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Delta Apparel, Inc.
Annual Meeting of Shareholders
February 6, 202010, 2022
Notice of Annual Meeting of Shareholders
and Proxy Statement
February 6, 202010, 2022
8:30 AM Eastern Time
Delta Apparel, Inc.
2750 Premiere Parkway - Suite 100
Duluth, GA 30097
Delta Apparel, Inc.
Telephone |
December 17, 20192021
To Our Shareholders:
Thank you for your investment in Delta Apparel, Inc. On behalf of our Board of Directors, it is my pleasure to invite you to attend our upcoming annual meeting of shareholders on Thursday, February 6, 202010, 2022 (the "Annual Meeting"). The Annual Meeting will be held at our offices located at 2750 Premiere Parkway, Suite 100, Duluth, Georgia 30097, and will begin at 8:30 a.m. local time.Eastern Time.
The attached Notice of Annual Meeting of Shareholders and Proxy Statement describes the matters that we expect to act upon at the Annual Meeting. If you were a shareholder of record as of December 13, 2019,14, 2021, you are entitled to vote on these matters. Your vote is very important to us. If you are unable to attend the meeting, please vote by proxy over the Internet, by telephone or by completing the enclosed proxy card and signing, dating and returning the card at your earliest convenience. Voting over the Internet, by telephone or by written proxy card will ensure your representation at the Annual Meeting regardless of whether you attend in person. If you attend the Annual Meeting and desire to revoke your proxy and vote in person, you may do so. In any event, you are entitled to revoke your proxy at any time before it is exercised.
We appreciate your continued support of Delta Apparel and look forward to seeing you at the Annual Meeting.
Sincerely,
Robert W. Humphreys
Chairman and Chief Executive Officer
Delta Apparel, Inc.
Telephone |
Notice of Annual Meeting of Shareholders
February 6, 2020, 8:30 AM ET
It is my pleasure to invite you to attend the annual meeting of the shareholders of Delta Apparel, Inc. (the "Company") on Thursday, February 6, 2020,10, 2022, at 8:30 a.m. local timeEastern Time (the "Annual Meeting"). The Annual Meeting will be held at our offices located at 2750 Premiere Parkway, Suite 100, Duluth, Georgia 30097.At the Annual Meeting, shareholders will vote on the following matters, which are further described in the attached proxy statement (the "Proxy Statement"):
1. | To elect | |
2. | To hold an advisory vote to approve the compensation of the Company's named executive officers; | |
3. | ||
| To ratify the appointment of Ernst & Young LLP to serve as the Company's independent registered public accounting firm for the fiscal year ending October | |
| To transact such other business as may properly come before the Annual Meeting or any adjournments thereof. |
Only shareholders whose names appear of record on our books as of the close of business on December 13, 2019,14, 2021, are entitled to notice of and to vote atduring the Annual Meeting or any adjournments thereof.
You are cordially invited to attend the Annual Meeting in person, but if you are unable to do so, please vote by proxy over the Internet, by telephone or by completing the enclosed proxy card and signing, dating and returning the card at your earliest convenience. Voting over the Internet, by telephone or by written proxy card will ensure your representation at the Annual Meeting regardless of whether you attend in person. If you attend the Annual Meeting and desire to revoke your proxy and vote in person, you may do so. In any event, you are entitled to revoke your proxy at any time before it is exercised.
By Order of the Board of Directors,
Deborah H. MerrillS. Lauren Satterfield
Chief Financial OfficerDeputy General Counsel & President, Delta GroupCorporate Secretary
December 17, 20192021
Greenville, South Carolina
Duluth, Georgia
* * * * * *
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on February 6, 2020:10, 2022: The Delta Apparel, Inc. Notice of Annual Meeting of Shareholders and Proxy Statement and the Delta Apparel, Inc. Fiscal Year 20192021 Annual Report are available at www.proxyvote.com.
* * * * * *
Explanatory Note
We qualify as a "smaller reporting company" pursuant to Item 10 of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), because our public float was less than the applicable $250 million threshold on the last day of the second quarter of our 20192021 fiscal year. As such, we have elected to provide in the Proxy Statement certain scaled disclosures permitted of smaller reporting companies under the Exchange Act.
Environmental, Social, and Governance | 19 |
Delinquent Section 16(a) Reports | 21 |
PROXY STATEMENT
The Notice of Internet Availability of Proxy Materials, this Proxy Statement, the accompanying proxy voting card, and our Annual Report for our fiscal year 20192021 were first made available to holders of Delta Apparel, Inc. common stock on or about December 17, 2019.2021. On behalf of our Board of Directors, we are soliciting your proxy to vote your shares of the Company's common stock at our Annual Meeting and all adjournments or postponements of such meeting. We solicit proxies to provide all shareholders of record with an opportunity to vote on matters to be presented at the Annual Meeting. The information provided in this Proxy Statement is intended to assist you in voting your shares on these matters. This Proxy Statement and our Fiscal Year 20192021 Annual Report are available at no charge on our website at www.deltaapparelinc.com.
IMPORTANT INFORMATION REGARDING THE ANNUAL MEETING
Purpose and location of the Annual Meeting
At the Annual Meeting, our shareholders will act upon the matters outlined in the Notice of Annual Meeting of Shareholders in this Proxy Statement, including the election of the eightseven nominees as directors, an advisory vote on the compensation of our named executive officers, approval of the Delta Apparel, Inc. 2020 Stock Plan, ratification of the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for our 20202022 fiscal year, and such other business as may be properly brought before the Annual Meeting. This Proxy Statement summarizes certain material information regarding the Annual Meeting. The Annual Meeting will be held on Thursday, February 6, 2020,10, 2022, at 8:30 a.m. local timeEastern Time at our offices located at 2750 Premiere Parkway, Suite 100 Duluth, Georgia 30097.
Attendance at the Annual Meeting
All of our shareholders are invited to attend the Annual Meeting. Only Delta Apparel, Inc. shareholders as of the close of business on Friday,Tuesday, December 13, 201914, 2021 (the "Record Date"), may vote at the Annual Meeting.
Solicitation of proxies
Our Board of Directors (the "Board") is soliciting your proxy to vote at the Annual Meeting.
Proposals to be voted on at the Annual Meeting
At the Annual Meeting, shareholders as of the Record Date will vote on fourthree proposals:
1. | The election of the following |
| Nominee |
| Director Since | ||
| Anita D. Britt |
| 2018 | ||
| J. Bradley Campbell |
| 2015 | ||
| Dr. G. Jay Gogue |
| 2010 | ||
Glenda E. Hood | 2019 | ||||
| Robert W. Humphreys |
| 1999 | ||
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| A. Alexander Taylor, II |
| 2016 | ||
| David G. Whalen |
| 2017 |
2. | An advisory vote on the compensation of our named executive officers as disclosed in this Proxy Statement; | |
3. | ||
| Ratification of the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for our |
Voting recommendations of the Board
The Board recommends the following votes:
1. | FOR each of the |
2. | FOR the approval of the compensation of our named executive officers ("Proposal No. 2"); | |
3. |
| FOR ratification of the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for our |
Other matters to be voted on
The Board does not intend to present any other matters at the Annual Meeting, and we do not know of any other matters that will be brought before the shareholders for a vote at the Annual Meeting. If any other matter is properly brought before the Annual Meeting, your signed proxy card gives authority to the persons named in the proxy to vote on such matters in their discretion and in accordance with their best judgment.
Entitlement to vote and number of votes
Holders of our common stock as of the close of business on the Record Date, December 13, 2019,14, 2021, may vote at the Annual Meeting, either in person or by proxy.
Each share of Delta Apparel, Inc. common stock that you owned at the close of business on the Record Date is entitled to one vote for each director nominee and one vote for each of the remaining proposals. You do not have the right to cumulate your votes with respect to the election of any director.
Difference between holding shares as a shareholder of record and as a beneficial owner
Many shareholders hold their shares through a broker or bank rather than directly in their own names. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
Shareholder of Record. If your shares are registered directly in your name with the Company's transfer agent, American Stock Transfer & Trust Company, you are considered, with respect to those shares, the shareholder of record, and these proxy materials are being sent directly to you by the Company.
Beneficial Owner. If your shares are held in a stock brokerage account or by a bank, you are considered the beneficial owner of shares held in street name, and these proxy materials may be forwarded to you by your bank or broker, which is considered the shareholder of record of these shares. As the beneficial owner, you have the right to direct your bank or broker how to vote, and are also invited to attend the Annual Meeting. However, if you are not the shareholder of record, you may not vote these shares in person at the Annual Meeting unless you bring with you a legal proxy from the shareholder of record. Your bank or broker may provide a voting card or voting instruction form for you to use for providing directions for how to vote your shares.
How to vote
If you are a shareholder of record, there are four ways to vote:
1. | By internet at www.proxyvote.com; |
2. | By toll-free telephone at 1-800-690-6903; |
3. | By completing and mailing your proxy card; or |
4. | By voting |
The internet and telephone voting procedures are designed to confirm your identity, to allow you to provide your voting instructions and to verify that your instructions have been properly recorded. If you wish to vote by internet or telephone, please follow the instructions that are printed on the enclosed proxy card. If you vote by internet or telephone, your vote must be received by 11:59 p.m. local timeEastern Time on
Delta Apparel, Inc. 2 Proxy Statement
indicate. If you sign and return your proxy card but you do not indicate your voting preferences, the proxy holders will vote your shares FOR each of the nominees in Proposal No. 1 and FOR Proposal Nos. 2 3 and 4.3. Although we are not currently aware of any other matters that will be brought before the Annual Meeting, by signing and returning your proxy card, you appoint the proxy holders as your representatives at the Annual Meeting. If a matter is raised for a vote at the Annual Meeting that is not included in these proxy materials, then the proxy holders will vote your shares in accordance with their best judgment.
If your shares are held in street name, you should follow the voting directions provided by your bank or broker. You may complete and mail a voting instruction card to your bank or broker or, in most cases, submit voting instructions by the internet or telephone to your bank or broker. If you provide specific voting instructions by mail, the internet or telephone, your shares should be voted by your bank or broker as you have directed. AS A RESULT OF THE RULES OF THE NEW YORK STOCK EXCHANGENYSE AMERICAN, LLC ("NYSE"NYSE American"), YOUR BANK OR BROKER CANNOT VOTE WITH RESPECT TO PROPOSAL NOS. 1 2 OR 32 UNLESS IT RECEIVES VOTING INSTRUCTIONS FROM YOU.
We will distribute written ballots at the Annual Meeting to any shareholder of record who wants to vote. If you hold your shares in street name, you must request and receive a legal proxy from your bank or broker to vote in person at the Annual Meeting.
Householding
Please note that only one copy of the proxy materials may be delivered to multiple shareholders of record sharing an address unless we receive contrary instructions from one or more of the applicable shareholders. Upon request from any such shareholder, we will provide a separate copy of the proxy materials. Such requests can be made to Lauren Satterfield, Associate Counsel,Corporate Secretary, at the Company's principal executive offices located at 322 S. Main Street, Greenville, South Carolina 29601,2750 Premiere Parkway, Suite 100, Duluth, Georgia 30097, or via telephone at (864) 232-5200.(678) 775-6900.
Changing or revoking proxy
If you are a shareholder of record, you can change your vote or revoke your proxy any time before the Annual Meeting by:
1. | Entering a new vote by internet or telephone; |
2. | Returning a later-dated proxy card; |
3. | Sending written notice of revocation to Lauren Satterfield, |
4. | Completing a written ballot at the Annual Meeting. If you choose to complete a written ballot at the Annual Meeting, please bring proof of personal identification. |
Attendance at the Annual Meeting will not in and of itself constitute a revocation of a proxy.
If your shares are held in street name, you must follow the specific directions provided to you by your bank or broker to change or revoke any instructions you have already provided to your bank or broker.
Method of counting votes
Votes are counted by an inspector of election designated by our Board of Directors.
Financial responsibility for soliciting proxies
We will pay for the cost of preparing, assembling, printing and mailing the proxy materials to our shareholders, as well as the cost of soliciting proxies relating to the meeting. In addition, we will reimburse banks and brokers for their reasonable charges and expenses in forwarding proxies and proxy materials to the beneficial owners of the shares held in street name. Our officers, directors and employees may, without additional compensation, supplement these solicitations of proxies by telephone, email and personal solicitation.
Quorum requirement for Annual Meeting
To conduct the Annual Meeting, two-thirds of the outstanding shares of the Company's common stock entitled to vote must be present in person or by proxy at the Annual Meeting. This is referred to as a "quorum." If you vote, your shares will be considered present at the Annual Meeting for purposes of determining whether a quorum exists. Abstentions and broker non-votes will be counted as shares present at the Annual Meeting in determining the presence or absence of a quorum. On the
Delta Apparel, Inc. 3 Proxy Statement
Record Date, there were 6,988,8237,035,843 shares outstanding and approximately 805804 shareholders of record. Two-thirds of the Company's outstanding shares of common stock, or 4,659,2164,690,562 shares, will constitute a quorum.
Broker non-votes
Broker non-votes occur when holders of record, such as banks and brokers holding shares on behalf of beneficial owners, do not receive voting instructions from the beneficial owners by the date specified in the statement requesting voting instructions that has been provided by the bank or broker. If that happens, the bank or broker may vote those shares only on matters as permitted by the NYSE'sNYSE American's rules and regulations. The NYSE American prohibits banks and brokers from voting uninstructed shares in the election of directors and in matters related to executive compensation; accordingly, banks and brokers cannot vote with respect to Proposal Nos. 1 2 and 32 unless they receive voting instructions from the beneficial owners. However, banks and brokers may vote on Proposal No. 43 without receiving specific instructions from the beneficial owner. Broker non-votes will not affect the outcome of Proposal Nos.No. 2 and 3 being voted on at the Annual Meeting, assuming that a quorum is obtained.
Vote required to approve each proposal
Proposal No. 1: | For the election of directors, the |
Proposal No. 2: | For the advisory vote on the compensation of our named executive officers, the vote is not binding on our Board of Directors or our Compensation Committee and, therefore, no specific vote is required to approve the proposal. However, our Board and Compensation Committee will review the voting results and consider them in making future decisions about executive compensation. |
Proposal No. 3: |
| Ratification of the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for our fiscal year |
Availability of the Company's proxy materials on the internet
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on February 6, 2020: 10, 2022: The Delta Apparel, Inc. Notice of Annual Meeting of Shareholders and Proxy Statement and the Delta Apparel, Inc. Fiscal Year 20192021 Annual Report are available at www.proxyvote.com.
We have also made available on our website at www.deltaapparelinc.com a copy of our fiscal year 20192021 Annual Report and Notice of Annual Meeting and Proxy Statement, as filed with the Securities and Exchange Commission ("SEC").
Obtaining a paper copy of the proxy materials
If you received a notice regarding the internet availability of the proxy materials, you will find instructions about how to obtain a paper copy of the proxy materials in your notice. We will furnish, on written request and without charge, a printed copy of the proxy materials to each person whose proxy is solicited and to each person representing that, as of the Record Date, he, she, or it was a beneficial owner of shares entitled to be voted at the meeting. Such written request should be directed to Lauren Satterfield, Associate Counsel,Corporate Secretary, at the Company's principal executive offices located at 322 S. Main Street, Greenville, South Carolina 29601.2750 Premiere Parkway, Suite 100, Duluth, Georgia 30097. We will mail a paper copy of the proxy materials to all shareholders to whom we do not send a notice regarding the internet availability of the proxy materials.
Voting results of the Annual Meeting
We will announce the preliminary voting results at the Annual Meeting and will publish final results in a current report on Form 8-K filed with the SEC on or before February 12, 2020.16, 2022. This Form 8-K will be available without charge to shareholders upon written request to Lauren Satterfield, Associate Counsel,Corporate Secretary, Delta Apparel, Inc., 322 S. Main Street, Greenville, South Carolina 29601,2750 Premiere Parkway, Suite 100, Duluth, Georgia 30097, or via the internet at www.deltaapparelinc.com.
Delta Apparel, Inc. 4 Proxy Statement
References to our website address throughout this proxy statement and the accompanying materials are for informational purposes only, or to fulfill specific disclosure requirements of the SEC’s rules. These references are not intended to, and do not, incorporate the contents of our website by reference into this proxy statement or the accompanying materials.
Deadline for consideration of shareholder proposals or director nominations for our next annual meeting of shareholders following the Annual Meeting
Applicable SEC rules and regulations govern the submission of shareholder proposals and the Company's consideration of them for inclusion in next year's proxy statement. If you are a shareholder and you want to present a proposal at our next annual meeting and have it included in the Company's proxy statement for that meeting, you must submit the proposal in writing at the Company's principal executive offices at 322 S. Main Street, Greenville, South Carolina 29601,2750 Premiere Parkway, Suite 100, Duluth, Georgia 30097, Attention: Associate Counsel,Corporate Secretary, on or before August 19, 2020.18, 2022. If you want to present a proposal at the Company's next annual meeting (but not have the proposal included in the Company's proxy statement) or to nominate a person for election as a director, you must comply with the advance written notice and other requirements set forth in our Bylaws, including delivering the proposal or nomination to the Company's Associate CounselCorporate Secretary no later than October 9, 2020,12, 2022, which is 120 days prior to the first anniversary of the prior year annual meeting.
ELECTION OF DIRECTORS Each of our director nominees brings extensive management and leadership experience gained through his or her service to diverse businesses and institutions. Our directors are committed to effectively Our Bylaws provide that the number of directors to be elected at any meeting of shareholders will be between two and fifteen, and will otherwise be determined by our Board of Directors. Our Board of Directors has determined that The Our Board has affirmatively determined that with the exception of Robert W. Humphreys, our Chairman and Chief Executive Officer, each of the nominees qualifies as "independent" under NYSE American corporate governance listing standards and also meets the Company's director qualification standards, which are described in the "Corporate Governance” section of this Proxy Statement. We believe that all of the nominees will be available and able to serve as directors. Unless you vote “Withhold” with respect to a particular nominee or all nominees, the proxy holders will vote your shares “FOR” each of the nominees listed below. In the event that any nominee is not available or able to serve, our Board may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority. THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE Current Directors and Director Nominees: Anita D. Britt (Independent) Director Since: 2018 Age: Committees: Audit Corporate Governance Ms. Britt served as Chief Financial Officer for the apparel company Perry Ellis International, Inc. from March 2009 until her retirement in March 2017. From August 2006 to February 2009, Ms. Britt served as Executive Vice President and Chief Financial Officer of Urban Brands, Inc., a privately held apparel company. From 1993 to 2006, Ms. Britt served in various financial leadership roles, including Executive Vice President, Finance, for Jones Apparel Group, Inc. Since February 2018, Ms. Britt has served as a member of the Board of Directors and Audit Committee of Smith & Wesson Brands Inc. (f/k/a American Outdoor Brands J. Bradley Campbell (Independent) Director Since: 2015 Age: Committees: Audit Corporate Governance Mr. Campbell has been a Certified Public Accountant for over 40 years. He served as the Managing Partner of the South Carolina Upstate practice of Cherry Bekaert LLP, CPAs, from 2003 until his retirement in 2013. Mr. Campbell spent the first 28 years of his career with Deloitte LLP, one of the world's largest accounting firms, where he was a partner for over 18 years and served as Managing Partner of its South Carolina practice. He is a member of the American Institute of Certified Public Accountants and the South Carolina Association of Certified Public Accountants. [This page intentionally left blank]Delta Apparel, Inc. 6 Proxy Statementoverseeoverseeing management’s performance, to act in the long-term best interests of shareholders and to maintain a high standard of corporate governance.eightseven directors shall be nominated for election at the Annual Meeting.eightseven individuals listed below are nominees for election as directors at the Annual Meeting to serve until our next annual meeting of shareholders, until their successors are duly elected and qualified, or until their earlier resignation. Included in each nominee's biography below is a description of the qualifications, experience, attributes and skills of such nominee that led our Board to conclude that he or she is well-qualified to serve as a member of our Board. With the exception of Ms. Hood, who was appointed to our Board in April 2019, eachEach of the nominees was elected by the shareholders at our most recent annual meeting of shareholders.EIGHTSEVEN NOMINEES.5658CorporationCorporation) (NASDAQ: AOBC)SWBI) and currently chairs its Audit Committee, and since August 2020, Ms. Britt has also served as a member of their Compensation and ESG Committees. Since June 2021, Ms. Britt has served as a member of the Board of Directors, Audit, Compensation, and Governance Committees of Urban-Gro, Inc. (NASDAQ: UGRO) and chairs its Audit Committee. Ms. Britt previously served on the Board of Trustees and Finance Committee of St. Thomas University from April 2013 to January 2018 and as its Chief Financial Officer from January 2018 to March 2018. Ms. Britt is a Certified Public Accountant and is a member of the American Institute of Certified Public Accountants and the Pennsylvania Institute of Certified Public Accountants. Ms.Ms. Britt is also a Board Leadership Fellow, as designated by the National Association of Corporate Directors. Ms. Britt has received the Carnegie Mellon Cybersecurity Oversight Certification. Ms. Britt brings to our Board extensive financial leadership and apparel industry experience in both the public and private sectors as well as extensive experience with consumer-oriented companies.7173Since his retirement, Mr. Campbell has independently engaged in business and financial consulting services. Mr. Campbell currently serves on the Advisory Committee to the Board of Directors of a privately-held multinational company and has served on the boards of numerous non-profit and community organizations.organizations and, since his retirement, has independently engaged in business and financial consulting services to privately-held companies. During his career, Mr. Campbell has advised a wide variety of publicly-traded and large privately-held companies, including companies in the apparel, textile and consumer products industries. Mr. Campbell brings to our Board extensive financial, accounting and tax expertise with a focus on our industry, as well as significant business leadership experience.
Dr. G. Jay Gogue | ||
Director Since: 2010
Age:
Committees:
Corporate Governance Compensation | Dr. Gogue served as President of Auburn University from 2007 until his retirement in July 2017, and subsequently served as President Emeritus of Auburn University until July 2019. | |
Glenda E. Hood (Independent) | ||
Director Since: 2019
Age:
Committees:
Audit (Chair) Compensation | Ms. Hood served as Secretary of State for the State of Florida from 2003 to 2005 and served three terms as Mayor and Chief Executive Officer for the City of Orlando, Florida, spanning from 1992 to 2003. Since 2006, Ms. Hood has provided business development and consulting services as President and Chief Executive Officer of Hood Partners, LLC, and also provided strategic consulting services to business, government and civic leaders across the country through triSect, a firm she founded in 2010. In addition, since 2008, Ms. Hood has served on the Board of Directors and Executive Committee for each of SantaFe HealthCare and Axiom Bank, NA, and currently serves as Chair of each. She has also served as a director for engineering services firm Baskerville-Donovan, Inc. since 2006. Ms. Hood previously served on the Board of Directors and Audit Committee for energy services provider Allete (NYSE: ALE) from 2000 to 2003, and on the Board of Directors and Audit, Finance & Budget and Quality Committees for AvMed Health Plans from 2006 to 2008. Ms. Hood also currently serves in advisory roles for a variety of other civic and community organizations. Ms. Hood brings to our Board over 40 years of valuable business, organizational and political leadership experience spanning multiple industries and sectors. | |
Robert W. Humphreys | ||
Director Since: 1999
Age:
Committees:
None | Mr. Humphreys is the Chairman and Chief Executive Officer of Delta Apparel, Inc. He has served as Chairman of our Board since 2009. Mr. Humphreys previously served Delta Apparel, Inc. as President and Chief Executive Officer for more than 10 years. From April 1999 until December 1999, Mr. Humphreys served as President of the Delta Apparel division of Delta Woodside Industries, Inc. In 1998, he was named Vice President of Finance and Assistant Secretary of Delta Woodside Industries, Inc. and served in that capacity until November 1999. From 1987 to May 1998, Mr. Humphreys served as President of Stevcoknit Fabrics Company, the former knit fabrics division of a subsidiary of Delta Woodside Industries, Inc. Mr. Humphreys has over 30 years of experience in the textile and apparel industry, including senior leadership roles in operations and finance. Under his direction, the Company has grown from a commodity t-shirt manufacturer to a diverse, branded apparel company. Mr. Humphreys' long history with the Company, combined with his leadership skills and operating experience, makes him particularly well-suited to be our Chairman and serve on our Board. | |
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Delta Apparel, Inc. 8 Proxy Statement
A. Alexander Taylor, II | |
Director Since: 2016
Age:
Committees:
Compensation Corporate Governance (Chair) | Mr. Taylor served as Chairman and Chief Executive Officer of FGX International, Inc. (NASDAQ: FGXI), a worldwide producer and marketer of eyeglasses and sunglasses, from 2005 to 2013, and as a consultant to FGX from July 2013 until 2014. Mr. Taylor served as President and Chief Operating Officer of Chattem, Inc. (NASDAQ: CHTT), a consumer products company, from 1998 to 2005, and was previously an attorney with Miller & Martin PLLC in Chattanooga, Tennessee from 1978 to 1998. Mr. Taylor served on the Board of Directors of Zoe's Kitchen, Inc. (NYSE: ZOES) from April 2015 to November 2018, including service on its Audit Committee and as Chair of its Compensation Committee. Mr. Taylor currently serves on the boards of several privately-held |
David G. Whalen (Independent) | |
Director Since: 2017
Age:
Committees:
Compensation (Chair)
Audit | Mr. Whalen was President and Chief Executive Officer |
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") requires each publicly-traded company to hold a shareholder advisory vote on the executive compensation of its named executive officers, otherwise known as a "Say-on-Pay" vote, at least once every three years. Our shareholders are being asked to vote on the following advisory resolution:
Resolved, that the shareholders advise that they approve the compensation paid to the Company's named executive officers as disclosed pursuant to the compensation disclosure requirements of the U.S. Securities and Exchange Commission, including the Executive Compensation section, compensation tables and related narrative discussion provided in this Proxy Statement.
Our Board's Compensation Committee is committed to creatingdesigning an executive compensation program that enables us to attract, retain, and motivate outstanding and diverse executives. Each year, our Compensation Committee reviews all of our executive compensation programs to ensure that they continue to reflect our commitment to align the objectives and rewards of our executive officers with the creation of value for our shareholders. The programs have been designed to reinforce our pay-for-performance philosophy by delivering total compensation that motivates and rewards short-term and long-term financial performance to maximize shareholder value. At the same time, we believe our compensation programs are appropriately measured and do not encourage excessive risk-taking by our executive team. Our Board believes that our philosophy and compensation practices strike the appropriate balance between utilizing responsible pay practices and effectively motivating our executives to dedicate themselves to the interests of our shareholders.
For these reasons, the Board requests that you approve the Company's executive compensation policies and practices for our named executive officers as described in this Proxy Statement, including the Executive Compensation section, compensation tables and related narrative discussions. Because your vote is advisory, it will not be binding on our Board, our Compensation Committee, or the Company, and we will not be required to take any action as a result of the outcome of the vote on this proposal. However, our Compensation Committee will carefully consider the voting results and take them into consideration when making future decisions regarding executive compensation arrangements.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE COMPANY'S POLICIES AND PRACTICES ON EXECUTIVE COMPENSATION FOR OUR NAMED EXECUTIVE OFFICERS.
APPROVAL OF DELTA APPAREL, INC. 2020 STOCK PLAN
On November 20, 2019, our Board unanimously approved, subject to shareholder approval at the Annual Meeting, the Delta Apparel, Inc. 2020 Stock Plan (“2020 Stock Plan”). Our previous equity compensation plan, the Delta Apparel, Inc. 2010 Stock Plan (the "Prior Plan"), which was originally approved by our shareholders on November 11, 2010 and re-approved by our shareholders on February 4, 2015, will expire by its terms on September 14, 2020. Therefore, our Board has approved the 2020 Stock Plan to continue to afford our Board and its Compensation Committee the ability to offer a variety of compensatory awards designed to enhance our long-term success by encouraging stock ownership among our executives, key employees and directors.
The 2020 Stock Plan is substantially similar in both form and substance to the Prior Plan and, as discussed in more detail below, includes an amount of shares equal to that available for grant under the Prior Plan as of the date of the Annual Meeting plus any shares subject to awards granted under the Prior Plan that are subsequently forfeited or terminated for any reason before vesting or being exercised. Accordingly, shareholders are not being asked to approve any additional amount of shares to be available for grant beyond what was previously approved by shareholders under the Prior Plan.
Management and our Board believe that the 2020 Stock Plan will provide a means of giving existing and new employees, as well as non-employee directors, an increased opportunity to acquire an investment in the Company, thereby maintaining and strengthening their desire to remain with or join the Company, and stimulating their efforts on the Company’s behalf. Further, as discussed in greater detail in the Executive Compensation section of this Proxy Statement, the Plan provides an important tool in the Company’s overall policy of establishing compensation programs that align the interests of our officers and directors with those of our shareholders.
The complete text of the 2020 Stock Plan is attached as Exhibit 1. The following description of the 2020 Stock Plan is a summary of certain terms and is qualified entirely by reference to Exhibit 1.
Description of the 2020 Stock Plan
The purpose of the 2020 Stock Plan is to promote the long-term success of Delta Apparel, Inc. and to provide meaningful incentives in the form of shares of stock in Delta Apparel, Inc. and/or cash to our officers and key employees and members of our Board that are aligned with, and supportive of, the attainment of business goals that will enhance shareholder value.
Shares Available Under the 2020 Stock Plan
The aggregate number of shares of common stock that may be delivered under the 2020 Stock Plan, and the aggregate number of shares of common stock that may be issued pursuant to incentive stock options, is the number of shares available for grant as of February 6, 2020, the date of the Annual Meeting, under the Delta Apparel, Inc. 2010 Stock Plan, plus any shares of common stock subject to outstanding awards (as of the date that the 2020 Stock Plan is approved by shareholders) under the Prior Plan that are subsequently forfeited or terminated for any reason before vesting or being exercised. We expect that 449,714 shares of common stock will be available for grant under the Prior Plan as of February 6, 2020. All shares available for grant are subject to adjustment in the event of stock splits, stock dividends and other capital changes. If any award under the 2020 Stock Plan or Prior Plan terminates without having vested or been exercised in full, or if any award under the 2020 Stock Plan or Prior Plan is satisfied in cash rather than common stock, the number of shares of common stock as to which the award did not vest, was not exercised or for which cash was substituted will be available for future grants. Shares of restricted stock that have been forfeited and shares held back in satisfaction of the exercise price or tax withholding requirements from shares that would otherwise have been delivered pursuant to an award shall also be available for future grants. No fractional shares may be issued under the 2020 Stock Plan. Please see the "Equity Compensation Plan Information" section of the Proxy Statement for specific information regarding the shares currently available under the Prior Plan as well as any plans established prior thereto. The price of a share of common stock as of December 13, 2019, was $29.50.
Administration
The 2020 Stock Plan will be administered by the Compensation Committee of our Board. Our Compensation Committee will have authority to determine the employees and directors to whom awards may be granted and the size and type of each award and manner in which such awards will vest. Our Compensation Committee is authorized to establish the terms and conditions of awards granted under the 2020 Stock Plan and to waive any terms and conditions at any time. Our Compensation Committee may amend or cancel existing awards in whole or in part, provided that, in general, any such action may not adversely affect the rights of an award holder. Our Compensation Committee is authorized to interpret the 2020 Stock Plan, to establish, amend and rescind any rules and regulations relating to the 2020 Stock Plan, and to make any other determinations that it deems necessary. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend,
Delta Apparel, Inc. 11 Proxy Statement
distribution (whether in the form of cash, common stock, other securities or other property), stock split, extraordinary cash dividend, recapitalization, change in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of common stock or other securities, or similar transactions), the Company may not, without obtaining shareholder approval: (a) reduce the exercise price of outstanding stock options or stock appreciation rights; (b) cancel outstanding stock options or stock appreciation rights in exchange for new stock options or stock appreciation rights with an exercise price that is less than the exercise price of the cancelled options or rights; or (c) cancel outstanding stock options or stock appreciation rights with an exercise price below the current stock price in exchange for cash or other securities.
Eligibility for 2020 Stock Plan
Only employees of Delta Apparel, Inc. and its subsidiaries and affiliates, and members of our Board are eligible to participate in the 2020 Stock Plan. There are currently approximately 8,600 employees, including all executive officers of the Company, and seven non-employee directors who would currently be eligible to participate in the 2020 Stock Plan.
Types of Awards Under the 2020 Stock Plan
The awards available under the 2020 Stock Plan consist of stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock, performance units, and other stock or cash awards.
Stock Options. Our Compensation Committee is authorized to grant stock options giving the participant the right to purchase common stock at a predetermined price, the exercise price, upon exercise. The exercise price of an option will be determined by our Compensation Committee, but in no case may the exercise price paid for stock which is part of an original issue of authorized stock be less than the par value per share of the stock. Our Compensation Committee will determine the term of each option, with the maximum term of each option being ten years from the date prior to the date of grant. Subject to this limit, the times at which each option will be exercisable and provisions requiring forfeiture of unexercised options at or following termination of employment or upon the occurrence of other events generally are fixed by our Compensation Committee. In general, options may be exercised by payment of the exercise price in cash or shares. Methods of exercise will be determined by our Compensation Committee. Options granted under the 2020 Stock Plan may be nonqualified stock options or incentive stock options. Awards of incentive stock options under the 2020 Stock Plan will be subject to certain additional restrictions.
Stock Appreciation Rights. Stock appreciation rights (“SARs”) may be granted by our Compensation Committee, entitling the participant on exercise to receive an amount in cash or common stock, or combination of cash and common stock, as may be determined by our Compensation Committee, determined in whole or in part by reference to appreciation, from and after the date of grant, in the fair market value of a share of common stock. SARs may be based solely on the appreciation in the fair market value of the Company’s common stock or on a comparison of such appreciation with some other measure of market growth such as, but not limited to, appreciation in a recognized market index.
Restricted Stock and Restricted Stock Units. Our Compensation Committee is authorized to grant shares of restricted stock and restricted stock units entitling the recipient to receive, subject to the terms of the applicable award, common stock, cash and/or other property with a value equal to the value of a specified number of shares of common stock. These stock-based awards will be subject to the terms and conditions established by our Compensation Committee. Shares of restricted stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable period or periods established by our Compensation Committee and the satisfaction of any other conditions or restrictions established by our Compensation Committee. During the period of restriction, the participants holding shares of restricted stock and restricted stock units will have no voting rights and will not receive cash dividends and other distributions paid with respect to the shares of restricted stock or restricted stock units in question, including any dividends and distributions paid in shares.
Stock and Stock Units. Our Compensation Committee may grant awards in shares of common stock and/or units that are based on a value based on a share of common stock that is defined by our Compensation Committee.
Performance-Based Awards. Our Compensation Committee may impose conditions and performance goals that must be met prior to the vesting or receipt of payment under any award. Our Compensation Committee may also make awards entitling the participant to receive an amount in cash upon attainment of specified performance goals. These awards shall vest based on the attainment of written performance goals approved by our Compensation Committee for a performance period established by our Compensation Committee.
Performance Goals Under the 2020 Stock Plan
The performance goals under the 2020 Stock Plan shall be based upon one or more performance measures determined by our Compensation Committee, which may include return on invested capital, net operating profit (before or after tax), revenue, operating profit margin, gross margin, operating profit, earnings before income taxes, earnings (which may include earnings before interest and taxes and net earnings, and may be determined in accordance with United States Generally Accepted
Delta Apparel, Inc. 12 Proxy Statement
Accounting Principles (“GAAP”) or adjusted to include or exclude any or all items), earnings per share (on a GAAP or non-GAAP basis), cash flow (defined as operating cash flow, free cash flow or any other defined cash flow measure), growth in any of the foregoing measures, stock price, return on equity or average shareholders’ equity, total shareholder return, growth in shareholder value relative to the moving average of the S&P 500 Index or another index, return on capital employed, return on assets or net assets, return on investment, economic value added, market shares, overhead or other expense reduction, credit rating, strategic plan development and implementation, succession plan development and implementation, improvement in workforce, diversity, customer indicators, improvements in productivity, attainment of objective operating goals, employee metrics and other performance measures designated by our Compensation Committee.
The foregoing criteria may relate to the Company, one or more of its subsidiaries or one or more of its segments, divisions or units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, all as our Compensation Committee shall determine. In addition, the performance goals may be calculated without regard to extraordinary items.
Maximum Awards Under the 2020 Stock Plan
Annual Individual Limits on Awards. The 2020 Stock Plan limits the number of shares that may be covered by awards to any participant in a given calendar year. Under this annual per-person limitation, no person may receive in any calendar year: (i) stock options relating to more than 150,000 shares; (ii) restricted stock or restricted stock units that are subject to the attainment of performance criteria relating to more than 75,000 shares; (iii) stock appreciation rights relating to more than 150,000 shares, or (iv) performance stock or performance units relating to more than 75,000 shares. Under the 2020 Stock Plan, the maximum cash payment that may be made to a single participant in any calendar year under a performance unit award or other cash award shall not exceed 200% of the participant’s salary for the performance period.
Annual Aggregate Limits on Awards. Awards of restricted stock, restricted stock units, performance units and performance stock may not be granted under the 2020 Stock Plan in any one calendar year with respect to more than 125,000 shares of common stock in the aggregate; provided that any portion of such share limit not reserved for grants of restricted stock, restricted stock units, performance units or performance stock made in any calendar year beginning in 2020, shall be added to the annual aggregate share limit for subsequent calendar years.
Termination of Employment
In the event a participant’s employment or service is terminated other than due to death or disability, a participant may exercise stock options and stock appreciation rights to the extent exercisable at the date of termination for up to three months after such termination, and if a participant retires at or after age 62 with the consent of the Company, this three-month period is extended to one year. Stock options and stock appreciation rights that are not exercisable at the time of a termination other than due to death or disability will expire on the date of termination. If a participant dies or becomes disabled (as defined in the 2020 Stock Plan) while employed by or serving as a director of the Company, all stock options and stock appreciation rights that are not already exercisable will become exercisable, and all stock options and stock appreciation rights may be exercised for one year after the date of death or disability. Any unvested portion of a restricted stock award, restricted stock unit award, performance stock or unit award or other stock-based award shall terminate upon the termination of employment or service for any reason other than death or disability. In the event of the death or disability of a participant, any restricted stock award, restricted stock unit award, performance stock or unit award or other stock-based award will become fully vested.
Transferability
Unless otherwise determined by our Compensation Committee, awards granted under the 2020 Stock Plan generally are not transferable other than by will or by the laws of descent and distribution.
Change of Control
In the event of a change of control (as defined in the 2020 Stock Plan), all stock options and stock appreciation rights shall become fully vested and exercisable, all restrictions on restricted stock and restricted stock units shall be terminated, all performance goals shall be deemed achieved at target levels and all other terms and conditions shall be deemed met to deliver all performance stock, and pay out all performance units and restricted stock units, subject to compliance with Section 409A of the Internal Revenue Code.
Amendment and Termination of Plan
Our Compensation Committee may amend or terminate the 2020 Stock Plan in any respect at any time, provided that no such amendment will, without the approval of the shareholders of the Company, result in a change for which shareholder approval is required in order for the 2020 Stock Plan to continue to qualify for the award of incentive stock options (“ISOs”). In any case,
Delta Apparel, Inc. 13 Proxy Statement
no amendment may alter or impair any of the rights of a participant under any awards previously granted, without the participant’s consent.
Federal Income Tax Consequences
The grant of a stock option or a stock appreciation right will create no U.S. federal income tax consequences for the participant or the Company. A participant will not have taxable income upon exercising an option which is an ISO, except that the difference between the value of the shares and the exercise price will be taken into account in determining the participant’s income for alternative minimum tax purposes. Upon exercising an option which is not an ISO, the participant generally must recognize ordinary income equal to the difference between the exercise price and the fair market value, on the date of exercise, of the shares acquired. Upon exercising a stock appreciation right, the participant must generally recognize ordinary income equal to the fair market value of the shares and/or cash received.
Upon a disposition of shares acquired upon exercise of an ISO before the end of the applicable ISO holding periods (described below), the gain realized from the sale will be taxable as ordinary income to the extent it is not more than the difference between the fair market value of the ISO shares at the date of exercise and the exercise price, and any remaining gain will be treated as capital gain. If the disposition occurs after the ISO holding periods are met, all of the gain or loss will be taxable as long-term capital gain or loss. The ISO holding period requirements are met if the shares acquired by the exercise of an ISO are held for at least two years from the date the ISO is granted and at least one year from the date the ISO is exercised.
The Company normally can claim a tax deduction equal to the amount recognized as ordinary income by a participant in connection with the exercise of an option or stock appreciation right or the sale of shares acquired by the exercise of an ISO before the applicable ISO holding period requirements are met. We will not be entitled to any tax deduction with respect to an ISO if the participant holds the shares for the applicable ISO holding periods before selling the shares.
With respect to awards other than options and SARs that result in a transfer to the participant of shares or other property, the participant generally must recognize ordinary income equal to the fair market value of shares or other property actually received on the date the shares become vested or if later, the date vested shares are delivered in settlement of the award, and the Company may be entitled to a corresponding tax deduction. A participant may make an early income election with respect to the receipt of unvested shares, in which case the participant will realize ordinary income equal to the value of the stock on the date it is transferred to him or her. If the stock later vests and is sold, any gain from the sale will be taxable as a capital gain. The Company may be entitled to a deduction for the amount of ordinary income realized by the participant when the early income election is made. Cash compensation paid under the 2020 Stock Plan will be taxable as ordinary income when received and, in general, the Company may be entitled to a corresponding tax deduction.
The preceding summary is based upon an analysis of the Internal Revenue Code ("IRC") as currently in effect and only provides a general description of the application of U.S. federal income tax laws to certain awards under the 2020 Stock Plan. It is intended for the information of shareholders considering how to vote at the Annual Meeting and not as tax guidance to participants of awards under the 2020 Stock Plan.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE DELTA APPAREL, INC. 2020 STOCK PLAN.
Delta Apparel, Inc. 14 Proxy Statement
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Each year our Audit Committee evaluates and considers the qualifications, independence, compensation and performance of our independent registered public accounting firm. In evaluating our independent registered public accounting firm's qualifications and performance, our Audit Committee considers the firm's independence, integrity, and controls and procedures as well as its expertise specific to the Company's business and the regions in which the Company operates. Our Audit Committee also considers the quality of our independent registered public accounting firm's work and communications, the effectiveness of its personnel assigned to the Company's engagement, the appropriateness of its fees, the length of its engagement with the Company and the content of reports issued by the Public Company Accounting Oversight Board regarding the firm. In evaluating our independent registered public accounting firm and considering whether to retain it, our Audit Committee also considers the potential impacts of changing independent registered public accounting firms.
Our Audit Committee is ultimately responsible for negotiations regardingappointing, determining compensation for, and overseeing the work of our independent registered accounting firm. In addition, our Audit Committee is required to pre-approve all audit and non-audit services and fees charged by our independent registered public accounting firm and the selection of the lead, or responsible, partner of our independent registered public accounting firm with respect to the Company's engagement. The current lead partner of our independent registered public accounting firm was appointed following the November 19, 2018, filing of our Form 10-K with the SEC and replaced the prior lead partner that was appointed in calendar year 2016.firm.
In addition to all required communications between our Audit Committee and independent registered public accounting firm, our Audit Committee and independent registered public accounting firm periodically communicate regarding the Company's testing and evaluation of its internal controls, risk management efforts, accounting system and related information technology matters, subsidiaries, and tax and legal matters.
Based on its evaluation, the Audit Committee has appointed Ernst & Young LLP ("EY") to serve as our independent registered public accounting firm for our 20202022 fiscal year. EY audited our financial statements for our fiscal years 2018, 2019, 2020, and 2019.2021.
Although our Bylaws do not require that shareholders ratify the appointment of our independent registered public accounting firm, our Board believes that submitting the appointment of the independent registered public accounting firm for shareholder ratification at the Annual Meeting is appropriate from a corporate governance perspective. In the event that our shareholders do not ratify the appointment of EY, our Audit Committee will reconsider the appointment (but is not required to appoint a different independent registered public accounting firm). Even if the appointment is ratified, our Audit Committee, in its discretion, may appoint a different independent registered public accounting firm at any time during the fiscal year if our Audit Committee believes that such a change would be in the Company’s best interests and the best interests of our shareholders.
Representatives of EY are expected to be present at the Annual Meeting and such representatives will have the opportunity to make a statement if they desire to do so and will also be available to respond to appropriate questions from shareholders.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF EY AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR OUR 20202022 FISCAL YEAR.
As reflected in the table below, we incurred fees of $1,164,420 and $1,181,387 in fiscal years 2019 and 2018, respectively, for services performed by EY.
Independent Registered Public Accounting Firm Fees
Fiscal Years 20192021 & 20182020
(Amounts in thousands)
2019 | 2018 | |||||||
Audit Fees | $ | 1,164,420 | $ | 1,181,387 | ||||
Audit-Related Fees | — | — | ||||||
Tax Fees | — | — | ||||||
All Other Fees | — | — | ||||||
Total | $ | 1,164,420 | $ | 1,181,387(1) |
(1) At the time of the filing of our Proxy Statement for our 2018 fiscal year, we had not received a final bill for professional services rendered by EY for our fiscal year ended September 29, 2018. Our previously reported estimate of professional fees of $1,171,387 has been revised as set forth above to account for such final billing.
Delta Apparel, Inc. 15 Proxy Statement
2021 | 2020 | |||||||
Audit Fees | $ | 1,007 | $ | 1,027 | ||||
Audit-Related Fees | — | 16 | ||||||
Tax Fees | — | — | ||||||
All Other Fees | — | — | ||||||
Total | $ | 1,007 | $ | 1,043 |
"Audit Fees" consist of fees billed for professional services rendered for the audits of our fiscal year 20192021 and fiscal year 20182020 consolidated annual financial statements, audits of internal control over financial reporting for our fiscal year 20192021 and fiscal year 2018,2020, reviews of the interim consolidated financial statements included in quarterly reports, and services that are normally provided by our independent registered accounting firm in connection with SEC filings. "Audit-Related Fees" consist of fees billed for professional services rendered to provide consent for incorporation by reference of audit reports in certain registrations statements filed with the SEC. We did not incur any fees for audit-related, tax or other services performed by EY in fiscal years 20192021 or 2018.2020.
Audit Committee Pre-Approval Policies and Procedures
It is our Audit Committee's policy to pre-approve all audit and permitted non-audit services proposed to be performed by our independent registered public accounting firm. The pre-approval process is typically as follows: Audit Committee pre-approval is sought at one of the committee’s regularly scheduled meetings following the presentation of information at such meeting detailing the particular services proposed to be performed. The authority to pre-approve non-audit services may be delegated by the Audit Committee, pursuant to guidelines approved by the committee, to one or more members of the committee. All audit and permitted non-audit services performed by our independent registered public accounting firm for fiscal year 20192021 were pre-approved by our Audit Committee. The committee has authorized our Chief Financial Officer to engage our independent registered public accounting firm to perform certain non-audit services that the committee believes would not impair independence in an amount not to exceed $10,000.
Our Audit Committee assists our Board in its oversight of the integrity of the Company’s financial statements, compliance with legal and regulatory requirements, the appointment, qualifications, independence, compensation and performance of the independent registered public accounting firm, and the performance of the internal audit function. Our Audit Committee is comprised entirely of independent directors who meet independence, experience and other qualification requirements of the NYSE American listing exchange and the SEC. In addition, our Board has determined that J. Bradley Campbell qualifies as an audit committee financial expert as defined by SEC rules and regulations.
Management is responsible for our financial reporting process, including our internal control over financial reporting, and for the preparation of our consolidated financial statements, in accordance with generally accepted accounting principles. Our independent accountants are responsible for expressing an opinion on the financial statements and the effectiveness of the Company's internal control over financial reporting, based on an audit conducted in accordance with generally accepted auditing standards. Our Audit Committee's responsibility is to oversee and review these processes. Our Audit Committee relies, without independent verification, on the information provided to us and on the representations made by management and the independent registered public accounting firm.
The Audit Committee hereby reports as follows:
The Audit Committee appointed EY as the Company's independent registered public accounting firm for fiscal year 2019.
• | The Audit Committee appointed EY as the Company's independent registered public accounting firm for fiscal year 2021. | |
• | The Audit Committee has reviewed and discussed the audited financial statements for the year ended |
• | The Audit Committee has discussed with EY the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC. |
• | The Audit Committee has received the written disclosures and the letter from EY required pursuant to Public Company Accounting Oversight Board requirements and has discussed with EY its independence from the Company. |
In determining EY’s independence, the Audit Committee also considered whether the provision of any of the non-audit services provided to the Company is compatible with maintaining its independence. The Audit Committee received regular updates on EY’s fees and the scope of audit and any non-audit services it provided. All such services were provided consistent with applicable rules and our pre-approval policies and procedures.
Based on our discussions with management, internal auditors and EY, and our review of the audited financial statements, including the representations of management and EY with respect thereto, and subject in all cases to the limitations on our role and responsibilities referred to above and set forth in our charter, the Audit Committee recommended to the Board that the Company's audited consolidated financial statements for the fiscal year ended September 28, 2019,October 2, 2021, be included in the Company's Annual Report on Form 10-K.
AUDIT COMMITTEE:
Anita D. Britt
J. Bradley Campbell
RobertGlenda E. Staton, Sr.Hood (Chair)
David G. Whalen
Overview
We believe that good corporate governance practices not only reflect our values as a Company but also support strong strategic growth and financial performance. Each committee of our Board has a charter, which can be found on the "Corporate Governance" tab of the "Investors" page of our website located at www.deltaapparelinc.com, that spells out the committee's assigned roles and responsibilities. In addition, our Board has established policies and procedures that address matters such as chief executive officer and key management succession planning, transactions with related persons, risk oversight, communications with the Board by shareholders and other interested parties, as well as the independence and qualifications of our directors. The following discussion provides insight into how our Board has implemented these policies and procedures to benefit our Company and our shareholders.
Director Independence
Our Board evaluates the independence of each director in accordance with applicable laws and regulations and the listing standards of the NYSE American. Generally, an “independent director” is a director who is not also an officer or employee of the Company or any parent or subsidiary of the Company. In addition, no director qualifies as independent unless the Board affirmatively determines that the director does not have a material relationship with the Company that would interfere with the exercise of independent judgment. Our Board has reviewed the relationships between each member of the Board and the Company and determined that with the exception of Robert W. Humphreys, our Chairman and Chief Executive Officer, each of our current directors and each individual standing for election is “independent” as required by applicable laws and meets the applicable NYSE American independence requirements. Each director is required to keep the Board fully and promptly informed of any developments that might affect his or her independence, and the Board regularly reviews the continuing independence of the directors.
Code of Ethics and Business Conduct
We maintain a code of ethics and business conduct known as our Ethics Policy Statement that applies to all employees, officers and directors, including, but not limited to, our Chief Executive Officer, Chief Financial Officer (who is also our principal accounting officer), and our Chief Accounting Officer. Our Ethics Policy Statement covers topics such as conflicts of interest, insider trading, competition and fair dealing, discrimination and harassment, confidentiality, anti-corruption, compliance procedures and employee complaint and reporting procedures. Our Ethics Policy Statement is available without charge on the "Corporate Governance" tab of the "Investors" page of our website located at www.deltaapparelinc.com under "Governance Documents." Any amendments or waivers to provisions of our Ethics Policy Statement that are applicable to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Controllercontroller or persons performing similar functions will be posted on our website. There were no waivers of the provisions of our Ethics Policy Statement for our Chief Executive Officer, Chief Financial Officer or any director, senior financial officer or other executive officer during our fiscal year 2019.2021.
Board Leadership Structure
Our governance documents provide the Board with flexibility to select the appropriate leadership structure for the Company. Our Board does not have a policy regarding whether the roles of Chairman of the Board and Chief Executive Officer should be separate and, if they are to be separate, whether the Chairman of the Board should be selected from our non-employee directors or be an employee of the Company. Our Board believes that it should be free to determine the leadership structure that is in the best interests of the Company and our shareholders based on the particular circumstances in effect from time to time.
During fiscal year 2019,2021, Robert W. Humphreys served as the Chairman of our Board and as Chief Executive Officer. Mr. Humphreys is the director most familiar with our business and industry, and possesses intimate knowledge of the issues, opportunities and challenges facing us and our business. Our Board believes this combined position is in the current best interest of our Company, as it makes the best use of Mr. Humphreys’ extensive experience and qualifications within the apparel industry and in-depth knowledge of our markets, helps provide strong, unified leadership and direction on important strategic initiatives to both management and our Board, and leverages the insight gained from the combined role to most effectively lead our Company. We believe that our overall corporate governance policies and practices, combined with the presence of a Lead Independent Director, adequately address any governance concerns raised by the dual Chairman and Chief Executive Officer role.
Lead Independent Director
Dr. G. Jay GogueA. Alexander Taylor, II has served as our Lead Independent Director since February 2018.2021. Our Lead Independent Director is appointed by the independent members of our Board, generally serves for a term of at least one year, and is empowered to carry out a number of critical responsibilities. In addition to serving as a liaison between the Chairman and the independent directors,
Delta Apparel, Inc. 18 Proxy Statement
our Lead Independent Director presides at executive sessions of the Board and at meetings at which our Chairman is not present, approves meeting schedules to ensure there is sufficient time for discussion of agenda items, advises on and approves meeting agendas and information provided for Board meetings and meetings of independent directors, calls meetings of the independent directors as appropriate, and is available for direct communication with shareholders. The Lead Independent Director, along with our other non-employee directors, also provides independent oversight of management and the Company’s strategy.
Board Committees
Our Board delegates certain responsibilities and authority to its various committees and these committees regularly report on their activities and actions to the full Board. The Board currently has an Audit Committee, a Compensation Committee and a Corporate Governance Committee (which serves as our nominating committee), and may also appoint other committees from time to time. Each of the members of the Audit Committee, Compensation Committee, and Corporate Governance Committee has been determined by the Board to be independent as required by applicable legal requirements and meets applicable NYSE American independence standards and, in the case of our Audit Committee, the independence requirements established by the SEC. Each committee’s activities are governed by a written committee charter, which is available without charge on the "Corporate Governance" tab of the "Investors" page of our website located at www.deltaapparelinc.com, or by sending a request in writing to Lauren Satterfield, Associate Counsel,Corporate Secretary, at 322 S. Main Street, Greenville, South Carolina 29601.2750 Premiere Parkway, Suite 100, Duluth, Georgia 30097.
The following table details the membership of each of our Board committees during our 20192021 fiscal year, as well as the expected committee membership in our 20202022 fiscal year.
Board Committee Composition
Fiscal Years 20192021 & 20202022
| Fiscal Year |
| Fiscal Year | ||||||
Director Name | Audit | Compensation | Governance |
| Audit | Compensation | Governance | ||
Anita D. Britt | X |
| X |
| X |
| X | ||
J. Bradley Campbell | X |
| X |
| X |
| X | ||
Dr. G. Jay Gogue |
| X |
|
|
| X |
| ||
Glenda E. Hood | C | X | X | ||||||
Robert W. Humphreys |
|
|
|
|
|
|
| ||
| X | C |
|
| X | C | |||
|
|
|
|
| |||||
David G. Whalen | X |
|
|
| X |
|
C - Committee Chairperson |
X - Committee Member |
|
Audit Committee. Our Audit Committee is a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our Audit Committee serves as an independent and objective party to oversee and monitor the financial and reporting processes of the Company, including the general quality of the Company's financial statements and reporting, the audits of the Company's financial statements and the Company’s accounting and internal controls and policies. Our Audit Committee appoints, evaluates, and, when appropriate, replaces the independent registered public accounting firm engaged to audit our financial statements. The independent auditors report directly to our Audit Committee, and our Audit Committee determines the compensation and other terms of the engagement and oversees their work. Our Audit Committee also monitors and reviews our compliance with legal and regulatory requirements as well as our procedures with respect to maintaining books and records, the adequacy and implementation of internal auditing, accounting, disclosure, and financial controls, and our policies concerning financial reporting and business practices. In addition, our Audit Committee is responsible for establishing procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters and the confidential, anonymous submission of concerns regarding questionable accounting or auditing matters.
After considering relationships between each member of our Audit Committee and the Company and its subsidiaries, and reviewing the qualifications of the members of our Audit Committee, our Board has determined that each member of our Audit Committee meets all applicable independence and financial literacy requirements as defined in NYSE American governance standards and applicable SEC regulations. Due to J. Bradley Campbell's over 40 years as a Certified Public Accountant, decades of service with accounting and financial services firms Cherry Bekaert LLP, CPAs and Deloitte LLP, and his extensive
Delta Apparel, Inc. 19 Proxy Statement
financial, accounting and tax expertise, our Board has determined that Mr. Campbell qualifies as an "audit committee financial expert" as defined in SEC regulations.
Compensation Committee. Our Compensation Committee develops our overall compensation philosophy and programs, reviews and determines compensation, including salaries, bonuses and equity compensation, for our named executive officers other than our Chief Executive Officer (which is collectively confirmed by the independent members of our Board), and reviews and determines director compensation. Our Compensation Committee also oversees, reviews and administers all of the Company’s executive compensation plans and programs, including equity compensation plans and plans pursuant to which performance-based compensation may be granted. Our Compensation Committee is authorized to delegate its responsibilities as it deems necessary or appropriate.
After considering relationships between each member of our Compensation Committee and the Company and its subsidiaries, and reviewing the qualifications of the members of our Compensation Committee, our Board has determined that each member of our Compensation Committee meets all applicable independence requirements as defined in NYSE American governance standards.
Corporate Governance Committee. Our Corporate Governance Committee develops and recommends to the Board corporate governance standards for business conduct and ethics, oversees the annual self-evaluation of the Board and its committees, and makes recommendations concerning the structure and membership of the Board's committees. Our Corporate Governance Committee also oversees the performance evaluation of the Chief Executive Officer and succession planning with respect to the Chief Executive Officer as well as the other executive officers of the Company. Our Corporate Governance Committee also serves as the Board's nominating committee and identifies, interviews and recommends director nominees for election or appointment to the Board pursuant to written guidelines approved by the Board.
The Board’s Role in Risk Oversight
Our Board oversees and assesses our enterprise and strategic risk management processes. This risk oversight responsibility is enabled by management reporting processes designed to provide visibility to the Board regarding the identification, assessment and management of critical risks and associated risk mitigation strategies. Our Board recognizes that it is neither possible nor prudent to eliminate all risk and that properly measured risk-taking is essential for the Company to be competitive and to achieve its strategic objectives.
Our Board implements its risk oversight function both as a whole and through its committees. Oversight responsibility for particular areas of risk is allocated among the Board committees according to the committee’s area of responsibility as reflected in its charter. In particular:
The full Board oversees strategic, financial and operational risks and exposures associated with our annual business plans and other current matters that may present material risk to the Company’s operations, strategies, prospects, or reputation. The full Board's risk oversight responsibility includes risks and exposures related to cybersecurity matters.
• | The full Board oversees strategic, financial and operational risks and exposures associated with our annual business plans and other current matters that may present material risk to the Company’s operations, strategies, prospects, or reputation. The full Board's risk oversight responsibility includes risks and exposures related to cybersecurity matters. | |
• | Our Audit Committee regularly reviews and oversees the risks associated with financial matters, particularly financial reporting, tax, accounting, disclosure, internal control over financial reporting, financial policies, credit and liquidity matters, compliance with legal and regulatory matters, including environmental matters, and the Company's related risk management policies. |
• | Our Compensation Committee oversees risks associated with attraction and retention of executive talent, management development and compensation philosophy and programs, including a periodic review of compensation programs to ensure that they do not encourage excessive risk-taking. |
• | Our Corporate Governance Committee oversees risks associated with governance matters, including our Ethics Policy Statement, succession planning for our directors, Chief Executive Officer and other named executive officers, and the structure and performance of the Board and its committees. |
Our Board believes that its leadership structure properly supports its risk oversight functions and responsibilities in that the appropriate directors chair the various committees involved in risk oversight, there is open communication between management and directors, and all directors are involved in the risk oversight function.
Delta Apparel, Inc. 20 Proxy Statement
Board Meetings, Attendance & Executive Sessions
Our Board and its committees meet throughout the year on a set schedule, and hold special meetings and act by written consent from time to time as appropriate. Directors are expected to make every effort to attend meetings of the Board, assigned committees and annual meetings of shareholders. All current directors attended 100% of the aggregate meetings held by the Board and their assigned committees during the period for which they served on the Board or such committees during fiscal year 2019.2021. During fiscal year 2019,2021, our Board held five in-person meetings and three telephonic meetings. Our Audit Committee held fourthree in-person meetings and one telephonic meeting, our Compensation Committee held four in-person meetings and one telephonic meeting, and our Corporate Governance Committee held fivetwo in-person meetings. All of our current directors attended the 20192021 annual meeting of shareholders. Although we do not have a formal policy regarding director attendance at annual meetings of shareholders, each director is encouraged and expected to attend the Annual Meeting.
Independent directors meet regularly in executive session with no members of management present. Our Company's Lead Independent Director presides at each executive session. Throughout the year, our directors communicate informally with management on a variety of topics, including suggestions for Board or committee meeting agenda topics, recent developments, and other matters of interest to the Company.
Retention of Independent Advisors
Our Board is authorized and empowered to retain independent advisors and consultants when it deems appropriate, and the charter for each of its committees empowers each committee to retain independent advisors and consultants when appropriate.
Succession Planning
In light of the critical importance of executive leadership to our success, our Board has a chief executive officer and key management succession planning process that is led by its Corporate Governance Committee. Our Corporate Governance Committee is charged with the responsibility of identifying and evaluating candidates to succeed our Chief Executive Officer and to report to the Board on the status of the succession plan. Our Corporate Governance Committee also reviews the potential internal candidates for each of our critical senior management positions and identifies areas of growth for those candidates that will best enable them to fill any anticipated or emergency leadership needs. Where there is not a satisfactory internal candidate for a position, our Board considers whether outside candidates are likely to be available in a timely manner and whether other alternatives need to be considered.
Declassified Board
Our Board of Directors is not classified and is elected annually.
Director Nominations
Our Corporate Governance Committee identifies potential director candidates through a variety of means, including recommendations from members of the Board, suggestions from Company management, and shareholder recommendations. Our Corporate Governance Committee may also, in its discretion, engage director search firms to identify candidates. During fiscal year 2019,2021, our Corporate Governance Committee did not retain the services of any director search firm and accordingly, no fees were paid to a director search firm or other third party to assist in identifying and evaluating director candidates.
Shareholders may recommend director candidates for consideration by the Corporate Governance Committee by submitting a written recommendation to the Corporate Governance Committee, c/o Lauren Satterfield, Associate Counsel,Corporate Secretary, Delta Apparel, Inc., 322 S. Main Street, Greenville, South Carolina 29601,2750 Premiere Parkway, Suite 100, Duluth, Georgia 30097, or by email to lauren.satterfield@deltaapparel.com. The recommendation should include (i) the name, address and telephone number of the nominating shareholder, (ii) the nominee’s name, address, telephone number, qualifications (including principal occupation and employment history), and written consent to be named as a nominee in the Company’s proxy statement and to serve as a director, if elected, and (iii) the additional information regarding the nominating shareholder and nominee required by our Bylaws. Pursuant to our Bylaws, the recommendation must be received not less than 120 days prior to the first anniversary of the prior year annual meeting. A copy of our Bylaws may be obtained by submitting a written request to the Associate CounselCorporate Secretary of the Company.
Our Board has adopted qualification standards for the selection of independent nominees for director that can be found on the "Corporate Governance" tab on the "Investors" page of our website at www.deltaapparelinc.com under "Governance Documents." As provided in these standards, at a minimum, a nominee for our Board must (i) be over 21 years of age at the time of election; (ii) have experience in a position with a high degree of responsibility in a business or other organization; (iii) be able to read and understand basic financial statements; (iv) possess integrity and have high moral character; (v) be willing to apply sound, independent business judgment; and (vi) have sufficient time to devote to our Company.
Delta Apparel, Inc. 21 Proxy Statement
We do not have a formal policy regarding Board member diversity; however, our Corporate Governance Committee considers diversity in selecting nominees for director and in the re-nomination of an incumbent director. Our Corporate Governance Committee views diversity broadly, including gender, ethnicity, differences of viewpoint, geographic location, skills, education, and professional and industry knowledge and experience, among other factors, and its goal is to nominate candidates from a broad range of experiences and backgrounds. We believe that a variety and balance of perspectives on our Board can result in more thoughtful discussions and deliberations.
In considering the re-nomination of an incumbent director, our Corporate Governance Committee reviews the director’s overall service to the Company during his or her term, including the number of meetings attended, level of participation and quality of performance, as well as any special skills or diversity that such director brings to our Board. In evaluating incumbent directors and all potential new directors, our Corporate Governance Committee considers, among other things, the candidate’s leadership, strategic, or policy-setting experience; experience and expertise that is relevant to our business; experience that provides our Board with a diversity of backgrounds; technical or other specialized expertise; and whether the candidate has high ethical character and a reputation for honesty, integrity and sound business judgment. All director candidates, whether recommended by shareholders or identified by other means, are initially screened by our Corporate Governance Committee, which may seek additional background and qualification information on the candidate. With respect to new director candidates who pass the initial screening, our Corporate Governance Committee conducts interviews with the candidates and then meets to discuss and consider each candidate’s qualifications and potential contributions to our Board, and determines by majority vote whether to recommend such candidates to our Board. The final decision to either appoint a candidate to fill a vacancy between annual meetings of shareholders or include a candidate on the slate of nominees proposed at an annual meeting of shareholders is made by our Board.
Board Self-Evaluation
Our Board of Directors annually evaluates and assesses its performance and effectiveness as well as that of its committees. This assessment includes a comprehensive review of our Board's composition, responsibilities, leadership and committee structure, processes, and effectiveness.
Shareholder Communication with Directors
Shareholders and other interested parties desiring to communicate directly with our Board of Directors or any individual director may do so in writing addressed to the intended recipient or recipients, c/o Lauren Satterfield, Associate Counsel,Corporate Secretary, Delta Apparel, Inc., 322 S. Main Street, Greenville, South Carolina 29601,2750 Premiere Parkway, Suite 100, Duluth, Georgia 30097, or by email to lauren.satterfield@deltaapparel.com. All such communication will be reviewed by our Associate Counsel,Corporate Secretary, with communications determined to be solicitations, junk mail, communication primarily commercial or operational in nature, or that request general information regarding the Company redirected as appropriate. All other shareholder communications will be promptly forwarded to the applicable member(s) of our Board or to the collective Board, as requested in the shareholder communication.
Issues or concerns regarding accounting, internal accounting controls or audit matters or possible violations of the Company's Ethics Policy Statement should be communicated pursuant to the terms of the Ethics Policy Statement, which is available without charge on the "Corporate Governance" tab on the "Investors" page of our website located at www.deltaapparelinc.com under "Governance Documents."
Related Party Transactions
Our Board is committed to upholding the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest. Our Board has adopted written policies and procedures with respect to these transactions that define related party transactions and provide a list of transactions which are excluded from the policy, such as executive officer compensation, director compensation, and transactions where all security holders receive proportional benefits. On an annual basis, each director and named executive officer is obligated to complete a questionnaire that requires disclosure of any transactions with the Company in which the director or executive officer, or any member of his or her immediate family, has a direct or indirect material interest. Our related party transactions policy requires that the Audit Committee review proposed related party transactions, and if approved, oversee them if they are (i) required to be disclosed pursuant to SEC rules, or (ii) subject to review and oversight by the Audit Committee under applicable listing requirements of the NYSE American exchange. Our policy is to approve a related party transaction only if it is in, or not inconsistent with, the best interests of the Company and its shareholders. When reviewing a proposed transaction, the Audit Committee is to consider, among other factors, whether the terms of the transaction are fair and on the same basis as would apply if the transaction did not involve a related party, the business reasons for the transaction, the impact of the transaction on the independence of an independent director, and whether it would represent an improper conflict of interest based on several specified criteria. The Company has not entered into any related party transactions which are required to be disclosed in the proxy statement.
Delta Apparel, Inc. 22 Proxy Statement
Insider Trading and Hedging Policy
We maintain an insider trading policy that prohibits the purchase or sale of Company securities while being aware of material, non-public information about the Company as well as the disclosure of such information to others who may trade in securities of the Company. Our insider trading policy also prohibits our directors, executive officers and employees from engaging in hedging activities or other short-term or speculative transactions in the Company's securities such as short sales, puts, calls or any similar transaction involving the Company's securities.
Director and Executive Officer Stock Ownership and Retention Guidelines
To better align the interests of our directors and senior management team with our shareholders and to further demonstrate a commitment to the Company and its future well-being, our Board of Directors has adopted minimum stock ownership requirements and guidelines with respect to our non-employee directors and certain of our executive officers. These guidelines require our non-employee directors to retain throughout their entire tenure with our Board at least 50% of all shares received as compensation for their Board service. In addition, these guidelines require individuals in the following executive officer positions to maintain ownership of a minimum amount of Company stock equal to that indicated below.
Executive Officer Stock Ownership Guidelines
Title | Stock Ownership Requirement |
Chief Executive Officer | 4 times annual base salary |
Chief Financial Officer | 2 times annual base salary |
Chief Operating Officer | 2 times annual base salary |
The covered executives are granted certain time periods within which to gain compliance with the ownership requirements and are subject to mandatory share retention provisions until compliance is achieved. Our Corporate Governance Committee is responsible for monitoring compliance with these guidelines. As of September 28, 2019,October 2, 2021, these ownership requirements were satisfied by the applicable covered executives.
Director Resignation Policy
The Company's Board of Directors maintains a target director retirement age of 72. Upon any director reaching the age of 72, each such situation is reviewed on a case-by-case basis to determine what is in the best interests of the Company. The Company's Board of Directors also maintains a policy requiring directors that experience a substantive change in their occupation or career to offer their resignation to the Corporate Governance Committee, which will review each such situation on a case-by-case basis to determine what is in the best interests of the Company.
Service on Outside Boards
As of December 13, 2019,14, 2021, none of the Company's directors served on more than one other public company board of directors.directors with the exception of Ms. Britt who serves on two additional public company boards.
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE
We aim to disclose and communicate transparently any material risks that could affect our stakeholders, and we strive to implement policies and practices that continuously improve the transparency and sustainability of our supply chain. The Environmental, Social, and Governance (“ESG”) disclosures within our Annual Report on Form 10-K filed with the SEC for our fiscal year 2021 along with this definitive Proxy Statement align with the standards issued by the Sustainability Accounting Standards Board (“SASB”) for the Apparel, Accessories, and Footwear industry and with regulations and guidance issued by the Securities and Exchange Commission. The indicators in the Annual Report and definitive Proxy Statement have been carefully selected to show the most relevant aspects of our performance in the areas of environmental impact, health and safety, responsible raw material sourcing, safe chemical management, and responsible corporate governance.
The table below reflects SASB disclosures under the Apparel, Accessories, and Footwear industry and the location of that disclosure within the Annual Report on Form 10-K for fiscal year 2021 under Part I, Item 1. Business:
Topic | Accounting/Activity Metric(a) | Sub-heading in Form 10-K | ||
Management of Chemicals in Products | CG-AA-250a.1 Discussion of processes to maintain compliance with restricted substances regulations | Conserving the Environment, Using Safe Chemistry | ||
CG-AA-250a.2 Discussion of processes to assess and manage risks and/or hazards associated with chemicals in products | Conserving the Environment, Using Safe Chemistry | |||
Environmental Impacts in the Supply Chain | CG-AA-430a.1 Percentage of (1) Tier 1 supplier facilities and (2) supplier facilities beyond Tier 1 in compliance with wastewater discharge permits and/or contractual agreement | Conserving the Environment, Managing Water | ||
CG-AA-430a.2 Percentage of (1) Tier 1 supplier facilities and (2) supplier facilities beyond Tier 1 that have completed the Sustainable Apparel Coalition’s Higg Facility Environmental Module (Higg FEM) assessment or an equivalent environmental data assessment | Conserving the Environment, Monitoring Progress | |||
Labor Conditions in the Supply Chain | CG-AA-430b.1 Percentage of (1) Tier 1 supplier facilities and (2) supplier facilities beyond Tier 1 that have been audited to a labor code of conduct, (3) percentage of total audits conducted by a third-party auditor | Social Responsibility, Monitoring | ||
CG-AA-430b.2 Priority non-conformance rate and associated corrective action rate for suppliers’ labor code of conduct audits | Social Responsibility, Monitoring | |||
CG-AA-430b.3 Description of the greatest (1) labor and (2) environmental, health, and safety risks in the supply chain | Social Responsibility, Health and Safety | |||
Raw Materials Sourcing | CG-AA-440a.1 Description of environmental and social risks associated with sourcing priority raw materials | Conserving the Environment, Responsible Sourcing | ||
CG-AA-440a.2 Percentage of raw materials third-party certified to an environmental and/or social sustainability standard, by standard | Conserving the Environment, Responsible Sourcing | |||
Activity Metric | CG-AA-000.A Number of (1) Tier 1 suppliers and (2) suppliers beyond Tier 1 | See note (a) that follows |
(a) | Tier 1 suppliers are defined as suppliers that transact directly with the entity, such as finished goods manufacturers (e.g., cutting and sewing facilities). Suppliers beyond Tier 1 are the key suppliers to the entity’s Tier 1 suppliers and can include manufacturers, processing plants, and providers of raw materials extraction. As a vertically integrated manufacturer and distributor of apparel products, in fiscal year 2021 we manufactured over 90% of our finished goods. Of those finished goods, approximately 95% were sewn in our own manufacturing facilities, primarily using fabric internally produced from our textile operations. Unless otherwise noted in the applicable disclosures, we have aligned our disclosures based on environmental and social responsibility metrics for our five offshore cutting, sewing, or decorating facilities in Honduras, El Salvador, and Mexico and for our textile facility in Honduras, as well as for our two supplemental fabric vendors that supply the majority of the 20% of fabric that we purchased externally in fiscal year 2021. |
Management and Directors
The following table sets forth the number of shares of our common stock and common stock equivalents we believe to be beneficially owned as of December 13, 2019,14, 2021, by (i) our current directors, (ii) the executive officers named in the Summary Compensation table and (iii) all of our current directors and executive officers as a group. Except as otherwise indicated, we believe that all of the individuals listed below have sole voting and investment power over the shares of our common stock identified as beneficially owned.
Stock Ownership of Management and Directors
As of December 13, 201914, 2021
Directors and Executive Officers | Common Stock | Percentage | Common Stock | Percentage | ||||||||
| # | % | # | % | ||||||||
|
|
|
|
|
|
|
|
| ||||
Carlos E. Encalada Arjona | 2,154 | * | ||||||||||
Anita D. Britt | 3,375 |
| * |
| 8,875 |
| * |
| ||||
J. Bradley Campbell | 10,250 |
| * |
| 17,750 |
| * |
| ||||
Dr. G. Jay Gogue | 17,625 |
| * |
| 23,125 |
| * |
| ||||
Glenda E. Hood | 2,063 | 7,563 | * | |||||||||
Justin M. Grow (1) | 15,905 |
| * |
| ||||||||
Robert W. Humphreys | 527,719 |
| 7.6 | % |
| 430,577 |
| 6.1 | % |
| ||
Deborah H. Merrill | 124,536 |
| 1.8 | % |
| 115,723 |
| 1.6 | % |
| ||
Robert E. Staton, Sr. | 18,875 |
| * |
| ||||||||
S. Lauren Satterfield | — |
| * |
| ||||||||
Jeffery N. Stillwell | 32,197 |
| * |
| 44,373 |
| * |
| ||||
A. Alexander Taylor, II | 13,950 |
| * |
| 20,881 |
| * |
| ||||
David G. Whalen | 7,750 | (2) | * |
| 14,750 | (2) | * |
| ||||
All current directors and executive officers as a group (12 persons) | 774,245 | (3) | 11.1 | % |
| |||||||
All current directors and executive officers as a group (11 persons) | 685,771 | (3) | 9.7 | % |
|
* Less than 1% of the shares deemed outstanding. |
(1) |
(2) | Mr. Whalen shares voting and/or investment power with respect to these shares. |
(3) | Includes all shares deemed to be beneficially owned by any current director or executive officer. |
Principal Shareholders
The following table sets forth the number of shares of our common stock we believe to be beneficially owned as of December 13, 2019,14, 2021, by each individual or entity, excluding the executive officers named in the Summary Compensation table and our current directors, known to the Company to be the beneficial owner of more than five percent of our common stock. Unless otherwise indicated, we believe that the individuals or entities named in the table have sole voting and investment power with respect to all shares shown.
Stock Ownership of Principal Shareholders
As of December 13, 201914, 2021
|
| Common Stock | Percentage |
| Common Stock Beneficially Owned | Percentage | ||||||||
5% Shareholders | 5% Shareholders | # | % | 5% Shareholders | # | % | ||||||||
Wells Fargo & Company 420 Montgomery Street San Francisco, CA 94163 | 716,797 | (1) | 10.3 | % |
| |||||||||
Allspring Global Investments Holdings, LLC 525 Market St., 10th Floor San Francisco, CA 94105 | Allspring Global Investments Holdings, LLC 525 Market St., 10th Floor San Francisco, CA 94105 | 743,623 | (1) | 10.6 | % |
| ||||||||
Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, TX 78746 | Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, TX 78746 | 549,029 | (2) | 7.8 | % |
| ||||||||
Wilen Investment Management Corp. 14551 Meravi Drive Bonita Springs, Florida 34135 | Wilen Investment Management Corp. 14551 Meravi Drive Bonita Springs, Florida 34135 | 642,870 | (2) | 9.2 | % |
| Wilen Investment Management Corp. 14551 Meravi Drive Bonita Springs, Florida 34135 | 434,487 | (3) | 6.2 | % | |||
Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, TX 78746 | 588,882 | (3) | 8.4 | % |
| |||||||||
E. Erwin Maddrey, II 233 North Main Street, Suite 200 Greenville, SC 29601 | E. Erwin Maddrey, II 233 North Main Street, Suite 200 Greenville, SC 29601 | 517,155 | (4) | 7.4 | % |
| E. Erwin Maddrey, II 233 North Main Street, Suite 200 Greenville, SC 29601 | 399,875 | (4) | 5.7 | % |
| ||
Franklin Mutual Advisors, LLC 101 John F. Kennedy Park Short Hills, NJ 07078 | 367,200 | (5) | 5.3 | % |
|
(1) | The information set forth above is based on |
|
|
| The information set forth above is based on an amendment to a Schedule 13G filed by Dimensional Fund Advisors LP (“Dimensional”) with the SEC on February |
(3) | The information set forth above is based on an amendment to a Schedule 13G filed by Wilen Investment Management Corp. (“Wilen”) with the SEC on February 12, 2021, with respect to the Company's common stock. Wilen reported that it has sole power to vote and/or dispose of the above-referenced shares. |
(4) | The information set forth above is based on an amendment to a Schedule 13D filed by E. Erwin Maddrey II with the SEC on July 11, 2007, with respect to the Company's common stock and other information provided to us by Mr. Maddrey. |
|
|
Delinquent Section 16(a)16(a) Reports
Members of our Board of Directors, certain of our executive officers, and persons who hold more than 10% of our common stock are subject to the reporting requirements of Section 16(a) of the Exchange Act, which requires such individuals to file reports with the SEC regarding their beneficial ownership and changes in beneficial ownership of our common stock. We believe that all of our directors and such executive officers complied on a timely basis with filing requirements arising under Section 16(a) of the Exchange Act during our fiscal year 20192021 except that as a result ofdue to an inadvertent administrative error, Jeffery N.Forms 4 with respect to restricted stock equity awards granted to Mr. Humphreys, Ms. Merrill, Mr. Stillwell, Mr. Encalada Arjona, and Ms. Satterfield were not timely filed one late report onalong with Ms. Satterfield's Form 4 reporting multiple direct sale transactions of 3.
Delta Apparel, Inc. 25- 21 - Proxy Statement
Our current executive officers are listed below, whichbelow. Excluding Ms. Satterfield and Ms. Walsh, we refer to those listed below as our "named executive officers" or "NEO's" in the Executive Compensation section and elsewhere in this Proxy Statement. Certain information regarding our named executive officers is provided below. These individuals are appointed to serve at the discretion of our Board. As previously disclosed in a Current Report on Form 8-K we filed with the SEC on October 25, 2019, Justin M. GrowNovember 30, 2021, Deborah H. Merrill voluntarily resigned from hisher position as Vice President of Administration, General Counsel and Corporate SecretaryChief Financial Officer of the Company effective as of December 15, 2019.2021, and will resign from all other positions with the Company effective January 22, 2022. The primary business address for Mr. Humphreys, Ms. Merrill (until January 22, 2022), Mr. Encalada Arjona, and Ms. MerrillWalsh is (and for Mr. Grow prior to his resignation was)2750 Premiere Parkway, Suite 100, Duluth, Georgia 30097. Ms. Satterfield's primary business address is 322 S. Main Street, Greenville, South Carolina 29601.29601, and Mr. Stillwell's primary business address is 24 12th Street,1147 Sixth Avenue, Columbus, Georgia 31901.
Robert W. Humphreys |
|
Chairman Age: | Mr. Humphreys is the Chairman and Chief Executive Officer of Delta Apparel, Inc. He has served as Chairman of our Board since 2009. Mr. Humphreys previously served Delta Apparel, Inc. as President and Chief Executive Officer for more than 10 years. Mr. Humphreys serves on the Board of Directors or Board of Managers, as applicable, of each of our domestic wholly-owned subsidiaries, and also serves on the Board of Directors of Green Valley Industrial Park, S.A. de C.V., which owns and operates the industrial park where our Honduran textiles operations are located and in which we are a minority owner. From April 1999 until December 1999, Mr. Humphreys served as President of the Delta Apparel division of Delta Woodside Industries, Inc. In 1998, he was named Vice President of Finance and Assistant Secretary of Delta Woodside Industries, Inc. and served in that capacity until November 1999. From 1987 to May 1998, Mr. Humphreys served as President of Stevcoknit Fabrics Company, the former knit fabrics division of a subsidiary of Delta Woodside Industries, Inc. Mr. Humphreys has over 30 years of experience in the textile and apparel industry, including senior leadership roles in operations and finance. |
Deborah H. Merrill |
|
President, Delta Group and Former Chief Financial Officer Age: | Ms. Merrill |
Simone C. Walsh | |
| |
Vice President, Age:
|
|
Jeffery N. Stillwell |
|
President, Salt Life Group Age: | Mr. Stillwell was appointed President of our Salt Life Group segment in July 2018. Mr. Stillwell joined the Company in 2009, serving in various executive leadership roles with Salt Life, LLC (formerly To The Game, LLC), a wholly-owned subsidiary of the Company, until 2011, and then serving as President of Salt Life, LLC from 2011 to July 2018. Before joining the Company, Mr. Stillwell and others founded Kudzu, LLC, a supplier of licensed and decorated headwear, in 1994, and Mr. Stillwell served in various executive leadership roles for that business and several related businesses until joining the Company in 2009. |
Carlos E. Encalada Arjona |
|
Vice President of Manufacturing Age: 47 | Mr. Encalada Arjona was appointed Vice President of Manufacturing of Delta Apparel, Inc. in November 2017. Prior to November 2017, Mr. Encalada Arjona was the Director of Apparel Manufacturing for the Company. Mr. Encalada Arjona joined the Company in August 2000 and has served in various management roles within our manufacturing operations, including Offshore Human Resources Director and Director of Apparel Manufacturing. Mr. Encalada Arjona holds a Master of Business Administration from the University of Texas at Austin as well as a mechanical and electrical engineering degree from Instituto Tecnologico de Estudios Superiores de Monterrey. |
S. Lauren Satterfield | |
Deputy General Counsel and Corporate Secretary Age: 34 | Ms. Satterfield has served as Deputy General Counsel since February 2020 and as Corporate Secretary since August 2020. From August 2018 to February 2020, Ms. Satterfield served as Associate Counsel for the Company. Before joining the Company, Ms. Satterfield served as Senior Tax Associate with Elliott Davis, LLC, a regional accounting firm, from January 2015 through July 2018. Before January 2015, Ms. Satterfield worked as an associate attorney with a law firm from November 2012 to January 2015. Ms. Satterfield holds a JD and an LLM in Taxation. |
Delta Apparel, Inc. 26 Proxy Statement
This Executive Compensation section discusses the material elements of compensation earned by, paid to or awarded to each of our named executive officers during our fiscal year ended September 28, 2019,October 2, 2021, and describes the principles and philosophies underlying our executive compensation programs and policies. In addition, you will find a series of tables in this Proxy Statement containing specific information regarding our named executive officers' compensation in our 20192021 fiscal year.
Executive Summary
Delta Apparel, Inc., along with its operating subsidiaries, DTG2Go, LLC, Salt Life, LLC, and M.J. Soffe, LLC, is a vertically-integrated, international apparel company that designs, manufactures, sources, and markets a diverse portfolio of core activewear and lifestyle apparel products under the primary brands of Salt Life®, COAST®, Soffe®, and Delta. We are a market leader in the direct-to-garmenton demand, digital print and fulfillment industry, bringing DTG2GoDTG2Go's proprietary technology and innovation to the supply chain of our customers. We specialize in selling casual and athletic products through a variety of distribution channels and tiers, including outdoor and sporting goods retailers, independent and specialty stores, better department stores and mid-tier retailers, mass merchants and e-retailers, the U.S. military, and through our business-to-business e-commerce sites.digital platform. Our products are also made available direct-to-consumer aton our ecommerce sites and in our branded retail stores and on our websites at www.saltlife.com, www.coastapparel.com, www.soffe.com and www.deltaapparel.com. stores. OurWe believe this diversified distribution allows us to capitalize on our strengths to provide casualour activewear and otherlifestyle apparel products to a broad and evolving customer base whose shopping preferences may span multiple retail channels.
As a vertically-integrated manufacturer, we design and internally manufacture the majority of our products, whichproducts. More than 90% of the apparel units we sell are sewn in our owned or leased facilities. This allows us to offer a high degree of consistency and quality, leverage scale efficiencies, and react quickly to changes in trends within the marketplace. We have manufacturing operations located in the United States, El Salvador, Honduras and Mexico, and we use domestic and foreign contractors as additional sources of production. Our distribution facilities are strategically located throughout the United States to better serve our customers with same-day shipping on our catalog products and weekly replenishments to retailers. Additional information about our Company is available at www.deltaapparelinc.com.
The compensation of our named executive officers was approved at our prior annual meeting of shareholders on February 7, 2019,11, 2021, with almost 99% of the shares represented at the meeting (excluding broker non-votes) cast in favor of our executive compensation programs. We have considered those results in making executive compensation decisions and determiningreviewing our executive compensation programs and policies. Our executive compensation programs and policies during fiscal year 20192021 generally remained consistent with those presented in our proxy statement for our February 7, 2019,11, 2021, annual meeting of shareholders.shareholders, with the exception of adjustments to our named executive officer incentive compensation program payout calculations in fiscal year 2020 due to the COVID-19 pandemic.
Key Features of Our Executive Compensation Programs
Below are some of the key features of our executive compensation programs.
What We Do:
We pay for performance and place a significant portion of executive officer compensation "at risk"
We cap the amount of cash incentive compensation and equity awards that an executive may receive in any year
We have robust stock ownership guidelines for certain executive positions and our directors
We have double trigger change-in-control cash severance benefits in our executive employment agreements
We pay reasonable salaries and provide appropriate benefits to our executives
We generally provide a blend of short-term and long-term incentive opportunities as well as a blend of cash and equity incentive opportunities
Our Compensation Committee is made up entirely of independent directors and is empowered to select and engage its own independent advisors
• | We pay for performance and place a significant portion of executive officer compensation "at risk" | |
• | We cap the amount of cash incentive compensation and equity awards that an executive may receive in any year | |
• | We have robust stock ownership guidelines for certain executive positions and our directors | |
• | We have double trigger change-in-control cash severance benefits in our executive employment agreements | |
• | We pay reasonable salaries and provide appropriate benefits to our executives | |
• | We generally provide a blend of short-term and long-term incentive opportunities as well as a blend of cash and equity incentive opportunities | |
• | Our Compensation Committee is made up entirely of independent directors and is empowered to select and engage its own independent advisors |
What We Don't Do:
We do not allow hedging, puts, calls or similar derivative transactions related to our stock
We do not reprice stock options and do not exchange "underwater" options for cash
We do not provide guaranteed cash bonuses to our named executive officers
We do not offer a defined benefit pension plan
We do not offer a supplemental executive retirement plan
Delta Apparel, Inc. 27 Proxy Statement
• | We do not allow hedging, puts, calls or similar derivative transactions related to our stock | |
• | We do not reprice stock options and do not exchange "underwater" options for cash | |
• | We do not provide guaranteed cash bonuses to our named executive officers | |
• | We do not offer a defined benefit pension plan | |
• | We do not offer a supplemental executive retirement plan | |
• | We do not provide any excise tax reimbursement payments (including "gross-ups") on payments contingent upon a change in control of the Company | |
• | We do not provide special health or welfare benefits to our executives, other than participation in broad-based employee programs on the same basis as our other full-time employees | |
• | Perquisites or other personal benefits are not a material part of our compensation program for our executives |
The principal elements of our named executive officer compensation program are base salary, performance-based annual cash incentives, service-based and performance-based equity incentives, and the employee benefits provided to our other full-time domestic employees. We utilize a combination of the foregoing elements with the ultimate goals of attracting, retaining and appropriately rewarding executive management talent and aligning the short-term and long-term interests of our executives with those of our shareholders. It is important to us that the compensation of our named executive officers be directly linked to Company performance and, with that goal in mind, our Compensation Committee believes that a significant portion of our named executive officer compensation must be "at risk", or not guaranteed, and directly tied to the financial success of the Company.
Consistent with our approach in prior years, we placed primary emphasis on earnings before interest and taxes, or "EBIT", and return on capital employed, or "ROCE", in evaluating and monitoring Company performance relative to the compensation of our executives in fiscal year 2019.2021. We define EBIT as our revenue less expenses, excluding interest and taxes. ROCE is defined as our EBIT as a percentage of our 12-month average capital employed, with capital employed generally being equity plus debt, net of cash, cash equivalents and deferred taxes. We continue to believe that these metrics strike a proper balance between generating financial profits and efficiently allocating our capital, and that these metrics are also understandable to the applicable stakeholders.
The discussion below is intended to assist you in understanding the information provided in this Executive SummaryCompensation section and the accompanying compensation tables contained in this Proxy Statement, and to put that information into context within our overall executive compensation program. For the reasons described in this Executive Compensation section and accompanying tables, we believe our executive compensation programs are designed to properly support our Company goals and encourage profitable growth for our business.
Performance and Pay Implications
We continue to believe that the compensation programs offered to our named executive officers align with our performance-based compensation philosophy and that our emphasis on performance-based compensation is reflected in the compensation paid to our named executive officers. For example, in fiscal year 2019, the Company achieved ROCE that was slightly below the target threshold set by our Compensation Committee applicable to the equity award for which our Chairman and Chief Executive Officer, Mr. Humphreys, was eligible, and Mr. Humphreys forfeited shares as a result. By way of further example, in our 2018 fiscal year, the Company achieved ROCE in line with the target threshold applicable to Mr. Humphreys' equity award and he received the target amount of shares for which he was eligible. However, in fiscal years 2016 and 2017, the Company achieved ROCE above the applicable target threshold and, as a result, Mr. Humphreys was awarded shares in excess of the target amount for which he was eligible in each of those years. In other years the Company has not achieved the applicable minimum ROCE threshold and Mr. Humphreys was not awarded any shares in such years. The same dynamic is evident in our cash incentive plans tied to our consolidated EBIT performance, with our named executive officers receiving more than the target amount of cash incentive compensation for which they were eligible for fiscal years 2018 and 2019 because our EBIT was above applicable target levels. In some years, however, our named executive officers have received less than or none of the target amount of cash incentive compensation because our consolidated EBIT was below the applicable minimum or target levels. In fiscal year 2020 due to the unusual challenges presented as a result of the COVID-19 pandemic, our Compensation Committee reviewed additional measurements of Company performance in order to determine adjusted payout calculations for our NEOs.
For equity awards based on ROCE calculations for both fiscal years 2020 and 2021 granted to our NEOs, the Compensation Committee, using the criteria discussed in our proxy statement for our February 11, 2021 annual meeting of shareholders, determined the Company generated an adjusted ROCE of 9.5% for fiscal year 2020. This adjusted ROCE of 9.5% was used for fiscal year 2020 performance when determining the vesting amount for these equity awards based on performance during fiscal years 2020 and 2021. For fiscal year 2021 performance, the ROCE calculation was not adjusted and was calculated to be 11.7%.
More detail regarding the compensation of our named executive officers can be found within the Summary Compensation table located within this Proxy Statement.
Compensation Philosophy and Objectives
Our approach to executive compensation continues to be defined by the following primary objectives: