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PRELIMINARY PROXY STATEMENT
SUBJECT TO COMPLETION
DATED MARCH 5, 20203, 2023
Herbalife Nutrition Ltd.
|
Annual General Meeting of Shareholders
Our 20202023 Annual General Meeting of Shareholders
will be held on Wednesday, April 29, 202026, 2023 at 8:30 a.m., Pacific Daylight Time, at:at
800 W. Olympic Blvd., Suite 406
Los Angeles, CA 90015
Admission requirements
See Part 1 – “Information concerning solicitation and voting” for details on admission requirements to attend the Annual General Meeting.
Proxy voting options
Your vote is important!
All shareholders are cordially invited to attend the Annual General Meeting in person.Meeting. However, in order to assure your representation at the Annual General Meeting, you are urged to vote promptly. You may vote your shares via a toll-free telephone number, over the Internet or by completing, signing and mailing the proxy card or voting instruction form provided to you. Please follow the instructions on the proxy card or voting instruction form.
Proxies submitted by mail, the Internet or telephone must be received by 11:59 p.m., Eastern Time, on April 28, 2020.25, 2023.
Vote by Internetinternet
www.envisionreports.com/HLF
24 hours a day / 7 days a week
Instructions:
| 1. | Go to: www.envisionreports.com/HLF. |
| 2. | Follow the steps outlined on the secure website. |
Vote by telephone
1.800.652.VOTE (8683) via touch tone phone
toll-free within the USA, US territories & Canada 24 hours a day / 7 days a week
Outside the USA, US territories & Canada, call 1.781.575.2300 via a touch tone phone. Standard rates will apply.
Instructions:
| 1. | Call toll-free 1.800.652.VOTE (8683) within the USA, US territories & Canada. Outside the USA, US territories & Canada, call 1.781.575.2300. |
| 2. | Follow the instructions provided by the recorded message. |
Herbalife Nutrition Ltd.
Notice of Annual General Meeting of Shareholders
| Date: | Wednesday, April | |
| Time: | 8:30 a.m., Pacific Daylight Time | |
| Place: | 800 W. Olympic Blvd., Suite 406 Los Angeles, CA 90015 | |
| Record date: | ||
| Proxy voting: | All shareholders are cordially invited to attend the Annual General
However, to assure your representation at the Annual General Meeting, you are urged to vote promptly. You may vote your shares via a toll-free telephone number, over the Internet or by completing, signing and mailing the proxy card or voting instruction form provided to you. Please follow the instructions on the proxy card or voting instruction form provided to you. | |
| Items of business: | 1. Elect each of the
2. Approve, on an advisory basis, the compensation of the Company’s named executive officers;
3.
4. Approve, as a special resolution, 5. Approve the Company’s
Shareholders will also | |
| The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. Only shareholders of record at the close of business on | ||
| Availability of materials: | On or about March , 2023, we began mailing a Notice of Internet Availability of Proxy Materials to our shareholders. The Proxy Statement and Annual Report to Shareholders are available at http:// | |
NOTICE IS HEREBY GIVEN that the 20202023 Annual General Meeting of Shareholders of Herbalife Nutrition Ltd., a Cayman Islands exempted company incorporated with limited liability, or the Company, will be held on Wednesday, April 29, 202026, 2023 at 8:30 a.m., Pacific Daylight Time, at 800 W. Olympic Blvd., Suite 406, Los Angeles, CA 90015.
Sincerely,
HENRY C. WANG
General Counsel and Corporate Secretary
Los Angeles, California
March , 2020
Proxy summary
ThisThe following is a summary highlights information contained elsewhereof certain key disclosures in thisour Proxy Statement. You should carefully read thisThis is only a summary, and it may not contain all the information that is important to you. For more complete information, please review the Proxy Statement in its entirety prioras well as our 2022 Annual Report, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. References to voting on the proposals listed below and outlined herein. This Proxy Statement is dated March “Herbalife,” “Herbalife Nutrition”, 2020 and is first being made available“the Company,” “we,” “us” or “our” refer to shareholders of Herbalife Nutrition Ltd., a Cayman Islands exempted company incorporated with limited liability, or the Company, on or about March , 2020. A Notice Regarding Internet Availability of Proxy Materials for the 2020 Annual General Meeting of Shareholders, or the Meeting, was mailed to shareholders of the Company on or about March , 2020.
Annual General Meeting of Shareholders
Proposals to be Voted on and Board Voting Recommendations | ||||||||
| More
| Board’s Voting Recommendation | ||||||
Proposal 1 | ||||||||
| FOR EACH NOMINEE | ||||||||
Proposal 2 | Advisory Vote to Approve the Compensation of the | |||||||
Admission to Meeting: Proof of share ownership will be required to enter the Meeting. See Part 1 – “Information concerning solicitation and voting” for details on admission requirements to enter the Meeting.
Meeting agenda
| FOR | ||||||
Proposal 3 | Advisory Vote as to the | Page 26 | FOR EVERY 1 YEAR | |||
Proposal 4 | Approve, as a Special Resolution, the Name Change of the Company | |||||
from “Herbalife Nutrition Ltd.” to “Herbalife Ltd.”
Page 27 | FOR | |||||
Proposal 5 | Approve the Company’s 2023 Stock Incentive Plan | Page 28 | FOR | |||
Proposal 6 | Ratification, on an advisory basis, | Page 34 | FOR | |||
2023 Director nominees
Name | Independent | Audit | Compensation | Nominating and Corporate | ESG | |||||
| Michael O. Johnson (Chairman and CEO) | ||||||||||
| Richard H. Carmona |  | Chair | ||||||||
| Celine Del Genes | | ● | ||||||||
| Stephan Paulo Gratziani | ||||||||||
Kevin M. Jones | | ● | ||||||||
Sophie L’Hélias | | ● | Chair | |||||||
Alan W. LeFevre (Lead Director) | | ● | ● | |||||||
Juan Miguel Mendoza | ● | |||||||||
Don Mulligan | | Chair | ● | |||||||
Maria Otero | | Chair | ● | ● | ||||||
Shareholders will also act upon such other matters as may properly come before the Meeting.
| Proxy summary |
Corporate Governance Highlights
| All director seats stand for election annually |
| Independent lead director with clearly defined duties and responsibilities |
| One vote per share |
| Majority voting standard for uncontested director elections |
| All members of the Audit, Compensation and Nominating and Corporate Governance Committees are independent |
| ESG (Environmental, Social & Governance) Committee provides direct board oversight of environmental and social sustainability |
| Robust share ownership guidelines for directors and named executive officers |
| Annual board and committee assessments |
Executive Compensation Highlights
| Incentive design links pay outcomes to Company share price performance and against preset goals |
| Balanced mix between fixed and variable compensation and short- and long-term incentives. |
| Annual say-on-pay advisory vote |
| Compensation risk assessment |
| Robust share ownership guidelines for named executive officers |
| “Double trigger” change in control |
| Clawback policy applicable to Section 16 officers applicable to cash and equity incentives |
| Anti-hedging and anti-pledging policies applicable to all employees |
This proxy statement includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current facts, including statements regarding our environmental and other sustainability plans and goals, made in this document are forward-looking. We use words such as anticipates, believes, expects, future, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Actual results or outcomes could differ materially for a variety of reasons. Risks and uncertainties that could cause our actual results to differ significantly from management’s expectations are described in our 2022 Annual Report on Form 10-K. In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Website references throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this document.
| Proxy summary |
Proxy Statement table of contents
| Part 1. Our annual general meeting of shareholders | ||||
| 1 | ||||
| Part 2. Corporate governance | ||||
| 7 | ||||
| 11 | ||||
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| 13 | ||||
| Part 3. Proposals to be voted on at the meeting | ||||
| 28 | ||||
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| Part 4. Executive compensation | ||||
| 40 | ||||
Role of executive officers in executive compensation decisions | ||||
Narrative disclosure to summary compensation table and grants of plan-based awards | ||||
| Table of Contents | i |
| 64 | ||||
| 68 | ||||
| 69 | ||||
| Part 5. Security ownership of certain beneficial owners and management | ||||
| Part 6. Certain relationships and related transactions | ||||
| Part 7. Additional information | ||||
Information with respect to securities authorized for issuance under equity compensation plans | ||||
| 78 | ||||
Shareholder proposals for the | ||||
Codes of | ||||
| ii | Table of Contents |
Part 1
| Our annual general meeting of |
Information concerning solicitation and voting
Place, time and date of meeting. This Proxy Statement is being furnished to the Company’s shareholders in connection with the solicitation of proxies on behalf of our Board of Directors, or the Board, for use at the 2023 Annual General Meeting of Shareholders, or the Meeting, to be held on Wednesday, April 29, 202026, 2023 at 8:30 a.m., Pacific Daylight Time, and at any subsequent adjournment(s) or postponement(s) thereof, for the purposes set forth herein and in the accompanying Notice of Annual General Meeting of Shareholders. The Meeting will be held at 800 W. Olympic Blvd., Suite 406, Los Angeles, CA 90015. Our telephone number is(213) 745-0500. On or about March , 2023, we began mailing a Notice of Internet Availability of Proxy Materials to our shareholders. The Proxy Statement and Annual Report to Shareholders are available at http://www.edocumentview.com/HLF.
Record date and voting securities. Only shareholders of record at the close of business on March 2, 2020,February 28, 2023, or the Record Date, or duly authorized proxy holders of such shareholders of record, are entitled to notice of, and to vote at, the Meeting. The Company has one series of common shares, or Common Shares, outstanding. AsEach owner of record on the Record Date 147,701,213is entitled to one vote for each Common Share held by such shareholder. On February 28, 2023, there were 98,733,602 Common Shares were issued and outstanding and held of record by 518 registered holders.outstanding.
Voting. Each shareholder is entitled to one vote for each Common Share held on the Record Date on all matters submitted for consideration at the Meeting. A quorum, representing the holders of not less than a majority of the issued and outstanding Common Shares entitled to vote at the Meeting, must be present in person or by proxy at the Meeting for the transaction of business. Common Shares that reflect abstentions are treated as Common
Shares that are present and entitled to vote for the purposes of establishing a quorum, andbut will have no effect determining the
outcome of any matter submitted to the shareholders for a vote that requires the approval of a specified percentage of shares present and entitled to vote.proposal.
“Brokernon-votes” are Common Shares held in “street name” through a broker or other nominee over which the broker or nominee lacks discretionary power to vote and for which the broker or nominee has not received specific voting instructions. Thus, if Common Shares you own are held through a broker or other nominee, and you do not give your broker or nominee specific instructions, your Common Shares may not be voted on certain matters. Common Shares that reflect “brokernon-votes” are treated as Common Shares that are present and entitled to vote for the purposes of establishing a quorum. However, for the purposes of determining the outcome of any matter as to which the broker or nominee has indicated on the proxy that it does not have discretionary authority to vote, which is the case with all proposals to be considered at the Meeting other than proposal 5,6, those Common Shares will be treated as not present and not entitled to vote with respect to that matter, even though those Common Shares are considered present and entitled to vote for the purposes of establishing a quorum and may be entitled to vote on other matters.
See “Meaning of shareholder of record” below for additional information regarding the different ways you may hold your Common Shares.
Votes Requiredrequired for Proposalsproposals and Board Recommendations.recommendations. The following table details information regarding the proposals to be voted on at the Annual Meeting, the Board’s recommendation on how to vote on each proposal, the votes required to approve each proposal and the effect of abstentions and brokernon-votes.
| Our annual general meeting of shareholders | 1 |
Proposal | Voting Options | Board
| Vote Required
| Effect of
| Effect of
| |||||
Item 1: Elect each of the | For, Against or Abstain on each nominee | FOR each nominee | Majority of votes cast | No effect | No effect | |||||
Item 2: Approve, on an advisory basis, the compensation of the Company’s named executive officers | For, Against or Abstain | FOR | Majority of shares represented in person or by proxy and entitled to vote and which do vote |
| No effect | |||||
Item 3: | For | FORevery 1 year |
|
| No effect | |||||
Item 4: Approve, as a special resolution, | For, Against or Abstain | FOR | 66.67% of the shares represented in person or by proxy and entitled to vote and which do vote |
| No effect | |||||
Item 5: | For, Against or Abstain | FOR | Majority of shares represented in person or by proxy and entitled to vote and which do vote |
| No effect | |||||
Item 6: Ratify, on an advisory basis, the appointment of PricewaterhouseCoopers LLP as | For, Against or Abstain | FOR | Majority of shares represented in person or by proxy and entitled to vote and which do vote | No effect | Brokers have discretion to vote | |||||
| 2 | Our annual general meeting of shareholders |
YOUR VOTE IS VERY IMPORTANT.Whether or not you plan to attend the Meeting, please take the time to vote. You may vote your shares via a toll-free telephone number, over the Internet or by completing, signing and mailing the proxy card or voting instruction form provided to you. Please follow the instructions on the proxy card or voting instruction form.
Revocability of proxies. Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use by either: (a) delivering to the Corporate Secretary of the Company a written notice of revocation or a duly executed proxy bearing a later date; (b) granting a subsequent proxy through the Internet or
telephone; or (c) attending the Meeting and voting in person. However, please note that if you would like to vote at the Meeting and you are not the shareholder of record, you must request, complete and deliver a proxy from your broker or other nominee.
Proxy solicitation. The Company bears the expense of printing and mailing proxy materials. Proxies may be solicited by certain of our directors, officers and employees, without additional compensation, in person, by telephone, facsimile or electronic mail. We will, upon request, reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation material to the beneficial owners of Common Shares.
Meeting attendance. Only shareholders of record and beneficial owners as of the Record Date, their authorized proxy holders, and invited guests of the Board of Directors may attend the Meeting.
If you are a shareholder of record, in order to be admitted to the Meeting, you will need to produce a valid government issued picture identification (such as a valid driver’s license or passport) and either a copy of a form of proxy card or a Notice of Internet Availability of Proxy Materials showing your name and address. If you are a beneficial owner and you wish to vote in person at the Meeting, you will need to obtain a proxy from the shareholder of record. IfAdditionally, if you are a beneficial owner or other authorized proxy holder, in order to attend the Meeting, you will needboth an admission ticket and a valid government issued picture identification (such as a valid driver’s license or passport). To obtain an admission ticket to the Meeting, please send your written request to our Corporate Secretary at c/o Herbalife International of America, Inc., 800 W. Olympic Blvd., Suite 406, Los Angeles, California 90015 or electronically by emailingcorpsec@herbalife.com.
Your request for an admission ticket must be received on or before April 19, 202017, 2023 and include a copy of a form of proxy card or voting instruction form confirming your appointment as a proxy holder of a shareholder of record. In your request, please include the address where your admission ticket should be mailed to, and any special assistance needs. The Board requests that persons attending the Meeting observe a professional business dress code.Thecode.The Company also does not permit the use of
cameras or other recording devices at the Meeting.
In continued support for the health and safety of all, and to continue to enhance shareholder accessibility, the Company will again hold a live listen-only audio webcast of the Meeting. Shareholders may listen to the Meeting via live audio webcast by logging on to www.meetnow.global/MUK79Y4 using your control number. Please see below:
| • | Shareholders of record: For shareholders of record, the control number can be found on your proxy card or Notice, or the email you receive from Computershare, the Company’s transfer agent. |
| • | Beneficial owners: If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to access the live audio webcast. To register, you must submit proof of your proxy power (legal proxy) reflecting your Herbalife Nutrition holdings along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 3:00 p.m., Eastern Time on April 21, 2023. You will receive a confirmation email of your registration from Computershare. Late submissions will be processed to the extent feasible, but registration cannot be guaranteed in time for the Meeting. Requests for registration should be directed to us at the following: |
By email: Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com
By mail: Computershare, Herbalife Nutrition Legal Proxy, P.O. Box 43001, Providence, RI 02940-3001.
Pursuant to the Company’s Amended and Restated Memorandum of Articles of Association, or the Articles, please be advised that shareholders will not be deemed to be “present” for quorum purposes and will not be able to vote their shares, or revoke or change a previously submitted vote, by logging onto the listen-only audio webcast of the Meeting. As a result, the Company strongly urges shareholders to submit their proxies or votes in advance of the Meeting.
In the event it is not possible or advisable to hold our Meeting in person as currently planned, we will announce the decision to do so via a press release and posting details on our website that will also be filed with the Securities and Exchange Commission, or the SEC, as proxy material. If you are planning to attend our Meeting, please check our Investor Relations website the week of the Meeting. As always, we encourage you to vote your shares prior to the Meeting.
| Our annual general meeting of shareholders | 3 |
Meaning of shareholder of record. You are a shareholder of record only if your name is recorded on the Company’s register of members. If your name is not recorded on the Company’s register of members, any shares you hold in the Company are held beneficially. In
this case you may still be entitled to direct the holder of your shares as to who should be appointed as proxy in respect of those shares and/or how to vote those shares on your behalf.
Shareholders who have purchased their shares on an exchange may hold those shares through a depository, in which case they are beneficial shareholders and not shareholders of record. If you hold your shares in “street name,” you are not a shareholder of record.
If you wish to inquire as to whether or not you are a shareholder of record, please contact our Corporate
Secretary at c/o Herbalife International of America, Inc., 800 W. Olympic Blvd., Suite 406, Los Angeles, California 90015 or electronically by emailingcorpsec@herbalife.com.
Additional information. This Proxy Statement contains summaries of certain documents, but you are urged to read the documents yourself for complete information. The summaries are qualified in their entirety by reference to the complete text of the document. In the event that any of the terms, conditions or other provisions of any such document is inconsistent with or contrary to the description or terms in this Proxy Statement, such document will control. Each of these documents, as well as those documents referenced in this Proxy Statement as being available in print upon request, are available upon written request to the Company by following the procedures described under Part 7 — “Annual report, financial and additional information”.
information.”
Important Notice Regarding the Availability of Proxy Materials for the Annual General Meeting of Shareholders to Be Held on April 29, 2020.26, 2023. The Proxy Statement and Annual Report to Shareholders are available athttp://www.envisionreports.com/HLF.www.edocumentview.com/HLF.
| 4 | ||||
| Our annual general meeting of shareholders |
Part 2
| Corporate governance |
Under the listing standards of the New York Stock Exchange, or the NYSE, a majority of the members of the Board must satisfy the NYSE criteria for “independence”.“independence.” No director qualifies as independent under the NYSE listing standards unless the Board affirmatively determines that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company).
The Board evaluates the independence of our directors annually and will review independence of individual directors on an interim basis as needed to consider changes in employment, relationships and other factors. Our Board has affirmatively determined that all of the directors, andas well as each individual who served as a director nominees,at any time during 2022, other than Dr. Agwunobi and Messrs. Johnson, Mendoza and Tartol, are independent in accordance with Section 303A.02 of the NYSE listing standards. Additionally, Mr. Dunn,standards, or the NYSE Independence Standards. Under the NYSE Independence Standards, a former director waswill not be considered independent throughoutin the period in 2019 that he served on following circumstances:
Under the Company’s Principles of Corporate Governance, an independent director. The Boarddirector must, in addition to satisfying the NYSE Independence Standards, be free of Directors has affirmatively determined that noneany existing or potential professional or personal interest, business, or relationship which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the foregoing independent directors had any relationship with the Company that would compromise his or her independence from the Company.and all its shareholders.
The Board considered Dr. Carmona’s independence in lightview of the $50,000$75,000 in speaking fees he received from the Company in 2019,2022, as disclosed in the subsection “2019 Director Compensation”.“Compensation to directors.” The Company leverages Dr. Carmona’s professional experience as the 17th Surgeon General of the United States to provide training and education to Herbalife Nutrition Members at various Company-sponsored sales, events, such as Extravaganzas.promotional, and training events. After consideration of the foregoing and other relevant factors, the Board determined that the Company’s engagement of Dr. Carmona for these limited services did not present a conflict of interest nor compromise Dr. Carmona’s independence from the Company.
The Board also consideredMs. Paláu-Hernández’s independence in lightDr. Agwunobi was not determined independent because of the approximately $1.07 million
in fees paid by the Company in 2019 toInter-Con Security Systems, Inc.(“Inter-Con”), a private security company wholly-owned byMs. Paláu-Hernández’s husband,brother-in-law andsister-in-law, for security services. After consideration of relevant factors, includinghis role as the Company’s termination ofInter-Con services made effective in January 2020,Chief Executive Officer during his time on the Board determined thatBoard. Mr. Johnson previously served as the Company’s prior engagement ofInter-Con didChief Executive Officer within the last three years, and has resumed that role on October 27, 2022. Accordingly, he is not present a conflict of interest nor compromiseMs. Paláu-Hernández’s independence from the Company.
The Board also considered the independence of the following five directors in light of the Second Amended and Restated Support Agreement, dated as of July 15, 2016 (the “Support Agreement”) among the Company, Carl C. Icahn and certain affiliated entities of Mr. Icahn (the “Icahn Parties”): Messrs. Christodoro, Gary, Graziano, Lynn and Nelson. Mr. Icahn and his affiliated entities beneficially own approximately 35,227,904 Common Shares, or 23.85% of the outstanding Common Shares, as of the Record Date, and in accordance with the Support Agreement, the Company notified the Icahn Parties that each of Messrs. Christodoro, Gary, Graziano, Lynn and Nelson would be nominated for election as a director at the Meeting. After consideration of the foregoing and other relevant factors, the Board determined that Messrs. Christodoro, Gary, Graziano, Lynn and Nelson have no material relationship with the Company and are independent from the Company.independent.
Dr. Agwunobi and Mr. Johnson are not deemed independent because they are employed by the Company.
| Corporate governance | 5 |
Messrs. Mendoza and Tartol are not, deemedand, if elected, Mr. Gratziani will not be, determined independent because they areeach of them receives income for serving as top distributors of Herbalife Nutrition products, also referred to as Herbalife Nutrition Members. Although neitherthereby precluding them from being determined independent.
None are employees of the Company,Company. For additional details regarding Messrs. Mendoza and Tartol’s compensation as Herbalife Nutrition Members, which they are not deemed independent becausereceive irrespective of their income levels as top distributors of Herbalife products, as disclosed inany service on the subsection “2019 Director Compensation”.Board, please see “Compensation to directors.”
During theThe Board of Directors held eleven meetings during fiscal year ended December 31, 2019,2022. The independent directors generally meet in executive session at each regularly scheduled meeting, without the presence of management and non-independent directors, to discuss various matters relating to the Board’s function and Company oversight, including the Company’s management. The independent lead director, or the Lead Director, presides over such executive sessions.
Each director is expected to dedicate sufficient time, energy and attention to allow for the diligent performance of his or her duties, including attending the Company’s annual general meeting of the shareholders and meetings of the Board of Directors held six meetings, including four regular meetings and two special meetings.committees of which he or she is a member. All regular meetings included executive sessions without the presence of management. These executive sessions were led by the Lead Director. Additionally, executive sessions with only independent directors were held from time to time as required or determined to be necessary.
Each of our directors attended at least 75% of the aggregate of all Board and applicable committee meetings held during the period that he or she served as a director.
Each director is expected to dedicate sufficient time, energy and attention to ensure the diligent performance of his or her duties, including attending meetings of the shareholders of the Company, the Board of Directors and committees of which he or she is a member. All members of the Board of Directors then serving attended the Company’s 20192022 annual general meeting of shareholders.
Mr. JohnsonThe Company’s governance framework provides the Board with the flexibility to select the appropriate leadership structure for the Company. The current leadership structure is the Chairmancomprised of a combined Chair of the Board of Directors and the Chief Executive Officer, of the Company,an independent Lead Director, Board committees led by independent directors and serves as a key link between the Board and other members of management. As previously disclosed, Dr. Agwunobi will assume the role of CEO of the Company effective March 30, 2020, and upon election to the Board, the role of Chairman of the Board.active engagement by all directors. The Board believes having a board leadershipthis structure featuring an executive as Chairman with a separate Lead Director best serves the interests of the Company and its shareholders becauseshareholders. The combined Chair and CEO role supports the Board’s effective oversight of the Company’s business and strategy, with the CEO serving as a key link between the Board believes thatand management, providing a deep understanding of the Company’s business and operations, bringing key business considerations to the Board’s attention and leading implementation of the Company’s strategic plans as reviewed and approved by the Board. The Lead Director in turn allows for strong, independent Board leadership, iswith authority to set the meeting agendas and to lead sessions outside the Chair’s presence. We believe this to be a critical aspect of effective corporate governance.
In turn, theThe Lead Director is an independent director elected for atwo-year term by the independent directors. The appointment is reconsideredevaluated biannually. The Lead Director chairs the Board meetings during all executive sessions and when the ChairmanChair is unable to participate in Board meetings, and ismeetings. The Lead Director also serves as a contact point for major shareholders and third parties who wish to contact the
Board independentlyindependent of the ChairmanChair and CEO. Mr. Nelson was appointed to serve as Lead Director by the independent directors for atwo-year term, effective July 22, 2019, when Mr. Dunn, the previous Lead Director, resigned from the Board. The responsibilities of the Lead Director include:
| • | presiding at meetings of the Board at which the Chair is not present, including executive sessions of the non-management and independent directors; |
Mr. LeFevre was elected to serve as Lead Director by the independent directors effective July 1, 2021, to serve until the Company’s 2023 Annual General Meeting of Shareholders. The Board periodically reviews the structure of the Board and Company leadership as part of the succession planning process.
| 6 | Corporate governance |
Annual Board and committee assessment process
The Board and each committee annually conduct self-evaluations, a process that is overseen by the Nominating and Corporate Governance Committee. Additionally, as part of our annual evaluation process, each director evaluates the Board and the committees on which he or she serves. The assessments provide directors and applicable committee members the opportunity
to provide feedback on a number of issues, including:
| Board and committee structure, composition, roles and leadership; |
| Board and committee function and effectiveness, including quality of materials, meetings and flow of information; and |
| Access to management, advisors and internal and external resources. |
The Board’s role in risk oversight
The full Board of Directors hasoversees the ultimate responsibility for risk oversight regarding the Company. The Board oversees a Company-wideCompany’s enterprise-wide approach to risk management, designedmanagement. As part of executing its risk oversight responsibility, the Board delegates specific enterprise risk oversight duties to enhance shareholder value, support the achievement of strategic objectives and improve long-term organizational performance. The first aspecteach Board committee, as set forth below, while maintaining direct oversight over other enterprise risks.
Audit Committee
appropriate level of risk for the Company generally, followed by an assessment of the specific risks the Company facescybersecurity, privacy and theproduct safety matters, and steps management is takinghas taken to manage those risks. The full Board’s involvement in settingassess, monitor and control any such exposures
Compensation Committee
Nominating and Corporate Governance Committee
ESG Committee
The Board also provides oversight of management regarding key enterprise risks as well as the Company’s risk management policies and procedures to ensure they are designed and implemented in a strategic planway that reflects the Board’s and management’s
consensus as to appropriate levels of risk for specific aspects of the Company’s businessbusiness. The Company’s Management Risk Committee is comprised of members of senior management who meet on a regular basis to serve as a forum for risk information sharing, and the appropriate measures to manage those risks. Additionally, the full Board of Directors participates in a periodicrisk management coordination, decisioning and response. The enterprise risk management assessment during its quarterly meetings. In this process, risk is assessed throughout the business with a focus on risks arising out of various aspects of the Company’s strategic planprogram promotes timely, informed and its implementation, including financial, legal, compliance, operational/strategicdata-driven decisions and compensationintegrated processes to identify, monitor and mitigate key enterprise risks. The Board also assesses its role in risk oversight throughout the Company’s business. In addition to the discussion of risk with the full Board at least once a year, the independent directors discuss risk management during executive sessions without management present with the Lead Director presiding.
While the full Board of Directors has the ultimate oversight responsibility for the risk management process, various Board committees also have responsibility for risk
management in their respective focus areas. In particular, the audit committee focuses on financial risk, including internal controls, and assesses the Company’s risk profile with the Company’s internal auditors. The internal controls risk profile drives the internal audit plan for the coming year. At each quarterly meeting of the audit committee, management presents to the committee risks related to the Company’s cyber security, privacy and security matters. The audit committee also handles violations of the Company’s Code of Business Conduct and Ethics and related corporate policies. Finally, the compensation committee periodically reviews compensation practices and policies to confirm that they do not encourage excessive risk-taking. Management regularly reports on these risks to the relevant committee or the full Board, as appropriate, and additional review or reporting on enterprise risks is conducted as needed or as requested by the Board or the relevant committee.
The Compensation Committee, with the assistance of Meridian Compensation Partners, LLC, its compensation advisor, conductedregularly conducts a review of the Company’s material compensation policies and practices applicable to its employees, including its executive officers. Based on this review, the Compensation Committee concluded that these policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. The keyKey features
of the executive compensation
program that support this conclusion include: the balanced mix between fixed and variable compensation and short- and long-term incentives; the use of multiple performance measures within incentive plans; strong internal controls, including a code of business conductconduct; Compensation Committee discretion over all final annual incentive awards and ethics policy;active involvement in setting performance targets; the use of stockshare ownership guidelines; and the existence of an anti-hedging policy.
Environmental and Social Approach
Since 1980, Herbalife Nutrition has been on a mission to improve the nutritional habits around the world with nutrition products that help people achieve their nutrition goals. Our products are available exclusively through Herbalife Nutrition Members who provide comprehensive and personalized solutions to their customers’ nutrition and wellness goals.
Beyond these product solutions, our direct selling business model provides an attractive entrepreneurial opportunity for millions of individuals. By owning and operating their own business, Herbalife Nutrition Members have the ability to increase personal economic empowerment, which, in turn, helps to build stronger, vibrant communities.
Herbalife Nutrition is committed to operating its business in a socially responsible manner, incorporating social impact, environmental stewardship and transparent governance practices throughout its operations. We view
our work in this critically important area as a journey and appreciate and strive for continuous improvement.
Corporate Social Responsibility, Philanthropy and Social Impact
The Company and the Herbalife Nutrition Foundation (HNF) are dedicated to improving the lives of communities around the world by providing healthy nutrition and nutrition education to children and communities in need.
While our social impact strategy prioritizes partnership and programs focused on nutrition, we support numerous leading organizations that focus on additional areas to improve and empower thriving communities.
Herbalife Nutrition has been recognized for significant contributions to supporting communities. In 2019, the Company received more than a dozen awards for our corporate social responsibility achievements and impact.
Corporate Philanthropy
As a global nutrition company, Herbalife Nutrition is helping tackle global challenges including eradicating hunger through an initial $2 million investment in our Nutrition for Zero Hunger initiative. In partnership with leading global and regional nonprofit organizations, the program supports:
The program combines many different partnerships, activities and programs customized to regional market needs. Nutrition for Zero Hunger aligns with the United Nation’s Sustainable Development Goal #2 – Zero Hunger.
As a part of the Nutrition for Zero Hunger initiative, Herbalife Nutrition partners with more than 10 leading nonprofits including global organizations such as World Food Program USA, Feed the Children and The Hunger Project. Nutrition for Zero Hunger partners support more than 114 million people annually across 120 countries worldwide.
As a part of our corporate social responsibility strategy, Herbalife Nutrition supports leading organizations that promote health and wellness for underserved and vulnerable populations. For example, for more than 20 years we have supported various Red Cross organizations around the globe in helping them provide positive nutrition and other services to communities devasted by disaster. In the last five years the Company donated more than 1.1 million Protein Deluxe Bars, valued at $2 million, to 120 Red Cross blood donation centers in the U.S.
We also leverage the power of our diverse global community of employees and millions of Herbalife Nutrition Members and their customers. This community comes together during our annual “Global Month of Purpose,” in which we create opportunities for individuals to volunteer in underserved communities around the globe. In 2019, we donated more than 11,000 volunteer hours in communities around the globe with more than 1,800 participants.
For more than 35 years, Herbalife Nutrition has proudly supported Hispanic and Latino organizations that promote nutrition, health and wellbeing and empower opportunities. In 2019, the Company supported more than a dozen of these organizations, including UnidosUS and League of United Latin American Citizens (LULAC) national and regional chapters. In addition to financial donations, we support various programs including nutrition, health and fitness resources, mentoring, human rights, gender equity and advocacypolicy, as well as providein-kind donations of nutrient-dense products.clawback policy.
Herbalife Nutrition is a member of LULAC’s national Women’s Commission to further drive discussions and actions to promote women’s empowerment and gender equity issues. We also demonstrate our commitment to advance Hispanic diversity and inclusion in the workplace as a member of the Hispanic Association on Corporate Responsibility (HACR) since 2014.
Herbalife Nutrition Foundation
Established in 1994, Herbalife Nutrition Foundation (HNF) supports over 170 community-based Casa Herbalife Nutrition partners around the globe that help bring good nutrition to socially vulnerable communities and aid to organizations focused on promoting access, education and empowerment of good nutrition and general wellness. In 2019, HNF granted $4.75 million to Casa Herbalife Nutrition partners, a 50% increase in grants from 2018.
Environmental Initiatives
As with our product quality philosophy, we view our environmental footprint through a product lifecycle lens that extends from seed to feed. This work is focused on responsible environmental stewardship, meeting the needs of both Herbalife Nutrition Members and their customers; as well as regulations around the world. Currently, we have numerous active environmentally sustainable projects around the globe.
Environmental Impact of Plant-Based Protein
Food requirements are expected to double by 2050 when the global population surpasses 9 billion. Protein requirements alone will increase 74 percent. With animal-based protein as a major contributor to greenhouse gas emissions, we believe it is imperative to provide convenient, affordable and sustainable sources of protein. Thenumber-one ingredient in many of our products is plant-based protein derived from soy, including the majority of formulations of Formula 1, our flagship product.
This sustainable plant-based protein is grown and farmed with fewer environmental resources per acre than animal protein. Soy requires less land and water and emits less carbon than animal-based protein.
Operations
Within our manufacturing footprint, we have identified and continue to identify carbon emission and resource conservation projects, many of which deploy technology and/or operational efficiency initiatives.
| Corporate governance | 7 |
ESG highlights
Environmental, Social, Governance (ESG) Approach
For more than 40 years, Herbalife Nutrition has been committed to improving people’s lives. We have expanded molding capacity withbelieve that incorporating environmental stewardship, social responsibility programs, and rigorous governance practices throughout our plantsbusiness activities will be important in delivering on that commitment. ESG is and will be a value driver for a more sustainable future that will benefit all our employees, Members, shareholders, and global communities in which we work and live.
ESG Strategic Development
Our ESG strategy continues to eliminate 1.3 million kilometersevolve and is informed by periodic materiality assessments that identify priority ESG topics that are most relevant to our business and stakeholders. In 2022, the Company conducted our second materiality assessment to identify priority ESG topics, which involved conducting a robust survey of shipments between manufacturing sitesmore than 6,000 internal and avoid 1.25 metric tons of CO2 annually.external stakeholders and mapping our enterprise risks. Priority ESG topics include:
Our ESG strategy is developed in collaboration with regional and functional subject matter experts. Aligning our ESG strategy with universal sustainability goals that create shared value is important. To this end, we have eliminated 5.2 million plastic bags annuallybeen a signatory member of the UN Global Compact since 2018.
Packaging
We have also focused on reductions insingle-use plasticsESG data that will help support the development of future goals and plastic bagstargets. The full details of our ESG materiality assessment, ESG programs, and impact will be available in our product packaging2023 Global Responsibility Report.
ESG Governance
ESG Committee of the Board of Directors: In fiscal year 2022, oversight of ESG activities continued to be managed by the ESG Committee. Reflecting the strategic prioritization of ESG issues and distribution. These reduce, reuse, recycle initiatives, have yielded the following results:Committee assists the Board in overseeing Herbalife Nutrition’s ESG-related strategies, initiatives, investments, risks, and
policies. The ESG Committee also provides insights to rising, relevant issues under the purview of other committees including the Audit, Nominating and Corporate Governance and Compensation Committees.
Plastic Reduction in Formula 1 CanistersExecutive Committee: Provides executive direction and ensures integration of ESG strategy into business strategy across functions and regions.
Steering Committee and Working Groups: Leads implementation of ESG programs to meet goals and targets.
Canister Recycling Programs in Sales Centers
| * | The ESG Committee of the Board of Directors assists the Board in overseeing Global Responsibility strategy. It also works with other Committees, depending on relevance, scope and other factors. |
Environmental Stewardship
Herbalife Nutrition is committed to protecting the future of plastic recycled since 2013
These efforts illustrate some regional pilot programs with demonstrated results. We intendour planet by making responsible choices in an environment where natural resources are constrained. To that end, we continue to expand these programs across additional markets to further drivebuild on our global efforts for environmental stewardship.
The Company’s full Corporate Social Responsibility principles and programs are available athttps://iamherbalifenutrition.com/who-we-are/corporate-social-responsibility/.sustainability initiatives.
| 8 | Corporate governance |
Circular Packaging: Introduction of recycled plastic material in packaging contributes to circular packaging and helps reduce environmental impact. We have implemented projects to reduce virgin plastic by incorporating post-consumer recycled (PCR) materials into the packaging of our flagship product, Formula 1 Health Meal Nutritional Shake, distributed in multiple markets, where permitted by regulation. We continue to seek opportunities across operations to reduce the amount of plastic used in packaging materials, which will reduce cost and waste.
Climate and Carbon Footprint: Herbalife Nutrition is committed to doing our part to reduce GHG emissions across our value chain to limit global warming to 1.5°C. Our goal is to achieve net zero emissions by 2050 in our global factories, warehouses, and offices. Improving efficiency in our manufacturing operations and other sustainability initiatives that create value for the business and environment will play a vital role in helping us achieve this goal. The Company has been actively collecting and reporting annual GHG emissions, including Scope 1 and 2 emissions, across 10 of our largest facilities worldwide (5 Herbalife Innovation and Manufacturing facilities and 5 US-based offices and distribution centers with more than 40,000 square feet occupancy). Data collected will enable us to set short-term and mid-term science-based targets to reduce GHG emissions for our operations and across our entire value chain.
Social Responsibility
Herbalife Nutrition’s social responsibility programs focus on building thriving, vibrant communities that we are a part of, whether it is our own workplace or society around us.
Diversity, Equity, and Inclusion: At Herbalife Nutrition, we are committed to diversity, equity, and inclusion at all
The table below summarizeslevels, including our employees, management and executive leadership and Board of Directors. Our Diversity, Equity, and Inclusion (DEI) strategy is currently focused on creating opportunities to further recruit and support diverse talent at all levels, encouraging inclusion and belonging, and embedding equity throughout our culture and operations. In 2022, we extended a global applicant tracking system to all regions in the compensation paidcompany to deepen our commitment to fair recruitment practices and launched a dashboard for employee metrics and talent analytics. We have further developed and involved our Global and Regional DEI councils to support our commitments to an inclusive workplace. Our DEI goals are overseen by the CompanyBoard’s ESG and Compensation Committees. In 2022, our Board of Directors included approximately 55% women and ethnically underrepresented groups.
Nutrition for Zero Hunger: As a part of our efforts tonon-management directors provide people access to nutrition in communities around the world, we launched Nutrition for Zero Hunger in partnership with the fiscal year ended December 31,Herbalife Nutrition Foundation in 2019. In 2022, the footprint of Nutrition for Zero Hunger included more than 20 dedicated programs and partnerships worldwide. Our premier global non-profit partners include the World Food Program USA, Global Food Banking Network, Feed the Children, and Power of Nutrition.
Herbalife Nutrition Foundation: Established in 1994, the Herbalife Nutrition Foundation (HNF) is a public charity. Its mission is to improve the lives of children and communities around the globe. In 2022, HNF gave $5.12M in grants to 178 community-based Casa Herbalife Nutrition partners around the world, supporting more than 229,000 people in need.
Name | Fees earned or paid in cash ($)
| Equity awards ($)(1) | All other compensation
| Total ($) | ||||||||||||
Dr. Richard Carmona
|
| 110,000
|
|
| 134,988
|
|
| 50,000
| (3)
|
| 294,988
|
| ||||
Jonathan Christodoro
|
| 120,000
|
|
| 134,988
|
|
| —
|
|
| 254,988
|
| ||||
Jeffrey T. Dunn(2)
|
| 80,600
|
|
| 159,987
|
|
| —
|
|
| 240,587
|
| ||||
Hunter C. Gary
|
| 110,000
|
|
| 134,988
|
|
| —
|
|
| 244,988
|
| ||||
Nicholas Graziano
|
| 110,000
|
|
| 134,988
|
|
| —
|
|
| 244,988
|
| ||||
Alan LeFevre
|
| 130,000
|
|
| 134,988
|
|
| —
|
|
| 264,988
|
| ||||
Jesse A. Lynn
|
| 120,000
|
|
| 134,988
|
|
| —
|
|
| 254,988
|
| ||||
Juan Miguel Mendoza
|
| 100,000
|
|
| 134,988
|
|
| 1,299,045
| (4)
|
| 1,534,033
|
| ||||
Michael Montelongo
|
| 129,400
|
|
| 134,988
|
|
| —
|
|
| 264,388
|
| ||||
James L. Nelson
|
| 151,000
|
|
| 159,950
|
|
| —
|
|
| 310,950
|
| ||||
Maria Otero
|
| 135,000
|
|
| 134,988
|
|
| —
|
|
| 269,988
|
| ||||
MargaritaPaláu-Hernández
|
| 109,000
|
|
| 134,988
|
|
| —
|
|
| 243,988
|
| ||||
John Tartol
|
| 100,000
|
|
| 134,988
|
|
| 1,424,790
| (5)
|
| 1,659,778
|
| ||||
ESG Index, Policies and Position Statements
Herbalife Nutrition is committed to transparency pertaining to ESG-related strategies, programs, impact, and investments. Our publicly available ESG index provides detailed information, and it is updated annually and consistently in accordance with standard ESG frameworks. The Company’s full ESG index and all ESG-related policies and position statements can be found at https://ir.herbalife.com/esg.
| Corporate governance | 9 |
Compensation to directors
Eachnon-management director receives annual cash fees for service on the Board and Committeescommittees* as follows:
Board service | $100,000 per year | |
Audit Committee service | Member - $10,000 per year Chair - $20,000 per year | |
Compensation Committee service | Member - $10,000 per year Chair - $15,000 per year | |
Nominating and Corporate Governance Committee service | Member - $10,000 per year Chair - $15,000 per year | |
| Member - $10,000 per year Chair - | |
| * |
The Lead Director also receives an annual fee of $25,000 per year for additional services provided in that capacity.
Cash fees with respect to Board or committee membership or service as the Lead Director or a committee chair are paid ratably assuming 12 consecutive months of service from the date the particular membership or service commences.Non-management directors also receive an annual equity grant pursuant to the Herbalife Ltd. 2014 Stock Incentive Plan, or the 2014 Plan, as it may be amended from time to time (or a successor equity incentive plan), in the form of restricted stock units, or RSUs, with a grant date fair value of $135,000 (rounded down to the nearest whole unit) that vest annually. The 2019Board equity grants made in May 2022, or the 2022 Board RSU grantsGrants, are scheduled to vest on April 15, 2020. 2023.
The Lead Director also receives an equity grant or the Lead
Director Equity Grant, in the form of RSUs with a grant date fair value of $25,000 (rounded down to the nearest whole unit) per each year of his or her two-year term, which vests annuallyin full the following
year. The Lead Director Equity GrantMr. LeFevre’s lead director equity grant that was made in 2019May 2022 is scheduled to Mr. Nelson will vest on April 15, 2020.2023.
The compensation disclosed in the 20192022 Director Compensation table below for Mr.Messrs. Mendoza and Tartol includes other compensation, unrelated to their services as directors. Specifically, in addition to their director compensation, the table below includes each of Messrs. Mendoza’s and Mr. Mendoza include theirTartol’s respective earnings as top distributors of Herbalife Nutrition Productsproducts under the Company’s Marketing Plan.Plan, as well as leading and training other Herbalife Nutrition distributors.
The Company may also reimburse our directors for their respective travel, lodging and related expenses associated with attendance at Board or Board committee meetings, as well as reasonable costs in connection with attending director continuing education programs in accordance with the Company’s applicable orientation and continuing education policy.
| 10 | Corporate governance |
The following table summarizes the compensation paid by the Company to each of our directors, except for Mr. Johnson, the Company’s Chairman and Chief Executive Officer, and Dr. Agwunobi, the Company’s former Chairman and Chief Executive Officer and former director, who are named executive officers and whose compensation is covered in Part 4 of this Proxy Statement, for the fiscal year ended December 31, 2022. The table includes: (1) compensation paid to directors for their services on the Board and the Board’s committees, (2) payments made to directors for any services provided at Company events, such as speaking engagements at Company events, and (3) payments made to independent distributors of Herbalife Nutrition products in accordance with the Company’s Marketing Plan.
2022 Director compensation table
Name | Fees earned or paid in cash ($) | Stock awards ($)(1) | All other compensation | Total ($) | ||||||||||||
Richard H. Carmona |
| 125,000 |
|
| 134,998 |
|
| 75,000 | (2) |
| 334,998 |
| ||||
Celine Del Genes(3) |
| 71,944 |
|
| 134,998 |
| — |
| 206,942 |
| ||||||
Kevin M. Jones |
| 110,000 |
|
| 134,998 |
| — |
| 244,998 |
| ||||||
Sophie L’Hélias |
| 135,000 |
|
| 134,998 |
|
| — |
|
| 269,998 |
| ||||
Alan W. LeFevre |
| 145,000 |
|
| 159,983 | (4) |
| — |
|
| 304,983 |
| ||||
Juan Miguel Mendoza(5) |
| 100,000 |
|
| 134,998 |
|
| 1,434,801 | (5)(6) |
| 1,669,799 |
| ||||
Don Mulligan |
| 140,000 |
|
| 134,998 |
|
| — |
|
| 274,998 |
| ||||
Maria Otero |
| 145,000 |
|
| 134,998 |
|
| — |
|
| 279,998 |
| ||||
John Tartol(5) |
| 100,000 |
|
| 134,998 |
| 1,572,521 | (5)(7) |
| 1,807,519 |
| |||||
| (1) | Amounts represent the aggregate grant date fair value of the relevant award(s) presented in accordance with FASB ASC Topic 718, “Compensation—Stock Compensation.” See Note 9 to the to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of the relevant assumptions used in calculating these amounts pursuant to FASB ASC Topic 718. |
| (2) | Amount represents fees for speaking at Herbalife Nutrition events. |
| (3) | Ms. Del Genes joined the Board in April 2022. |
| (4) | Includes Mr. LeFevre’s lead director equity grant in 2022. |
| (5) | All independent distributors of Herbalife Nutrition products, including Messrs. Mendoza and Tartol, are eligible to receive income under the Company’s Marketing Plan as a result of their activities as distributors. Under the Company’s Marketing Plan, Herbalife Nutrition Members may earn profits by purchasing products at wholesale prices, discounted depending on the Member’s level within our Marketing Plan, and reselling those products at prices they establish for themselves to generate retail profit. Second, Herbalife Nutrition Members who sponsor other Members and establish, maintain, coach, and train their own sales organizations may earn commissions on the sales of their organization. Both Mr. Mendoza and Mr. Tartol would have received this income irrespective of their services on the Board. Neither Mr. Mendoza nor Mr. Tartol receive any preferential treatment or payments under the Company’s Marketing Plan. |
| (6) | Amount includes $5,000 in fees for speaking at Herbalife Nutrition events for Herbalife Nutrition Members. Additionally, unrelated to his service as a Board member, amount also includes $1,429,801 in income earned as a top distributor of Herbalife Nutrition products. See note 5 above. |
| (7) | Amount includes $40,000 in fees for speaking at Herbalife Nutrition events for Herbalife Nutrition Members. Additionally, unrelated to his service as a Board member, amount also includes $1,532,521 in income earned as a top distributor of Herbalife Nutrition products. See note 5 above. |
| Corporate governance | 11 |
The table below summarizes the equity-based awards held bynon-management directors who served on the Company’s Board of Directors in 2019,2022, as of December 31, 2019.2022.
| Name | Options/Stock Appreciation Rights | Stock Unit Awards | ||||||||||||||||||||||
Number of securities underlying unexercised options/SARs (#) exercisable | Number of securities underlying unexercised options/SARs (#) unexercisable | Exercise price ($) | 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(1) ($) | |||||||||||||||||||
Dr. Richard Carmona |
| 9,052 |
|
| — |
|
| 39.79 |
|
| 12/19/2020 |
|
| — |
|
| — |
| ||||||
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2,689 |
|
| 128,185 |
| ||||||
Jonathan Christodoro |
| 9,052 |
|
| — |
|
| 39.79 |
|
| 12/19/2020 |
|
| — |
|
| — |
| ||||||
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2,689 |
|
| 128,185 |
| ||||||
Jeffrey T. Dunn(2) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||
Hunter C. Gary |
| — |
|
| — |
|
| — |
|
| — |
|
| 2,689 |
|
| 128,185 |
| ||||||
Nicholas Graziano |
| — |
|
| — |
|
| — |
|
| — |
|
| 2,689 |
|
| 128,185 |
| ||||||
Alan LeFevre |
| — |
|
| — |
|
| — |
|
| — |
|
| 2,689 |
|
| 128,185 |
| ||||||
Jesse Lynn |
| — |
|
| — |
|
| — |
|
| — |
|
| 2,689 |
|
| 128,185 |
| ||||||
Juan Miguel Mendoza |
| — |
|
| — |
|
| — |
|
| — |
|
| 2,689 |
|
| 128,185 |
| ||||||
Michael Montelongo |
| — |
|
| — |
|
| — |
|
| — |
|
| 2,689 |
|
| 128,185 |
| ||||||
James L. Nelson |
| — |
|
| — |
|
| — |
|
| — |
|
| 2,689 |
|
| 128,185 |
| ||||||
|
| — |
|
| — |
|
| — |
|
| — |
|
| 655 |
|
| 31,224 |
| ||||||
Maria Otero |
| 9,052 |
|
| — |
|
| 39.79 |
|
| 12/19/2020 |
|
| — |
|
| — |
| ||||||
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2,689 |
|
| 128,185 |
| ||||||
MargaritaPaláu-Hernández |
| — |
|
| — |
|
| — |
|
| — |
|
| 2,689 |
|
| 128,185 |
| ||||||
John Tartol |
| 9,052 |
|
| — |
|
| 39.79 |
|
| 12/19/2020 |
|
| — |
|
| — |
| ||||||
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 2,689
|
|
| 128,185
|
| ||||||
Name | Stock Unit Awards | |||||||
Number of Shares or units of stock that have not vested (#) | Market value of Shares or units of stock that have not vested(1) ($) | |||||||
Richard H. Carmona |
| 5,387 |
|
| $80,159 |
| ||
Celine Del Genes |
| 5,387 |
|
| $80,159 |
| ||
Kevin M. Jones |
| 5,387 |
|
| $80,159 |
| ||
Sophie L’Hélias |
| 5,387 |
|
| $80,159 |
| ||
Alan W. LeFevre |
| 6,384 | (2) |
| $94,994 |
| ||
Juan Miguel Mendoza |
| 5,387 |
|
| $80,159 |
| ||
Don Mulligan |
| 5,387 |
|
| $80,159 |
| ||
Maria Otero |
| 5,387 |
|
| $80,159 |
| ||
John Tartol |
| 5,387 |
|
| $80,159 |
| ||
| (1) | Market value based on the closing price of a Common Share on the NYSE on December |
|
StockShare ownership guidelines
The Company has adopted stockshare ownership guidelines applicable to each named executive officer andnon-management director. director to encourage each person to acquire a meaningful ownership stake in the Company over time by retaining financial interest in our common shares. Our CEO is encouraged to acquire and hold Common Shares and/or vested equity awardsand unvested restricted stock units with an aggregate value equal to five times his base salary within five years of his appointment to such position.salary. Our other named executive officers are encouraged to acquire and hold Common Shares and/or vested equity awardsand unvested restricted stock units with an aggregate value equal to two times their respective base salaries within five years
following their respective designation as a named executive officer.salaries. Eachnon-management director is encouraged to hold
Common Shares and/or vested equity awardsand unvested restricted stock units with an aggregate value equal to five times such director’s annual retainer within five yearsretainer. Such named executive officers and directors are expected to refrain from selling Common Shares until such guideline is satisfied, and, so long as they are complying with such holding requirement, such director or named executive officer will not be considered out of such director’s appointment or election to the Board of Directors. compliance.
As of the date of this Proxy Statement, allnon-management directors and current named executive officers are in compliance with the current guidelines.
We value the viewpoint of all investors and have actively engaged with shareholders to better understand their perspectives, and strongly consider their feedback when evaluating our governance provisions and practices.
In 2019Since the 2022 Annual General Meeting of Shareholders, we engaged with a number of shareholders to initiate new, and deepen existing, relationships with our investor
base. We reached out to the top 30 Herbalife Nutrition shareholders that, in the aggregate, ownedown in excess of 45%approximately 68% of our outstanding Common Shares,
(excluding the shares held by our largest shareholder), and covered various governance topics including boardBoard composition, and compensation,shareholder rights, risk oversight shareholder rights and Environmentalenvironmental & Socialsocial initiatives across the Company. In aggregate, we had discussions with investors who hold approximately 35%25% of outstanding Common Shares (excluding the shares held by our largest shareholder). We also reached out to the proxy advisors, ISS and Glass Lewis, to better understand their perspectives and update them on certain of our governance practices.Shares.
| 12 | Corporate governance |
Communications with the board of directors
Board
Shareholders and other parties interested in communicating directly with the Board of Directors,non-management or independent directors as a group or individual directors, including the Chair or Lead Director in hissuch capacity, as such, may do so by writing to our Corporate Secretary at c/o Herbalife International of America, Inc., 800 W. Olympic Blvd., Suite 406, Los Angeles, California 90015, or by email to corpsec@herbalife.com, indicating to whose attention the communication should be directed. The Office of the Corporate Secretary of the Company reviews and logs all such correspondence and forwards to members of the Board of Directors a summary and/or
copies of any such
correspondence that, in the opinion of the Corporate Secretary, deal with the functions of the Board of Directors or committees thereof, or that he otherwise determines requires their attention. Directors may at any time review a log of all communications received by the Company and addressed to members of the Board of Directors and request copies of any such correspondence. Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of the Company’s internal audit department and handled in accordance with procedures established by the audit committeeAudit Committee with respect to such matters.
Director orientation and continuing education
Herbalife Nutrition is in the business of providing health and wellness products to consumers in 95 markets through our direct-selling business model. As part of our onboarding process that spans over a two-month period consisting of eleven “onboarding sessions,” we introduce new directors to our company with an overview of our business through a review of background and reference materials, and meetings with senior management and their direct reports. Additionally, where feasible, new directors tour manufacturing facilities, nutrition clubs, and distributor events. Our comprehensive orientation sessions are designed to provide new directors a thorough understanding of their fiduciary duties and familiarize them with the Company’s business and strategic plans, significant financial matters, risk management approach, compliance and ethics programs, corporate governance practices, and other key policies
and practices. These orientation sessions allow new directors to begin making contributions to the Board at the start of their service.
The Company also provides, on an ongoing basis, additional opportunities for directors to further familiarize themselves with the Company’s business, finances and operations, which may include, among other things, presentations from members of management of the Company and visits to Herbalife Nutrition Members events, such as Extravaganzas and Herbalife Honors. Additionally, our directors receive internal training and materials. We also encourage our directors to participate in external continuing director education programs, and provide reimbursement of expenses associated with our independent directors’ attendance at one outside director education program each fiscal year.
Committees of the board
Board
Our Board of Directors has a standing audit committee, nominatingan Audit Committee, Nominating and corporate governance committee,Corporate Governance Committee, Compensation Committee, and compensation committee. During fiscal 2019, we also had the implementation oversight committee, as discussed below.ESG Committee. Our Board of Directors has adopted a written charter for each of these committees, which isand the charters for current
committees are available on
the Company’s website atwww.herbalife.com by following the links through “Investor Relations” to “Corporate Governance,”https://ir.herbalife.com/corporate-governance, and in print to any shareholder who requests it as set forth under Part 7 —“Annual report, financial and additional information”.information.”
| Corporate governance |
Current committee memberships
Directors | Audit(1) | Compensation(2) | Nominating and Corporate | |||||
| Chair | ||||||||
| Kevin M. Jones † | ● | |||||||
| Sophie L’Hélias † | ● | Chair | ||||||
| Alan W. LeFevre * † | ● | ● | ||||||
| Don Mulligan * † | Chair | ● | ||||||
| Maria Otero † | Chair | ● | ● | |||||
| Juan Miguel Mendoza |
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* Audit Committee “financial expert” ●† Independent • Member
| (1) |
| (2) |
| (3) | Dr. Agwunobi served on the ESG Committee until October 27, 2022. Mr. Johnson was appointed to the ESG Committee effective August 1, 2022 and served until February 7, 2023. Mr. Mendoza was appointed to the ESG Committee on February 7, 2023. |
Audit | ||
| The | Meetings Held in
8 | |
The principal duties of the audit committeeAudit Committee include the following:
monitoring the integrity of the Company’s financial reporting process and systems of internal controls regarding finance, accounting and reporting;
monitoring the independence and performance of the Company’s independent registered public accounting firm and internal audit function;
providing an avenuemonitoring compliance with legal and regulatory requirements and performance of communication among the Company’s independent registered public accounting firm, management, the internal audit departmentethics and the Board of Directors;compliance program; and
reviewing the Company’s framework and guidelines with respect to risk assessment and risk management, including the Company’s enterprise risk management program and risks and practices related to cyber security, privacy and securityproduct safety matters.
Compensation | ||
| The | Meetings Held in
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| 14 | Corporate governance |
The principal duties of the compensation committeeCompensation Committee include the following:
to overseeoverseeing and approveapproving compensation policies and programs;programs, and administering existing incentive compensation plans and equity-based plans;
to reviewreviewing and approveapproving corporate goals and objectives relevant to the compensation of the Company’s CEO and other executive officers;
to evaluateevaluating the performance of the CEO and recommendrecommending the compensation level of the CEO for approval by the independent members of the Board of Directors;
to evaluateevaluating the performance of certain executive officers and, considering the CEO’s recommendations, setsetting the compensation level for such executive officers;
reviewing the compensation of directors, and making recommendations to administer existing incentive compensation plans and equity-based plans;the Board;
to overseeoverseeing management succession planning processes; and
overseeing the Company’s response to regulatory developments affecting executive compensation; and
to review the compensation of directors.compensation.
Nominating and | ||
| The Nominating and Corporate Governance Committee oversees, and represents and assists the Board in fulfilling its responsibilities relating to, our corporate governance, and | Meetings Held in
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The principal duties of the nominatingNominating and corporate governance committeeCorporate Governance Committee include the following:
to recommendrecommending to the Board of Directors proposed nominees for election to the Board of Directors both at annual general meetings of shareholders and to fill vacancies that occur between annual general meetings; and
to reviewreviewing and makemaking recommendations to the Board of Directors regarding the Company’s corporate governance matters and practices.
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The | Meetings Held in
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For more information regarding the Consent Order, see note 7, Contingencies,The principal duties of the notesESG Committee include the following:
recommending to consolidated financial statements included inthe Board on the Company’s Annual Reportenvironmental and social sustainability strategy, programs, policies and investments that support the Company’s overall business strategy;
overseeing the review and evaluation of risks and opportunities related to environmental and social sustainability topics that may arise in connection with the Company’s activities and advising the Board on Form10-K forsuch risks and opportunities in coordination with the year ended December 31, 2019.Board’s other committees; and
reviewing and discussing with management the Company’s public disclosures and communication strategies with investors and other stakeholders regarding such topics.
Compensation committeeCommittee interlocks and insider participation
During the fiscal year ended December 31, 2019,2022, Messrs. Montelongo, Dunn, GaryJones and GrazianoMulligan and Mme.Paláu-HernándezMmes. Otero and Del Genes served on the compensation committeeCompensation Committee of the Board of Directors, as further outlined in “Committees of the board — Compensation Committee”.Board. During the fiscal year ended December 31, 2019, other than the approximately $1.07 million in fees paid by the Company in 2019 to Inter-Con, a private security company
wholly-owned byMs. Paláu-Hernández’s husband, brother-in-law and sister-in-law, as described in further detail in “Part 6 — Certain relationships and related transactions,”2022, there were no relationships or transactions between the Company and any member of the compensation committeeCompensation Committee requiring disclosure hereunder.
None of our executive officers currently serves, or during the fiscal year ended December 31, 2022 served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board of Directors or Compensation Committee.
| Corporate governance |
Part 3
| Proposals to be voted on at the |
Proposal 1: The election of directors
Generally
The Articles presently provide for not less than one nor more than 15 directors. The Board of Directors or the Board, has, by resolution, presently fixed the number of directors at 13. There10, and there is currently is a full complement of 1310 members of the Board. There are 10 Board nominees recommended for election at the Meeting. Directors are elected at each annual general meeting of shareholders to hold office forone-year terms until the next annual general meeting of shareholders.
The Board has nominated each of John Agwunobi, James L. Nelson,Michael O. Johnson, Richard H. Carmona, Jonathan Christodoro, Hunter C. Gary, Nicholas Graziano,Celine Del Genes, Stephan Paulo Gratziani, Kevin M. Jones, Sophie L’Hélias, Alan W. LeFevre, Jesse A. Lynn, Michael Montelongo, Juan Miguel Mendoza, Don Mulligan and Maria Otero MargaritaPaláu-Hernández and John Tartol for election as directors to serveone-year terms expiring at the 20212024 annual general meeting. Other than Dr. Agwunobi, who isCo-PresidentMr. Gratziani was identified and Chief Healthrecommended by management and Nutrition Officercertain members of the CompanyBoard for consideration by the Nominating and will begin serving as Chief Executive Officer on March 30, 2020, each nominee is a current member of the Board. The nominations of Messrs. Christodoro, Gary, Graziano, Lynn, and Nelson were made pursuantCorporate Governance Committee, which then recommended to the Support Agreement. A copyfull Board to include Mr. Gratziani on the slate of the Support Agreement was filed by the Company in its current report on Form8-K on July 15, 2016. In considerationnominees of these nominations, the Icahn Parties have agreed to vote their Common Shares in favor of the Board’s nomineesdirectors for directorselection at the Meeting and thereafter for so long as any Icahn Party designee is a member of the Board. As of the Record Date, the Icahn Parties beneficially own approximately 35,227,904 Common Shares. The Support Agreement also includes standstill and voting provisions applicable to the Icahn Parties’ ownership of Common Shares. The Company did not receive any shareholder nominations for director.
Meeting. Directors are elected under a majority voting standard in uncontested director elections (i.e., an election where the number of persons nominated for election does not exceed the number of directors to be elected). The election of directors at the Meeting constitutes an uncontested director election. Under a majority voting standard in uncontested director elections, each vote is required to be counted “for” or “against” a director nominee’s election. In order to be elected, the votes cast “for” such nominee’s election must exceed the number of
votes cast “against” such nominee’s election. Abstentions and “brokernon-votes” will not affect the outcome of the election of directors.
The persons named as proxies on the accompanying proxy card intend to vote the Common Shares as to which they are granted authority to vote for the election of the nominees listed herein. The form of proxy card does not permit shareholders to vote for a greater number of nominees than 13.10. Although the Board does not know of any reason why any nominee will be unavailable for election, in the event any nominee should be unavailable at the time of the Meeting, the proxies may be voted for a substitute nominee as selected by the Board of Directors or just for the remaining nominees, leaving a vacancy. Alternatively, the Board may reduce the size of the Board.
Director qualifications
The Board believes that the Board, as a whole, should possess a combination of skills, professional experience and diversity of backgrounds necessary to oversee the Company’s business.business and strategy. In addition, the Board believes that there are certain attributes that every director should possess, as reflected in the Board’s membership criteria discussed hereunder. Accordingly, the Board and the nominatingNominating and corporate governance committeeCorporate Governance Committee consider the qualifications of directors and director candidates individually and in the broader context of the Board’s overall composition, as well as the Company’s current and future needs.
The nominatingNominating and corporate governance committeeCorporate Governance Committee is responsible for developing and recommending Board membership criteria to the Board for approval. TheThese criteria which are set forthdiscussed in the Company’s Principles of Corporate Governance, which are available on the Company’s websitewww.herbalife.com,by following the links through “Investor Relations” to “Corporate Governance,” at https://ir.herbalife.com/corporate-governance, and include business experience and skills, independence, judgment, integrity, the ability to commit sufficient time and attention to Board activities and the absence of potential conflicts with the Company’s interests. In addition, the nominatingNominating and corporate governance committeeCorporate Governance Committee periodically evaluates the composition of the Board to assess the skills and experience that are currently
represented on the Board, as well as the skills and experiences that the Board will find valuable in the future, given the Company’s current situationneeds and strategic plans. The nominatingNominating and corporate governance committeeCorporate Governance Committee seeks a variety of occupational, educational and personal backgrounds on the Board in order to obtain a range of viewpoints and perspectives and to enhance the diversity of the Board as a group in areas including professional experience, geography, race, gender, ethnicity and age. This periodic assessment of the Board’s composition enables the Board to update the skills and experience it seeks in the Board as a whole, and in individual directors, as the Company’s needs evolve and change over time and to assess the effectiveness of efforts at pursuing diversity.
| 16 | Proposals to be voted on at the meeting |
In identifying and recruiting director candidates through a combination of internal referrals, from time to time,both management and members of the nominatingBoard, and corporate governance committeethird-party executive search firms, the Nominating and Corporate Governance Committee may establish specific skills and experiences that it believes the Company should seek in order to constitute a balanced and effective Board.
In evaluating director candidates, and considering incumbent directors forre-nomination to the Board, the nominatingNominating and corporate governance committeeCorporate Governance Committee considers a variety of factors. These include each
nominee’s independence, financial literacy, personal and professional accomplishments and experience, each in light of the composition of the Board as a whole and the needs of the Company in general, and for incumbent directors, past performance on the Board. The nominatingBoard believes that our director nominees represent an effective mix of skills, experiences, diversity and corporate governance committee also considers the terms of the Support Agreement.perspectives, including gender and ethnic/racial diversity.
Additionally, the nominatingNominating and corporate governance committeeCorporate Governance Committee believes it is important that the viewpoints of theindependent distributors of Herbalife Nutrition Members, sometimes referred to as independent distributors,products are represented on the Board. As of the date of this Proxy Statement, two independent distributors of Herbalife Nutrition Membersproducts sit on the Board: Messrs. Mendoza and Tartol.
The process undertaken by the nominatingNominating and corporate governance committee in recommending qualifiedCorporate Governance Committee will consider director candidates is described in Part 2recommended by shareholders under the subsection “Committeessame criteria and processes outlined above. A shareholder who wishes to recommend a prospective nominee for the Board of Directors pursuant to the provisions of the boardArticles should notify the Corporate Secretary in writing with the appropriate supporting materials, as more fully described under Part 7 — “Shareholder nominations.”
Director skills and experience
The Nominating and corporate governance committee.” We believeCorporate Governance Committee expects each of the Company’s directors to be accomplished individuals in their respective fields of expertise. In addition to the significant diversity of perspectives and individual expertise, the Nominating and Corporate Governance Committee assess the specific skills and experience that the Board, as a whole, possesses. The matrix reflects the key skills and expertise identified as necessary by Nominating and Corporate Governance Committee to ensure oversight of management’s execution of our strategy as well as the number of director nominees represent an effective mix of skills, experiences, diversity and perspectives.who possess the relevant skill or experience:
| Proposals to be voted on at the meeting |
The below reflects: (1) the tenure of our director nominees and (2) the racial/ethnic and gender diversity of our director nominees:
Set forth below is biographical information about the 1310 nominees standing for election at the Meeting, including each such person’s specific experience, qualifications, attributes and skills that led our Board of Directors to conclude that such individual should serve on our Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES NAMED IN THIS PROXY STATEMENT TO THE BOARD OF DIRECTORS.
Nominees for Election as Directors
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Dr. Agwunobi, who will assume the role as the Company’s Chief Executive Officer effective March 30, 2020, has served as the Company’s Chief Health and Nutrition Officer since February 2016, and assumed the additional role ofCo-President in February 2018. Prior to joining the Company, from April 2014 to February 2016, Dr. Agwunobi advised a number of privately-held companies and, from September 2007 to April 2014, served as Senior Vice President and President, Health and Wellness for Walmart Stores, Inc. From December 2005 to September 2007, he served as the Assistant Secretary of Health for the U.S. Department of Health and Human Services, where he was responsible for disease prevention and health promotion. Dr. Agwunobi is currently a director at the U.S. African Development Foundation.
Other Public Board Memberships: bluebird bio (since June 2017).
Previous Public Board Memberships (Past Five Years): Magellan Health Services, Inc. (from December 2014 to June 2019).
Director Qualifications: Dr. Agwunobi has an extensive professional background focused on health and wellness, including his service as Assistant Secretary of Health for the U.S. Department of Health and Human Services, his executive experience with the Company, as well as his prior experience as a physician and public health official. Having the Company’s CEO serve as a director also provides an open channel of communication between the Board and management.
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Mr. Nelson currently serves as Chief Executive Officer of Global Net Lease, Inc., or GNL, a publicly-traded real estate investment trust, a position he has held since July of 2017, and, since March of 2017, as a director of GNL. Mr. Nelson previously served as a member of GNL’s audit committee from March 2017 until July 2017. Mr. Nelson was Chairman and Chief Executive Officer of Eaglescliff Corporation, a specialty investment banking, consulting and wealth management company, from 1986 until 2009. From March 1998 through 2003, he was Chairman and Chief Executive Officer of Orbit Aviation, Inc., a company engaged in the acquisition and completion of Boeing Business Jets for private and corporate clients; and from August 1995 until July 1999, Mr. Nelson was Chief Executive Officer andCo-Chairman of Orbitex Management, Inc., a financial services company in the mutual fund sector.
Other Public Board Memberships: Caesars Entertainment Corporation (since March 2019).
Previous Public Board Memberships (Past Five Years): Icahn Enterprises GP (from June 2001 to March 2019); New York REIT, Inc. (from November 2015 to June 2017); Voltari Corporation (f.k.a. Motricity Inc.) (from June 2011 to September 2015).
Mr. Icahn has anon-controlling interest in Caesars Entertainment through the ownership of securities.
Director Qualifications: Mr. Nelson brings over 25 years of experience in leadership roles at complex organizations, and a global business perspective from his service on other public company boards. Mr. Nelson was recommended by the Icahn Parties pursuant to the Support Agreement.
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Dr. Carmona has served as Chief of Health Innovations of Canyon Ranch, a life-enhancement company, since August 2017. He previously served as Vice Chairman of Canyon Ranch, Chief Executive Officer of the Canyon Ranch Health division, and the president of the nonprofit Canyon Ranch Institute, from October 2006 until August 2017. Dr. Carmona is also a Distinguished Professor of Public Health at the Mel and Enid Zuckerman College of Public Health at the University of Arizona. Prior to joining Canyon Ranch, Dr. Carmona served as the 17th Surgeon General of the United States from August 2002 through July 2006. Previously, he was Chairman of the State of Arizona Southern Regional Emergency Medical System; a professor of surgery, public health, and family and community medicine at the University of Arizona; and surgeon and deputy sheriff of the Pima County, Arizona, Sheriff’s Department. Dr. Carmona served in the U.S. Army and the Army’s Special Forces.
Other Public Board Memberships: Axon Enterprise Inc. (formerly Taser International since March 2007); and Clorox Company (since February 2007).
Previous Public Board Memberships (Past Five Years): None.
Director Qualifications: Dr. Carmona’s experience as the Surgeon General of the United States, extensive background in public health, including as CEO of a hospital and healthcare system, and service on other public company boards bring valuable and significant insight to the Board.
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Jonathan Christodoro is a Partner at Patriot Global Management, LP, an investment manager, a position he has held since March 2017. Mr. Christodoro served as a Managing Director of Icahn Capital LP, the entity through which Carl C. Icahn manages investment funds, from July 2012 to February 2017. Mr. Christodoro was responsible for identifying, analyzing and monitoring investment opportunities and portfolio companies for Icahn Capital. Prior to joining Icahn Capital, Mr. Christodoro served in various investment and research roles. Mr. Christodoro began his career as an investment banking analyst at Morgan Stanley, where he focused on merger and acquisition transactions across a variety of industries.
Mr. Christodoro received an M.P.H. in Epidemiology from the Harvard T.H. Chan School of Public Health, an M.B.A. from the University of Pennsylvania’s Wharton School of Business with Distinction, majoring in Finance and Entrepreneurial Management, and a B.S. in Applied Economics and Management Magna Cum Laude with Honors Distinction in Research from Cornell University. Mr. Christodoro also served in the United States Marine Corps.
Other Public Board Memberships: Sandridge Energy, Inc. (since June 2018); Xerox Corporation (from June 2016 to December 2017 andre-appointed in May 2018); PayPal Holdings, Inc. (since July 2015); and Enzon Pharmaceuticals, Inc. (since October 2013).
Previous Public Board Memberships (Past Five Years): Lyft, Inc. (May 2015 -March 2019); American Railcar Industries, Inc. (June 2015 – February 2017); Cheniere Energy, Inc. (August 2015 – August 2017); Hologic, Inc. (December 2013 to March 2016); eBay Inc. (March 2015 – July 2015); Talisman Energy Inc. (December 2013 – May 2015).
Mr. Icahn has or previously hadnon-controlling interests in each of Sandridge, Xerox, Cheniere, PayPal, eBay, Lyft, Hologic, Talisman, Enzon and Herbalife through the ownership of securities.
Director Qualifications: Mr. Christodoro’s service on other public company boards and his extensive investment, research and investment banking experience in a variety of industries bring valuable insights into corporate strategy and growth. Mr. Christodoro was recommended by the Icahn Parties pursuant to the Support Agreement.
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Mr. Gary is the Senior Managing Director since January 2019 of Icahn Enterprises L.P., or IEP, a diversified holding company, where he has served in various roles since November 2010, including President of IEP’s Real Estate segment since November 2013 and head of IEP’s Information Technology and Cybersecurity group since September 2015. At IEP, Mr. Gary is responsible for monitoring portfolio company operations, implementing operational value enhancement and leading operational activities in areas including, technology, merger integration, supply chain, organization transformation, real estate, recruiting, business process outsourcing, SG&A cost reduction, strategic IT projects, and executive compensation. Before IEP, Mr. Gary worked in various roles at other affiliated companies of Carl C. Icahn, including Icahn Associates Corporation and Icahn Sourcing LLC (n.k.a. Insight Portfolio Group LLC).
Other Public Board Memberships: CVR Energy, Inc. (since September 2018); CVR Partners, L.P. (since September 2018).
Previous Public Board Memberships (Past Five Years): Viskase Companies Inc. (from August 2012 to June 2015).
CVR Energy, CVR Partners and Viskase Companies are each indirectly controlled by Carl C. Icahn. Mr. Icahn also has anon-controlling interest in Herbalife through the ownership of securities.
Director Qualifications: Mr. Gary’s experience in operations and oversight matters for a variety of companies and service on other public company boards, enable him to advise our Board on a range of matters. Mr. Gary was recommended by the Icahn Parties pursuant to the Support Agreement.
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Mr. Graziano has served as Portfolio Manager of Icahn Capital, the entity through which Carl C. Icahn manages investment funds, since February 2018. From June 2015 to August 2017, Mr. Graziano was the Founding Partner and Chief Investment Officer of the hedge fund Venetus Partners LP, where he was responsible for portfolio and risk management, along withday-to-day firm management. Prior to founding Venetus, Mr. Graziano was a Partner and Senior Managing Director at the hedge fund Corvex Management LP from December 2010 to March 2015, where he played a key role in investment management and analysis, hiring and training of analysts and risk management. Prior to Corvex, from September 2009 until December 2010 Mr. Graziano was a Portfolio Manager at the hedge fund Omega Advisors, Inc., where he managed a proprietary equity portfolio and made investment recommendations. Before Omega, from July 2006 to July 2009 Mr. Graziano served as a Managing Director and Head of Special Situations Equity at the hedge fund Sandell Asset Management, where he helped build and lead the special situations team responsible for managing a portfolio of concentrated equity and activist investments.
Mr. Graziano completed a five-year undergraduate/MBA program at Duke University earning a BA in Economics and an MBA from The Fuqua School of Business.
Other Public Board Memberships: Cloudera, Inc. (since August 2019); Conduent Incorporated (since May 2018); Herc Holdings Inc. (since May 2018); and Xerox Corporation (since May 2018).
Carl C. Icahn hasnon-controlling interests in each of Cloudera, Conduent, Herc, and Xerox through the ownership of securities.
Previous Public Board Memberships (Past Five Years): None.
Director Qualifications: Mr. Graziano’s extensive investment, research and investment banking experience in a variety of industries and service on other public company boards bring significant financial experience to the Board. Mr. Graziano was recommended by the Icahn Parties pursuant to the Support Agreement.
| 18 | Proposals to be voted on at the meeting |
Nominees for election as directors
 Michael O. Johnson | ||
Director Chairman Since October 2022 | Qualifications and Expertise Provided to the Board Mr. Johnson has unparalleled institutional knowledge of the Company’s operations and distributor network, and experience leading the Company through multiple economic cycles and international expansion over his previous 15 years as its CEO. Mr. Johnson brings extensive global sales and marketing leadership as well as significant experience in government engagement around the world. His expertise helps the Board provide effective oversight of the Company’s business strategy. |
Mr. LeFevre is the former Executive Vice President – Finance and Chief Financial Officer for Jarden Corporation, a leading provider of consumer products with a portfolio of over 120 brands sold globally, a position he held from June 2014 to April 2016. Prior to Jarden, from February 1997 to June 2014, Mr. LeFevre worked for Jarden Consumer Solutions, a subsidiary of Jarden and formerly the Sunbeam Corporation, a manufacturer of home appliances, including from April 2002 until June 2014, as the Executive Vice President of Operations and Chief Financial Officer, where he led the Supply Chain, Manufacturing, Sourcing, Engineering, and Information Technology groups for JCS, and oversaw accounting and finance. From February 1997 to April 2002, Mr. LeFevre held positions of increasing responsibilities within the same business unit. Mr. LeFevre started his career with Arthur Andersen & Co. in 1982. Mr. LeFevre graduated with distinction from Valparaiso University with a Bachelor of Science in Business Administration degree and was a certified public accountant.
Other Public Board Memberships: None.
Previously Public Board Memberships (Past Five Years): None.
Director Qualification: Mr. LeFevre brings significant finance and operations experience to the Board as a former chief financial officer of a public company and a former CPA with more than 30 years of experience.
Experience Mr. Johnson currently serves as the Company’s Chairman and Chief Executive Officer and has held such positions since December 2022. He served as the Company’s Chairman and interim Chief Executive Officer from October 2022 to December 2022. He previously served as Chairman of the Board and held this position from May 2007 to April 2020. He also previously served as Chief Executive Officer of the Company and held such position from January 2019 to March 2020. He previously served as the Company’s Executive Chairman from June 2017 to January 2019 and as the Company’s Chief Executive Officer from April 2003 to May 2017. Prior to joining the Company, Mr. Johnson spent 17 years with The Walt Disney Company, where he served as President of Walt Disney International, and also served as President of Asia Pacific for The Walt Disney Company and President of Buena Vista Home Entertainment. Mr. Johnson has also served as a publisher of Audio Times magazine, and has directed the regional sales efforts of Warner Amex Satellite Entertainment Company for three of its television channels that include MTV, Nickelodeon and The Movie Channel. Mr. Johnson formerly served as a director of Univision Communications, Inc., a television company serving Spanish-speaking Americans, until March 2007, and on the Board of Regents for Loyola High School of Los Angeles. Mr. Johnson received his Bachelor of Arts in Political Science from Western Colorado University. Other Public Boards • None Previous Public Boards(Past Five Years) • Herbalife Nutrition Ltd. (April 2003 – April 2020) | ||
 Dr. Richard H. Carmona | ||
Age: 73 Independent Director Since 2013 Board Committees: Nominating and Corporate Governance Committee (Chair) |
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Experience Dr. Carmona has served as Chief of Health Innovations of Canyon Ranch, a life-enhancement company, since |
Mr. Lynn is the General Counsel of Icahn Enterprises L.P., a position he has held since January 2015. From September 2004 to January 2015, Mr. Lynn was Assistant General Counsel of Icahn Enterprises. Prior to joining Icahn Enterprises, L.P., from February 2000 to September 2004, Mr. Lynn practiced law in the New York office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. in its business and finance department. From September 1996 until February 2000, Mr. Lynn was an associate in the corporate group at Gordon Altman Butowsky Weitzen Shalov & Wein.
Mr. Lynn received a B.A. in 1992 from the University of Michigan and a J.D. in 1996 from the Boston University School of Law.
Other Public Board Membership: Cloudera, Inc. (since August 2019); and Conduent Incorporated (since April 2019).
Carl C. Icahn has non-controlling interests in each of Cloudera and Conduent through the ownership of securities.
Previous Public Board Memberships (Past Five Years): The Manitowoc Company, Inc. (from April 2015 to February 2018).
Director Qualifications: Mr. Lynn brings his legal and finance experience gained both in private legal practice and service on other public company boards. Mr. Lynn was recommended by the Icahn Parties pursuant to the Support Agreement.
| Proposals to be voted on at the meeting | 19 |
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Other Public Boards • Director, McKesson Corporation (September 2021 – Present)
• Director, Better Therapeutics – Public October 2021 (November 2017 – Present) Previous Public Boards(Past Five Years) • Director, Clorox Company (February 2007 – November 2022) • Director, Axon Enterprise Inc. (formerly Taser International) (March 2007 – May 2022) | |
Celine Del Genes | ||
Age: 46
IndependentDirector Board Committees: Compensation | Qualifications and Expertise Provided to the Board Ms. Del Genes’ over twenty years of experience in a fast growing, global consumer products company and expertise in the areas of marketing and communications is additive to the Board. Her expertise strengthens the Board’s oversight of the Company’s strategic business strategy, particularly as it pertains to branding, marketing and digital initiatives across a large number of international markets. |
Mr. Mendoza has been an independent Herbalife distributor for 27 years and a member of the Company’s Chairman’s Club since 2013. He has been active in training independent Herbalife distributors around the world, and is a member of various strategy and planning groups for Herbalife.
Other Public Board Membership: None.
Previous Public Board Memberships (Past Five Years): None.
Director Qualifications: Mr. Mendoza’s 27 years of experience as a distributor of Herbalife products bring a first-hand understanding of the function and specific needs of the drivers of the Company’s business. His tenure as a distributor also provides valuable insight into the Company’s growth and development over the27-year period.
Experience Ms. Del Genes has served as the Global General Manager, Specialist Sports Business Unit at Adidas AG, a multinational corporation that designs and manufactures footwear, apparel and accessories, since February 2019. From January 2017 to February 2019, Ms. Del Genes served as the Global Vice President, Concept-to-Consumer, Global Football/Soccer at Adidas, and has held various positions with Adidas and Reebok around the globe since 2001 with a focus in marketing and communications. Ms. Del Genes holds a Bachelors degree in Marketing, Marketing Management from the EDC Paris Business School. Other Public Boards • None Previous Public Boards(Past Five Years) • None | ||
 Stephan Paulo Gratziani
Age: 54 New Nominee |
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Experience Mr. Gratziani has been an independent Herbalife distributor for 31 years and a member of the Company’s Chairman’s Club since Other Public Boards • None Previous Public Boards(Past Five Years) • None |
The Honorable Michael Montelongo, a career soldier, presidential appointee, and corporate executive, has been President and Chief Executive Officer of GRC Advisory Services, LLC, a private board governance firm since July 2016. He is also a senior advisor atleadershipForward, Inc., a premier leadership performance firm and serves on the boards of the Larry H. Miller Management Corporation and Exostar LLC. From January 2008 to July 2016, Mr. Montelongo served as chief administrative officer and senior vice president, public policy and corporate affairs for Sodexo, Inc., a quality of life services enterprise in North America. He is a former George W. Bush White House appointee serving as the 19th assistant secretary for financial management and chief financial officer of the U.S. Air Force from August 2001 until March 2005 and concluded his tenure at the Pentagon as acting secretary of the Air Force. Before joining President Bush’s administration, Mr. Montelongo was an executive with a global management consulting firm, a regional telecommunications company, and completed a career in the U.S. Army that included line and staff assignments, a Congressional Fellowship in the U.S. Senate, and service as an assistant professor teaching economics and political science at West Point.
Mr. Montelongo is a lifetime member of the Council on Foreign Relations and earned his bachelor’s degree in science from West Point and an M.B.A. from Harvard Business School.
Other Public Board Membership: None.
Previous Public Board Memberships (Past Five Years): None.
Director Qualifications: An experiencedc-level executive and board governance leader with a cross-industry background, Mr. Montelongo brings significant experience in public policy and strategy, finance and audit, global food service, talent management, and U.S. Latino market and community insight to the Board.
| 20 | Proposals to be voted on at the meeting |
 Kevin M. Jones | ||
Age: 54 Independent Director Since 2021 Board Committees: Compensation |
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Ms. Otero currently serves on the board of Development Alternatives Inc. The first Latina undersecretary in the U.S. Department of State’s history, Ms. Otero served as Undersecretary of State for Democracy and Global Affairs and Undersecretary for Civilian Security, Democracy, and Human Rights under President Obama. During her time at the Department of State, Undersecretary Otero also served as the President’s Special Coordinator for Tibetan Issues. Prior to serving the government, from 2000 to 2009 Ms. Otero served as President and CEO of Accion International, a global microfinance organization operating in 26 countries. At Accion International, Ms. Otero chaired the board of Accion Investments, a global equity investment fund and represented Accion on the board of several microfinance banks. She was appointed by President Clinton to chair the board of the Inter-American Foundation and by President Bush to serve as vice-chair on the board of the US Institute of Peace. In 2006, she was appointed by Secretary General Kofi Annan to the U.N. Advisors Group on Inclusive Financial Sectors. Ms. Otero has served on the boards of The Kresge Foundation since 2013, the Public Welfare Foundation since 2013, Oxfam America since 2014, and the Smithsonian Institution National Portrait Gallery since 2016, and is a member of the Council of Foreign Relations. She also chaired the board of Bread for the World, and served on the boards of the Calvert Foundation and BRAC in Bangladesh. Ms. Otero also worked as an economist for Latin America and the Caribbean in the Women in Development Office of USAID.
Ms. Otero holds an M.A. in literature from the University of Maryland; an M.A. in International Relations from the Paul H. Nitze School of Advanced International Studies (SAIS), at the Johns Hopkins University; and holds an honorary Doctorate of Humane Letters from Dartmouth College.
Other Public Board Membership: None.
Previous Public Board Memberships (Past Five Years): None.
Director Qualifications: Ms. Otero’s leadership experience and extensive background in public service, microfinance and board governance bring a wealth of expertise in public affairs, finance and government to the Board.
Experience Mr. Jones has served as President and Chief Executive Officer of Calabrio, a workforce performance software company, since January 2023. Mr. Jones served as an operating advisor at Apollo Global Management from September 2022 to January 2023. He previously served as the Chief Executive Officer of Rackspace Technology, Inc., a cloud computing company, from April 2019 to September 2022. From October 2017 to April 2019, Mr. Jones served as Chief Executive Officer of MV Transportation, Inc., a passenger transportation contracting service company. From April 2017 to October 2017, Mr. Jones served as Senior Vice President and General Manager of Americas at DXC Technology Company, a multinational end-to-end IT services and solutions company. Mr. Jones served as Senior Vice President and General Manager at Hewlett Packard Enterprise Company from August 2014 to March 2017 and as the Chief Customer and Sales Officer for Dell Services at Dell Inc. from 2011 to 2014. Before joining Dell, Mr. Jones held various leadership roles at Hewlett Packard and Electronic Data Systems. Throughout his career, Mr. Jones also worked with local and national government agencies in Asia, Australia, and United Kingdom, where he received a Commendation Award from Her Majesty’s Government. Mr. Jones holds a Bachelor’s degree from James Madison University and is a Certified Management Accountant. Other Public Boards • None Previous Public Boards(Past Five Years) • Director, Rackspace Technology, Inc. (April 2019 – September 2022) | ||
 Sophie L’Hélias | ||
Age: 59 Independent Director Since 2021 Board Committees: Audit ESG (Chair) |
| |
Experience Ms. L’Hélias is the President and Founder of LeaderXXchange, an advisory firm founded in 2015 that develops solutions that integrate sustainability and diversity in strategy, leadership and investment. She is co-founder of the International Corporate Governance Network (ICGN) and served as an advisor to the UN Global Compact’s Blueprint for SDG Leadership. Ms. L’Hélias is also a non-executive director on the Board of IWG PLC, a global leader in flexible workspace, Africa50, an infrastructure development impact fund, Agence France-Locale, a community lending financial institution, and Echiquier Positive Impact Europe funds. Ms. L’Hélias is a non-executive Board member of the European Corporate Governance Institute (ECGI), a non-profit based in Brussels, a member of the HCGE, the authority charged with overseeing the implementation of French Afep-Medef corporate governance code, and a Fellow at The Conference Board ESG Center in New York. Ms. L’Hélias holds an MBA from INSEAD; a |
Ms. Paláu-Hernández is the founder and Chief Executive Officer of Hernández Ventures, a private firm engaged in the acquisition and management of a variety of business interests in the United States and Mexico. Prior to founding Hernández Ventures in November 1988,Ms. Paláu-Hernández was an attorney from September 1985 until August 1988 with the law firm of McCutcheon, Black, Verleger & Shea, where she focused on domestic and international business and real estate transactions. In September 2018,Ms. Paláu-Hernández was nominated by President Donald Trump to serve as United States Representative to the Seventy-third Session of the General Assembly of the United Nations.Ms. Paláu-Hernández is also a member of the followingnon-profit organizations and boards: Pacific Counsel on International Policy, since April 2017;Co-Chair of the Yale School of Management Council of Global Advisors, since March 2016;Ex-Officio member of the Yale School of Management Board of Advisors, since March 2016; Smithsonian National Latino Board, since August 2016 (Vice-Chair since 2019); UCLA School of Law Board of Advisors, since October 2008; UCLA Law Women L.E.A.D. since September 2016; and Trustee Emeritus of the University of San Diego Board of Trustees, since December 2017.Ms. Paláu-Hernández also served on the University of San Diego Board of Trustees from September 2007 until July 2016.
Ms. Paláu-Hernández has a B.A. from the University of San Diego and a J.D. from UCLA School of Law.
Other Public Board Membership: Conduent Incorporated (since August 2019)
Previous Public Board Memberships (Past Five Years): ALJ Regional Holdings, Inc. (from November 2015 to October 2019)
Director Qualifications:Ms. Paláu-Hernández brings to the Board her knowledge and experience in U.S. and Mexico business matters, and the U.S. Latino community.
| Proposals to be voted on at the meeting | 21 |
 |
Other Public Boards • Director, Previous Public Boards(Past Five Years) • Director, Kering SA (Euronext Paris-listed) (April 2016 – March 2022) | |
Alan W. LeFevre | ||
Lead Independent Director Age: 63 Independent Director Since 2018 Board Committees: Audit Nominating and Corporate Governance | Qualifications and Expertise Provided to the Board Mr. LeFevre’s significant finance and operations experience as a former Chief Financial Officer of a leading public consumer products company where he spent nearly two decades, along with his CPA experience are valuable to the Board. His expertise strengthens the Board’s oversight of the Company’s financial, operational and human capital risks. | |
Experience Mr. LeFevre is the former Executive Vice President – Finance and Chief Financial Officer for Jarden Corporation, a leading provider of consumer products with a portfolio of over 120 brands sold globally, a position he held from June 2014 to April 2016. Prior to Jarden, from February 1997 to June 2014, Mr. LeFevre worked for Jarden Consumer Solutions (JCS), a subsidiary of Jarden and, formerly, the Sunbeam Corporation, a manufacturer of home appliances, including from April 2002 to June 2014, as the Executive Vice President of Operations and Chief Financial Officer, where he led the Supply Chain, Manufacturing, Sourcing, Engineering, and Information Technology groups for JCS, and oversaw accounting and finance. From February 1997 to April 2002, Mr. LeFevre held positions of increasing responsibilities within the same business unit. Mr. LeFevre started his career with Arthur Andersen & Co. in 1982. Mr. LeFevre graduated with distinction from Valparaiso University with a Bachelor of Science in Business Administration degree and was a certified public accountant. Other Public Boards • None Previous Public Boards(Past Five Years) • None |
Mr. Tartol has been an independent Herbalife distributor for 38 years and a member of the Company’s Chairman’s Club since 2000. He is active in training other independent Herbalife Nutrition Members all over the world and has served on various strategy and planning groups for Herbalife. He is also active on behalf of various charities in his community and worldwide on behalf of the Herbalife Nutrition Foundation. He has a Bachelor’s degree in finance from the University of Illinois.
Other Public Board Membership: None.
Previous Public Board Memberships (Past Five Years): None.
Director Qualifications: With over 38 years of experience as an independent Herbalife distributor, Mr. Tartol brings a first-hand understanding of the function and specific needs of our independent Herbalife distributors. His tenure as a distributor also provides valuable insight into the Company’s growth and development over the38-year period.
| 22 | Proposals to be voted on at the meeting |
Juan Miguel Mendoza | ||
Age: 49 Director Since 2018 Board Committees: ESG | Qualifications and Expertise Provided to the Board Mr. Mendoza’s nearly 30 years of experience as an independent distributor of Herbalife Nutrition products bring a first-hand understanding of the function, drivers and specific needs of the Company’s business to the Board. His tenure as a distributor also provides valuable institutional insight into the Company’s growth and development over the last three decades. | |
Experience Mr. Mendoza has been an independent Herbalife distributor for 30 years and a member of the Company’s Chairman’s Club since 2013. He has been active in training independent Herbalife distributors around the world and is a member of various strategy and planning groups for the Company. Other Public Boards • None Previous Public Boards(Past Five Years) • None | ||
Don Mulligan | ||
Age: 62 Independent Director Since 2021 Board Committees: Audit (Chair) Compensation | Qualifications and Expertise Provided to the Board Mr. Mulligan’s tenure as CFO of a Fortune 200 company and experience working in Asia and Latin America is directly relevant to the Company’s growth strategy. His experience helps the Board provide effective oversight of the Company’s global expansion, talent development, financial disclosures, capital structure, risk management, investments, M&A and corporate governance. | |
Experience Mr. Mulligan served as Chief Financial Officer at General Mills, a multinational manufacturer and marketer of branded consumer foods, from 2007 to 2020. Mr. Mulligan previously held executive positions with General Mills from 2001 to 2007, including Vice President, Finance for the International division; Vice President, Finance for Operations and Technology; and Vice President, Treasurer. Prior to General Mills, Mr. Mulligan served as Chief Financial Officer, International, for the Pillsbury Company from 1999 to 2001, and held various international positions with PepsiCo Inc. and YUM! Brands, Inc., including Regional CFO, Americas; Finance Director, Asia; and Finance Director, Canada, from 1987 to 1998. Mr. Mulligan started his career with GTE Corporation in 1985. Mr. Mulligan earned his Bachelor of Arts from Duke University and his MBA from University of Michigan Graduate School of Business. Other Public Boards • Director, Energizer Holdings, Inc. (April 2021 – Present) • Director, Tennant Company (2009 – Present) Previous Public Boards(Past Five Years) • None |
| Proposals to be voted on at the meeting | 23 |
Maria Otero | ||
Age: 72 Independent Director Since 2013 Board Committees: Compensation (Chair), Nominating and Corporate Governance ESG | Qualifications and Expertise Provided to the Board Ms. Otero’s extensive leadership experience in government and global microfinance, including as the first Latina Undersecretary of the U.S. State Department, provides the Board with valuable public affairs, regulatory and financial expertise. Her experience strengthens the Board’s oversight of the Company’s global investment and expansion strategy, as well as regulatory risks. | |
Experience Ms. Otero currently serves on the board of Development Alternatives Inc. The first Latina undersecretary in the U.S. Department of State’s history, Ms. Otero served as Undersecretary of State for Democracy and Global Affairs and Undersecretary for Civilian Security, Democracy, and Human Rights under President Obama. During her time at the U.S. Department of State, Undersecretary Otero also served as the President’s Special Coordinator for Tibetan Issues. Prior to serving the government, from 2000 to 2009 Ms. Otero served as President and CEO of Accion International, a global microfinance organization operating in 26 countries. At Accion International, Ms. Otero chaired the board of Accion Investments, a global equity investment fund and represented Accion on the board of several microfinance banks. She was appointed by President Clinton to chair the board of the Inter-American Foundation and by President Bush to serve as vice-chair on the board of the U.S. Institute of Peace. In 2006, she was appointed by Secretary General Kofi Annan to the U.N. Advisors Group on Inclusive Financial Sectors. Ms. Otero has served on the boards of: Development Alternatives Inc. from 2014, the Kresge Foundation since 2013, the Public Welfare Foundation from 2013 to 2021, Oxfam America from 2014 to 2020, and the Smithsonian Institution National Portrait Gallery since 2016, and is a member of the Council of Foreign Relations. In December 2020 she was named to the Board of Trustees of American University. She also chaired the board of Bread for the World, and served on the boards of the Calvert Foundation and BRAC in Bangladesh. Ms. Otero also worked as an economist for Latin America and the Caribbean in the Women in Development Office of USAID. Ms. Otero holds an M.A. in literature from the University of Maryland; an M.A. in International Relations from the Paul H. Nitze School of Advanced International Studies (SAIS) at Johns Hopkins University; and holds an honorary Doctorate of Humane Letters from Dartmouth College. Other Public Boards • None Previous Public Boards(Past Five Years) • None |
| 24 | Proposals to be voted on at the meeting |
Proposal 2: Approve, on an advisory basis, the compensation of the Company’s named executive officers
As required by Section 14A of the Exchange Act, the Company is seeking an advisory shareholder vote ofon the compensation of the named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative disclosure, in this Proxy Statement.
Our executive compensation program is designed to pay for performance and to attract motivate and encourage a long-term commitment from talented and high-performing executivesretain an accomplished executive team to lead the Company’s global success selling nutrition products that are regulated at varying levels in the 94 countries where we operate through a direct selling independent sales organization. Our program is further designed to advance our shareholders’ interests in a manner that is consistent with our Company value of “operating with integritygrowth and transparency”.success. The executive compensation program places strong emphasis on actions that create long-term sustainable growth and enhanced value for our shareholders through an annual equity grant program that providesrewards executives with the ability to participate in our share price appreciation and to share equally in potential downside if key targets that drive shareholdershare value arecreation is not achieved. By encouraging long-term performance and enhanced shareholder value, our executives are encouragedincentivized to operate our business with integrity, focusing on fostering strategic growth while being mindful to mitigate against risk. In addition to emphasizing long-term growth, our compensation program attracts talented executives by offering a competitive base salary and annual cash incentives, which promote retention and encourage our executives to achieve short-termannual financial goals.
The vast majority of the compensation of the Company’s named executive officers — the officers identified in Part 4 — “Compensation Discussion and Analysis” — is tied to Company operating and share price performance. Volume Points and operating income are used to determine executives’ annual incentive compensation. Long term incentives were provided in 2019 to our named executive officers (other than Mr. Goudis) in the form of an annual grant of restricted stock units, or RSUs, which are subject to service criteria, and, other than in the case of Mr. Johnson, the Company’s Chairman and Chief Executive Officer, performance share units, or PSUs, which are subject to performance and service criteria. These awards directly align the long-term interests of our executives with those of our shareholders.
At our 20192022 annual general meeting of shareholders, our shareholders expressed extremely strongcontinued support forof our 2018 executive compensation program, with approximately 99%87.8% of votes cast in favor of the advisory vote proposal.1 When designing our 20192022 executive compensation program, the compensation committeeCompensation Committee of the Board of Directors, or the Committee, considered, among other things, the Company’s overall financial performance and growth, profitparticular financial andnon-financial objectives, benchmarking against market
practices, the Company’s financial performance, incentives that reward shareholder value creation, and any shareholder feedback.
We believe that the Company’s financial performance is facilitated by the “pay for performance” design of our compensation program. Our program motivates our executives to deliver financial results, with the appropriate level of risk-taking, against three performance metrics in a manner that ultimately aligns with the realized growth of shareholder equity value.
Additional information regarding the Company’s compensation program applicable to the named executive officers is described in Part 4 — “Compensation discussion and analysis” and the related tables and narrative disclosure. For the reasons discussed above, the Board of Directors unanimously recommends that shareholders vote in favor of the following resolution:
“Resolved, that the shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed pursuant to Item 402 ofRegulation S-K and described in the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative disclosure, in the proxy statement.”
While the shareholder vote on the resolution isnon-binding, the Board of Directors values the opinions that shareholders express in their votes and in any additional dialogue. ItThe Board will consider the outcome of the vote and those opinions when making future compensation decisions. The next shareholder advisory vote on the Company’s executive compensation is expected to occur at the 20212024 annual general meeting.meeting of shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ADVISORY RESOLUTION ON THE COMPANY’S NAMED EXECUTIVE OFFICER COMPENSATION.
1 The support of our executive compensation program was approximately 76.4% if “abstention” votes are considered votes.
| Proposals to be voted on at the meeting |
Proposal 3: Advise as to the frequency of shareholder advisory votes on compensation of the Company’s named executive officers
In proposal 2 above, we are asking shareholders to vote on an advisory resolution on executive compensation. As part of the Board of Director’s commitment to excellence and pursuant to Section 14A of the Exchange Act, in this proposal 3 the Company is asking shareholders to vote on whether future advisory votes on executive compensation should occur every 1, 2 or 3 years.
After careful consideration, the Board has determined that continuing to hold an advisory vote on executive compensation every year is the most appropriate policy for the Company, and recommends that shareholders vote for future advisory votes on executive compensation to occur every year. While the Company’s executive compensation programs are designed to promote a long-term connection between pay and performance, the Board recognizes that compensation disclosures are made annually. Continuing to hold an annual advisory vote on executive compensation would continue the established practice of shareholders providing the Company with more direct and immediate feedback on those compensation disclosures. However, shareholders should note that because the advisory vote on executive
compensation occurs well after the beginning of the compensation year, and because the different elements of our executive compensation programs are designed to operate in an integrated manner and to complement one another, in many cases it may not be appropriate or feasible to change our executive compensation by the time of the following year’s annual general meeting of shareholders.
Please mark on the proxy card your preference as to the frequency of holding “Say-on-Pay” shareholder advisory votes as either every 1 year, every 2 years, or every 3 years or mark “abstain.” You are not voting to approve or disapprove the Board of Directors’ recommendation on this item.
While the result of this advisory vote on the frequency of the vote on executive compensation is non-binding, the Board of Directors values the opinions that shareholders express in their votes and in any additional dialogue. The Board will consider the outcome of the vote and those opinions when deciding how frequently to conduct the vote on executive compensation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR “1 YEAR” AS TO THE FREQUENCY OF SHAREHOLDER ADVISORY VOTES ON THE COMPANY’S EXECUTIVE COMPENSATION.
| 26 | Proposals to be voted on at the meeting |
Proposal 4: Approve, as a special resolution, an amendmentthe name change of the Company from “Herbalife Nutrition Ltd.” to the Company’s Amended and Restated Memorandum and Articles of Association to eliminate the casting vote“Herbalife Ltd.”
The Company’s Board of Directors is recommending to shareholders to approve, as a special resolution, an amendment topass the Articles to eliminate the casting vote, or second vote, which currently allows the Chairman of the Board a second or casting vote in the instance where therefollowing resolution:
“It is an equality of votes in a matter voted on by the Board at a Board meeting, as follows:
“Resolvedresolved, that, as a special resolution, Article 122 of the memorandum and articles of associationname of the Company currently in effect be amendedis changed from “Herbalife Nutrition Ltd.” to “Herbalife Ltd.”
If this proposal is approved by the additionshareholders, the name change will be effective as of the word “not” afterdate of the word “shall”Meeting, or April 26, 2023. Subsequent to the name change, the Company will not change its trading symbol on the NYSE and before the word “have”Common Shares will continue to trade on the NYSE.
The Board of Directors determined that, with the Company’s global reach and the growing field of health and wellness innovation, it would be in the last sentenceCompany’s best interest to change the Company’s name from “Herbalife Nutrition” to “Herbalife” to better align the name with the Company’s expanding business strategy and operation to reach beyond nutritional categories of Article 122 suchweight management, targeted nutrition, and energy, sports and fitness products. The Board of Directors, together with management, believes that the last sentence of Article 122 shall read in full: “In case of an equality of votes,proposed name change would allow the Chairman shall not have a second or casting vote.””
The proposed change isCompany to Article 122 ofbetter represent our business strategy to distributors, customers, business partners, and the Articles. The last sentence of Article 122 currently provides, “In case of an equality of votes [at a meeting of the Board of Directors], the Chairman shall have a second or castinginvestment community to
vote.” The proposed change tobe the Articles would amend the last sentence of Article 122 to provide as follows: “In case of an equality of votes, the Chairman shall not have a second or casting vote.”
This change to eliminate the casting vote from the Articles will also eliminate the current ability of chairpersons of each committee of the Board to cast a tie-breaking vote,premier health and is proposed in recognition of best corporate governance practices in the U.S. in that each director should have one votewellness company and an equal say in all matters submitted to the Board for its consideration.community.
Under the Articles and Cayman Islands Law, the affirmative vote of not less than 66.67% of the Common Shares present or represented by proxy and entitled to vote, and which do vote, must approve the amendmenta change to the Articles set forthCompany’s name.
The change of name will not affect in any way the validity or transferability of share certificates outstanding at the time of the name change, our capital structure or the trading of the Common Shares on the NYSE.
Following the date of the Meeting, shareholders should continue to hold their existing share certificates regardless of whether the shareholders approve this proposal 3.4 to change the Company’s name. Shareholders should not destroy any share certificates and should not deliver any share certificates to the transfer agent or take any other action with respect to their Common Shares solely as a result of this proposal. If the name change is approved by shareholders at the Meeting, uncertificated shares currently held in direct registration accounts and any new share certificates that are issued after the name change becomes effective will bear the name “HERBALIFE LTD.”
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSED AMENDMENTPROPOSAL TO CHANGE THE NAME OF THE COMPANY’S ARTICLESCOMPANY FROM “HERBALIFE NUTRITION LTD.” TO ELIMINATE THE CASTING VOTE.
Proposal 4: Approve, as a special resolution, an amendment to the Company’s Amended and Restated Memorandum and Articles of Association to require the approval oftwo-thirds of the members of the Board of Directors then in office to amend the Company’s Principles of Corporate Governance to make any changes to the responsibilities of the Chairman of the Board or the Lead Director as set forth therein
The Company’s Board of Directors is recommending to shareholders to approve, as a special resolution, an amendment to the Articles to require the approval oftwo-thirds of the members of the Board of Directors then in office to amend the Company’s Principles of Corporate Governance (the “Principles”) to make any changes to the responsibilities of the Chairman of the Board or the Lead Director as set forth in the Principles, as follows:
“Resolved that, as a special resolution, Article 122 of the memorandum and articles of association of the Company currently in effect be amended by the addition of the words “; provided that, not less thantwo-thirds of the votes of the Board then in office shall be required to amend the Company’s Principles of Corporate Governance to make any changes to the responsibilities of the Chairman of the Board or the Lead Director as set forth therein” in the second sentence of Article 122, such that the second sentence of Article 122 shall read in full: “Questions arising at any meeting shall be decided by a majority of votes of the Board present at a meeting at which there is a quorum; provided that, not less thantwo-thirds of the votes of the Board then in office shall be required to amend the Company’s Principles of Corporate Governance to make any changes to the responsibilities of the Chairman of the Board or the Lead Director as set forth therein.“HERBALIFE LTD.””
The proposed change is to Article 122 of the Articles. The second sentence of Article 122 provides that “Questions arising at any meeting shall be decided by a majority of votes of the Board present at a meeting at which there is a quorum”. The proposed change to the Articles would
amend this sentence in Article 122 to provide as follows: “Questions arising at any meeting shall be decided by a majority of votes of the Board present at a meeting at which there is a quorum; provided that, not less thantwo-thirds of the votes of the Board then in office shall be required to amend the Company’s Principles of Corporate Governance to make any changes to the responsibilities of the Chairman of the Board or the Lead Director as set forth therein”.
This change is recommended to ensure that the Board collectively agrees as to the role the Chairman and the Lead Director take in the Board’s functions.
Relatedly, the Board has previously voted to amend the Principles, effective as of the date of the Meeting, April 29, 2020, to limit the term of office of the Chairman to one year, and to limit the responsibilities of the Chairman to (x) calling and running meetings of the Board and (y) working in consultation with the Lead Director, approving agendas for meetings of the Board. If this proposal 4 is passed, any future changes to the responsibilities of the Chairman or the Lead Director in the Principles will require the approval oftwo-thirds of the members of the Board then in office, and language to such effect will be included in the Principles, effective April 29, 2020.
Under the Articles and Cayman Islands Law, the affirmative vote of not less than 66.67% of the Common Shares present or represented by proxy and entitled to vote must approve the amendment to the Articles set forth in this proposal 4.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSED AMENDMENT OF THE COMPANY’S ARTICLES TO REQUIRE THE APPROVAL OFTWO-THIRDS OF THE MEMBERS OF THE BOARD OF DIRECTORS THEN IN OFFICE TO AMEND THE COMPANY’S PRINCIPLES OF CORPORATE GOVERNANCE TO MAKE ANY CHANGES TO THE RESPONSIBILITIES OF THE CHAIRMAN OF THE BOARD OR THE LEAD DIRECTOR AS SET FORTH THEREIN.
| Proposals to be voted on at the meeting |
Proposal 5: Approve the Company’s 2023 Stock Incentive Plan
On February 7, 2023, the Board of Directors approved and recommended for submission to the shareholders for their adoption the Herbalife Nutrition Ltd. 2023 Stock Incentive Plan, or the 2023 Plan. The majority of shares represented in person or by proxy and entitled to vote and which do vote is required for adoption.
The Board believes that the adoption of the 2023 Plan is desirable because it will promote and closely align the interests of employees, directors and consultants of the Company and its shareholders by providing the ability for the Company to award stock-based compensation and other performance-based compensation. The Board believes the 2023 Plan promotes the Company’s ability to drive performance, which the Board believes enhances long-term shareholder value; increases employee stock ownership; and enables the Company to attract and retain outstanding employees, directors and consultants.
If the 2023 Plan is approved by our shareholders, it will become effective on April 26, 2023 (the “Effective Date”), and no further awards will be granted under the Herbalife Ltd. 2014 Stock Incentive Plan (the “2014 Plan”) after the Effective Date.
A maximum of 8,500,000 Common Shares plus (i) any Common Shares that remained available for issuance under the Company’s 2014 Plan as of the Effective Date and (ii) any Common Shares subject to outstanding awards under the 2014 Plan as of the Effective Date that after such date cease for any reason to be subject to such awards (other than by reason of exercise or settlement of the awards to the extent they are exercised for or settled in vested and nonforfeitable shares), subject to adjustments as described below, will be available for grants of awards under the 2023 Plan. As of December 31, 2022, the number of Common Shares that remained available for issuance under the 2014 Plan was approximately 2.6 million and the number of Common Shares subject to outstanding awards was approximately 4.6 million. As of December 31, 2022, the maximum potential dilution from the approximately 11.1 million shares available under the 2023 Plan would not have
exceeded 10.6% of fully diluted Common Shares then outstanding. However, taking into account the fungible share counting formula described below, if all of the awards under the 2023 Plan were granted as full value awards (rather than options or SARs), the number of shares subject to such full value awards would only be approximately 6.0 million shares representing approximately 5.7% of fully diluted Common Shares outstanding as of December 31, 2022. The Board believes that the number of Common Shares available under the 2023 Plan represents a reasonable amount of potential equity dilution in light of the purposes of the 2023 Plan as described above. Taking into account the Company’s historic and anticipated mix of equity awards, it is anticipated that the shares available under the 2023 Plan will meet the Company’s needs for up to two years, depending on the Company’s stock price performance over the period. Assuming the Company’s shareholders approve the 2023 Plan at the Meeting, the Company will file a Registration Statement on Form S-8 to register the Common Shares available for issuance under the 2023 Plan under the Securities Act of 1933, as amended.
The following summary of the 2023 Plan is qualified in its entirety by reference to the complete text of the 2023 Plan as set forth in Appendix A to this Proxy Statement. You should read the complete text of the 2023 Plan for more details regarding the operation of the 2023 Plan.
Information Regarding Grants Made under 2014 Plan
Common Share Price. As of February 24, 2023, the closing price of a Common Share on the NYSE was $19.48.
Information on Outstanding Equity Awards; Overhang. Overhang is equal to the number of equity awards outstanding plus the total number of Common Shares available for grant under the Company’s equity plan, divided by the sum of the total Common Shares outstanding, the number of equity awards outstanding and the total number of shares available for grant under the Company’s equity plan. Our overhang as of December 31, 2022 was 9.4%.
Information regarding awards outstanding as of December 31, 2022 under the 2014 Plan is summarized in the following table:
Award | Number Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Term | |||||||||
Stock Options & SARs | 3,074,170 | $24.21 | 4.6 years | |||||||||
Full Value Awards(1) | 4,716,237 | Not applicable | Not applicable | |||||||||
Total Overhang | 9.4% | — | — | |||||||||
| (1) | Full-value awards are awards other than stock options and SARs. These include RSUs and PSUs. PSUs are included assuming the maximum level of performance. |
| 28 | Proposals to be voted on at the meeting |
Burn Rate. One means of evaluating the long-term dilution from equity compensation plans is to monitor the number of equity awards granted annually, commonly referred to as “burn rate.” As shown in the following table, the Company’s three-year average annual burn rate has been 2.12%.
Year | SAR Options | Full-Value Awards Granted(1) | Total Granted | Weighted Average Number of Common Shares Outstanding | Burn Rates | |||||||||||||||
2022 | 783,699 | 2,963,243 | 3,746,942 | 99,549,122 | 3.76% | |||||||||||||||
2021 | 0 | 1,313,183 | 1,313,183 | 108,254,628 | 1.21% | |||||||||||||||
2020 | 0 | 1,814,979 | 1,814,979 | 131,531,285 | 1.38% | |||||||||||||||
Three-year average | 2.12% | |||||||||||||||||||
| (1) | Full Value awards are awards other than stock options and SARS. These include RSUs and PSUs. PSUs are included assuming the target level of performance. |
Key Features of the 2023 Plan
| • | Limitation on shares requested. The maximum number of Common Shares available for grant under the 2023 Plan is 8,500,000 Common Shares, plus any Common Shares that remained available for issuance as of the Effective Date under, or were subject to, outstanding awards under the 2014 Plan as of the Effective Date, that after such date are canceled, expired, forfeited or otherwise not issued under the 2014 Plan or settled in cash, in each case adjusted as described in the 2023 Plan. |
| • | Limitation on term of stock option and SAR grants. The term of each stock option or SAR will not exceed ten years. |
| • | Fungible share counting formula. Common Shares issued pursuant to stock options and SARs will count against the number of Common Shares available for issuance under the 2023 Plan on a one-for-one basis, whereas each Common Share issued pursuant to all other awards will count against the number of Common Shares available for issuance under the 2023 Plan as 1.85 shares. Accordingly, Common Shares issued pursuant to all awards (other than stock options or SARs) will lower the potential dilutive effect on the overall Common Shares available for grant under the 2023 Plan. |
| • | Limitation on share recycling. Common Shares surrendered for the payment of the exercise price of stock options or SARs, Common Shares subject to SARs not issued upon net settlement of such awards, Common Shares withheld by the Company to pay withholding taxes related to awards, and Common Shares repurchased on the open market with the cash proceeds of an option exercise, may not again be made available for issuance under the 2023 Plan. |
| • | No repricing or grant of discounted stock options or SARs. Under the 2023 Plan, other than in connection with a change in the Company’s capitalization, the Company will not, without shareholder approval, reduce the exercise price of a stock option or SAR and, at any time |
when the exercise price of a stock option or SAR is above the fair market value of a Common Share, the Company will not, without shareholder approval (except in the case of a change in control), exchange such stock option or SAR for a new award or for cash. The 2023 Plan prohibits the granting of stock options or SARs with an exercise price less than the fair market value of a Common Share on the date of grant. |
| • | No evergreen provision. There is no “evergreen” feature that permits any increase in the number of Common Shares authorized for issuance under the 2023 Plan without shareholder approval. |
| • | Minimum Vesting Requirement. All awards granted under the 2023 Plan are subject to a minimum vesting requirement such that no portion of any such award will be permitted to vest until at least one year after the date of grant thereof, except in the event of death or disability of the participant or in connection with a change in control; provided that up to 5% of the aggregate number of Common Shares authorized for issuance under the 2023 Plan may be issued pursuant to awards subject to any, or no, vesting conditions as our Compensation Committee deems appropriate, and awards to non-employee directors my vest in less than one year and not count against the 5% pool. |
| • | Non-Employee Director Limits. The aggregate number of Common Shares subject to awards granted under the 2023 Plan during any calendar year to any one non-employee director will not exceed that number of Common Shares having a fair market value on the date of grant of $375,000; provided, however, that in the calendar year in which a non-employee director first joins the Board of Directors or is first designated as Chairman of the Board or Lead Director, the maximum number of shares subject to Awards granted to such non-employee director may be up to two hundred percent (200%) of the number of Common Shares indicated by the foregoing limit. |
| Proposals to be voted on at the meeting | 29 |
Description of the 2023 Plan
The material features of the 2023 Plan are summarized below. This summary is qualified in its entirety by reference to the full text of the proposed 2023 Plan, a copy of which is attached as Appendix A to this Proxy Statement. You should read the complete text of the proposed 2023 Plan for more details regarding its operation.
Eligibility. Our members of the Board, employees (including executive officers) and consultants, and the employees and consultants of our subsidiaries, are eligible to participate in the 2023 Plan. As of February 24, 2023, we had 9 non-employee directors, approximately 10,000 employees and 1 consultant that were eligible to participate in the 2023 Plan. As a matter of practice, we limit plan participation among our employees to those who are director-level and above, and dramatically limit the participation of consultants.
Administration. The 2023 Plan is administered by the Compensation Committee or such other committee as designated by the Board, or the Committee. The Committee may grant awards to eligible persons and, to the extent permitted by applicable law, may delegate to (i) one or more subcommittees consisting of one or more directors and/or officers of the Company any of the authority of the Committee under the 2023 Plan or (ii) one or more officers, the right to grant awards in accordance with the terms of the 2023 Plan. The Committee may further designate or delegate to one or more additional officers or employees of the Company or any subsidiary, and/or to one or more agents, authority to assist the Committee in any or all aspects of the day-to-day administration of the 2023 Plan and/or of the awards granted under the 2023 Plan. The Committee has broad authority, as stated in the 2023 Plan, to interpret and administer the 2023 Plan and related agreements and documents and to take various other actions with respect thereto.
Common shares available under the 2023 Plan
Subject to adjustment as provided for in the 2023 Plan, the number of Common Shares subject to grants under the 2023 Plan will not exceed in the aggregate:
| • | 8,500,000 Common Shares, |
were subject to stock options or SARs under the 2014 Plan and as 1.85 Common Shares if such Common Shares were subject to awards other than options or SARs under the 2014 Plan). |
These share authorizations are affected by various provisions in the 2023 Plan, as discussed below under “Share counting” and “Other provisions — Adjustments.” The Common Shares issued pursuant to awards granted under the 2023 Plan may be authorized and unissued Common Shares or Common Shares that were reacquired by the Company, including Common Shares purchased in the open market, or a combination of the foregoing.
Share counting
Under the 2023 Plan, each Common Share that is subject to a stock option or SAR counts against the aggregate Plan limit as one Common Share, and each Common Share that is subject to an award other than a stock option or SAR under the 2023 Plan counts against the aggregate 2023 Plan limit as 1.85 Common Shares. Accordingly, under the 2023 Plan, while stock options or SARs could potentially be granted with respect to approximately 11.1 million shares, only approximately 6.0 million shares could be subject to full value awards granted under the 2023 Plan as a result of this share counting formula. For each Common Share subject to an award that is cancelled, forfeited, expires or is settled for cash (in whole or in part) under the 2023 Plan, one Common Share will be added back to the aggregate 2023 Plan limit for such Common Shares subject to a stock option or SAR, and 1.85 Common Shares will be added back to the aggregate 2023 Plan limit for such Common Shares subject to an award other than a stock option or SAR. The number of Common Shares available for grant under the 2023 Plan will not be increased by the following:
Common Shares issued as substitution awards (as defined in the 2023 Plan) in connection with any merger with or acquisition of a company will not decrease the number of Common Shares available for grant under the 2023 Plan, but Common Shares subject to substitution awards will not be available for further awards under the 2023 Plan if the substitution awards are forfeited, expire or settled in cash.
| 30 | Proposals to be voted on at the meeting |
Repricing prohibited
Under the 2023 Plan, other than in connection with a change in the Company’s capitalization, the Company will not, without shareholder approval, reduce the exercise price of a stock option or SAR and, at any time when the exercise price of a stock option or SAR is above the fair market value of a Common Share, the Company will not, without shareholder approval (except in the case of a change in control), exchange such stock option or SAR for a new award or for cash. However, the foregoing provision does not apply in connection with an adjustment involving a corporate transaction or event as provided in the 2023 Plan.
Types of awards authorized under the 2023 Plan
Stock options and stock appreciation rights. The Committee may award stock options, in the form of nonqualified stock options or incentive stock options, or SARs, each with a maximum term of ten years. The Committee will establish the vesting schedule for stock options and SARs and the method of payment for the exercise price, which may include cash, Common Shares, or other awards.
Restricted stock and stock units. The Committee may award restricted stock and restricted stock units and establish the applicable restrictions, including any limitation on voting rights or the receipt of dividends or dividend equivalents. Generally, the Committee will establish the manner and timing under which restrictions may lapse. The Committee may decide to include dividends or dividend equivalents as part of an award of restricted stock or stock units and may accrue dividends or dividend equivalents, as applicable, with or without interest, until the award is paid. However, in no event will dividends or dividend equivalents be paid with respect to unvested or unearned restricted stock or stock unit awards.
Incentive bonuses. The Committee may establish performance criteria and level of achievement versus these criteria that shall determine the amount payable under an incentive bonus. Payment of the amount due under an incentive bonus may be denominated in cash or shares as determined by the Committee. Performance criteria mean any measures, as determined by the Committee, which may be used to measure the level of performance of the Company or a participant during a performance period.
Performance criteria
The Committee may determine that awards under the 2023 Plan will be subject to performance-based vesting criteria. The performance criteria will be one or more of the following performance criteria, or derivations of such
performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee: (i) cash flow (before or after dividends), (ii) earnings per share (including earnings before interest, taxes, depreciation and amortization), (iii) stock price, (iv) return on equity, (v) total shareholder return, (vi) return on capital (including return on total capital or return on invested capital), (vii) return on assets or net assets, (viii) market capitalization, (ix) economic value added, (x) debt leverage (debt to capital), (xi) revenue (including adjusted revenue, Volume Points, net sales and analogous financial measures), (xii) income or net income, (xiii) operating income, (xiv) operating profit or net operating profit, (xv) operating margin or profit margin, (xvi) return on operating revenue, (xvii) cash from operations, (xviii) operating ratio, (xix) operating revenue, (xx) customer service or (xxi) any other measures of performance as the Committee, in its discretion, deems appropriate. The Committee may provide that any evaluation of performance under a performance criteria shall include or exclude any of the following events that occurs during the applicable performance period: (a) the effects of charges for restructurings or discontinued operations, (b) items of gain, loss or expense determined to be infrequently occurring or related to the disposal of a segment of a business or related to a change in accounting principle, (c) the cumulative effect of accounting change, (d) asset write-downs, (e) litigation, claims, judgments, settlements or loss contingencies, (f) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (g) accruals for reorganization and restructuring programs and (h) accruals of any amounts for payment under the 2023 Plan or any other compensation arrangement maintained by the Company.
Other provisions
Limitations on transfer. Awards are not transferable other than by will or the laws of descent and distribution unless determined otherwise by the Committee. Awards may not be pledged or otherwise encumbered.
Amendments. The Board may alter, amend, suspend or terminate the 2023 Plan from time to time subject to approval by the Company’s shareholders if required by applicable law, including the rules and regulations of the NYSE. The Committee may waive conditions or amend the term of awards, or otherwise amend or suspend awards already granted subject to certain conditions.
| Proposals to be voted on at the meeting | 31 |
Adjustments. In the event of certain corporate transaction or events affecting the number or type of outstanding Common Shares, including, for example, a dividend or other distribution (whether in cash, shares or stock), recapitalization, stock or share split, reverse stock or share split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of shares or issuance of warrants, the Committee will make adjustments as it deems appropriate. These adjustments include changing the number and type of shares to be issued under the 2023 Plan and outstanding awards; changing the per-participant limitations on awards and the grant, purchase or exercise price of outstanding awards; and changing the limitations on the total amount of restricted stock, stock units, performance awards or other share- or stock-based award that may be granted. The Committee may also make adjustments in the terms of awards in connection with certain acquisitions, and make adjustments in performance award criteria or in the terms and conditions of other awards in recognition of infrequently occurring events affecting the Company or its financial statements or of changes in applicable laws, regulations, or accounting principles.
Unless otherwise expressly provided for in an award agreement or another contract, including an employment agreement, or under the terms of a transaction constituting a change in control, the following will occur upon a participant’s involuntary termination of employment within twenty-four months following a change in control, provided that such termination does not result from the participant’s termination for disability, cause or gross misconduct: (i) in the case of a stock option or SAR, the participant will have the ability to exercise such stock option or SAR, including any portion of the stock option or SAR not previously exercisable, and the stock option or SAR will remain exercisable for a period of three years following such termination, but in no event after the expiration of such stock option or SAR, (ii) in the case of an award subject to performance conditions in accordance with the 2023 Plan, the participant will have the right to receive a payment based on performance through a date determined by the Committee prior to the change in control (unless such performance cannot be determined, in which case the participant will have the right to receive a payment equal to the target amount payable), and (iii) in the case of outstanding restricted stock and/or stock units, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such award will immediately lapse.
In the event of a change in control in which the acquiring or surviving company in the transaction does not assume or continue outstanding awards upon the change in control, immediately prior to the change in control, all awards that are not assumed or continued will be treated as follows effective immediately prior to the change in
control: (i) in the case of a stock option or SAR, the participant will have the ability to exercise such stock option or SAR, including any portion of the stock option or SAR not previously exercisable (provided, that any stock option or SAR for which the exercise price is less than the consideration per Common Share payable to shareholders of the Company in such change in control may be cancelled upon the consummation of the change performance conditions in accordance with the 2023 Plan, the participant will have the right to receive a payment based on performance through a date determined by the Committee prior to the change in control (unless such performance cannot be determined, in which case the participant will have the right to receive a payment equal to the target amount payable), and (iii) in the case of outstanding restricted stock and/or stock units, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such award will immediately lapse.
Federal income tax consequences
This general discussion of the U.S. federal income tax consequences of stock options and other awards that may be awarded under the 2023 Plan is intended for the information of shareholders considering how to vote with respect to this proposal and not as tax guidance to participants in the 2023 Plan. Different tax rules may apply to specific participants and transactions under the 2023 Plan, particularly in jurisdictions outside the United States. In addition, this discussion does not address other federal or state tax issues that may be implicated by awards that may be granted under the 2023 Plan.
SARs. No taxable income is recognized upon receipt of SARs. The participant will recognize ordinary income in the year in which the SAR is exercised, in an amount equal to the excess of the fair market value of the underlying Common Shares on the exercise date over the exercise price of the SAR, and the participant will be required to satisfy the tax withholding requirements applicable to such income. The Company generally will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant in connection with the exercise of the SAR.
Incentive Stock Options. A participant will have no taxable income upon the grant or exercise of an incentive stock option, except that the alternative minimum tax may apply. Unless there is a disqualifying disposition, as described below, the participant will recognize long-term capital gain in an amount equal to the excess of (i) the amount realized upon the sale or other disposition of the purchased Common Shares over (ii) the exercise price paid for the Common Shares. A disqualifying disposition occurs if the disposition is less than two years after the date of grant or less than one year after the exercise date. If there is a disqualifying disposition of the Common
| 32 | Proposals to be voted on at the meeting |
Shares, then the excess of (a) the fair market value of those Common Shares on the exercise date or (if less) the amount realized upon such sale or disposition over (b) the exercise price paid for the Common Shares will be taxable as ordinary income to the participant. Any additional gain or loss recognized upon the disposition will be a capital gain or loss.
If the participant makes a disqualifying disposition of the purchased Common Shares, then the Company will be entitled to an income tax deduction for the taxable year in which such disposition occurs equal to the amount or ordinary income recognized by the participant as a result of the disposition. The Company will not be entitled to any income tax deduction if the participant makes a qualifying disposition of the Common Shares.
Nonqualified Stock Options. No taxable income is recognized by the participant upon the grant of a nonqualified stock option. Upon exercise of a nonqualified stock option, a participant generally must recognize ordinary income equal to the fair market value of the Common Shares acquired minus the exercise price. The Company generally will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant with respect to the exercised nonqualified stock option.
Restricted Stock. A participant who receives a restricted stock award will not recognize any taxable income at the time those Common Shares are issued but will recognize ordinary income as and when those Common Shares subsequently vest, in an amount equal to the excess of (i) the fair market value of the Common Shares on the vesting date over (ii) the cash consideration (if any) paid for the Common Shares. The participant may, however, elect under Section 83(b) of the Internal Revenue Code, or
the Code, to include as ordinary income in the year the unvested Common Shares are issued an amount equal to the excess of (a) the fair market value of those Common Shares on the issue date over (b) the cash consideration (if any) paid for such Common Shares. If the Section 83(b) election is made, the participant will not recognize any additional income as and when the shares subsequently vest. The Company will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant with respect to the restricted stock award at the time such ordinary income is recognized by the participant.
RSUs and Other Incentive Awards. No taxable income is recognized upon receipt of RSUs and other incentive awards. The participant will recognize ordinary income in the year in which the Common Shares subject to the award are actually issued or in the year in which the award is settled in cash. The amount of that income will be equal to the fair market value of the Common Shares on the date of issuance or the amount of cash paid in settlement of the award, and the participant will be required to satisfy the tax withholding requirements applicable to the income. The Company generally will be entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant at the time the Common Shares are issued or the cash amount is paid.
Deductibility of Executive Compensation. Section 162(m) of the Code generally limits the Company’s ability to obtain tax deductions for compensation (including under the 2023 Plan) in excess of $1.0 million in any taxable year paid to certain “covered employees.” Covered employees will generally include any executive officer whose compensation was required to be disclosed in the Company’s annual proxy statement for any fiscal year after 2016.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ADOPTION OF THE HERBALIFE NUTRITION LTD. 2023 STOCK INCENTIVE PLAN.
| Proposals to be voted on at the meeting | 33 |
Proposal 6: Ratification, on an advisory basis, of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm
The audit committeeAudit Committee has selected PricewaterhouseCoopers LLP, or PwC, as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020.2023. Services provided to the Company and its subsidiaries by PwC in fiscal years 20192022 and 20182021 are described below under “Fees to independent registered public accounting firm for fiscal years 20192022 and 2018”.2021.” Additional information regarding the audit committeeAudit Committee is set forth in the “Audit committee report”.Committee Report.”
The Articles do not require that our shareholders ratify the selection of PwC as the Company’s independent registered public accounting firm. However, we are requesting ratification because we believe it is a matter of good corporate practice. If the Company’s shareholders do not ratify the selection, the audit committeeAudit Committee will reconsider whether or not to retain PwC, but may, nonetheless, retain PwC as the Company’s independent registered public accounting firm. Even if the selection is ratified, the audit committeeAudit Committee in its discretion may change the appointment at any time if it determines that the change would be in the best interests of the Company and its shareholders.
The Company has been advised that representativesRepresentatives of PwC will be present atare expected to attend the Meeting where they will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
Audit committee reportCommittee Report
The audit committeeAudit Committee is responsible for monitoring our financial auditing, accounting and financial reporting processes and our system of internal controls, and selecting the independent registered public accounting firm on behalf of the Board of Directors. Our management has primary responsibility for our internal controls and reporting process. Our independent registered public accounting firm, PwC, is responsible for performing an independent audit of our consolidated financial statements and the effectiveness of our internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States), or the PCAOB, and issuing an opinion thereon. In this context, the audit committeeAudit Committee met
regularly and held discussions with management and PwC. Management represented to the audit committeeAudit Committee that the consolidated financial statements for fiscal year 20192022 were prepared in accordance with U.S. generally accepted accounting principles.
The audit committeeAudit Committee hereby reports as follows:
| • | PwC also provided to the Audit Committee the written disclosures and the letter required by the applicable requirements of the PCAOB regarding PwC’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with PwC the accounting firm’s independence. The Audit Committee also considered whether non-audit services provided by PwC during the last fiscal year were compatible with maintaining the accounting firm’s independence. |
Based on the reviews and discussions referred to above, the audit committeeAudit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in our Annual Report onForm 10-K for the year ended December 31, 2019,2022, which havehas been filed with the Securities and Exchange Commission, or the SEC. The audit committeeAudit Committee also selected PwC to serve as our independent registered public accounting firm for the year ending December 31, 2020.2023.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Don Mulligan (Chair)
Sophie L’Hélias
Alan W. LeFevre (Chairman)
Michael Montelongo
James L. Nelson
| Proposals to be voted on at the meeting |
Fees to independent registered public accounting firm for fiscal years 20192022 and 20182021
The following fees were for services provided by PwC:
2019 | 2018 | |||||||
Audit fees(1) |
| $7,007,000 |
|
| $8,030,000 |
| ||
Audit-related fees(2) |
| $266,000 |
|
| $344,000 |
| ||
Tax fees(3) |
| $1,124,000 |
|
| $938,000 |
| ||
Total |
| $8,397,000 |
|
| $9,312,000 |
| ||
2022 | 2021 | |||||||
Audit fees(1) |
| $8,305,000 |
|
| $7,645,000 | |||
Audit-related fees(2) |
| $70,000 |
| $80,000 | ||||
Tax fees(3) |
| $1,994,000 |
| $2,274,000 | ||||
Total |
| $10,369,000 |
|
| $9,999,000 |
| ||
| (1) | Audit fees for |
| (2) | Audit-related fees consist of assurance and related services that were reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and which are not reported under “Audit |
| (3) | Tax fees were for tax compliance and tax guidance. |
The audit committeeAudit Committee has adoptedpre-approval policies and procedures for audit andnon-audit services which the Company’s independent registered public accounting firm have historically provided. Pursuant to those policies and procedures, the Company’s independent registered
public accounting firm cannot be engaged to provide the Company any audit ornon-audit services to the Company unless the engagement ispre-approved by the audit committeeAudit Committee in compliance with the Sarbanes-Oxley Act of 2002. All fees and services described in the table above werepre-approved pursuant to this policy.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” RATIFICATION, ON AN ADVISORY BASIS, OF THE APPOINTMENT OF PwC AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2020.2023.
| Proposals to be voted on at the meeting |
Part 4
| Executive compensation |
Compensation discussion and analysis
This section explains the Company’s 20192022 executive compensation program as it relates to our named executive officers, or NEOs:
| Michael O. Johnson | Chairman and Chief Executive Officer(1) | |
| Chief Strategic Officer(3) | ||
| Robert Levy | Executive Vice President, Worldwide Distributor Affairs(3) | |
| John O. Agwunobi | Former Chairman and Chief Executive Officer | |
| (1) |
| (2) | Effective |
| (3) |
Executive summary of our compensation program
Financial performance for purposes of our annual incentive program
The Company’s financial performance is a material factor in determining the total compensation for our NEOs. As such,top-line growth stated in terms of Volume Points and profitability stated in terms of Operating Income are the performance metrics used for our annual incentive program with a weighting of 30% and 70%, respectively. These performance measures are more fully described in “Annual incentive awards — Targets and award determination” below.
The payouts under our annual incentive award program were below target based on the Company’s 2019 Volume Points and Operating Income.
Results for Bonus Purposes
| ||||||||||||||||||||
| 2016 | 2017 | 2018 | 2019 | 2019 Target
| ||||||||||||||||
Volume Points (millions)
|
| 5,582
|
|
| 5,379
|
|
| 5,861
|
|
| 6,069
|
|
| 6,238
|
| |||||
Operating Income ($, millions)
| 637.9 | (1) | 575.3 | (2) | 703.2 | (3) | 660.8 | (4) | 677.5 | |||||||||||
| (4) |
| Executive compensation |
Executive summary
The following table generally summarizes the 2019 annual incentive awards for the NEOs. All 2019 annual incentive awards to NEOs were based solely on the calculated results to target performance levels. For a more detailed discussionkey elements of our 2019 annual incentive awards for the NEOs, please refer to the discussion under “— Annual incentive awards & long-term incentiveexecutive compensation program — Annual incentive awards.”in 2022:
Base Salary | Short-Term Incentives | Long-Term Equity-Based Incentives | |||||
|
|
| |||||
|
| ||||||
|
| ||||||
|
| ||||||
|
| ||||||
|
| ||||||
Annual cash incentive designed to reward NEOs for achievement of challenging annual financial targets for the |
For 2022, performance was evaluated against preset goals for the following financial metrics: • Operating Income (60%) • Volume Points (40%) |
In addition to the financial performance discussed above, theThe Company achieved the following key strategic accomplishments in 20192022 that provided significant support for the Company’s continued growth and success. These include:
| • | continued to support and expand the global roll-out of daily consumption-based sales and marketing activities, such as Nutrition Clubs; and |
| Executive compensation | 37 |
Compensation program that aligns pay and performance
Our executive compensation program is designed to pay for performance and to attract motivate and encourage a long-term commitment from talented and high-performing executivesretain an accomplished executive team to lead the Company’s global success selling nutrition products. Our program is further designed to advance our shareholders’ interests in a manner consistent with our Company value of “operating with integrity and transparency”. The
compensation program places strong emphasis on actions that create long-term sustainable growth and enhanced value for our shareholders through an annual equity grant program that rewards executives with the ability to participate in our share price appreciation and to share equally in potential downside if key targets that drive shareholder value arecreation is not achieved. By encouraging long-term performance and enhanced shareholder value, our executives are committedincentivized to operatingoperate our business with integrity, focusing on fostering strategic growth while being mindful to mitigate against risk. In addition to emphasizing long-term growth, our compensation program attracts talented executives by offering a competitive base salary and annual cash incentives, which encourage our executives to achieve short-termannual financial goals. The Committee has the responsibility for establishing, developing and implementing these programs while ensuring an appropriateagainst excessive level of risk-taking by the Company’s executives.
The direct compensation of our NEOs in 20192022 consisted of base salary, annual cash incentives, and grants of equity in the form of performance share units, or PSUs, and time-vestingtime-
vesting restricted share units, or RSUs.RSUs, and, in the case of Mr. Johnson in December 2022, stock appreciation rights, or SARs. To create and reinforce a “pay for performance” philosophy and culture and increase alignment with the expectations of investors in the Company, the annual cash incentives and equity components of compensation comprise the vast majority of the total compensation of our NEOs. In setting target total compensation, the Committee annually reviews and assesses the total compensation opportunity for each NEO primarily against that of comparable executives within the list of comparator companies selected by the Committee to serve as a market benchmark, along with other comparative factors.factors such as scope and responsibilities of a given executive role. Although there is no targeted mix of compensation elements, the proportion of compensation designed to be delivered in variable pay versus base salaryfixed pay increases with the ability of the executive to influence overall Company performance.
For 2019,2022, the percentage of targeted direct compensation provided in the form of annual and long-term incentives tied to the Company’s performance was between 54%79% to 74%100% for our executive officersNEOs who were NEOsexecutive officers as of December 31, 2019.2022. As reflected under the “2019
“2022 summary compensation table”, actual compensation paid provided in the form of such incentives was between 53%77% to 73%100% of total compensation for ourNEOs who were executive officers who were NEOs as of December 31, 2019.2022.*
 |  |
Actual Direct Compensation*
 |  |
| * | Percentages may not total 100% due to rounding. Compensation for Dr. Agwunobi and Messrs. DeSimone and Levy, who were no longer serving as executive officers as of December 31, 2022, are not included. Mr. Johnson, |
Percentages may not total 100% due
| 38 | Executive compensation |
Other than Mr. Johnson, who became an executive officer in October 2022 and received separate equity grants as described below, annual grants made in February 2022 to rounding.
In 2019, grants toour NEOs (other than Messrs. Johnson and Goudis) pursuant to our long-term incentive program generally consisted of PSUs (~75% of equity value) and RSUs (~25% of equity value). With this allocation of equity awards, the Company’s executive compensation program retainsretained its most effective feature, its direct emphasis on multi-year performance. This ensures that NEOaligns executive pay is aligned with the Company’s sustained performance over several years, while also aligning the interests of NEOs with our shareholders through share ownership. The NEOs each received PSUsIn addition to such annual grants, in consideration of executive retention, the Company granted additional RSUs to Messrs. Amezquita, Lamberti, Levy, Schissel and RSUsWang in February 2019 as partDecember 2022, which will vest 100% two years from grant date.
During periods of their long-term incentive award granted instable macroeconomic trends when the ordinary course.
TheCompany provides financial guidance, the use of PSUs accomplishesfor the annual grants in 2022 accomplish the following goals:
increase alignment of equity compensation with shareholder value;
reward management for accelerating the Company’s growth;
align executives with shareholderslong-term interests of all stakeholders through share ownership (provided the PSUs are earned);
broaden performance focus and accountability of our NEOs; and
require sustained operating performance for PSUs to be earned.
ForIn October 2022, Mr. Johnson returned as the Company’s Chairman and interim Chief Executive Officer, and in December 2022, the “interim” designation was removed and Mr. Johnson became the Company’s Chairman and Chief Executive Officer. In connection with completion of his Board service,employment agreement as the Company’s Chairman and Chief Executive Officer on December 22, 2022, Mr. Johnson received $1.00 in annual salary and an equity award having a grant date fair value equal to $10,000,000, of which 50% was granted in the form of RSUs and 50% was granted in the form of SARs.
In 2023, the Committee determined to eliminate PSUs entirely from the design of our long-term executive incentive program for 2023, in line with Mr. Johnson’s 2019December 2022 equity grants. In 2023, grants to executives pursuant to our long-term incentive program are expected to consist of SARs (75%) and time-vesting RSUs (25%), each of which will vest in three equal annual tranches on the grant consisted only of time-vested RSUs, structureddate anniversary. The Committee made this change in response to the rapidly shifting macroeconomic sentiment and backdrop, as well as increased volatility in the same mannermarketplace, including global inflationary pressures and amount as othernon-executive director equity grants. macroeconomic factors, which make it difficult to reasonably estimate future performance and set PSU performance targets. As a result, to align the executives’ incentives with the interests of his termination in January 2019, Mr. Goudis did not receive anshareholders, the performance will be measured through the appreciation of share price over multiple years through this equity award in 2019.mix.
| Executive compensation | 39 |
At our 2019 annual general meeting, our shareholders demonstrated their strong support of
Additionally, our executive compensation program with approximately 99% of votes cast in favor ofincludes the advisory “say on pay” vote proposal. Wefollowing practices and policies, which we believe this vote reflects strong support forreinforce our executive compensation program structure, which focuses on optimizing (a) incentivesphilosophy and metricsobjectives that result inare aligned with the greatest degreeinterests of alignment with shareholder interests, and (b) recruitment, engagement, motivation and retention of executives. Although no changes were made to our executive compensation program based on the 2019say-on-pay vote, we continue to evaluate our program to find ways we can further align management incentives with shareholder interests, which we view to be essential to our long-term success.shareholders:
At our 2022 annual general meeting of shareholders, excluding “abstention” votes, our shareholders demonstrated their continued support of our executive compensation program, with approximately 87.8% of votes cast in favor of the advisory “say on pay” vote proposal.1 We believe this vote reflects continued support for our executive compensation program structure, which focuses on optimizing (a) incentives and metrics that result in the greatest degree of alignment with all stakeholder interests, and (b) recruitment, engagement, motivation and retention of executives. Additionally,
through our meetings with shareholders, our investors expressed continued support for our executive compensation program. Accordingly, no changes were made to our executive compensation program in response to the 2022 say-on-pay vote. We continue to consider the results from our advisory votes on executive compensation, as well as feedback received throughout the year, and evaluate our program to find ways we can further align management incentives with the interests of our shareholders, our distributors and our employees, which we view to be essential to our long-term success.
| 40 | Executive compensation |
1 The support of our executive compensation program was approximately 76.4% if “abstention” votes are considered votes.
Executive compensation program objectives
As a global nutrition business, we operate in an environment of challenging regulatory, economic and geopolitical uncertainty. We manufactured approximately 60% to 65%51% of our own inner nutrition products that arewere sold through a direct selling distribution channelworldwide, and generated approximately 79%77% of our net sales outside the United States for the year ended December 31, 2019.2022. Our continued success depends on the leadership of a highly-talented,highly talented, adaptive and dedicated executive team. Our executive compensation program provides competitive rewards to our NEOs who contribute to our annual success in achieving growth in revenues and profitability, creating and growing a global network that provides customers with personalized nutrition solutions, as well as making strategic decisions that should lead to increasing shareholder returns to stakeholders over time.
The Committee believes that shareholderstakeholder interests are advanced when the Company assembles, motivates and rewards a high-performing management team. To promote this objective, the Committee developed its executive compensation program guided by a “pay for performance” organizing framework and the resulting underlying principles listed below:
Principle | Implication on HLF Program | Rationale | ||
Alignment of Executives’ and Long-Term Shareholders’ Interests. Long-term incentives should be provided in Company equity, where allowed by local law, to encourage
| •
• • In 2023, long-term incentive awards to be granted to NEOs will consist of • The Company has competitive share ownership guidelines. | •
• | ||
Pay for Superior Performance. Incentive compensation must provide superior pay for superior performance that meets or exceeds the expectations of our shareholders. | • Superior performance expectations are built into performance targets and ranges of our incentive plans such that when incentive targets are met, the Company is exceeding peer financial performance and meeting shareholder expectations. • In addition to occasional retention awards to recruit and retain high-performing and highly employable executives, our incentive plans are calibrated to deliver above-median compensation for meeting superior performance targets, and, in the case of PSUs, deriving value through achieving performance targets, while in the case of SARs, through share price appreciation. | • The only way for our executives to earn above-target compensation is by exceeding financial goals and share price appreciation. | ||
| Executive compensation | 41 |
Principle | Implication on HLF Program | Rationale | ||
Balanced Incentives to Promote Sustainable Value-Creation. Incentive compensation should reflect a balanced time horizon between annual and long-term performance in order to promote sustainable growth in the value of the enterprise. | • Annual incentive is paid in cash, based on achievement of annual financial performance targets. • PSUs awarded in 2022 are earned based on achievement of the following two metrics over a performance period from January 1, 2022 to December 31, 2024: Local Currency Net Sales and Adjusted EBIT. • SARs demonstrate our pay for performance commitment by aligning executive incentives with long-term shareholder interest and share price appreciation and have a ten-year term and a vesting schedule over three years, which over that time derive value only from share price appreciation. | • A mix of cash and equity compensation is a competitive practice. • Paying a mix of cash and equity based on a “portfolio” of equity vehicles and performance metrics also helps balance risk within the pay program. | ||
Focus on Shareholder Aligned Incentives. A majority of total compensation is at-risk and tied to achievement of annual financial performance goals and improvement in long-term stakeholder value through share price appreciation. | • 75% of our typical annual long-term incentives awarded in 2022 to our executives were performance-based and 25% were time-vesting equity, other than special retention awards to certain NEOs and grants to Mr. Johnson in December 2022. • Value of PSUs and SARs align with sustained long-term shareholder value and vesting requires achievement of performance goals that support our business. | • Annual and long-term incentive plans use growth, profit, and share price performance as measures. These plans are forward-looking and backward-looking, to provide a comprehensive set of metrics used to consider overall performance of the Company and our executive team. | ||
Competitive Pay Opportunities.Compensation opportunities must be competitive with the pay practices of companies that operate in global markets and enable us to attract and retain high-performing, | • Peer group reflects the market in which we reasonably compete for executive talent.
• We reference both proxy-sourced market data from our peer group as well as general industry survey data from
• The Committee’s independent advisor provides the Committee with the 25th, 50th and 75th percentiles of market data to understand the scope of the market, with target compensation for top executives positioned relative to market references based on a variety of factors, including individual performance, internal equity, succession planning and business strategy.
• Overall, our executives are within a competitive range of market, with appropriate variance based on incumbent-specific characteristics. | • The Company recruits high-performing executives with known track records in competitive, complex and global businesses.
• To attract the talent the Company needs to lead its business, compensation opportunities must be | ||
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PurposeElements of compensation elementsCompensation
The compensation and benefits program for our NEOs generally consists of and is designed to achieve the following:
Direct | Purpose | |
| Base salary | Provide a competitive foundation for total compensation to each executive
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| Annual cash incentives | Reward NEOs for the achievement of challenging annual financial targets that drive growth in shareholder value.
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| Long-term equity-based incentives | Provide incentives for NEOs to develop strategic plans, and make tactical decisions that will enhance
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Indirect | Purpose | |
| Retirement benefits | Encourage NEOs to build retirement resources by providing a match on deferred compensation in the Company’s 401(k) plan and Senior Executive Deferred Compensation Plan.
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| Life insurance benefits | Provide a competitive benefit in the event of death of an executive.
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| Severance benefits | Enable each NEO to focus his full time and attention on meeting the financial and operating objectives set by the Committee without fear of the financial consequences of an unexpected termination of employment.
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| Change in control benefits | Enable NEOs to focus on shareholder interests when considering strategic alternatives.
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The Chair of the Committee, with input from the independent compensation advisor, recommends the CEO’s compensation to the Committee in an executive session not attended by the CEO. Once a recommendation has been established by the Committee, the CEO’s compensation is reviewed with, and approved by, the independent members of the Board in an executive session.session not attended by the CEO or any non-independent members of the Board.
Role of executive officers in executive compensation decisions
The CEO reviews compensation data gathered from a group of peer companies approved by the Committee and described on page 53 under the subsection “— Peer“Peer Group”, or the Herbalife Nutrition Peer Group, and, along with general industry compensation surveys, considers each executive officer’s performance and scope of responsibility, and makes a recommendation to the Committee on changes to base salary, annual incentive awards and equity awards for each executive officer other than himself. The CEO participates in Committee meetings at the Committee’s request to provide relevant background information regarding the Company’s strategic objectives and to evaluate the performance of and compensation recommendations for the other executive officers. The Committee utilizes the information provided by the CEO along with input from its independent compensation advisor and the knowledge and experience of Committee members in making compensation decisions.
| 43 |
Base salaries for our NEOs are intended to reflect the scope of their responsibilities, performance, skills and experience as compared with relevant and comparable market talent. When establishing base salaries for NEOs, the Committee considers market data and positions target pay for the NEOs based on a number of factors, including experience and tenure of the executive, scope of responsibilities, business performance and individual performance.
The Committee generally reviews base salaries of our NEOs in February of each year. In its annual review of the base salaries for our NEOs in February 2019,2022, the Committee determined to have the base salaries of our NEOs listed below remain generally unchanged, except for increasesother than Mr. Amezquita as noted below. Mr. Levy was not subject to Dr. Agwunobi’s and Mr. Chiu’s base salaries.Committee review in February 2022. The chart below shows the 20182022 and 20192021 base salaries for each NEO (other than Dr. Agwunobi), and the rationale for any salary changes in 2019 following the Committee’s annual review in February 2019.2022.
| NEO | 2018 Salary(1) | 2019 Salary | Rationale for Change | |||||||||
Michael O. Johnson |
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$300,000 |
(2) |
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$1,236,000 |
(3) | Ø Continued Chief Executive Officer Role | |||||
John Agwunobi | $525,000 | $619,000 | (4) | |||||||||
| John G. DeSimone | $619,000 | $619,000 | (4) | |||||||||
| David Pezzullo | $565,000 | $565,000 | (4) | |||||||||
| Shin-Shing Bosco Chiu | $430,000 | $450,000 | (4) | |||||||||
| NEO | 2021 Salary(1) | 2022 Salary(1) | Rationale for 2022 Change | |||||||||
| Michael O. Johnson | — | $1(2) | ||||||||||
| Alexander Amezquita | $500,000 | $550,000 | (3) | Ø Increased tenure in CFO role | ||||||||
| Mark Schissel | $530,000 | $530,000 | ||||||||||
| Henry Wang | $550,000 | $550,000 | ||||||||||
| Frank Lamberti | $566,500 | $566,500 | ||||||||||
| John DeSimone | $695,000 | $348,000 | (4) | Ø Transition to part-time position | ||||||||
| Robert Levy | $566,500 | $566,500 | ||||||||||
| (1) | Base |
| (2) |
| (3) |
| (4) |
Annual incentive awards & long-term incentive program
Our annual cash incentive plan is designed to motivate and reward the achievement of annual financial targets that create value for our shareholders.stakeholders. The Committee establishes financial performance targets and goals for our annual incentive plan each year, taking into consideration that such targets and goals align with and support the Company’s business strategy, recognize current business conditions, align with the current year financial budget align with Wall Street analysts and public investor expectations and require performance that is competitive with those of the Herbalife Nutrition Peer Group. The criteria used for 2019 consisted of targeted Volume Points, serving as a proxy for sales, and targeted
Operating Income, subject to adjustments as discussed below, which ensures our executives make decisions that improve our profitability.
Incentive bonus awards are subject to approval by the Committee, and continuous employment through the date such bonus award payment is made. Notwithstanding the foregoing, the Committee, in its sole
and absolute discretion, may provide for payment of any incentive bonus award to a terminated employee, which award shall be paid at the time incentive bonus awards are paid to active employees.
SubjectThe 2022 performance criteria consisted of: (1) targeted Volume Points, serving as a proxy for sales, and (2) targeted Operating Income, subject to the limits described above, target incentivesadjustments as discussed below, which we believe incentivizes our executives to make decisions that improve our profitability.
Target incentive opportunities for our executives are set by the Committee depending on the employee’s position, scope of responsibilities, ability to influence Company results, and competitive pay practices among the Herbalife Nutrition Peer Group.
| 44 | ||
| Executive compensation |
The following table summarizes the target bonus and target bonus as a percentage of base salary for each of the NEOs (other than Dr. Agwunobi):
Bonus Eligible Base Salary(1) | Target Bonus | |||||||||||
NEO | (% of Salary)(2)
| $
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Michael O. Johnson(3) | — | — | — | |||||||||
Alexander Amezquita | $542,055 | 72.8% | $394,623 | |||||||||
Mark Schissel | $530,000 | 70% | $371,000 | |||||||||
Henry Wang | $550,000 | 69.2% | $380,630 | |||||||||
Frank Lamberti | $566,500 | 60% | $339,900 | |||||||||
John DeSimone | $550,496 | 80% | $440,397 | |||||||||
Robert Levy | $566,500 | 60% | $339,900 | |||||||||
| (1) |
| (2) | Calculated using prorated percentages for Messrs. Amezquita and Wang.Prior to February 28, 2022, Mr. Amezquita’s annual target bonus opportunity was 60%, and effective February 28, 2022, increased to 75%. Prior to February 28, 2022, Mr. Wang’s annual target bonus opportunity was 65%, and effective February 28, 2022, increased to 70%. |
| (3) | Mr. Johnson, who returned to the Company as an officer in October 2022, was not eligible for a bonus in 2022. |
The chart belowfollowing table summarizes the 2019performance metrics, targets, weightings, actual performance and eligible payout percentages for the components of the 2022 annual incentive plan performance measures and weightings for our NEOs.executive officers:
Weight in determining annual incentive | ||
Volume Points | Operating Income | |
30%
| 70%
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2022 Annual Incentive Plan Performance Metrics | Performance Metrics Weightings | 2022 Target (millions) | 2022 Results (millions) | 2022 Results as a % of target | Payout as a % of Target | Weighted Payout | ||||||||||||||||||
Operating Income | 60% | $695.6 | $610.5 | (1) | 87.8% | 0% | 0% | |||||||||||||||||
Volume Points | 40% | 7,171 | 6,379 | 88.9% | 0% | 0% | ||||||||||||||||||
| Total Payout Achieved: | 0% | |||||||||||||||||||||||
| (1) | Operating Income presented as adjusted, as discussed below. |
Executive bonuses are only awarded for results at or above 95% of the volume points target and 90% of operating income target, with payouts capped at performance levels at and above 105% of volume points target and 110% of the operating income target. Results below the 95% of volume points level would result in no payout, at the 95% level would result in a 50% payout as a percentage of applicable target, and at or above the maximum 105% level would result in a 200% payout as a percentage of applicable target. Results below the 90% of operating income level would result in no payout, at the 90% level would result in a 50% payout as a percentage of applicable target, and at or above the maximum 110% level would result in a 200% payout as a percentage of applicable target. Bonuses are calculated utilizing linear interpolation for performance outcomes between levels. This bonus scale is designed to encourage realistic target-setting and prudent risk-taking while simultaneously
creating consequences for not meeting target and capping the potential payout in order to avoid excessive incentive awards as compared to performance.
Targets and award determination
Annual financial performance targets are aligned to what we believe to be the expectations of our investors and what we believe is achievable at the time of the annual budget review process. The annual budget review for the 2019 performance period2022 occurred in February 2019.2022. Budget figures are built from the “bottom up” based on input from operating regions regarding trends in their respective markets, including the general economic environment, sale and consumption of our products, sales leader activity and retention, and the degree of risk in achieving forecasted revenue and expense levels.
| Executive compensation | 45 |
For purposes of our annual incentive plan, the performance measures are defined and calculated as follows:
| • | Volume Points are point values assigned to each of our products for use by the Company to determine an independent member’s sales achievement level. We assign a Volume Point value to a product when it is first introduced into a market and that value is unaffected by subsequent exchange rate and price changes. The specific number of Volume Points assigned to a product, generally consistent across all markets, is based on a Volume Point to suggested retail price ratio for similar products in the market. Volume Points are used by management as a proxy for sales trends because in general, excluding the impact of price changes, an increase in Volume Points in a particular geographic region or country indicates an increase in our local currency net sales while a decrease in Volume Points in a particular geographic region or country typically indicates a decrease in our local currency net sales. Management evaluates each year our current approach to assigning and maintaining Volume Point value for certain products or markets in order to better align qualification thresholds across markets. Any changes to this approach may have an impact on the use of Volume Points as a proxy for sales trends in future periods. Because we assign a Volume Point value to a product when it is first introduced into a market, which value is unaffected by subsequent exchange rate and price changes, we believe that Volume Points exhibit the most accurate available measure of organic growth or decline in the local demand for our products. |
| • | Operating Income is the Company’s net sales less expenses, including royalty payments, costs of sales and general operating expenses adjusted for certain items, including without limitation currency fluctuations, which the Committee believes are not reflective of management’s performance and which are typically made public on a quarterly basis. |
For 2022 annual incentive plan performance purposes, our Operating Income was calculated consistent with our adjusted EPS presentations and earnings guidance provided to the investment community, adjusting for:COVID-19 expenses that are not reflectiveexpected to recur once the effects have largely receded; expenses related to our transformation program; charges related to the Russia-Ukraine conflict; and expenses related to our digital technology program. Our Operating Income was further adjusted, consistent with prior years, to include the following for bonus purposes: impact of management’s performancechanges in currency exchange rates.
COVID-19 Adjustments to Operating Income. Non-recurring COVID-19 expenses in 2022 include temporary hazard pay to employees, personal protective equipment (PPE) provided to employees, penalties for non-performance of contracts, and lost deposits on event cancellations, the total of which adjustments to the 2022 Operating Income were approximately $4.4 million. Certain additional COVID-19 expenses incurred during 2022 were not excluded because the Company anticipates this will be a recurring expense, such as increased home delivery expenses.
Motivating Operating Income growth permits Volume Point growth to be achieved in a cost-effective manner so that cost efficiencies and productivity enhancements are typically made public on a quarterly basis.
We believe that the Company’s financial performance is facilitated by the “pay for performance” design of our compensation program. Our program motivates our NEOs to deliver financial results, with the appropriate level of risk-taking, against performance metrics in a manner that ultimately aligns with the realized growth of shareholder equity value. Our NEOs have the opportunity to earn annual incentive awards provided that the Company achieves aggressive growth targets in Volume Points and Operating Income.
Because we assign a Volume Point value The Committee reviews and discusses the performance metrics and applicable weightings in approving the annual incentive award program each year to a product whenensure it is first introduced into a market, which value is unaffected by subsequent exchange rate and price changes, we believe that Volume Points exhibitproviding the most accurate available measure of organic growth or decline in the local demand for our products.
Motivating Operating Income growth ensures that Volume Point growth is achieved in a cost-effective manner and that cost efficiencies and productivity enhancements are pursued throughout the Company.appropriate incentives.
The following table showssummarizes the performance targets set byresults for bonus purposes under the Committee with respect to 2019 and the Company’s performance relative to those targets.
2019 Annual2022 annual incentive plan performance targetsas compared to the results in the preceding three years:
| Target | 2019 Target
| 2019 Results
| 2019 Results as a % of target
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Volume Points (millions)
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| 6,238
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Operating income (millions)
| $677.5 | $660.8 | (1) | 97.5% | ||||||
| Results for Bonus Purposes | 2022 Target | |||||||||||||||||||
2019 | 2020 | 2021 | 2022 | |||||||||||||||||
Operating Income ($, millions) | 660.8 | (1) | 797.9 | (2) | 794.9 | (3) | 610.5 | (4) | 695.6 | |||||||||||
Volume Points (millions) | 6,069 | 6,926 | 7,098 | 6,379 | 7,171 | |||||||||||||||
| (1) | Operating Income |
Annual incentive awards for 2019 are payable to our NEOs only if and to the extent Volume Points or Operating Income meet and exceed 95% of the applicable performance target. Targets are set at budget during the annual budget process, and modified, if necessary, at the first Board meeting of the performance period. For 2019 annual incentive plan performance purposes, our Operating Income was calculated consistent with our adjusted EPS presentations and earnings guidance provided to the investment community, adjusting for:
| (2) | Operating Income for 2020 was adjusted to exclude expenses relating to regulatory inquiries and legal accruals, China grant income, impact from changes in currency exchange rates, COVID-19 expenses and our China growth program. |
Our Operating Income was further adjusted to include the following for bonus purposes:
For 2019, target-level bonuses were awarded for results between 95% and 108% of the applicable target. Should 95% of the applicable financial target not be achieved, there is no bonus funding or payouts to the NEOs for that metric. To align with our sales-oriented culture and our desire to continuously strive for incremental performance improvements throughout the year, beginning with performance of 95% of target, potential payouts increase in “steps” for each performance hurdle shown below (i.e., payouts are not interpolated for performance outcomes between two levels). The Committee determined to increase the maximum percentage to 108% in order to encourage the Company’s high performance culture. This bonus scale is designed to encourage realistic target-setting and prudent risk-taking while simultaneously creating consequences for not meeting target and capping the potential payout in order to avoid excessive incentive awards as compared to performance. Our 2019 annual incentive performance (and corresponding payout) levels were established as follows:
2019 Annual incentive plan leverage
Performance Hurdles (% of Target) — Volume Points and Operating Income | ||||||||||||||||||||
| Threshold | Target | Maximum | ||||||||||||||||||
| Below 95% | 95% | 96.25% | 97.5% | 98.75% | 100% | 102% | 104% | 106% | 108% | |||||||||||
Payout (% of Target) | 0% | 50% | 62.5% | 75% | 87.5% | 100% | 125% | 150% | 175% | 200% | ||||||||||
| Executive compensation |
| Operating Income for 2021 was adjusted to exclude expenses relating to legal accruals as described in the Company’s Form 10-K for the year ended December 31, 2021, China grant income, impact from changes in currency exchange rates, COVID-19 expenses that were not expected to recur once the effects have largely receded, our China growth program, non-income tax assessments, recoveries, and credits related to tax contingencies for prior years and expenses related to our transformation program. Operating Income for 2021 without any COVID-19 adjustments would be approximately $781.1 million. |
| (4) | Operating Income for 2022 was adjusted to exclude expenses relating to COVID-19 expenses that are not expected to recur once the effects have largely receded; expenses related to our transformation program; charges related to the Russia-Ukraine conflict; expenses related to our digital technology program; and impact from changes in currency exchange rates. Operating Income for 2022 without any COVID-19 adjustments would be approximately $606.1 million. |
The following tables detailtable details the Company’s performance for each metric under the Annual Incentive Plan, as well aseligible payout percentage and the resulting payout for each of our NEOs.
2019 ActualNEOs (other than Dr. Agwunobi). Based on the results for bonus payout detail
2019 Actual Resultspurposes, NEOs received zero payout.
| Metric | Weighting | Target Performance | Actual Performance | Actual Results (% of Target) | ||||||||||||
| Volume Points (in millions) | 30% | 6,238 | 6,069 | 97.3% | ||||||||||||
| Operating Income (millions) | 70% | $677.5 | $660.8 | 97.5% | ||||||||||||
Aggregate
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2019 Payouts
Bonus Eligible Base Salary(1) | Target Bonus | Actual Bonus | ||||||||||||||||||
| Executive | (% off Salary) | $ | $ | (% of Target)(1) | ||||||||||||||||
| Michael O. Johnson | $895,419 | (2) | $1,343,129 | $844,795 | 62.90% | |||||||||||||||
| John Agwunobi | $603,033 | 75% | $452,275 | $322,246 | 71.25% | |||||||||||||||
| John G. DeSimone | $619,000 | 75% | $464,250 | $330,778 | 71.25% | |||||||||||||||
| David Pezzullo | $565,000 | 75% | $423,750 | $301,922 | 71.25% | |||||||||||||||
| Shin-Shing Bosco Chiu | $446,603 | 60% | $267,962 | $190,923 | 71.25% | |||||||||||||||
Bonus Eligible Base Salary(1) | Target Bonus | Actual Bonus | ||||||||||||||||||
NEO | (% of Salary)(2) | $ | $ | (% of Target)(1)(2) | ||||||||||||||||
Michael O. Johnson(3) | — | — | — | — | — | |||||||||||||||
Alexander Amezquita | $542,055 | 72.8% | $394,623 | $0 | 0% | |||||||||||||||
Mark Schissel | $530,000 | 70% | $371,000 | $0 | 0% | |||||||||||||||
Henry Wang | $550,000 | 69.2% | $380,630 | $0 | 0% | |||||||||||||||
Frank Lamberti | $566,500 | 60% | $339,900 | $0 | 0% | |||||||||||||||
John DeSimone | $550,496 | 80% | $440,397 | $0 | 0% | |||||||||||||||
Robert Levy | $566,500 | 60% | $339,900 | $0 | 0% | |||||||||||||||
| (1) | Calculated using prorated salaries for |
| (2) |
| (3) | Mr. Johnson, |
Long-term incentive awards are designed to provide a link to long-term shareholder value through equity awards for our executives. Each year, the Committee determines the form of equity grant. For 2019, the Committee maintained the equity mix and the performance measures applicable to long-term incentive awards to be comprised of 75% PSUs and 25% RSUs for our NEOs (other than Mr. Goudis, who resigned from the Company in early January 2019, and Mr. Johnson, who received no equity for his services as Chief Executive Officer, as described above under “Compensation program that aligns pay and performance”).
Additional details of the 20192022 equity awards made to our NEOs can be found below and in the tabular disclosure below under “— 2019“2022 Grants of plan-based awards.”awards” on page 59.
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2022 Long-term incentive awards — annual grant program
| NEO | PSU grant value(1)
| Total PSUs awarded
| RSU grant value(1)
| Total
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Michael O. Johnson
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| $135,000
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| 2,689
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John Agwunobi
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| $960,000
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| 17,103
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| $320,000
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| 5,701
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John G. DeSimone
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| $960,000
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| 17,103
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| $320,000
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| 5,701
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David Pezzullo
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| 16,034
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Shin-Shing Bosco Chiu
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| 8,685
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| NEO(1) | SARs grant value | Total SARs award | PSU grant value | Total PSUs awarded(2) | RSU grant value | Total RSUs awarded | ||||||||||||||||||
| Michael Johnson | $5,000,000 | 783,699 | — | — | $5,135,000 | (3) | 351,407 | (3) | ||||||||||||||||
| Alexander Amezquita | — | — | $825,000 | 22,522 | $1,475,000 | (4) | 102,144 | |||||||||||||||||
| Mark Schissel | — | — | $825,000 | 22,522 | $1,475,000 | (4) | 102,144 | |||||||||||||||||
| Henry Wang | — | — | $825,000 | 22,522 | $1,475,000 | (4) | 102,144 | |||||||||||||||||
| Frank Lamberti | — | — | $487,500 | 13,308 | $1,362,500 | (4) | 99,073 | |||||||||||||||||
| John DeSimone | — | — | $1,687,500 | 46,068 | $562,500 | 15,356 | ||||||||||||||||||
| Rob Levy | — | — | $487,500 | 13,308 | $1,362,500 | (4) | 99,073 | |||||||||||||||||
| (1) | The Committee approved the annual equity awards in February 2022, and approved a separate grant of RSUs to Messrs. Amezquita, Lamberti, Levy, Schissel and Wang and SARs and RSUs grants to Mr. Johnson in December 2022. Because he was no longer considered a Section 16 officer, and based on reporting structure at the time, Mr. Levy was not subject to Committee review during the time of his February 2022 award. All equity grants reflected in this table were made under the 2014 Plan. Grant values are set by the Committee and may vary slightly from amounts set forth in the |
| (2) | Total PSUs are listed at target level of performance. |
| (3) | Includes the $135,000 annual equity grant to directors in May 2022, prior to Mr. Johnson returning as an officer of the Company in October 2022. |
| (4) | Includes the December 2022 RSUs grants, each with a grant value of $1.2 million made in December 2022. |
| Executive compensation |
Performance Share Unitsshare units
In 2019,2022, the Committee utilized PSUs as part of the Company’s long-term incentive program. All such PSUs awarded in 20192022 will vest on December 31, 2021,2024, subject to the Company’s achievement of the performance targets set by the Committee as measured over the three-year performance period beginning on January 1, 20192022 and ending on December 31, 2021,2024, subject further to continued Company service. Such targets were established based on the Company’s Five-Year Plan reviewed by the Company’s Board of Directors in February 2019. The number of PSUs that will become earned and vested will be determined based on the Company’s performance against the financial and operating performance targets. Astargets over the three-year performance period. These targets correspond to the Company’s long-range forecast and, in setting such targets, the Committee took into account the continued uncertainty caused by the COVID-19 pandemic and related impact on the Company’s business, anticipating such uncertainty to continue during 2022. The minimum number of PSUs that may become earned is zero. The maximum number of PSUs that may become earned and vested is 200% of the target PSU award granted to the participant.
The number of PSUs that will become earned upon vesting is based on achievement of performance targets for Local Currency Net Sales Adjusted EBIT and Adjusted EPS.EBIT. Each of these metrics makes upone-thirdone-half of the PSU award granted to the NEOs, and are defined as follows:
