BALCHEM CORP
10-Qs and 10-Ks
PROXIES
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ Preliminary Proxy Statement
☐
Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
☒ Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material Pursuant to §240.14a-12
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than
the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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☐
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Fee paid previously with preliminary materials.
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and
0-11.
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I am pleased to invite you to join us for Balchem Corporation
(“Balchem”)’s 2024 Annual Meeting of Shareholders (the “Annual Meeting”), which will take place on June 20, 2024, at 9:00 a.m. Eastern Daylight Time.
Our Annual Meeting will continue to be held virtually. It will be conducted via live
webcast, and shareholders may attend online by logging in at
www.virtualshareholdermeeting.com/BCPC2024
. Using this website, you will be able to listen, vote, and submit questions.
The enclosed 2024 Proxy Statement and Notice of Annual Meeting describe the items of
business that we will conduct at the meeting and provide you with important information about Balchem, including our practices in the areas of corporate governance and executive compensation. We strongly encourage you to read these materials
and then vote your shares.
It is important that your shares be represented at the Annual Meeting and voted in
accordance with your wishes. Whether or not you plan to attend the Annual Meeting, we urge you to authorize a proxy as promptly as possible — by Internet, telephone, or mail — so that your shares will be voted at the Annual Meeting.
Instructions for voting are contained in the Notice of Internet Availability of Proxy Materials, and on page
67
of the attached Proxy Statement.
At the Annual Meeting we ask for your vote to:
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Elect four Class 2 directors to the Board of Directors to serve until the 2027
annual meeting;
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Ratify the appointment of RSM US LLP as our independent registered public
accounting firm for the fiscal year ending December 31, 2024;
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Provide advisory approval on the compensation of our named executive officers
(“Say-on-Pay”); and
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Transact such other business as may properly come before the Annual Meeting.
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The Board of Directors (the “Board”) unanimously recommends that you vote
FOR
all of the director nominees listed in the attached Proxy Statement,
FOR
the ratification of the appointment of RSM US LLP as our independent registered public
accounting firm for the fiscal year ending December 31, 2024, and
FOR
the advisory approval of the compensation of our named executive officers’ compensation, all as disclosed in the attached Proxy
Statement.
I would like to thank the Board for their contributions to Balchem. They play a
critical and active role in our success. Our Board is intimately involved in overseeing the development and implementation of our business strategy, risk management, and corporate governance.
2023 was another successful year for Balchem. We delivered strong financial results
while advancing our key strategic initiatives, in what continued to be a challenging macro-economic environment, highlighting once again the resilience of our business model.
We fully integrated the Kappa Bioscience and Bergstrom Nutrition acquisitions. We
completed exciting new scientific studies that support the supplementation of our portfolio of minerals, nutrients and vitamins for both human and animal nutrition, we enhanced our marketing capabilities to leverage the science behind our
products and to help drive awareness and market penetration, and we expanded production capacity to better meet the rising demand for human choline, an essential nutrient well known in the supplement industry in relation to cognitive, liver and
overall health.
Our Board continues to monitor best practices in corporate governance, sustainability,
and executive compensation and via our ongoing shareholder engagement efforts, we continue to solicit input from our shareholders on these important topics.
In 2023, as part of our shareholder engagement efforts, we reached out to 52 of our
largest shareholders representing over 80% of our outstanding shares to hear their views on a broad array of topics including, governance, sustainability, and executive compensation. We found these discussions incredibly helpful as we continue
to lead our company forward. Based on the feedback we received from our shareholders and upon careful review, the Compensation Committee selected Pearl Meyer as their new independent compensation consultants. Additional information regarding
our shareholder engagement and Say-on-Pay vote can be found on pages
35
-
36
of our Proxy Statement.
At our 2023 Annual Meeting, we held an advisory vote on the frequency of holding a
Say-on-Pay vote and based on the results, we will be holding Say-on-Pay votes each year. During this meeting, the Amended and Restated 2017 Omnibus Incentive plan which authorized the issuance of 800,000 additional shares for future grants
under the plan was approved by our shareholders. We thank you for your continued strong support.
We recently adopted our Incentive-Based Compensation Recovery Policy (commonly
referred to as a clawback policy) which complies with the requirements under the Securities Exchange Act of 1934 and Nasdaq listing rules and is in addition to, not in lieu of, any other rights of recoupment that may be available under our
equity award agreements or compensatory plans, etc. Over the last year, we also updated our Corporate Governance Guidelines to clarify the limitation on other board service (to avoid potential overboarding issues) and the Board’s oversight
responsibilities, including information technology, cybersecurity and sustainability.
Last year, we were pleased to welcome two new independent directors to our Board to
replace two long-tenured board members who retired from our Board. Olivier Rigaud, Chief Executive Officer of Corbion N.V., a global food and biochemicals company based in the Netherlands, and Monica Vicente, Senior Vice President and Chief
Financial Officer of Fresh Del Monte Produce Inc., a global agricultural and fresh food produce company based in the U.S., each bring added diversity, relevant market expertise, and strong global business acumen to the Board.
We also remained focused on our 2030 environmental goals to reduce both greenhouse gas
emissions and water usage by 25%, on an absolute basis from a 2020 baseline. Building on the success we had in 2022, we were pleased to announce that we again exceeded our greenhouse gas emissions goal with a 32% absolute reduction in 2023,
from our 2020 baseline. This puts us in a position to execute on our strategic growth plans and achieve our 2030 emissions reduction goal.
Additionally, in 2023, Balchem was named one of America’s Most Responsible Companies
by Newsweek magazine for the fourth consecutive year. This list, compiled by Newsweek in partnership with Statista Inc., recognizes the most responsible companies in the U.S. across a variety of industries.
We are pleased with the progress we are making as a company and we believe that we are
indeed making the world a healthier place.
Thank you for your continued support of Balchem and I look forward to our Annual
Meeting.
Sincerely,
1
Table of Contents
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2
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Notice of Annual Meeting of SHAREHOLDERS
for Balchem Corporation
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DATE AND TIME:
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Thursday, June 20, 2024, 9:00 a.m., Eastern Daylight Time (“
EDT
”)
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PLACE:
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Online, at
www.virtualshareholdermeeting.com/BCPC2024
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ITEMS OF
BUSINESS:
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1.
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Election of four Class 2 director nominees to the Board of Directors of Balchem
Corporation (“
Balchem
” or the “
Company
”) to serve until the 2027 Annual Meeting of Shareholders and until their successors are duly elected and qualified;
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2.
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Ratification of the appointment of RSM US LLP (“
RSM
”)
as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024;
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3.
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Advisory approval of the compensation of the Company’s named executive officers (“
Say-on-Pay
”); and
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4.
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To transact such other business as may properly come before the 2024 Annual
Meeting of Shareholders (the “
Annual Meeting
”) or any postponement or adjournment thereof.
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WHO CAN VOTE:
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Shareholders of record at the close of business on April 22, 2024.
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HOW TO VOTE:
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Shareholders who receive a printed copy of this Proxy Statement and who do not
expect to attend the Meeting are requested to complete, date and sign the enclosed Proxy Card and promptly return the same in the stamped, self-addressed envelope enclosed for your convenience. Shareholders may also submit a Proxy Card
over the Internet, at www.proxyvote.com, or by phone. You will need to input the 16-digit control number located on the Proxy Card or Notice of Internet Availability of Proxy Materials if you are submitting a Proxy Card over the Internet
or by phone
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If you hold your shares through a broker, bank or other nominee, please follow the
instructions on the voting instruction form that you should receive from your broker, bank or other nominee.
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2023 ANNUAL REPORT AND DATE OF DISTRIBUTION:
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For more complete information, please review the Annual Report to Shareholders and
the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “
Annual Report
”), a copy of which accompanies this Notice of Annual Meeting of Shareholders and Proxy
Statement. This Notice of Annual Meeting of Shareholders and Proxy Statement and the Annual Report are first being made available or mailed to shareholders on or about April 26, 2024.
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By order of the Board of Directors,
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Hatsuki Miyata
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April 26, 2024
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General Counsel and Secretary
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3
Balchem is committed to making the world a healthier
place by delivering trusted, innovative, and science-based solutions for the health and nutritional needs of the world. We provide the service, quality, and technology that enables our customers to win with their customers. We have built a
reputation for delivering results to all of our stakeholders. Founded in 1967, Balchem, a Maryland corporation, became a publicly-traded company in 1970 and is listed on Nasdaq under the symbol “BCPC.” Our corporate headquarters is located in
Montvale, New Jersey, and we have a broad network of sales offices, manufacturing sites, and R&D centers, primarily located in the U.S. and Europe.
The Company consists of three business segments: Human Nutrition and Health, Animal
Nutrition and Health, and Specialty Products. Balchem employs approximately 1,300 people worldwide who are engaged in diverse activities, committed to developing, for each of our business segments, global market positions across the Company.
Balchem solves
today, shapes tomorrow.
Human Nutrition and Health
Balchem Human Nutrition and Health is a global leader in choline, chelated minerals, and
microencapsulation technologies with strong positions in powder, flavor and cereal system formulation. Food or beverage, supplement or pharmaceutical, our Human Nutrition and Health business segment provides ready-made and custom nutrients,
vitamins, ingredients, systems, and products that enable our customers to create better finished goods that improve all aspects of life. As the human nutrition space continues to evolve, our capabilities grow, allowing us to deliver
scientifically proven health benefits and fantastic taste in applications from infant formulas to performance shakes and functional foods.
Animal Nutrition and Health
Balchem Animal Nutrition and Health is a global leader in choline production, nutrient
encapsulation, chelated minerals, and functional ingredients. With a growing portfolio of products and a dedication to innovation and industry sustainability, Balchem Animal Nutrition and Health is leading the charge to meet the nutritional
needs of ruminants, swine, poultry, and companion animals.
Specialty Products
Our Specialty Products business segment specializes in re-packaging and worldwide
distribution of select sterilants and fumigants, especially for the sterilization of medical devices and spice and nutmeat fumigation. We have the packaging and distribution know-how to ensure the safe delivery of these products in returnable,
reusable, environmentally safe containers. Our Plant Nutrition business unit, included in Specialty Products, provides chelated minerals under the trade name Metalosate
®
to the agricultural market.
Certain statements in this Proxy Statement, other than purely historical information,
are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. We generally use the
words “believe,” “expect,” “intend,” “plan,” “anticipate,” “likely,” “will,” “would,” “will be,” “will continue,” “will likely result,” “estimate,” “project,” “forecast,” “outlook,” “strategy,” “future,” “opportunity,” “may,” “should,” or the
negative thereof or variations thereon or similar expressions generally intended to identify forward-looking statements. Such forward-looking statements, including those concerning our expectations, involve risks, uncertainties and other
factors, some of which are beyond our control, which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such
forward-looking statements. The risks, uncertainties and factors that could cause our results to differ materially from our expectations and beliefs include, but are not limited to, those factors set forth in our Annual Report on Form 10-K for
the year ended December 31, 2023, and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K filed with the Securities and Exchange Commission (“
SEC
”). The Company undertakes no
obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise.
No Incorporation
by Reference
Website references throughout this Proxy Statement are provided for convenience only,
and the content on the referenced websites is not incorporated by reference into this Proxy Statement.
4
This Proxy Statement is furnished in connection with the solicitation of proxies on
behalf of the Board of Directors (the “
Board of Directors
” or the “
Board
”) of Balchem to be voted at the Annual Meeting on June 20, 2024 at 9:00 a.m. EDT and at any
adjournment or postponement thereof.
Shareholders will be able to listen, vote, and submit questions from their home or from
any remote location that has Internet connectivity. Shareholders may only participate online by logging into
www.virtualshareholdermeeting.com/BCPC2024
beginning at 8:45 a.m. EDT.
This Proxy Statement, Proxy Card and Notice of Internet Availability of Proxy Materials (“
Notice of Internet Availability
”) are expected to be sent to shareholders beginning on or about April 26, 2024.
The Board of Directors has approved the close of business on April 22, 2024 as the record
date (the “
Record Date
”) to determine which shareholders are entitled to receive notice and to vote at the Annual Meeting. At the Annual Meeting, shareholders will be asked to consider and vote upon the
following matters:
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Proposal
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Recommendation
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Voting Standard*
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Page
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1
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The election of four Class 2 director nominees to the Board of Directors to serve until the Annual
Meeting of Shareholders in 2027 and until their successors are duly elected and qualified.
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FOR
each nominee
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Majority present
and entitled to
vote.
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2
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The ratification of the appointment of RSM US LLP as our independent registered public accounting
firm for the fiscal year ending December 31, 2024.
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FOR
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Majority present
and entitled to
vote.
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3
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Advisory approval of the compensation of the Company’s named executive officers
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FOR
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Majority present
and entitled to
vote.
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*
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For all proposals, you have the choice to vote “FOR”, “AGAINST” or “ABSTAIN.”
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Casting Your Vote
Please provide your proxy by Internet, phone, or by filling in, signing, dating and
promptly mailing your Proxy Card or voting instruction form.
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By Internet:
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By Phone:
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By Mail:
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www.proxyvote.com
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1-800-690-6903
(toll free within
U.S. and Canada)
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Vote Processing
c/o Broadridge
51 Mercedes Way
Edgewood, NY 11717
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To vote at the Annual Meeting, visit www.virtualshareholdermeeting.com/BCPC2024 and enter
the 16-digit control number included on your Proxy Card or Notice of Internet Availability.
5
Our Board is soliciting proxies to be voted at the Annual Meeting on June 20, 2024. To
participate in the Annual Meeting, visit www.virtualshareholdermeeting.com/BCPC2024 and enter the 16-digit control number included on your Proxy Card or Notice of Internet Availability. You may begin to log into the virtual meeting platform (the
“
Meeting Platform
”) at 8:45 a.m. EDT on June 20, 2024. The Annual Meeting will begin promptly at 9:00 a.m. EDT on June 20, 2024.
How are these materials being distributed?
On or about April 26, 2024, we began mailing this Proxy Statement and a Proxy Card or a
Notice of Internet Availability to our shareholders of record as of the close of business on April 22, 2024 and posted our proxy materials for shareholder access at www.proxyvote.com. As more fully described in the Notice of Internet
Availability, shareholders may also request printed proxy materials. The Notice of Internet Availability and website also provide information regarding how you may request proxy materials in printed or electronic form on an ongoing basis.
Why am I getting these materials from my broker, bank or other nominee,
and not directly from Balchem?
If you hold your shares through a broker, bank or other nominee, you will receive either
the Notice of Internet Availability or printed proxy materials from that entity, as required by SEC rules.
What is the difference between a “shareholder of record” and a
“beneficial shareholder”?
If your shares are registered in your name on the books and records of our transfer agent,
Broadridge Corporate Issuer Solutions, you are a shareholder of record. If your shares are held for you in the name of your broker, bank or other nominee, you are a beneficial shareholder and it is commonly said that your shares are held in
“street name.”
Who is entitled to vote at the Annual Meeting?
Shareholders of record as of the Record Date will be entitled to vote at the Annual
Meeting or any adjournment or postponement of the Annual Meeting. As of April 22, 2024, there were 32,423,468 outstanding shares of our Common Stock. Each share of our Common Stock is entitled to one vote on each matter to be voted on at the
Annual Meeting.
How do I vote my shares online at the Annual Meeting?
Shareholders as of the Record Date may vote and submit questions while attending the
Annual Meeting online. Shares held in your name as the shareholder of record or beneficially in street name may be voted by you, while the polls remain open, at www.virtualshareholdermeeting.com/BCPC2024 during the Annual Meeting. You will need
the 16-digit control number included on your Notice of Internet Availability or, if you received a printed copy of the proxy materials, on your proxy card or the instructions that accompanied your proxy materials in order to be able to vote and
enter the meeting. You will be able to submit questions during the meeting by typing your question into the “ask a question” box on the meeting page. If you encounter any technical difficulties with the Meeting Platform on the Annual Meeting day,
please call the technical support number that will be posted on the Meeting Platform. Technical support will be available starting at 8:30 a.m. EDT on June 20, 2024 and will remain available until thirty minutes after the Annual Meeting has
finished.
Even if you plan to attend the Annual Meeting, we encourage you to authorize your voting
instructions in advance by Internet, telephone or mail so that your vote will be counted even if you later decide not to attend the Annual Meeting.
If I am a shareholder of record, how do I vote my shares without
attending the Annual Meeting?
By Telephone, E-Mail or Internet:
All shareholders of record may authorize the voting of their shares by telephone (within the United States, U.S. territories and Canada, there is no charge for the call), e-mail
or by Internet, using the procedures and instructions described on the Proxy Card or Notice of Internet Availability. A control number, located on the Proxy Card or Notice of Internet Availability, must be provided to verify your identity and
allow you to vote your shares and confirm that your voting instructions have been properly
6
QUESTIONS AND ANSWERS ABOUT THE BALCHEM ANNUAL MEETING
recorded. If you vote by telephone, e-mail or Internet, you need not return your Proxy
Card. If you hold your shares in “street name” (that is, through a broker or other nominee), you should instruct your broker or nominee how to vote your shares by following the voting instructions provided by your broker or nominee.
In Writing:
All shareholders of record also may vote by completing, signing and mailing their Proxy Card in the postage-prepaid (in the U.S.) envelope.
If I am a beneficial shareholder (i.e., my shares are held in street
name), how do I vote my shares without attending the Annual Meeting?
If your shares are held in a brokerage account or by a bank or other holder of record, you
are considered the “beneficial owner” of the shares and your shares are held in “street name.” The Notice of Internet Availability or the proxy materials, if you elected to receive a hard copy, has been forwarded to you by your broker, bank or
other nominee who is the shareholder of record of those shares. As the beneficial owner, you have the right to direct your broker, bank or other holder of record on how to vote your shares by following their instructions that they should send
you, including a “voting instruction form”. Please refer to information from your bank, broker or other nominee on how to submit your voting instructions.
May I vote my shares by filling out and returning the Notice of
Internet Availability?
The Notice of Internet Availability identifies and provides notice of the items to be
voted on at the Annual Meeting, but you cannot vote by marking the Notice of Internet Availability and returning it. If you would like a paper proxy card, you should follow the instructions in the Notice of Internet Availability. The paper proxy
card you receive will also provide instructions as to how to authorize via the Internet or telephone your proxy to vote your shares according to your voting instructions. Alternatively, you can mark the paper proxy card on how you would like your
shares voted, sign the proxy card and return it in the envelope provided.
What constitutes a quorum?
The presence (in person at the virtual meeting or by proxy) of shareholders entitled to
cast a majority of all the votes entitled to be cast at the Annual Meeting on any matter constitutes a quorum. If you sign and return your paper proxy card or authorize a proxy to vote electronically or telephonically, your shares will be counted
to determine whether we have a quorum even if you abstain or fail to vote. Broker non-votes will also be considered present for the purpose of determining whether there is a quorum for the Annual Meeting. A “broker non-vote” is generally viewed
as a vote that is not cast on a non-routine matter by a broker that is present (in person at the virtual meeting or by proxy) at a meeting at which there is at least one routine matter on the proxy card (otherwise the broker does not have
authority to vote on anything and does not send in a proxy). Because the shares entitled to cast the vote are held in street name and the broker has not received voting instructions from the beneficial owner, the broker lacks discretionary
authority to vote the shares on non-routine matters.
What vote is required to approve each proposal?
Proposal 1 (election of directors). Directors are elected by a majority vote other than in
the case of a contested election in which case directors will be elected by a plurality vote. Assuming a quorum is present, the affirmative vote of a majority of all votes cast, either by attendance at the Annual Meeting or by proxy, is required
to approve Proposal 1. Abstentions and broker non-votes will not be counted as votes cast and will have no effect on the outcome of the vote for Proposal 1 (non-routine matter). Under the Company’s Corporate Governance Guidelines (the “
Governance Guidelines
”), if an incumbent director nominee in an uncontested election receives a majority of “WITHHOLD”, that director shall promptly offer his or her resignation to the Board. The Corporate
Governance and Nominating Committee (the “
Governance Committee
”) will then make a recommendation to the Board whether to accept or reject the resignation tendered by such director or whether other action is
recommended.
Proposal 2 (ratification of the appointment of RSM as the independent auditor of the
Company for the fiscal year ending December 31, 2024). Assuming a quorum is present, the affirmative vote of a majority of all votes cast, either by attendance at the Annual Meeting or by proxy, is required to approve Proposal 2. Abstentions will
not be counted as votes cast and will have no effect on the outcome of the vote for Proposal 2. Brokers have discretionary authority to vote on Proposal 2 (routine matter), so there will be no broker non-votes.
Proposal 3 (advisory approval of the compensation of the Company’s Named Executive
Officers (“
NEOs
”)). Assuming a quorum is present, the affirmative vote of a majority of all votes cast, either by attendance at the Annual Meeting or by proxy, is required to approve Proposal 3. Abstentions
and broker non-votes will not be counted as votes cast and will have no effect on the outcome of the vote for Proposal 3 (non-routine matter).
7
QUESTIONS AND ANSWERS ABOUT THE BALCHEM ANNUAL MEETING
Will my shares be voted if I do not provide my Proxy Card or voting
instructions?
Shareholders of Record:
If your shares are registered in your name on the books and records of our transfer agent, you are a shareholder of record. If you are a shareholder of record, your shares will not be voted if you do
not properly complete, sign and return your Proxy Card or otherwise vote at the Annual Meeting. It is, therefore, important that you vote your shares.
Street Name Holders:
If your shares are held in a brokerage, bank or another account that bears the name of the holder and not you—shares referred to as held in “street name”—and you do not provide your voting instructions
to your broker, your shares may be voted by your broker, bank or other nominee only on certain “routine” matters, pursuant to stock exchange rules. Of the proposals to be considered and voted on at the Annual Meeting, only the ratification of
RSM as our independent registered public accounting firm (Proposal 2) is considered a “routine” matter for which brokers, banks or other nominees may vote uninstructed shares. The other proposals to be voted on at the Annual Meeting are
considered “non-routine”. If you do not provide voting instructions on a non-routine matter that appears on a proxy card with at least one routine matter (as is the case with the Annual Meeting), your broker may indicate on the proxy that it
does not have discretionary voting authority and your shares will not be voted on such non-routine matter, which is referred to as a “broker non-vote.” Proposals 1 and 3 on this year’s ballot are “non-routine” matters for which brokers may not
vote absent voting instructions from the beneficial owner.
How are votes counted?
With respect to the election of directors (Proposal 1), you may vote “FOR,” “AGAINST” or
“ABSTAIN”. Votes that are abstained will not count as votes “FOR” or “AGAINST” a director. Proposal 1 is a “non-routine” matter for which brokers may not vote absent voting instructions from their beneficial owners. For Proposal 1, abstentions
and “broker non-votes” are not considered votes cast and will not affect the outcome of this proposal.
With respect to the ratification of RSM as our independent registered public accounting
firm (Proposal 2), you may vote “FOR,” “AGAINST” or “ABSTAIN.” For Proposal 2, abstentions will not affect the outcome of this proposal and, as this proposal is considered a “routine” matter, there will be no broker non-votes as brokers are
permitted to exercise their discretion to vote uninstructed shares on this proposal.
With respect to the advisory vote on executive compensation of our NEOs (Proposal 3), you
may vote “FOR,” “AGAINST” or “ABSTAIN.” Proposal 3 is a “non-routine” matter for which brokers may not vote absent voting instructions from their beneficial owners. For Proposal 3, abstentions and “broker non-votes” are not considered votes cast
and will not affect the outcome of this proposal.
If your Proxy Card is signed and returned without specifying choices, the shares will be
voted FOR all Director nominees in Proposal 1, FOR the ratification of the appointment of RSM as our independent registered public accounting firm in Proposal 2, and FOR the approval, on an advisory basis, of the compensation of the Company’s
Named Executive Officers in Proposal 3.
How will my shares be voted on any other matters to come before the
Annual Meeting?
The Board is not aware of any matter to come before the Annual Meeting other than as
described above. If any matter other than as described above should properly come before the Annual Meeting, then the persons named in the enclosed form of Proxy Card will have discretionary authority to vote all proxies with respect thereto in
accordance with their judgment.
How Will Business Be Conducted at the Annual Meeting?
The chair of the Annual Meeting will determine the order of business and all other matters
of procedure at the Annual Meeting. Only nominations and other proposals brought before the Annual Meeting in accordance with the advance notice and information requirements of our Bylaws will be considered, and no such nominations or other
proposals were received.
May shareholders ask questions at the 2024 Annual Meeting?
Yes. You may submit questions online via the link provided below.
Questions must relate directly to the business of the Annual Meeting. To submit a question, log into the Meeting Platform at: www.virtualshareholdermeeting.com/BCPC2024 type your question into the “Ask a Question” field and click “Submit.”
Questions pertinent to Annual Meeting matters will be answered during the meeting, subject
to time constraints. Questions regarding personal matters, including those related to employment, product or service issues, or
8
QUESTIONS AND ANSWERS ABOUT THE BALCHEM ANNUAL MEETING
suggestions for product innovations, are not pertinent to Annual Meeting matters and
therefore will not be answered. Any questions pertinent to Annual Meeting matters that cannot be answered during the Annual Meeting due to time constraints will be posted online and answered at https://balchem.com/our-company/investor-relations/.
Who pays for this proxy solicitation?
All expenses incurred relating to this solicitation will be borne by the Company. This
will include the fee of D.F. King & Co., Inc. who will help us solicit proxies, for a fee of $13,000 plus expenses. Proxies may be solicited, without additional compensation, by directors, officers and other regular employees of the Company
by telephone, email, fax or in person. Brokers, nominees, fiduciaries and other custodians have been requested to forward soliciting material to the beneficial owners of shares of our Common Stock held of record by them, and such custodians will
be reimbursed for their reasonable expenses.
Can I change my vote or revoke my proxy?
Yes. Whether you have voted by Internet, telephone or mail, if you are a shareholder of
record, you may change your vote and revoke your proxy by:
|
•
|
sending a written statement revoking your proxy to the Secretary of the Company,
provided such statement is received no later than 11:59 p.m., EDT on June 19, 2024;
|
|
•
|
voting again via the Internet or by telephone at a later time before the closing of
those voting facilities at 11:59 p.m., EDT on June 19, 2024;
|
|
•
|
submitting a properly signed proxy card with a later date that is received no later
than 11:59 p.m., EDT on June 19, 2024; or
|
|
•
|
attending the Annual Meeting (virtually) and voting at the Annual Meeting.
|
Proxy revocation notices should be sent to 5 Paragon Drive, Montvale, NJ 07645, Attention:
Secretary. New paper proxy cards should be sent to set forth above.
If you are a beneficial shareholder (i.e., you hold shares in street name), you must
follow the instructions provided by your broker, bank or other holder of record for changing or revoking your proxy. Beneficial shareholders may also attend the virtual Annual Meeting and vote online during the meeting, which will replace any
previous votes.
Your virtual attendance at the Annual Meeting will not, by itself, revoke a proxy
previously authorized by you. We will honor the proxy card or authorization with the latest date.
The Company’s Proxy Statement and the Annual Report are available at https://materials.
proxyvote.com/default.aspx?ticker=057665.
9
PROPOSAL 1. ELECTION OF DIRECTORS
At the time of the Annual Meeting, our Board will consist of 8 members, with the
classification of the Board into three classes (Class 1, Class 2 and Class 3).
The term of our four Class 2 directors will expire at the Annual Meeting and, assuming
their election, the class 2 Directors will hold office until the 2027 annual meeting of shareholders or until their successors have been elected and qualified. The nominees and continuing directors are listed below with brief biographies.
| |
Name
|
| |
Class
|
| |
Next Election Date*
|
|
| |
Kathleen Fish
|
| |
1
|
| |
2025
|
|
| |
Theodore Harris
|
| |
1
|
| |
2025
|
|
| |
Matthew Wineinger
|
| |
1
|
| |
2025
|
|
| |
Daniel Knutson
|
| |
2
|
| |
2027
|
|
| |
Joyce Lee
|
| |
2
|
| |
2027
|
|
| |
Olivier Rigaud
|
| |
2
|
| |
2027
|
|
| |
Monica Vicente
|
| |
2
|
| |
2027
|
|
| |
David Fischer
|
| |
3
|
| |
2026
|
|
|
*
|
Subject to the Company's Director Retirement Policy.
|
The Board is not aware of any reason why Mr. Knutson, Ms. Lee, Mr. Rigaud, and Ms. Vicente
may be unable to serve as a director. If any, some, or all of such nominees are unable to serve, the shares represented by all valid proxies will be voted for the election of such other person or persons, as the case may be, as the Board may
recommend, or the Board may fill the vacancy or may amend the Company’s Bylaws to reduce the size of the Board.
A director nominee in an uncontested election must receive a majority of the votes cast at
the Annual Meeting, assuming a quorum is present. In the case of a contested election, directors will be elected by a plurality vote. Regardless, a broker non-vote or a vote withheld from a particular nominee will not affect the outcome of the
election of directors.
Under the Company’s Corporate Governance Guidelines (the “
Governance
Guidelines
”), if an incumbent director nominee in an uncontested election receives a majority of “WITHHOLD” votes, that director shall promptly offer his or her resignation to the Board. The Governance Committee will then make a
recommendation to the Board whether to accept or reject the resignation tendered by such director or whether other action is recommended. The Board will act on the tendered resignation, considering the recommendation of the Governance Committee
as well as other potentially relevant factors, within 90 days from the date of the certification of the election results. The director whose resignation is under consideration is not permitted to participate in the consideration or recommendation
of the Governance Committee or deliberations of the Board with respect to his or her resignation.
The Governance Guidelines are available on the Leadership & Governance page in the
Investor Relations section of the Company’s website:
www.balchem.com
.
10
PROPOSAL 1. ELECTION OF DIRECTORS
| |
Daniel Knutson
Class 2 Director
(Term expires 2024)
Age:
67
Independent Director since 2018
|
|
Professional Highlights
|
|
|
|
•
Mr. Knutson served as the Executive Vice President for Special Projects at Land O’Lakes, Inc., an agribusiness and food co-operative, until his retirement at the end of 2017.
|
| ||
|
|
•
From
2000 to 2017, Mr. Knutson served as Executive Vice President and Chief Financial Officer at Land O’Lakes, where he oversaw corporate finance, accounting, treasury, audit, information technology and strategy and played key roles in many
of Land O’Lakes’ transactions. In addition, he was responsible for Land O’Lakes’ investment in Moark LLC.
|
| ||
|
|
Committee Assignments
|
| ||
|
|
•
Audit, Chair
|
| ||
|
|
•
Compensation
|
| ||
|
|
Other Current Public Company Directorships
|
| ||
|
|
•
None
|
| ||
|
|
Nominee Qualifications
|
| ||
|
|
Our Company’s financial compliance programs and policies benefit from
Mr. Knutson’s input and skilled guidance. Mr. Knutson’s animal feed and human food industry experience, combined with his financial and international business management experience, makes him a valuable member of our Board. Mr. Knutson
has served as Chair of our Audit Committee since June 2018.
|
|
| |
Joyce Lee
Class 2 Director
(Term expires 2024)
Age:
51
Independent Director since 2019
|
|
Professional Highlights
|
|
|
|
•
President of Cobb-Vantress, Inc., a wholly owned subsidiary of Tyson Foods, Inc. (NYSE: TSN) since January 2022. Cobb-Vantress, Inc. is the world’s oldest pedigree broiler breeding company, dedicated to genetic research and innovation.
|
| ||
|
|
•
From
2020 to 2021, Ms. Lee served as Executive Vice President and President of U.S. Pet Health and U.S. Commercial Operations of Elanco Animal Health Incorporated (NYSE: ELAN).
|
| ||
|
|
•
From
2016 to 2020, Ms. Lee served as the president of North America for Bayer Animal Health.
|
| ||
|
|
•
From
2013 to 2015, Ms. Lee was Executive Vice President and Area President of Canada and Latin America at Zoetis Inc. (NYSE: ZTS).
|
| ||
|
|
Committee Assignments
|
| ||
|
|
•
Audit
|
| ||
|
|
•
Governance
|
| ||
|
|
Other Current Public Company Directorships
|
| ||
|
|
•
None
|
| ||
|
|
Nominee Qualifications
|
| ||
|
|
Ms. Lee’s domestic and international business management experience,
particularly with respect to the development and supply of products to the animal feed and nutrition industries, makes her a valuable member of our Board.
|
|
11
PROPOSAL 1. ELECTION OF DIRECTORS
| |
Olivier Rigaud
Class 2 Director
(Term expires 2024)
Age:
59
Independent Director since 2023
|
|
Professional Highlights
|
|
|
|
•
Mr. Rigaud has been Chief Executive Officer and Chair of the Board of Management for Corbion N.V., a global food and biochemicals company based in the Netherlands, since August 2019. He also serves as a member of the Executive Committee
at Corbion N.V.
|
| ||
|
|
•
Chief
Executive Officer of Naturex, a global specialty ingredients company for the food & beverage, nutrition & health, and personal care industries. Prior to joining Corbion N.V., Mr. Rigaud successfully finalized the sale of Naturex
to Givaudan.
|
| ||
|
|
Committee Assignments
|
| ||
|
|
•
Audit
|
| ||
|
|
•
Governance
|
| ||
|
|
Other Current Public Company Directorships
|
| ||
|
|
•
Corbion N.V. (Euronext Amsterdam)
|
| ||
|
|
Board Qualifications
|
| ||
|
|
Mr. Rigaud brings over thirty years of relevant industry expertise and strong
global business acumen, including extensive M&A and strategic experience, to our Board. He is also well-versed on sustainability and corporate social responsibility matters. As CEO at Corbion N.V., he leads an organization of
2,500 employees, 16 industrial sites, and 6 R&D and Innovation centers. Mr. Rigaud is a French national working out of the Netherlands, and brings unique and diverse international perspective, relevant CEO experience, and insights to
our Board.
|
|
| |
Monica Vicente
Class 2 Director
(Term expires 2024)
Age:
58
Independent Director since 2023
|
|
Professional Highlights
|
|
|
|
•
Senior
Vice President and Chief Financial Officer of Fresh Del Monte Produce Inc., a global agricultural company, since April 2022.
|
| ||
|
|
•
Prior
to that, she served as Vice President, Corporate Finance at Fresh Del Monte for 19 years.
|
| ||
|
|
Committee Assignments
|
| ||
|
|
•
Audit
|
| ||
|
|
Other Current Public Company Directorships
|
| ||
|
|
•
None
|
| ||
|
|
Board Qualifications
|
| ||
|
|
Ms. Vicente’s experience as a current CFO for a global public company brings
substantial financial expertise to our Board. She has extensive financial expertise across global and regional finance, financial planning and analysis, investor relations and procurement for a global public company. She has experience in
SEC reporting and controlling, tax and treasury as well. Ms. Vicente brings these relevant experiences, strategic business acumen, and relevant food industry expertise to our Board.
|
|
UPON RECOMMENDATION BY THE CORPORATE GOVERNANCE AND NOMINATING
COMMITTEE, THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “
FOR
” THE ELECTION OF THE ABOVE NOMINEES AS DIRECTORS.
12
PROPOSAL 1. ELECTION OF DIRECTORS
| |
David Fischer,
Class 3 Director
(Term expires 2026)
Age:
61
Independent Director since 2010
|
|
Professional Highlights
|
|
|
|
•
Retired
director and President and Chief Executive Officer of Greif, Inc. (NYSE), a supplier of industrial packing systems from November 2011 to October 2015. President and Chief Operating Officer of Greif from 2007 to 2011, and from 2004 to
2007, Senior Vice President and Divisional President, Industrial Packaging & Services - Americas.
|
| ||
|
|
•
A
co-founder and chairman of the board of directors of 10x Engineered Materials, a manufacturer of high-tech abrasives for industrial applications.
|
| ||
|
|
Committee Assignments
|
| ||
|
|
•
Executive
|
| ||
|
|
•
Compensation
|
| ||
|
|
•
Governance
|
| ||
|
|
Other Current Public Company Directorships
|
| ||
|
|
•
Ingredion Incorporated (NYSE)
|
| ||
|
|
Board Qualifications
|
| ||
|
|
Mr. Fischer’s management and leadership skills, developed over years of
responsibility for complex, global manufacturing operations, and his intimate knowledge of mergers and acquisitions, position him as a critical component of our Board as we look to grow both organically and by acquisition.
|
|
| |
Kathleen Fish,
Class 1 Director
(Term expires 2025)
Age:
67
Independent Director since 2022
|
|
Professional Highlights
|
|
|
|
•
Prior
to her retirement, Ms. Fish was Chief Research, Development and Innovation Officer for The Procter & Gamble Company (NYSE: PG) (“P&G”) (NYSE) (2017 – 2020).
|
| ||
|
|
•
Chief Technology Officer, P&G (2014 – 2017)
|
| ||
|
|
Committee Assignments
|
| ||
|
|
•
Executive
|
| ||
|
|
•
Compensation
|
| ||
|
|
•
Governance, Chair
|
| ||
|
|
Other Current Public Company Directorships
|
| ||
|
|
•
Origin Materials, Inc. (Nasdaq)
|
| ||
|
|
Board Qualifications
|
| ||
|
|
Ms. Fish’s executive leadership skills along with her expertise in the field of
innovation, research, and new product development, including in highly regulated industries and direct to consumer markets provide valuable insights to the Board in driving growth and overseeing governance and risk. Ms. Fish has served as
Chair of our Governance Committee since February 2023.
|
|
13
PROPOSAL 1. ELECTION OF DIRECTORS
| |
Ted Harris,
Class 1 Director,
Chairman of the Board (Term
expires 2025)
Age:
59
Director since 2015, Chairman since 2017
|
|
Professional Highlights
|
|
|
|
•
Director, Chief Executive Officer and President of Balchem Corporation since April 2015, and Chairman of the Board of Directors since January 2017.
|
| ||
|
|
•
Prior
to joining the Company, Mr. Harris was employed by Ashland Global Holdings Inc. (formerly Ashland Inc.) (NYSE), a specialty chemical company. During his tenure at Ashland, his management positions included Senior Vice President/Ashland,
President, Performance Materials, from November of 2014 to April 2015, Senior Vice President/Ashland, President, Performance Materials & Ashland Supply Chain from 2011 to 2014, and Vice President/Ashland, President, Performance
Materials & Ashland Supply Chain.
|
| ||
|
|
Other Current Public Company Directorships
|
| ||
|
|
•
Pentair plc (NYSE)
|
| ||
|
|
Board Qualifications
|
| ||
|
|
Mr. Harris has led the Company since April 2015, effectively using his extensive
knowledge and deep understanding of the Company’s global business, operations, people and strategic priorities to lead the Company in achieving its vision of “making the world a healthier place.” Mr. Harris’ broad managerial,
international, operational and sales experience, as well as his proven track record of developing and implementing strategies for delivering sustainable, profitable growth, make him a valuable member and Chairman of our Board.
|
|
| |
Matthew Wineinger,
Class 1 Director and Lead
Director
(Term expires 2025)
Age:
57
Independent Director since 2015
|
|
Professional Highlights
|
|
|
|
•
Since
June 2015, Mr. Wineinger has been the President and Chief Executive Officer of United Sugars Producers and Refiners Cooperative (formerly, United Sugars Corporation until October 2023), a privately held, leading marketer of sugar.
|
| ||
|
|
•
President, Bulk Ingredients of Tate & Lyle PLC (LSE) from June 2010 to November 2014 and prior to that, President, Food and Industrial Ingredients from March 2008 to June 2010.
|
| ||
|
|
Committee Assignments
|
| ||
|
|
•
Executive, Chair
|
| ||
|
|
•
Compensation, Chair
|
| ||
|
|
Other Current Public Company Directorships
|
| ||
|
|
•
None
|
| ||
|
|
Board Qualifications
|
| ||
|
|
Mr. Wineinger’s over thirty years of extensive global, operational and strategic
industry experience, together with his previous knowledge of manufacturing operations involving many of the Company’s current raw materials, make him a valuable member of our Board, particularly as the Company focuses on development and
supply of products to human nutrition markets. Mr. Wineinger has served as Lead Director and Chair of our Compensation Committee and Executive Committee since February 2023.
|
|
14
PROPOSAL 1. ELECTION OF DIRECTORS
Our directors possess a varied and balanced mix of skills, business and leadership
experience, board experience and viewpoints. While each director is individually qualified to make substantial contributions, collectively, our directors’ rich experience, diverse backgrounds and viewpoints enhance the quality and effectiveness
of the Board’s deliberations and decision making.
The following chart provides information regarding the members of our Board, including
certain types of knowledge, skills, experiences and attributes possessed by one or more of our directors which our Board believes are relevant to our business or industry. The charts do not encompass all of the knowledge, skills, experiences or
attributes of our directors, and the fact that a particular knowledge, skill, experience or attribute is not listed does not mean that a director does not possess it. In addition, the absence of a particular knowledge, skill, experience or
attribute with respect to any of our directors does not mean the director in question is unable to contribute to the decision-making process in that area. The type and degree of knowledge, skill and experience listed below may vary among the
members of the Board.
| |
Knowledge Skills and Experience
|
| |
Fischer
|
| |
Fish
|
| |
Harris
|
| |
Knutson
|
| |
Lee
|
| |
Rigaud
|
| |
Vicente
|
| |
Wineinger
|
|
| |
Core Industry Experience
based
on experience at other companies in similar industries
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Executive Experience
based on
current or prior role(s)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Corporate Governance
based on
current or prior role(s)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Public Company Board Experience
based on current or prior service on other public boards
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Environmental/Social
based on
current or prior role(s)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Financial / Accounting / Risk Management / Capital Markets
based on experience gained as a CFO, accounting professional or risk management professional
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Health & Safety
based on
current or prior role(s)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Mergers & Acquisitions / Strategy
experience and knowledge in evaluating and implementing M&A transactions and business/investment strategies
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
15
PROPOSAL 1. ELECTION OF DIRECTORS
| |
Knowledge Skills and Experience
|
| |
Fischer
|
| |
Fish
|
| |
Harris
|
| |
Knutson
|
| |
Lee
|
| |
Rigaud
|
| |
Vicente
|
| |
Wineinger
|
|
| |
Research & Development
based on current or prior role(s)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
International Markets
business
experience outside the United States
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Marketing and Sales
experience
in understanding, assessing, developing and implementing marketing and sales strategies
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Manufacturing / Supply Chain
based on current or prior role(s)
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Compensation / HR
experience
based on HR expertise or CEO/head of business role with people management responsibilities or member of Compensation Committee at a public board
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
16
PROPOSAL 1. ELECTION OF DIRECTORS
| |
Board Diversity Matrix
|
| |||||||||||||||
| |
Total Number of Directors
|
| |
8
|
| ||||||||||||
| |
Gender
|
| |
Male or Man
|
| |
Female or
Woman
|
| |
Non-Binary
(not female/
woman or male/man)
|
| |
Other –
A gender
not listed
|
| |
Unknown /
I choose not
to disclose
|
|
| |
|
| |
5
|
| |
3
|
| |
|
| |
|
| |
|
|
| |
Number of Directors who identify in any of the categories below
|
| |||||||||||||||
| |
Hispanic or Latino
|
| |
|
| |
1
|
| |
|
| |
|
| |
|
|
| |
American Indian or Alaskan Native
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Asian
|
| |
|
| |
1
|
| |
|
| |
|
| |
|
|
| |
Black or African American
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
Native Hawaiian or Other Pacific Islander
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
White
|
| |
5
|
| |
1
|
| |
|
| |
|
| |
|
|
| |
Two or More Races
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
LGBTQ+
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
17
The Audit Committee, upon review, has appointed RSM as the Company’s independent
registered public accounting firm for the year ending December 31, 2024. The Company is submitting its selection of RSM for ratification by the shareholders at the Annual Meeting. RSM has audited the Company’s financial statements since 2004 and
has a strong understanding of our business and operations, accounting policies and financial systems, and internal control framework. Based on such understanding and their ability, and lower fee structure due to efficiencies from such knowledge,
we believe RSM is best qualified to perform this important function. Further, RSM rotates its lead audit engagement partner every five years.
Neither the Company’s charters nor its Bylaws require that the shareholders ratify the
selection of RSM as the Company’s independent registered public accounting firm. However, the Company is submitting the selection of RSM to shareholders for ratification as a matter of good corporate governance practice. If shareholders do not
ratify the selection, the Audit Committee will reconsider whether to retain RSM. Even if the selection is ratified, the Audit Committee in its discretion may change the appointment at any time during the year if they determine that such a change
would be in the best interests of the Company and its shareholders.
Assuming a quorum is present, the affirmative vote of a majority of all votes, by
attendance at the Annual Meeting or represented by proxy, is required for approval of this proposal. Abstentions will not be counted as votes cast and will have no effect on the outcome of the vote. Brokers have discretionary authority to vote on
this proposal, so there will be no broker non-votes.
We expect that representatives of RSM will be present at the Annual Meeting, will have the
opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
Please refer to the section titled “Information Relating to Proposal 2: Ratification of
Appointment of Independent registered Public Accounting Firm” of this proxy statement for more information.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “
FOR
” THE RATIFICATION OF
THE APPOINTMENT OF RSM AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2024.
19
Since our 2017 annual meeting, at which our shareholders last approved holding advisory
or “Say-on-Pay” votes on executive compensation on an annual basis, the “Say-on-Pay” vote has been held every year. Last year, our shareholders approved our “Say-on-Pay” resolution by approximately 72% of the votes cast on the executive
compensation described in our 2023 Proxy Statement. Details regarding our shareholder engagement and Say-on-Pay vote in 2023 are on pages
35
-
36
of this Proxy Statement.
The Company again seeks your advisory vote and asks that you approve the compensation of
the Company’s Named Executive Officers (“
NEOs
”) as disclosed in this Proxy Statement by voting FOR the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation
of the Named Executive Officers, as disclosed pursuant to the compensation disclosure rules of the SEC (which disclosure includes the Compensation Discussion and Analysis, compensation tables and any related material disclosed in this proxy
statement).”
Please refer to the section entitled “Compensation Discussion and Analysis”, and the
tables and narratives in the Executive Compensation portion of this section for the discussion and summary of the policies of the Compensation Committee which form the basis for the compensation of our NEOs and information on the amounts paid.
For reference, the pay versus performance disclosure is provided under the section titled “Pay versus Performance” of this Proxy Statement.
This vote is not intended to address any specific item of compensation, but rather the
overall compensation of our NEOs and the policies and practices described in this Proxy Statement. Because this vote is advisory only, the vote is not binding; however, the Compensation Committee will consider the results of shareholder voting in
making future compensation decisions regarding NEOs.
Assuming a quorum is present, the affirmative vote of a majority of all votes cast, by
attendance at the Annual Meeting or represented by proxy, is required for approval of this proposal. Abstentions and broker non-votes will not be counted as votes cast and will have no effect on the vote.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “
FOR
” THE
APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.
20
General
Balchem is committed to adhering to sound corporate governance practices.
|
•
|
Balchem’s Governance Guidelines:
|
|
○
|
Include corporate governance practices to guide and assist the Board in fulfilling
its responsibilities to oversee management in the operation and results of Balchem’s business and affairs.
|
|
○
|
Are designed to enhance the necessary authority and practices for the Board to make
decisions that are in the best interests of Balchem and independent of Balchem’s management.
|
|
○
|
Are intended to align the interests of directors and management with the long-term
interests of Balchem’s shareholders.
|
|
○
|
The Governance Guidelines are available on the Leadership & Governance page in
the Investor Relations section of the Company’s website, www.balchem.com.
|
|
•
|
Code of Business Conduct and Ethics
(our “Code of Conduct”)
|
|
○
|
Our Code of Conduct applies to all Balchem employees, directors and officers.
|
|
○
|
Our Code of Conduct is the foundation of Balchem’s Compliance and Ethics Program and
embodies the first of Balchem’s Core Values, which is “Always Doing the Right Thing.”
|
|
○
|
Our Code of Conduct promotes honest and ethical conduct, compliance with applicable
laws, rules and regulations, prompt reporting of violations of the code and full, fair, accurate, timely and understandable disclosure in reports filed with the SEC.
|
|
○
|
Our Code of Conduct meets the requirements of a “code of ethics” as defined by
Item 406 of Regulation S-K. The Code of Conduct covers topics including, but not limited to, avoiding conflicts of interest, maintaining confidentiality of information, working with suppliers, preventing bribery and corruption, avoiding
insider trading, and compliance with laws and regulations.
|
|
○
|
Additionally, the Company has adopted a Code of Conduct for Senior Financial Officers
that applies to the Company’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Treasurer and Corporate Controller.
|
|
○
|
Among other things, this code requires Senior Financial Officers to provide full,
fair, accurate, timely, and understandable disclosure in reports and documents that the Corporation files with or submits to the Securities and Exchange Commission and in other public communications.
|
|
○
|
Amendments to, or waivers of the provisions of, the Code of Conduct, if any, made
with respect to any of our directors or officers will be posted on our website at www.balchem.com.
|
|
○
|
Both codes are available on the Leadership & Governance page in the Investor
Relations section of the Company’s website at www.balchem.com.
|
|
○
|
We also have a Supplier Code of Conduct which our suppliers are expected to adhere
to. The Supplier Code of Conduct defines our commitment to protecting human rights and ensuring safe work environments throughout our supplier chain.
|
|
•
|
Board Committee Charters
|
|
○
|
Balchem’s Board Committees (Audit, Compensation and Governance) have each adopted a
charter defining its respective purposes and responsibilities. These charters are reviewed by the Committees annually. The charters for the Audit, Compensation and Governance Committees are available on the Leadership & Governance
page in the Investor Relations section of the Company’s website, www.balchem.com.
|
|
•
|
Director Independence
|
|
○
|
Each year, the Board conducts a survey to determine the independence of its members.
The Board has determined that each of the Company’s directors, other than Mr. Harris, is independent, as defined under the Nasdaq Listing Rules.
|
21
CORPORATE GOVERNANCE
|
•
|
Evaluations
|
|
○
|
The Board conducts an annual self-evaluation (which includes a director
self-assessment) and the Committees conduct a self-evaluation on a biennial basis.
|
The Board provides general oversight of the Company’s risk management program, focusing on
the most significant and material risks facing the Company and helps to ensure that management develops and implements preventative controls and appropriate risk mitigation strategies.
At the direction of the Board, we have instituted an enterprise-wide risk management
process that identifies potential exposure to risks that arise in the course of our business. The Board uses our enterprise-wide risk management system as a key tool for understanding the risks facing us as well as assessing whether management’s
processes, procedures and practices for mitigating those risks are effective. Our Internal Audit function is primarily responsible for the planning, assessment and reporting of our risk profile and this risk management system.
Although most risk oversight activities are administered through the Audit Committee, each
of our Board Committees has historically focused and continues to focus on specific risks within its respective area of responsibility and regularly reports to the full Board.
The Board and the Audit Committee regularly discuss the Company’s major risk exposures
with management, their potential financial impact on the Company and the management thereof.
|
(1)
|
The Audit Committee receives, or arranges for the Board to receive, on a no less than annual basis, reports from management on
areas of material risk to the Company, including financial, operational, legal, regulatory, information security and cybersecurity and strategic risks (the “
Company Risk Reports
”).
|
|
(2)
|
The Audit Committee receives the Company Risk Reports from members of management tasked with the responsibility to understand,
manage and mitigate the risks (with the Company’s enterprise risk management effort being facilitated by its Internal Audit function).
|
|
(3)
|
The Chair of the Audit Committee reports on its discussion of the Company Risk Reports to the full Board during the Committee
reports portion of the Board meeting following the receipt of said Company Risk Reports, which enables the Board and its Committees to coordinate the risk oversight role, particularly with respect to cross-discipline risks and
interrelated risks.
|
The Compensation Committee also evaluates risk in relation to our compensation program.
Please refer to the discussion in the Compensation Discussion and Analysis under the section “Risk Considerations in our Compensation Program.”
As part of its role in evaluating the Company’s corporate governance practices and
procedures, including identifying best practices and reviewing and recommending to the Board for approval any changes to the documents, policies and procedures in the Company’s corporate governance framework, including its Articles of
Incorporation and Bylaws, the Governance Committee evaluates the risks associated it with these practices and procedures.
Additionally, the Governance Committee plays a critical role in mitigating the risks
associated with key employee departures via its role in succession planning for the Chief Executive Officer (“
CEO
”) and other executives. At least once per year, usually as part of the annual talent review
process, the Governance Committee and the Board discuss and review the succession plans for the CEO and other key executives. The Board also becomes familiar with potential successors via various means, including annual talent reviews,
presentations to the Board, and communications outside of meetings. Our succession planning process is an organization-wide practice designed to proactively identify, develop and retain the leadership talent that is critical for our future
business success.
22
CORPORATE GOVERNANCE
The chart below sets forth the responsibilities of the Board and its Committees for risk oversight:
We are committed to running our business in a way that respects the overall environment in
which we operate. Therefore, corporate responsibility and sustainability play an important role in our strategies and long-term value creation for our stakeholders. We believe that our sustainability practices require transparency and
accountability. Our sustainability framework focuses on the most critical Environmental, Social, and Governance (“
ESG
”) topics relevant to our business and stakeholders, including monitoring climate risk
and diversity and inclusion efforts. The Governance Committee periodically, and at least annually, reviews Balchem’s sustainability efforts, ESG strategy, initiatives, and policies.
The Company issues a sustainability report on an annual basis, which is the result of a
process of engagement with Balchem’s stakeholders to understand their sustainability interests and concerns and capture Balchem’s efforts and achievements in key areas of sustainability. We are committed to reducing our greenhouse gas emissions
by implementing new technologies, improving operational efficiencies, and expanding green energy usages. In addition, we are committed to reducing our global water use by reducing water usage, recycling, and investing in new technologies to
improve water efficiency. For more information on our approach to sustainability, please see our sustainability report which is available on our Corporate Social Responsibility page at www.balchem.com. Our Governance Committee, in connection with
its responsibility for reviewing the Company’s activities and practices regarding sustainability and ESG matters, maintains responsibility for oversight of our sustainability-related practices and monitors the Company’s progress in this area.
Periodically, and at least annually, our entire Board receives information on our sustainability and ESG efforts, with a focus on the Company’s sustainability program, including performance against targets.
23
CORPORATE GOVERNANCE
Cybersecurity is a critical part of our enterprise risk management. The Board, through its
Audit Committee, oversees enterprise risk management, including cybersecurity. To more effectively address cybersecurity threats, we have numerous security layers within our least privilege network approach which is managed by our Information
Technology Department. Our cybersecurity programs align with numerous standards and continues to grow and develop as new technologies emerge. Further, we have regular user awareness testing and trainings in place which helps keep all end users
and executive leadership up-to-date on the most current threats. The global head of Information Security, possessing credentials in both information technology (“IT”) and cybersecurity, provides regular updates to senior management. Additionally,
they provide at least an annual update, or more frequently if necessary, to both the Audit Committee and the full Board regarding the current threat landscape at Balchem, cybersecurity technologies, mitigation strategies, industry trends and best
practices that we follow, major cybersecurity incidents (if any), and other areas of importance. The global head of Information Security has responsibility over cybersecurity management globally and reports directly to the Chief Financial
Officer. Additional activities to maintain and enhance information security are discussed below.
|
•
|
Reliable, Scalable Systems and Infrastructure
|
Our information security systems,
infrastructure, and processes are built on and follow the U.S. National Institute of Standards and Technology (
“NIST”
)
framework for information security, which is a set of guidelines, accepted standards, and best practices for mitigating organization cybersecurity risks published by NIST. We continue to make significant investments in industry-leading and
advanced technologies as part of our strategy to strengthen our security posture, business continuity capabilities, and ability to protect and safeguard systems and stakeholder data. Our Information Security Program and systems are tested and
assessed annually by an independent third party.
|
•
|
Automation and Artificial Intelligence
|
We have implemented automated systems to
proactively test attack vectors by emulating inside and outside threats resulting in the validation of our ability to detect and defend against a cyber attack. Artificial intelligence is used as part of early warning systems designed to detect,
alert, and respond to potential cyber threats.
|
•
|
Training
|
Recognizing that information security,
stakeholder data, and privacy principles involve more than just systems and infrastructure, we provide semi-annual cybersecurity education and training to all users with access to IT systems, devices, or applications. Internal social
engineering phishing campaigns are conducted regularly with the goal of building a culture of cybersecurity, as well as raising awareness and reinforcing best practices across the organization.
Third parties also play a role in our cybersecurity. We engage third-party services to
conduct evaluations of our security controls, whether through penetration testing, independent audits or consulting on best practices to address new challenges. These evaluations include testing both the design and operational effectiveness of
security controls.
We apply a risk-based approach to mitigate cybersecurity risks associated with our use of
third-party service providers and cybersecurity considerations affect the selection and oversight of these third-party service providers. We perform due diligence on third parties that have access to our most critical systems, data or facilities
that house such systems or data.
Corporate Strategy
At least once per year, the Board and senior management engage in an in-depth strategic
review of our corporate strategy and our business units’ strategic plans. These plans are designed to create long-term shareholder value and serve as the foundation upon which goals are established. Throughout the year, the Board reviews our
strategy and monitors management’s progress against such goals.
24
CORPORATE GOVERNANCE
Role of the Board
The Board oversees the management and governance of the Company. The Board, acting
directly or through its committees, monitors and oversees various matters, including, overall Company performance, the integrity of the Company’s financial controls, the Company’s strategic plan, the Company’s financial statements, the Company’s
management succession plan, the Company’s enterprise risk management (including information technology and cybersecurity), the Company’s sustainability initiatives, and the Company’s ethical standards and legal compliance programs – while also
selecting, evaluating and compensating a well-qualified Chief Executive Officer of high integrity, selecting individuals for Board membership and evaluating the performance of the Board and individual directors, reviewing and approving various
compensation plans and executives’ compensation, and reviewing and approving the Company’s operating budget.
The Board has the following standing committees, each of which is comprised solely of
independent directors:
|
(1)
|
Executive Committee;
|
|
(2)
|
Audit Committee;
|
|
(3)
|
Compensation Committee; and
|
|
(4)
|
Governance Committee.
|
The Board appoints the members of each Committee. The Governance Committee evaluates and
recommends to the Board the responsibilities of the Board committees, including composition of committees, structure of committees, and operations. The table below represents the current committee composition.
| |
Name
|
| |
Audit
|
| |
Compensation
|
| |
Governance
|
| |
Executive
|
|
| |
David Fischer
|
| |
|
| |
|
| |
|
| |
|
|
| |
Kathleen Fish
|
| |
|
| |
|
| |
Chair
|
| |
|
|
| |
Daniel Knutson
|
| |
Chair
|
| |
|
| |
|
| |
|
|
| |
Joyce Lee
|
| |
|
| |
|
| |
|
| |
|
|
| |
Olivier Rigaud
|
| |
|
| |
|
| |
|
| |
|
|
| |
Monica Vicente
|
| |
|
| |
|
| |
|
| |
|
|
| |
Matthew Wineinger
|
| |
|
| |
Chair
|
| |
|
| |
Chair
|
|
| |
Number of Committee Meetings Held in 2023
|
| |
7
|
| |
4*
|
| |
3
|
| |
0
|
|
|
*
|
Includes one special meeting.
|
The Audit Committee is directly responsible for appointing, compensating and overseeing
the work of the Company’s independent registered public accounting firm. The Audit Committee also assists the Board in fulfilling its oversight responsibilities with respect to the Company’s financial reporting, internal controls and procedures,
and audit functions.
The other primary duties and responsibilities of the Audit Committee are to:
|
(1)
|
monitor the integrity of the Company’s financial reporting process and systems of internal controls regarding finance, accounting,
and legal compliance;
|
|
(2)
|
monitor the independence, qualifications, performance and compensation of the Company’s independent auditors;
|
25
CORPORATE GOVERNANCE
|
(3)
|
establish policies and procedures with respect to enterprise risk assessment and risk management;
|
|
(4)
|
review Company procedures for identifying, monitoring, and mitigating risk exposures, including cybersecurity risks; and
|
|
(5)
|
provide an avenue of communication among the independent auditors, internal audit, management and the Board.
|
The Audit Committee’s role with respect to the Company’s risk oversight is discussed under
the section above entitled “Corporate Risk Oversight.” The Audit Committee also monitors and, if necessary, investigates reports made to the Company’s hotline. Responsibilities, activities and the independence of the Audit Committee are discussed
in greater detail under the section below entitled “Audit Committee Report.”
The Board has determined that Mr. Knutson, Chair of the Audit Committee, Mr. Rigaud, and
Ms. Vicente all meet the qualifications of an “audit committee financial expert” under the applicable SEC rules, and that Ms. Lee is at least financially literate in accordance with Nasdaq Listing Rules. Further, the Board has determined all
members of the Audit Committee are “independent” under the Nasdaq Listing Rules and SEC independence requirements applicable to audit committee members.
The duties of the Compensation Committee are, among other things, to:
|
(1)
|
ensure that compensation and benefit plans are aligned with the interests of shareholders and meet the needs of the Company and its
employees;
|
|
(2)
|
review, approve and recommend to the Board for approval various aspects of a compensation program, including incentives, for the
CEO and senior executives of the Company (the CEO may not be present during deliberations or voting on his compensation);
|
|
(3)
|
recommend to the Board for approval the compensation of directors;
|
|
(4)
|
administer the Company’s equity compensation plans; and
|
|
(5)
|
interpret, construe, and administer the Company’s Incentive-Based Compensation Recovery Policy, including reviewing such policy
from time to time and recommending any changes to the Board for adoption.
|
The Compensation Committee solicits input from our CEO with respect to the performance of
our executive officers and their compensation levels no less frequently than annually, usually in the first quarter. The members of our Compensation Committee have extensive and varied experience with various public and private corporations - as
investors and shareholders, as senior executives, and as directors charged with the oversight of management and the setting of executive compensation levels.
The Compensation Committee may, in its discretion, delegate all or a portion of its duties
and responsibilities to a subcommittee or, to the extent permitted by applicable law, to any other body or individual.
In particular, the Compensation Committee may delegate the approval of certain
transactions to a subcommittee consisting solely of members of the Compensation Committee who are “non-employee directors” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as amended.
In setting 2023 director and executive compensation, the Compensation Committee engaged
Mercer, LLC (“
Mercer
”) from January to October 2023 and Pearl Meyer & Partners, LLC (“
Pearl Meyer
”) from October 2023 onwards, as their independent executive
compensation advisory firm, to provide survey data and advice on market trends on director and executive compensation. For fiscal year 2023, aggregate fees for executive and Non-Employee Director compensation consulting services were
approximately $140,000 to Mercer relating to executive and Board compensation matters.
Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (“
MMC
”). In 2023, MMC and its affiliates (excluding Mercer) provided certain services to us and our affiliates unrelated to executive and Non-Employee Director compensation, primarily, insurance brokerage (from
January through early March 2023) and healthcare benefits consulting services during 2023. For these services, MMC and its affiliates received compensation totaling approximately $260,000. The non-compensation-related services were recommended by
management, and the services and fees are not subject to the Compensation Committee’s or the Board’s review or approval. The Mercer consultants providing services to the Compensation Committee and the Company do not market or sell to us, nor do
they receive incentive or other compensation based on, these non-compensation-related services.
26
CORPORATE GOVERNANCE
Each year, the Compensation Committee evaluates the independence and quality of the
services provided by its independent compensation consultant. The Compensation Committee considered the independence of Mercer under applicable SEC rules and regulations and Nasdaq listing standards. Based on its review, the Compensation
Committee determined that the services provided by MMC and its affiliates and the engagement of Mercer (from January to October 2023) did not raise any conflict of interest or other issues that would adversely impact Mercer’s independence. The
Compensation Committee also evaluated the independence of Pearl Meyer under applicable SEC rules and regulations and Nasdaq listing standards and determined that Pearl Meyer was independent and that there were no conflicts of interest with
respect to Pearl Meyer’s work for the committee.
In early 2023, the Compensation Committee reviewed with senior management its
recommendations and basis for Company performance goals for payouts of 2023 annual incentive awards and long-term compensation awards. Following this discussion, the Compensation Committee set the 2023 Company performance goals for annual
incentive awards and long-term compensation awards and also approved the long-term compensation awards. For information regarding the Compensation Committee’s role, absence of conflicts and fees, among other matters, see “Compensation Discussion
and Analysis.”
The duties of the Governance Committee are, among other things:
|
(1)
|
considering and making recommendations to the Board concerning the appropriate size, function and needs of the Board;
|
|
(2)
|
determining the criteria for Board membership, overseeing searches, and evaluating and recommending candidates for election to the
Board;
|
|
(3)
|
evaluating and recommending to the Board responsibilities of the Board committees;
|
|
(4)
|
annually reviewing and assessing the adequacy of the Governance Guidelines and recommending any changes to the Board for adoption;
|
|
(5)
|
annually evaluating its own performance as well as overseeing an annual self-evaluation of the Board (which includes a director
self-assessment) and other Board Committees;
|
|
(6)
|
overseeing compliance with the Company’s Stock Ownership Policies;
|
|
(7)
|
developing and recommending to the Board for approval a CEO and other key executive succession plan (the “
Succession Plan
”), reviewing the Succession Plan annually with the CEO and Board, developing and evaluating potential candidates for these positions and recommending to the Board any candidates or changes to previously
identified candidates under the Succession Plan;
|
|
(8)
|
considering matters of corporate social responsibility, including reviewing the Company’s activities and practices regarding
sustainability, including environmental, social, and governance (“
ESG
”) matters that are significant to the Company and periodically reviewing the Company’s sustainability strategy, initiatives and
policies;
|
|
(9)
|
recruiting and evaluating new candidates for nomination by the full Board for election as directors;
|
|
(10)
|
preparing and updating an orientation program for new directors;
|
|
(11)
|
evaluating the performance of current directors in connection with the expiration of their term in office and providing advice to
the full Board as to their nomination for reelection; and,
|
|
(12)
|
annually reviewing and recommending policies on director retirement age.
|
The Executive Committee is authorized to exercise all the powers of the Board in the
interim meetings of the Board, subject to the limitations imposed by Maryland law. The Executive Committee, convenes as needed, and is also responsible for:
|
(1)
|
the recruitment, evaluation and selection of suitable candidates for the position of CEO, for approval by the full Board; and,
|
|
(2)
|
the preparation, together with the Compensation Committee, of objective criteria for the evaluation of the performance of the CEO.
|
The Company’s independent directors meet regularly in executive sessions following each
regularly scheduled meeting of the Board. These executive sessions are presided over by the Lead Director.
27
CORPORATE GOVERNANCE
The Board believes that establishing the right leadership structure is key to ensuring
appropriate oversight of management and creating a strategic, forward-looking Board. The right leadership structure will vary depending on the needs of the Company and the Board’s assessment of the CEO. In evaluating its leadership structure, the
Board considers a number of factors, including the CEO’s experience and leadership, the Board and Committee processes and procedures, shareholder feedback and best practices. Balchem’s Governance Committee continuously reviews the functioning of
the Board and leadership structure and makes recommendations to the Board regarding the CEO, Chairman of the Board (the “
Chairman
”) and Lead Director.
|
•
|
Our Corporate Governance Guidelines do not require the Chairman to be an independent
director and do not require separation of the Chairman and CEO positions. However, per our Corporate Governance Guidelines, the Board appoints a Lead Director who functions to reinforce the independence of the Board of Directors, and is
appointed from the independent directors.
|
|
•
|
The Board and the Governance Committee regularly consider the appropriate leadership
structure for the Company and have concluded that the Company and its shareholders are best served by the Board and the Governance Committee retaining discretion to determine whether the same individual should serve as both CEO and
Chairman.
|
|
•
|
The Board and the Governance Committee believe it is important to retain the
flexibility to make this determination based on what it believes will provide the best leadership structure for the Company at any given time.
|
Mr. Harris, our CEO and President, has been the Chairman since January 1, 2017. The Board
and the Governance Committee currently believe the Company and its shareholders are best served by having Mr. Harris serve in both positions. The Board and the Governance Committee believe several factors support this decision. These include:
|
•
|
The combined Chairman and CEO structure promotes decisive leadership, ensures clear
accountability and enhances our ability to communicate with a single and consistent voice to shareholders, employees and other stakeholders.
|
|
•
|
Mr. Harris has an extensive understanding and grasp of our business and operations,
competitive pressures and the challenges the Company faces in the current environment, and has demonstrated leadership and management skills, and is best situated to lead and focus discussions on those critical matters affecting the
Company, which increases the effectiveness of Board meetings.
|
|
•
|
Finally, the combination of the Chairman and the CEO position succeeds because of the
engaged, knowledgeable involvement of our Board in combination with our culture of open communication with the CEO and senior management, enabling the CEO to be an effective conduit between management and the Board.
|
Our board leadership structure is supported by the active function of the Lead Director,
who provides and confirms the necessary independence in the functioning of the Board.
Mr. Wineinger has served as Lead Director since February 2023. The Lead Director role
reinforces the independence of the Board and is appointed from the independent directors.
The Lead Director serves at the pleasure of the Board and, in any event, only so long as
that person is an independent director of the Company. The Governance Committee annually reviews the functions of the Lead Director and recommends to the Board any changes that it considers appropriate. The Lead Director provides a source of
Board leadership complementary to that of the Chairman.
The Lead Director’s responsibilities include:
|
(1)
|
working with the Chairman and other directors to set agendas for Board meetings;
|
|
(2)
|
together with the Executive Committee, providing leadership in times of crisis;
|
|
(3)
|
reviewing the individual performance of each of the directors with the Chair of the Governance Committee;
|
|
(4)
|
chairing regular meetings of independent Board members without management present (executive sessions);
|
28
CORPORATE GOVERNANCE
|
(5)
|
acting as liaison between the independent directors and the Chairman; and
|
|
(6)
|
chairing Board meetings when the Chairman is not in attendance.
|
Mr. Fischer, Ms. Fish, Mr. Knutson and Mr. Wineinger, each of whom is an independent
director of the Company, served as members of the Compensation Committee during 2023.
None of Mr. Fischer, Ms. Fish, Mr. Knutson nor Mr. Wineinger:
|
(i)
|
was, during the last completed fiscal year, an officer or employee of the Company,
|
|
(ii)
|
was formerly an officer of the Company, or
|
|
(iii)
|
had any relationship requiring disclosure by the Company under Item 404 of Regulation S-K under the Securities Act of 1933, as
amended.
|
During 2023, there were no interlocking relationships between the Board or Compensation
Committee, or the board of directors or compensation committee of any other company that are required to be disclosed under Item 407 of Regulation S-K.
Related Party Transactions Policy
See pages
54
of this proxy statement.
Director Retirement Policy
In accordance with the Company’s Corporate Governance Guidelines, directors must satisfy
the Company’s age limit policy for directors, which require that a director retire at the conclusion of the term in which the director reaches the age of 70 (the “
Director Retirement Policy
”). Upon
completion of their terms and in accordance with the Director Retirement Policy, Dr. John Televantos and Perry Premdas retired from the Board in June 2023.
The Governance Committee considers recommending that the Board re-nominate incumbent
directors who continue to satisfy the Company’s criteria for membership on the Board, particularly whether the director will continue to make meaningful contributions to the Board. When vacancies occur on the Board, the Governance Committee will
solicit recommendations from Board members, members of management and others likely to be familiar with qualified candidates.
The Governance Committee typically engages a professional search firm to assist in
identifying qualified candidates. The Company may also consider candidates recommended by one or more substantial, long-term shareholders. Generally, shareholders that individually or as a group hold 5% or more of our Common Stock for more than
one year will be considered substantial, long-term shareholders. To be considered by the Governance Committee, the nomination must comply with Article II, Section 6 of our Bylaws and be properly submitted to the Secretary of the Company by the
deadline for including shareholder proposals as set forth on page
66
in “Shareholder Proposals for 2025 Annual Meeting of Shareholders.” Shareholder nominations that comply with these procedures and meet the criteria
outlined above and in our Bylaws will receive the same consideration as other candidates.
The Governance Committee considers the following criteria when evaluating candidates:
|
(1)
|
have experience and skills in areas critical to understanding the Company and its business;
|
|
(2)
|
possess certain personal characteristics, such as integrity and judgment;
|
|
(3)
|
have a diverse background of experience and perspectives (including business experience, geographic origin, age, gender, and
ethnicity); and
|
|
(4)
|
have sufficient ability to commit the necessary time and effort required to serve on the Board.
|
Members of the Governance Committee (and/or the Board) also meet personally with each
candidate to evaluate the candidate’s ability to work effectively with other members of the Board, while also exercising independent judgment. The Board believes that diversity within a Board promotes the inclusion of different perspectives and
ideas and ensures that the Company benefits from all available talent. Therefore, the Board evaluates each candidate in the context of the Board as a whole, with the objective of recommending an individual that can best contribute to perpetuate
the success of the Company and represent shareholder interests through the exercise of sound judgment based upon a diversity of background, experience and perspectives.
29
CORPORATE GOVERNANCE
As noted above, the Board seeks to identify a diverse talent pool of highly qualified
candidates for consideration as part of board refreshment. We believe that Board membership should reflect diversity in its broadest sense and that diversity within a Board promotes the inclusion of different perspectives and ideas, mitigates
against groupthink and ensures that the Company has the opportunity to benefit from all available talent. We also seek to combine the skills and experience of our long-standing Board members with fresh perspectives, insights, skills and
experiences of new members.
In selecting and assessing potential Board candidates, the Board, with the support of the
Governance Committee, takes into consideration a broad range of factors such as skills, expertise, breadth of experience, understanding of business and financial issues, ability to exercise sound judgment, leadership, achievements and experience
in matters affecting business and industry, board experience and viewpoints, including a candidate’s gender, race, ethnicity, geography and other factors that would complement the existing Board and contribute to enhancing the quality of the
Board’s deliberations and decisions, recognizing that our businesses and operations are diverse and global in nature.
With the additions of Mr. Rigaud and Ms. Vicente to our Board in September 2023, the Board
is comprised of 8 members, three of whom are women (37.5% gender diversity). See page
18
of this Proxy Statement for pie charts with information regarding board diversity, board independence, board tenure, and board age range.
During 2023: (i) the Board held five meetings; (ii) the Audit Committee held seven
meetings; (iii) the Compensation Committee held four meetings (including one special meeting); (iv) the Governance Committee held three meetings; and (v) the Executive Committee did not meet.
Each of our directors demonstrates their strong engagement, has adequate time to devote to
Board matters, and has high attendance. During 2023, all directors attended, on average, 100% of Board meetings and 100% of all Committee meetings on which they served during that year. No director attended less than 100% of all meetings. Note:
Mr. Rigaud and Ms. Vicente were appointed to the Board effective September 6, 2023. Hence, Board and Committee meeting held prior to their appointment dates are not included for purposes of their respective attendance record.
We maintain an active dialogue with our shareholders. We value the opinions of our
shareholders and other stakeholders and welcome their views on key issues. We engage with shareholders in a number of ways, including the following:
|
•
|
Hold annual election of directors
|
|
•
|
Hold advisory approval by shareholders of executive compensation (“Say-on-Pay” votes)
annually
|
|
•
|
Senior management attends major investor conferences each year
|
|
•
|
Majority voting in uncontested director elections
|
|
•
|
Hold “Say-on-Frequency” votes regarding advisory approval of executive compensation
at least every six years (Note: Based on the results of the 2023 Say-on-Frequency vote, the Company will hold Say-on-Pay votes annually)
|
|
•
|
Share information through the Company website, Annual Report, press releases, and SEC
filings, including 10-K, 10-Q, 8-K, and Proxy Statement
|
Members of the Board and executive officers are accessible by mail in care of the Company.
Any matter intended for the Board or for any individual member or members of the Board should be directed to the Secretary with a request to forward the communication to the intended recipient. In the alternative, shareholders may direct
correspondence to the Board via the Chairman or to the attention of the Lead Director in care of the Company at the Company’s principal executive office address, 5 Paragon Drive, Montvale, New Jersey, 07645. The Company will forward such
communications, unless of an obviously inappropriate nature, to the intended recipient.
30
CORPORATE GOVERNANCE
The Compensation Committee periodically reviews, in consultation with their independent
executive compensation advisory firm, to ensure alignment of Non-Executive Director compensation with current market and peer group practices.
The non-equity components of the non-executive director compensation structure remain
unchanged for 2023 compared to the prior year. For 2023, these amounts are as follows:
|
(1)
|
Annual Cash Retainer – $65,000;
|
|
(2)
|
Annual Fee for Lead Director - $20,000
|
|
(3)
|
Annual Fee for Audit Committee Chair – $15,000;
|
|
(4)
|
Annual Fee for Compensation Committee Chair – $10,000; and
|
|
(5)
|
Annual Fee for the Governance Committee Chair – $10,000.
|
Directors also received equity awards composed of Time-Based Restricted Shares and Stock
Options (in each case as defined below) as more fully discussed in the table below.
The following table sets forth the fees, equity awards, and other compensation earned,
paid, or awarded to each of the Company’s Non-Executive Directors for the fiscal year ended December 31, 2023. Mr. Rigaud and Ms. Vicente were appointed to the Board effective September 6, 2023 so their fees reflect their dates of service during
2023.
| |
Name
|
| |
Retainer
& Fees
|
| |
Stock Awards
(1)
|
| |
All Other
Compensation ($)
|
| |
Total ($)
|
|
| |
David Fischer
|
| |
$
65,000
|
| |
$146,259
|
| |
$0
|
| |
$
211,259
|
|
| |
Kathleen Fish
|
| |
$
72,500
|
| |
$146,259
|
| |
$0
|
| |
$
218,759
|
|
| |
Daniel Knutson
|
| |
$
80,000
|
| |
$146,259
|
| |
$0
|
| |
$ 226,259
|
|
| |
Joyce Lee
|
| |
$
65,000
|
| |
$146,259
|
| |
$0
|
| |
$
211,259
|
|
| |
Perry Premdas
(2)
|
| |
$
32,500
|
| |
$
0
|
| |
$0
|
| |
$
32,500
|
|
| |
Olivier Rigaud
|
| |
$21,667
(3)
|
| |
$
0
|
| |
$0
|
| |
$
21,667
|
|
| |
John Televantos
(2)
|
| |
$
45,000
|
| |
$
0
|
| |
$0
|
| |
$
45,000
|
|
| |
Monica Vicente
|
| |
$
21,667
|
| |
$
0
|
| |
$0
|
| |
$
21,667
|
|
| |
Matthew Wineinger
|
| |
$
85,000
|
| |
$146,259
|
| |
$0
|
| |
$
231,259
|
|
|
(1)
|
On February 8, 2023, each Non-Executive Director, was granted 530 Time-Based
Restricted Shares and 1,790 Stock Options. The Time-Based Restricted Shares cliff vest after three years. The grant date fair value per share of each share of restricted stock was $138.09. The Stock Options have a strike price of
$138.09 per share and expire on February 8, 2033.
|
|
(2)
|
Dr. John Televantos and Perry Premdas completed their terms on June 22, 2023.
Accordingly, their respective cash retainer and fees were pro-rated based on their dates of service in 2022.
|
|
(3)
|
The retainer payment for Mr. Rigaud was processed in Q1 2024 due to
administrative reasons.
|
31
CORPORATE GOVERNANCE
The following table shows the aggregate number of Stock Options and stock awards
outstanding for each outside director as of December 31, 2023:
| |
Name
|
| |
Aggregate
Stock Options Outstanding
as of 12/31/2023
|
| |
Aggregate
Stock Awards Outstanding
as of 12/31/2023
|
|
| |
David Fischer
|
| |
15,577
|
| |
1,629
|
|
| |
Kathleen Fish
|
| |
3,537
|
| |
1,039
|
|
| |
Daniel Knutson
|
| |
15,577
|
| |
1,629
|
|
| |
Joyce Lee
|
| |
8,607
|
| |
1,629
|
|
| |
Olivier Rigaud
|
| |
0
|
| |
0
|
|
| |
Monica Vicente
|
| |
0
|
| |
0
|
|
| |
Matthew Wineinger
|
| |
15,577
|
| |
1,629
|
|
Under the Time-Based Restricted Shares grant agreements, restricted shares vest in full,
three years from grant, or upon an earlier change in control of the Company, provided the director is a director of the Company on that date. The Time-Based Restricted Shares will also vest in full upon the director’s death.
In the event of the director’s disability, retirement (in accordance with our Director
Retirement Policy) or the director’s resignation due to a conflict of interest or serious health issue, the number of Time-Based Restricted Shares that vest equals the product of:
|
(A)
|
1/36 of the total number of Time-Based Restricted Shares subject to the applicable grant; and
|
|
(B)
|
the number of full months that the director has served on the Board from the date of the grant to the date of the director’s
retirement or resignation, as applicable; and all Restricted Shares not so vested shall be immediately forfeited.
|
Under the Stock Option grant agreements, the Stock Options have a term of ten years from
the grant date and become exercisable 20% after 1 year, 40% after 2 years and 40% after 3 years, beginning on the first anniversary of the grant date, or upon an earlier change in control of the Company, provided the director is a director of the
Company on that date. The Stock Options will also become fully exercisable in full upon the director’s death.
In the event of the director’s disability, retirement (in accordance with our Director
Retirement Policy) or the director’s resignation from the Board of Directors due to a conflict of interest or serious health issue, the options continue to vest and become exercisable in accordance with the applicable vesting schedule.
If a director voluntarily retires:
|
(1)
|
in accordance with the Director Retirement Policy discussed above and the combination of the Director’s age and years of service as
a member of the Board is equal to or greater than 75; or
|
|
(2)
|
prior to the conclusion of his or her term in which he or she reaches the age of 70 and the combination of the Director’s age and
years of service as a member of the Board is equal to or greater than 75 and he/she has given the Company one (1) year’s prior written notice to the Company of his/her intention to retire;
|
then:
|
(A)
|
all Stock Options shall continue to vest and become exercisable in accordance with their original vesting schedule; and
|
|
(B)
|
All Time-Based Restricted Shares shall continue to vest in accordance with their original vesting schedule.
|
The Company does not pay any other direct or indirect compensation to directors.
The Company has a Stock Ownership Policy that applies to directors. See “Stock Ownership
Requirements; Trading Limitations” on page
42
of this Proxy Statement.
32
This Compensation Discussion and Analysis (“
CD&A
”)
provides a detailed description of our executive compensation philosophy and programs, the compensation decisions the Compensation Committee has made under those programs and the factors considered in making those decisions. This CD&A focuses
on the compensation of our NEOs.
Our NEOs for 2023 are the following individuals:
| |
Name
|
| |
Position
|
|
| |
Theodore L. Harris
|
| |
Chairman, President and Chief Executive Officer
|
|
| |
C. Martin Bengtsson
|
| |
Executive Vice President and Chief Financial Officer
|
|
| |
Frederic Boned
|
| |
Senior Vice President and General Manager,
Human Nutrition and Health
|
|
| |
Hatsuki Miyata
|
| |
Executive Vice President, General Counsel and Secretary
|
|
| |
Martin L. Reid
|
| |
Senior Vice President and Chief Supply Chain Officer
|
|
At Balchem, we strive to attract and retain key executives who will consistently deliver
short- and long-term value to our shareholders through the realization of our specific business objectives. These include consistent, sustained growth in earnings, cash flow and return on investments. We seek to offer competitive salaries, cash
incentives, equity awards and benefit plans consistent with peer entities, while also considering the Company’s financial performance. Rewarding key employees who contribute to the continued success of the Company through cash compensation and
equity participation are key elements of the Company’s compensation policy.
The Company’s executive compensation policy is designed to establish a direct link between
executive compensation and the performance of the Company by rewarding individual results and the achievement of annual corporate goals through salary and cash bonus awards, and to provide equity awards to incentivize executives to generate
enhanced shareholder value.
Consistent with this philosophy, the Compensation Committee favors a “pay for performance”
approach. As a result, our compensation program contains a mix of stable and at-risk compensation components, where a significant percentage of executive compensation is variable and tied to corporate performance.
33
COMPENSATION DISCUSSION AND ANALYSIS
| |
We DO
|
| |
We DON’T
|
|
| |
Target total direct compensation for our NEOs generally at the 50th percentile as
part of our annual benchmarking process against a similarly sized peer group.
|
| |
Allow hedging or pledging of Company securities for any employee (including our
NEOs) or director.
|
|
| |
Pay for performance and, accordingly, a significant portion of each NEO’s total
compensation opportunity is “at risk” and dependent upon achievement of specific corporate and individual performance goals, resulting in lesser emphasis on fixed base salary.
|
| |
Encourage unnecessary or excessive risk-taking as a result of our compensation
policies and practices.
|
|
| |
Base our short-term incentive plan on explicit and quantifiable Corporate and
business segment financial performance metrics that are set at the beginning of each year.
|
| |
Have employment agreements with any of our NEOs other than as described in the
section of this proxy statement titled “Executive Compensation.”
|
|
| |
Complement our annual compensation to each NEO with time-based and
performance-based multi-year vesting schedules and performance cycles for equity incentive awards.
|
| |
Provide a defined benefit pension plan for our NEOs.
|
|
| |
Have annual base salary adjustments that are based, primarily, on prior-year
individual performance.
|
| |
Provide for “gross ups” for excise taxes imposed with respect to Section 280G
(change-in-control payments) or Section 409A (nonqualified deferred compensation) of Internal Revenue Code of 1986, as amended (the “
Code
”).
|
|
| |
Maintain a clawback provision pursuant to which the Company can seek reimbursement
of either cash or equity-based incentive compensation in the event of a financial restatement, to the extent set forth in any applicable compensation recovery policy contained in the Amended 2017 Plan or implemented by the Company.
|
| |
Except as may be provided for from time-to-time under employment agreements,
provide for single-trigger vesting acceleration upon a change in control of the Company. There are currently no outstanding awards that provide for single-trigger vesting.
|
|
| |
Maintain a Compensation Committee, which is comprised solely of independent
directors.
|
| |
Allow: (i) any repricing of options and Stock Appreciation Rights (“
SARs
”) without shareholder approval or (ii) for the unlimited transferability of awards.
|
|
| |
Have stock ownership guidelines for our executives and non-employee directors.
|
| |
|
|
| |
Subject awards under the Amended 2017 Plan to minimum vesting periods and maximum
annual per-person limits.
|
| |
|
|
| |
Ensure that a significant portion of our non-employee director compensation
consists of long-term equity awards.
|
| |
|
|
| |
Consult with outside experts to determine the overall competitiveness of the
Company’s executive compensation program.
|
| |
|
|
34
COMPENSATION DISCUSSION AND ANALYSIS
We are committed to both listening and being responsive to our shareholders. The
Compensation Committee carefully considers the results of the advisory vote on the approval of the compensation of our NEOs, commonly referred to as “Say-on-Pay”. Throughout the course of the year, we engage with shareholders in various ways as
indicated below under “Shareholder Engagement Highlights.” In particular, during 2023 and early 2024, we actively reached out to our shareholders representing over 80% of outstanding shares in relation to executive compensation to help identify
their views on our executive compensation programs and, where appropriate, implement changes.
| |
Shareholder Engagement Highlights
|
| ||||||
| |
Engaged with:
✔
Institutional investors
✔
Retail shareholders
✔
Pension funds
✔
Proxy advisory firms
✔
Industry associations
|
| |
Engaged through:
✔
Quarterly earnings call
✔
Investor conferences
✔
Individual investor meetings
✔
Annual General Meeting of
Shareholders
✔
Sustainability Report
✔
Data verification process of proxy advisory firms
|
| |
Engagements include:
✔
President, Chairman
and CEO
✔
CFO and Investor Relations
team
✔
Executive Officers
✔
Independent Directors
✔
Head of Global Sustainability
|
|
| |
In 2023, engaged with shareholders representing:
Over 80% of total outstanding shares
or
Over 25.8 million shares
|
| |
Information shared through:
•
SEC filings including 10-K, 10-Q, 8-K and Proxy Statement
•
Quarterly earnings call
•
Press releases
•
Company website
•
Media and digital platforms
|
|
During our 2023 Annual Meeting of Shareholders, approximately 72.3% of votes were cast in
support of the compensation of our NEOs, compared to an average of approximately 95.9% support over the preceding five years. We believe this strong support in prior years is in recognition of our pay-for-performance compensation philosophy where
the majority of executive compensation is tied to variable pay and payouts are aligned with the Company’s performance.
As part of our 2023 shareholder outreach efforts, we invited our largest 52 shareholders,
representing over 80% of shares, to discuss their views on executive compensation, board diversity, and corporate social responsibility efforts, among other things. In June 2023, we held meetings with 13 of our largest shareholders representing
over 40% of outstanding shares, including 7 of our 10 largest shareholders (“June 2023 Meetings”). Further, in January 2024, we reached out to our 10 largest shareholders (representing 56% of outstanding shares) and held meetings with four of
them (representing 28.8% of outstanding shares) to receive feedback on updates related to our governance and remuneration practices (“January 2024 Meetings”).
Participants in the June 2023 Meetings consisted of our Lead Director and Chair of the
Compensation Committee, the former Lead Director and Chair of the Compensation Committee, our Chief Financial Officer, General Counsel and Secretary, and Chief Human Resources Officer, with slight variance depending on schedules. Participants in
the January 2024 Meetings consisted of our Lead Director and Chair of the Compensation Committee, our Chief Financial Officer, General Counsel and Secretary, Chief Human Resources Officer, Head of Global Sustainability, and Director of Investor
Relations, with slight variance depending on schedules.
During the June 2023 Meetings, we mainly sought to receive feedback and views in relation
to the additional definitive proxy solicitation materials that were filed with the U.S. Securities and Exchange Commission (SEC) on June 12, 2023 (“2023 Additional Proxy Materials”). The Additional Proxy Materials provided a detailed description
and explanation of the one-time stock option retention grant that was provided in September 2022 (“2022 Retention Grant”) to Ted Harris, our Chairman, President and CEO. As explained in the 2023 Additional Proxy Materials, the Compensation
Committee believed the 2022 Retention Grant was
35
COMPENSATION DISCUSSION AND ANALYSIS
necessary to retain the services of Mr. Harris and was consistent with the Company’s
retention strategy and pay-for-performance compensation philosophy. Further, the 2022 Retention Grant, which was structured in four tranches with increasing exercise prices and with the first 25% vesting only upon the third anniversary of the
grant date, was intended to further drive the financial performance of the Company to the benefit of our shareholders as a whole.
During the June 2023 and January 2024 Meetings, our shareholders expressed a preference
for addressing retention matters as part of the Company’s existing remuneration program instead of through a one-time retention grant. They understood the rationale behind the 2022 Retention Grant, expressed robust support for Mr. Harris’
leadership as CEO, which drove the Company’s growth and strong financial performance over the last 8 years, and recognized the need to retain his services. Further, we received positive feedback indicating strong support for the structure of the
Company’s existing remuneration program and its alignment with the Company’s pay-for-performance compensation philosophy. This feedback was consistent with the very strong support (approval ratings in the mid-to-high nineties) for Say-On-Pay that
the Company has received in prior years.
We have made the following clarifications and changes to
our executive compensation in response to shareholder feedback:
|
•
|
The Compensation Committee does not expect to make one-time equity awards to
executive officers, absent extraordinary circumstances, such as in connection with new hires or promotions. This is consistent with not otherwise having a history of granting one-time retention awards to executive officers.
|
|
•
|
In October 2023, the Compensation Committee selected Pearl Meyer as its new
independent compensation consultant. Pearl Meyer is a leading independent executive and board compensation consulting firm.
|
|
•
|
In December 2023, the Compensation Committee completed a review and update of
Balchem’s executive compensation peer group, which will be used for benchmarking purposes in 2024.
|
|
•
|
The Company has enhanced its disclosure of the performance achievement metrics (TSR
and EBITDA) for the Company’s 2021-2023 performance share grant cycle.
|
The Company communicates regularly with shareholders on
various matters, including executive compensation, and seeks to incorporate shareholder input into its executive compensation practices. The Compensation Committee will continue to consider shareholder feedback and evolving best practices in
making compensation decisions in future years and will continuously endeavor to ensure that management’s interests are aligned with those of our shareholders and support long-term value creation.
In addition, and driven in part by our efforts to maintain best practices in executive
compensation, the following features are included in the Amended and Restated Balchem Corporation 2017 Omnibus Incentive Plan (the “
Amended 2017 Plan
”):
|
•
|
Limitation on Shares
: The maximum number of shares which may be issued under the Amended 2017 Plan is 2,400,000 shares;
|
|
•
|
No Repricing of Stock Options or SARs
: No repricing (or amendments or replacements related to a repricing) of outstanding Stock Options/SARs is allowed without shareholder approval;
|
|
•
|
No Discounted Awards
: The exercise price per share of stock under a Stock Option or SAR award must be not less than the fair market value of our Common Stock on the date of grant;
|
|
•
|
Minimum Vesting
: Except for 5% of the shares authorized for grant under the Amended 2017 Plan and other limited exceptions, awards (other than cash performance awards) are generally subject to a minimum vesting period of one year;
|
|
•
|
Dividends or Dividend Equivalents
: Dividends or dividend equivalents otherwise payable on an unvested award will accrue and be paid only when the vesting conditions applicable to the underlying award have been satisfied;
|
|
•
|
No Liberal Share Recycling
: Recycling of shares used to satisfy the exercise price or taxes for any awards is prohibited;
|
36
COMPENSATION DISCUSSION AND ANALYSIS
|
•
|
No Liberal Change in Control
: The consummation of a merger or similar transaction and a minimum acquisition of 50% of the outstanding shares is required before a change-in-control occurs;
|
|
•
|
No Automatic “Single-Trigger” Vesting on Change in Control
: There is no automatic acceleration of any outstanding awards upon the occurrence of a change in control;
|
|
•
|
Limitations on Awards to Non-Employee Directors
: In the case of awards to non-employee directors, the maximum amount or value that may be granted in any calendar year (inclusive of cash compensation) may not exceed $800,000; and
|
|
•
|
Compensation Recovery
: In the event that the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with any financial reporting requirements under the securities
laws, the Compensation Committee would have the discretion to require reimbursement or forfeiture of certain excess performance-based awards received by certain executive officers of the Company during the three completed fiscal years
immediately preceding the date that the Company is required to prepare an accounting restatement.
|
Note: GAAP Net Earnings were $108.5 million for FY 2023 and $105.4 million for FY 2022.
Please refer to the reconciliation of the above non-GAAP financial measures (Adjusted EBITDA, Adjusted Net Earnings, and Adjusted Earnings Per Share) to the comparable GAAP financial measures in Appendix A beginning on page A-
1
of this proxy statement.
NEOs Other than the CEO:
|
•
|
The CEO recommends to the Compensation Committee the amount of total annual
compensation for each of the other NEOs.
|
|
•
|
The CEO completes an annual performance assessment for each of the other NEOs, which
is reviewed and considered by the Compensation Committee.
|
The CEO:
|
•
|
The Compensation Committee conducts an annual performance appraisal of the CEO using
evaluation information solicited from each independent Board member and recommends to the Board the annual compensation package for the CEO.
|
In determining the compensation of the Company’s NEOs for 2023, the Compensation Committee
considered many quantitative and qualitative performance factors, including the financial performance of the Company, return on equity, cash flow, return on assets, growth, management of assets, liabilities, capital, liquidity and risk. The
Compensation Committee also considered intangible factors such as the scope of responsibility of the NEO leadership within the Company, the community, the applicable industries in which the Company operates and the enhancement of shareholder
value.
37
COMPENSATION DISCUSSION AND ANALYSIS
When establishing performance criteria for each of the NEOs and for the management team as
a group, the Compensation Committee endeavors to balance short-term and long-term performance of the Company and cumulative shareholder value.
All factors are considered in the context of the market for Balchem’s products and
services, and the complexity and difficulty of managing business risks in the prevailing economic conditions and regulatory environment.
The Compensation Committee believes that the total compensation provided to the NEOs is
competitive and has been demonstrated as effective. Details regarding the NEO compensation are set forth in the tables that follow.
Compensation Consultants
The Compensation Committee has authority to engage attorneys, accountants and consultants,
including executive compensation consultants, to solicit input concerning compensation matters, and to delegate any of its responsibilities to one or more directors or members of management, where it deems such delegation appropriate and
permitted under applicable law.
To better understand the compensation practices of similar companies, the Compensation
Committee from time to time, reviews data gathered from a custom peer group. In late 2023, the Compensation Committee, upon close consultation with Pearl Meyer, completed a review and update of Balchem’s peer group. Peer group information serves
as the primary reference point for the Compensation Committee with Mercer market survey data used as a secondary reference.
COMPENSATION DISCUSSION AND ANALYSIS
2023 Peer Group Companies
The following companies comprised our peer group for 2023:
| |
American Vanguard Corp.
|
| |
H.B. Fuller Co.
|
| |
NewMarket Corp.
|
|
| |
Ashland Global Corp.
|
| |
Hain Celestial Group
|
| |
Phibro Animal Health Corp.
|
|
| |
Cabot Corp.
|
| |
Ingevity Corp.
|
| |
Quaker Chemical Corp.
|
|
| |
Chase Corp.
|
| |
Innospec Inc.
|
| |
Sensient Technologies
|
|
| |
Element Solutions
|
| |
J&J Snack Foods Corp.
|
| |
The Simply Good Foods Co.
|
|
| |
Ferro Corp.
|
| |
Kraton Corp.
|
| |
Stepan Co.
|
|
| |
FMC Corp.
|
| |
Lancaster Colony Corp.
|
| |
Tootsie Roll Industries
|
|
| |
FutureFuel Corp.
|
| |
Minerals Technologies
|
| |
|
|
This peer group was developed based on comparability to the Company in terms of industry
and size, with data gathered from peer group proxy statements. We intend to continue to retain outside compensation consultants that will provide benchmarking data. Based on input from Pearl Meyer, the peer group was refreshed in December 2023
and a new group of peers, which includes many of the companies identified above plus certain new peers, will be used for benchmarking purposes in 2024.
Benchmarks
While compensation survey data and benchmarking are useful guides for comparative
purposes, we believe that a successful compensation program also requires the application of judgment and subjective determinations, particularly with respect to individual performance. Accordingly, our Compensation Committee applies its judgment
to adjust and align each individual element of our compensation program with the broader objectives of the program. For example, we consider other factors, including, but not limited to, the Company’s historical compensation trends;
recommendations of the CEO; the performance of the Company, its operating units and their respective executives; market factors such as the health of the economy and of the industries served by the Company; the availability of executive talent;
executives’ length of service; and internal assessments and recommendations regarding particular executives.
Base Salary
Base salary is the fixed component of pay based on each NEO’s job responsibilities,
performance and competitive benchmark data. Annual incentive cash bonuses and long-term compensation also are based on a percentage of base salary.
38
COMPENSATION DISCUSSION AND ANALYSIS
To ensure we attract and retain the leadership talent required to successfully lead the
Company, NEO base salaries are targeted to be competitive with base salary compensation paid to peer group NEOs and other relevant external benchmarks derived from established market survey information.
In establishing NEO base salaries, the Compensation Committee also considers:
|
•
|
experience and industry knowledge;
|
|
•
|
the quality and effectiveness of their leadership;
|
|
•
|
performance relative to total compensation;
|
|
•
|
internal pay equity among the NEOs and other Company senior executives;
|
|
•
|
historical considerations;
|
|
•
|
retention factors; and
|
|
•
|
input from our CEO regarding individual performance.
|
NEO base salaries are reviewed annually and may be adjusted to recognize individual
performance, promotions, competitive compensation levels, retention requirements, internal pay equity, overall budgetary considerations and other qualitative factors.
Cash Based Incentives – Incentive Compensation Plan
Balchem’s Incentive Compensation Plan (“
ICP
”)
represents a variable, at-risk, cash-based component of each NEO’s compensation. The Company’s policy is to base a meaningful portion of NEO cash compensation on variable incentive opportunities that drives year-over-year financial performance to
align NEO compensation opportunities directly with Company financial performance.
ICP awards are based on two financial metrics:
|
•
|
Company Adjusted EBITDA (defined as earnings before interest, other expense/income,
taxes, depreciation, amortization, stock-based compensation, acquisition-related expenses and legal settlements, and the fair valuation of acquired inventory); and,
|
|
•
|
Free Cash Flow (defined as operating cash flow minus capital expenditures).
|
Unless the Compensation Committee in its discretion determines otherwise, no ICP awards
are payable unless the Company attains the Compensation Committee-approved threshold minimum of Adjusted EBITDA.
Adjusted EBITDA and Free Cash Flow are financial measures that are not in accordance with
United States generally accepted accounting principles (“
GAAP
”). The Company believes that the use of these measures in the executive compensation context is helpful in evaluating and comparing our past
financial performance with our future results.
These non-GAAP financial measures should not be considered a substitute for, or superior
to, financial measures calculated in accordance with GAAP; however, the Company believes that they provide useful information about certain of the Company’s core operating results and thus are appropriate to enhance the overall understanding of
the Company’s past financial performance and its prospects for the future in the context of evaluating the performance of our executive officers.
As part of the 2022 ICP design and onwards, the Compensation Committee approved the
inclusion of an ESG component in the ICP structure for senior management in the form of an ESG modifier of +/- 10% in an effort to drive accountability in advancing progress towards our ESG goals, including reducing greenhouse gas emissions by
25% by 2030 (from a 2020 baseline) and reducing water withdrawal by 25% by 2030 (from a 2020 baseline). Achieving progress toward these strategic targets is a baseline expectation and the enhancement or reduction of the ICP will only be for
achievement well above or below overall expected progress towards our ESG goals. Regardless of ESG performance, the maximum payout for ICP is 200% of target. Upon review by the Compensation Committee, the ESG modifier amount was 0% for 2023,
considering the Company’s overall progress on ESG initiatives is in line with expectations.
The Compensation Committee may in its discretion approve cash-based bonuses when ICP goals
are not met, if it believes there has nevertheless been exceptional segment or individual performance. No such discretionary bonuses were approved by the Compensation Committee in 2023. The Compensation
39
COMPENSATION DISCUSSION AND ANALYSIS
Committee may also approve at its discretion ICP or discretionary cash-based awards at
other times during the year in connection with new appointments or promotions. Our Compensation Committee does not time the issuance of incentive awards around our release of undisclosed material information.
ICP target amounts for each NEO are expressed as a percentage of actual base salary earned
during the applicable calendar year. For 2023, NEO ICP targets were:
| |
NEO
|
| |
ICP Target as a Percent of Base Salary
|
|
| |
Ted Harris
|
| |
110%
|
|
| |
C. Martin Bengtsson
|
| |
65%
|
|
| |
Frederic Boned
|
| |
50%
|
|
| |
Hatsuki Miyata
|
| |
50%
|
|
| |
Martin Reid
|
| |
50%
|
|
For the 2023 plan year, the Compensation Committee established the Adjusted EBITDA and
Free Cash Flow performance weighting and metrics as follows:
| |
Metric
|
| |
Weighting
|
| |
Threshold
|
| |
Target
|
| |
Stretch
|
| |
Maximum
|
|
| |
Adjusted EBITDA
|
| |
70%
|
| |
$216.1
|
| |
$244.9
|
| |
$257.1
|
| |
269.4
|
|
| |
Free Cash Flow
|
| |
30%
|
| |
$115.4
|
| |
$135.8
|
| |
$142.6
|
| |
$149.4
|
|
| |
ESG Modifier for Executive Officers
|
| |
+/- 10%
|
| |
|
| |
|
| |
|
| |
|
|
2023 ICP Discussion
On February 7, 2024, the Compensation Committee, following its review of the Company’s
2023 financial results, noted that the Company had achieved the following results:
| |
Metric
|
| |
2023 Result
|
| |
Actual vs. Target
|
| |
Payout Percentage
|
|
| |
Adjusted EBITDA
|
| |
$230.9 million
|
| |
94.3%
|
| |
51.5%
|
|
| |
Free Cash Flow
|
| |
$151.1 million
|
| |
111.3%
|
| |
200%
|
|
Based on the resulting Adjusted EBITDA and Free Cash Flow results, the Compensation
Committee, approved the aggregate ICP payout level at 96.0% of target. With respect to the ESG modifier, the Compensation Committee recognized that good progress was made in 2023 and was aligned with expectations. The modifier is intended to
apply only to achievement that is well above or below overall expected progress. Therefore, the Compensation Committee did not modify the 2023 ICP payout up or down based on progress made towards ESG goals during the year.
For additional detail on the ICP, see “Summary Compensation Table – Non-Equity Incentive Plan
Compensation.”
Equity Based Compensation – Long-Term Incentive Program (“LTIP”)
Our NEOs have significant responsibility for the management, growth and long-term success
of the Company. Consequently, the Compensation Committee believes that a significant portion of their compensation be a variable, at-risk equity component that is aligned with the creation over time of value for shareholders and stakeholders
while supporting critical retention and key leadership development efforts.
40
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee establishes each NEO’s “Target Equity Multiplier,” which is
multiplied by the NEOs’ base salary to determine the “Target Equity Value” and expressed as the dollar value of the LTIP award. The Target Equity Multiplier for each NEO is shown below:
| |
NEO
|
| |
Target Equity
Multiplier
(of Base Salary)
|
|
| |
Ted Harris
|
| |
3.00
|
|
| |
C. Martin Bengtsson
|
| |
1.75
|
|
| |
Frederic Boned
|
| |
1.00
|
|
| |
Hatsuki Miyata
|
| |
1.00
|
|
| |
Martin Reid
|
| |
1.00
|
|
The Target Equity Value is then converted into equity awards based upon the fair value on
the date LTIP awards are granted, usually in February of each calendar year, as computed in accordance with FASB Accounting Standards Codification 718.
Although the Compensation Committee approves the LTIP equity in this time frame, it also
reviews competitive market data for NEOs from time to time. The Compensation Committee may grant LTIP awards at other times during the year because of new appointments, promotions or other special circumstances. Our Compensation Committee does
not time the grants of incentive awards around our release of undisclosed material information. The Compensation Committee may in its discretion adjust individual grants based upon individual performance.
The Target Equity Value is granted through a mix of stock options (“
Stock Options
”), time-based restricted shares (“
Time-Based Restricted Shares
”) and Performance Shares (as defined below) as follows:
|
•
|
25% of the 2023 Target Equity Value is awarded as Stock Options with an exercise
price equal to the fair market value of our Common Stock on the date of grant. Stock Options have a ten-year term and vest 20% after Year 1, 40% after Year 2 and 40% after Year 3.
|
|
•
|
25% of the 2023 Target Equity Value is awarded as Time-Based Restricted Shares which
are granted at the fair market value of our Common Stock on the date of grant and cliff vest three (3) years from said date.
|
|
•
|
25% of the 2023 Target Equity Value is awarded as EBITDA performance shares (“
EBITDA Performance Shares
”). The number of EBITDA Performance Shares that will vest (or not vest) is based upon the
attainment of a pre-determined Company EBITDA performance target over the three (3) fiscal years beginning with the fiscal year in which the grant was made (“
Performance
Period
”). The EBITDA Performance Shares will vest (or not vest) at the end of the Performance Period.
|
|
•
|
25% of the 2023 Target Equity Value is awarded as Total Shareholder Return
performance shares (the “
TSR Performance Shares
” and collectively with the EBITDA Performance Shares, the “
Performance Shares
”). The number of TSR Performance Shares that will vest (or not vest) is based upon the relative Company
TSR vs. the Russell 2000 Index over the three (3) fiscal years beginning with Performance Period.
|
The 2023-2025 Performance Period will conclude at the end of fiscal 2025 and the awards
will pay out, to the extent earned, in shares of common stock in February 2026.
41
COMPENSATION DISCUSSION AND ANALYSIS
On February 7, 2024, the Compensation Committee, following its review of the Company’s
EBITDA and TSR performance from the 2021-2023 Performance Period, approved the following payout for the 2021 Performance Share grant:
| |
2021 PSU GRANTS EBITDA
(50% Weight)
|
| ||||||||||||||||||
| |
2020 FY EBITDA
|
| |
2023 FY EBITDA
|
| |
Actual EBITDA
Growth
(2021-2023)
|
| |
Threshold
EBITDA Growth
(50% of Target Payout)
|
| |
Target
EBITDA Growth
(100% of Target Payout)
|
| |
Maximum
EBITDA Growth
(200% of Target Payout)
|
| |
EBITDA Payout
as a % of Target
|
|
| |
$162.1
|
| |
$213.8
|
| |
31.8%
|
| |
10.0%
|
| |
24.2%
|
| |
31.5%
|
| |
200.0%
|
|
| |
2021 PSU GRANTS - Relative TSR
(50% Weight)
|
| |||||||||||||||
| |
Balchem TSR
|
| |
Russell 2000
25th %'ile
(50% of Target Payout)
|
| |
Russell 2000
50th %'ile
(100% of Target Payout)
|
| |
Russell 2000
75th %'ile
(200% of Target Payout)
|
| |
Balchem
%'ile Rank
|
| |
TSR Payout
% of Target
|
|
| |
23.8%
|
| |
-50.4%
|
| |
2.0%
|
| |
46.5%
|
| |
63.5
|
| |
153.9%
|
|
In aggregate, the 2021-23 Performance Shares (PSUs) vested in 178.5% of the target units
originally granted.
The Company has formal stock ownership requirements for its directors and executive
officers. The requirements under the Company’s Stock Ownership Policy for Directors and Executive Officers are:
| |
Director/Officer
|
| |
Ownership Requirement
(Value of Common Stock)
|
|
| |
Directors
|
| |
5x multiple of annual cash retainer
|
|
| |
CEO
|
| |
3x multiple of annual base salary
|
|
| |
Chief Financial Officer
|
| |
1.5x multiple of annual base salary
|
|
| |
All Other Executive Officers
|
| |
1x multiple of annual base salary
|
|
Both directors and executive officers have five years from the date of hire or
commencement of service as a director, as applicable, to attain the required level of ownership. The number of shares to be held will be calculated at the end of each fiscal year based on the closing price of the Company’s common stock on Nasdaq
as of December 31 of each calendar year and submitted to the Governance Committee for review. Once the holding requirement is met, any subsequent change in the value of the shares will not affect the amount of stock that executive officers or
directors should hold. In the event an executive officer’s annual base salary is increased or a director’s annual cash retainer is increased, such officer or directors will have five years from the time of increase to acquire any additional
shares needed to meet the requirements under the stock ownership policy. Further, executive officers who are subsequently promoted to a higher officer level will have five years from the date of promotion to acquire any additional shares needed
to meet this policy.
For purposes of the stock ownership requirement, the following are included:
|
•
|
value of shares owned separately or owned jointly with, or separately by, immediate
family members residing in the same household;
|
|
•
|
value of shares held in trust for the benefit of the Executive Officer or Director
and immediate family members;
|
42
COMPENSATION DISCUSSION AND ANALYSIS
|
•
|
value of shares purchased on the open market;
|
|
•
|
value of shares acquired and held by an Executive Officer through the Company’s 401(k)
plan;
|
|
•
|
value of shares obtained through stock option exercise (and not thereafter sold); and
|
|
•
|
value of shares of restricted stock or performance shares, which have vested free and
clear of restrictive legends.
|
Stock ownership does not include unexercised stock options, stock appreciation rights, or
the non-vested portion of any stock options, restricted stock or performance awards.
Pursuant to the stock ownership policy, the Governance Committee may, at its discretion,
waive the stock ownership requirement if compliance would create an undue hardship or prevent an Executive Officer or Director from complying with a court order. In such instances, the Governance Committee may make a decision to develop an
alternative stock ownership program for such executive officer or director that reflects the intention of the policy and give appropriate consideration of his/her personal circumstances.
All directors and officers are currently in compliance with our stock ownership policy.
In 2023, the Company formally adopted an Incentive-Based Compensation Recovery Policy, or
clawback policy, pursuant to which the Company can seek reimbursement of either cash or equity-based incentive compensation in the event of a financial restatement due to the Company’s material noncompliance with any financial reporting
requirement under the securities laws. This policy, which applies to current and former executive officers, applies broadly to incentive-based compensation, including:
|
(i)
|
non-equity incentive plan awards that are earned solely or in part by satisfying a financial reporting measure performance goal;
|
|
(ii)
|
bonuses paid from a bonus pool, where the size of the pool is determined solely or in part by satisfying a financial reporting
measure performance goal;
|
|
(iii)
|
other cash awards based on satisfaction of a financial reporting measure performance goal;
|
|
(iv)
|
restricted stock, stock options and performance share units that are granted or vest solely or in part on satisfying a financial
reporting measure performance goal; and
|
|
(v)
|
proceeds from the sale of shares acquired through an incentive plan that were granted or vested solely or in part on satisfying a
financial reporting measure performance goal.
|
The amount of erroneously awarded compensation to be recovered will be the amount of
incentive-based compensation received that exceeds the amount of incentive-based compensation that otherwise would have been received had it been determined based on the restated amounts, and must be computed without regard to any taxes paid. Any
right of recoupment under the Company’s clawback policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company pursuant to the terms of any similar policy in any compensatory or
incentive plan, employment agreement, equity award agreement, or similar plan or agreement and any other legal remedies available to the Company. The Company may not indemnify any such executive officer against the loss of such recovered
compensation.
Employment Agreements
The Company has employment agreements with Mr. Harris and has entered into the Bengtsson
Offer Letter, which are described below under the section of this proxy statement titled “Termination of Employment and Change in Control Arrangements.” Other than such agreements, there are no agreements or understandings between the Company and
any NEO that guarantee continued employment or any level of compensation, including incentive or bonus payments. The Company does not have a written policy regarding employment agreements. There is no provision in foregoing agreements or in any
employment or other arrangement with any other executive officer whereby any tax gross-up payment to cover any excise taxes on excess parachute payments will be made.
Balchem Corporation 401(k) Plan
The Company sponsors the 401(k) Plan for eligible employees, including NEOs. The Company
provides a fully vested match in company stock that is equal to 100% of participant contributions up to 6% of eligible compensation, subject to Internal Revenue Service guidelines. Such share purchases are handled through the plan administrator
in the open market and no shares are issued by the company for purposes of the company match under the 401(k) Plan.
43
COMPENSATION DISCUSSION AND ANALYSIS
The amount of the Company’s contribution to the 401(k) Plan for each NEO is shown in a
footnote to the “All Other Compensation” section of the Summary Compensation Table.
Perquisites
Perquisites are granted to the NEOs occasionally and are not a material component of
compensation. Mr. Harris is entitled to the use of an automobile owned or leased by the Company and to be reimbursed for a specified level of premiums for life and disability insurance. He is also entitled to the use of a financial planner. The
Company pays to insure and maintain Mr. Harris’ automobile, and reimburses Mr. Harris for auto expenses that are related to Company business. Mr. Bengtsson, Mr. Boned, Ms. Miyata, and Mr. Reid receive or received cash allowances associated with
the use of their personal automobiles. Perquisites for each NEO are shown in the “All Other Compensation” section of the Summary Compensation Table.
Balchem offers a voluntary, non-qualified deferred compensation plan (“
Deferred Compensation Plan
”) for NEOs and select other executives. The Deferred Compensation Plan allows participants to defer up to 75% of annual base salary and up to 100% of annual ICP bonus. Compensation
deferred under the Deferred Compensation Plan is deemed invested by the participant among various mutual fund investment options. Earnings (or losses) on investments are market earnings (or losses). The Deferred Compensation Plan is not formally
funded nor does the Company guarantee any rate of return. The Company does not match any deferral contributions. Distributions may be in a lump sum or installments as determined by the participant’s distribution election.
Risk Considerations in Our Compensation Program
Our Compensation Committee has discussed the concept of risk as it relates to our
compensation program and does not believe our compensation program encourages excessive or inappropriate risk-taking for the following reasons:
|
•
|
Our compensation consists of both fixed and variable components.
|
|
—
|
The fixed (or salary) portion of compensation is designed to provide a steady income regardless of our stock price performance so
that executives do not feel pressured to focus exclusively on stock price performance to the detriment of other important business aspects.
|
|
—
|
The variable portions of compensation (cash bonus and equity) are designed to reward both short- and long-term corporate
performance.
|
|
○
|
For short-term performance, our cash bonus is awarded based primarily on corporate
and business segment performance goals or targets.
|
|
○
|
For long-term performance, our Stock Options generally vest ratably over three years
and are only valuable if our stock price increases over time. Our Time-Based Restricted Share grants and Performance Share grants generally cliff vest in three years.
|
|
•
|
The variable elements of compensation are a sufficient percentage of overall
compensation to motivate executives to produce superior short- and long-term corporate results, while the fixed element is also sufficient such that executives are not encouraged to take unnecessary or excessive risks in doing so.
|
|
•
|
The use of Adjusted EBITDA as the contingent factor upon which ICP cash incentive
depends, encourages our executives to take a balanced approach that focuses on corporate profitability, rather than other measures such as revenue targets, which may create incentives for management to drive sales without regard to cost
structure. No payout is made under the ICP program if we are not sufficiently profitable.
|
|
•
|
Our ICP and LTIP awards are capped for each participant, which mitigates excessive
risk-taking. Even if the Company dramatically exceeds its Adjusted EBITDA target, the awards are limited. Conversely, there is no ICP or LTIP award unless minimum performance levels of applicable goals are achieved.
|
|
•
|
Because a portion of management’s personal investment portfolio consists of the
Company’s stock, we believe that the stock ownership guidelines we have in place provide a considerable incentive for management to consider the Company’s long-term interests in both their short- and long-term decisions. In addition, we
prohibit all hedging transactions involving our stock, so our executives and directors cannot insulate themselves from the effects of poor Company stock price performance.
|
44
COMPENSATION DISCUSSION AND ANALYSIS
The following table sets forth fixed and variable components as a percentage of total
compensation, as presented in the “Total” column of the “Summary Compensation Table for 2023,” that we paid for the year ended December 31, 2023, to each NEO.
| |
Name
|
| |
Fixed Component of
Compensation
|
| |
Variable Component of
Compensation
|
|
| |
Ted Harris
|
| |
20.4%
|
| |
79.6%
|
|
| |
C. Martin Bengtsson
|
| |
31.3
%
|
| |
68.7
%
|
|
| |
Frederic Boned
|
| |
40.7
%
|
| |
59.3
%
|
|
| |
Hatsuki Miyata
|
| |
43.1
%
|
| |
56.9%
|
|
| |
Martin Reid
|
| |
42.1
%
|
| |
57.9%
|
|
We have reviewed and discussed the above “Compensation Discussion and Analysis” with management.
Based upon this review and discussion, we have recommended to the Board that the
“Compensation Discussion and Analysis” be included in this Proxy Statement.
COMPENSATION COMMITTEE
Matthew Wineinger (Chair)
David Fischer
Kathleen Fish
Daniel Knutson
45
The following table sets forth the compensation earned by our NEOs:
| |
Name and
Principal Position
|
| |
Year
|
| |
Salary
|
| |
Bonus
(1)
|
| |
Stock
Awards
(2)
|
| |
Stock
Options
(2)
|
| |
Non-equity
Incentive Plan
Compensation
(3)
|
| |
Deferred
Compensation
Earnings
(4)
|
| |
All Other
Compensation
(5)
|
| |
Total
|
|
| |
Ted Harris,
Chairman, President and Chief Executive Officer
|
| |
2023
|
| |
$
1,155,000
|
| |
$
0
|
| |
$
2,601,958
|
| |
$
867,121
|
| |
$
1,219,937
|
| |
$0
|
| |
$
45,691
|
| |
$
5,889,707
|
|
| |
2022
|
| |
$
1,100,000
|
| |
$
0
|
| |
$ 2,476,850
|
| |
$7,137,150
|
| |
$
1,189,293
|
| |
$0
|
| |
$
44,972
|
| |
$11,948,265
|
| |||
| |
2021
|
| |
$ 1,050,000
|
| |
$
0
|
| |
$
2,165,751
|
| |
$
725,105
|
| |
$ 1,757,640
|
| |
$0
|
| |
$
63,177
|
| |
$
5,761,673
|
| |||
| |
C. Martin Bengtsson,
Executive Vice President and Chief Financial Officer
|
| |
2023
|
| |
$
527,337
|
| |
$
0
|
| |
$
671,295
|
| |
$
224,961
|
| |
$
329,433
|
| |
$0
|
| |
$ 30,600
|
| |
$
1,783,626
|
|
| |
2022
|
| |
$
502,226
|
| |
$
0
|
| |
$
601,307
|
| |
$
201,299
|
| |
$
329,903
|
| |
$0
|
| |
$
32,000
|
| |
$
1,666,735
|
| |||
| |
2021
|
| |
$
478,311
|
| |
$
0
|
| |
$
521,223
|
| |
$
175,482
|
| |
$
482,627
|
| |
$0
|
| |
$
31,250
|
| |
$
1,688,893
|
| |||
| |
Frederic Boned,
Senior Vice President and General Manager, Human Nutrition and Health
|
| |
2023
|
| |
$
432,765
|
| |
$ 50,000
|
| |
$
319,662
|
| |
$
106,345
|
| |
$
198,832
|
| |
$0
|
| |
$ 30,600
|
| |
$
1,138,204
|
|
| |
2022
|
| |
$
65,385
|
| |
$
0
|
| |
$
419,400
|
| |
$
0
|
| |
$
150,000
|
| |
$0
|
| |
$
51,662
|
| |
$
686,447
|
| |||
| |
Hatsuki Miyata,
Executive Vice President, General Counsel and Secretary
|
| |
2023
|
| |
$
435,870
|
| |
$
0
|
| |
$
319,662
|
| |
$
106,345
|
| |
$
209,399
|
| |
$0
|
| |
$
46,147
|
| |
$
1,117,423
|
|
| |
2022
|
| |
$
176,539
|
| |
$
0
|
| |
$
534,000
|
| |
$
0
|
| |
$
218,809
|
| |
$0
|
| |
$
46,319
|
| |
$
975,667
|
| |||
| |
Martin Reid,
Senior Vice President and Chief Supply Chain Officer
|
| |
2023
|
| |
$
454,920
|
| |
$
0
|
| |
$
335,647
|
| |
$
114,525
|
| |
$
218,571
|
| |
$0
|
| |
$ 30,600
|
| |
$
1,154,263
|
|
| |
2022
|
| |
$
437,423
|
| |
$
0
|
| |
$
319,777
|
| |
$
108,701
|
| |
$
202,836
|
| |
$0
|
| |
$
32,000
|
| |
$
1,100,737
|
| |||
| |
2021
|
| |
$
375,962
|
| |
$
0
|
| |
$
499,872
|
| |
$
191,128
|
| |
$
339,539
|
| |
$0
|
| |
$
26,227
|
| |
$
1,432,728
|
|
|
(1)
|
Reflects the value of cash sign-on bonus.
|
|
(2)
|
The amounts included in the “Stock Awards” and “Stock Options” columns
reflect the aggregate grant date fair value as computed in accordance with FASB Accounting Standards Codification 718 adjusted to eliminate service-based forfeiture assumptions used for financial reporting purposes. A discussion of the
assumptions used in valuation of Stock Options may be found in “Note 3 – Shareholders’ Equity” in the Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the
SEC on February 16, 2024. For the fiscal years ended December 31, 2021 - 2023, the awards reported in the “Stock Awards” column above consist of Performance Shares and Time-Based Restricted Shares. The grant date fair value of the
Performance Shares is reflected at target payout based on the probable outcome of the applicable performance conditions. The maximum value for the Performance Shares is as follows: (i) for 2023: Mr. Harris – $3,189,879; Mr. Bengtsson –
$823,016; Mr. Boned - $392,176; Ms. Miyata - $392,176; Mr. Reid - $411,508; (ii) for 2022: Mr. Harris – $3,523,546; Mr. Bengtsson – $856,034; Mr. Boned – N/A; Mr. Ms. Miyata - N/A; Mr. Reid - $455,631; and (iii) for 2021: Mr. Harris -
$2,713,781; Mr. Bengtsson – $652,832; Mr. Boned – N/A; Ms. Miyata - N/A; Mr. Reid $402,659, with the foregoing being calculated by multiplying the number of shares that would be granted upon achievement of the highest performance
conditions by the price on the grant date. For Ms. Miyata, the Stock Awards column for 2022 reflects sign-on Time-Based Restricted shares granted in part in recognition of the value in unvested equity and other benefits from her prior
employer that she forfeited. In September 2022, the Compensation Committee approved a one-time retention grant comprised of 130,000 stock options with a grant date of September 15, 2022, and an estimated grant date fair value of
approximately $6.3 million for Mr. Harris as part of the Company’s retention strategy and consistent with its pay-for-performance compensation philosophy. This stock options award grant is structured in four tranches with increasing
exercise prices: (a) 25% at fair market value as of grant date (“FMV”); (b) 25% at FMV plus 10% premium; (c) 25% at FMV plus 15% premium; and (d) 25% at FMV plus 20% premium. Further, the options vest over a five-year period with: (a)
25% vesting on the third anniversary of the grant date; (b) 25% vesting on the fourth anniversary of the grant date; and (c) 50% vesting on the fifth anniversary of the grant date. The options expire on the tenth anniversary of the
grant date.
|
|
(3)
|
Reflects the value of cash incentive bonuses earned under the Company’s ICP.
|
|
(4)
|
The Deferred Compensation Plan does not provide above-market or preferential
earnings.
|
|
(5)
|
The amounts listed in the “All Other Compensation” column for fiscal 2023
include actual and estimated matching by the Company under the 401(k) Plan, and other perquisites and personal benefits, and details about these amounts are set forth in the table below.
|
46
Executive Compensation
| |
Name
|
| |
Company 401k
Plan Matching
|
| |
Other
Perquisites
|
| |
Total All Other
Compensation
|
|
| |
Ted Harris
|
| |
$19,800
|
| |
$
25,891
|
| |
$
45,691
|
|
| |
C. Martin Bengtsson
|
| |
$19,800
|
| |
$10,800
|
| |
$ 30,600
|
|
| |
Frederic Boned
|
| |
$19,800
|
| |
$10,800
|
| |
$ 30,600
|
|
| |
Hatsuki Miyata
|
| |
$19,800
|
| |
$
26,347
|
| |
$
46,147
|
|
| |
Martin Reid
|
| |
$19,800
|
| |
$10,800
|
| |
$ 30,600
|
|
For Mr. Harris, the amounts other than 401(k) contributions
reflect: (i) an automobile allowance; (ii) the reimbursement of certain expenses related to his use of a financial planner; (iii) amounts associated with the insurance and maintenance of Mr. Harris’ automobile; and (iv) the reimbursement of
automobile expenses that are related to Company business. For Ms. Miyata, the amounts other than 401(k) contributions reflect: (i) an automobile allowance and (ii) relocation expenses. For each NEO other than Mr. Harris and Ms. Miyata, the
amounts other than 401(k) contributions reflect an automobile allowance.
47
Executive Compensation
| |
Name
|
| |
Grant
Date
|
| |
Grant Type
|
| |
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
(1)
|
| |
Estimated Future Payouts
Under Equity Incentive
Plan Awards
(2)
|
| |
All Other
Stock
Awards:
Number of
Shares of
Stock
(#)
|
| |
All Other:
Number
of
Securities
Underlying
Stock
Options
(#)
|
| |
Exercise
Price of
Stock
Option
(3)
($/Share)
|
| |
Grant Date
Fair Value
of Stock
and
Option
Awards
(4)
($)
|
| ||||||||||||
| |
Threshold
|
| |
Target
|
| |
Maximum
|
| |
Threshold
(#)
|
| |
Target
(#)
|
| |
Maximum
(#)
|
| |||||||||||||||||||||
| |
Ted Harris
|
| |
|
| |
ICP
|
| |
$0
|
| |
$1,270,500
|
| |
$2,541,000
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
02/08/2023
|
| |
Performance Shares
|
| |
|
| |
|
| |
|
| |
5,775
|
| |
11,550
|
| |
23,100
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
02/08/2023
|
| |
Time-Based Restricted Shares
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
6,280
|
| |
|
| |
|
| |
|
| |||
| |
02/08/2023
|
| |
Stock Options
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
21,200
|
| |
$138.09
|
| |
|
| |||
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
$3,469,079
|
| |||
| |
C. Martin Bengtsson
|
| |
|
| |
ICP
|
| |
$0
|
| |
$
342,769
|
| |
$
685,538
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
02/08/2023
|
| |
Performance Shares
|
| |
|
| |
|
| |
|
| |
1,490
|
| |
2,980
|
| |
5,960
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
02/08/2023
|
| |
Time-Based Restricted Shares
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
1,620
|
| |
|
| |
|
| |
|
| |||
| |
02/08/2023
|
| |
Stock Options
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
5,500
|
| |
$138.09
|
| |
|
| |||
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
$
896,255
|
| |||
| |
Frederic Boned
|
| |
|
| |
ICP
|
| |
$0
|
| |
$
216,382
|
| |
$
432,765
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
02/08/2023
|
| |
Performance Shares
|
| |
|
| |
|
| |
|
| |
710
|
| |
1,420
|
| |
2,840
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
02/08/2023
|
| |
Time-Based Restricted Shares
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
770
|
| |
|
| |
|
| |
|
| |||
| |
02/08/2023
|
| |
Stock Options
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
2,600
|
| |
$138.09
|
| |
|
| |||
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
$
426,007
|
| |||
| |
Hatsuki Miyata
|
| |
|
| |
ICP
|
| |
$0
|
| |
$
217,935
|
| |
$
435,870
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
02/08/2023
|
| |
Performance Shares
|
| |
|
| |
|
| |
|
| |
710
|
| |
1,420
|
| |
2,840
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
02/08/2023
|
| |
Time-Based Restricted Share Awards
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
770
|
| |
|
| |
|
| |
|
| |||
| |
02/08/2023
|
| |
Stock Options
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
2,600
|
| |
$138.09
|
| |
|
| |||
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
$
427,007
|
| |||
| |
Martin Reid
|
| |
|
| |
ICP
|
| |
$0
|
| |
$
227,460
|
| |
$
454,920
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
02/08/2023
|
| |
Performance Shares
|
| |
|
| |
|
| |
|
| |
745
|
| |
1,490
|
| |
2,980
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
02/08/2023
|
| |
Time-Based Restricted Shares
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
810
|
| |
|
| |
|
| |
|
| |||
| |
02/08/2023
|
| |
Stock Options
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
2,800
|
| |
$138.09
|
| |
|
| |||
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
$
450,173
|
| |||
|
(1)
|
The maximum amounts equal 200% of target. Additional information regarding
the design of the ICP is included in the Compensation Discussion and Analysis.
|
|
(2)
|
The target number of shares shown in the table reflects the number of shares
of our Common Stock earned if performance is achieved at target levels. All shares will be awarded net of applicable tax withholding. Dividend equivalents accrue during the performance cycle and will be paid out in shares, net of
applicable tax withholding, based on the actual number of shares earned for the performance cycle, if any.
|
|
(3)
|
The exercise price equals the closing price of our Common Stock on the grant
date except as otherwise indicated.
|
|
(4)
|
The amounts represent the grant date fair value of the awards as computed in
accordance with FASB ASC Topic 718.
|
48
Executive Compensation
The 2017 Omnibus Incentive Plan (the “2017 Plan”), as amended and restated in 2023 (the “
Amended 2017 Plan
”) provides for a variety of equity award vehicles to maintain flexibility. The Amended 2017 Plan permits the Company to grant Stock Options, Stock Appreciation Rights (“
SARs
”), restricted stock awards, dividend equivalents, performance awards, and other stock-based awards, and provides for the granting of cash performance awards. The Amended 2017 Plan is flexible and allows
the Company to change equity grant practices from time to time.
After the adoption of the Amended 2017 Plan, no further awards were granted under the
Second Amended and Restated 1999 Stock Plan (the “
1999 Plan
”), but outstanding awards granted under the 1999 Plan prior to the adoption of the Amended 2017 Plan continue in accordance with their terms.
Under the Amended 2017 Plan:
|
1.
|
Officers and other employees of the Company may be granted Stock Options which qualify as incentive stock options (“
ISOs
”) under Section 422(b) of the Code;
|
|
2.
|
Directors, officers and employees may be granted Stock Options which do not qualify as ISOs (“
Non-Qualified
Options
”); and
|
|
3.
|
Directors, officers and employees may be granted Time-Based Restricted Shares and Performance Shares.
|
Generally, the exercise price per share of each Stock Option granted under the Amended
2017 Plan may not be less than the fair market value per share of Common Stock on the date of such grant and must have a term no longer than ten years. The Amended 2017 Plan expressly prohibits the repricing of stock options without shareholder
approval.
Time-Based Restricted Shares vest in full three years from the date of grant. In the event
the NEO’s employment with the Company is terminated prior to vesting in full, the Time-Based Restricted Shares are forfeited. In the event of death or disability, Time-Based Restricted Shares will vest based upon the amount of time remaining
until the vesting date.
For grants in 2023, the Performance Shares are earned based on the Company’s achievement
of certain performance criteria over a three year period. Performance Shares will vest based upon the amount of time remaining until the vesting date in the event of recipient’s prior death, disability or “retirement,” as such is defined in the
applicable Performance Share Grant Agreement.
In addition, upon a change in control or in connection with a termination of employment of
the NEO without cause, the Compensation Committee may accelerate the vesting and/or payment dates of awards in its discretion.
49
Executive Compensation
The following table shows outstanding Stock Options classified as exercisable and not
currently exercisable as of December 31, 2023 for each NEO. The table also discloses the number and value of unvested Time-Based Restricted Shares and Performance Shares as of December 31, 2023.
| |
Name
|
| |
|
| |
Stock Awards
|
| |
Performance Awards
|
| |||||||||||||||
| |
# Of Securities Unexercised Underlying Options
|
| ||||||||||||||||||||||||
| |
Exercisable
(1)
|
| |
Not currently
Exercisable
(1)
|
| |
Option
Exercise
Price/share
|
| |
Option
Expiration
Date
|
| |
Number of
Unvested
Shares
|
| |
$
(3)
|
| |
Number of
Unvested
Shares
(2)
$
|
| |
$
(3)
|
| |||
| |
Ted Harris
|
| |
10,000
|
| |
0
|
| |
54.87
|
| |
4/28/2025
|
| |
|
| |
|
| |
|
| |
|
|
| |
24,350
|
| |
0
|
| |
60.85
|
| |
2/23/2026
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
25,930
|
| |
0
|
| |
85.40
|
| |
2/21/2027
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
18,800
|
| |
0
|
| |
74.57
|
| |
2/15/2028
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
28,300
|
| |
0
|
| |
84.09
|
| |
2/13/2029
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
24,500
|
| |
0
|
| |
111.94
|
| |
2/13/2030
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
13,140
|
| |
8,760
|
| |
119.13
|
| |
2/11/2031
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
4,100
|
| |
16,400
|
| |
138.07
|
| |
2/10/2032
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
0
|
| |
32,500
|
| |
125.71
|
| |
9/15/2032
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
0
|
| |
32,500
|
| |
138.28
|
| |
9/15/2032
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
0
|
| |
32,500
|
| |
144.57
|
| |
9/15/2032
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
0
|
| |
32,500
|
| |
150.85
|
| |
9/15/2032
|
| |
|
| |
|
| |
|
| |
|
| |||
| |
0
|
| |
21,200
|
| |
138.09
|
| |
2/8/2033
|
| |
18,320
|
| |
$2,725,100
|
| |
35,700
|
| |
$5,310,375
|
| |||
| |
C. Martin
Bengtsson
|
| |
15,000
|
| |
0
|
| |
85.33
|
| |
2/4/2029
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
6,000
|
| |
0
|
| |
84.09
|
| |
2/13/2029
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
4,800
|
| |
0
|
| |
111.94
|
| |
2/13/2030
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
3,180
|
| |
2,120
|
| |
119.13
|
| |
2/11/2031
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
1000
|
| |
4,000
|
| |
138.07
|
| |
2/10/2032
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
0
|
| |
5,500
|
| |
138.09
|
| |
2/8/2033
|
| |
4,530
|
| |
$
673,838
|
| |
8,820
|
| |
$
1,311,975
|
|
| |
Frederic Boned
|
| |
0
|
| |
2,600
|
| |
138.09
|
| |
2/8/2033
|
| |
3,770
|
| |
$
560,788
|
| |
1,420
|
| |
$
211,225
|
|
| |
Hatsuki Miyata
(4)
|
| |
0
|
| |
2,600
|
| |
138.09
|
| |
2/8/2033
|
| |
3,437
|
| |
$
511,254
|
| |
1,420
|
| |
$
211,225
|
|
| |
Martin Reid
|
| |
1,500
|
| |
1,000
|
| |
118.96
|
| |
2/8/2031
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
1,980
|
| |
1,320
|
| |
119.13
|
| |
2/11/2031
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
540
|
| |
2,160
|
| |
138.07
|
| |
2/10/2032
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
0
|
| |
2,800
|
| |
138.09
|
| |
2/8/2033
|
| |
3,980
|
| |
$
592,025
|
| |
4,830
|
| |
$
718,463
|
|
|
(1)
|
Stock Options granted under the Amended 2017, the 2017 Plan, and the 1999
Plan have a term of ten years from the grant date and become exercisable 20% after 1 year, 60% after 2 years and 100% after 3 years, beginning on the first anniversary of the grant date.
|
|
(2)
|
Time-Based Restricted Shares vest three years from the date of grant.
Performance Shares vest in three years and are reflected at target payout based on the probable outcome of the performance conditions. The following table provides information with respect to the final vesting dates of each outstanding
restricted stock award (both Time-Based Restricted Shares and Performance Shares) held by each NEO as of December 31, 2023.
|
|
(3)
|
Value is computed based on the closing price of our Common Stock on December 29,
2023, which was $148.75 per share.
|
50
Executive Compensation
| |
Final Vesting Date
|
| |
Ted
Harris
|
| |
Martin
Bengtsson
|
| |
Frederic
Boned
|
| |
Hatsuki
Miyata
|
| |
Martin
Reid
|
|
| |
Jan. 1, 2024
|
| |
11,390
|
| |
2,740
|
| |
|
| |
|
| |
1,690
|
|
| |
Feb. 8, 2024
|
| |
|
| |
|
| |
|
| |
|
| |
1,500
|
|
| |
Feb. 11, 2024
|
| |
6,060
|
| |
1,460
|
| |
|
| |
|
| |
900
|
|
| |
July 27, 2024
|
| |
|
| |
|
| |
|
| |
1,333
(4)
|
| |
|
|
| |
Jan. 1, 2025
|
| |
12,760
|
| |
3,100
|
| |
|
| |
|
| |
1,650
|
|
| |
Feb. 10, 2025
|
| |
5,980
|
| |
1,450
|
| |
|
| |
|
| |
770
|
|
| |
July 27, 2025
|
| |
|
| |
|
| |
|
| |
1,334
|
| |
|
|
| |
Oct. 31, 2025
|
| |
|
| |
|
| |
3,000
|
| |
|
| |
|
|
| |
Jan. 1, 2026
|
| |
11,550
|
| |
2,980
|
| |
1,420
|
| |
1,420
|
| |
1,490
|
|
| |
Feb. 8, 2026
|
| |
6,280
|
| |
1,620
|
| |
770
|
| |
770
|
| |
810
|
|
| |
Total
|
| |
54,020
|
| |
13,350
|
| |
5,190
|
| |
4,857
|
| |
8,810
|
|
|
(4)
|
In connection with the hiring of Ms. Miyata as Executive Vice President,
General Counsel and Secretary, the Company provided in part that Ms. Miyata would receive 4,000 shares of Company Time-Based Restricted Shares, which will vest ratably over three years after the date of grant (July 27, 2022), with one
third vesting each year beginning in 2023. These Time-Based Restricted Shares were granted in part in recognition of the value in unvested equity and other benefits from her prior employer that she forfeited.
|
The following table sets forth certain information regarding options and stock awards
exercised and vested, respectively, by each of our NEOs during the fiscal year ended December 31, 2023.
| |
|
| |
Option Awards
|
| |
Stock Awards
|
| ||||||
| |
Name
|
| |
Number of
Shares
Acquired on
Exercise
(#)
|
| |
Value
Realized on
Exercise
($)
(1)
|
| |
Number of
Shares
Acquired on
Vesting
(#)
|
| |
Value
Realized on
Vesting
($)
|
|
| |
Ted Harris
|
| |
0
|
| |
N/A
|
| |
22,374
(2)
|
| |
$3,077,453
|
|
| |
Martin Bengtsson
|
| |
0
|
| |
N/A
|
| |
4,352
(2)
|
| |
$
598,596
|
|
| |
Frederic Boned
|
| |
0
|
| |
N/A
|
| |
0
|
| |
N/A
|
|
| |
Hatsuki Miyata
|
| |
0
|
| |
N/A
|
| |
1,333
(3)
|
| |
$
171,344
|
|
| |
Martin Reid
|
| |
0
|
| |
N/A
|
| |
0
|
| |
N/A
|
|
|
(1)
|
Value realized represents the excess of the fair market value of the shares
at the time of exercise over the exercise price of the options.
|
|
(2)
|
Reflects the vesting of (a) Performance Shares granted in 2020 under the
Fiscal 2020 – 2022 Performance Share awards including dividend equivalent shares; and (b) Time-based Restricted Shares granted in 2020, subject to a three year vesting requirement. The Performance Shares were subject to performance
goals for the performance period ended December 31, 2022, with the number of TSR Performance Shares vesting representing 181.6% of the target shares and the EBITDA Performance Shares vesting representing 200.0% of the target shares.
Awards vested on February 8, 2023. See “LTIP Awards” beginning at Page
41
above). Values realized for Performance Shares earned are based on the closing share prices $138.09 on February 8, 2023, the date the
Compensation Committee determined that the performance targets for the performance period ended December 31, 2022 had been met.
|
|
(3)
|
Reflects the vesting of Time-based Restricted Shares which vest ratably over
three years after the grant date (July 27, 2022), with one third vesting each year beginning in 2023. These Time-Based Restricted Shares were granted in part in recognition of the value in unvested equity and other benefits from
Ms. Miyata’s prior employer that she forfeited.
|
51
Executive Compensation
For a description of the Balchem Deferred Compensation Plan, see “Balchem Deferred
Compensation Plan” at page
44
above.
Information regarding deferred elections under the Deferred Compensation Plan are included
in the table below:
| |
Name
|
| |
NEO
Contributions in
Last Fiscal
Year
(1)
($)
|
| |
Aggregate
Earnings in Last
Fiscal Year
($)
|
| |
Aggregate
Withdrawals/
Distributions
($)
|
| |
Aggregate
Balance at
Last Fiscal
Year End
($)
|
|
| |
Ted Harris
|
| |
$0
|
| |
$449,444
|
| |
$0
|
| |
$4,404,848
|
|
| |
Martin Bengtsson
|
| |
$0
|
| |
$
0
|
| |
$0
|
| |
$
0
|
|
| |
Frederic Boned
|
| |
$0
|
| |
$
0
|
| |
$0
|
| |
$
0
|
|
| |
Hatsuki Miyata
|
| |
$0
|
| |
$
0
|
| |
$0
|
| |
$
0
|
|
| |
Martin Reid
|
| |
$0
|
| |
$
0
|
| |
$0
|
| |
$
0
|
|
|
(1)
|
NEO contributions include any deferrals of annual compensation, including
earned awards under the ICP. These amounts are included in the NEOs’ compensation under either “Salary” or “Non-Equity Incentive Compensation”.
|
Agreement with Mr. Harris
. We
entered into an employment agreement with Mr. Harris on April 22, 2015 (the “
Harris Agreement
”), which provides for automatic one-year
extensions of the employment term unless either party provides within 60 days of the end of the then-current term written notice of its intention not to extend the agreement.
If the Harris Agreement is terminated, either by us or by Mr. Harris, and Mr. Harris
releases claims in favor of the Company, Mr. Harris is entitled to receive any unpaid (earned at the date of such termination) salary, vacation and/or ICP bonus which Mr. Harris earned in respect of specific objectives completed during the fiscal
year, and, in certain circumstances, other payments as more particularly described in the table below.
For equity awards made under the Amended 2017 Plan, in the event of a Change in Control
(as defined therein) and involuntary termination by the Company within 24 months following such Change in Control, awards that are options or SARs will become fully exercisable upon the date of such involuntary termination, and the restrictions
in force and applicable with respect to any other such awards (i.e., awards other than options and SARs) will automatically lapse upon the date of the involuntary termination, with any such awards that are subject to performance criteria deemed
to vest at the “target” level of performance.
In the event that any of the payments provided for in the Harris Agreement otherwise would
constitute an “excess parachute payment” (as defined in Section 280G of the Code), the amount of payments would be reduced to the maximum level that would not result in excise tax under Section 4999 of the Code, if this reduction would cause
Mr. Harris to receive a larger after-tax amount than if no reduction were made.
During the period of Mr. Harris’ employment (or, in the case of a voluntary termination by
Mr. Harris or a termination of his employment by the Company for Cause, the balance of the term of the Harris Agreement before giving effect to such termination) and for a period of two years thereafter, the Harris Agreement imposes on Mr. Harris
certain non-competition and non-solicitation obligations regarding the Company and its clients, customers and its employees.
The amount of compensation payable to Mr. Harris in the event of termination of
employment, assuming termination as of December 31, 2023, and a share price for our Common Stock equal to the closing market price on that date, is set forth in the table below. The Harris Agreement does not obligate us to provide any
compensation to Mr. Harris in the case of a Change in Control that does not result in termination of employment. The Amended 2017 Plan allows for the discretionary acceleration of outstanding awards upon the occurrence of a Change in Control.
52
Executive Compensation
| |
Benefits and Payments Upon Termination
(1)
|
| ||||||||||||
| |
Event
|
| |
Base
Salary
|
| |
ICP
Bonus
(2)
|
| |
Acceleration of
Vesting Stock
Options and
Restricted
Shares
(3)
|
| |
Total
|
|
| |
Voluntary termination by Mr. Harris, upon Mr. Harris’ death or termination
for Cause
(4)
|
| |
$
0
|
| |
$1,219,937
|
| |
$
0
|
| |
$
1,219,937
|
|
| |
Termination by the Company for other than Cause, Mr. Harris’ death or in
response to a notice from that he intends to terminate the Harris Agreement or by Mr. Harris for Good Reason
(5)
|
| |
$2,310,000
|
| |
$1,219,937
|
| |
$
0
|
| |
$
3,529,937
|
|
| |
Termination by Company prior to the second anniversary of a Change in Control
for other than for Cause, Mr. Harris’ death or in response to a notice from that he intends to terminate the Harris Agreement
|
| |
$2,310,000
|
| |
$1,219,937
|
| |
$9,921,015
|
| |
$13,450,952
|
|
| |
Voluntary termination by Mr. Harris prior to the second anniversary of a
Change in Control
|
| |
$
1,155,000
|
| |
$1,219,937
|
| |
$9,921,015
|
| |
$
12,295,952
|
|
|
(1)
|
Table assumes termination occurred on December 31, 2023, and, in the case of
events following a Change in Control, that the Change in Control occurred during 2023.
|
|
(2)
|
Represents the ICP Bonus earned by Mr. Harris in fiscal year 2023.
|
|
(3)
|
While the Harris Agreement does not call for the acceleration of equity
(other than the Equity Replacement Shares (as defined therein) which such Equity Replacement Shares vested by their own terms in 2016 and 2017), under the Amended 2017 Plan, the Compensation Committee has discretionary authority to
determine the treatment of awards thereunder and the Amended 2017 Plan calls for the acceleration of equity grants as described in the narrative above in the event of a Change in Control (as defined in the Amended 2017 Plan). Amounts in
this column are calculated by: (i) multiplying the number of shares subject to accelerated vesting (all Time-Based Restricted Shares being accelerated, and the target level of Performance Shares being accelerated) by $148.75, which is
the closing market price per share of our Common Stock on December 29, 2023, and (ii) the difference between (x) the per share grant price of the accelerated Stock Options and (y) $148.75, which is the closing market price per share of
our Common Stock on December 29, 2023.
|
|
(4)
|
Under the Harris Agreement, “Cause” means: habitual absence or lateness;
gross insubordination or material violation of published material Company policies; failure to devote full time to the Company’s business; failure to comply with the obligations of confidentiality, non-competition and non-solicitation
of the Company’s clients, customers and employees; any action which constitutes a violation of any applicable criminal statute; or any act which frustrates or violates the fiduciary duties owed by Mr. Harris to the Company.
|
|
(5)
|
Under the Harris Agreement, “Good Reason” will have occurred if Mr. Harris
terminates his employment within twelve months after he has been demoted from his position as President and Chief Executive Officer or shall otherwise have suffered by reason of the Company’s intentional actions regarding the terms and
nature of his employment such a fundamental change in his employment as to effectively amount to a “constructive termination” of his employment with Company (but he shall not in fact have been discharged from such employment), including
a reduction of his base annual salary, or a diminution in his duties or responsibilities.
|
The amounts shown in the table above do not include payments for accrued salary and
vacation, or payments made under any life insurance policy in the case of death. Amounts shown in the table are subject to reduction to the extent necessary to avoid an “excess parachute payment” under Section 280G of the Code, if such reduction
would cause the executive to receive a larger after-tax amount than if no reduction were made.
Offer Letter with Mr. Bengtsson.
Under
the terms of the Bengtsson Offer Letter, if the Company terminates Mr. Bengtsson’s employment for any reason other than Cause (as defined in the Bengtsson Offer Letter), Mr. Bengtsson will receive a severance payment equal to one year of annual
base salary, which was $527,337 as of December 31, 2023, payable in twelve equal installments commencing on the month following the month in which the termination occurs.
The other NEOs are employees at-will and, as such, do not have employment agreements or
any entitlement to post-employment compensation or benefits, except to the extent such officers are eligible to receive certain benefits under the Company’s Officer Retiree Program, as described below.
53
Executive Compensation
In the event of an executive officer’s retirement in accordance with the Officer Retiree
Program which requires that at the time of voluntary termination of employment, the sum of the officer’s age and years of service is at least 70, the officer has at least ten years of service and has served at least three consecutive years as an
officer, then, subject to the terms of the Officer Retiree Program: (1) the retiree officer and their spouse and any eligible dependents (who are eligible to be covered under the retiring officer’s medical plan) are eligible to receive the same
coverage available to an active employee (under such plan) for the retiree officer and spouse’s life, or until Medicare is available, for a maximum of ten (10) years, and the retiree officer or his/her spouse will be charged the portion of the
coverage premiums that the Company would have paid if the retiree officer were an active employee; (2) stock options granted shall continue to vest and become exercisable in accordance with their original vesting schedule; (3) restricted stock
grants shall continue to vest in accordance with their original vesting schedule; and (4) performance share grants shall continue to vest in accordance with their original vesting schedule.
Upon a change in control or in connection with a termination of employment of the NEO
without cause, the Compensation Committee may accelerate the vesting and/or payment dates of awards in its discretion. Except as provided in the Harris Agreement, the Amended 2017 Plan does not provide for automatic acceleration of outstanding
awards upon the occurrence of a change in control.
The Company has adopted a related party transaction policy. Under the related party
transaction policy, our Audit Committee reviews and approves proposed transactions or courses of dealings expected to exceed $120,000 in any fiscal year with respect to which holders of 5% or more of our stock, our officers, our directors, or
members of their immediate families, have a direct or indirect material interest. Before entering into any transaction, arrangement or relationship constituting a related party transaction, other than certain pre-approved transactions, the
related party must notify the Company’s General Counsel in writing of all material facts and circumstances of the proposed transaction. Proposed related party transactions must be reviewed by the Audit Committee, which has the authority to
approve or disapprove the transaction based on appropriate factors, including whether the transaction is in the ordinary course of business, whether the transaction was initiated by the Company or the related party, whether the transaction is on
terms no less favorable to the Company than terms generally available from an un-affiliated third party, the potential benefit to the Company, the amount of money involved, any impact on a director’s independence to serve on the board or any
committees, the extent of the related person’s interest in the transaction, and any other information that would be material to investors.
An Audit Committee member who is the related party does not participate in the decision to
approve or disapprove the transaction. If a related party transaction will be ongoing, the Audit Committee may establish guidelines for Company management to follow in its dealings with the related party and the Audit Committee will regularly
review such transactions.
The Audit Committee has preapproved the following related party transactions: (a)
employment of executive officers, (b) director compensation, (c) transactions with other companies where the related party’s only relationship is as a director or owner of less than 10% of that company’s outstanding equity, (d) charitable
contributions not exceeding $120,000 where the related party’s only relationship is as an employee, (e) transactions where all shareholders receive proportional benefits, and (f) indemnification pursuant to the Company’s Certificate of
Incorporation or Bylaws or other agreement.
In addition, the Company’s Code of Conduct, which sets forth standards applicable to all
employees, officers and directors of the Company, requires that all employees, officers and directors must disclose outside business or financial interest which could influence the discharge of their responsibilities to the Company. Any waivers
of the provisions of, the Code of Conduct, if any, made with respect to any of our directors or officers will be posted on our website at www.balchem.com. No such waivers were requested or granted in 2023.
During 2023, there were no Related Person Transactions in which any of our directors or
officers or their immediate family members had a direct or indirect material interest. We have not made payments to our independent, non-employee directors other than the fees to which they are entitled as directors (described under the heading
“Director Compensation” on page
31
of this Proxy Statement) and the reimbursement of expenses related to their services as directors. As an employee director, Mr. Harris does not receive any compensation for his services as
Director and Chairman of the Board.
54
Executive Compensation
The following table provides information, as of December 31, 2023, with respect to shares
of our Common Stock that may be issued pursuant to awards under the Amended 2017 Plan, 2017 Plan and the 1999 Plan (each described above). These plans are the Company’s only equity compensation plans approved by security holders, and there are no
equity compensation plans that have not been approved by security holders. It should be noted that shares of our Common Stock may be allocated to, or purchased on behalf of, participants in the Company’s 401(k) retirement plan (described above).
Consistent with SEC regulations governing equity compensation plans, information relating to shares issuable or purchased under the Company’s 401(k) retirement plan is not included in the table below.
| |
Plan Category
|
| |
Number of
Shares to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants
and Rights
|
| |
Weighted-Average
Exercise Price Per
Share of
Outstanding
Options, Warrants
and Rights
|
| |
Number of
Shares Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans (Excluding
Shares Reflected
in Column)
(1)
|
|
| |
Equity compensation plans approved by security holders
|
| |
1,077,840
|
| |
104.38
|
| |
1,034,260
|
|
| |
Equity compensation plans not approved by security holders
|
| |
|
| |
|
| |
|
|
| |
Total
|
| |
1,077,840
|
| |
104.38
|
| |
1,034,260
|
|
|
(1)
|
10,813 shares of unvested Time-Based Restricted Shares granted to
non-employee directors and 86,227 shares of unvested Time-Based Restricted Shares granted to NEOs are excluded from this table.
|
55
Executive Compensation
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act and Item 402(u) of Regulation S-K, set forth below is disclosure regarding the relationship of the annual total compensation of our employees and the total annual compensation of Mr. Harris, our Chairman, President and CEO.
Mr. Harris had 2023 annual total compensation of $5,889,707 as reflected in the Summary
Compensation Table included in this Proxy Statement. Our median employee’s annual total compensation for 2023 was $63,793. Therefore, the ratio of Mr. Harris’ 2023 annual total compensation to that of our median employee is approximately 92 to 1.
We identified the median employee by examining the 2023 total cash compensation for all
individuals, excluding our CEO, who were employed by us on December 31, 2023, the last day of our payroll year. We included all employees whether they were employed on a full-time, part-time or seasonal basis. We did not make any assumptions,
adjustments, or estimates with respect to total cash compensation, and annualized the compensation for any full-time employees who were not employed by the Company for all of 2023. We believe the use of total cash compensation for all employees
is a consistently applied compensation measure because we do not widely distribute annual equity awards to employees. Approximately four percent of our employees receive annual equity awards.
After identifying the median employee based on total cash compensation, we calculated
annual total compensation for such employee using the same methodology that we use for our NEOs as set forth in the 2023 Summary Compensation Table. Given the different methodologies that various public companies will use to determine their pay
ratio, the CEO Pay Ratio reported above should not be used as a basis for comparison between companies.
56
Pay versus Performance Disclosure
Pay versus Performance Disclosure
The following table sets forth the compensation for our Chief Executive Officer and the
average compensation for our other named executive officers, both as reported in the Summary Compensation Table and with certain adjustments to reflect the “compensation actually paid” (“CAP”) to such individuals, as defined under SEC rules, for
each of 2023, 2022, 2021 and 2020. The table also provides information on our cumulative total shareholder return (“TSR”), the cumulative TSR of our peer group, Net Income (which we refer to as “Net Earnings” in the Consolidated Statements of
Earnings in our Form 10-K) and Adjusted EBITDA over such years in accordance with SEC rules.
| |
Year
|
| |
Summary
Compensation
Table Total for
Ted Harris
(1)
$
|
| |
Compensation
Actually Paid to
Ted Harris
(2)(2a)
$
|
| |
Average
Summary
Compensation
Table Total for
Non-CEO
NEOs
(3)
$
|
| |
Average
Compensation
Actually Paid to
Non-CEO
NEOs
(2)(2a)(3)
$
|
| |
Year-end value of $100 invested
on 12/31/2019 in
(4)
:
|
| |
Net
Income ($)
(in millions)
$
|
| |
Adjusted
EBITDA
(6)
(in millions)
$
|
| |||
| |
BCPC
$
|
| |
Peer Group
Total
Shareholder
Return
$
|
| |||||||||||||||||||||
| |
2023
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
2022
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
2021
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
2020
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
1.
|
The PEO for all four fiscal years is
|
|
2.
|
CAP for the PEO and average CAP for our other NEOs in each of 2023, 2022, 2021 and 2020 reflect the respective amounts set forth in the table above, adjusted as set forth in the table below, as determined in accordance with SEC rules. CAP values reflected in the table above do not reflect the actual amount of compensation earned by or paid to the PEO and our other NEOs during the applicable year. For information regarding the decisions made by our Executive Compensation Committee in regards to the PEO and our other NEOs’ compensation for fiscal year 2023, see the section titled “Compensation Discussion and Analysis” of this proxy statement.
|
| |
|
| |
2023
|
| |
2022
|
| |
2021
|
| |
2020
|
| ||||||||||||
| |
|
| |
Harris, Ted
|
| |
Average
Non-CEO
NEOs
|
| |
Harris, Ted
|
| |
Average
Non-CEO
NEOs
|
| |
Harris, Ted
|
| |
Average
Non-CEO
NEOs
|
| |
Harris, Ted
|
| |
Average
Non-CEO
NEOs
|
|
| |
Total Compensation from Summary Compensation Table
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
|
| |
Adjustments for Equity Awards
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Adjustment for grant date values in the Summary Compensation Table
|
| |
$(
|
| |
$
(
|
| |
$(
|
| |
$
(
|
| |
$(
|
| |
$
(
|
| |
$(
|
| |
$
(
|
|
| |
Year-end fair value of unvested awards granted in the current year
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
|
| |
Year-over-year difference of year-end fair values for unvested awards granted in prior years
|
| |
$
|
| |
$
|
| |
$
(
|
| |
$
(
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
|
| |
Fair values at vest date for awards granted and vested in current year
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
|
| |
Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years
|
| |
$
|
| |
$
|
| |
$
(
|
| |
$
(
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
|
57
Pay versus Performance Disclosure
| |
|
| |
2023
|
| |
2022
|
| |
2021
|
| |
2020
|
| ||||||||||||
| |
|
| |
Harris, Ted
|
| |
Average
Non-CEO
NEOs
|
| |
Harris, Ted
|
| |
Average
Non-CEO
NEOs
|
| |
Harris, Ted
|
| |
Average
Non-CEO
NEOs
|
| |
Harris, Ted
|
| |
Average
Non-CEO
NEOs
|
|
| |
Forfeitures during current year equal to prior year-end fair value
|
| |
$
|
| |
$
|
| |
$
(
|
| |
$
(
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
|
| |
Dividends or dividend equivalents not otherwise included in total compensation
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
|
| |
Total Adjustments for Equity Awards
|
| |
$
|
| |
$
|
| |
$(
|
| |
$(
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
|
| |
Compensation Actually Paid (as calculated)
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
|
|
(2a)
|
The following summarizes the valuation assumptions used for stock option awards included as part of Compensation Actually Paid:
|
Expected life of each stock option is based on the "simplified
method" using an average of the remaining vest and remaining term, as of the vest/FYE date.
- Strike price is based on each grant date closing price and asset price is based on
each vest/FYE closing price.
- Risk free rate is based on the Treasury Constant Maturity rate
closest to the remaining expected life as of the vest/FYE date.
- Historical volatility is based on daily price history for each
expected life (years) prior to each vest/FYE date. Closing prices provided by S&P Capital IQ are adjusted for dividends and splits.
- Represents annual dividend yield on each vest/FYE date.
|
(3)
|
Non-CEO NEOs reflect the average Summary Compensation Table total compensation and average Compensation Actually Paid for the following executives by year:
|
2023: Martin Bengtsson, Martin Reid, Hatsuki Miyata, Frederic Boned
2022: Martin Bengtsson, Jim Hyde, Martin Reid, Jonathan Griffin, Hatsuki Miyata
2021: Martin Bengtsson, Jim Hyde, Mark Stach, William Backus, Martin Reid
2020: Martin Bengtsson, Jim Hyde, Mark Stach, William Backus, Scott Mason
|
(4)
|
TSR is cumulative (assuming $100 was invested on December 31, 2019) for the measurement periods beginning on December 31, 2019 and ending on December 31 of each of 2023, 2022, 2021 and 2020, respectively, calculated in accordance with Item 201(e) of Regulation S-K. The peer group for purposes of this table is the Dow Jones U.S. Specialty Chemicals Index. Historic stock price performance is not necessarily indicative of future stock performance.
|
|
(5)
|
Reflects “Net Earnings” in the Company’s Consolidated Statements of Earnings included in the Company’s Annual
Reports on Form 10-K for each of the years ended December 31, 2023, 2022, 2021 and 2020.
|
|
(6)
|
|
Most Important Financial Performance Measures
The unranked list below represents the Company’s most important measures used to link
compensation to performance:
| |
Company Performance Metrics
(1)
|
| |
|
|
| |
|
| |
|
|
| |
|
| |
|
|
| |
|
| |
|
|
| |
|
| |
|
|
|
(1)
|
For further information regarding these company performance metrics and their
function in the Company’s executive compensation program, please see the “Compensation Discussion and Analysis” section of this Proxy Statement.
|
58
Pay versus Performance Disclosure
Relationship between Compensation Actually Paid and Company Performance Measures
CAP vs. TSR
The following graph compares compensation actually paid to our PEO and the average
compensation actually paid to our other NEOs to (i) our cumulative TSR, and (ii) Dow Jones U.S. Specialty Chemicals Index TSR, for the fiscal years ended December 31, 2020, 2021, 2022 and 2023.
CAP vs. GAAP Net Earnings
The following graph compares (i) compensation actually paid to our PEO and the average
compensation actually paid to our other NEOs to (ii) our net earnings, for the fiscal years ended December 31, 2020, 2021, 2022 and 2023.
59
Pay versus Performance Disclosure
CAP vs. Company Selected Measure
The following graph compares (i) compensation actually paid to our PEO and the average
compensation actually paid to our other NEOs to (ii) annual adjusted EBITDA, for the fiscal years ended December 31, 2020, 2021, 2022 and 2023.
60
Security Ownership
of Certain Beneficial Owners and of Management
The table below sets forth as of the Record Date of April 22, 2024, the number of shares
of Common Stock beneficially owned by (i) each director, (ii) each NEO, (iii) each beneficial owner of, or institutional investment manager exercising investment discretion with respect to, 5% or more of the outstanding shares of our Common Stock
known to the Company based upon filings with the SEC, and (iv) all directors and executive officers as a group, and the percentage ownership of our outstanding Common Stock as of the Record Date.
The table does not include Performance Shares granted under the Company’s LTIP (which
grants vest at the end of three years), as the number of shares to be awarded is not determinable at the time of grant and the recipients do not have beneficial ownership of such shares.
| |
Name and Address of Beneficial Owner
|
| |
Amount
and
Nature of
Beneficial
Ownership
|
| |
Beneficially
Owned
(1)
|
| |
Percent of
Class
(2)
|
|
| |
BlackRock, Inc.
50 Hudson Yards, New York, NY 10001
|
| |
(3)
|
| |
4,989,247
|
| |
15.39%
|
|
| |
The Vanguard Group, Inc.
100 Vanguard Blvd., Malvern, PA 19355
|
| |
(4)
|
| |
3,791,512
|
| |
11.69%
|
|
| |
APG Asset Management US Inc.
666 Third Ave, 2
nd
Floor, New York, NY 10017
|
| |
(5)
|
| |
2,917,112
|
| |
9.00%
|
|
| |
Wasatch Advisors LP
505 Wakara Way, Salt Lake City, UT 84108
|
| |
(6)
|
| |
1,910,409
|
| |
5.89%
|
|
| |
Ted Harris
|
| |
(7)
|
| |
183,572
|
| |
*
|
|
| |
Martin Bengtsson
|
| |
(8)
|
| |
49,887
|
| |
*
|
|
| |
David Fischer
|
| |
(9)
|
| |
25,876
|
| |
*
|
|
| |
Matthew Wineinger
|
| |
(10)
|
| |
18,029
|
| |
*
|
|
| |
Daniel Knutson
|
| |
(11)
|
| |
16,916
|
| |
*
|
|
| |
Martin Reid
|
| |
(12)
|
| |
11,960
|
| |
*
|
|
| |
Joyce Lee
|
| |
(13)
|
| |
7,673
|
| |
*
|
|
| |
Hatsuki Miyata
|
| |
(14)
|
| |
1,702
|
| |
*
|
|
| |
Kathleen Fish
|
| |
(15)
|
| |
1,406
|
| |
*
|
|
| |
Frederic Boned
|
| |
(16)
|
| |
806
|
| |
*
|
|
| |
Olivier Rigaud
|
| |
(17)
|
| |
0
|
| |
*
|
|
| |
Monica Vicente
|
| |
(18)
|
| |
0
|
| |
*
|
|
| |
Directors and Executive Officers as a Group (16 people)
|
| |
|
| |
403,951
|
| |
1.25%
|
|
| |
|
| |
|
| |
|
| |
|
|
| |
Shares Outstanding as of April 22, 2024
|
| |
|
| |
32,423,468
|
| |
|
|
|
*
|
Less than 1%
|
|
(1)
|
Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to securities. In accordance with SEC rules, shares which are vesting within 60 days of the Record Date or which may be acquired upon exercise of stock options which are
currently exercisable, or which become exercisable within 60 days after the date of the information in the table are deemed to be beneficially owned. Except as indicated by footnote, and subject to community property laws where
applicable, to the Company’s knowledge, the persons or entities named in the table above are believed to have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them.
|
|
(2)
|
The ownership percentages set forth in this column are based on the Company’s
outstanding shares on the Record Date and assumes that each of the beneficial owners continued to own the number of shares reflected in the table above on such date.
|
|
(3)
|
Based upon information provided in a Schedule 13G/A for such entity filed
with the SEC on January 22, 2024, reporting beneficial ownership as of December 31, 2023, with sole dispositive power as to all shares and sole voting power as to 4,935,576 shares.
|
|
(4)
|
Based upon information provided in a Schedule 13G/A for such entity filed
with the SEC on February 13, 2024, reporting beneficial ownership as of December 29, 2023, with sole dispositive power as to 3,698,113 shares, shared dispositive power of 93,399 shares, and shared voting power as to 59,244 shares.
|
61
Security Ownership of Certain Beneficial Owners and of Management
|
(5)
|
Based upon information provided in a Schedule 13G/A for such entity filed
with the SEC on February 7, 2024, reporting beneficial ownership as of December 31, 2023, with shared dispositive and voting powers as to all shares.
|
|
(6)
|
Based upon information provided in a Schedule 13G/A filed with the SEC on
February 9, 2024, reporting beneficial ownership as of December 31, 2023, with sole dispositive and voting powers as to all shares.
|
|
(7)
|
Consists of 135,970 shares such person has the right to acquire pursuant to
Stock Options, 1,804 shares held in such person’s Company 401(k) retirement account, and 45,798 shares held directly.
|
|
(8)
|
Consists of 35,200 shares such person has the right to acquire pursuant to
Stock Options, 912 shares held in such person’s Company 401(k) retirement account and 13,775 shares held directly.
|
|
(9)
|
Consists of 13,446 shares such person has the right to acquire pursuant to Stock
Options, and 12,430 shares held directly.
|
|
(10)
|
Consists of 13,446 shares such person has the right to acquire pursuant to Stock
Options, and 4,583 shares held directly.
|
|
(11)
|
Consists of 13,446 shares such person has the right to acquire pursuant to Stock
Options, and 3,470 shares held directly.
|
|
(12)
|
Consists of 7,980 shares such person has the right to acquire pursuant to
Stock Options, 530 shares held in such person’s Company 401(k) retirement plan account and 3,450 shares held directly.
|
|
(13)
|
Consists of 6,476 shares such person has the right to acquire pursuant to Stock
Options and 1,197 shares held directly.
|
|
(14)
|
Consists of 520 shares such person has the right to acquire pursuant to Stock
Options, 331 shares held in such person’s Company 401(k) retirement plan account and 851 shares held directly.
|
|
(15)
|
Consists of 1,406 shares such person has the right to acquire pursuant to Stock
Options.
|
|
(16)
|
Consists of 520 shares such person has the right to acquire pursuant to Stock
Options, and 286 shares held in such person’s Company 401(k) retirement plan account.
|
62
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors
and officers, and persons who beneficially own more than 10% of the Company’s ordinary shares, to file reports of ownership and reports of changes in ownership with the SEC and the NYSE. To the Company’s knowledge, based solely on its review of
such forms received by the Company and written representations that no other reports were required, all Section 16(a) filing requirements were complied with for the year 2023.
63
Information Relating to Proposal 2: Ratification of Appointment of
Independent Registered Public Accounting Firm
Principal Accountant Fees and Services
During 2023, the Company retained RSM to audit the consolidated financial statements for
the fiscal year ended 2023. In addition, the Company also retained RSM to provide services relating to Management’s Assessment of Internal Controls as required by Section 404 of the Sarbanes-Oxley Act, as well as for other audit-related services.
During the period covering the fiscal years ended December 31, 2023 and 2022, RSM performed the following professional services:
| |
|
| |
2023
|
| |
2022
|
|
| |
Audit fees
(1)
|
| |
$1,274,671
|
| |
$1,362,465
|
|
| |
Audit-related fees
(2)
|
| |
229,970
|
| |
316,136
|
|
| |
Tax fees
(3)
|
| |
8,400
|
| |
151,000
|
|
| |
Total fees
|
| |
$
1,513,041
|
| |
$
1,829,601
|
|
|
(1)
|
Audit fees relate to audit of the annual consolidated financial statements
and quarterly reviews, including out of pocket disbursements and administrative charges, and fees related to foreign statutory audits. 2023 also includes fees related to S-8 filing.
|
|
(2)
|
Audit-related fees for 2023 consist of fees paid for the employee benefit
plan audit and fees paid for unconsummated acquisition financial due diligence procedures. Audit-related fees for 2022 consist of fees paid for the employee benefit plan audit and fees paid for financial due diligence procedures related
to consummated acquisitions.
|
|
(3)
|
Tax fees for 2023 consist of unconsummated acquisition tax due diligence
procedures. Tax fees for 2022 consist of tax due diligence procedures related to consummated acquisitions.
|
Audit Committee Financial Experts
The Board of Directors has determined that Mr. Knutson, the Chair of the Audit Committee,
Mr. Rigaud and Ms. Vicente, both members of the Audit Committee, are “audit committee financial experts” as defined under SEC rules.
Policy on Pre-Approval of Audit and Non-Audit Services
All audit and non-audit services provided to the Company by the independent accountants
are pre-approved by the Audit Committee or in certain instances by one or more of its members pursuant to delegated authority. At the beginning of each year, the Audit Committee reviews and approves all known audit and non-audit services and fees
to be provided by and paid to the independent accountants. During the year, specific audit and non-audit services or fees not previously approved by the Audit Committee are approved in advance by the Audit Committee or in certain instances by one
or more of its members pursuant to delegated authority. In addition, during the year the Chief Financial Officer and the Audit Committee monitor actual fees to the independent accountants for audit and non-audit services, as appropriate.
The Audit Committee reviewed all audit and non-audit services provided by RSM with respect
to the fiscal year ended December 31, 2023 and concluded that the provision of such services was compatible with maintaining independence in the conduct of its auditing functions. All audit and non-audit services provided by RSM described in the
table above were pre-approved by the Audit Committee.
The Board of Directors has appointed an Audit Committee consisting of four directors. Each
member of the Audit Committee is independent as defined under the Nasdaq Stock Market LLC and SEC independence requirements applicable to audit committee members. The Board of Directors has adopted a written charter with respect to the Audit
Committee’s responsibilities. The Audit Committee oversees the Company’s internal and independent auditors and assists the Board of Directors in overseeing matters relating to the Company’s financial reporting process and risk exposure.
In fulfilling its responsibilities, the Audit Committee reviewed and discussed the audited
financial statements for the fiscal year ended December 31, 2023 with management and discussed with RSM: (i) the audit; and, the matters required to be discussed by Public Company Accounting Oversight Board (“
PCAOB
”)
Auditing Standard No. 1301 (Communications with Audit Committees). This included a discussion of the RSM’s judgment as to the quality, not just the acceptability, of the Company’s accounting principles as applied to
64
the Company’s financial reporting, and such other matters that generally accepted auditing
standards require to be discussed with the Audit Committee. The Audit Committee also received from RSM the written disclosures and letter required by applicable requirements of the PCAOB regarding its communications with the Audit Committee
concerning independence. Audit Committee also discussed with RSM and management RSM’s independence.
Management is responsible for maintaining internal controls over financial reporting and
assessing the effectiveness of internal control over financial reporting. RSM’s responsibility is to express an opinion on the effectiveness of the Company’s internal control over financial reporting based on its audit. In fulfilling its
oversight responsibilities, the Audit Committee reviewed the Company’s assessment process of internal controls over financial reporting. The Audit Committee reviewed with RSM any deficiencies that had been identified during its engagement.
The Audit Committee also considered whether the provision of non-audit services by RSM to
the Company is compatible with RSM’s independence. RSM advised the Audit Committee that RSM was, and continues to be, independent with respect to the Company.
Based upon the reviews, discussions and considerations referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved) that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2023 for filing with the Securities and Exchange
Commission.
The Audit Committee has also appointed RSM as the Company’s independent auditors for 2024.
Daniel Knutson (Chair)
Joyce Lee
Olivier Rigaud
Monica Vicente
65
Maryland law and the Company’s Bylaws require the presence of a quorum for the meeting,
defined as the presence at the Annual Meeting or represented by proxy of shareholders entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting. Abstentions will be treated as “present” for purposes of determining the
presence of a quorum for the Annual Meeting.
The voting securities of the Company consist of its Common Stock, of which 32,423,468
shares were outstanding on the Record Date. Each share of Common Stock outstanding on the Record Date will be entitled to one vote.
Shareholders who wish to have proposals considered for inclusion in the Proxy Statement
and form of proxy for our 2025 annual meeting of our shareholders pursuant to Rule 14a-8 under the Exchange Act must cause their proposals to be received in writing by our Secretary at 5 Paragon Drive, Montvale, NJ 07645 no later than
December 27, 2024. Any proposal should be addressed to our Secretary and may be included in the following year’s proxy materials only if such proposal complies with the rules and regulations promulgated by the SEC. Nothing in this section shall
be deemed to require us to include in our Proxy Statement or our proxy relating to any annual meeting any shareholder proposal that does not meet all of the requirements for inclusion established by the SEC.
In addition, our Bylaws currently require that we be given advance written notice of
nominations for election as directors and other matters that shareholders wish to present for action at an annual meeting of shareholders (other than matters included in our proxy materials in accordance with Rule 14a-8 under the Exchange Act).
Our Secretary must receive such notice at 5 Paragon Drive, Montvale, NJ 07645 not later than the close of business on March 22, 2025 and no earlier than February 20, 2025 for nominations and other matters to be presented at the 2025 Annual
Meeting of our Shareholders. However, in the event that the 2025 annual meeting is held before May 21, 2025 or after August 19, 2025, for notice by a shareholder to be timely it must be received no earlier than 120 days prior to the date of the
2025 annual meeting and not later than 5:00 p.m. EDT on the later of (a) 90 days prior to the date of the 2025 annual meeting and (b) the tenth day following the day on which we first made a public announcement of the date of such meeting.
Each Director is encouraged to attend annual meetings of shareholders. All then-current
directors attended the Company’s 2023 Annual Meeting of Shareholders. Mr. Rigaud and Ms. Vicente did not join the Board until September 6, 2023.
The Board of Directors is not aware of any matters to come before the Annual Meeting
other than as described above. If any matter other than as described above should come before the Annual Meeting, then the persons named in the enclosed form of Proxy Card will have discretionary authority to vote all proxies with respect thereto
in accordance with their judgment.
66
Our Annual Meeting will be held virtually. There will be no physical meeting location. The
Annual Meeting will only be conducted via live webcast. We encourage our shareholders to participate in the Annual Meeting. As described below, technical support will be available to you on the Annual Meeting date through the Meeting Platform. If
you have questions about participating in the Annual Meeting prior to the meeting date, please email shareholder@broadridge.com or call at 1-855-449-0975.
To participate in the Annual Meeting, visit www.virtualshareholdermeeting.com/BCPC2024 and
enter the 16-digit control number included on Proxy Card or Notice of Internet Availability or on the instructions that accompanied your proxy materials. You may begin to log into the Meeting Platform beginning at 8:45 a.m. EDT on June 20, 2024.
The Annual Meeting will begin promptly at 9:00 a.m. EDT on June 20, 2024.
If you wish to submit a question, you may submit your question during the Annual Meeting,
by logging into the Meeting Platform at www.virtualshareholdermeeting.com/BCPC2024, typing your question into the “Ask a Question” field, and clicking “Submit.”
Questions pertinent to Annual Meeting matters will be answered during the Annual Meeting,
subject to time constraints. Questions regarding personal matters, including those related to employment, product or service issues, or suggestions for product innovations, are not pertinent to Annual Meeting matters and therefore will not be
answered. Any questions pertinent to Annual Meeting matters that cannot be answered during the Annual Meeting due to time constraints will be posted online and answered at https://balchem.com/our-company/investor-relations/. The questions and
answers will be available as soon as practical after the Annual Meeting and will remain available until one week after posting.
If you encounter any technical difficulties with the Meeting Platform on the Annual
Meeting day, please call the technical support number that will be posted on the Meeting Platform. Technical support will be available starting at 8:30 a.m. EDT on June 20, 2024 and will remain available until thirty minutes after the Annual
Meeting has finished.
| |
|
| |
/s/ Hatsuki Miyata
|
|
| |
|
| |
|
|
| |
|
| |
Hatsuki Miyata
General Counsel and Secretary
|
|
| |
|
| |
April 26, 2024
|
|
| |
|
| |
|
|
| |
|
| |
Montvale, New Jersey
|
|
The Annual Report is being mailed or otherwise made available to
shareholders. The Annual Report does not form part of this Proxy Statement for the solicitation of proxies.
67
NON-GAAP FINANCIAL MEASURES
In addition to disclosing financial results in accordance
with United States (U.S.) generally accepted accounting principles (GAAP), this proxy statement contains non-GAAP financial measures that we believe are helpful in understanding and comparing our past financial performance and our future results.
The non-GAAP financial measures in this proxy statement include adjusted net earnings and the related adjusted per diluted share amounts, EBITDA, and adjusted EBITDA. The non-GAAP financial measures disclosed by the company exclude certain
business combination accounting adjustments and certain other items related to acquisitions, certain equity compensation, nonqualified deferred compensation plan expense (income), and certain one-time or unusual transactions. Detailed non-GAAP
adjustments are described in the reconciliation tables below and also explained in the related footnotes. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance
with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Investors should not consider non-GAAP measures as alternatives to the related GAAP measures.
Set forth below are reconciliations of the non-GAAP financial measures to the most
directly comparable GAAP financial measures.
Table 1
Reconciliation of Non-GAAP Measures to GAAP
(Dollars in thousands, except per
share data)
(unaudited)
| |
|
| |
Year Ended
December 31,
|
| |||
| |
|
| |
2023
|
| |
2022
|
|
| |
Reconciliation of adjusted net earnings
|
| |
|
| |
|
|
| |
GAAP net earnings
|
| |
$ 108,543
|
| |
$105,367
|
|
| |
Inventory valuation adjustment
(1)
|
| |
1,419
|
| |
3,057
|
|
| |
Amortization of intangible assets and finance lease
(2)
|
| |
28,561
|
| |
27,816
|
|
| |
Restructuring costs
(3)
|
| |
8,365
|
| |
—
|
|
| |
Transaction and integration costs and unallocated legal fees
(4)
|
| |
(9,683)
|
| |
3,109
|
|
| |
Net realized gain on foreign currency forward contracts
(5)
|
| |
—
|
| |
(512)
|
|
| |
Income tax adjustment
(6)
|
| |
(7,487
)
|
| |
(8,306
)
|
|
| |
Adjusted net earnings
|
| |
$
129,718
|
| |
$
130,531
|
|
| |
Adjusted net earnings per common share - diluted
|
| |
$
4.00
|
| |
$
4.03
|
|
A-
1
The following table sets forth a reconciliation of Net Income calculated using amounts
determined in accordance with GAAP to EBITDA and to Adjusted EBITDA for the years ended December 31, 2023 and 2022.
Table 2
(unaudited)
| |
|
| |
Year Ended
December 31,
|
| |||
| |
|
| |
2023
|
| |
2022
|
|
| |
Net income - as reported
|
| |
$
108,543
|
| |
$
105,367
|
|
| |
Add back:
|
| |
|
| |
|
|
| |
Provision for income taxes
|
| |
28,718
|
| |
28,382
|
|
| |
Interest and other expenses
|
| |
21,932
|
| |
11,437
|
|
| |
Depreciation and amortization
|
| |
54,647
|
| |
51,513
|
|
| |
EBITDA
|
| |
213,840
|
| |
196,699
|
|
| |
Add back certain items:
|
| |
|
| |
|
|
| |
Non-cash compensation expense related to equity awards
|
| |
16,052
|
| |
13,224
|
|
| |
Inventory valuation adjustment
(1)
|
| |
1,419
|
| |
3,057
|
|
| |
Restructuring costs
(3)
|
| |
8,365
|
| |
—
|
|
| |
Transaction and integration costs and unallocated legal fees
(4)
|
| |
(9,683)
|
| |
3,109
|
|
| |
Nonqualified deferred compensation plan expense (income)
(7)
|
| |
917
|
| |
(401
)
|
|
| |
Adjusted EBITDA
|
| |
$230,910
|
| |
$
215,688
|
|
|
(1)
|
Inventory valuation adjustment:
Business combination accounting
principles require us to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company’s cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment to our cost of
sales excludes the expected profit margin component that is recorded under business combination accounting principles. We believe the adjustment is useful to investors as an additional means to reflect cost of sales and gross margin
trends of our business.
|
|
(2)
|
Amortization of intangible assets and finance lease
: Amortization of
intangible assets and finance lease consists of amortization of customer relationships, trademarks and trade names, developed technology, regulatory registration costs, patents and trade secrets, capitalized loan issuance costs, other
intangibles acquired primarily in connection with business combinations, an intangible asset in connection with a company-wide ERP system implementation, and one finance lease. We record expense relating to the amortization of these
intangibles and finance lease in our GAAP financial statements. Amortization expenses for our intangible assets and finance lease are inconsistent in amount and are significantly impacted by the timing and valuation of an acquisition.
Consequently, our non-GAAP adjustments exclude these expenses to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.
|
|
(3)
|
Restructuring costs
: Expenses related to a reorganization of the
business.
|
|
(4)
|
Transaction and integration costs and unallocated legal fees
:
Transaction and integration costs related to acquisitions and divestitures are expensed in our GAAP financial statements. Unallocated legal fees for transaction-related non-compete agreement disputes are expensed in our GAAP financial
statements. Management excludes these items for the purposes of calculating Adjusted EBITDA and other non-GAAP financial measures. We believe that excluding these items from our non-GAAP financial measures is useful to investors because
these are items associated with transactions that are inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult.
|
|
(5)
|
Net realized gain on foreign currency exchange forward contracts
: The
net realized gain on foreign currency exchange forward contracts related to four short-term foreign currency exchange forward contracts with JP Morgan Chase, N.A. in connection with the Kappa acquisition. These contracts did not qualify
for hedge accounting and the net gain was recorded as other income in our GAAP financial statements. We believe that excluding the gain from our Non-GAAP financial measures is useful to investors because such income is inconsistent in
amount and frequency causing comparison of current and historical financial results to be difficult.
|
|
(6)
|
Income tax adjustment
: For purposes of calculating adjusted net
earnings and adjusted diluted earnings per share, we adjust the provision for (benefit from) income taxes to tax effect the taxable and deductible non-GAAP adjustments described above as they have a significant impact on our income tax
(benefit) provision. Additionally, the income tax adjustment is adjusted for the impact of adopting ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” and uses our non-GAAP effective rate applied to both our GAAP
earnings before income tax expense and non-GAAP adjustments described above. See Table 3 for the calculation of our non-GAAP effective tax rate.
|
|
(7)
|
Nonqualified deferred compensation plan (income) expense
: Gains and
losses on rabbi trust assets related to our nonqualified deferred compensation plan are recorded in other (income) expense while the offsetting increases or decreases to the deferred compensation liability are recorded within earnings
from operations. The increases and decreases in the deferred compensation liability are driven by market volatility and are not a true reflection of company performance. We believe excluding these amounts from our non-GAAP financial
measures is useful to investors because these items are inconsistent in amount based on market conditions causing comparison of current and historical financial results to be difficult. Adjustments have been made to the prior period
(2022) to conform with the current period (2023).
|
A-
2
TABLE OF CONTENTS
Letter to Shareholders Notice of Annual Meeting About Balchem Forward-Looking Information Proxy Statement of Balchem Corporation Meeting Agenda and Recommendations Questions and Answers about the Balchem Annual Meeting MANAGEMENT PROPOSALS PROPOSAL 1. ELECTION OF DIRECTORS Directors Standing for Re-Election print Vote Required to Elect Directors print Nominees Biographical Information print Continuing Directors Biographical Information print Board Matrices print PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PROPOSAL 3: ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS CORPORATE GOVERNANCE Governance Principles Code of Business Conduct and Ethics print Board Committee Charters print Director Independence print Corporate Risk Oversight print Sustainability print Cybersecurity print Board Structure & Responsibilities Committees of the Board of Directors Audit Committee print Compensation Committee print Corporate Governance and Nominating Committee print Executive Committee. print Executive Sessions of the Board of Directors print Board Chair print Lead Director print Nominations of Directors print Board Refreshment and Diversity print Meeting Attendance print Communicating with the Board of Directors and Shareholder Engagement print Director Compensation print COMPENSATION DISCUSSION AND ANALYSIS Named Executive Officers Compensation Objectives and Philosophy