Securities Exchange Act of 1934
(Amendment No. )
☒ | Preliminary Proxy Statement |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☐ | Definitive |
☐ | Definitive Additional Materials |
☐ | Soliciting Material Pursuant to |
☒ | No fee required. |
☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
☐ | Fee paid previously with preliminary materials. |
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(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
Statement on the enclosed WHITE proxy card. The Board does NOT endorse the election of any of the Grossman Group nominees and strongly urges you NOT to sign or return any proxy card sent to you by Ms. Grossman, the Grossman Group or any of their affiliates. If you have previously submitted a proxy card sent to you by Ms. Grossman, the Grossman Group or any of their affiliates, you can revoke that proxy and have your shares voted for our Board’s nominees and on the other matters to be voted on at the meeting by signing, dating and returning the enclosed WHITE proxy card or by following the instructions provided in the WHITE proxy card to submit a proxy over the Internet or by telephone or by appearing at the Annual Meeting and voting your shares in person.
| D. Deverl Maserang, II President and Chief Executive Officer | Randy E. Clark Chairman of the Board of Directors |
FARM@morrowsodali.com
Farmer Bros. Co.• 1912 Farmer Brothers Drive, Northlake, Texas 76262 • (682) 549-6600 www.FarmerBros.com
10, 2019
1. | To elect |
2. | To ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30, |
3. | To hold an advisory(non-binding) vote to approve the compensation paid to the Company’s |
4. | To approve a management proposal to amend the Company’s |
5. | To consider a non-binding stockholder proposal urging the Board of Directors to provide for the phased-in declassification of the Board of Directors, beginning at the 2020 annual meeting, if properly presented at the Annual Meeting; and |
6. | To transact such other business as may properly come before the Annual Meeting or any continuation, postponement or adjournment thereof. |
10, 2019
By Order of the Board of Directors |
|
October 25, 2018
Proposal No. 1: The election of twothree Class IIII directors to serve on our Board for a three-year term of office expiring at the Company’s 20212022 Annual Meeting of Stockholders and until their successors are elected and duly qualified;
Proposal No. 2: The ratification of the selection of Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm for the fiscal year ending June 30, 2019;
Proposal No. 3: The approval, on an advisory(non-binding) basis, of the compensation paid to the Company’s named executive officers;Named Executive Officers; and
Proposal No. 4: The approval of a management proposal to amend the Company’s forum selectionby-lawAmended and Restated Certificate of Incorporation to provide for the phased-in declassification of the Board of Directors, beginning at the 2020 annual meeting.
“FOR” the election of each of the twothree nominees named herein to serve on our Board as Class IIII directors for a three-year term of office expiring at the Company’s 20212022 Annual Meeting of Stockholders and until their successors are elected and duly qualified;
“FOR” the ratification of the selection of Deloitte as our independent registered public accounting firm for the fiscal year ending June 30, 2019;
“FOR” the approval of, in an advisory(non-binding) vote, the compensation paid to our named executive officers;Named Executive Officers; and
“FOR” the approval of a management proposal to amend the Company’s forum selectionby-lawAmended and Restated Certificate of Incorporation to provide for the phased-in declassification of the Board of Directors, beginning at the 2020 annual meeting.
By mail. You may vote your shares by completing, signing and mailing the enclosedWHITE proxy card included with these proxy materials (or WHITE voting instruction form in the case of beneficial holders). Please refer to your WHITE proxy card or WHITE voting instruction form for instructions on either submitting your proxy or voting by mail.
Over the Internet. If you have access to the Internet, you may submit your proxy over the Internet by following the instructions included on the enclosed WHITE proxy card (or WHITE voting instruction form in the case of beneficial holders for whom Internet voting is available). Please refer to your WHITE proxy card or WHITE voting instruction form for instructions on either submitting a proxy or voting over the Internet.
By telephone. You may submit a proxy to have your shares voted by calling a toll-free telephone number listed on the enclosed WHITE proxy card (or WHITE voting instruction form in the case of beneficial holders for whom telephone voting is available). Please refer to your WHITE proxy card or WHITE voting instruction form for instructions on submitting a proxy by phone.
In person at the Annual Meeting. Stockholders are invited to attend the Annual Meeting and vote in person at the Annual Meeting. If you are a beneficial owner of shares you must obtain a legal proxy from the bank, broker or other nominee of your shares to be entitled to vote those shares in person at the Annual Meeting. If you are a record holder, you are encouraged to complete, sign and date the enclosed WHITE proxy card and mail it in the enclosed postage-paid envelope regardless of whether or not you plan to attend the Annual Meeting. If you hold your shares in “street name,” you are encouraged to follow the voting instructions provided by your bank, broker or other nominee to ensure that your shares are represented and voted at the Annual Meeting.
quorum.
This means that the twothree individuals nominated for election to the Board at the Annual Meeting who receive the highest number of properly cast “FOR” votes (among votes properly cast in person or by proxy) will be elected as directors. In director elections, stockholders may either vote “FOR” or withhold voting authority with respect to director nominees. Shares voting “withhold” are counted for purposes of determining a quorum. However, if you withhold authority to vote with respect to the election of eitherany or bothall of the nominees, your shares will not be voted with respect to those nominees indicated. Therefore, “withhold” votes will not affect the outcome of the election of directors. Brokernon-votes will also not affect the outcome of the election of directors.
Advisory(Non-Binding) Vote to Approve the Compensation Paid to our Named Executive Officers.The advisory(non-binding) vote to approve the compensation paid to the Company’s named executive officersNamed Executive Officers requires the affirmative vote of a majority of the shares of Common Stock and Series A Preferred Stock (on anas-converted basis voting together with the Common Stock as a single class) present or represented by proxy at the Annual Meeting and entitled to vote thereat. Abstentions will have the same effect as votes “against” the proposal. Brokernon-votes will not affect the outcome of the vote to approve the compensation paid to the Company’s named executive officersNamed Executive Officers because shares held by a bank, broker or other nominee who has not received instructions from the beneficial owner of the shares as to how the shares are to be voted on the proposal are not entitled to vote on such proposal at the Annual Meeting.
Broker non-votes will not affect the oucome of this proposal because shares held by a broker who has not received instructions from the benefical owner of the shares as to how such shares are to be voted will not be entitled to vote at the Annual Meeting.
“FOR” the election of each of the twothree Board nominees named herein to serve on our Board as Class IIII directors for a three-year term of office expiring at the Company’s 20212022 Annual Meeting of Stockholders and until their successors are elected and duly qualified;
“FOR” the ratification of the selection of Deloitte as our independent registered public accounting firm for the fiscal year ending June 30, 2019;
“FOR” the approval of, in an advisory(non-binding) vote, the compensation paid to our named executive officers;Named Executive Officers; and
“FOR” the approval of an amendment to the Company’s forum selectionby-lawCompany's Amended and Restated Certificate of Incorporation to declassify the Company's Board.
On September 7, 2018, the Company received a stockholder notice from Jeanne Farmer Grossman informing the Company that she intended to nominate herself to stand for election to the Board at the Annual Meeting, however this notice was subsequently withdrawn on October 14, 2018. On October 8, 2018, the Company’s counsel began discussions with Dr. Richard F. Farmer, Ms. Grossman’s brother, and agreed to work constructively with Dr. Farmer to identify a mutually acceptable individual who could be appointed to the Board. Such individual would need to be independent and would be subject to the Nominating and Corporate Governance Committee’s vetting processes. If an individual is identified and agreed upon, the Board would expand the size of the Board to accommodate the individual’s appointment. Other than the notice from Ms. Grossman, no other stockholder proposal or nomination was received on a timely basis, so no such matters may be brought to a vote at the Annual Meeting.
any substantial interest, direct or indirect, in any matter to be acted upon at the Annual Meeting other than Proposal No. 1—Election1-Election of Directors.
The
Due to the possibility of a proxy contest, we have engaged Morrow Sodali to solicit proxies from stockholders in connection with the Annual Meeting. Morrow Sodali expects that approximately 40 of its employees will assist in the solicitation of proxies. We will pay Morrow Sodali a fee of up to $175,000 plus costs and expenses. In addition, we have agreed to indemnify Morrow Sodali and certain related persons against certain liabilities arising out of or in connection with their engagement.
Background of the Solicitation
Class III consists of two directors, continuing in office until the 2021 Annual Meeting of Stockholders.
As part
In connection with its engagement, Spencer Stuart identified Stacy Loretz-Congdon as a possible director nominee and brought Ms. Loretz-Congdon to the Nominating and Corporate Governance Committee’s attention in August 2017 and then again in June 2018. The Nominating and Corporate Governance Committee viewed Ms. Loretz-Congdon as an exceptional candidate. Ms. Loretz-Congdon recently retired after a26-year career at Core-Mark Holding Company, Inc. (“Core-Mark”), one of the largest marketers of fresh and broad-line supply solutions to the convenience retail industry in North America. Prior to her retirement, Ms. Loretz-Congdon spent nearly a decade as Core Mark’s Senior Vice President, Chief Financial Officer and Assistant Secretary. The Nominating and Corporate Governance Committee was particularly impressed with Ms. Loretz-Congdon’s significant public company and industry experience, her critical understanding of capital markets, corporate financing, accounting, mergers and acquisitions, and strategy formation and execution. In addition, if elected, Ms. Loretz-Congdon would be an independent director under the NASDAQ standards and qualified to serve on the Company’s standing committees.
Mr. Clark currently serves as a director of the Company and Chairman of the Board. Ms. Loretz-Congdon has been nominated for election to the seat currently held by Jeanne Farmer Grossman.Company. Each of Mr. ClarkMarcy, Mr. Maserang and
Ms. Loretz-Congdon Mr. Mottern has agreed to be named in this Proxy Statement and to serve on our Board of Directors if elected. We have no reason to believe that either such nomineeany of the nominees will be unable to serve on our Board of Directors if elected.
Name | Age | Director Since | Class | Term Expiration | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee |
Hamideh Assadi | 74 | 2019 | II | 2020 | X | ||
Allison M. Boersma | 54 | 2017 | II | 2020 | Chair | X | |
Randy E. Clark | 67 | 2012 | III | 2021 | |||
Stacy Loretz-Congdon | 60 | 2018 | III | 2021 | X | X | |
David W. Ritterbush | 53 | 2017 | II | 2020 | X | X |
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR”
EACH OF THE NOMINEES NAMED ABOVE.
Directors Continuing in Office
Set forth below is biographical information for each director continuing in office and a summary of the specific experience, qualifications, attributes and skills which led our Board to conclude that the individual should serve on the Board at this time, in light of the Company’s business and structure.
Name | Age | Director Since | Class | Term Expiration | Executive Committee | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | ||||||||
Allison M. Boersma | 53 | 2017 | II | 2020 | X | X | ||||||||||
Michael H. Keown | 56 | 2012 | I | 2019 | ||||||||||||
Charles F. Marcy | 68 | 2013 | I | 2019 | X | X | Chair | |||||||||
Christopher P. Mottern | 74 | 2013 | I | 2019 | X | Chair | X | |||||||||
David W. Ritterbush | 52 | 2007 | II | 2020 | X | X |
Allison M. Boersma is currently the Chief Financial Officer and Chief Operating Officer of BRG Sports Inc., a corporate holding company of leading brands that design, develop and market innovative sports equipment, protective products, apparel and related accessories. The company’s core football brand, Riddell, is the industry leader in football helmet technology and innovation. Ms. Boersma has served as the finance and operations leader for BRG Sports since April 2016, responsible for financial oversight, including planning, treasury and risk management; leadership of global sourcing, manufacturing and distribution; human resources; strategic planning and acquisitions; and manufacturing strategy. Ms. Boersma has also served as Chief Financial Officer and Chief Operating Officer of Riddell Inc., since May 2014, and Senior Vice President Finance and Chief Financial Officer of Riddell, from February 2009 to May 2014. Previously, Ms. Boersma was a finance executive with Kraft Foods, a multinational confectionery, food and beverage conglomerate, for over 17 years, with various positions of increasing responsibility, including serving as Senior Director Finance, Global Procurement, from May 2007 to February 2009, with leadership and oversight of commodity hedging and risk management, including for coffee; execution of global strategies to improve supplier performance; commodity tracking and derivative accounting. Other positions with Kraft included Controller, Grocery Sector; Controller, Meals Division; Director, Sales Finance, Kraft Food Services Division; and Senior Manager, Corporate Financial Business Analysis. Ms. Boersma began her career as a Senior Auditor with Coopers & Lybrand. Ms. Boersma received her undergraduate degree in Accountancy from the University of Illinois Champaign-Urbana, and her Masters of Management, Marketing and Finance, from JL Kellogg Graduate School of Management.
We believe Ms. Boersma’s qualifications to serve on our Board include her CFO and COO leadership, coffee industry knowledge and foodservice experience, supply chain and manufacturing experience, accounting and financial expertise, as well as her experience in IT, risk assessment, strategy formation and execution, mergers and acquisitions, and global sourcing.
Michael H. Keownhas served as the Company’s President and Chief Executive Officer since March 2012. Prior to joining the Company, Mr. Keown served in various executive capacities at Dean Foods Company, a food and beverage company, from 2003 to March 2012. He was at WhiteWave Foods Company, a subsidiary of Dean Foods, from 2004 to March 2012, including as President, Indulgent Brands from 2006 to March 2012. He was also responsible for WhiteWave’s alternative channel business comprised largely of foodservice. Mr. Keown served as President of the Dean Branded Products Group of Dean Foods from 2003 to 2004. Mr. Keown joined Dean Foods from The Coca-Cola Company, where he served as Vice President and General Manager of the Shelf Stable Division of The Minute Maid Company. Mr. Keown has over 25 years of experience in the Consumer Goods business, having held various positions with E.&J. Gallo Winery and The Procter & Gamble Company. Mr. Keown has served as Vice Chairman of the Board of Directors of World Coffee Research, a collaborative,not-for-profit 501(c)(5) research organization created by the global coffee industry, since October 2016. In October 2018, Mr. Keown was nominated to stand for election as a director of Lancaster Colony Corporation, a manufacturer and marketer of specialty food products for the retail and foodservice channels and a publicly
traded company listed on the NASDAQ Global Select Market, at Lancaster Colony’s annual meeting of shareholders to be held on November 14, 2018. Mr. Keown received his undergraduate degree in Economics from Northwestern University.
We believe Mr. Keown’s qualifications to serve on our Board include hisin-depth knowledge of food manufacturing, food processing and the foodservice business, marketing and consumer branding experience, expertise in global sourcing, sustainability and corporate responsibility, and his ability to provide a critical link between management and the Board of Directors thereby enabling the Board to provide its oversight function with the benefit of management’s perspective of the business.
Charles F. Marcy is a food industry consultant. He served as Chief Executive Officer of Turtle Mountain, LLC, a privately held natural foods company, and the maker of the So Delicious brand of dairy free products from May 2013 until April 2015. Prior to this, he was a principal with Marcy & Partners, Inc., providing strategic planning and acquisition consulting to consumer products companies. Mr. Marcy served as President and Chief Executive Officer and a member of the Board of Directors of Healthy Food Holdings, a holding company for branded“better-for-you” foods and the maker of YoCrunch Yogurt and Van’s Frozen Waffles from 2005 through April 2010. Previously, Mr. Marcy served as President, Chief Executive Officer and a Director of Horizon Organic Holdings, then a publicly traded company listed on NASDAQ with a leading market position in the organic food business in the United States and the United Kingdom, from 1999 to 2005. Mr. Marcy also previously served as President and Chief Executive Officer and a member of the Board of Directors of the Sealright Corporation, a manufacturer of food and beverage packaging and packaging systems, from 1995 to 1998. From 1993 to 1995, Mr. Marcy was President of the Golden Grain Company, a subsidiary of Quaker Oats Company and maker of the Near East brand ofall-natural grain-based food products. From 1991 to 1993, Mr. Marcy was President of National Dairy Products Corp., the dairy division of Kraft General Foods. From 1974 to 1991, Mr. Marcy held various senior marketing and strategic planning roles with Sara Lee Corporation and Kraft General Foods. Mr. Marcy currently serves as First Vice Chair on the Board of Trustees of Washington and Jefferson College and has served on the Board of Directors of B&G, Foods, Inc. (“B&G”), a manufacturer and distributor of shelf-stable food and household products across the United States, Canada and Puerto Rico and a publicly traded company listed on the New York Stock Exchange, since 2010. Mr. Marcy served on the Strategy Committee and currently serves as a member and Chairman of the Audit Committee and a member of the Compensation Committee of the Board of Directors of B&G. Mr. Marcy received his undergraduate degree in Mathematics and Economics from Washington and Jefferson College, and his MBA from Harvard Business School. Mr. Marcy is an NACD Board Leadership Fellow and has demonstrated his commitment to boardroom excellence by completing NACD’s advanced corporate governance program for directors.
We believe Mr. Marcy’s qualifications to serve on our Board include his leadership as a former CEO, extensive experience in the food industry, including foodservice, manufacturing, supply chain, marketing and regulatory experience, as well as his corporate governance and public company board and executive compensation experience.
Christopher P. Motternis an independent business consultant. He served as President and Chief Executive Officer of Peet’s Coffee & Tea, Inc., a specialty coffee and tea company, from 1997 to 2002 and a director of Peet’s Coffee & Tea, Inc., from 1997 through 2004. From 1992 to 1996, Mr. Mottern served as President of The Heublein Wines Group, a manufacturer and marketer of wines, now part of Diageo plc, a multinational alcoholic beverage company. From 1986 through 1991, he served as President and Chief Executive Officer of Capri Sun, Inc., one of the largest single-service juice drink manufacturers in the United States. He has served as a director, including lead director, and member of the finance committee, of a number of private companies. Mr. Mottern received his undergraduate degree in Accounting from the University of Connecticut.
We believe Mr. Mottern’s qualifications to serve on our Board include his leadership as a former CEO, coffee industry, foodservice, manufacturing, supply chain and consumer branding experience, risk oversight experience, and financial and accounting expertise.
David W. Ritterbush,age 53, is currently the Chief Executive Officer of Quest Nutrition, LLC, a manufacturer and retailer of protein and nutrition food products. He has served in this position since March 2017, with oversight of
the organization, including organizational structure, supply chain strategy, and product innovation. Prior to joining Quest Nutrition, Mr. Ritterbush served as Chief Executive Officer of Popchips (Sonora Mills, Inc.), a manufacturer of popped rice, corn, soy, and other grain-based snack food products, from August 2015 to February 2017. While at Popchips, Mr. Ritterbush’s responsibilities included organization leadership, restructuring, sales turnaround, refreshed branding and new product innovation, supply chain restructuring,co-manufacturing and global procurement. Previously, from April 2009 to March 2015, Mr. Ritterbush held leadership positions with Premier Nutrition Corporation, a manufacturer and retailer of beverage products, bars and shakes, including Chief Executive Officer, Post Active Nutrition from April 2014 to March 2015; Chief Executive Officer, Premier Nutrition from August 2010 to March 2014; and Chief Operating Officer from April 2009 to August 2010. While at Premier Nutrition, Mr. Ritterbush reorganized the organization, led a significant turnaround of the supply chain across facilities andco-manufacturers, restructured the sales organization, and actively participated in strategy formation and acquisitions. Prior to this, Mr. Ritterbush was Vice President/General Manager—WestManager-West Business Unit, for Red Bull North America, from October 2007 to March 2009, with leadership for the West Business Unit including sales, marketing, supply chain, finance and accounting. Previously, Mr. Ritterbush was a sales and marketing executive with Dreyer’s Grand Ice Cream, Inc., for over 16 years, with various positions of increasing responsibility, including serving as Senior Vice President of Marketing—PackagedMarketing-Packaged Products from October 2006 to October 2007, where he was responsible for product design, pricing, and consumer positioning. During this period, Mr. Ritterbush served as a member of Dreyer’s Operating Committee, Dreyer’s Graphics Development team, and a board member of the Starbuck’s Ice Cream partnership. Mr. Ritterbush received his undergraduate degree in Business Administration, Marketing from San Diego State University.
REGISTERED PUBLIC ACCOUNTING FIRM
Annual Meeting.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class(1) | ||||||
Carol Farmer Waite(2) | 1,678,972 | 9.7 | % | |||||
Richard F. Farmer(3) | 1,357,184 | 7.8 | % | |||||
Jeanne Farmer Grossman(4) | 1,564,049 | 9.0 | % | |||||
Farmer Bros. Co. Employee Stock Ownership Plan(5) | 1,574,438 | 9.1 | % | |||||
Levin Capital Strategies, L.P. and affiliated entities(6) | 1,236,801 | 7.1 | % | |||||
Trigran Investments, Inc., Douglas Granat, Lawrence A. Oberman, Steven G. Simon, Bradley F. Simon, Steven R. Monieson(7) | 1,027,681 | 5.9 | % |
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class(1) | |
Richard F. Farmer(2) | 1,357,184 | 7.8 | |
Farmer Bros. Co. Employee Stock Ownership Plan(3) | 1,250,445 | 7.3 | |
Levin Easterly Partners LLC and affiliated entities(4) | 1,567,471 | 9.0 | |
Trigran Investments, Inc., Douglas Granat, Lawrence A. Oberman, Steven G. Simon, Bradley F. Simon, Steven R. Monieson(5) | 1,729,685 | 9.9 | |
Russell Investments Group, Ltd.(6) | 2,639,756 | 15.1 | |
Dimensional Fund Advisors LP(7) | 929,387 | 5.3 | |
Adage Capital Partners, L.P. and affiliated entities(8) | 869,699 | 5.0 |
(1) | Percent of class is calculated based on total outstanding voting securities of |
(2) |
|
This information is based on a Schedule 13D/A filed with the SEC on January 16, 2018 (the “Farmer Schedule 13D/A”) and a Form 4 filed with the SEC on February 1, 2018 |
F. Farmer. The Farmer Schedule 13D/A and Farmer Form 4 reported that Richard F. Farmer is the beneficial owner, with sole voting and dispositive power, of 1,357,184 shares of Common Stock through certain trusts. As stated in the Farmer Schedule 13D/A, the address for Richard F. Farmer is P.O. Box 50725, Eugene, Oregon 97405. |
|
This information is based on the Company’s records and includes |
(4) | This information is based on a Schedule 13D/A filed with the SEC on |
(5) | This information is based on a Schedule 13G/A filed with the SEC on |
(6) | This information is based on a Schedule 13G/A filed with the SEC on October 10, 2019 (the “Russell Schedule 13G”) by Russell Investments Group, Ltd. ("Russell Investments"). The Russell Schedule 13G/A reports that Russell Investments has sole voting and shared dispositive power over 2,639,756 shares of Common Stock. As indicated in the Russell Schedule 13G, the address of Russell Investments is 1301 Second Avenue, Suite 1800, Seattle, Washington 98101. |
(7) | This information is based on a Schedule 13G/A filed with the SEC on February 8, 2019 (the “Dimensional Schedule 13G/A”) by Dimensional Fund Advisors LP ("Dimensional Advisors"). The Dimensional Schedule 13G/A reports that Dimensional Advisors has sole voting power over 872,775 shares of Common Stock and sole dispositive power over 929,387 shares of Common Stock. Dimensional Advisors is an investment adviser registered under Section 203 of the Investment Advisors Act of 1940, and furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional Advisors may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or manager, Dimensional Advisors or its subsidiaries may possess voting and/or investment power over the securities of the Issuer that are owned by the Funds, and may be deemed to be the beneficial owner of the shares of the Issuer held by the Funds. However, all securities reported in the Dimensional Schedule 13G/A are owned by the Funds. Dimensional Advisors disclaims beneficial ownership of such securities. As indicated in the Dimensional Schedule 13G/A, the address of Dimensional Advisors is Building One, 6300 Bee Cave Road, Austin, Texas 78746. |
(8) | This information is based on a Schedule 13G filed with the SEC on September 20, 2019 (the “Adage Schedule 13”) by Adage Capital Advisors, L.P., Adage Capital Partners GP, L.L.C., Adage Capital Advisors, L.L.C., Robert Atchinson, and Phillip Gross (collectively, the “Adage Filing Group”). The Adage Schedule 13G reports that the Adage Filing Group and each of the member of the Adage Filing Group shares voting and dispositive power over 869,699 shares of Common Stock. As indicated in the Adage Schedule 13G, the address of the Adage Filing Group is 200 Clarendon Street, 52nd floor, Boston, Massachusetts 02116. |
Security Ownership of Directors and Executive Officers
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class(1) | ||||||
Non-Employee Directors and Nominees: | ||||||||
Allison M. Boersma(2) | 1,901 | * | ||||||
Randy E. Clark(3) | 16,217 | * | ||||||
Jeanne Farmer Grossman(4) | 1,564,049 | 9.0 | % | |||||
Stacy Loretz-Congdon(Nominee) | — | — | ||||||
Charles F. Marcy(5) | 13,478 | * | ||||||
Christopher P. Mottern(6) | 19,978 | * | ||||||
David W. Ritterbush(2) | 1,901 | * | ||||||
Named Executive Officers: | ||||||||
Michael H. Keown(7) | 222,765 | 1.3 | % | |||||
David G. Robson(8) | 7,357 | * | ||||||
Ellen D. Iobst(9) | 5,803 | * | ||||||
Scott A. Siers(10) | 34,189 | * | ||||||
Thomas J. Mattei, Jr.(11) | 30,510 | * | ||||||
All directors and executive officers as a group (11 individuals) | 1,918,148 | 10.9 | % |
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class(1) | |
Non-Employee Directors: | |||
Hamideh Assadi (2) | 8,554 | * | |
Allison M. Boersma(3) | 4,612 | * | |
Randy E. Clark(4) | 21,928 | * | |
Stacy Loretz-Congdon (5) | 2,711 | * | |
Charles F. Marcy(6) | 17,189 | * | |
David W. Ritterbush(7) | 4,612 | * | |
Named Executive Officers: | |||
D. Deverl Maserang, II | 0 | * | |
Christopher P. Mottern(8) | 42,113 | * | |
Michael H. Keown(9) | 48,700 | * | |
David G. Robson(10) | 19,807 | * | |
Ellen D. Iobst(11) | 5,682 | * | |
Scott A. Siers(12) | 29,884 | * | |
Thomas J. Mattei, Jr.(13) | 26,139 | * | |
All directors and executive officers as a group (16 individuals) | 239,320 | 1.4 |
* | Less than 1% |
(1) | Percent of class is calculated based on total outstanding voting securities of |
(2) |
|
Includes |
| |
(3) | Includes 2,711 unvested shares of |
(4) | Includes |
(5) | Includes |
(6) | Includes |
(7) | Includes 2,711 unvested shares of |
(8) | Includes 2,711 unvested shares of restricted stock. |
(9) | Includes 3,004 shares of Common Stock beneficially owned by Mr. Keown through the ESOP, rounded to the nearest whole share and 624 shares through the Company's 401(k) plan, rounded to the nearest whole share. |
(10) | Includes |
(11) | Includes |
(12) | Includes |
(13) | Includes |
Director | Status | |
Hamideh Assadi | Independent(1) | |
Allison M. Boersma | Independent | |
| Independent(2) | |
| Independent(3) | |
| Not Independent | |
Stacy Loretz-Congdon | Independent(4) | |
| Not Independent(5) | |
| ||
| ||
| ||
| Independent |
(1) | Ms. Assadi stepped down as a Class II director at the end of her term on December 7, |
(2) |
|
Mr. Clark is the current Chairman of the Board. |
|
Mr. |
(4) | Core-Mark was a customer of the Company in fiscal |
owns less than 1% of the outstanding publicly traded stock of Core-Mark. The Board has determined that these relationships do not create a conflict of interest under the Company’s Code of Conduct and Ethics, do not require disclosure under Item 404(a) of RegulationS-K, and do not interfere with Ms. Loretz-Congdon’s exercise of independent judgment in carrying out the responsibilities of a director of the Company. |
. 2019.(5) Mr. Mottern served as interim President and Chief Executive Officer from May 5, 2019 through October 31, 2019. The Board expects to reconsider Mr. Mottern's independence once he is no longer in his interim role. For information regarding Mr. Mottern’s compensation as interim CEO see “Compensation Discussion and Analysis—Key Elements of Fiscal 2019 Compensation Program” below. seventen meetings during fiscal 2018,2019, including four regular meetings and threesix special meetings. During fiscal 2018,2019, each director attended at least 75% of the total number of meetings of the Board of Directors (held during the period for which he or she served as a director) and committees of the Board on which he or she served (during the periods that he or she served). The independent directors generally meet in executive session in connection with each regularly scheduled Board meeting. Under the Company’s Corporate Governance Guidelines, continuing directors are expected to attend the Company’s annual meeting of stockholders absent a valid reason. All directors who were then serving were present at the 20172018 Annual Meeting of Stockholders held on December 7, 20176, 2018 (the “2017“2018 Annual Meeting”) with the exception of Hamideh Assadi and Guenter W. Berger who stepped down as Class II directors at the 2017 Annual Meeting at the end of their terms.www.farmerbros.comwww.farmerbros.com. Information contained on the website is not incorporated by reference in, or considered part of, this Proxy Statement.In addition, the Board maintains an Executive Committee to assist the Board in discharging its oversight responsibilities between regular Board meetings. Summary information about each of these committees is set forth below.ThereA Chief Executive Officer Search Committee ("CEO Search Committee") and a Management Transition Support Committee ("Transition Committee") were no suchad hoc committeesestablished in fiscal 2018.
management, including the Company’s cyber security risk. The Audit Committee is directly and solely responsible for the appointment, dismissal, compensation, retention and oversight of the work of any independent auditor engaged by the Company for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company. The independent auditor reports directly to the Audit Committee.
Christopher P. Mottern served as a member of the Audit Committee until his appointment as interim President and Chief Executive Officer in May 2019.
Compensation Consultant
The Compensation Committee has the authority to retain the services of outside consultants to assist it in performing its responsibilities. In fiscal 2018, the Compensation Committee engaged Meridian Compensation Partners, LLC (“Meridian”) for, (i) with respect to the Compensation Committee, advisory and consulting services relating to the Company’s executive officer and director compensation programs, consultation regarding short-term and long-term incentive plan design, consultation regarding CEO pay ratio disclosure, and consultation regarding corporate governance practices and general Compensation Committee matters and processes, and (ii) with respect to the Nominating and Corporate Governance Committee, consultation regarding performance assessment with respect to our President and Chief Executive Officer.
Meridian provided no other services to the Company or its affiliates during fiscal 2018 other than as described above. The Compensation Committee has determined that Meridian is “independent” according to the criteria required by the SEC in Rule10C-1 of the Exchange Act.
Management’s Role in Establishing Compensation
The compensation of the executive officers is determined by the Compensation Committee, taking into account the input and recommendations of our President and Chief Executive Officer regarding compensation for those executive officers reporting to him, and taking into account the input of the Nominating and Corporate Governance Committee regarding performance of our President and Chief Executive Officer. The Compensation Committee has sole authority for all final compensation determinations regarding our President and Chief Executive Officer. Our President and Chief Executive Officer, Chief Financial Officer, Chief Legal Officer, and SVP, Human Resources routinely attend the meetings of the Compensation Committee to provide input, as requested by the Compensation Committee and, in the case of the Chief Legal Officer, to act as secretary for the meeting; however, no executive officer has any role in approving his or her own compensation, and neither our President and Chief Executive Officer nor any other executive officer is present during the portion of the meeting at which the Compensation Committee considers the executive officer’s own compensation. The Compensation Committee regularly meets in executive session, without members of the management team present, when discussing and approving executive compensation.
Compensation Committee Interlocks and Insider Participation
Ms. Assadi,
2019.
Company, subject to certain enumerated exceptions as set forth in its charter consistent with Delaware law. During fiscal 2018, the Executive Committee met four times. The current members of the Executive Committee are Randy E. Clark, Charles F. Marcy (chair), Stacy Loretz-Congdon and Christopher P. Mottern.
David W. Ritterbush. The CEO Search Committee was disbanded in September 2019 upon the engagement of a new Chief Executive Officer. In June 2019, the Board also created an ad hoc Transition Committee to assist the Company during its
The candidate’s experience in corporate management, such as serving as an officer or former officer of a publicly held company;
The candidate’s experience as a board member of another publicly held company;
The candidate’s professional and academic experience relevant to the Company’s industry;
The strength of the candidate’s leadership skills;
The candidate’s senior level experience in food manufacturing and distribution, with an emphasis on direct-store-delivery experience and expertise;
The candidate’s experience in finance and accounting and/or executive compensation practices; and
Whether the candidate has the time required for preparation, participation and attendance at Board meetings and committee meetings, if applicable.
On October 14, 2018, the Board of Directors adopted an amendment to the Company’sBy-Laws to add a forum selectionby-law to provide that the courts located within the State of Delaware will serve as the exclusive forum for the adjudication of certain legal disputes. Thisby-law is intended to benefit the Company and its stockholders in significant part by directing litigation to a single Delaware court, which will apply its own state law with a well-established body of precedent, thereby reducing the risk and expense of concurrent, multi-jurisdictional litigation, saving Company resources (money and management attention) and leading to a single, more predictable outcome in litigation involving corporate governance and internal affairs. Adopting such an exclusive forum provision covering specified claims does not materially change the substantive legal claims available to stockholders. Additionally, the Company retains the ability to consent to an alternative forum in appropriate circumstances where the Company determines that its interests and those of its stockholders are best served by permitting a particular dispute to proceed in a forum other than Delaware.
Although stockholder approval is not required to amend theBy-Laws, the Board of Directors believes this is an important issue and that it is in the best interests of the Company and its stockholders to seek a stockholder vote to approve the Amendment as described in “Proposal No. 4—Approval of the Company’s Forum SelectionBy-Law.” If stockholder approval is not obtained, the Amendment will be made void and of no further force or effect.
A good balance of fixed andat-risk compensation, as well as an appropriate balance of cash and equity-based compensation.
Management incentive programs are based on multiple metrics, including strategic, individual and operational measures.
The Compensation Committee is directly involved in setting short- and long-term incentive performance targets and payout intervals, assessing performance against targets, and reviewing/approving the performance goals for the CEO and other executives.
Executive annual short-term incentive awards are capped at 200% of the target opportunity and the performance-based restricted stock units in the long-term incentive plan are capped at 150% of target opportunity.
Long-term equity awards are generally made on an annual basis which creates overlapping vesting periods and ensures that management remains exposed to the risks of their decision-making through their unvested equity-based awards for the period during which the business risks are likely to materialize.
Long-term compensation for senior executives is comprised of stock options that vest ratably over three years and performance-based restricted stock units that are earned based on three-year performance goals. Company shares are inherently subject to the risks of the business, and the combination of options and performance-based restricted stock units ensure that management participates in these risks.
Performance-based restricted stock units are earned based on cumulative coffee pound sales and cumulative adjusted EBITDA performance goals over a full three-year performance period. Using a sales metric coupled with an earnings metric helps minimize the potential for increasing sales in an unprofitable or value-destructive manner.
The Company has significant share ownership requirements for executives and non-employee directors. Executive officers are required to hold share-based compensation awards until meeting their ownership requirements. Company shares held by management are inherently subject to the risks of the business.
Executive compensation is benchmarked annually relative to pay levels and practices at peer companies.
The Company has a clawback policy in place that allows for recovery of incentive compensation if there is a material restatement of financial results caused by the fraud or misconduct of an individual which resulted in an over payment of incentives.
The Company prohibits employees and directors from hedging or pledging its securities.
The Compensation Committee is composed solely of independent directors and retains an independent compensation consultant to provide a balanced perspective on compensation programs and practices. The Compensation Committee approves all pay decisions for executive officers.
the Board include, without limitation, customer complaints, solicitations, communications that do not relate directly or indirectly to the Company’s business, or communications that relate to improper or irrelevant topics.
Name | Age | Title | Executive Officer Since | |||||
Michael H. Keown | 56 | President and Chief Executive Officer | 2012 | |||||
David G. Robson | 52 | Treasurer and Chief Financial Officer | 2017 | |||||
Ellen D. Iobst | 59 | Chief Operations Officer | 2017 | |||||
Scott A. Siers | 55 | Senior Vice President and General Manager—Sales | 2017 | |||||
Thomas J. Mattei, Jr. | 48 | Chief Legal Officer and Secretary | 2015 |
Michael H. Keownhas served
Name(1) | Age | Title | Executive Officer Since | |||
D. Deverl Maserang, II | 56 | President and Chief Executive Officer | 2019 | |||
David G. Robson | 53 | Treasurer and Chief Financial Officer | 2017 | |||
Ronald J. Friedman | 49 | Chief Human Resources Officer | 2019 | |||
Gabriela Villalobos | 51 | Senior Vice President Strategy, M&A and Transformation | 2019 | |||
Jerry Michael Walsh | 53 | Senior Vice President and General Manager - DSD | 2019 |
Ellen D. Iobstjoined the Company as
planning, procurement and commercial beverage equipment). Prior to becoming an employee of the Company, Ms. Iobst served as an independent consultant to the Company, reporting directly to the CEO, from April 2016 until her hire in February 2017. During this consulting period, Ms. Iobst focused on strategic initiatives relating to coffee manufacturing and sourcing, coffee equipment, supply chain improvement, acquisitions, and project implementation. Ms. Iobst’s supply chain expertise includesstate-of-the art manufacturing, lean manufacturing, supply chain and logistics optimization, purchasing, engineering and technical services, with executive experience in acquisitions and divestitures, site start up and closures, sustainability, and risk management. Prior to becoming a consultant to the Company, Ms. Iobst was the SVP, Supply Chain and Chief Sustainability Officer at Sunny Delight Beverages Co., a producer, distributor, and marketer of juices, juice drinks, and flavored waters, from August 2004 to October 2015. As one of the founding managers of Sunny Delight, she created and led a team of 600 people including manufacturing (5 plants), contract manufacturing, supply chain/logistics, purchasing/risk management, engineering/capital management and technical services, and provided leadership for the company’s sustainability program. Ms. Iobst’s other experience includes over 20 years with Procter & Gamble, a multinational consumer goods company, serving in a variety of roles relating to supply chain operations, plant management and human resources. Ms. Iobst graduated with a B.S. in Chemical Engineering from Lehigh University.
Scott A. Siershas served as a member of the Company’s executive management team since February 2017January 2019 after having served as Senior Vice President, Human Resources from June 2018 to December 2018. As Chief Human Resources Officer, Mr. Friedman is responsible for all aspects of Human Resources including HR Management, HRIS, Payroll, Total Rewards, Labor Relations, Employee Relations, Performance Management, Learning and Development, Strategic Business and Workforce Planning. Prior to joining the Company’sCompany, Mr. Friedman was Senior Vice President, Human Resources for Saputo Dairy Foods, USA, a beverage company, from January 2013 to June 2018, where he lead all aspects of HR for an operating division comprised of over 2,000 employees and 11 manufacturing facilities. Prior to that, Mr. Friedman held Human Resources leadership positions for Dean Foods, SABMiller/ MillerCoors and Coca-Cola Enterprises. Mr. Friedman received his Bachelors degree in Communications from the University of Pittsburgh.
Thomas J. Mattei, Jr.was promoted to Chief Legal Officer and Secretary in September 2018 after having served as General Counsel from December 2014 to September 2018, Assistant Secretary from August 2015 to September 2018, and Vice President and Corporate Counsel from January 2013 to December 2014. As Chief Legal Officer, Mr. Mattei’s current responsibilities include oversight of corporate, strategic, and tactical legal and risk-related initiatives, as well as matters of corporate governance.service across North America. Prior to joining the Company,Aramark, Mr. Mattei was in private practice with Weintraub Tobin Chediak Coleman Grodin Law CorporationWalsh held progressive sales and Weissmann Wolff Bergman Coleman Grodin & Evall LLP in Beverly Hills, CA, from July 2004 to December 2012, with primary responsibilities in corporate, financeleadership roles at Dean Foods, Pepsi Bottling Group and real estate transactional matters. From October 1999 to July 2004,Nestle Food Company. Mr. Mattei was a Corporate Associate at Latham & Watkins LLP in Los Angeles, CA, with primary responsibilities in securities, mergers and acquisitions, and general corporate matters. Mr. MatteiWalsh received his undergraduateBachelor of Arts degree in Public Policy from Duke University and his Juris DoctorEconomics from the University of Virginia School of Law.
Name | Title (as of June 30, 2019) | |
| Interim President and Chief Executive Officer | |
Michael H. Keown | Former President and Chief Executive Officer | |
David G. Robson | Treasurer and Chief Financial Officer | |
Ellen D. Iobst | Chief Operations Officer | |
Scott A. Siers | Senior Vice President and General | |
Thomas J. Mattei, Jr. | Chief Legal Officer and Secretary |
In fiscal 2018, the Company continued to refine its executive compensation program by making changes to the short- and long-term incentive programs. Fiscal 2018 short-term cash incentives were based on the Company’s achievement of adjusted EBITDA and free cash flow targets along with the relative achievement of individual executive officer objectives, as well as aone-time cash incentive program for our Named Executive Officers with a separate set of performance goals aimed at the successful and rapid integration of the acquired business of Boyd Coffee Company (the “Boyd Business”). For fiscal 2018 long-term incentives, the Company adopted a new performance share vehicle to more directly align long-term incentive awards with the Company’s strategy of incentivizing profitable growth. On a value basis, fiscal 2018 long-term incentive awards were awarded as 50% in performance-based restricted stock units (“PBRSUs”), based on cumulative coffee pound sales and cumulative adjusted EBITDA over a full three-year performance period, and 50% innon-qualified stock options.
In fiscal 2018, the Company’s3-year cumulative TSR performance was aligned with lower realized compensation amounts relative to target, reflecting strong alignment between pay and performance. While our Named Executive Officers received a cash payout for achievement of the integration-based performance goals relating to the Boyd Business, the Company’s Named Executive Officers did not receive any cash payout based on achievement of Company-wide performance.
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Compensation Policies and Practices—Good Governance
Consistent with our commitment to strong corporate governance, in fiscal 2018 our Board followed the compensation policies and practices described below to drive performance and serve our stockholders’ long-term interests:
What We Do
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What We Do Not Do
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Stockholder Advisory Vote on Executive Compensation and Key Compensation Program Enhancements
In December 2017, we held a stockholder advisory vote to approve the compensation of our named executive officers (the“say-on-pay proposal”). Our stockholders approved the compensation of our named executive officers, with approximately 78% of the shares present or represented by proxy at the 2017 Annual Meeting and entitled to vote thereat, casting votes in favor of thesay-on-pay proposal, an increase from an approval rate of approximately 67% in fiscal 2016.
The Compensation Committee reviews the results of the annual vote on thesay-on-pay proposal, and determines whether to make any adjustments to the Company’s executive compensation policies and practices. In light of the increase in stockholder support in fiscal 2017 compared to the prior year’s advisory vote results, the Compensation Committee determined that the enhancements to the Company’s executive compensation programs and practices in fiscal 2017 were viewed by stockholders as effective in further aligning the Company with stockholders in its executive compensation practices. In fiscal 2018, the Compensation Committee continued those enhancements and made the following additional enhancements to our compensation programs and practices:
limited base salary increases to a modest 2% or less for all Named Executive Officers with the exception of the CEO, who received a larger increase to address a market shortfall;
adopted a new performance share vehicle to more directly align long-term incentive awards with our strategy of incentivizing profitable growth, with fiscal 2018 long-term incentive awards awarded, on a value basis, as 50% in PBRSUs, based on cumulative coffee pound sales and cumulative adjusted EBITDA over a full three-year performance period, and 50% innon-qualified stock options;
established a performance funding structure for short-term cash incentive awards that established a maximum cash incentive opportunity for the program, generally, and for each of our executive officers that participated in the program;
approved short-term cash incentive awards including annual performance awards based on the Company’s achievement of adjusted EBITDA and free cash flow targets along with the relative achievement of individual executive officer objectives, as well as aone-time cash incentive program with a separate set of performance goals aimed at the successful and rapid integration of the Boyd Business; and
continued review of potential modifications to our short- and long-term incentive plans and programs to further align our incentive programs with market-competitive practices and the Company’s strategic goals.
The Compensation Committee will continue to consider the outcome of oursay-on-pay votes when making future compensation decisions for the named executive officers. In addition, when determining how often to hold futuresay-on-pay votes to approve the compensation of our named executive officers, the Board took into account the strong preference for an annual vote expressed by our stockholders at our 2017 Annual Meeting. Accordingly, the Board determined that we will continue to holdsay-on-pay votes to approve the compensation of our named executive officers every year.
Stockholder Engagement and Feedback
In fiscal 2018, following the outcome of the Stockholder Advisory Vote on Executive Compensation, the Compensation Committee reached out to stockholders representing in excess of 50% of common shares outstanding, offering to engage in a dialogue about the Company’s executive pay programs in order to gain feedback and insights from the Company’s stockholders. Conversations were held with any of the stockholders in that group that were interested in having a discussion regarding executive compensation. Key themes of feedback provided by stockholders include:
Overall, the Company’s executive pay programs appear to be working effectively, and stockholders were pleased with the strong alignment of pay with performance.
It is important that pay programs, generally, function correctly to attract and retain talent, and that incentive pay remains a motivating force.
The addition of the PBRSUs was a positive change for the long-term incentive program.
Stockholders discussed certain of the metrics that they use in their own analysis of the Company’s performance and discussed the appropriateness of these or other measures in the design of short- and long-term incentive compensation programs for executives.
The Compensation Committee is committed to continuing stockholder engagement efforts, and to discussing and considering feedback and learnings from these conversations.
Executive Compensation Philosophy and Objectives
Our Compensation Committee recognizes that effective compensation strategies are critical to retaining and incentivizing key employees who contribute to the Company’s long-term success and, as such, create long-term value for our stockholders. To that end, our executive compensation program is designed to achieve the following primary objectives:
attract, retain, and motivate talented executives;
motivate executive officers to achieve our short-term and long-term goals by providing “at risk” compensation, the value of which is ultimately based on our future performance, without creating undue risk-taking behavior nor unduly emphasizing short-term performance over long-term value creation;
reward positive results for the Company and our stockholders; and
maintain total compensation and relative amounts of base salary, annual, and long-term incentive compensation competitive with those amounts paid by peer companies selected by the Compensation Committee.
* | Peer group TSR data in the chart above excludes Boulder Brands, Inc. and Diamond Foods, Inc., which were each acquired. The Russell 2000 index median TSR is based on the 2018 constituent companies. |
What We Do |
Our Compensation Committee is composed solely of independent directors, and regularly meets in executive session without members of management present. |
Our Compensation Committee retains an independent compensation consultant to provide it with advice on matters related to executive compensation. |
Our Compensation Committee periodically reviews and assesses the potential risks of our compensation policies and practices. |
The structure of our executive compensation program includes a mix of cash and equity-based compensation, with an emphasis on performance-based compensation. |
The competitiveness of our executive compensation program is assessed by comparison to the compensation programs of peer group companies that are similar to us in terms of industry, annual revenue, significant founding family share ownership and/or other business characteristics. |
Our claw-back policy requires the Board to recoup certain incentive compensation in the event of a material restatement of the Company’s financial results due to fraud or misconduct. |
We maintain meaningful stock ownership guidelines for directors and executive officers that promote a long-term stockholder perspective. |
What We Do Not Do |
We do not provide for excise tax gross-ups in connection with severance or other payments or benefits arising in connection with a change in control. |
We do not provide for “single trigger” change in control payments or benefits. |
We do not provide guaranteed base salary increases or guaranteed bonuses. |
We do not provide supplemental pension (“SERP”) benefits to our Named Executive Officers. |
We do not provide excessive perquisites. |
We do not permit (absent stockholder approval in the case of repricing/exchanging), and have not engaged in, the practice of backdating or re-pricing/exchanging stock options. |
We do not allow directors or executive officers to hedge or short sell Company stock. |
We do not allow directors or executive officers to pledge shares as collateral for a loan or in a margin account. |
Executive Officer and each of our other executive officers. In exercising this authority, the Compensation Committee determines the forms and amount of executive compensation appropriate to achieve the Compensation Committee’s strategic objectives, including base salary, bonus, incentive or performance-based compensation, equity awards and other benefits.
In fiscal 2019, the Compensation Committee also engaged Meridian to help determine the compensation of our Interim President and Chief Executive Officer.
individual performance;
impact on long-term stockholder value creation;
impact on development and execution of Company strategy;
experience and tenure in role; and
scope of responsibility.
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| Lancaster Colony Corporation | |
Calavo Growers, Inc. | MGP Ingredients Inc. | |
Cal-Maine Foods, Inc. | Primo Water Corporation | |
The Chef’s Warehouse Inc. |
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J & J Snack Foods Corp. |
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What We Pay | Why and How We Pay It | |
Base Salary | • Base salary comprises fixed cash compensation that is designed to provide a reasonable level of fixed income • Base salaries are reviewed annually and adjusted when appropriate (increases are neither fixed nor guaranteed). • Competitive base salaries are a key component of attracting and retaining executive talent. | |
Short-Term Cash Incentives | • Annual cash incentives constitute variable “at risk” compensation, payable in cash based on Company-wide and individual performance. These awards are designed to reward achievement of annual financial objectives as well as near-term strategic objectives that create momentum that is expected to foster the long-term success of the Company’s business. • Company-wide metrics and targets are derived from, and intended to promote, our near-term business strategy. |
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• Individual targets are consistent with our focus on both quantitative and qualitative priorities and thereby reward both attainment of objective metrics and individual contributions.
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Long-Term Incentives | • Stock options subject to time-based vesting conditions are designed to create direct alignment with stockholder objectives and retain critical talent over extended timeframes. • Stock options and • Performance-based award metrics and targets align with long-term business strategy as well as stock price appreciation. | |
Severance Benefits | • Severance benefits provide income and health insurance protection to our Named Executive Officers in connection with certain involuntary terminations of employment. These severance benefits are designed to enable the Named Executive Officers to focus on the best interests of the Company and its stockholders, including in circumstances that may jeopardize the individual’s job security. • Enhanced severance benefits are available if the termination of employment occurs in connection with a change in control to ensure continued focus on the best alternatives for the Company and its stockholders, free from distractions caused by personal uncertainties associated with the heightened risk to job security that arises for senior executives in the transactional context. • Severance benefits are also key to attracting and retaining key talent. | |
Retirement and Welfare Benefits | • A standard complement of retirement, health, welfare and insurance benefits, offered to our Named Executive Officers on terms generally similar to those available to other employees, provides important protections and stability for our Named Executive Officers and their families that help enable our Named Executive Officers to remain focused on their work responsibilities. • These are generallylow-cost benefits with a higher perceived value that are intended to help keep our overall compensation package competitive. | |
Perquisites | • We provide limited perquisites such as an automobile allowance or use of a Company car and fuel card, as well as relocation assistance, each intended to facilitate the operation of the Company’s business and to assist the Company in recruiting and retaining key executives. • These are alsolow-cost benefits with a higher perceived value that are intended to help keep our overall compensation package competitive. |
Base Salary
Name | Fiscal 2018 Annual Base Salary(1) | Fiscal 2017 Annual Base Salary(1) | Annual Base Salary Percentage Change | |||||||
Michael H. Keown | $ | 570,000 | $ | 517,140 | 10% | |||||
David G. Robson | $ | 352,520 | $ | 350,000 | 1% | |||||
Ellen D. Iobst | $ | 338,618 | $ | 335,000 | 1% | |||||
Scott A. Siers | $ | 293,132 | $ | 290,000 | 1% | |||||
Thomas J. Mattei, Jr. | $ | 312,120 | $ | 306,000 | 2% |
Name | Fiscal 2019 Annual Base Salary(1) | Fiscal 2018 Annual Base Salary | Annual Base Salary Percentage Change | |||||||
Named Executive Officers: | ||||||||||
Michael H. Keown | $ | 581,400 | $ | 570,000 | 2% | |||||
David G. Robson | $ | 359,570 | $ | 352,520 | 2% | |||||
Ellen D. Iobst | $ | 345,390 | $ | 338,618 | 2% | |||||
Scott A. Siers | $ | 298,995 | $ | 293,132 | 2% | |||||
Thomas J. Mattei, Jr. | $ | 343,332 | $ | 312,120 | 10% |
(1) | Annual base salary as of the end of the applicable fiscal year. Increase in fiscal |
For fiscal 2018 short-term cash incentive awards under the 2017 Farmer Bros. Co. Long-Term Incentive Plan (the “2017 Plan”), we established a maximum annual cash incentive opportunity for the program, generally, and for each of our executive officers that participated in this program, based on a 1.9% of our fiscal 2018 gross profit as reported in our audited consolidated financial statements for the fiscal year ended June 30, 2018 included in our 2018 Form10-K. The Compensation Committee specified an allocation percentage for each of our Named Executive Officers, subject to a maximum of 250% of the Named Executive Officer’s fiscal 2018 target bonus award, under the 2017 Plan. The 2017 Plan is an umbrella plan intended to satisfy the performance-based requirements of Section 162(m) of the Internal Revenue Code as in effect in 2017.
The Compensation Committee believes that the fiscal 2018 performance metrics represented challenging, yet achievable, goals that effectively incentivized the Named Executive Officers. Payouts were ultimately determined based on the performance goals described below, and any payouts earned based on achievement against these performance goals could not exceed the amount funded by the gross profit pool.
Performance Achievement
2019
“adjusted EBITDA” was defined as net (loss) income excluding the impact of: (i) income taxes; (ii) interest expense; (iii) income from short-term investments; (iv) depreciation and amortization expense; (v) ESOP and share-based compensation expense;(vi) non-cash impairment losses;(vii) non-cash pension withdrawal expense; (viii) other similarnon-cash expenses; (ix) restructuring and other transition expenses;(x) non-recurring stockholder-related expenses; (xi) acquisition costs (and related revenues only during the same fiscal year); (xii) capital issuance expenses; (xiii) out of period external legal expenses; (xiv) business segment disposition expenses (and exclusion of related gain on sales); (xv) net gain or loss on sale of assets other than M&A or business segment disposition; and(xvi) non-recurring and/or extraordinary expenses; and
“free cash flow” was defined as adjusted EBITDA less maintenance capital expenditures;
in each case, excluding the impact of the acquired Boyd Business during the fiscal year.
Metric | Weighting | Threshold Goal (80% of target performance) | Target Goal | Maximum Goal (140% of target performance) | Actual Achievement | Actual Achievement Compared to Target Performance | Earned Payout for Fiscal 2018 Company- wide Performance | |||||||||||||||||||
Adjusted EBITDA | 75% | $ | 41,748,000 | $ | 52,185,000 | $ | 73,059,000 | $ | 41,537,000 | 79.6% | — | |||||||||||||||
Free Cash Flow | 25% | $ | 24,000,000 | $ | 30,000,000 | $ | 42,000,000 | $ | 21,302,000 | 71.0% | — | |||||||||||||||
Weighted Company-wide Performance Goals | 77.4% | $ | 0 |
Metric | Weighting | Threshold Goal (80% of Target Performance) | Target Goal | Maximum Goal (140% of Target Performance) | Actual Achievement | Actual Achievement Compared to Target Performance | Earned Payout for Fiscal 2019 Company-wide Performance | |||||||||||||||||
Adjusted EBITDA | 75% | $ | 42,360,000 | $ | 52,950,000 | $ | 74,130,000 | $ | 31,882,000 | 60.2% | $ | 0 | ||||||||||||
Free Cash Flow | 25% | $ | 26,660,000 | $ | 33,325,000 | $ | 46,655,000 | $ | 10,794,000 | 32.4% | $ | 0 | ||||||||||||
Weighted Company-wide Performance Goals | 53.3% | $ | 0 |
As compared to recent years, in fiscal 2018, achievement of individual goals was not limited to 100% in the aggregate, and no Company target multiplier was applied to individual achievement. The significant accomplishments considered by our Compensation Committee in determining the individual performance component of our Named Executive Officers’ fiscal 2018 annual cash incentive awards under the 2017 Plan are summarized below:
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Name | Fiscal 2018 Target Award | Fiscal 2018 Target Award as Percentage of Fiscal 2018 Base Salary | Payout as Percentage of Target Company- wide Performance (90% Weight) | Payout as Percentage of Target- Individual Performance (10% Weight) | Fiscal 2018 Payout | |||||||||
Michael H. Keown | $ | 570,000 | 100% | 0% | —(1) | $ | 0 | |||||||
David G. Robson | $ | 246,764 | 70% | 0% | 56% | $ | 0 | |||||||
Ellen D. Iobst | $ | 203,171 | 60% | 0% | 74% | $ | 0 | |||||||
Scott A. Siers | $ | 161,223 | 55% | 0% | 50% | $ | 0 | |||||||
Thomas J. Mattei, Jr. | $ | 171,666 | 55% | 0% | 87% | $ | 0 |
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Integration Achievement Program for Fiscal 2018
In addition to the Performance Achievement Program described above, in fiscal 2018 the Compensation Committee approved the Integration Achievement Program with a separate set of integration-based performance goals required to be achieved within 90 days following the closing of the Boyd Coffee acquisition, relating to the integration of the Boyd Business. The Compensation Committee believed that, given the magnitude of the Boyd Coffee acquisition and potential impact on Farmer Bros.’ growth and financial performance, it was important to establish aone-time cash incentive program to motivate the Named Executive Officers to expediently and successfully integrate the Boyd Business into Farmer Bros. This special Integration Achievement Program only applies for fiscal 2018 and will not recur in fiscal 2019.
The performance goals for the Integration Achievement Program required the following within 90 days following the closing date:
retention and transition of top five key customers (50% weight);
assumption of certain accounting functions (25% weight); and
successful qualification/test run of Boyd Coffee retail product at Company production facility (25% weight).
Each of these goals were indicative of the essential aspects of successful integration of the Boyd Business: revenue retention, swift assumption of business processes, and transfer of production.
Subject to continuing employment by the Company through the end of fiscal 2018, each Named Executive Officer was eligible to earn a cash incentive award under the Integration Achievement Program of up to an additional 50% of the Named Executive Officer’s target annual bonus under the Performance Achievement Program. Achievement or failure of the performance goals for the Integration Achievement Program was independent of any achievement under the Performance Achievement Program, with any cash incentive award earned under the Integration Achievement Program to be supplemental to any cash incentive award earned under the Performance Achievement Program.
In fiscal 2018, the Named Executive Officers earned the following awards under the Integration Achievement Program:
Name | Fiscal 2018 Target Award | Integration Achievement Target Award as Percentage of Fiscal 2018 Target Award | Integration Achievement Target Award | Fiscal 2018 Payout | ||||||||||
Michael H. Keown | $ | 570,000 | 50% | $ | 285,000 | $ | 285,000 | |||||||
David G. Robson | $ | 246,764 | 50% | $ | 123,382 | $ | 123,382 | |||||||
Ellen D. Iobst | $ | 203,171 | 50% | $ | 101,586 | $ | 101,586 | |||||||
Scott A. Siers | $ | 161,223 | 50% | $ | 80,612 | $ | 80,612 | |||||||
Thomas J. Mattei, Jr. | $ | 171,666 | 50% | $ | 85,833 | $ | 85,833 |
Key Fiscal 2019 Compensation Decisions
For fiscal 2019, annual short-term incentive compensation awards will be based on the Company’s achievement of targets for adjusted EBITDA and free cash flow (collectively weighted at 90%) along with the relative achievement by each executive officer of individual goals and objectives approved by the Compensation Committee (weighted at 10%). The Integration Achievement Program will not continue for fiscal 2019, and there are no other specifically-targeted or supplemental incentive opportunities for fiscal 2019. More details about our fiscal 2019 annual short-term incentive program will be provided in our fiscal 2019 proxy filing.
Long-Term Incentives
Awards
Fiscal 2018 long-term incentive awards were made under the 2017 Plan, which was approved by stockholders on June 20, 2017 (the “Effective Date”). The 2017 Plan succeeded the Company’s prior long-term incentive compensation plans, the Farmer Bros. Co. Amended and Restated 2007 Long-Term Incentive Plan (the “Amended Equity Plan”) and the Farmer Bros. Co. 2007 Omnibus Plan (collectively, the “Prior Plans”). On the Effective Date, the Company ceased granting awards under the Prior Plans; however, awards outstanding under the Prior Plans will remain subject to the terms of the applicable Prior Plan.
Prior to In fiscal 2018, the Compensation Committee granted stock option, performance stock option, and restricted stock awards under the Prior Plans. Beginning in fiscal 2018,2019, the Company granted stock option, restricted stock and PBRSU awards under the 2017 Plan.
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pay for performance alignment in that the stock options only realize value to the extent that the stock price appreciates above the exercise price, and the PBRSUs only vest to the extent that the performance goals are achieved.
(weighted approximately 50% of targeted grant date long-term incentive value)
Name | Fiscal 2018 Annual Stock Option Grant (# of Shares of Common Stock Issuable Upon Exercise) | Grant Date Fair Value of Stock Option Awards ($) | ||||||
Michael H. Keown | 28,819 | 300,093 | ||||||
David G. Robson | 12,699 | 132,235 | ||||||
Ellen D. Iobst | 9,759 | 101,621 | ||||||
Scott A. Siers | 7,040 | 73,308 | ||||||
Thomas J. Mattei, Jr. | 8,995 | 93,665 |
12, 2018:
Name(1) | Fiscal 2019 Annual Stock Option Grant (# of Shares of Common Stock Issuable Upon Exercise) | Grant Date Fair Value of Stock Option Awards ($) | ||
Michael H. Keown | 39,233 | 305,233 | ||
David G. Robson | 17,331 | 134,835 | ||
Ellen D. Iobst | 13,318 | 103,614 | ||
Scott A. Siers | 9,608 | 74,750 | ||
Thomas J. Mattei, Jr. | 13,239 | 102,999 |
(weighted approximately 50% of targeted grant date long-term incentive value)
business. The Compensation Committee has historically established aggressive, yet achievable performance goals intended to motivate the Company’s executive officers to achieve internal goals and results that will benefit the Company’s stockholders, while maintaining strong alignment between pay and performance. For example, in fiscal 2018 and 2017, the Company failed to achieve threshold levels of performance, resulting in the absence of any payout for short-term incentives based on Company performance, and, in fiscal 2017, the Company’s failure to achieve performance targets resulted in the forfeiture of 20% of the shares subject to fiscal 2017 stock option awards. Actual achievement of the three-year performance goals for the fiscal 20182019 PBRSU awards will be reflected in our proxy statement that reports the payouts at the end of the three-year performance period.
Name | Fiscal 2018 Target PBRSU Grant (# of Shares of Common Stock Issuable Upon Vesting) | Grant Date Fair Value of Target PBRSUs ($) | ||||||
Michael H. Keown | 9,464 | 300,009 | ||||||
David G. Robson | 4,171 | 132,221 | ||||||
Ellen D. Iobst | 3,205 | 101,599 | ||||||
Scott A. Siers | 2,312 | 73,290 | ||||||
Thomas J. Mattei, Jr. | 2,954 | 93,642 |
New Hire Restricted Stock Awards and Stock Option Awards
In connection with commencement of their employment, pursuant to the terms of their respective employment agreements with the Company, in fiscal 2018 the Company granted the followingnon-qualified stock option awards and restricted stock awards to Mr. Robson and Ms. Iobst. The stock options have an exercise price of $31.70 per share, which was the closing price of our Common Stock as reported on the NASDAQ Global Select Market on the date of grant.One-third of the total number of shares subject to each such stock option vest ratably on each of the first three anniversaries of the grant date, contingent on continued employment, and subject to accelerated vesting in certain circumstances. The restricted stock has a grant date fair value of $31.70 and cliff vests on the third anniversary of the grant date, subject to continued service to the Company through the vesting date and the acceleration provisions of the 2017 Plan and restricted stock award agreement.
Name | Fiscal 2018 New Hire Stock Option Grant (# of Shares of Common Stock Issuable Upon Exercise) | Fiscal 2018 New Hire Restricted Stock Grant (#) | Grant Date Fair Value of New Hire Stock and Option Awards ($) | |||||||||
David G. Robson | 5,764 | 947 | 90,041 | |||||||||
Ellen D. Iobst | 4,611 | 757 | 72,012 |
Key Fiscal 2019 Compensation Decisions
For fiscal 2019, the long-term incentive program will be substantially the same as fiscal 2018, with long-term incentives awarded 50% in PBRSUs and 50% in stock options, on a value basis. PBRSUs will be earned based on the achievement of cumulative coffee pound sales and cumulative adjusted EBITDA, both measured over a full three-year performance period. The stock options will vest over a three-year period based on continued employment over the period. The Compensation Committee believes this program design incentivizes value creation through profitable growth, directly aligning long-term incentive awards with the Company’s business strategy and stockholder interests. More details about our fiscal 2019 long-term incentive awards will be provided in our fiscal 2019 proxy filing.
Name(1) | Fiscal 2019 Target PBRSU Grant (# of Shares of Common Stock Issuable Upon Vesting) | Grant Date Fair Value of Target PBRSUs ($) | ||
Michael H. Keown | 12,190 | 305,238 | ||
David G. Robson | 5,385 | 134,840 | ||
Ellen D. Iobst | 4,138 | 103,616 | ||
Scott A. Siers | 2,985 | 74,744 | ||
Thomas J. Mattei, Jr. | 4,113 | 102,990 |
| ESOP Allocation (# of Shares) | |||
Michael H. Keown | 244 | |||
David G. Robson | 244 | |||
Ellen D. Iobst | 244 | |||
Scott A. Siers | 244 | |||
Thomas J. Mattei, Jr. | 244 |
employee.
stock units (whether or not the restrictions have lapsed); (iii) ESOP shares (with respect to executive officers only); (iv) shares of Common Stock held in trust for the benefit of the executive officer ornon-employee director or his or her family; and (v) shares of Common Stock issuable under vested options held by the executive officer ornon-employee director.
Position | Value of Shares Owned | |
Chief Executive Officer | 3x base salary | |
Other Executive Officers | 1x base salary | |
Non-Employee Directors |
Taxes and
Tax Deductibility Under Section 162(m) of the Internal Revenue Code
Certain of our incentive compensation programs are intended to provide for compensation that is tax deductible to us, however, the Compensation Committee believes that achieving the desired flexibility in the design and delivery of compensation, due to competitive or other factors, may result in compensation that in certain cases is not deductible for federal income tax purposes. At the time the Compensation Committee made its fiscal 2018 compensation decisions, Section 162(m) of the Internal Revenue Code disallowed a federal tax deduction to public companies for compensation greater than $1 million paid in any tax year to specified executive officers unless the compensation is “qualified performance-based compensation” under that section. Our fiscal 2018 executive compensation program was designed with the intent to provide cash and equity-based incentive compensation under the 2017 Plan as “qualified performance-based compensation” under Section 162(m).
The Section 162(m) exception was repealed as part of the Tax Cuts and Jobs Act enacted on December 22, 2017 for taxable years beginning after December 31, 2017. It is uncertain whether compensation that the Compensation Committee originally intended to structure as qualified performance-based compensation under Section 162(m) that is paid in calendar 2018 or subsequent years will be deductible under transition rules. The Compensation Committee will continue to focus on performance-based compensation, although certain of the requirements of Section 162(m) will no longer be relevant and will not be taken into account when making future compensation decisions.
Accounting Standards
Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 requires us to recognize an expense for the fair value of share-based compensation awards. Grants of stock options, restricted stock and PBRSUs under the Company’s long-term incentive plans are accounted for under FASB ASC Topic 718. The Compensation Committee considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our long-term incentive program. As accounting standards change, the Company may revise certain programs to appropriately align accounting expenses of our share-based compensation awards with our overall executive compensation philosophy and objectives.
Randy E. Clark,
Charles F. Marcy
A | B | C | D | E | F | G | H | I | ||||||||||||||||||||||||
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(1) | Total ($) | ||||||||||||||||||||||||
Michael H. Keown | 2018 | 565,758 | — | 300,009 | 300,093 | 285,000 | 15,922 | 1,466,782 | ||||||||||||||||||||||||
President and CEO | 2017 | 534,690 | — | — | 472,000 | — | 16,541 | 1,023,231 | ||||||||||||||||||||||||
2016 | 507,000 | 659,100 | — | 799,503 | 677,109 | 25,391 | 2,668,103 | |||||||||||||||||||||||||
David G. Robson(2) | 2018 | 351,938 | — | 162,241 | 192,256 | 123,382 | 69,266 | 899,083 | ||||||||||||||||||||||||
Treasurer and CFO | 2017 | 121,154 | — | — | — | — | 74,184 | 195,338 | ||||||||||||||||||||||||
Ellen D. Iobst(3) | 2018 | 337,783 | — | 125,596 | 149,636 | 101,586 | 104,551 | 819,152 | ||||||||||||||||||||||||
Chief Operations Officer | 2017 | 115,962 | — | — | — | — | 372,891 | 488,853 | ||||||||||||||||||||||||
Scott A. Siers | 2018 | 292,409 | — | 73,290 | 73,308 | 80,612 | 7,822 | 527,441 | ||||||||||||||||||||||||
SVP, GM Sales | ||||||||||||||||||||||||||||||||
Thomas J. Mattei, Jr. | 2018 | 310,708 | — | 93,642 | 93,665 | 85,833 | 15,922 | 599,770 | ||||||||||||||||||||||||
Chief Legal Officer and Secretary | 2017 | 316,383 | — | — | 111,551 | — | 16,541 | 444,475 | ||||||||||||||||||||||||
2016 | 287,893 | 325,000 | — | 99,931 | 220,660 | 115,075 | 1,048,559 |
A | B | C | D | E | F | G | H | I | ||||||||||||
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(1) | Total ($) | ||||||||||||
Michael H. Keown (2) | 2019 | 663,063 | — | 305,235 | 305,235 | — | 26,978 | 1,300,511 | ||||||||||||
President and CEO | 2018 | 565,758 | — | 300,009 | 300,093 | 285,000 | 15,922 | 1,466,782 | ||||||||||||
2017 | 534,690 | — | — | 472,000 | — | 16,541 | 1,023,231 | |||||||||||||
Christopher P. Mottern (3) | 2019 | 62,311 | — | 215,002 | — | — | 88,750 | 366,063 | ||||||||||||
Interim President and CEO | ||||||||||||||||||||
David G. Robson(4) | 2019 | 372,033 | — | 134,839 | 134,839 | — | 23,060 | 664,771 | ||||||||||||
Treasurer and CFO | 2018 | 351,938 | — | 162,241 | 192,256 | 123,382 | 69,266 | 899,083 | ||||||||||||
2017 | 121,154 | — | — | — | — | 74,184 | 195,338 | |||||||||||||
Ellen D. Iobst(5) | 2019 | 359,123 | — | 103,617 | 103,617 | — | 22,700 | 589,057 | ||||||||||||
Chief Operations Officer | 2018 | 337,783 | — | 125,596 | 149,636 | 101,586 | 104,551 | 819,152 | ||||||||||||
2017 | 115,962 | — | — | — | — | 372,891 | 488,853 | |||||||||||||
Scott A. Siers(6) | 2019 | 305,928 | — | 74,749 | 74,749 | — | 13,508 | 468,934 | ||||||||||||
SVP, GM Sales | 2018 | 292,409 | — | 73,290 | 73,308 | 80,612 | 7,822 | 527,441 | ||||||||||||
Thomas J. Mattei, Jr.(7) | 2019 | 352,265 | — | 103,000 | 103,000 | — | 22,741 | 581,006 | ||||||||||||
Chief Legal Officer and Secretary | 2018 | 310,708 | — | 93,642 | 93,665 | 85,833 | 15,922 | 599,770 | ||||||||||||
2017 | 316,383 | — | — | 111,551 | — | 16,541 | 444,475 |
(1) | For a detailed summary of the amounts shown in this column see discussion under the heading “All Other Compensation (Column H),” below. For Mr. Mottern, this amount reflects the amount paid in cash retainers in connection with his service on the Board of Directors and its committees, prior to becoming interim President and Chief Executive Officer. |
(2) | Mr. Keown's salary reflects the amount actually paid to him through the date of his separation of employment. |
(3) | Mr. Mottern joined the Company as interim President and Chief Executive Officer from May 2019 to October 2019, after having served as an independent director. The amounts shown in the table for fiscal 2019 include 3,016 restricted stock units, with a grant-day value of $62,311, in lieu of salary (Salary); a restricted stock units award upon hire of 8,436 shares, with a grant-date value of $149,992 (Stock Awards); a restricted stock award of 2,711 shares with a grant-date value of $65,010 granted to Mr. Mottern in his capacity as a director prior to joining the Company as interim President and Chief Executive Officer (Stock Awards) and $88,750 in cash retainers in connection with his service on the Board of Directors and its committees, prior to becoming interim President and Chief Executive Officer (Other). |
(4) | Mr. Robson joined the Company as Treasurer and Chief Financial Officer |
(5) | Ms. Iobst joined the Company as Chief Operations Officer in February 2017, after having served as an independent consultant to the Company from April 2016 to February 2017. The amounts shown in the table for fiscal 2017 reflect Ms. Iobst’s |
(6) | Mr. Siers has subsequently resigned from the Company |
(7) | Mr. Mattei has subsequently resigned from the |
Officers. The amounts reported in column E for fiscal 2018 represent the aggregate grant date fair value of annual PBRSU awards received by each of the Named Executive Officers, and restricted stock awards received by Mr. Robson and Ms. Iobst in connection with commencement of their employment under the terms of theiryear.year or the dates of resignation or termination. The amounts shown include amounts contributed by the employee to the Company’s 401(k) plan. Fiscal 2017 base salary included one extra pay period.and 2016 is shown in column G.DE for fiscal 20162019 represent discretionary bonuses awarded to the indicatedaggregate grant date fair value of annual PBRSU awards received by each of the Named Executive Officer during fiscal 2016, which were awarded by the Board in order to promote continued engagement and orderly transition of processes and duties in connection with the Company’s relocation of its headquarters from Torrance, California to Northlake, Texas.Stock Awards (Column E)
respective employment agreements, in each case, computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in calculating the amounts in this column may be found in Note 18 to our audited consolidated financial statements for the fiscal year ended June 30, 20182019 included in our 20182019 Form10-K, except that, as required by applicable SEC rules, we did not reduce the amounts in this column for any forfeitures relating to service-based (time-based) vesting conditions.
The amount reported in column F for fiscal 2016 for Mr. Keown includes the aggregate grant date fair value of stock option awards granted to Mr. Keown under the Amended Equity Plan on December 3, 2015 and the aggregate grant date fair value of stock option awards granted to Mr. Keown under the Amended Equity Plan on June 3, 2016. However, as discussed in Note 18 to our audited consolidated financial statements for the fiscal year ended June 30, 2018 included in our 2018 Form10-K, a portion of the December 3, 2015 stock option award was found to be invalid and was voided on June 3, 2016. The aggregate grant date fair value of the option awards granted to Mr. Keown in fiscal 2016, net of the portion of the option award that was voided, was $537,505.
discussed in this Proxy Statement under the heading “Compensation Discussion and Analysis—Short-TermAnalysis-Short-Term Cash Incentives.” As a result of our failure to achieve a threshold level of adjusted EBITDA, as determined by the Compensation Committee, our Named Executive Officers did not receive any cash payout under the Performance AchievementShort-Term Cash Incentive Program in fiscal 2018.
2018 or fiscal 2019.
Name | Perquisites and Other Personal Benefits ($) | Tax Gross-Up Payments ($)(1) | ESOP Allocation(2)($) | Company Contributions to 401(k) Plan(3)($) | Total ($) | |||||||||||||||
Michael H. Keown | — | (4) | — | 7,822 | 8,100 | 15,922 | ||||||||||||||
David G. Robson | 49,178 | (5) | 4,166 | 7,822 | 8,100 | 69,266 | ||||||||||||||
Ellen D. Iobst | 77,588 | (6) | 11,041 | 7,822 | 8,100 | 104,551 | ||||||||||||||
Scott A. Siers | — | (7) | — | 7,822 | — | 7,822 | ||||||||||||||
Thomas J. Mattei, Jr. | — | (8) | — | 7,822 | 8,100 | 15,922 |
ESOP Allocation (2) | Company Contributions to 401(k) Plan (3) | Total | ||||
($) | ($) | ($) | ||||
Michael H. Keown | 7,528 | 19,450 | 26,978 | |||
Christopher P. Mottern | — | — | — | |||
David G. Robson | 7,528 | 15,532 | 23,060 | |||
Ellen D. Iobst | 7,528 | 15,242 | 22,770 | |||
Scott A. Siers | 7,528 | 5,980 | 13,508 | |||
Thomas J. Mattei, Jr. | 7,528 | 15,213 | 22,741 |
(1) |
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(2) | Represents the dollar value of ESOP shares allocated to each Named Executive Officer based on compensation earned during calendar |
(3) | Represents the Company’s |
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severance benefits upon termination of employment other than for “Cause,” “Disability” or death, or termination due to resignation from employment for “Good Reason,” in each case, in connection with a “Change in Control” or “Threatened Change in Control” (as each such term is defined in the Severance Agreement). The Severance Agreements are structured so that payments and benefits are provided only if there is both a change in control or threatened change in control and a qualifying termination of employment (“double trigger”). A more detailed description of the severance benefits to which our Named Executive Officers are entitled in connection with a change in control or threatened change in control is set forth below under the heading “Change in Control and Termination Arrangements.”
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards(1) | |||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Date of Action | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/ Sh)(2) | Grant Date Fair Value of Stock and Option Awards ($)(3) | ||||||||||||||||||||||||||||||||||||
Michael H. Keown | — | — | 285,000 | (4) | 570,000 | (4) | 1,140,000 | (4) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
— | — | 0 | 285,000 | (5) | 285,000 | (5) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
11/10/17 | 09/29/17 | — | — | — | 0 | 9,464 | 14,196 | — | — | — | 300,009 | |||||||||||||||||||||||||||||||||||||
11/10/17 | 09/29/17 | — | — | — | — | — | — | — | 28,819 | (7) | 31.70 | 300,093 | ||||||||||||||||||||||||||||||||||||
David G. Robson | — | — | 123,382 | (4) | 246,764 | (4) | 493,528 | (4) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
— | — | 0 | 123,382 | (5) | 123,382 | (5) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
11/10/17 | 09/29/17 | — | — | — | 0 | 4,171 | 6,256 | — | — | — | 132,221 | |||||||||||||||||||||||||||||||||||||
11/10/17 | 09/29/17 | — | — | — | — | — | — | — | 12,699 | (7) | 31.70 | 132,235 | ||||||||||||||||||||||||||||||||||||
11/10/17 | 09/29/17 | — | — | — | — | — | — | 947 | (6) | — | — | 30,020 | ||||||||||||||||||||||||||||||||||||
11/10/17 | 09/29/17 | — | — | — | — | — | — | — | 5,764 | (8) | 31.70 | 60,021 | ||||||||||||||||||||||||||||||||||||
Ellen D. Iobst | — | — | 101,586 | (4) | 203,171 | (4) | 406,342 | (4) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
— | — | 0 | 101,586 | (5) | 101,586 | (5) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
11/10/17 | 09/29/17 | — | — | — | 0 | 3,205 | 4,807 | — | — | — | 101,599 | |||||||||||||||||||||||||||||||||||||
11/10/17 | 09/29/17 | — | — | — | — | — | — | — | 9,759 | (7) | 31.70 | 101,621 | ||||||||||||||||||||||||||||||||||||
11/10/17 | 09/29/17 | — | — | — | — | — | — | 757 | (6) | — | — | 23,997 | ||||||||||||||||||||||||||||||||||||
11/10/17 | 09/29/17 | — | — | — | — | — | — | — | 4,611 | (8) | 31.70 | 48,015 | ||||||||||||||||||||||||||||||||||||
Scott A. Siers | — | — | 80,612 | (4) | 161,223 | (4) | 322,446 | (4) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
— | — | 0 | 80,612 | (5) | 80,612 | (5) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
11/10/17 | 09/29/17 | — | — | — | 0 | 2,312 | 3,468 | — | — | — | 73,290 | |||||||||||||||||||||||||||||||||||||
11/10/17 | 09/29/17 | — | — | — | — | — | — | — | 7,040 | (7) | 31.70 | 73,308 | ||||||||||||||||||||||||||||||||||||
Thomas J. Mattei, Jr. | — | — | 85,833 | (4) | 171,666 | (4) | 343,332 | (4) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
— | — | 0 | 85,833 | (5) | 85,833 | (5) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
11/10/17 | 09/29/17 | — | — | — | 0 | 2,954 | 4,431 | — | — | — | 93,642 | |||||||||||||||||||||||||||||||||||||
11/10/17 | 09/29/17 | — | — | — | — | — | — | — | 8,995 | (7) | 31.70 | 93,665 |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards(1) | |||||||||||
Name | Grant Date | Date of Action | Threshold ($)(4) | Target ($)(4) | Maximum ($)(4) | Threshold (#)(5) | Target (#)(5) | Maximum (#)(5) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#)(5) | Exercise or Base Price of Option Awards ($/ Sh)(2) | Grant Date Fair Value of Stock and Option Awards ($)(3) |
Michael H. Keown | - | - | 299,250 | 598,500 | 1,197,000 | - | - | - | - | - | - | - |
11/12/18 | 10/08/18 | - | - | - | 0 | 12,190 | 18,285 | - | - | - | 305,238 | |
11/12/18 | 10/08/18 | - | - | - | - | - | - | - | 39,233 | 25.04 | 305,233 | |
Christopher P. Mottern | 5/9/19 | 5/5/19 | - | - | - | - | - | - | 8436(6) | - | 17.78 | 149.992 |
5/31/19 | 5/5/19 | - | - | - | - | - | - | 1582(7) | - | 18.32 | 28.982 | |
6/28/19 | 5/5/19 | - | - | - | - | - | - | 2036(7) | - | 16.37 | 33.329 | |
David G. Robson | - | - | 134,839 | 269,678 | 539,356 | - | - | - | - | - | - | - |
11/12/18 | 10/08/18 | - | - | - | 0 | 5,385 | 8,078 | - | - | - | 134,840 | |
11/12/18 | 10/08/18 | - | - | - | - | - | - | - | 17,331 | 25.04 | 134,835 | |
Ellen D. Iobst | - | - | 103,617 | 207,234 | 414,468 | - | - | - | - | - | - | - |
11/12/18 | 10/08/18 | - | - | - | - | 4,138 | 6,207 | - | - | - | 103,616 | |
11/12/18 | 10/08/18 | - | - | - | - | - | - | - | 13,318 | 25.04 | 103,614 | |
Scott A. Siers | - | - | 89,699 | 179,397 | 358,794 | - | - | - | - | - | - | - |
11/12/18 | 10/08/18 | - | - | - | - | 2,985 | 4,478 | - | - | - | 74,744 | |
11/12/18 | 10/08/18 | - | - | - | - | - | - | - | 9,608 | 25.04 | 74,750 | |
Thomas J. Mattei, Jr. | - | - | 103,000 | 205,999 | 411,998 | - | - | - | - | - | - | - |
11/12/18 | 10/08/18 | - | - | - | - | 4,113 | 6,170 | - | - | - | 102,990 | |
11/12/18 | 10/08/18 | - | - | - | - | - | - | - | 13,239 | 25.04 | 102,999 |
(1) | Represents PBRSU awards granted to our Named Executive Officers in fiscal |
(2) | Exercise price of stock option awards is equal to the closing price of the Company’s Common Stock as reported on the NASDAQ Global Select Market on the date of grant. |
(3) | Reflects the grant date fair value of stock options, restricted stock and PBRSU awards computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in calculating the amounts in this column may be found in Note |
(4) | Represents annual cash incentive opportunities under the |
(5) |
|
Represents |
|
(6) | Represents |
(7) | Represents restricted stock granted to Mr. Mottern, in |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||
Michael H. Keown | — | — | — | — | ||||||||||||||||||||||||||||||||
23,334 | (1) | — | — | 11.81 | 12/07/19 | — | — | — | — | |||||||||||||||||||||||||||
45,470 | (2) | — | — | 21.33 | 12/12/20 | — | — | — | — | |||||||||||||||||||||||||||
49,902 | (3) | — | — | 23.44 | 02/09/22 | — | — | — | — | |||||||||||||||||||||||||||
16,732 | (4) | — | 8,366 | (4) | 29.48 | 12/03/22 | — | — | — | — | ||||||||||||||||||||||||||
15,241 | (5) | — | 7,621 | (5) | 29.48 | 12/03/22 | — | — | — | — | ||||||||||||||||||||||||||
11,022 | (6) | — | 22,044 | (6) | 32.85 | 11/10/23 | — | — | — | — | ||||||||||||||||||||||||||
— | 28,819 | (1) | — | 31.70 | 11/10/24 | — | — | 9,464 | (9) | 289,125 | (10) | |||||||||||||||||||||||||
David G. Robson | — | 12,699 | (1) | — | 31.70 | 11/10/24 | — | — | 4,171 | (9) | 127,424 | (10) | ||||||||||||||||||||||||
— | 5,764 | (1) | — | 31.70 | 11/10/24 | 947 | (7) | 28,931 | (8) | — | — | |||||||||||||||||||||||||
Ellen D. Iobst | — | 9,759 | (1) | — | 31.70 | 11/10/24 | — | — | 3,205 | (9) | 97,913 | (10) | ||||||||||||||||||||||||
— | 4,611 | (1) | — | 31.70 | 11/10/24 | 757 | (7) | 23,126 | (8) | — | — | |||||||||||||||||||||||||
Scott A. Siers | 2,720 | (1) | — | — | 13.09 | 02/27/20 | — | — | — | — | ||||||||||||||||||||||||||
4,700 | (2) | — | — | 21.33 | 12/12/20 | — | — | — | — | |||||||||||||||||||||||||||
9,095 | (3) | — | — | 23.44 | 02/09/22 | — | — | — | — | |||||||||||||||||||||||||||
5,813 | (4) | — | 2,907 | (4) | 29.48 | 12/03/22 | — | — | — | — | ||||||||||||||||||||||||||
2,004 | (6) | — | 4,008 | (6) | 32.85 | 11/10/23 | — | — | — | — | ||||||||||||||||||||||||||
— | 7,040 | (1) | — | 31.70 | 11/10/24 | — | — | 2,312 | (9) | 70,623 | (10) | |||||||||||||||||||||||||
Thomas J. Mattei, Jr. | 2,720 | (1) | — | — | 13.09 | 02/27/20 | — | — | — | — | ||||||||||||||||||||||||||
3,760 | (2) | — | — | 21.33 | 12/12/20 | — | — | — | — | |||||||||||||||||||||||||||
4,281 | (3) | — | — | 23.44 | 02/09/22 | — | — | — | — | |||||||||||||||||||||||||||
5,813 | (4) | — | 2,907 | (4) | 29.48 | 12/03/22 | — | — | — | — | ||||||||||||||||||||||||||
2,605 | (6) | — | 5,210 | (6) | 32.85 | 11/10/23 | — | — | — | — | ||||||||||||||||||||||||||
— | 8,995 | (1) | — | 31.70 | 11/10/24 | — | — | 2,954 | (9) | 90,245 | (10) |
Option Awards | Stock Awards | ||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | 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 ($) |
Michael H. Keown | - | - | - | - | |||||
45,470(2) | - | - | 21.33 | 12/12/20 | - | - | - | - | |
49,902(3) | - | - | 23.44 | 02/09/22 | - | - | - | - | |
16,732(4) | - | - | 29.48 | 12/03/22 | - | - | - | - | |
15241(5) | - | - | 29.48 | 12/03/22 | - | - | - | - | |
11,022(6) | - | - | 32.85 | 11/10/23 | - | - | - | - | |
9,510(1) | - | - | 31.70 | 11/10/24 | - | - | - | - | |
Christopher P. Mottern | 8,436(7) | 138,097(9) | |||||||
1,582(7) | 25,897(9) | ||||||||
2,036(7) | 33,329(9) | ||||||||
David G. Robson | 4,190(1) | 8,509(1) | - | 31.70 | 11/10/24 | - | - | 4,171(10) | 127,424(11) |
1,902(1) | 3,862(1) | - | 31.70 | 11/10/24 | 947(8) | 28,931(9) | - | - | |
- | 17,331(1) | 25.04 | 11/12/25 | - | - | 5,385(10) | 88,152(11) | ||
Ellen D. Iobst | 3,220(1) | 6,539(1) | - | 31.70 | 11/10/24 | - | - | 3,205(10) | 97,913(11) |
1,521(1) | 3,090(1) | - | 31.70 | 11/10/24 | 757(8) | 23,126(9) | - | - | |
- | 13,318(1) | 25.04 | 11/12/25 | 4,138(8) | 67,739 (9) | ||||
Scott A. Siers | 2,720(1) | - | - | 13.09 | 02/27/20 | - | - | - | - |
4,700(2) | - | - | 21.33 | 12/12/20 | - | - | - | - | |
9,095(3) | - | - | 23.44 | 02/09/22 | - | - | - | - | |
8,720(4) | - | - | 29.48 | 12/03/22 | - | - | - | - | |
4,008(6) | - | 2,004(6) | 32.85 | 11/10/23 | - | - | - | - | |
2,323(1) | 4,717(1) | - | 31.70 | 11/10/24 | - | - | 2,312(10) | 70,623(11) | |
- | 9,608(1) | 25.04 | 11/12/25 | 2,985(8) | 48,864(9) | ||||
Thomas J. Mattei, Jr. | 2,720(1) | - | - | 13.09 | 02/27/20 | - | - | - | - |
3,760(2) | - | - | 21.33 | 12/12/20 | - | - | - | - | |
4,281(3) | - | - | 23.44 | 02/09/22 | - | - | - | - | |
8,720(4) | - | 2,907(4) | 29.48 | 12/03/22 | - | - | - | - | |
2,605(6) | - | 2,605(6) | 32.85 | 11/10/23 | - | - | - | - | |
2,968(1) | 6,027(1) | - | 31.70 | 11/10/24 | - | - | 2,954(10) | 90,245(11) | |
- | 13,239(1) | 25.04 | 11/12/25 | 4,113(8) | 67,330(9) |
(1) | Stock options vest in equal ratable installments on each of the first three anniversaries of the date of grant, contingent on continued employment through the applicable vesting date, and subject to accelerated vesting in certain circumstances. |
(2) | Stock options vest over a three-year period withone-third of the total number of shares of Common Stock subject to each such stock option vesting on the first anniversary of the grant date based on the Company’s achievement of a modified net income target for the first fiscal year of the performance period as approved by the Compensation Committee, and the remainingtwo-thirds of the total number of shares of Common Stock subject to each such stock option vesting on the third anniversary of the grant date based on the Company’s achievement of a cumulative modified net income target for all three years during the performance period as approved by the Compensation Committee, in each case, contingent on continued employment through the applicable vesting date, and subject to accelerated vesting in certain circumstances. |
(3) | Stock options vest over a three-year period withone-third of the total number of shares of Common Stock subject to each such stock option vesting on each anniversary of the grant date based on the Company’s achievement of a modified net income target for each fiscal year of the performance period as approved by the Compensation Committee, as well as an ability for each such tranche of each grant to vest in the subsequent fiscal years of the performance period (if applicable) based upon achievement of cumulative modified net income equal to the sum of the individual targets for the fiscal years being accumulated, in |
each case, contingent on continued employment on the applicable vesting date, and subject to accelerated vesting in certain circumstances. |
(4) | Stock options vest in equal ratable installments on each of the first three anniversaries of the date of grant, contingent on continued employment through the applicable vesting date, and subject to accelerated vesting in certain circumstances. Further 20% of the shares of Common Stock subject to each such stock option are subject to forfeiture if the Company fails to achieve modified net income of at least $15,232,000 in the fiscal year during which the award is granted. The Company met the first-year modified net income goal during fiscal 2016 with respect to these stock options, such that all of the shares of Common Stock subject to these stock options will continue to vest subject to and in accordance with the three-year vesting schedule described above. |
(5) | Stock options vest as follows: 7,620 shares of Common Stock subject to the stock option vest on the first anniversary of the date of grant, and 7,621 shares of Common Stock subject to the stock option vest on each of December 3, 2017 and December 3, 2018, in each case, contingent on continued employment through the applicable vesting date, and subject to accelerated vesting in certain circumstances. Further, 20% of the shares of Common Stock subject to the stock option are subject to forfeiture if the Company fails to achieve modified net income of at least $15,232,000 in the fiscal year during which the award is granted. The Company met the first-year modified net income goal with respect to this stock option, such that all of the shares of Common Stock subject to this stock option will continue to vest subject to and in accordance with the service-based vesting schedule described above. |
(6) | Stock options vest in equal ratable installments on each of the first three anniversaries of the date of grant, contingent on continued employment through the applicable vesting date, and subject to accelerated vesting in certain circumstances. In fiscal 2017, the Company failed to achieve the modified net income target of at least $23,900,000 which resulted in the forfeiture of 20% of the shares subject to the original stock option award. The number of shares underling the stock option award shown in the table is net of such forfeiture. |
(7) | Restricted stock cliff vests on the first anniversary of the date of grant, subject to accelerated vesting in certain circumstances. |
(8) | Restricted stock cliff vests on the third anniversary of the date of grant, contingent on continued employment through the vesting date, and subject to accelerated vesting in certain circumstances. |
(9) | The market value was calculated by multiplying the closing price of our Common Stock on June |
(10) | PBRSU awards cliff vest following the expiration of the three-year performance period upon the certification by the Compensation Committee of the Company’s achievement of |
(11) | The market value was calculated by multiplying the closing price of our Common Stock on June |
Name Michael H. Keown David G. Robson Ellen D. Iobst Scott A. Siers Thomas J. Mattei, Jr. If a Named Executive Officer used share withholding to pay the exercise price of stock options or to satisfy the tax obligations with respect to the vesting of restricted stock, the number of shares actually acquired was less than the amounts shown.2018.2019. Option Awards(1) Stock Awards Number of Securities
Acquired
on Exercise(#) Value Realized on
Exercise($) Number of Shares
Acquired on Vesting(#) Value Realized on
Vesting($) 68,666 1,432,801 — — — — — — — — — — — — — — — — — — Name
Acquired
on Exercise(#)
Exercise($)
Acquired on Value Realized on
Vesting($)Named Executive Officers: Michael H. Keown 23,333 378,928 — — Christopher P. Mottern — — — — David G. Robson — — — — Ellen D. Iobst — — — — Scott A. Siers — — — — Thomas J. Mattei, Jr. — — — — (1)
However, Mr. Keown's compensation listed in the table below shows his actual compensation paid upon his termination from the Company on May 5, 2019.
Michael H. Keown | Death | Disability | Retirement | Change in Control and Involuntarily Terminated or Resignation for Good Reason within 24 Months of Change in Control | Threatened Change in Control and Involuntarily Terminated or Resignation for Good Reason | Termination Without Cause or Resignation With Good Reason | ||||||||||||||||||
Base Salary Continuation | $ | — | $ | — | $ | — | $ | 1,140,000 | $ | 1,140,000 | $ | 570,000 | ||||||||||||
Annual Incentive Payments | $ | 570,000 | $ | 570,000 | $ | — | $ | 570,000 | $ | 570,000 | $ | 570,000 | ||||||||||||
Value of Accelerated Stock Options | $ | 13,294 | $ | 13,294 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Value of Accelerated Restricted Stock | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Value of Accelerated PBRSUs | $ | 61,192 | $ | 61,192 | $ | — | $ | 289,125 | $ | — | $ | — | ||||||||||||
Vested ESOP Shares/Value of Continued ESOP Participation | $ | 82,791 | $ | 82,791 | $ | 82,791 | $ | 98,432 | $ | 98,432 | $ | 82,791 | ||||||||||||
Health and Dental Insurance | $ | — | $ | — | $ | — | $ | 23,672 | $ | 23,672 | $ | 11,836 | ||||||||||||
Outplacement Services | $ | — | $ | — | $ | — | $ | 25,000 | $ | 25,000 | $ | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
TotalPre-Tax Benefit | $ | 727,276 | $ | 727,276 | $ | 82,791 | $ | 2,146,229 | $ | 1,857,104 | $ | 1,234,627 | ||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
David G. Robson | Death | Disability | Retirement | Change in Control and Involuntarily Terminated or Resignation for Good Reason within 24 Months of Change in Control | Threatened Change in Control and Involuntarily Terminated or Resignation for Good Reason | Termination Without Cause or Resignation With Good Reason | ||||||||||||||||||
Base Salary Continuation | $ | — | $ | — | $ | — | $ | 705,040 | $ | 705,040 | $ | 352,520 | ||||||||||||
Annual Incentive Payments | $ | 246,764 | $ | 246,764 | $ | — | $ | 246,764 | $ | 246,764 | $ | 246,764 | ||||||||||||
Value of Accelerated Stock Options | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Value of Accelerated Restricted Stock | $ | 6,110 | $ | 6,110 | $ | — | $ | 28,931 | $ | — | $ | — | ||||||||||||
Value of Accelerated PBRSUs | $ | 26,976 | $ | 26,976 | $ | — | $ | 127,424 | $ | — | $ | — | ||||||||||||
Vested ESOP Shares/Value of Continued ESOP Participation | $ | 7,821 | $ | 7,821 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Health and Dental Insurance | $ | — | $ | — | $ | — | $ | 23,210 | $ | 23,210 | $ | 11,605 | ||||||||||||
Outplacement Services | $ | — | $ | — | $ | — | $ | 25,000 | $ | 25,000 | $ | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
TotalPre-Tax Benefit | $ | 287,671 | $ | 287,671 | $ | — | $ | 1,156,369 | $ | 1,000,014 | $ | 610,889 | ||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
Ellen D. Iobst | Death | Disability | Retirement | Change in Control and Involuntarily Terminated or Resignation for Good Reason within 24 Months of Change in Control | Threatened Change in Control and Involuntarily Terminated or Resignation for Good Reason | Termination Without Cause or Resignation With Good Reason | ||||||||||||||||||
Base Salary Continuation | $ | — | $ | — | $ | — | $ | 677,236 | $ | 677,236 | $ | 338,618 | ||||||||||||
Annual Incentive Payments | $ | 203,171 | $ | 203,171 | $ | — | $ | 203,171 | $ | 203,171 | $ | 203,171 | ||||||||||||
Value of Accelerated Stock Options | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Value of Accelerated Restricted Stock | $ | 4,888 | $ | 4,888 | $ | — | $ | 23,126 | $ | — | $ | — | ||||||||||||
Value of Accelerated PBRSUs | $ | 20,713 | $ | 20,713 | $ | — | $ | 97,913 | $ | — | $ | — | ||||||||||||
Vested ESOP Shares/Value of Continued ESOP Participation | $ | 7,821 | $ | 7,821 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Health and Dental Insurance | $ | — | $ | — | $ | — | $ | 23,210 | $ | 23,210 | $ | 11,605 | ||||||||||||
Outplacement Services | $ | — | $ | — | $ | — | $ | 25,000 | $ | 25,000 | $ | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
TotalPre-Tax Benefit | $ | 236,593 | $ | 236,593 | $ | — | $ | 1,049,656 | $ | 928,617 | $ | 553,394 | ||||||||||||
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|
|
Scott A. Siers | Death | Disability | Retirement | Change in Control and Involuntarily Terminated or Resignation for Good Reason within 24 Months of Change in Control | Threatened Change in Control and Involuntarily Terminated or Resignation for Good Reason | Termination Without Cause or Resignation With Good Reason | ||||||||||||||||||
Base Salary Continuation | $ | — | $ | — | $ | — | $ | 586,264 | $ | 586,264 | $ | 293,132 | ||||||||||||
Annual Incentive Payments | $ | 161,223 | $ | 161,223 | $ | — | $ | 161,223 | $ | 161,223 | $ | 161,223 | ||||||||||||
Value of Accelerated Stock Options | $ | 2,665 | $ | 2,665 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Value of Accelerated Restricted Stock | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Value of Accelerated PBRSUs | $ | 14,939 | $ | 14,939 | $ | — | $ | 70,632 | $ | — | $ | — | ||||||||||||
Vested ESOP Shares/Value of Continued ESOP Participation | $ | 66,355 | $ | 66,355 | $ | 66,355 | $ | 81,996 | $ | 81,996 | $ | 66,355 | ||||||||||||
Health and Dental Insurance | $ | — | $ | — | $ | — | $ | 15,242 | $ | 15,242 | $ | 7,621 | ||||||||||||
Outplacement Services | $ | — | $ | — | $ | — | $ | 25,000 | $ | 25,000 | $ | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
TotalPre-Tax Benefit | $ | 245,182 | $ | 245,182 | $ | 66,355 | $ | 940,357 | $ | 869,725 | $ | 528,331 | ||||||||||||
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|
|
|
|
|
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|
|
Thomas J. Mattei, Jr. | Death | Disability | Retirement | Change in Control and Involuntarily Terminated or Resignation for Good Reason within 24 Months of Change in Control | Threatened Change in Control and Involuntarily Terminated or Resignation for Good Reason | Termination Without Cause or Resignation With Good Reason | ||||||||||||||||||
Base Salary Continuation | $ | — | $ | — | $ | — | $ | 624,240 | $ | 624,240 | $ | 312,120 | ||||||||||||
Annual Incentive Payments | $ | 171,666 | $ | 171,666 | $ | — | $ | 171,666 | $ | 171,666 | $ | 171,666 | ||||||||||||
Value of Accelerated Stock Options | $ | 2,665 | $ | 2,665 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Value of Accelerated Restricted Stock | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Value of Accelerated PBRSUs | $ | 19,094 | $ | 19,094 | $ | — | $ | 90,245 | $ | — | $ | — | ||||||||||||
Vested ESOP Shares/Value of Continued ESOP Participation | $ | 63,941 | $ | 63,941 | $ | 63,941 | $ | 79,583 | $ | 79,583 | $ | 63,941 | ||||||||||||
Dental Insurance | $ | — | $ | — | $ | — | $ | 1,088 | $ | 1,088 | $ | 544 | ||||||||||||
Outplacement Services | $ | — | $ | — | $ | — | $ | 25,000 | $ | 25,000 | $ | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
TotalPre-Tax Benefit | $ | 257,366 | $ | 257,366 | $ | 63,941 | $ | 991,822 | $ | 901,577 | $ | 548,271 | ||||||||||||
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|
|
|
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|
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|
|
Michael H. Keown | Death | Disability | Retirement | Change in Control and Involuntarily Terminated or Resignation for Good Reason within 24 Months of Change in Control | Threatened Change in Control and Involuntarily Terminated or Resignation for Good Reason | Termination Without Cause or Resignation With Good Reason |
Base Salary Continuation | - | - | - | - | - | $581,400 |
Annual Incentive Payments | - | - | - | - | - | $491,864 |
Value of Accelerated Stock Options | - | - | - | - | - | $- |
Value of Accelerated Restricted Stock | - | - | - | - | - | $- |
Value of Accelerated PBRSUs | - | - | - | - | - | $- |
Health and Dental Insurance | - | - | - | - | - | $11,914 |
Outplacement Services | - | - | - | - | - | $- |
Total Pre-Tax Benefit | - | - | - | - | - | $1,085,178 |
David G. Robson | Death | Disability | Retirement | Change in Control and Involuntarily Terminated or Resignation for Good Reason within 24 Months of Change in Control | Threatened Change in Control and Involuntarily Terminated or Resignation for Good Reason | Termination Without Cause or Resignation With Good Reason |
Base Salary Continuation | $- | $- | $- | $719,140 | $719,140 | $359,570 |
Annual Incentive Payments | $251,699 | $251,699 | $- | $251,699 | $251,699 | $251,699 |
Value of Accelerated Stock Options | $- | $- | $- | $- | $- | $- |
Value of Accelerated Restricted Stock | $8,275 | $8,275 | $- | $28,931 | $- | $- |
Value of Accelerated PBRSUs | $74,904 | $74,904 | $- | $156,432 | $- | $- |
Health and Dental Insurance | $- | $- | $- | $23,310 | $23,310 | $11,655 |
Outplacement Services | $- | $- | $- | $25,000 | $25,000 | $- |
Total Pre-Tax Benefit | $334,877 | $334,877 | $- | $1,204,512 | $1,019,149 | $622,924 |
Ellen D. Iobst | Death | Disability | Retirement | Change in Control and Involuntarily Terminated or Resignation for Good Reason within 24 Months of Change in Control | Threatened Change in Control and Involuntarily Terminated or Resignation for Good Reason | Termination Without Cause or Resignation With Good Reason |
Base Salary Continuation | $- | $- | $- | $690,780 | $690,780 | $345,390 |
Annual Incentive Payments | $207,234 | $207,234 | $- | $207,234 | $207,234 | $207,234 |
Value of Accelerated Stock Options | $- | $- | $- | $- | $- | $- |
Value of Accelerated Restricted Stock | $6,614 | $6,614 | $- | $12,392 | $- | $- |
Value of Accelerated PBRSUs | $57,557 | $57,557 | $- | $120,205 | $- | $- |
Health and Dental Insurance | $- | $- | $- | $23,330 | $23,330 | $11,665 |
Outplacement Services | $- | $- | $- | $25,000 | $25,000 | $- |
Total Pre-Tax Benefit | $271,405 | $271,405 | $- | $1,078,941 | $946,344 | $564,289 |
Scott A. Siers | Death | Disability | Retirement | Change in Control and Involuntarily Terminated or Resignation for Good Reason within 24 Months of Change in Control | Threatened Change in Control and Involuntarily Terminated or Resignation for Good Reason | Termination Without Cause or Resignation With Good Reason |
Base Salary Continuation | $- | $- | $- | $597,990 | $597,990 | $298,995 |
Annual Incentive Payments | $164,447 | $164,447 | $- | $164,447 | $164,447 | $164,447 |
Value of Accelerated Stock Options | $8,922 | $8,922 | $- | $- | $- | $- |
Value of Accelerated Restricted Stock | $- | $- | $- | $- | $- | $- |
Value of Accelerated PBRSUs | $41,520 | $41,520 | $- | $86,712 | $- | $- |
Health and Dental Insurance | $- | $- | $- | $15,138 | $15,138 | $7,569 |
Outplacement Services | $- | $- | $- | $25,000 | $25,000 | $- |
Total Pre-Tax Benefit | $214,889 | $214,889 | $- | $889,287 | $802,575 | $471,011 |
Thomas J. Mattei, Jr. | Death | Disability | Retirement | Change in Control and Involuntarily Terminated or Resignation for Good Reason within 24 Months of Change in Control | Threatened Change in Control and Involuntarily Terminated or Resignation for Good Reason | Termination Without Cause or Resignation With Good Reason |
Base Salary Continuation | $- | $- | $- | $686,664 | $686,664 | $343,332 |
Annual Incentive Payments | $205,999 | $205,999 | $- | $205,999 | $205,999 | $205,999 |
Value of Accelerated Stock Options | $8,922 | $8,922 | $- | $- | $- | $- |
Value of Accelerated Restricted Stock | $- | $- | $- | $- | $- | $- |
Value of Accelerated PBRSUs | $54,681 | $54,681 | $- | $115,687 | $- | $- |
Dental Insurance | $- | $- | $- | $23,850 | $23,850 | $11,925 |
Outplacement Services | $- | $- | $- | $25,000 | $25,000 | $- |
Total Pre-Tax Benefit | $269,602 | $269,602 | $- | $1,057,200 | $941,513 | $561,256 |
Employment Agreements
table for Mr. Keown does not reflect any annual cash incentive as he did not receive any following his termination.
Stock Options and Restricted Stock
a pro rata portion of any unvested stock options granted under the Prior Plans will vest;
100% of any unvested stock options granted under the 2017 Plan will vest;
a pro rata portion of any unvested restricted stock granted under the 2017 Plan will vest; and
outstanding PBRSUs will remain outstanding and the participant will be eligible to earn apro-rata portion of the number of PBRSUs that would have been earned based on actual performance through the end of the performance period (amounts shown in the tables above assume 100% of the target PBRSUs were earned at the end of the performance period).
100% of any unvested stock options granted under the 2017 Plan will vest;
100% of any unvested restricted stock granted under the 2017 Plan will vest; and
the target number of PBRSUs will be deemed to have immediately vested as of the date of termination of service.
The value of accelerated awards shown in the tables above was calculated using the closing price of our Common Stock on June 29, 201828, 2019 ($30.55).16.37), except for Mr. Keown, which table does not show any value, since his employment was terminated prior to the end of the fiscal year at which time he forfeited all unvested awards. The value of accelerated stock options is based on the difference between the exercise price and such closing price for all accelerated stock options that werein-the-money as of such date.
28, 2019.
benefits, and group life insurance, if any, that would be paid and/or provided to each Named Executive Officer following termination of employment, because, in each case, these benefits are generally available to all regular Company employees similarly situated in age, years of service and date of hire and do not discriminate in favor of the Named Executive Officers.
2019.
stockholders.
OF
On October 14, 2018,AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO PROVIDE FOR THE PHASED IN DECLASSIFICATION OF THE BOARD OF DIRECTORS
The Amendment provides that, unlessBoard will always have prior experience with the Company, consentsespecially in writing to the selectionlight of an alternative forum,increasingly complex and changing regulatory environment. Additionally, classified boards may motivate potential acquirors seeking control to initiate arms-length discussions with the soleBoard, rather than engaging in unsolicited or coercive takeover tactics, since potential acquirors are unable to replace the entire Board in a single election, thereby better enabling the Board to maximize stockholder value and exclusive forumto ensure the equal and fair treatment of stockholders. The Board also recognizes that a classified structure may reduce directors’ accountability to stockholders because such a structure does not enable stockholders to express a view on each director’s performance by means of an annual vote. Moreover, many institutional investors believe that the election of directors is the primary means for (i) any derivative action or proceeding brought on behalfstockholders to influence corporate governance policies and to hold management accountable for implementing those policies.
Although stockholder approval is not required to amend theBy-Laws, the Board of Directors believes this is an important issueclassified board structure and determined that it iswould be in the best interests of the Company and itsthe stockholders to seekdeclassify the Board.
Background and Reasons for Forum SelectionBy-Law
The Board believes that the Company and its stockholders will benefit from having intra-corporate disputes litigated in the State of Delaware, where the Company is incorporated and whose laws govern such disputes. Thisby-law is intended to benefit the Company and its stockholders in significant part by directing litigation to a single Delaware court, which will apply its own state law with a well-established body of precedent, thereby reducing the risk and expense of concurrent, multi-jurisdictional litigation, saving Company resources (money and management attention) and leading to a single, more predictable outcome in litigation involving corporate governance and internal affairs. The Board approved the Amendment as a good governance measure in light of the incidence of such suits and multi-forum litigation.
In adopting the Amendment and determining that doing so is in the best interests of the Company and its stockholders, the Board considered various factors, including, among others:
prevailing market practice and perspectives on such provisions;
the importance to the Company and its stockholders of reducing litigation costs and preventing corporate resources from being unnecessarily diverted to address duplicative, costly and wasteful multi-forum litigation;
the value of facilitating consistency and predictability in litigation outcomes for the benefit of the Company and its stockholders;
that the Company is incorporated under the laws of the State of Delaware;
that the Delaware courts have developed considerable expertise in dealing with corporate law issues, as well as a substantial and influential body of case law construing Delaware’s corporate law and long-standing precedent regarding corporate governance;
that the Amendment limits forum shopping by plaintiffs’ lawyers and may discourage illegitimate claims;
that adopting such an exclusive forum provision covering specified claims does not materially change the substantive legal claims available to stockholders;
that the Company will retain the ability to consent to an alternative forum in appropriate circumstances where the Company determines that its interests and those of its stockholders are best served by permitting a particular dispute to proceed in a forum other than Delaware;
new Section 115 of the Delaware General Corporation Law and case law developments upholding the authority of the boardoffice of directors to adopt such a provision and confirming its validity and enforceability;
case law developments outside of Delaware enforcing such provisions; and
the benefit of having the Board deliberate on whether to adopt such a provision when it is not being proposed in response to actual or threatened litigation.
The Board believes that it is in the best interest of stockholders to take preventive measures before the Company and its stockholders are harmed by such litigation. The Amendment was not adopted by the Board in reaction to any specific litigation confronting the Company, though the Company has had to deal with such claims and threatened claims in the past. Rather, this action was taken to prevent potential future harm to the Company and its stockholders.
This type of litigation has become more prevalent over time, and the cost of litigating and/or settling these cases is an unwelcome draw against Company resources. Similarly, these matters require the attention of senior management. Having to defend against these cases in varied jurisdictions can increase the challenge of managing and obtaining results that benefit the Company and its stockholders and, so, increase costs. Moreover, the complexity of these types of matters can make themill-suited for resolution in state courts that are not familiar with the issues and case law and that have to handle a docket that is much more diverse and less specialized in this area of the law. Recent trends and holdings exacerbate the situation. So called “event-driven” shareholder derivative suits have been on the rise. It is expected that the U. S. Supreme Court’s recent holding in theCyan, Inc. v. Beaver County Employees Retirement Fund matter will lead to moreone class actions under the Securities Act of 1933 in state courts because that holding made removal to federal courts more difficult. When there are ways to make it more efficient for the Company to address successfully these type of matters, in ways that reduce distraction and reduce the use of Company resources that could otherwise be devoted to endeavors that drive long-term growth, the Company believes that it is its duty to implement these measures in the interest of its stockholders and the long-term value of their investment in the Company.
The Board is committed to strong corporate governance practices, as evidenced by this proposal. A description of our key corporate governance practices appears under “Corporate Governance” above.
Vote Required
expiring at each annual meeting.
APPROVAL OF THE COMPANY’S FORUM SELECTIONBY-LAW.
The changes in the new fiscal 2018non-employee director compensation program are as follows:
Form of Non-Employee Director | Previous Non-Employee | New Fiscal 2018 | ||
Annual Board Cash Retainer | $37,000 | $60,000 | ||
Committee Chair Cash Retainer | $7,500 for Compensation Committee and Nominating and Corporate Governance Committee $15,000 for Audit Committee | $10,000 for Compensation Committee and Nominating and Corporate Governance Committee $15,000 for Audit Committee | ||
Non-Chair Committee Cash Retainer | — | $7,500 for Compensation Committee and Nominating and Corporate Governance Committee $10,000 for Audit Committee | ||
Chairman of the Board Cash Retainer |
$20,000, with additional fees paid for committee service | $50,000, with no additional fees for committee service | ||
Chairman Emeritus Cash Retainer | $10,000, with additional fees paid for committee service | — | ||
Meeting Fees | $2,000 for each Board or Executive Committee meeting, and $2,500 for each Compensation Committee, Audit Committee or Nominating and Corporate Governance Committee meeting, subject to maximum daily meeting fees of $4,500 | $2,000 only paid for Board or committee meetings in excess of seven in the fiscal year | ||
Annual Equity Award Value | $30,000 | $65,000 |
Form of Non-Employee Director |
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| $60,000 | |||
Committee Chair Cash Retainer | $10,000 for Compensation Committee and Nominating and Corporate Governance Committee $15,000 for Audit Committee | |||
Non-Chair Committee Cash Retainer | $7,500 for Compensation Committee and Nominating and Corporate Governance Committee $10,000 for Audit Committee | |||
Chairman of the Board Cash Retainer | $50,000, with no additional fees for committee service | |||
Chairman Emeritus Cash Retainer | The Company does not currently have a Chairman Emeritus | |||
Meeting Fees | $2,000 only paid for Board or | |||
Annual Equity Award Value | $65,000 | |||
Expense Reimbursement | Payment or reimbursement of reasonable travel expenses from outside the greater Dallas-Fort Worth area, in accordance with Company policy, incurred in connection with attendance at Board and committee meetings, as well as payment or reimbursement of amounts incurred in connection with director continuing education | |||
Other | ||||
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Director Compensation Table
Director(1) | Fees Earned or Paid in Cash($) | Stock Awards($)(2) | Change in Pension Value ($)(3) | All Other Compensation ($)(4) | Total( $) | |||||||||||||||
Hamideh Assadi | 48,750 | — | — | 2,471 | 51,221 | |||||||||||||||
Guenter W. Berger | 44,500 | — | — | 17,777 | 62,277 | |||||||||||||||
Allison M. Boersma | 38,750 | 65,014 | — | — | 103,764 | |||||||||||||||
Randy E. Clark | 122,000 | 65,014 | — | — | 187,014 | |||||||||||||||
Jeanne Farmer Grossman | 58,500 | 65,014 | — | — | 123,514 | |||||||||||||||
Charles F. Marcy | 96,250 | 65,014 | — | — | 161,264 | |||||||||||||||
Christopher P. Mottern | 108,000 | 65,014 | — | — | 173,014 | |||||||||||||||
David W. Ritterbush | 37,500 | 65,014 | — | — | 102,514 |
Director | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Change in Pension Value ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||||
Hamideh Assadi | 23,333 | 48,748 | 1,916 | 2,416 | 76,413 | ||||||
Allison M. Boersma | 80,000 | 65,010 | — | — | 145,010 | ||||||
Randy E. Clark | 110,000 | 65,010 | — | — | 175,010 | ||||||
Jeanne Farmer Grossman | 30,000 | — | — | — | 30,000 | ||||||
Stacy Loretz-Congdon | 83,750 | 65,010 | — | — | 148,760 | ||||||
Charles F. Marcy | 105,385 | 65,010 | — | — | 170,395 | ||||||
David W. Ritterbush | 90,000 | 65,010 | — | — | 155,010 |
(1) |
|
Represents the full grant date fair value of restricted stock granted to eachnon-employee director in fiscal |
(2) | Represents the aggregate change in the actuarial present value of the accumulated benefit under all defined benefit and actuarial pension plans from the pension plan measurement date used for financial statement reporting purposes with respect to the Company’s audited consolidated financial statements for the fiscal year ended June 30, |
(3) | All Other Compensation for Ms. Assadi includes life insurance premiums paid by the Company under the Company’s postretirement death benefit plan ($2,030) and the economic benefit of the associated life insurance policy ($ |
The materiality of the related person’s interest, including the relationship of the related person to the Company, the nature and importance of the interest to the related person, the amount involved in the transaction, whether the transaction has the potential to present a conflict of interest, whether there are business reasons for the Company to enter the transaction, and whether the transaction would impair the independence of any independent director;
Whether the terms of the transaction, in the aggregate, are comparable to those that would have been reached by unrelated parties in an arm’s length transaction;
The availability of alternative transactions, including whether there is another person or entity that could accomplish the same purposes as the transaction and, if alternative transactions are available, there must be a clear and articulable reason for the transaction with the related person;
Whether the transaction is proposed to be undertaken in the ordinary course of the Company’s business, on the same terms that the Company offers generally in transactions with persons who are not related persons; and
Such additional factors as the Audit Committee determines relevant.
(ii) limitations on the amount involved in the transaction; (iii) limitations on the duration of the transaction or the Audit Committee’s approval of the transaction; and (iv) other conditions for the protection of the Company and to avoid conferring an improper benefit, or creating the appearance of a conflict of interest. Any member of the Audit Committee who has or whose immediate family member has an interest in the transaction under discussion will abstain from voting on the approval of the related person transaction, but may, if so requested by the Chair of the Audit Committee, participate in some or all of the Audit Committee’s discussions of the related person transaction.
Scott W. Bixby, former
Jonathan Michael Waite, the son of Carol Farmer Waite who is the beneficial owner of more than 5% of the Company’s voting securities, served as anon-executive employee of the Company in the position of Vice President, Construction Management through January 31, 2017, when his position was eliminated. Pursuant to a confidential general release and separation agreement entered into in fiscal 2017 between the Company and Mr. Waite, in fiscal 2018 the Company paid Mr. Waite an aggregate of $214,802, less required taxes and withholdings, consisting of: (i) severance benefits of $181,784; (ii) a prorated bonus award under the Company’s short-term incentive plan fornon-executive employees of $32,403 (paid in fiscal 2018 for fiscal 2017 performance); and (iii) $615 representing the Company’s 401(k) match for fiscal 2017 service. Receipt of severance and the foregoing benefits was conditioned upon, among other things, Mr. Waite having executed a general release of claims in favor of the Company.
2019.
Christopher P. Mottern, Chair
Randy E. Clark
Chair
Type of Fees | Fiscal 2018 | Fiscal 2017 | ||||||
Audit Fees | $ | 1,203,000 | $ | 964,000 | ||||
Audit-Related Fees | — | — | ||||||
Tax Fees | 68,757 | 111,274 | ||||||
All Other Fees | 2,020 | 2,020 | ||||||
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Total Fees | $ | 1,273,777 | $ | 1,077,294 |
Type of Fees | Fiscal 2019 | Fiscal 2018 | ||||||
Audit Fees | $ | 1,154,000 | $ | 1,203,000 | ||||
Audit-Related Fees | — | — | ||||||
Tax Fees | 55,093 | 68,757 | ||||||
All Other Fees | 2,051 | 2,020 | ||||||
Total Fees | $ | 1,211,144 | $ | 1,273,777 |
standards. Audit fees for fiscal 2017 consisted of fees associated with the audit of the Company’s fiscal 2017 annual financial statements, the audit of internal control over financial reporting in fiscal 2017, the review of the Company’s quarterly reports on Form10-Q, and services associated with an SEC registration statement.
tool.
The 20182019 Annual Report to Stockholders (which includes the Company’s 20182019 Form10-K) accompanies this Proxy Statement. The 20182019 Annual Report is neither incorporated by reference in this Proxy Statement nor part of the proxy soliciting material.Stockholders may obtain, without charge, a copy of the Company’s 20182019 Form10-K, filed with the SEC, including the financial statements included therein, without the accompanying exhibits, by writing to: Farmer Bros. Co., 1912 Farmer Brothers Drive, Northlake, Texas 76262, Attention: Chief Financial Officer. The Company’s 20182019 Form10-K is also available online at the Company’s website,www.farmerbros.com.A list of exhibits is included in the Company’s 20182019 Form10-K and exhibits are available from the Company upon the payment of the Company’s reasonable expenses in furnishing them.
requirements.
notice of their intent to make nomination(s) to the Secretary of the Company within the timeframes described above. Each such notice must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person, and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice, and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the
currently receive multiple copies of the proxy statement and annual report at their address and would like to request “householding” of their communications should contact their bank or broker.
| By Order of the Board of Directors | |
October [•], 2019 | JENNIFER H. BROWN | |
General Counsel and Secretary |
|
FORUM SELECTION BYLAW
ARTICLE VII
GENERAL PROVISIONS
Section 7.5.Forum for Certain Actions. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or stockholder of the Corporation to the Corporation or to the Corporation’s stockholders, (iii) any action arising pursuant to any provision of the DGCL or the Certificate of Incorporation or theseBy-Laws (as either may be amended from time to time), (iv) any action asserting a claim against the Corporation governed by the internal affairs doctrine, or (v) any action asserting an “internal corporate claim” as the term is defined in Section 115 of the DGCL. If any action the subject matter of which is within the scope of the preceding sentence is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (a) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the preceding sentence and (b) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
Appendix A
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Address Change? Mark box, sign, and indicate changes below: ☐
Name | ||
Title | ||||
D. Deverl Maserang, II |
| President and Chief Executive Officer | ||
David G. Robson | Treasurer and Chief Financial Officer |
TO VOTE BY MAIL, AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.
|
| Shares Acquired (Disposed) | Nature of Transaction | |||
Hamideh Assadi | 03/01/2019 | 2,032 | Grant of restricted stock under the Farmer Bros. Co. 2017 Long-Term Incentive Plan (the “2017 Incentive Plan”). | |||
Allison M. Boersma | 12/07/2018 | 2,711 | Grant of restricted stock under the 2017 Incentive Plan. | |||
Allison M. Boersma | 12/08/2018 | 1,901 | Grant of restricted stock under the 2017 Incentive Plan. | |||
Randy E. Clark
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The Board of Directors recommends that stockholders vote “FOR” Proposal Nos. 2, 3 and 4 listed below.
Open market purchase. | ||||||||||||||||||||
| 12/07/2018 | |||||||||||||||||||
Randy E. Clark | 12/08/2017 | |||||||||||||||||||
Randy E. Clark | 11/13/2017 | |||||||||||||||||||
Stacy Loretz-Congdon | 12/07/2018 | 2,711 | Grant of restricted stock under the 2017 Incentive Plan. | |||||||||||||||||
Charles F. Marcy | 09/16/2019 | 1,000 | Open market purchase. | |||||||||||||||||
Charles F. Marcy | 12/07/2018 | 2,711 | Grant of restricted stock under the 2017 Incentive Plan. | |||||||||||||||||
Charles F. Marcy | 12/08/2017 | 1,901 | Grant of restricted stock under the 2017 Incentive Plan. | |||||||||||||||||
Charles F. Marcy | 11/21/2017 | 800 | Open market purchase. | |||||||||||||||||
Charles F. Marcy | 11/20/2017 | 200 | Open market purchase. | |||||||||||||||||
D. Deverl Maserang, II | 9/13/2019 | 38,080 | Grant of performance-based restricted stock units under the 2017 Incentive Plan. | |||||||||||||||||
D. Deverl Maserang, II | 09/13/2019 | 223,713 | Grant of non-qualified stock options under the 2017 Incentive Plan. | |||||||||||||||||
Christopher P. Mottern | 09/30/2019 | 2,573 | Grant of restricted stock units (“RSUs”) under the 2017 Incentive Plan. | |||||||||||||||||
Christopher P. Mottern | 08/30/2019 | 2,745 | Grant of RSUs under the 2017 Incentive Plan. | |||||||||||||||||
Christopher P. Mottern | 07/31/2019 | 2,052 | Grant of RSUs under the 2017 Incentive Plan. | |||||||||||||||||
Christopher P. Mottern | 06/29/2019 | 2,036 | Grant of RSUs under the 2017 Incentive Plan. | |||||||||||||||||
Christopher P. Mottern | 05/31/2019 | 1,582 | Grant of RSUs under the. 2017 Incentive Plan. | |||||||||||||||||
Christopher P. Mottern | 05/09/2019 | 8,436 | Grant of RSUs under the 2017 Incentive Plan. |
Christopher P. Mottern | 12/07/2018 | 2,711 | Grant of RSUs under the 2017 Incentive Plan. | |||
Christopher P. Mottern | 02/14/2018 | 500 | Open market purchase. | |||
Christopher P. Mottern | 02/13/2018 | 1,000 | Open market purchase. | |||
Christopher P. Mottern | 12/08/2017 | 6,478 | Grant of RSUs under the 2017 Incentive Plan. | |||
Christopher P. Mottern | 11/10/2017 | 16,577 | Open market purchase by self as co-trustee for Mottern Family Trust. | |||
David W. Ritterbush | 12/07/2018 | 2,711 | Grant of RSUs under the 2017 Incentive Plan. | |||
David W. Ritterbush | 12/08/2017 | 1,901 | Grant of RSUs under the 2017 Incentive Plan. | |||
David G. Robson | 12/11/2018 | 17,331 | Grant of non-qualified stock options under the 2017 Incentive Plan. | |||
David G. Robson | 12/11/2018 | 5,385 | Grant of performance-based restricted stock units under the 2017 Incentive Plan. | |||
David G. Robson | 11/10/2017 | 12,699 | Grant of non-qualified stock option under the 2017 Incentive Plan. | |||
David G. Robson | 11/10/2017 | 947 | Grant of restricted stock under the 2017 Incentive Plan. | |||
David G. Robson | 11/10/2017 | 4,171 | Grant of performance-based restricted stock units under the 2017 Incentive Plan. | |||
David G. Robson | 11/10/2017 | 5,764 | Grant of non-qualified stock options under the 2017 Incentive Plan. |
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The shares represented by this proxy will be voted in the manner directed. In the absence of any direction, the shares will be voted “FOR” each nominee named in Proposal No. 1, and “FOR” Proposal Nos. 2, 3 and 4, and in accordance with the discretion of the persons appointed as proxies on such other matters as may properly come before the Annual Meeting, including any continuation, postponement or adjournment thereof, and any other matters incident to the conduct of the Annual Meeting.The Board of Directors knows of no other items of business that will be presented for consideration at the Annual Meeting other than those described in the accompanying Proxy Statement. If either of the director nominees should be unable to serve or for good cause will not serve, your proxy will be voted for such substitute nominee(s) as the holders of your proxy, acting in their discretion, may determine.
If you plan to attend the Annual Meeting in person, you can obtain directions to the Dallas/Fort Worth Marriott Solana, 1301 Solana Boulevard, Building 3, Westlake, Texas 76262 athttp//proxy.farmerbros.com.
Date
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Name: | ||
ANNUAL MEETING OF STOCKHOLDERS
Thursday, December 6, 2018
10:00 a.m. Central Standard Time
Annual Meeting to be held at:
Dallas/Fort Worth Marriott Solana
1301 Solana Boulevard, Building 3
Westlake, Texas 76262
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 6, 2018
Amended and form proxy card are available at:http://proxy.farmerbros.com.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING ON DECEMBER 6, 2018.
The undersigned stockholderRestated Bylaws of Farmer Bros. Co. are hereby amended by deleting
Vote by Internet, Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the named proxies to vote your shares
Board of Directors that results from an increase in the same manner asnumber of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and any other vacancy occurring on the Board of Directors may be filled by a majority of the Board of Directors then in office, even if you marked, signed and returned your proxy card.
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If you vote your proxy by Internetless than a quorum, or by Telephone, you do NOT needa sole remaining director. Any director elected to mail back your proxy card.