subject to the potentially applicable deduction limitations under Section 162(m) of the Code.
Restricted Stock, RSUs and Other Stock Settled Awards. In general, a participant who receives restricted stock, RSUs or other stock settled awards under the 2016 Plan will realize ordinary income at the time the award becomes vested or the participant receives vested shares in settlement of the award in an amount equal to the then fair market value of the shares, and we will be entitled to a corresponding deduction (subject to the potentially applicable deduction limitations under Section 162(m) of the Code). The participant’s tax basis in the
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shares will generally be equal to the value of the shares on the date that ordinary income is realized, and the participant’s tax holding period for the shares will generally begin on that date. Gain or loss on a subsequent sale of the shares will be long- or short-term capital gain or loss, depending on whether the sale occurs more than one year after the participant’s holding period begins.
Change in Control. The acceleration of the exercisability or the vesting of a grant or award upon the occurrence of a change in control may result in an “excess parachute payment” within the meaning of Section 280G of the Code. A “parachute payment” occurs when an employee receives payments contingent upon a change in control that exceed an amount equal to three times his or her “base amount.” The term “base amount” generally means the average annual compensation paid to such employee during the five-year period preceding the change in control. An “excess parachute payment” is the excess of all parachute payments made to the employee on account of a change in control over the employee’s base amount. If any amount received by an employee is characterized as an excess parachute payment, the employee is subject to a 20% excise tax on the amount of the excess, and we are denied a deduction with respect to such excess payment.
Section 162(m) of the Code. In general, a U.S. federal income tax deduction is allowed to the Company in an amount equal to the ordinary taxable income recognized by a participant with respect to awards granted under the 2016 Plan. However, Section 162(m) of the Code generally provides that the Company may not deduct compensation of more than $1,000,000 that is paid to covered employees in any taxable year. Following the enactment of the Tax Cuts and Jobs Act of 2017, beginning with the 2018 calendar year, there is no longer any exception to the Section 162(m) limitation for qualified performance-based compensation other than for certain outstanding awards that were in effect on November 2, 2017 and not subsequently materially modified (“grandfathered amounts”). For periods after 2017, without the performance-based compensation exception, it is expected that any compensation deductions (other than grandfathered amounts) for any individual who is our CEO, CFO or one of our other three most highly compensated executive officers in 2017 or any later year will be subject to a $1 million annual deduction limitation. Although the deductibility of compensation is a consideration evaluated by the Committee, the Committee believes that the lost deduction on compensation payable in excess of $1 million for each NEO is not material relative to the benefit of being able to attract and retain talented management. Accordingly, the Committee will continue to retain the discretion to pay compensation that is in excess of the $1 million deductibility limit, including compensation in the form of awards under the 2016 Plan.
Tax Withholding
The Company or its designated third party administrator has the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or shares under the 2016 Plan, an appropriate amount of cash, number of shares, or combination thereof for payment of taxes or other amounts required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all withholding obligations, provided that the amount withheld cannot exceed the required minimum withholding taxes.
Section 409A
The grant by the Board of other stock-based awards may have varying tax consequences to award recipients. Grants made pursuant to the 2016 Plan may be subject to Code Section 409A, and plan administration may have to conform to Code Section 409A. Failure to comply with Code Section 409A, if applicable, will result in acceleration of income and imposition of penalties and interest to award recipients.
New Plan Benefits
Awards granted under the 2016 Plan will be subject to the Committee’s discretion, subject to the terms of the 2016 Plan, and the Committee has not determined future awards or who might receive them. As a result, the benefits that will be awarded under the 2016 Plan are not currently determinable.
During the fiscal year ended December 31, 2022, we granted awards under the 2016 Plan to our employees (including our NEOs) and nonemployee directors as reflected in the 2022 Grants of Plan Based Awards Table and the 2022 Director Compensation Table, respectively, in this Proxy Statement.
Vote Required
The affirmative vote of holders of a majority of the shares of Common Stock present or represented at the meeting and entitled to vote thereon is required to approve the amendment to the 2016 Plan. Abstentions have the same effect as a vote “against” the proposal. Broker non-votes have no effect on the outcome of the vote on this Proposal.
The Board of Directors recommends a vote “FOR” the amendment of the 2016 Plan to increase the number of shares available for issuance thereunder.
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Equity Compensation Plan Information
As of December 30, 202229, 2023 there were 3,610,7495,373,382 shares available for issuance under the 2016 Plan.
The following table provides information as of December 30, 2022,29, 2023, the last trading day of fiscal year 2022,2023, regarding all compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.
| Plan Category | | Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights | | Weighted-average
exercise price of
outstanding options,
warrants and rights | | Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a)) |
| | | (a) | | (b) | | (c) |
| Equity compensation plans approved by security holders | | 2,658,946 (1) | | $29.91 (2) | | 4,401,944 (1)(3) |
| Equity compensation plans not approved by security holders | | — | | — | | — |
| TOTAL | | 2,658,946 | | $29.91 | | 4,401,944 |
| | | | | | |
| Plan Category | | Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights | | Weighted-average
exercise price of
outstanding options,
warrants and rights | | Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a)) |
| | | |
| | | (a) | | (b) | | (c) |
| | | |
Equity compensation plans approved by security holders | | 2,522,096 (1) | | $30.36 (2) | | 5,373,382 (1)(3) |
| | | |
Equity compensation plans not approved by security holders | | — | | — | | — |
| | | |
TOTAL | | 2,522,096 | | $30.36 | | 5,373,382 |
| (1) | At December 30, 2022,29, 2023, the last trading day of fiscal year 2022, 985,9502023, 827,090 SARs outstanding under our 2006 Plan, the 2016 Plan, and the Alon 2005 Long-Term Incentive Plan (the “Plans”) were at base prices above the $27.00$25.80 fair market value of our Common Stock on that date. For purposes of column (a), we included the number of shares that would have been issued to settle all outstanding SARs at December 30, 2022,29, 2023, calculated to be 37,613,13,048, which is determined based on the difference between the exercise price of the SAR and the market price of our Common Stock at December 30, 2022.29, 2023. The number of shares that have been excluded from column (c) totaled 34,62111,010 and related to the assumed exercise of SARs as of December 30, 202229, 2023 under the 2016 Plan and the Alon 2005 Long-Term Incentive Plan, as column (c) excludes the 2006 Plan and the Alon 2005 Long-Term Incentive Plan (as we are no longer issuing awards under those Plans). | |
| (2) | At December 30, 2022, 1,527,04529, 2023, 1,216,115 SARs/options were outstanding under the Plans at a weighted average exercise price of $34.83.$35.14. | |
| (3) | Consists of the number of securities available for future issuance under the 2016 Plan (4,401,944(5,373,382 shares as of December 30, 2022)29, 2023). | |
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DELEK US HOLDINGS, INC. | 2023
| 2024 PROXY STATEMENT | 8077 |
Burn Rate Information
The following table sets forth information regarding historical awards granted for the 2020 through 2022 fiscal years, and the corresponding rate of share usage, or burn rate, which is defined as the number of shares subject to certain equity-based awards granted in a year divided by the weighted average common shares outstanding for that year, for each of the last three fiscal years. This table does not include transaction-related shares issued in connection with the Company’s merger with Alon USA Energy, Inc. in 2017 (the “Delek/Alon Merger”).
| | | 2022 | | 2021 | | 2020 |
| Full Value Awards Granted (1) | | 1,345,746 | | 1,162,436 | | 1,544,309 |
| Applicable ISS Multiplier | | 1.50 | | 1.50 | | 1.50 |
| Total Adjusted Full Value Awards Granted | | 2,018,619 | | 1,743,654 | | 2,316,464 |
| SARs Granted | | — | | — | | 17,000 |
| Total Awards Granted | | 2,018,619 | | 1,743,654 | | 2,333,464 |
| Weighted Average Common Shares Outstanding During the Fiscal Year | | 70,789,458 | | 73,984,104 | | 73,598,389 |
| Annual Burn Rate | | 2.85% | | 2.36% | | 3.17% |
| Three-Year Average Burn Rate | | | | 2.79% | | |
(1) | Excludes 1,466,000 SARs granted under the Alon 2005 Long-Term Incentive Plan as a result of the Delek/Alon merger. |
DELEK US HOLDINGS, INC.
| 2023 PROXY STATEMENT | 81
|
AUDIT COMMITTEE REPORT
Overview
The Audit Committee is composed of non-employee directors who are independent and financially literate in accordance with the applicable requirements of the NYSE and the SEC. The Board has designated Messrs. Sullivan, Marcogliese, and Zohar as Audit Committee Financial Experts under the guidelines of the SEC. On January 1, 2022,2023, the Audit Committee was comprised of Messrs. Sullivan (chair), Marcogliese, Moreno, and Zohar and Ms. Sutil. Mr. Moreno was appointed to the Audit Committee in October 2022.
Responsibilities
Management is responsible for our system of internal controls and the overall financial reporting process. Our independent registered public accounting firm, Ernst & Young LLP (“Ernst & Young”), is responsible for performing
an independent audit of our consolidated financial statements and on the effectiveness of our internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), and to issue reports thereon. The Audit Committee is responsible for overseeing management’s conduct of the financial reporting process and systems of internal accounting and financial controls, as well as other responsibilities described under the “Committees of the Board of Directors” section in this Proxy Statement.
Activities in 20222023
During 2022,2023, the Audit Committee established meeting agendas in consultation with the Board and members of the Company’s management. The Audit Committee also, among other activities, performed the following:
| ✓ | Reviewed and discussed with both management and Ernst & Young all earnings releases and annual and quarterly financial statements prior to their issuance. Such discussions included that each set of audited financial statements reviewed had been prepared in accordance with United States generally accepted accounting principles (“GAAP”), and reviewed significant accounting and disclosure matters with Ernst & Young. |
| ✓ | Discussed with Ernst & Young matters required to be discussed pursuant to PCAOB Auditing Standard No. 1301 (Communications with Audit Committees), including the quality of our accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the audited financial statements. The Audit Committee also discussed with Ernst & Young matters relating to its independence, including a review of audit and non-audit fees and the written disclosures and an annual independence confirmation letter from Ernst & Young required by applicable requirements of the PCAOB. The Audit Committee also discussed and reviewed materials regarding Ernst & Young’s system of quality control. |
| ✓ | Met with the senior members of the Company’s financial management team at each regularly scheduled meeting including discussions regarding financial reporting developments and other financial matters. |
| ✓ | Held private sessions at each regularly scheduled meeting with management, including the Chief Financial Officer, the head of Internal Audit Services, the General Counsel, and Ernst & Young featuring candid discussions about financial reporting, internal controls, legal, compliance and other issues including the results of any “hotline” calls. |
| ✓ | Received reports at each regularly scheduled meeting on management’s process to assess the adequacy of the Company’s system of internal control over financial reporting, results of tests of controls, and management’s conclusions on the effectiveness of the Company’s internal controls over financial reporting. |
| ✓ | Approved the Company’s internal audit plan and reviewed quarterly the status of the internal audit plan, staffing, findings of internal audit activities, and performance of the internal audit function. |
| ✓ | Reviewed the Company’s financial forecast, cash flows, financing plans and debt compliance. |
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DELEK US HOLDINGS, INC. | | 2024 PROXY STATEMENT | 78 |
2022
2023 Audited Financial Statements
Members of the Audit Committee rely, without independent verification, on the information and representations provided to them by management and on the communications made to them by Ernst & Young. Accordingly, the oversight provided by the Audit Committee should not be considered as providing an independent basis for determining that management has established and maintained appropriate internal control over financial reporting, that the financial statements have been prepared in accordance with GAAP, or that the audit of the Company’s financial statements by Ernst & Young has been carried out in accordance with PCAOB standards.
DELEK US HOLDINGS, INC.
| 2023 PROXY STATEMENT | 82
|
The Audit Committee has reviewed the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.2023. We have discussed the financial statements with management and Ernst & Young including discussions concerning the following:
| • | | The reasonableness of significant accounting judgments and estimates, |
| • | | The clarity and completeness of disclosures in the financial statements, |
| • | | The quality, not just the acceptability, of the accounting principles, |
| • | | The auditor’s report on the effectiveness of internal control over financial reporting, |
| • | | The auditor’s report on the financial statements including Critical Audit Matters, |
| • | | Matters required to be reported to the Audit Committee by the independent registered public accounting firm under the rules of the PCAOB including receipt of a letter confirming the independence of Ernst & Young, and |
| • | | Management’s representations and certifications regarding the financial statements and internal control over financial reporting. |
Taking all these reviews and discussions into account, the Audit Committee members whose names are listed below, recommended to the Board that it approve the inclusion of the audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022,2023, for filing with the SEC.
Members of the Audit Committee
Gary M. Sullivan, Jr., Chair
Richard J. Marcogliese
Leonardo Moreno
Vasiliki (Vicky) Sutil
Shlomo Zohar
| | |
| Members of the Audit Committee
Gary M. Sullivan, Jr., Chair
Richard J. Marcogliese
Leonardo Moreno
Vicky Sutil
Shlomo Zohar |
DELEK US HOLDINGS, INC. | 2023
| 2024 PROXY STATEMENT | 8379 |
RELATIONSHIP WITH INDEPENDENT AUDITORS
Set forth below are the fees paid for the services of Ernst & Young:
| | December 31, |
| | 2022 | | 2021 |
| Audit fees (1) | $ 4,413,500 | | $ | 4,042,600 | |
| Audit-related fees (2) | 8,000 | | 10,815 | |
| Tax fees | 4,403 | | 9,060 | |
| All other fees | — | | — | |
| Total | $ 4,425,903 | | $ | 4,062,475 | |
| | | | | | | | |
| | |
| | | December 31, | |
| | | 2023 | | | 2022 | |
| | |
Audit fees (1) | | | $3,860,000 | | | | $4,413,500 | |
| | |
Audit-related fees (2) | | | $143,500 | | | | $8,000 | |
| | |
Tax fees | | | — | | | | $4,403 | |
| | |
All other fees | | | — | | | | — | |
| | | | | | | | |
Total | | | $4,003,500 | | | | $4,425,903 | |
| (1) | Audit fees include services related to the audits of the consolidated financial statements and internal controls over financial reporting, review of quarterly condensed consolidated financial statements and audit services provided in connection with acquisitions and dispositions, regulatory filings, and other transactions during the year. Fees and expenses are for services provided in connection with the audit of the fiscal year, regardless of when the fees and expenses were paid. | |
| (2) | Audit-related fees consist of subscription services to access accounting and financial reporting research materials, and audits in connection with acquisitions and dispositions. | |
The Audit Committee is responsible for the audit fee negotiations associated with the retention of the independent registered public accounting firm. The Audit Committee has a policy that it will pre-approve all audit and non-audit services provided by the independent registered public accounting firm and will not engage the independent registered public accounting firm to perform any specific non-audit services prohibited by law or regulation. The Audit Committee has given general pre-approval for specified audit, audit-related, and tax services after consideration that such services do not impair auditor independence. The term of any general pre-approval is 12 months from the date of pre-approval unless the Audit Committee specifically provides for a different term. The Audit Committee will annually review the services for which general pre-approval is given. The Audit Committee may revise the list of general pre-approved services from time to time, based upon subsequent determinations. Unless a type of service to be provided by the independent registered public accounting firm has received general pre-approval, it will require specific pre-approval by the Audit Committee.
The Audit Committee has considered and determined that the provision of non-audit services by our independent registered public accounting firm is compatible with maintaining auditor independence.
Pre-Approval Policies and Procedures. In general, all engagements performed by our independent registered public accounting firm, whether for auditing or non-auditing services, must be pre-approved by the Audit Committee. During 2022,2023, all of the services performed for us by Ernst & Young were pre-approved by the Audit Committee.
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DELEK US HOLDINGS, INC. | 2023
| 2024 PROXY STATEMENT | 8480 |
PROPOSAL 3:APPROVAL OF THE PROPOSED AMENDMENT TO THE SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCORPORATE NEW DELAWARE LAW PROVISIONS REGARDING OFFICER EXCULPATION
We are asking you to approve an amendment to the Company’s Second Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to provide for exculpation of certain officers of the Company as permitted by recent amendments to Delaware law (the “Proposed Amendment”).
The Board has unanimously approved, subject to stockholder approval, an amendment to our Certificate of Incorporation to update the exculpation provision as described below. If our stockholders approve the Proposed Amendment, subject to the discretion of the Board, we intend to file a Certificate of Amendment to our Second Amended and Restated Certificate of Incorporation, as amended, adding the new language below with the Secretary of State of the State of Delaware as soon as practicable after the Annual Meeting.
Overview of the Proposed Amendment
Consistent with Delaware law, the Proposed Amendment to our Certificate of Incorporation relating to officers is more limited in scope than the existing director exculpation provision and only permits exculpation of officers for certain direct claims. Further, the Proposed Amendment does not permit officers to be exculpated for liability arising out of:
| • | | claims brought by the company itself; |
| • | | claims brought by stockholders in the name of the company (derivative claims); |
| • | | breaches of the duty of loyalty to the company or its stockholders; |
| • | | acts or omissions not in good faith; |
| • | | acts or omissions that involve intentional misconduct; |
| • | | acts or omissions that involve a knowing violation of law; or |
| • | | any transaction in which the officer derived an improper personal benefit. |
In accordance with the recent amendment to Delaware law, the officers who will be covered by the expanded
Tableexculpation provision include any officer who is or was the president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer, or chief accounting officer of Contentsthe Company; any officer who is or was identified in the Company’s public filings with the SEC as one of the most highly compensated executive officers; and any officers who consent to being identified as an officer for purposes of service of process, at any time during the course of conduct alleged in the action or proceeding to be wrongful.
Rationale for the Proposed Amendment
The State of Delaware, which is our state of incorporation, recently enacted legislation that authorizes Delaware corporations to limit the liability of certain of their officers in the limited circumstances described above. As a result of this development, we propose expanding our existing director exculpation provision to cover officers to the extent now permitted by Delaware law.
The rationale of the Board for recommending the Proposed Amendment is to balance stockholders’ interest in accountability with their interest in the Company being able to attract and retain the highest quality officers and avoiding litigation abuse resulting from the current disparity that exists in the treatment of directors, who oversee and are ultimately accountable for corporate actions, and the officers who execute those actions on behalf of the Board.
The Board considered that the role of directors and officers requires them to make decisions on crucial matters in response to time-sensitive opportunities and challenges, which can create substantial risk of investigations, claims, actions, suits or proceedings seeking to impose liability on the basis of hindsight, especially in the current litigious environment and regardless of the absence of any underlying merit. The Proposed Amendment will better align the protections available to our officers with those currently available to our directors. It will also avoid an emerging practice among plaintiff’s lawyers of adding officers to direct claims relating to the duty of care in mergers and acquisition-related and other litigation so that claims against the officers continue even when identical
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DELEK US HOLDINGS, INC. | | 2024 PROXY STATEMENT | 81 |
claims against directors are dismissed. The costs to the Company to defend such claims can be significant, even when the claims are baseless. The Board believes that limiting concern about personal liability will empower officers to best exercise their business judgment in furtherance of stockholder interests without the distraction of potentially being subject to claims following actions taken in good faith.
In addition, we expect other companies with which we compete for employees to adopt exculpation clauses that limit the personal liability of officers as now permitted by the Delaware General Corporation Law. The Board believes that failing to adopt the Proposed Amendment will impact recruitment and retention of exceptional officer candidates who conclude that the potential exposure to liabilities, costs of defense and other risks of proceedings exceeds the benefits of serving as an officer of the company as compared to serving as an officer at another company that does exculpate officers.
Further, the Board noted that the Proposed Amendment would not eliminate stockholders’ right to pursue derivative claims relating to alleged breaches of the duty of care or limit the ability of the company itself to bring claims against officers. Therefore, taking into account the narrow class and type of claims for which officers’ liability would be exculpated, the Board believes the Proposed Amendment would enhance the ability to attract and retain talented officers, potentially reduce litigation costs associated with frivolous lawsuits, and more generally align the protections available to our officers with those currently available to our directors.
Based on the above, the Board has determined that it is in the best interests of the Company and our stockholders to amend the Certificate of Incorporation as described in this Proposal.
Text of the Proposed Amendment
Accordingly, we ask our stockholders to approve an amendment to the Company’s Second Amended and Restated Certificate of Incorporation, as amended, to replace the existing Article ELEVENTH with the following (changes marked in underlined blue text):
“ELEVENTH: A director or officer (as defined in Section 102(b)(7) of the GCL)of this corporation shall not be personally liable to the corporation or its stockholders for monetary damages for the breach of any fiduciary duty as a directoror officer, except (a) for any breach of the director’s or officer’s duty of loyalty to the corporation or its stockholders, (b) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (c) for a directorunder Section 174 of the GCL, as the same exists or hereafter may be amended, (d) for any transaction from which the director or officer derived an improper personal benefit, or (e) an officer in any action by or in the right of the corporation. If the GCL is amended after the date of incorporation of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officer of the corporation shall be eliminated or limited to the fullest extent permitted by the GCL, as so amended.”
The full text of the Proposed Amendment to the Certificate of Incorporation is attached to this Proxy Statement as Appendix A.
Vote Required
The affirmative vote of holders of a majority of the outstanding shares of Common Stock entitled to vote thereon is required to approve the Proposed Amendment to the Certificate of Incorporation. Abstentions and broker non-votes have the same effect as a vote “against” the Proposal.
The Board of Directors recommends a vote “FOR” the approval of the amendment to our Second Amended and Restated Certificate of Incorporation, as amended, to reflect new Delaware law provisions regarding officer exculpation.
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DELEK US HOLDINGS, INC. | | 2024 PROXY STATEMENT | 82 |
PROPOSAL 5: 4:RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR 20232024
The Audit Committee is responsible for the appointment, compensation (including final approval of audit and other fees), retention and oversight of the independent registered public accounting firm that audits our financial statements and our internal control over financial reporting.
The Audit Committee annually reviews Ernst & Young’s independence and performance in deciding whether to retain Ernst & Young or engage an alternative independent auditor. As part of this review, the Audit Committee, among other factors, considers the following:
| • | | Ernst & Young’s historical and recentannual performance including input from Audit Committee members, other independent directors and our management. |
| • | | Ernst & Young’s expertise and qualifications in serving as independent auditor for our different business operations. |
| • | | A review of Ernst & Young’s known legal risks and any significant legal or regulatory proceedings in which it is involved. |
| • | | Other information on audit quality and performance including recent PCAOB reports on Ernst & Young and its peer firms. |
| • | | Periodic rotation of the lead partner and engagement quality review partner and their industry experience and expertise most relevant to the Company’s business operations. The Audit Committee oversees and participates in the selection of the lead engagement partner. Management interviews candidates who meet professional, industry-specific experience, and personal criteria among other considerations. Management recommends a finalist candidate to the Audit Committee. The Audit Committee Chair then interviews the finalist and, in consultation with the Audit Committee, considers management’s recommendation and approves the appointment. |
| • | | Ernst & Young’s conclusion that they are independent with respect to serving as our independent auditor. |
In addition to Ernst & Young’s conclusion that they are independent, the Audit Committee believes that Ernst & Young is independent and that there are controls and processes that help ensure such independence including the following: (a) Audit Committee oversight of Ernst & Young includes at least four private meetings each year and an additional four private meetings with the Audit Committee Chair prior to each quarterly Audit Committee meeting; (b) Audit Committee interaction with and review of the industry and other qualifications of the lead partner and of the engagement quality review partner; (c) oversight of
non-audit services that require preapproval by the Audit Committee precludes certain non-audit services and determines that Ernst & Young is an appropriate service provider; (d) discussions with Ernst & Young regarding their internal system of quality control including the firm’s internal quality reviews and procedures for maintaining independence with regard to audit clients; and (e) the overall regulatory framework and regulations and requirements of the PCAOB and the SEC that Ernst & Young is subject to as an independent registered public accounting firm.
The Audit Committee oversees and participates in the selection of the lead engagement partner. Management interviews candidates who meet professional, industry-specific experience, and personal criteria among other considerations. Management recommends a finalist candidate to the Audit Committee. The Audit Committee Chair then interviews the finalist and, in consultation with the Audit Committee, considers management’s recommendation and approves the appointment.
Ernst & Young’s tenure as our independent registered public accounting firm is since 2002. In addition to the considerations of independence, periodic rotation, performance, and other matters discussed above, the reappointment of Ernst & Young provides continuity. Continuity enhances audit quality, efficiency, avoids switching costs, and can provide for competitive fees through the institutional knowledge and experience serving the Company over an extended period. As a matter of sound governance, the Audit Committee, in consultation with management and the Board, may periodically consider putting the audit of the Company’s financial statements out to bid.
After evaluating the foregoing criteria, the Audit Committee has appointed Ernst & Young as the independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2023,2024, including the audit of our internal control over financial reporting. Representatives of Ernst & Young are expected to be present at the Annual Meeting and will be offered the opportunity to make a statement if they so desire. They will also be available to respond to appropriate questions.
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DELEK US HOLDINGS, INC. | | 2024 PROXY STATEMENT | 83 |
We are asking you to ratify the selection of Ernst & Young as our independent registered public accounting firm for the 20232024 fiscal year. Although ratification is not required by our Bylaws or otherwise, the Board is submitting the selection of Ernst & Young to our stockholders for ratification because we value your views on our independent registered public accounting firm and as a matter of good corporate practice. In the event that our stockholders fail to ratify the selection, it will be considered as a direction to the Audit Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of us and our stockholders.
DELEK US HOLDINGS, INC.
| 2023 PROXY STATEMENT | 85
|
Vote Required
The affirmative vote of holders of a majority of the shares of Common Stock present or represented at the meeting and entitled to vote thereon is required to ratify the selection of Ernst & Young as our independent registered public accounting firm for the 20232024 fiscal year. Abstentions have the same effect as a vote “against” this Proposal. Broker non-votes have no effect on the outcome of the vote on this Proposal.
The Board of Directors recommends a vote “FOR” the ratification of Ernst & Young LLP as our independent registered public accounting firm.
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DELEK US HOLDINGS, INC. | 2023
| 2024 PROXY STATEMENT | 8684 |
OTHER PROXY INFORMATION
Information About the Annual Meeting and Voting
Cost of Solicitation of Proxies
We will bear all costs and expenses relating to the solicitation of proxies for the Company, including the costs of preparing, printing and mailing to stockholders this Proxy Statement and accompanying materials. Directors, certain officers, certain employees or other agents of Delekthe Company may solicit proxies in person, by telephone, telefax, personal calls, or other electronic means. DelekThe Company will request banks, brokers, custodians and other nominees in whose names shares are registered to furnish to the beneficial owners of Delek’sthe Company’s Common Stock this Proxy Statement and the proxy card, and any other materials related to the Annual Meeting, including, copies of our 20222023 Annual Report, and, upon request, the Company will reimburse such registered holders for their out-of-pocket and reasonable expenses in connection therewith.
Proxies
Shares of Common Stock that are entitled to be voted at the Annual Meeting and are represented by properly executed proxies will be voted in accordance with the instructions on those proxies. You may vote by proxy or at the Annual Meeting. You are encouraged to read the Proxy Statement and vote your shares as soon as possible to ensure that your shares are represented and voted at the Annual Meeting. If you hold your shares as a record holder, you may vote your shares by proxy via the phone or the Internet by following the instructions provided on the enclosed proxy card or by completing, signing, dating and returning your proxy card in the postage-paid envelope provided. If you hold your shares through your broker or other custodian, please follow the instructions you received from the holder of record to vote your shares.
Many of our stockholders hold their shares in more than one account and may receive separate proxy cards or voting instructions forms for each of those accounts. If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. Please sign, date and return or otherwise submit your proxy with respect to each proxy card to ensure that all of your shares are voted.
If no instructions are indicated, shares on a properly executed proxy will be voted:
| | If no instructions are indicated, shares on a properly executed proxy will be voted: |
| | |
| | • | | FOR ALLthe nine (9)ten (10) director nominees identified in this Proxy Statement and on the proxy card; |
| | • | | FOR the non-binding resolution to approve the compensation of our named executive officers; |
| | • | EVERY YEAR for the non-binding advisory vote on the frequency of future executive compensation advisory votes; |
| | • | FOR the approval of an amendment to our 2016 Long-Term Incentive Plan;Second Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation; and |
| | • | | FOR the ratification of the appointment of Ernst & Young to serve as our independent registered public accounting firm for the year ending December 31, 2023.2024. |
In respect of any other matters that may properly come before the Annual Meeting, shares represented by properly executed proxies may be voted at the discretion of the proxy holder. The Board is not currently aware of any other matters to be presented at the Annual Meeting.
Revocation of Proxies
A stockholder who has executed and returned a proxy may revoke it at any time prior to its exercise at the Annual Meeting by executing and returning a proxy bearing a later date by mail, by voting via the Internet, by filing with our Corporate Secretary a written notice of revocation bearing a later date than the proxy being revoked, or by voting the Common Stock covered thereby virtually at the Annual Meeting. In order to revoke a proxy executed with respect to shares held in street name, the stockholder must contact the appropriate broker or nominee.
Virtually attending the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically make that request or vote in person at the Annual Meeting.
DELEK US HOLDINGS, INC.
| 2023 PROXY STATEMENT | 87
|
Broker Non-Votes
Shares of Common Stock that are held in “street name,” which means shares of Common Stock held of record by a trustee or in an account at a brokerage firm, bank, dealer or other similar organization (collectively, brokerage firms), may be voted, even if the beneficial holder does not provide the brokerage firm with voting instructions. Brokerage firms have the authority under applicable securities rules to cast votes on certain “routine” matters, even if they do not receive instructions from their customers. When a proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is called a “broker non-vote.”
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DELEK US HOLDINGS, INC. | | 2024 PROXY STATEMENT | 85 |
See also “What is the effect of abstentions, withheld votes and broker non-votes?” under the “Questions & Answers” section of this Proxy Statement, above.
Vote Required
PROPOSAL 1: Because the director election at the 20232024 Annual Meeting is uncontested, as defined in the Bylaws, the election of directors will be by a majority of the votes cast, meaning that the nine (9)ten (10) director-nominees will be elected only if the number of votes cast “FOR” the nominee’s election exceeds the number of votes cast “AGAINST” that nominee’s election at the Annual Meeting.
PROPOSAL 2: The affirmative vote of holders of a majority of the shares of Common Stock present or represented at the Annual Meeting and entitled to vote thereon is required for the adoption of this Proposal. Abstentions have the same effect as a vote “against” this Proposal. Broker non-votes have no effect on the outcome of the vote on this Proposal.
The “say-on-pay”“say-on-pay” vote is advisory, and therefore is not binding on us, the Human Capital and Compensation Committee or the Board. However, the Board and its committees value the opinions of the stockholders and, to the extent there is any significant vote against the NEO compensation as disclosed in this Proxy Statement, will consider the stockholders’ concerns and the Board and its committees will evaluate whether any actions are necessary to address those concerns.
PROPOSAL 3: The option of “every year”, “every two years”, or “every three years” that receives the highest number of votes by the stockholders will be the frequency for the advisory vote on executive compensation that has been selected by the stockholders. Abstentions and broker non-votes will not count toward the outcome of the vote on this Proposal.
PROPOSAL 4: The affirmative vote of holders of a majority of the outstanding shares of Common Stock present or represented at the Annual Meeting and entitled to vote thereon is required to approve the amendment to the 2016 Plan.Second Amended and Restated Certificate of Incorporation. Abstentions and broker non-votes have the same effect as a vote “against” this Proposal. Broker non-votes have no effect on the outcome of the vote on this Proposal.
PROPOSAL 54: The affirmative vote of holders of a majority of the shares of Common Stock present or represented at the Annual Meeting and entitled to vote thereon is required to ratify the selection of Ernst & Young as our independent registered public accounting firm for the 20232024 fiscal year. Abstentions have the same effect as a vote “against” this Proposal. Broker non-votes have no effect on the outcome of the vote on this Proposal.
Holders of Record
You may vote by proxy or at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, you are encouraged to read this Proxy Statement and submit your proxy card or voting instructions form as soon as possible to ensure that your shares are represented and voted at the Annual Meeting. If you hold shares as a record holder, you may vote the shares by via the phone or the Internet by
following the instructions provided on the enclosed proxy card, by completing, signing, dating and returning your proxy card in the postage-paid envelope provided or by attending the Annual Meeting and voting in person. Each method is discussed further below:
o | • | | Voting by Mail.If you choose to vote by mail, simply mark the proxy card and complete, sign, date and return it in the postage-paid envelope provided. The proxy card must be completed, signed and dated by the stockholder or the stockholder’s authorized representative. |
o | • | | Voting by Telephone. Stockholders of record can vote by phone by following the instructions on your proxy card or by calling toll-free at 1-800-690-6903. Voice prompts will instruct stockholders to vote their shares and confirm that their vote has been properly recorded. |
o | • | | Voting over the Internet. Registered stockholders can vote on the Internet by accessing the website shown on your proxy card and following the easy directions. As with telephone voting, stockholders can confirm that their votes have been properly recorded. |
DELEK US HOLDINGS, INC.
| 2023 PROXY STATEMENT | 88
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| We provide Internet proxy voting to allow stockholders to vote their shares online, with procedures designed to ensure the authenticity and correctness of proxy vote instructions. However, please be aware that stockholders must bear any costs associated with their Internet access, such as usage charges from Internet access providers and telephone companies. |
o | • | | Voting Virtually at the Annual Meeting. You may virtually attend and vote your shares during the Annual Meeting by visiting our Annual Meeting website at www.virtualshareholdermeeting.com/DK2023DK2024. To virtually attend the Annual Meeting, you will need the instructions included on your proxy card. Shares held in your name as the stockholder of record may be voted electronically during the Annual Meeting. Shares for which you are the beneficial owner but not the stockholder of record also may be voted electronically during the Annual Meeting. Even if you plan to virtually attend the Annual Meeting we recommend that you also vote by proxy as described above so that your vote will be counted if you later decide not to virtually attend the Annual Meeting. |
If you have any questions or need assistance, please contact our Investor Relations department at (615) 767-4344.
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DELEK US HOLDINGS, INC. | | 2024 PROXY STATEMENT | 86 |
STOCKHOLDER PROPOSALS FOR 20242025 ANNUAL MEETING
To be considered for inclusion in the proxy statement for our 20242025 Annual Meeting pursuant to Rule 14a-8 under the Exchange Act, stockholder proposals must be in writing and submitted to the Corporate Secretary, Delek US Holdings, Inc., 310 Seven Springs Way, Suite 500, Brentwood, Tennessee 37027, and must otherwise comply with the requirements of Rule 14a-8. The proposal must be received no later than November 25, 202322, 2024 for us to consider it for inclusion.
Stockholders who desire to present business at our 20242025 Annual Meeting, without inclusion in the Proxy Statement for such meeting, including a nomination of a candidate for election as director at such meeting, must notify our Corporate Secretary of such intent in accordance with our Bylaws by writing to our Corporate Secretary, Delek US Holdings, Inc., 310 Seven Springs Way, Suite 500, Brentwood, Tennessee 37027. To be timely, such notice must be received no earlier than January 4, 2024,2, 2025, nor later than February 3, 2024,1, 2025, provided that if the date of the Annual Meeting is advanced more than 30 calendar days prior to or delayed by more than 60 calendar days after the anniversary of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of the 90th calendar day prior to such annual meeting or the 10th calendar day following the day on which public disclosure of the date of such meeting is first made. The advance notice must also meet the other requirements of Section 2.02 of our Bylaws. You may obtain a copy of our Bylaws by writing to our Corporate Secretary at the address above.
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DELEK US HOLDINGS, INC. | 2023
| 2024 PROXY STATEMENT | 8987 |
APPENDIX A
FIFTHFIRST AMENDMENT
TO THE
DELEK US HOLDINGS, INC.
2016 LONG-TERM INCENTIVE PLANSECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
Delek US Holdings, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “GCL”), does hereby certify as follows:
FIRST: That Article ELEVENTH of the Second Amended and Restated Certificate of Incorporation of the corporation, as amended, is hereby amended in its entirety to read as follows (the “Amendment”):
ELEVENTH: A director or officer (as defined in Section 102(b)(7) of the GCL) of this corporation shall not be personally liable to the corporation or its stockholders for monetary damages for the breach of any fiduciary duty as a director or officer, except (a) for any breach of the director’s or officer’s duty of loyalty to the corporation or its stockholders, (b) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (c) for a director under Section 174 of the GCL, as the same exists or hereafter may be amended, (d) for any transaction from which the director or officer derived an improper personal benefit, or (e) an officer in any action by or in the right of the corporation. If the GCL is amended after the date of incorporation of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officer of the corporation shall be eliminated or limited to the fullest extent permitted by the GCL, as so amended.
SECOND: That the Amendment was duly adopted in accordance with the applicable provisions of Section 242 of the GCL.
THIRD: That the Amendment shall become effective upon filing with the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed this day of , 2024.
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DELEK US HOLDINGS, INC. |
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By: | | |
Name: | | |
Title: | | |
A-1
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Delek US Holdings, Inc. 310 Seven Springs Way Suite 500 Brentwood, Tennessee 37027 | | DEFINITIVE PROXY MATERIALS VOTE BY INTERNET Before the Meeting – Go towww.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information until 11:59 p.m. Eastern Time on the day before the meeting date. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. During the Meeting – Go towww.virtualshareholdermeeting.com/DK2024 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE – 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, New York 11717. |
KEEP THIS PORTION FOR YOUR RECORDS
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
DETACH AND RETURN THIS PORTION ONLY
THIS FIFTH AMENDMENT TO THE PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DELEK US HOLDINGS, INC. 2016 LONG-TERM INCENTIVE PLAN (this “Fifth Amendment”) is effective
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” EACH DIRECTOR NOMINEE IN PROPOSAL 1:
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| 1 Election of Directors: | | | | | | | | |
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| NOMINEES: | | For | | Against | | Abstain | | |
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| | 1 | | Ezra Uzi Yemin | | | | ☐ | | ☐ | | ☐ | | |
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| | 2 | | Avigal Soreq | | | | ☐ | | ☐ | | ☐ | | |
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| | 3 | | Christine Benson Schwartzstein | | | | ☐ | | ☐ | | ☐ | | |
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| | 4 | | William J. Finnerty | | | | ☐ | | ☐ | | ☐ | | |
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| | 5 | | Richard J. Marcogliese | | | | ☐ | | ☐ | | ☐ | | |
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| | 6 | | Leonardo Moreno | | | | ☐ | | ☐ | | ☐ | | |
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| | 7 | | Gary M. Sullivan, Jr. | | | | ☐ | | ☐ | | ☐ | | |
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| | 8 | | Vasiliki (Vicky) Sutil | | | | ☐ | | ☐ | | ☐ | | |
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| | 9 | | Laurie Z. Tolson | | | | ☐ | | ☐ | | ☐ | | |
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| | 10 | | Shlomo Zohar | | | | ☐ | | ☐ | | ☐ | | |
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THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” PROPOSALS 2, 3, AND 4: |
| | | | FOR | | AGAINST | | ABSTAIN |
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| 2 | | To adopt the advisory resolution approving the executive compensation program for our named executive officers as described in the Proxy Statement. | | | | | | |
| 3 | | To approve the amendment to our Second Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation. | | | | | | |
| 4 | | Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the 2024 fiscal year. | | | | | | |
Note: If any other matters come before the meeting or any adjournment thereof, the persons named in this proxy will vote in their discretion.
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
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| Signature [PLEASE SIGN WITHIN BOX] | | Date | | Signature (Joint Owners) | | Date |
YOUR VOTE IS IMPORTANT
Regardless of ________________, 2023. Capitalized terms used and not defined herein shall havewhether you plan to virtually attend the meanings ascribed to them2024 Annual Meeting of Stockholders,
you can be sure these shares are represented at the meeting by voting online or promptly
returning the proxy in the Plan (as defined below)enclosed envelope.
Proxy card must be signed and dated on the reverse side.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The 2023 Annual Report, Notice & Proxy Statement are available at ir.delekus.com
Annual Meeting of Stockholders
May 2, 2024, 11:30 a.m., Central Daylight Savings Time
This proxy is solicited by the Board of Directors
Avigal Soreq and Reuven Spiegel, and each of them, as the true and lawful attorneys, agents and proxies of the undersigned, with full power of substitution and resubstitution, are hereby authorized to represent and to vote all section references shall refer to the Plan.
RECITALS
WHEREAS,shares of common stock, par value $0.01 per share, of Delek US Holdings, Inc. (the “Company”) currently awards long-term compensation to certain non-employee directors, employees, and consultants under its 2016 Long-Term Incentive Plan, as amended by that certain First Amendment dated asheld of May 8, 2018, that certain Second Amendment dated as of May 5, 2020, that certain Third Amendment dated as of June 9, 2021, and that certain Fourth Amendment dated as of May 3, 2022 (as amended, the “Plan”);
WHEREAS, the Plan reserves 14,995,000 shares of Common Stock for issuance in connection with awards granted thereunder;
WHEREAS, the Company desires to amend the Plan to increase the number of shares of Common Stock reserved for issuance under the Plan by 2,015,000 shares;
WHEREAS, this Fifth Amendment requires the approval of the Company’s stockholders; and
WHEREAS, the Board, based upon the recommendation of the Human Capital and Compensation Committee of the Board, which committee has previously been appointedrecord by the Board pursuant to Section 5 to administer the Plan (the “Committee”), has determined that it is in the best interests of the Company, subject to the approval of the Company’s stockholdersundersigned on March 8, 2024, at the Company’s 2023 Annual Meeting of Stockholders to amend the Plan to increase the number of shares of Common Stock reserved for issuance under the Plan by an additional 2,015,000 shares, from 14,995,000 shares to 17,010,000 shares,be held on May 2, 2024, at 11:30 a.m., Central Daylight Savings Time, via live webcast at www.virtualshareholdermeeting.com/DK2024, and any adjournment or postponement thereof. Any and all proxies heretofore given are hereby revoked.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD’S RECOMMENDATIONS.
(Continued and to amend the Plan as set forth in this Fifth Amendment.
NOW, THEREFORE, the Plan shall be amended effective as of the date hereof as follows:
1. Paragraph 4 of the Plan is deleted in its entirety and replaced with the following:
4. Common Stock Available for Awards. Subject to the provisions of Paragraph 16 hereof, there shall be available for Awards granted wholly or partly in Common Stock (including rights or options which may be exercised for or settled in Common Stock) during the term of this Plan an aggregate of 17,010,000 shares of Common Stock (the “Maximum Share Limit”), all of which may be used for the granting of ISOs. The Board and the appropriate officers of the Company are authorized to take from time to time whatever actions are necessary, and to file required documents with governmental authorities and stock exchanges and transaction reporting systems, to make shares of Common Stock available for issuance pursuant to Awards. Each Award settled in shares of Common Stock other than a Stock Option or SAR shall be counted against the Maximum Share Limit as 1.74 shares and each Stock Option or SAR shall be counted against the Maximum Share Limit as one share. Any shares of Common Stock subject to an Award that expires or is canceled, forfeited, or terminated without issuance of the full number of shares of Common Stock related to such Award shall not count against the Maximum Share Limit and will again be available for issuance under the Plan. Any shares of Common Stock that again become available for future grants pursuant to this Paragraph 4 shall be added back as one share if such shares were subject to Stock Options or Stock Appreciation Rights and as 1.74 shares if such shares were subject to other Awards. Notwithstanding anything to the contrary contained herein: shares subject to an Award under the Plan shall not again be made available for issuance or delivery under the Plan if such shares are (a) shares tendered in payment of a Stock Option, (b) shares delivered or withheld by the Company to satisfy any tax withholding obligation with respect to any Stock Option or SAR, (c) shares covered by a stock-settled SAR or other Awards that were not issued upon the settlement of the Award, or (d) shares repurchased by the Companysigned on the open market with proceeds from the exercise of Stock Options or SARs. Shares of Common Stock delivered under the Plan as an Award or in settlement of an Award issued or made (a) upon the assumption, substitution, conversion or replacement of outstanding awards under a plan or arrangement of an entity acquired in a merger or other acquisition or (b) as a post-transaction grant under such a plan or arrangement of an acquired entity shall not reduce or be counted against the maximum number of shares of Common Stock available for delivery under the Plan, to the extent that the exemption for transactions in connection with mergers and acquisitions from the stockholder approval requirements of the New York Stock Exchange for equity compensation plans applies. The Committee may from time to time adopt and observe such rules and procedures concerning the counting of shares against the Maximum Share Limit or any sub limit as it may deem appropriate, including rules more restrictive than those set forth above to the extent necessary to satisfy the requirements of any national stock exchange on which the Common Stock is listed or any applicable regulatory requirement.
2. Except as modified herein, all other terms and conditions of the Plan shall remain in full force and effect. In the event of a conflict between this Fifth Amendment and the Plan, this Fifth Amendment shall control.
IN WITNESS WHEREOF, the undersigned has executed this Fifth Amendment to the Plan, to be effective as of the date first written above.
| DELEK US HOLDINGS, INC. |
| By: | |
| Name: |
| Title: |
Delek US Holdings, Inc.(Name of Registrant as Specified In Its Charter)(Name of Person(s) Filing Proxy Statement, if other than the Registrant)Payment of Filing Fee (Check the appropriate box):
