We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management, as required by Item 402(b) of Regulation S-K. Based on our review and discussions with management, we have recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2017.25, 2020.
The Chefs’ Warehouse, Inc. Compensation Committee
The foregoing Report of the Compensation Committee shall not be considered soliciting material, nor shall it be deemed “filed” for any purpose, including for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section. The Report of the Compensation Committee shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, regardless of any general incorporation language in such filing.
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(7) | The aggregate grant date fair value is computed in accordance with FASB ASC Topic 718. For awards that are subject to performance conditions,Components of Named Executive Officer Compensation - Annual Cash Incentive Compensation” beginning on page 25 of this proxy statement. (3)Although these grants were later canceled, the amounts included in this column are the full fair value at the grant date based on the probable outcome with respect to the satisfaction of the performance condition consistent with the recognition criteria in FASB ASC Topic 718 (excluding the effect of estimated forfeitures). |
(8) These amounts consist of two future payout amounts undershown in these rows marked (3) reflect threshold, target and maximum performance for the non-equity incentive planperformance-based restricted share award granted pursuant to the 2019 Equity Incentive Plan. The forfeiture restrictions associated with these restricted stock awards one of which is pro rated from September 5, 2017 through November 10, 2017 andwould have immediately lapsed upon the other of which is pro rated from November 11, 2017 through the end of fiscal 2017. For the first period, Mr. Leddy was a partCompensation Committee’s certification of the variable incentive compensation plan, under which he could only earn up to 100% of his pro rated bonus. For the second period, Mr. Leddy was a partattainment of the 2017 Plan.
(9) These amounts are pro rated fromtwo targets, related to AEBITDA and ROIC, for the performance period beginning at the start of fiscal 20172020 and ending at the conclusion of fiscal 2022, provided that the grantee provided continuous service through November 10, 2017 after which Mr. Austin separated from the Company.
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(10) | This performance-based stock award was granted in fiscal 2017 but then later forfeited pursuant to Mr. Austin's severance arrangement. |
(11) The amount reported reflectsapplicable vesting date and further provided that the total valueadditional conditions and performance criteria related to AEBITDA and ROIC for the performance period ending at the conclusion of fiscal 2022 were met, as set forth in the grantee’s performance-based vesting restricted share award agreement.
(4)Although these grants were later canceled, the amounts shown in these rows marked (4) reflect threshold, target and maximum performance for the performance-based, market-based restricted share award granted pursuant to the 2019 Equity Incentive Plan. There were no threshold payouts with respect to the performance-based, market-based restricted share awards, as the possible performance-based, market-based award payments under the 2019 Equity Incentive Plan were to be either achieved or not achieved, with non-achievement resulting in attainment of zero shares under such award vesting and achievement resulting in attainment of all of the time-basedshares under such award vesting. The forfeiture restrictions associated with these restricted stock awards granted to Mr. Austinwill immediately lapse upon the Compensation Committee’s certification that the Company's common stock price was at least $37.95, based on an average of 20 consecutive trading days, at any time during the three-year performance period beginning upon the grant date and ending fiscal 2022 and provided that the grantee provides continuous service through the applicable vesting date.
(5)Although these grants were later canceled, the forfeiture restrictions associated with these restricted share awards would have lapsed in one-third increments on February 25, 2021 through 2023.
(6)In fiscal 2017 but, pursuant to Mr. Austin's severance arrangement, only 1,906 shares of Mr. Austin's2020, our named executive officers received time-based restricted stock awardshares in fiscal 2017 were actually paid,lieu of 50% of salary for the period following March 22, 2020. The forfeiture restrictions associated with these restricted share awards lapsed with respect to the entirety of the grant on March 18, 2021.
(7)Amounts represent the number of shares that vested in 2020 as a result of the modifications of the 2018 performance-based restricted stock awards, as discussed in more detail in footnote 1 to the “Summary Compensation Table - Fiscal Years 2018-2020.”
(8)The aggregate grant date fair value is computed in accordance with ASC Topic 718. For awards that are subject to performance conditions, the amounts included in this column are the full fair value at the grant date based on the probable outcome with respect to the satisfaction of the performance condition consistent with the recognition criteria in FASB ASC Topic 718 (excluding the effect of estimated forfeitures). With respect to the awards shown as granted on December 3, 2020, the amounts reflect the incremental fair value of approximately $28,117.those awards computed in accordance with ASC Topic 718, as discussed in more detail in footnote 1 to the “Summary Compensation Table - Fiscal Years 2018-2020.”
Outstanding Equity Awards at 20172020 Fiscal Year End
The table below summarizes the amount of unvested time-based vesting and performance-based vesting restricted stock awards granted for each named executive officer as of December 29, 2017.25, 2020. The vesting schedule for each grant can be found in the footnotes to this table, based on the grant date. We have not issued stock options in fiscal 2020 to any of our named executive officers. For additional information on our equity awards, see “EXECUTIVE COMPENSATION - Compensation Discussion and Analysis - Components of Fiscal 20172020 Compensation for Our Named Executive Officers - Long-Term Equity Compensation” on page 2527 of this proxy statement. |
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| OPTION AWARDS | | STOCK AWARDS |
NAME | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS | | OPTION EXERCISE PRICE | OPTION EXERCISE DATE | | NUMBER OF SHARES OF STOCK THAT HAVE NOT VESTED(#) | | MARKET VALUE OF SHARES OF STOCK THAT HAVE NOT VESTED($)(1) |
Christopher Pappas | 95,908 |
| (2) | $ | 20.23 | | 3/7/2026 | | N/A |
| | N/A |
|
John Pappas | 44,757 |
| (2) | $ | 20.23 | | 3/7/2026 | | N/A |
| | N/A |
|
James Leddy | — |
| | — | | | | 3,537 |
| (3) | 72,509 |
|
John Austin | — |
| (2) | $ | 20.23 | | 3/7/2026 | | N/A |
| | N/A |
|
| — |
| | — | | | | 3,401 |
| (4) | 69,721 |
|
| — |
| | — | | | | — |
| | 0 |
|
Alexandros Aldous | 8,632 |
| (2) | $ | 20.23 | | 3/7/2026 | | N/A |
| | N/A |
|
| — |
| | — | | | | 4,958 |
| (5) | 101,639 |
|
| — |
| | — | | | | 27,865 |
| (6) | 571,233 |
|
Patricia Lecouras | 7,193 |
| (2) | $ | 20.23 | | 3/7/2026 | | N/A |
| | N/A |
|
| — |
| | — | | | | 4,042 |
| (5) | 82,861 |
|
| — |
| | — | | | | 4,825 |
| (7) | 98,913 |
|
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(1) | The value presented in the table is equal to the product of the number of shares that had not vested as of the last trading day of fiscal 2017 (December 29, 2017), which was $20.50. |
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(2) | Price-based stock option eligible for vesting only upon the Company achieving a $30 stock price hurdle (based on 20-consecutive trading day average) on or before the fourth anniversary of the grant date; in addition, price based stock options may not be exercised before the third anniversary of the grant date and are subject to the reporting person’s non-qualified stock option agreement. |
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(3) | Includes 3,537 shares of time-based vesting restricted stock awards consisting of: 537 shares, which will vest in three annual installments on March 6, 2018 through 2020; and 3,000 shares, which will vest in four annual installments on September 11, 2018 through 2021. |
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(4) | These shares vested on March 7, 2018 under the terms of Mr. Austin’s severance arrangement. |
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(5) | The forfeiture restrictions associated with this time-based restricted stock award made in fiscal 2017 will lapse in one-third increments as of the first through third anniversary dates of the grant date (March 6, 2017). |
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(6) | Includes (i) 26,191 shares of time-based vesting restricted stock awarded prior to fiscal 2017 which were unvested at the end of fiscal 2017 and (ii) 1,674 shares of the performance-based restricted stock awarded in fiscal 2015 and for which the performance condition was satisfied based on fiscal 2015 performance but which remained subject to a time-based vesting condition at the end of fiscal 2015. Of the 26,191 shares of time-based vesting restricted stock: 718 shares will vest in two annual installments on March 6 of 2018 |
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| | OPTION AWARDS | | STOCK AWARDS |
Name | | Equity Incentive Plan Award: Number of Securities Underlying Unexercised Options (#) | | | Option Exercise Price ($) | Option Expiration Date | | Number of Shares of Stock That Have Not Vested (#) | | Market Value of Shares of Stock That Have Not Vested(1) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) ($) |
Christopher Pappas | | 95,908 | (2) | | 20.23 | 3/7/2026 | | — | | — | — | | — |
| | | | | | | | 162,275 | (3) | 3,876,750 | — | | — |
| | | | | | | | 17,517 | (4) | 418,481 | 7,882 | (13) | 188,301 |
| | | | | | | | | | | | | |
John Pappas | | — | | | — | | | 89,179 | (5) | 2,130,486 | — | | — |
| | | | | | | | 9,627 | (6) | 229,989 | 4,332 | (13) | 103,491 |
James Leddy | | — | | | — | | | 67,003 | (7) | 1,600,702 | — | | — |
| | | | | | | | 6,767 | (8) | 161,664 | 2,707 | (13) | 64,670 |
| | | | | | | | | | | | | |
Alexandros Aldous | | — | | | — | | | 62,538 | (9) | 1,494,033 | — | | — |
| | | | | | | | 5,616 | (10) | 134,166 | 2,527 | (13) | 60,370 |
| | | | | | | | | | | | | |
Patricia Lecouras | | — | | | — | | | 48,779 | (11) | 1,165,330 | — | | — |
| | | | | | | | 4,381 | (12) | 104,662 | 1,971 | (13) | 47,087 |
(1)The value presented in the table is equal to the product of the number of shares that had not vested as of the last trading day of fiscal 2020 (December 25, 2020) and the closing price of our common stock on such date, which was $23.89.
(2)The price-based stock options became exercisable during fiscal 2019 as the Company achieved the $30 stock price hurdle (based on an average of 20 consecutive trading days) and the third anniversary of the grant date had occurred, both requirements to exercise; in addition, the price-based stock options remain subject to the reporting person’s non-qualified stock option agreement.
(3)These 162,275 shares of time-based vesting restricted stock awarded in fiscal 2020 include: (i) 28,114 shares with forfeiture restrictions which will lapse in one-third increments on the first through 2019; 2,920third anniversary dates of the service-inception date (February 25, 2020); (ii) 98,411 shares with forfeiture restrictions which will lapse on the first anniversary date of the service-inception date (March 18, 2020); and (iii) 35,750 shares with forfeiture restrictions which will lapse in one-half increments on the first and second anniversary dates of the service-inception date (March 25, 2020).
(4)These 17,517 shares of time-based vesting restricted stock awarded prior to fiscal 2020 that were unvested at the end of fiscal 2020 include: 8,758 shares which vested on February 25, 2021 and 8,759 shares which will vest on February 25, 2022.
(5)These 89,179 shares of time-based vesting restricted stock awarded in three annual installmentsfiscal 2020 include: (i) 15,450 shares with forfeiture restrictions which will lapse in one-third increments on March 7, 2018the first through 2020;third anniversary dates of the service-inception date (February 25, 2020); (ii) 54,082 shares with forfeiture restrictions which will lapse on the first anniversary date of the service-inception date (March 18, 2020); and (iii) 19,647 shares with forfeiture restrictions which will lapse in one-half increments on the remaining 22,553first and second anniversary dates of the service-inception date (March 25, 2020).
(6)These 9,627 shares of time-based vesting restricted stock awarded prior to fiscal 2020 that were unvested at the end of fiscal 2020 include: 4,812 shares which vested on February 25, 2021 and 4,815 shares which will vest in two annual installments on April 6 of 2018 through 2019. The 1,674February 25, 2022.
(7)These 67,003 shares of time-based vesting restricted stock awarded in fiscal 2020 include: (i) 9,656 shares with forfeiture restrictions which will lapse in one-third increments on the first through third anniversary dates of the service-inception date (February 25, 2020); (ii) 45,068 shares with forfeiture restrictions which will lapse on the first anniversary date of the service-inception date (March 18, 2020); and (iii) 12,279 shares with forfeiture restrictions which will lapse in one-half increments on the first and second anniversary dates of the service-inception date (March 25, 2020).
(8)These 6,767 shares of time-based vesting restricted stock awarded prior to fiscal 2020 that were unvested at the end of fiscal 2020 include: 3,008 shares which vested on February 25, 2021; 750 shares which will vest on September 11, 2021; and 3,009 shares which will vest on February 25, 2022.
(9)These 62,538 shares of time-based vesting restricted stock awarded in fiscal 2020 include: (i) 9,013 shares with forfeiture restrictions which will lapse in one-third increments on the first through third anniversary dates of the service-inception date (February 25, 2020); (ii) 42,064 shares with forfeiture restrictions which will lapse on the first anniversary date of the service-inception date (March 18, 2020); and (iii) 11,461 shares with forfeiture restrictions which will lapse in one-half increments on the first and second anniversary dates of the service-inception date (March 25, 2020).
(10)These 5,616 shares of time-based vesting restricted stock awarded prior to fiscal 2020 that were unvested at the end of fiscal 2020 include: 2,807 shares which vested on February, 25, 2021 and 2,809 shares which will vest on February 25, 2022.
(11)These 48,779 shares of time-based vesting restricted stock awarded in fiscal 2020 include: (i) 7,030 shares with forfeiture restrictions which will lapse in one-third increments on the first through third anniversary dates of the service-inception date (February 25, 2020); (ii) 32,810 shares with forfeiture restrictions which will lapse on the first anniversary date of the service-inception date (March 18, 2020); and (iii) 8,939 shares with forfeiture restrictions which will lapse in one-half increments on the first and second anniversary dates of the service-inception date (March 25, 2020).
(12)These 4,381 shares of time-based vesting restricted stock awarded prior to fiscal 2020 that were unvested at the end of fiscal 2020 include: 2,189 shares which vested on February 25, 2021and 2,192 shares which will vest on February 25, 2022.
(13)Consists of earned performance-based restricted stock awarded in fiscal 2019 which will vest in two annual installments March 7following the three-year performance period ending on the last day of 2018 through 2019.
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(7) | Includes (i) 3,151 shares of time-based vesting restricted stock awarded prior to fiscal 2017 which were unvested at the end of fiscal 2017 and (ii) 1,674 shares of performance-based restricted stock awarded in fiscal 2015 and for which the performance condition was satisfied based on fiscal 2015 performance but which remained subject to a time-based vesting condition at the end of fiscal 2015. Of the 3,141 shares of time-based vesting restricted stock: 718 shares will vest in two annual installments on March 6 of 2018 through 2019; and 2,433 shares will vest in three annual installments on March 7, 2018 through 2020. The 1,674 shares of performance restricted stock will vest in two annual installments March 7 of 2018 through 2019. |
fiscal 2021 (December 24, 2021). On December 3, 2020, the Compensation Committee certified the achievement of the performance targets with respect to 30% of the target performance-based restricted stock awarded for the three-year performance period ending on the last day of fiscal 2021, subject to the satisfaction of the applicable service-based conditions until such time.
Fiscal 2020 Stock Vested Table
The following table sets forth certain information with respect to the number of shares of restricted stock that our named executive officers received upon vesting in fiscal 2017:2020:
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| OPTION AWARDS | | STOCK AWARDS |
Name | Number of shares acquired on exercise (#) | Value realized on exercise ($) | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
Christopher Pappas(1) | — | — | | 36,266 | 969,230 |
John Pappas(2) | — | — | | 19,928 | 532,584 |
James Leddy(3) | — | — | | 14,490 | 391,208 |
Alexandros Aldous(4) | — | — | | 24,433 | 759,097 |
Patricia Lecouras(5) | — | — | | 19,527 | 608,372 |
(1)Of Mr. C. Pappas’ 36,266 shares of restricted stock vested in fiscal 2020: (i) 8,758 shares vested on February 25, 2020, (ii) 3,521 shares vested on March 5, 2020, and (iii) 23,987 shares vested on December 17, 2020. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $33.00 (February 25, 2020), $27.03 (March 5, 2020), and $24.39 (December 17, 2020). In fiscal 2020, Mr. C. Pappas had 21,650 shares and 7,865 shares withheld, at the closing price of our common stock on the relevant grant date of $3.60 (March 18, 2020) and $11.81 (March 25, 2020), respectively, to satisfy taxes payable under Section 83(b) of the Internal Revenue Code in accordance with their elections to be taxed on the value of their restricted stock award grants in fiscal 2020.
(2)Of Mr. J. Pappas’ 19,928 shares of restricted stock vested in fiscal 2020: (i) 4,812 shares vested on February 25, 2020, (ii) 1,935 shares vested on March 5, 2020, and (iii) 13,181 shares vested on December 17, 2020. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $33.00 (February 25, 2020), $27.03 (March 5, 2020), and $24.39 (December 17, 2020). In fiscal 2020, Mr. J. Pappas had 11,898 shares and 4,322 shares withheld, at the closing price of our common stock on the relevant grant date of $3.60 (March 18, 2020) and $11.81 (March 25, 2020), respectively, to satisfy taxes payable under Section 83(b) of the Internal Revenue Code in accordance with their elections to be taxed on the value of their restricted stock award grants in fiscal 2020.
(3)Of Mr. Leddy’s 14,490 shares of restricted stock which vested in fiscal 2020: (i) 1,103 shares vested on February 3, 2020, (ii) 3,008 shares vested on February 25, 2020, (iii) 1,209 shares vested on March 5, 2020, (iv) 181 shares vested on March 6, 2020, (v) 750 shares vested on September 11, 2020, and (vi) 8,239 shares vested on December 17, 2020. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $37.28 (February 3, 2020), $33.00 (February 25, 2020), $27.03 (March 5, 2020), $26.22 (March 6, 2020), $16.60 (September 11, 2020), and $24.39 (December 17, 2020). In fiscal 2020, Mr. Leddy had 9,915 shares and 2,701 shares withheld, at the closing price of our common stock on the relevant grant date of $3.60 (March 18, 2020) and $11.81 (March 25, 2020), respectively, to satisfy taxes payable under Section 83(b) of the Internal Revenue Code in accordance with their elections to be taxed on the value of their restricted stock award grants in fiscal 2020.
(4)Of Mr. Aldous’ 24,433 shares of restricted stock which vested in fiscal 2020: (i) 10,180 shares vested on February 3, 2020, (ii) 2,807 shares vested on February 25, 2020, (iii) 1,128 shares vested on March 5, 2020, (iv) 1,654 shares vested on March 6, 2020, (v) 974 shares vested on March 7, 2020, and (vi) 7,690 shares vested on December 17, 2020. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $37.28 (February 3, 2020), $33.00 (February 25, 2020), $27.03 (March 5, 2020), $26.22 (March 6, 2020 and March 7, 2020), and $24.39 (December 17, 2020). In fiscal 2020, Mr. Aldous had 9,254 shares and 2,521 shares withheld, at the closing price of our common stock on the relevant grant date of $3.60 (March 18, 2020) and $11.81 (March 25, 2020), respectively, to satisfy taxes payable under Section 83(b) of the Internal Revenue Code in accordance with their elections to be taxed on the value of their restricted stock award grants in fiscal 2020.
(5)Of Ms. Lecouras’ 19,527 shares of restricted stock which vested in fiscal 2020: (i) 8,300 shares vested on February 3, 2020, (ii) 2,189 shares vested on February 25, 2020, (iii) 880 shares vested on March 5, 2020, (iv) 1,348 shares vested on March 6, 2020, (v) 811 shares vested on March 7, 2020, and (vi) 5,999 shares vested on December 17, 2020. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $37.28 (February 3, 2020), $33.00 (February 25, 2020), $27.03 (March 5, 2020), $26.22 (March 6, 2020 and March 7, 2020), and $24.39 (December 17, 2020). In fiscal 2020, Ms. Lecouras had 7,218 shares and 1,967 shares withheld, at the closing price of our common stock on the relevant grant date of $3.60 (March 18, 2020) and $11.81 (March 25, 2020), respectively, to satisfy taxes payable under Section 83(b) of the Internal Revenue Code in accordance with their elections to be taxed on the value of their restricted stock award grants in fiscal 2020.
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| STOCK AWARDS |
NAME | NUMBER OF SHARES ACQUIRED ON VESTING (#) | VALUE REALIZED ON VESTING ($) |
Christopher Pappas | — | — |
John Pappas | — | — |
James Leddy | — | — |
John Austin(1) | 22,331 | $293,889 |
Alexandros Aldous(2) | 13,446 | $184,343 |
Patricia Lecouras(3) | 2,007 | $29,191 |
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(1) | Of Mr. Austin’s 22,331 shares of restricted stock which vested in fiscal 2017: (i) 359 shares vested on March 6, 2017, (ii) 1,972 shares vested on March 7, 2017, and (iii) 20,000 shares vested on July 1, 2017. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $14.75 (March 6, 2017), $14.50 (March 7, 2017) and $13.00 (July 1, 2017). |
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(2) | Of Mr. Aldous’s 13,446 shares of restricted stock which vested in fiscal 2017: (i) 359 shares vested on March 6, 2017, (ii) 1,810 vested on March 7, 2017 and (iii) 11,277 vested on April 6, 2017. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $14.75 (March 6, 2017), $14.50 (March 7, 2017) and $13.55 (April 6, 2017). |
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(3) | Of the 2,007 shares of restricted stock of Ms. Lecouras which vested in fiscal 2017: (i) 359 vested on March 6, 2017 and (ii) 1,648 vested on March 7, 2017. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $14.75 (March 6, 2017) and $14.50 (March 7, 2017). |
Potential Payments upon Termination or Change in Control
The table below reports the amount of compensation payable to each of our named executive officers in the event of termination of such executive’s employment and in certain situations following a change in control of the Company. The amounts shown in the table below reflect the assumption that the named executive officer’s termination of employment was effective as of December 29, 2017,25, 2020, and that the executive was employed through such date. The columns for amounts due upon a change in control or upon certain terminations following a change in control reflect the assumption that the change in control occurred and, if applicable, the executive experienced a termination of employment as of December 29, 2017.25, 2020. Amounts listed represent the incremental amounts due to the named executive officers beyond what they would have received without, as applicable, a termination of employment or change in control. Thus, amounts earned under the 20172020 Plan, which were earned as of the end of fiscal 2017,2020, are not duplicated in the table. All amounts shown are estimates of the amounts which would be paid out to the executives. The actual amounts to be paid out can only be determined at the time of the relevant triggering event.
For purposes of the table, the value attributed to acceleration of the vesting of restricted stock awards is based on the closing price of our common stock on the last trading day of fiscal 20172020 (December 29, 2017)25, 2020), which was $20.50.$23.89. | | EXECUTIVE BENEFITS AND PAYMENTS UPON SEPARATION | INVOLUNTARY NOT-FOR-CAUSE TERMINATION ON 12/29/2017 | | DISABILITY ON 12/29/2017 | DEATH ON 12/29/2017 | CHANGE IN CONTROL ON 12/29/2017(1) | TERMINATION BY EXECUTIVE FOR GOOD REASON OR BY THE COMPANY WITHOUT CAUSE DURING THE TWO-YEAR PERIOD FOLLOWING A CHANGE IN CONTROL ON 12/29/2017(1)(2) | | |
Executive Benefits and Payments Upon Separation | | Executive Benefits and Payments Upon Separation | Involuntary Not-For-Cause Termination on 12/25/2020 ($) | | Disability on 12/25/2020(1) ($) | Death on 12/25/2020(1) ($) | Change in Control on 12/25/2020(1)(2) ($) | Termination By Executive For Good Reason or By the Company Without Cause At or During the Two-Year Period Following a Change in Control on 12/25/2020(1)(2)(3) ($) | |
Christopher Pappas | | | | | Christopher Pappas | |
Acceleration of Vesting of Restricted Stock | — |
| | — |
| — |
| — |
| — |
| | Acceleration of Vesting of Restricted Stock | — | | 3,949,734 | 4,483,532 | (6) |
Cash Severance Payment | $795,000 | (3) | — |
| — |
| — |
| $3,582,782 | | Cash Severance Payment | 1,935,514 | (4) | — | 5,671,542 | |
Total | $795,000 | | — |
| — |
| — |
| $3,582,782 | | Total | 1,935,514 | | 3,949,734 | 4,483,532 | 10,155,074 | |
John Pappas | | | | | John Pappas | |
Acceleration of Vesting of Restricted Stock | — |
| | — |
| — |
| — |
| — |
| | Acceleration of Vesting of Restricted Stock | — | | 2,170,622 | 2,463,967 | (6) |
Cash Severance Payment | $395,000 | (3) | — |
| — |
| — |
| $1,198,272 | | Cash Severance Payment | 832,275 | (5) | — | 2,119,400 | |
Total | $395,000 | | — |
| — |
| — |
| $1,198,272 | | Total | 832,275 | | 2,170,622 | 2,463,967 | 4,583,367 | |
James Leddy | | | | | James Leddy | |
Acceleration of Vesting of Restricted Stock | — |
| | $123,882 | $98,195 | $88,109 | (9) | Acceleration of Vesting of Restricted Stock | — | | 1,643,704 | 1,827,036 | (6) |
Cash Severance Payment | $375,000 | (4) | — |
| — |
| — |
| $1,348,272 | | Cash Severance Payment | 704,813 | (5) | — | 1,567,062 | |
Total | $375,000 | | $123,882 | $98,195 | $1,436,381 | | Total | 704,813 | | 1,643,704 | 1,827,036 | 3,394,098 | |
John Austin | | | | | |
Acceleration of Vesting of Restricted Stock | $0 | | $0 | | |
Cash Severance Payment | $0 | | — |
| — |
| — |
| $0 | | |
Total | $0 | | $0 | | |
Alexandros Aldous | | | | | Alexandros Aldous | |
Acceleration of Vesting of Restricted Stock | $462,337 | (6) | $1,147,160 | $910,016 | (9) | Acceleration of Vesting of Restricted Stock | — | | 1,517,445 | 1,688,569 | (6) |
Cash Severance Payment | $325,000 | (7) | — |
| — |
| — |
| $814,678 | | Cash Severance Payment | 662,325 | (5) | — | 1,467,926 | |
Total | $787,337 | | $1,147,160 | $910,016 | $1,724,694 | | Total | 662,325 | | 1,517,445 | 1,688,569 | 3,156,495 | |
Patricia Lecouras | | | | | Patricia Lecouras | |
Acceleration of Vesting of Restricted Stock | — |
| | $568,486 | $375,130 | (9) | Acceleration of Vesting of Restricted Stock | — | | 1,183,606 | 1,317,080 | (6) |
Cash Severance Payment | $265,000 | (8) | — |
| — |
| — |
| $671,553 | | Cash Severance Payment | 531,464 | (5) | — | 1,162,582 | |
Total | $265,000 | | $568,486 | $375,130 | $1,046,683 | | Total | 531,464 | | 1,183,606 | 1,317,080 | 2,479,662 | |
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(1) | Amounts in this column assume the individual’s awards of time-based vesting and performance-based vesting restricted shares of our common stock are not assumed in the change in control transaction and therefore vested immediately prior to the change in control transaction. If awards are assumed by the successor entity in the change in control, awards will vest if within one year following the change in control,(1) The named executive officers executed letters which noted that the performance measure with respect to the share-price portion of the performance-based vesting restricted share award granted in fiscal 2019 to the named executive officers (the “2019 PRSA Award”) shall be deemed achieved at target upon certification by the Compensation Committee and that the share-price portion of the 2019 PRSA Award shall not vest upon such certification but instead shall remain subject to forfeiture and vest at the earlier of (a) at the end of the fiscal 2021 (which shall be the end of the “Vesting Period” under the 2019 PRSA Award), subject to the named executive terminates employment by reason of death, disability, normal or early retirement, for “good reason” by the executive or involuntary termination for any reason other than “cause”. Thus amounts in this column would also apply if the individual’s time-based vesting and performance-based vesting restricted shares are assumed in the change in control transaction and the individual’s employment terminated for any of the foregoing reasons as of December 29, 2017. |
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(2) | As discussed in “EXECUTIVE COMPENSATION-Compensation Discussion and Analysis-Employment Agreements, Offer Letters and Severance Benefits-Offer Letters and Other Severance Benefits-Executive Change in Control Plan” the severance benefit due in connection with a resignation by the individual for “good reason” or termination by the Company without “cause” (as such terms are defined in the Executive CIC Plan) during the two-year period following a change in control is a multiple of the individual’s base salary and reference bonus (average of the annual bonuses paid to the executive for the two calendar years immediately preceding the change in control). The multiple for Mr. C. Pappas is 3x, and the multiple for the other named executive officers is 2x. For purposes of the table, annual bonuses paid for 2015 and 2016 were used to calculate the reference bonus, except in the case of Mr. Leddy as he was employed for less than a year and, pursuant to the Executive CIC Plan, his target bonus for fiscal 2017 is used as the reference bonus. In addition, under the Executive CIC Plan, amounts are reduced in the event that the individual would be subject to excise taxes imposed under Section 4999 of the Code or any similar tax imposed by state or local law, but only where the after-tax payments received by the individual would be greater than the after-tax payments without regard to such reduction. The total amounts payable above have been calculated assuming no reduction would apply to avoid excise taxes under Section 4999 or state or local law.
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(3) | Pursuant to our employment agreements with each of Mssrs. C. Pappas and J. Pappas, if such named executive officer is terminated by us without “cause” (as that term is defined in his employment agreement), he is entitled to receive an amount equal to his annual base |
officers providing continuous service to the Company until such date or (b) the date the named executive officers have a qualifying termination under Section 3 of the 2019 PRSA Award if before the end of the fiscal 2021.
(2) Amounts in this column assume the individual’s awards of time-based vesting and performance-based vesting restricted shares of our common stock are not assumed in the change in control transaction and therefore vested immediately prior to the change in control transaction. If awards are assumed by the successor entity in the change in control, awards will vest if within one year following the change in control, the executive terminates employment by reason of death, disability, normal or early retirement, for “good reason” by the executive or involuntary termination for any reason other than “cause.” Thus amounts in this column would also apply if the individual’s time-based vesting and performance-based vesting restricted shares are assumed in the change in control transaction and the individual’s employment terminated for any of the foregoing reasons as of December 25, 2020.
(3) As discussed in “EXECUTIVE COMPENSATION - Compensation Discussion and Analysis - Employment Agreements, Offer Letters and Severance Benefits - Executive Change in Control Plan” the severance benefit due in connection with a resignation by the individual for “good reason” or termination by the Company without “cause” (as such terms are defined in the Executive CIC Plan) during the two-year period following a change in control is a multiple of the individual’s base salary, target annual bonus for the year of termination, a lump sum benefits payment and an outplacement payment. The multiple for Mr. C. Pappas is 3x, and the multiple for the other named executive officers is 2x. In addition, under the Executive CIC Plan, amounts are reduced in the event that the individual would be subject to excise taxes imposed under Section 4999 of the Code or any similar tax imposed by state or local law, but only where the after-tax payments received by the individual would be greater than the after-tax payments without regard to such reduction. The total amounts payable above have been calculated assuming no reduction would apply to avoid excise taxes under Section 4999 or state or local law.
(4) Pursuant to our severance agreement with Mr. C. Pappas, if such named executive officer is terminated by us without “cause” (as that term is defined in the severance agreement), he is entitled to receive an amount equal to a multiple of his annual base salary and target annual bonus for the year of termination as well as a lump-sum benefits payment and lump-sum outplacement services payment payable for a period of one (1) yeartwo (2) years from the date of his termination and on the same terms and with the same frequency as his annual base salary was paid prior to such termination.
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(4) | Mr. Leddy is entitled to receive his base salary for twelve months following our termination of his employment without “cause” (as that term is defined in his offer letter). |
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(5) | Following his separation from the Company in October 2017, Mr. Austin entered into a severance agreement with the Company under which he is entitled to receive $562,500 cash severance and $69,721, which represents acceleration of vesting of the remaining unvested shares of restricted stock granted to Mr. Austin on March 6, 2015, March 7, 2016 and March 6, 2017, respectively. Mr. Austin would not be entitled to receive any additional amounts if a change in control occurred on December 31, 2017. |
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(6) | The vesting of a special award of 45,106 shares of restricted stock made to Mr. Aldous during fiscal 2015 would accelerate if we were to terminate Mr. Aldous’s employment without cause. |
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(7) | Mr. Aldous is entitled to receive an amount equal to twelve months of his base salary as in effect as of the date of his severance agreement or on the effective date of his termination, whichever is greater, following our termination of his employment without “cause” (as that term is defined in his severance agreement). |
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(8) | Ms. Lecouras is entitled to receive her base salary for twelve months following our termination of her employment without “cause” (as that term is defined in her offer letter). |
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(9) | Amounts assume the individual’s awards of time-based vesting and performance-based vesting restricted shares of our common stock were assumed in the change in control transaction and were accelerated in connection with the executive’s termination without “cause” or resignation for “good reason” as of December 29, 2017. |
The multiple for Mr. C. Pappas is 3x.
(5) Pursuant to our severance agreements with each of Messrs. J. Pappas, Leddy and Aldous as well as Ms. Lecouras, if such named executive officer is terminated by us without “cause” (as that term is defined in the severance agreement), they are entitled to receive an amount equal to a multiple of their annual base salary and target annual bonus for the year of termination as well as a lump-sum benefits payment and lump-sum outplacement payment payable for a period of eighteen (18) months from the date of their termination and on the same terms and with the same frequency as their annual base salary was paid prior to such termination. The multiple for each of Messrs. J. Pappas, Leddy and Aldous as well as Ms. Lecouras is 2x. (6) Amounts assume the individual’s awards of time-based vesting and performance-based vesting restricted shares of our common stock were assumed in the change in control transaction and were accelerated in connection with the executive’s termination without “cause” or resignation for “good reason” as of December 25, 2020.
Employment Agreements, Offer Letters and Severance Benefits
The following describes these arrangements as of December 25, 2020.
Mr. C. Pappas’ Employment Agreement
We entered into an employment agreement with Mr. C. Pappas on August 2, 2011, immediately prior to the consummation of our IPO. Mr. C. Pappas’ employment agreement has a three-year term and provides for the automatic extension of the term for successive one-year terms unless either party to the agreement elects not to renew the agreement at least 60 days prior to the end of the term. The agreement provides for an annual base salary of $750,000 (which has been subsequently increased), an annual cash bonus opportunity to be determined by the Board (or a committee thereof) and the right to participate in our equity-based incentive plans. Additionally, the agreement provides for four weeks of paid vacation annually, a monthly car allowance of $2,000 and participation in our employee benefit plans and programs for salaried employees to the extent permissible under such plans or programs.
The agreement also provides for severance benefits if Mr. C. Pappas is terminated by us without cause, pursuant to which he would receive the continued payment of base salary for one year from the date of termination and the right to receive any bonus that has been earned but remains unpaid on the date of termination; provided, however, that any severance or benefits payable to Mr. C. Pappas in the event of a change in control of the Company shall be determined in accordance with the Executive CIC Plan. Mr. C. Pappas’ employment agreement also includes a non-competition and non-solicitation provision, pursuant to which Mr. C. Pappas agrees, among other things, that for one year following the termination of his employment with us, he will not (i) compete with us or our subsidiaries; (ii) induce a customer or supplier of ours to cease doing business with us; or (iii) induce an employee of ours to leave our employ. For purposes of Mr. C. Pappas’ employment agreement, “cause” is defined as (i) engaging in willful misconduct that is injurious to the Company or our affiliates or (ii) the embezzlement or misappropriation of our, or our affiliates’, funds or property; however, that no act, or failure to act, is to be considered “willful” unless done, or omitted to be done, not in good faith and without reasonable belief that the action or omission was in the best interest of the Company.
Mr. J. Pappas’ Employment Agreement
We entered into an employment agreement with Mr. J. Pappas on January 12, 2012. Mr. J. Pappas’ employment agreement has a three-year term and provides for the automatic extension of the term for successive one-year terms unless either party to the agreement elects not to renew the agreement at least 60 days prior to the end of the term. The agreement provides for an annual base salary of $250,000 (which has been subsequently increased), an annual cash bonus opportunity to be determined by the Board (or a committee thereof) and the right to participate in our equity-based incentive plans. Additionally, the agreement provides for four weeks of paid vacation annually, a monthly car allowance of $2,000 and participation in our employee benefit plans and programs for salaried employees to the extent permissible under such plans or programs.
The agreement also provides for severance benefits if Mr. J. Pappas is terminated by us without cause, pursuant to which he would receive the continued payment of base salary for one year from the date of termination and the right to receive any bonus that has been earned but remains unpaid on the date of termination; provided, however, that any severance or benefits payable to Mr. J. Pappas in the event of a change in control of the Company shall be determined in accordance with the Executive CIC Plan. Mr. J. Pappas’ employment agreement also includes a non-competition and non-solicitation provision identical to the corresponding provision in the employment agreement with Mr. C. Pappas. For purposes of Mr. J. Pappas’ employment agreement, “cause” is defined in the same manner as in the employment agreement with Mr. C. Pappas.
Offer Letters and Other Severance Benefits
James Leddy
In connection with Mr. Leddy becoming Chief Financial Officer and Assistant Corporate Secretary, the Company entered into an offer letter with Mr. Leddy on October 17, 2017, effective as of November 11, 2017, which provides for the following: (i) an annual base salary of $375,000 (which has been subsequently increased), an annual cash bonus opportunity to be determined by the Board (or a committee thereof), and the right to participate in our equity-based incentive plans. Mr. Leddy’s offer letter also provides that he is entitled to receive his base salary for a period of one year (or payment until he finds a position that provides 80% or more of his then current base salary, if shorter), provided that any severance or benefits payable to Mr. Leddy in the event that his employment is terminated by the Company without “cause” (as defined in the Executive CIC Plan) or by Mr. Leddy for “good reason” (as defined in the Executive CIC Plan), within two years following a change in control of the Company, shall be determined in accordance with the Executive CIC Plan.
Alexandros Aldous
The terms of Mr. Aldous’ employment are described in an offer letter dated February 11, 2011, provided to him by the Company. This offer letter has no specific term and provides that Mr. Aldous is an at-will employee. Mr. Aldous’ annual base salary under the offer letter was $155,000 (which has been subsequently increased). Under his offer letter, Mr. Aldous was initially eligible to participate in our annual, performance-based cash incentive program at a target of 25% of his annual base salary. The Compensation Committee subsequently increased his target under the annual, performance-based cash incentive program to 35% of his annual base salary for 2012, increased the target to 50% of his annual base salary starting in 2013, and then further increased the target to 75% of his annual base salary starting in 2016.
In August 2014, Mr. Aldous entered into a severance agreement with the Company whereby Mr. Aldous is entitled to receive an amount equal to twelve months of his base salary as in effect as of the execution date of the severance agreement or on the effective date of his termination, whichever is greater, following the Company’s termination of his employment without “cause” (as defined in the severance agreement), provided that any severance or benefits payable to Mr. Aldous in the event that his employment is terminated by the Company without “cause” (as defined in the Executive CIC Plan) or by Mr. Aldous for “good reason” (as defined in the Executive CIC Plan), within two years following a change in control of the Company, shall be determined in accordance with the Executive CIC Plan.
Patricia Lecouras
The terms of Ms. Lecouras’ employment are described in an offer letter dated January 1, 2007, provided to her by the Company. This offer letter has no specific term and provides that Ms. Lecouras is an at-will employee. Ms. Lecouras’ annual base salary under the offer letter was initially $200,000 (which has been subsequently increased). Ms. Lecouras is eligible to participate in our annual performance-based cash incentive program at a target of 75% of her annual base salary. Ms. Lecouras’ offer letter also provides that she is entitled to receive her base salary for a period of twelve months following
her termination by us without “cause” (as defined in the offer letter), provided that any severance or benefits payable to Ms. Lecouras in the event that her employment is terminated by the Company without “cause” (as defined in the Executive CIC Plan) or by Ms. Lecouras for “good reason” (as defined in the Executive CIC Plan), within two years following a change in control of the Company, shall be determined in accordance with the Executive CIC Plan.
Severance Agreements
On March 25, 2020, the Compensation Committee approved certain enhancements to severance arrangements payable to its current named executive officers, absent a change in control, to provide stability and to help retain management. These changes were documented through severance agreements that provide that, during the term of the severance agreement, if the named executive officer is terminated without cause or resigns for good reason not in connection with a change in control of the Company, and subject to an execution of a release of claims, the named executive officer would be entitled to the following:
•A cash amount, to be paid in the form of salary continuation, equal to the named executive officer’s base salary and annual bonus for the year of termination multiplied by an applicable severance multiple (2x for Mr. C. Pappas and 1.5x for other named executive officers);
•A lump-sum cash payment in lieu of benefits continuation;
•A lump-sum cash payment in lieu of reimbursement for outplacement service costs; and
•Any earned but unpaid annual bonus with respect to the year prior to the year of termination.
The severance agreements each have an initial term of two years that automatically renews on an annual basis unless and until terminated by the Board prior to any renewal in accordance with the terms of the severance agreement.
Executive Change in Control Plan
On March 25, 2020, the Compensation Committee approved certain enhancements to the Executive CIC Plan which the Company has in place for certain senior executives of the Company, including the named executive officers. Under the Executive CIC Plan, if during the two years following a “change in control” of the Company (as defined in the Executive CIC Plan), a named executive officer’s employment is terminated by the Company without “cause” (as defined in the Executive CIC Plan), or the named executive officer resigns for “good reason” (as defined in the Executive CIC Plan), then the named executive officer will be entitled to the following:
•A cash amount equal to the named executive officer’s base salary multiplied by an applicable severance multiple (3x for Mr. C. Pappas and 2x for other named executive officers);
•A cash amount equal to the named executive officer’s target annual bonus for the year of termination multiplied by the same severance multiple that applies to base salary;
•If the termination of employment occurs during the calendar year in which the change in control occurs, a pro-rated target annual bonus for the year of termination, and if the termination of employment occurs in a calendar year following the calendar year in which the change in control occurs, a pro-rated annual bonus for the year of termination paid at the same time and in the same form as annual bonuses are paid to active employees generally based on actual performance in respect of the performance year, with all individual performance goals deemed attained at 100%;
•A lump-sum cash payment in lieu of benefits continuation for the two years commencing on the change in control date; and
•A lump-sum cash payment in lieu of reimbursement for outplacement service costs.
If any payments or benefits provided to a named executive officer pursuant to the Executive CIC Plan would trigger the payment of the excise tax imposed by Section 4999 of the Code or any similar tax imposed by state or local law, the named executive officer will receive (i) the full payment or (ii) a payment reduced to the minimum amount necessary to avoid any such excise tax, whichever amount is greater on a post-tax basis. In no event is the Company responsible to gross-
up or indemnify any named executive officer for excise taxes paid or reductions to payments and benefits received to avoid such excise taxes.
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our chief executive officer. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
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• | | For fiscal 2017,2020, the median annual total compensation of all employees of ourthe Company (other than the chief executive officer) was $46,549$44,524 and the annual total compensation of our chief executive officer was $1,535,875.$3,804,992. In each case, compensation was calculated using the methodology for determining the compensation of our named executive officers as reported in the Summary Compensation Table. |
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• | | Based on this information, for fiscal 2017,2020, the ratio of the annual total compensation of our chief executive officer to the median annual total compensation of all employees of ourthe Company was 33.085.5 to 1. |
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How We Calculated the Ratio
•The “median annual total compensation of all employees” is the annual total compensation of a single employee who is at the midpoint of all of the employees of ourthe Company (other than our chief executive officer) ranked in order of compensation amounts. When determining our midpoint, we considered the compensation of 1,9822,102 employees (other than the chief executive officer) who were employed by ourthe Company on November 1, 2017.as of December 25, 2020. Consistent with SEC requirements, we excluded all of our Canadian employee workforce, which was comprised of approximately fifty-six44 employees in Canada, who collectively constituted less than 3%three percent (3%) of our total workforce of approximately 2,0392,146 employees as of November 1, 2017,December 25, 2020, from consideration in determining the median annual total compensation of all employees. We do not have employees in any countries other than the United States and Canada, and we did not make any adjustments for the cost of living.
•SEC regulations allow employers to identify the midpoint based on a “consistently applied compensation measure” (CACM). WeDue to the termination of the initially identified median employee, we identified a new median employee in fiscal 2020. As a result, for fiscal 2020, we ran a check detail gross pay report as of November 1, 2017December 25, 2020 as our CACM to determine the midpoint of our employee population. We chose this CACM because the data was readily available and, in our judgement,judgment, did not include or exclude elements of compensation that would affect our midpoint.
Once•Although there were two acquisitions in early 2020, which initially caused an increase in our employee population, due to the economic impact of COVID-19, the Company reduced its workforce by approximately 28% in fiscal 2020.
•For fiscal 2020, once we identified our new median employee, we then calculated the median employee’s “annual total compensation.” We followed the methodology required under SEC regulations for calculating the total compensation of our named executive officers as reported in the Summary Compensation Table. We did not add the value of employer contributions to broad-based employee benefit plans except to the extent such amounts are included in the Summary Compensation Table for our named executive officers.
Director Compensation
Pursuant to our Corporate Governance Guidelines, the Board is responsible for setting the compensation of its independent directors. For fiscal 2017,2020, the retainer we paid our non-employee directors was increased from $75,000 to $85,000.$130,000. The retainer consists of a mix of cash and equity. The cash portion of the retainer, was increased from $25,000 to $30,000, and is paid in quarterly installments on the first day of each fiscal quarter. On May 15, 2020, in response to the significant impact on the global economy, and the food service industry in particular, from the effects of the COVID pandemic, the Board unanimously approved waiving the cash retainer component of the Board’s compensation package for purposes of liquidity preservation by the Company until the Board reevaluated such cash retainer compensation. On December 3, 2020, the Board approved the restoration of the $30,000 cash retainer component of the 2020-2021 independent Board member compensation, on a pro-rata basis for the remainder of each Board member’s current term, such restoration effective as of December 26, 2020. The equity portion of the retainer, was increased from $50,000 to $55,000$100,000 in time-based vesting restricted stock, which will vest at the Annual Meeting. In fiscal 2017,2020, we did not pay directors for attending meetings of the Board or its committees, but we did pay directors for lead directorship and committee membership and chairmanship andas well as reimbursed our independent directors for their expenses incurred in attending Board and committee meetings. Our directors receive retainers for their participation as members of committees of the Board equal to $8,000$12,500 for Audit Committee membership, $5,000$10,000 for Compensation Committee membership and $4,000$7,500 for Nominating and Corporate Governance Committee membership. Directors who serve as a chairperson of a committee of the Board receive retainers equal to $15,000$25,000 for the Audit Committee chairpersonship, $10,000$20,000 for the Compensation Committee chairpersonship, and $7,500$15,000 for the Nominating and Corporate Governance Committee chairpersonship. Our Lead Director also receives a retainer equal to $15,000 for Board lead directorship.
The table below summarizes the compensation paid by us to our directors for fiscal 2017:2020:
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Name | Fees Earned or Paid in Cash ($) | Stock Awards(3) ($) | | All Other Compensation ($) | Total ($) |
Christopher Pappas(1) | — | — | | — | — |
John Pappas(1) | — | — | | — | — |
Ivy Brown(2) | — | — | | — | — |
Dominick Cerbone | 63,875 | 100,001 | | — | 163,876 |
Joseph Cugine | 47,375 | 100,001 | | — | 147,376 |
Steven F. Goldstone | 14,125 | 100,001 | | — | 114,126 |
Alan Guarino | 40,375 | 100,001 | | — | 140,376 |
Stephen Hanson | 25,500 | 100,001 | | — | 125,501 |
Aylwin Lewis(2) | — | — | | — | — |
Katherine Oliver | 23,325 | 100,001 | | — | 123,326 |
(1) These individuals did not receive any compensation for their service as a director.
(2) These individuals did not receive any compensation in fiscal 2020 as their election as directors was not effective until January 1, 2021.
(3) Each of these restricted stock awards was unvested as of the end of fiscal 2020, and they will each vest at the Annual Meeting. Consistent with ASC Topic 718, the amounts in the table reflect the grant date fair value of our awards to each of our directors, other than Messrs. C. Pappas, J. Pappas and Lewis as well as Ms. Brown, of 7,746 restricted shares of our common stock on May 15, 2020, the date of our 2020 annual meeting of stockholders. The grant date fair value for these awards of restricted stock was determined by taking the closing market price of the Company’s common stock on the date of grant, which was $12.91, and multiplying it by the number of shares awarded.
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| FEES EARNED OR PAID IN CASH ($) | STOCK AWARDS ($)(2) | ALL OTHER COMPENSATION ($) | TOTAL ($) |
Christopher Pappas(1) | — |
| — |
| — |
| — |
|
John Pappas(1) | — |
| — |
| — |
| — |
|
John DeBenedetti(1) | — |
| — |
| — |
| — |
|
Dominick Cerbone | $58,000 | $54,996 | — |
| $112,996 |
John A. Couri | $46,500 | $54,996 | — |
| $101,496 |
Joseph Cugine | $43,000 | $54,996 | — |
| $97,996 |
Steven Goldstone | $25,500 | $54,996 | — |
| $80,496 |
Alan Guarino | $49,000 | $54,996 | — |
| $103,996 |
Stephen Hanson | $42,000 | $54,996 | — |
| $96,996 |
Katherine Oliver | $34,000 | $54,996 | — |
| $88,996 |
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(1) | These individuals did not receive any compensation for their service as a director, and they have no outstanding options or stock awards as of the end of fiscal 2017. |
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(2) | Each of these restricted stock awards was unvested as of the end of fiscal 2017, and they will each vest at the Annual Meeting. Consistent with ASC Topic 718, the amounts in the table reflect the grant date fair value of our awards to each of our directors, other than Messrs. C. Pappas, J. Pappas, and J. DeBenedetti, of 3,691 restricted shares of our common stock on May 19, 2017, the date of our 2017 annual meeting of stockholders. The grant date fair value for these awards of restricted stock was determined by taking the closing market price of the Company’s common stock on the date of grant, which was $14.90, and multiplying it by the number of shares awarded. |
Director Stock Ownership Requirement
To further align the interests of the Board with the interests of the Company’s stockholders, the Company believes that its independent directors should be stockholders and have a significant personal financial stake in the Company. Accordingly, each independent director is required to own shares of the Company’s common stock valued at three times the director’s equity component of the then-current annual retainer. Each director has three years from the date of the director’s election to the Board to attain such level of stock ownership. After achieving the minimum level of stock ownership, ownership of the minimum amount must be maintained as long as the director remains on the Board. The Nominating and Corporate Governance Committee in its discretion may extend the period of time for attainment of such ownership levels in appropriate circumstances. Until the stock ownership requirements are met, directors are required to retain the net number of shares of the Company’s common stock received by the directors pursuant to awards granted to the directors or exercised by the directors pursuant to the 20112019 Equity Incentive Plan.
PROPOSAL 2—RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is responsible for the appointment, compensation and oversight of the independent registered public accounting firm. The Audit Committee has selected BDO USA, LLP (“BDO”) as our independent registered public accounting firm for fiscal 20182021 and has recommended to the Board that this selection be submitted to our stockholders for ratification at the Annual Meeting. Stockholder ratification of the selection of BDO as our independent registered public accounting firm is not required by law or otherwise. However, the Board, upon the recommendation of the Audit Committee, is submitting the selection of BDO to stockholders for ratification as a matter of good corporate governance. If stockholders do not ratify the selection of BDO, the Audit Committee will reconsider the matter. BDO has served as our independent registered public accounting firm since 2006. The Audit Committee considers the impact of changing auditors when assessing whether to retain the current independent registered public accounting firm.
Representatives of BDO, which served as our independent registered public accounting firm for fiscal 2017,2020, will be present at the Annual Meeting to respond to appropriate questions and to make such statements as they may desire.
The Board unanimously recommends that stockholders vote “FOR” ratification of the selection of BDO as our independent registered public accounting firm for fiscal 2018.2021. Proxies received by the Board will be voted “FOR” ratification of BDO unless a contrary choice is specified in the proxy.
Vote Required
An affirmative vote of a majority of the shares represented at the Annual Meeting in person (including by webcast) or by properly executed proxy and entitled to vote on Proposal 2 is necessary to ratify the appointment of BDO as our independent registered public accounting firm for fiscal 2018.2021. Abstentions will be equivalent to a vote against this proposal. If no voting specification is made on a properly returned or voted proxy card, the proxy cardproxies will vote FOR Proposal 2.
Fees Paid to BDO USA, LLP
In addition to retaining BDO USA, LLP to audit our financial statements for fiscal 2017,2020, we engaged the firm from time to time during the year to perform other services. The following table sets forth the aggregate fees billed by BDO USA, LLP in connection with services rendered during the last two fiscal years.
| | | | | | | | | Fiscal 2020 | | Fiscal 2019 |
Fee Category | | Fiscal 2017 | | Fiscal 2016 | Fee Category | | ($) | | ($) |
Audit Fees | | 1,345,815 |
| | 1,158,854 |
| Audit Fees | | 1,421,980 | | 1,463,992 |
Audit-Related Fees | | 138,670 |
| | 77,201 |
| Audit-Related Fees | | — | | — |
Tax Fees | | — |
| | — |
| Tax Fees | | — | | — |
All Other Fees | | — |
| | — |
| All Other Fees | | — | | — |
| | 1,484,485 |
| | 1,236,055 |
| | 1,421,980 | | 1,463,992 |
Audit Fees consist of fees billed for professional services rendered in connection with the audit of our annual financial statements, the review of the interim financial statements included in quarterly reports and services that are normally provided by BDO in connection with statutoryregulatory or registration filings and regulatory filings or engagements.secondary offerings. Fees for audit services in fiscal 2017 include fees billed for the audit of our annual financial statements, fees billed for professional services related to BDO’s assessment of internal control over financial reporting2020 and fees billed for professional services related to our public offering of common stock, including providing comfort letters and consents. Fees for audit services in fiscal 2016 include2019 included fees billed for the audit of our annual financial statements and fees billed for professional services related to BDO’s assessment of internal controlcontrols over financial reporting.
Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees.” In fiscal 2017 and fiscal 2016, fees for audit-related services include fees billed for agreed upon procedures work performed in connection with the Company’s acquisitions.
Tax Fees consist of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal and state tax compliance, tax audit defense and mergers and acquisitions.
All Other Fees consist of fees for services other than the services reported above.
In fiscal 20172020 and fiscal 2016,2019, no services other than the audit and audit-related services discussed above were provided by BDO.
The Audit Committee has considered whether the provision of the audit-related services described above by BDO is compatible with maintaining auditor independence and determined that BDO’s provision of audit-related services did not compromise its independence as our independent registered public accounting firm.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services
The Audit Committee has adopted a policy requiring pre-approval of all audit and non-audit related services to be provided by the Company’s independent auditor regardless of amount. These services may include audit services, audit-related services, tax services and other related services. BDO and management are required to periodically report to the Audit Committee regarding the extent of services provided by BDO in accordance with this pre-approval and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis. In fiscal 2017,2020, all services provided by BDO were pre-approved by the Audit Committee in accordance with this policy.
Audit Committee Report
The Audit Committee of the Board reports to and acts on behalf of the Board and is responsible for providing independent, objective oversight of the Company’s accounting functions and internal controls and processes for monitoring compliance with laws and regulations. The Audit Committee is composed of “independent directors,” as defined in the NASDAQ Listing Rules, and acts under a written charter in compliance with the Sarbanes-Oxley Act of 2002 and other regulations adopted by the SEC and NASDAQ.
The role of the Audit Committee is to assist the Board in the oversight of:
•Compliance with legal and regulatory requirements;
•Accounting and reporting practices;
•The integrity of the Company’s financial statements;
•The qualifications, independence and performance of BDO, the Company’s independent registered public accounting firm;
•The performance of the Company’s internal audit function; and
•Risk and risk management.
During fiscal 2017,2020, the Audit Committee held eight (8)seven (7) meetings and fulfilled all its responsibilities as set forth in the Audit Committee’s charter, including:
•Reviewing with BDO and the internal auditors the overall scope and plans for the respective audits for the current year;
•Approving all audit engagement fees and terms, as well as permissible non-audit engagements with BDO (please refer to “PROPOSAL 2-RATIFICATION2 - RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM-FEESFIRM - FEES PAID TO BDO USA, LLP” beginning on page 4147 of this proxy statement for a detailed discussion of such fees and related approvals);
•Reviewing the experience and qualifications of the senior members of the BDO audit team;
•Assuring the regular rotation of BDO’s lead audit partner as required by law and considering whether there should be rotation of the independent registered public accounting firm itself;
•Reviewing and discussing with management the Company’s earnings press releases prior to release to the public;
•Meeting with BDO and the Company’s Director of Internal Audit, with and without management present, to discuss the adequacy and effectiveness of the Company’s internal control over financial reporting and the overall quality of the Company’s financial reporting; and
•Meeting independently with each of the Company’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and General Counsel.
With respect to fiscal year 2017,2020, the Audit Committee hereby reports as follows:
•The Audit Committee has reviewed and discussed the audited financial statements with the Company’s management and representatives from its independent registered public accounting firm, BDO.
•The Audit Committee has discussed with its independent registered public accounting firm, BDO, the matters required to be discussed by the statement on Auditing Standards No. 1301, Communications with Audit Committees, adopted by the Public Company Accounting Oversight Board.
•The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence. In addition, the Audit Committee has discussed and considered whether the provision of non-audit services by the Company’s principal auditor, as described above, is compatible with maintaining auditor independence.
•Based on the review and discussion referred to in the immediately preceding first through third paragraphs above, the Audit Committee recommended to the Company’s Board of Directors the inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K for fiscal year 20172020 for filing with the SEC.
The Chefs’ Warehouse, Inc. Audit Committee
Dominick Mr. Cerbone (chairman)
Christina Carroll Ms. Brown
JosephMr. Cugine
Stephen Mr. Hanson
The foregoing Report of the Audit Committee shall not be considered soliciting material, nor shall it be deemed “filed” for any purpose, including for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section. The Report of the Audit Committee shall not be deemed incorporated by reference into any filing under the Securities Act or under the Exchange Act, regardless of any general incorporation language in such filing.
PROPOSAL 3—3 — ADVISORY VOTE ON EXECUTIVE COMPENSATION
As described in this proxy statement under the caption “EXECUTIVE COMPENSATION-CompensationCOMPENSATION - Compensation Discussion and Analysis,” the Compensation Committee’s goal in setting executive compensation is to attract and retain highly-qualified executives by providing total compensation for each position that our board of directors and chief executive officer believe is competitive within our business sector. We also seek to provide appropriate incentives for our named executive officers to achieve performance metrics related to company-wideCompany-wide performance and the individual’s relevant performance goals. In applying these principles, we seek to integrate compensation with our short-and long-term strategic plans and to align the interests of our named executive officers with the long-term interests of our stockholders.
Stockholders are urged to read the Compensation Discussion and Analysis contained in this proxy statement, which discusses how our compensation policies and procedures implement our compensation objectives and philosophies, as well as the summary compensation table set forth in “EXECUTIVE COMPENSATION-SummaryCOMPENSATION - Summary Compensation Table-FiscalTable - Fiscal Years 2015-2017”2018-2020” and other related compensation tables and narrative disclosure which describe the compensation of our named executive officers in fiscal 2017.2020.
The Compensation Committee and the Board believe that the policies and procedures articulated in the Compensation Discussion and Analysis are effective in aligning the interests of our executives with those of our stockholders and in incentivizing performance that supports our short-and long-term strategic objectives and that the compensation of our named executive officers in fiscal 20172020 reflects and supports these compensation policies and procedures.
As required by Section 14A of the Exchange Act and as a matter of good corporate governance, stockholders will be asked at the Annual Meeting to approve the following advisory resolution:
RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.
This advisory vote, commonly referred to as a “say-on-pay” advisory vote, is non-binding on the Board. At our 20122018 annual meeting of stockholders, a majority of our stockholders voted, on a non-binding,an advisory basis, to hold the “say-on-pay” advisory vote every year, and our Board subsequently determined that the Company will do so until the next required vote on the frequency of such “say-on-pay” advisory votes occurs. Accordingly, weWe will hold the next frequency of “say-on-pay” advisory vote at the Annual Meeting.our 2024 annual meeting of stockholders. Although non-binding, the Board and the Compensation Committee will review the voting results of the “say-on-pay” advisory vote and take them into consideration when making future decisions regarding our executive compensation programs.
The Board unanimously recommends that stockholders vote “FOR” the non-binding, advisory vote on executive compensation. Proxies received by the Board will be voted “FOR” the non-binding, advisory vote on executive compensation unless a contrary choice is specified in the proxy.
Vote Required
An affirmative vote of a majority of the shares represented at the Annual Meeting in person (including by webcast) or by properly executed proxy and entitled to vote on Proposal 3 is necessary for approval. Broker non-votes will have no effect on the outcome of this proposal,Proposal 3, and abstentions will be equivalent to a vote against this proposal. If no voting specification is made on a properly returned or voted proxy card, the proxy cardproxies will vote FOR Proposal 3.
PROPOSAL 4—ADVISORY VOTE ON THE FREQUENCY OF ADVISORY VOTES ON EXECUTIVE COMPENSATION
In Proposal 4, the Board is asking stockholders to cast a non-binding advisory vote on how frequently say-on-pay votes should be held in the future. Stockholders will be able to cast their votes on whether to hold say-on-pay votes every one year, two years or three years. Alternatively, you may abstain from casting a vote.
You may cast your vote on the resolution below by indicating your preference for us to conduct future advisory votes on the compensation of our named executive officers every one year, two years or three years, or you may abstain from voting:
RESOLVED, that the option of once every one year, two years or three years that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which the Company is to hold an advisory stockholder vote to approve the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion.
Although this advisory vote is not binding on the Board, the Board will carefully consider and expects to be guided by the alternative that receives the most stockholder support in determining the frequency of future say-on-pay votes. Notwithstanding the outcome of the stockholder vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.
While our executive compensation programs are designed to promote a long-term connection between pay and performance, after careful consideration of the frequency alternatives, the Board believes that conducting advisory votes on executive compensation every one year is appropriate for us and our stockholders at this time.
The Board unanimously recommends that stockholders vote for the frequency of “ONE YEAR” on the non-binding, advisory vote on the frequency of non-binding, advisory votes on executive compensation. Proxies received by the Board will be voted for “ONE YEAR” unless a contrary choice is specified in the proxy.
Vote Required
The advisory vote regarding frequency of a stockholder advisory vote on the compensation of the Company’s named executive officers shall be determined by whichever of the choices-every one year, two years or three years-receives the greatest number of votes cast. Shares represented by proxies which are marked to indicate abstentions from this proposal and broker non-votes with respect to this proposal will not affect its outcome. If no voting specification is made on a properly returned or voted proxy card, the proxies named on the proxy card will vote for a frequency of every ONE YEAR for future advisory votes regarding the executive compensation of the named executive officers.
OTHER MATTERS
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Exchange Act requires our directors, executive officers and holders of more than 10% of our common stock (“Reporting Persons”) to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities. To the Company’s knowledge, based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished tofiled with the Company for fiscal 2017 pursuant to Rule 16a-3(e) of the Exchange ActSEC and written representations from Reporting Persons, that, the Company believes that all Reporting Persons filed the required reports on a timely basis, except that Mr. Austin had one late report for a March 2017 transaction relating to the surrender of stock back to the Company to cover withholding taxes on a release of restricted stock.basis.
Stockholder Proposals for the 20192022 Annual Meeting of Stockholders
The 20192022 annual meeting of stockholders is expected to be held on May 17, 2019,13, 2022, although this date may change. Eligible stockholders interested in submitting a proposal for inclusion in the proxy materials for the annual meeting of stockholders in 20192022 may do so by following the procedures prescribed in Rule 14a-8 under the Exchange Act. In order to be considered timely for inclusion in the Company’s proxy materials for the 20192021 annual meeting of stockholders, stockholder proposals must be received by the Company at 100 East Ridge Road, Ridgefield, Connecticut 06877, addressed to the corporate secretary of the Company, not later than December 5, 2018.November 29, 2021. Eligible stockholders interested in submitting a matter to be brought before the Company’s 20192022 annual meeting although not included in the Company’s proxy materials may do so by following the procedures prescribed in the Company’s bylaws. In order for the proposal to be considered timely for the Company’s 20192022 annual meeting, such stockholder proposal must be received by the Company at the address stated above not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting of stockholders (i.e., not earlier than January 19, 201914, 2022 and not later than February 18, 2019)13, 2022); provided, however, that if the date of the annual meeting is advanced more than 30 days prior to such anniversary date or delayed more than 60 days after such anniversary date, then to be timely such notice must be so received not later than the tenth (10th) day following the day on which notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was first made, whichever occurs first.
The stockholder’s submission must include certain specified information concerning the proposal and the stockholder, including such stockholder’s ownership of our common stock. As we will not entertain any proposals at an annual meeting that do not meet these requirements, we strongly encourage stockholders to seek advice from legal counsel before submitting a proposal. Submitting a stockholder proposal does not guarantee that we will include it in our proxy statement.
THE BOARD HOPES THAT STOCKHOLDERS WILL ATTEND THE ANNUAL MEETING ON THE INTERNET THROUGH THE VIRTUAL WEB CONFERENCE. REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO VOTE EITHER VIA THE INTERNET, OR BY TELEPHONE, OR BY COMPLETING, SIGNING, DATING AND RETURNING THE ENCLOSED PROXY CARD (IF RECEIVED BY MAIL) AS SOON AS POSSIBLE TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING. STOCKHOLDERS OF RECORD OR BENEFICIAL STOCKHOLDERS NAMED AS PROXIES BY THEIR STOCKHOLDERS OF RECORD WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND CAST THEIR VOTES ELECTRONICALLY OVER THE INTERNET DURING THE MEETING.
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| | By Order of the Board of Directors, |
| | /s/ Christopher Pappas |
| | Christopher Pappas |
| | Chairman of the Board |
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April 4, 2018March 29, 2021 | | |