CAL-MAINE FOODS INC
10-Ks and 10-Qs
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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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[ ]
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Preliminary Proxy Statement
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[ ]
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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[X]
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Definitive Proxy Statement
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[ ]
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Definitive Additional Materials
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[ ]
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Soliciting Material Pursuant to §240.14a-12
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Cal-Maine Foods, Inc.
(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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[X]
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No fee required.
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[ ]
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1)
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Title of each class of securities to which transaction applies:
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2)
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Aggregate number of securities to which transaction applies:
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3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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4)
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Proposed maximum aggregate value of transaction:
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5)
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Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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1)
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Amount Previously Paid:
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2)
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Form, Schedule or Registration Statement No.:
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3)
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Filing Party:
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4)
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Date Filed:
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Notice of
Annual Meeting
and
Proxy Statement
October 5, 2018
TABLE OF CONTENTS
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Page
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Notice of Annual Meeting
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1
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General Matters
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2
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Voting Shares
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3
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Ownership of Voting Securities by Certain Beneficial Owners and Management
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5
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Proposal No. 1: Election of Directors
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8
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Nominees for Directors
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9
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Executive Officers of the Company
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11
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Corporate Governance
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11
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Meetings and Attendance
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11
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Board Committees
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11
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Consideration of Director Nominees; Diversity
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12
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Stockholder Communications
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13
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Risk Oversight
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13
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Stock Ownership Guidelines
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13
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Board Independence and Impact of “Controlled Company” Status
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13
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Executive Sessions
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14
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Code of Ethics
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14
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Board Leadership Structure
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14
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Chairman Emeritus
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14
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Section 16(a) Beneficial Ownership Reporting Compliance
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14
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Related-Party Transactions
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14
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Compensation Discussion and Analysis
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15
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Compensation Philosophy and Process
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16
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Compensation Practices and Risks
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16
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Elements of Compensation
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16
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General Matters Regarding Executive Compensation
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18
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Compensation Advisors
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18
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Compensation Committee Report
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19
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Compensation Committee Interlocks and Insider Participation
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19
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Compensation Tables
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20
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Potential Payments Upon Termination or Change in Control
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25
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Pay Ratio Disclosure
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26
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Director Compensation
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27
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Report of the Audit Committee
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28
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Fees and Related Disclosures for Accounting Services
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28
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Proposal No. 2: Ratification of Selection of Independent Registered Public Accounting Firm
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29
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Stockholder Proposals
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29
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Other Matters
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29
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Incorporation by Reference
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29
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NOTICE OF ANNUAL MEETING
October 5, 2018
October 5, 2018
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Cal-Maine Foods, Inc. will be held at the corporate offices of Cal-Maine Foods, Inc. at 3320 W. Woodrow Wilson Avenue, Jackson, Mississippi 39209, at 10:00 a.m., Central Time, on Friday, October 5, 2018, for the following purposes:
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1.
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To elect six directors to serve for the ensuing year;
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2.
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To ratify the selection of Frost, PLLC as our independent registered public accounting firm for fiscal year 2019; and
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3.
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To consider and act upon such other matters as may properly come before the Annual Meeting or any adjournments thereof.
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August 10, 2018, has been fixed as the record date for determination of stockholders entitled to vote at the Annual Meeting and to receive notice thereof.
The directors sincerely desire your presence at the meeting. However, so that we may be sure your vote will be included, please sign, date and return the enclosed proxy card promptly. A self-addressed, postage-paid return envelope is enclosed for your convenience.
FOR THE BOARD OF DIRECTORS
TIMOTHY A. DAWSON SECRETARY
DATED: August 31, 2018
STOCKHOLDERS ARE URGED TO VOTE BY DATING, SIGNING AND RETURNING THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
1
CAL-MAINE FOODS, INC.
3320 W. Woodrow Wilson Avenue
Jackson, Mississippi 39209
PROXY STATEMENT FOR ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD OCTOBER 5, 2018
OF STOCKHOLDERS TO BE HELD OCTOBER 5, 2018
The information set forth in this proxy statement is furnished in connection with the Annual Meeting of Stockholders of Cal‑Maine Foods, Inc. (the “Company”) to be held on October 5, 2018, at 10:00 a.m., central time, at our principal executive offices, 3320 W. Woodrow Wilson Avenue, Jackson, Mississippi 39209. A copy of our Annual Report to Stockholders for the fiscal year ended June 2, 2018 (the “Annual Report”), accompanies this proxy statement. Our telephone number is (601) 948-6813. The terms “we,” “us” and “our” used in this proxy statement refer to the Company.
GENERAL MATTERS
Additional copies of the Annual Report, and Notice of Annual Meeting, proxy statement and proxy card for the 2018 Annual Meeting of Stockholders will be furnished without charge to any stockholder upon written request to: Cal-Maine Foods, Inc., ATTN: Timothy A. Dawson, Secretary, Post Office Box 2960, Jackson, Mississippi 39207. Exhibits to the Annual Report on Form 10-K for the fiscal year ended June 2, 2018, may be furnished to stockholders upon the payment of an amount equal to the reasonable expenses incurred by us in furnishing such exhibits. A list of the stockholders of record as of the record date will be available for inspection by stockholders of the Company at the Company’s corporate offices for 10 days preceding the date of the Annual Meeting.
The following proxy materials are first being sent on or about August 31, 2018 to stockholders of record on August 10, 2018 and, while we are not soliciting proxies by internet, are being made available free of charge at our website, www.calmainefoods.com:
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The Notice of Annual Meeting and Proxy Statement for the 2018 Annual Meeting of Stockholders
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The Annual Report
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The form of proxy card being distributed to stockholders in connection with the 2018 Annual Meeting of Stockholders
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Certain stockholders sharing an address may have received only one copy of this proxy statement and the Annual Report. The Company will promptly deliver, upon oral or written request, a separate copy of the proxy statement and the Annual Report to a stockholder at a shared address to which only a single copy of such documents were delivered.
If you want to receive separate copies of the Company’s Annual Report and proxy statement in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you can make these requests through the following sources:
Stockholders of record should contact the Company’s Corporate Secretary in writing or by telephone at Cal-Maine Foods, Inc., ATTN: Timothy A. Dawson, Secretary, Post Office Box 2960, Jackson, Mississippi 39207, telephone number (601) 948-6813.
Stockholders who are beneficial owners should contact their bank, broker or other nominee record holder.
Our Board of Directors is soliciting the enclosed proxy. The proxy may be revoked by a stockholder at any time before it is voted by filing with our Secretary a written revocation of such proxy or a duly executed proxy bearing a later date. The proxy also may be revoked by a stockholder attending the meeting, withdrawing the proxy, and voting in person.
The Company is not using a proxy solicitor. All expenses incurred in connection with the solicitation of proxies will be paid by us. In addition to the solicitations of proxies by mail, our directors, officers, and regular employees may solicit proxies in person, by telephone, mail, email, telecopy or employee communications. We will not pay such persons additional compensation for their proxy solicitation efforts. We will, upon request, reimburse banks, brokerage houses and other institutions, and fiduciaries for their expenses in forwarding proxy materials to their principals. No proxies will be solicited via the Internet or website posting.
2
VOTING SHARES
Stockholders of record at the close of business on August 10, 2018, are eligible to vote at the Annual Meeting in person or by proxy. As of the record date, 43,830,521 shares of our common stock were outstanding, and 4,800,000 shares of our Class A common stock were outstanding.
Each share of common stock is entitled to one vote on each matter to be considered at the Annual Meeting. Each share of Class A common stock is entitled to 10 votes on each such matter. The holders in person or by proxy of shares of our common stock and/or Class A common stock representing a majority of the voting interest of all the outstanding shares of our common stock and Class A common stock, considered together as a group, will constitute a quorum for purposes of the 2018 Annual Meeting of Stockholders. The ratification of the selection of our independent registered public accounting firm requires the vote of a majority of the voting interest present in person or represented by proxy. The election of directors requires a plurality of the votes cast.
If a quorum is not present in person or by proxy, the holders of shares representing a majority of the voting interest of all such shares present may, without notice other than announcement at the meeting, adjourn the meeting from time to time, until a quorum is present, and at any such adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the original meeting.
If your shares are held in a stock brokerage account by a bank or other nominee, you are considered the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by your bank or other nominee that is considered the stockholder of record of those shares. As the beneficial owner, you have the right to direct your bank or other nominee on how to vote your shares and your bank or other nominee will send you instructions on how to submit your voting instructions.
If you are a beneficial owner and you do not provide voting instructions to your bank or other nominee holding shares for you, your shares will not be voted with respect to any proposal for which the stockholder of record does not have discretionary authority to vote. Rules of the New York Stock Exchange (“NYSE”) determine whether proposals presented at stockholder meetings are “discretionary” or “non-discretionary.” If a proposal is determined to be discretionary, your bank or other nominee is permitted under NYSE rules to vote on the proposal without receiving voting instructions from you. If a proposal is determined to be non-discretionary, NYSE rules prohibit your bank or other nominee to vote on the proposal without receiving voting instructions from you. A “broker non-vote” occurs when a bank or other nominee holding shares for a beneficial owner returns a valid proxy, but does not vote on a particular proposal because it does not have discretionary authority to vote on the matter and has not received voting instructions from the stockholder for whom it is holding shares.
Under the NYSE rules, the proposal relating to the ratification of the appointment of our independent registered public accounting firm is a discretionary proposal, but the proposal relating to the election of directors is a non-discretionary proposal.
Abstentions occur when stockholders are present at the Annual Meeting but fail to vote or voluntarily withhold their vote for any of the matters upon which the stockholders are voting. Abstentions are counted for purposes of determining whether a quorum is present and will have the same effect as a vote against proposals other than the election of directors.
Election of Directors
. Both the shares of common stock and the shares of Class A common stock have the right of cumulative voting in the election of directors. Cumulative voting means that each stockholder is entitled to cast as many votes as he or she has the right to cast (before cumulating votes), multiplied by the number of directors to be elected. All such votes may be cast for a single nominee or may be distributed among the nominees to be voted for as the stockholder sees fit. To exercise cumulative voting rights by proxy, a stockholder must clearly designate the number of votes to be cast for any given nominee. Under Delaware law, votes that are withheld from a director’s election will be counted toward a quorum but will not affect the outcome of the vote on the election of a director. Broker non-votes will not be taken into account in determining the outcome of the election. The election of directors requires a plurality of the votes cast, which means that the candidates receiving the highest number of “FOR” votes will be elected.
The following table summarizes the votes required for passage of each proposal and the effect of abstentions and uninstructed shares held by brokers.
3
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Proposal
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Voting Options
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Votes Required
To Adopt Proposal
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Effect of Abstentions
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Effect of Broker Non-Votes
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No.1: Election of directors
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For or withhold on all nominees, or allocate votes among the nominees
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Plurality of votes cast
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N/A
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No effect
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No. 2: Ratification of selection of independent registered public accounting firm
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For, against or abstain
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Majority of voting interest present in person or by proxy
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Treated as votes against
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N/A
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Shares represented by a properly executed and returned proxy card will be voted at the Annual Meeting in accordance with the instructions indicated thereon. If no instructions are indicated, the person or persons named on the proxy card will vote:
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FOR
the election of the six nominees named in this proxy statement to serve as directors of the Company;
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FOR
the ratification of our selection of Frost, PLLC as independent registered public accounting firm of the Company for fiscal year 2019; and
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In their discretion
with respect to any unanticipated matters not included in this proxy statement that may properly come before the Annual Meeting or any adjournments thereof.
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In accordance with Delaware law, the Company will appoint two inspectors of election. The inspectors will take charge of and will count the votes and ballots cast at the Annual Meeting and will make a written report on their determination.
4
OWNERSHIP OF VOTING SECURITIES BY CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information as to the beneficial ownership of our common stock and Class A common stock as of August 10, 2018, unless otherwise indicated, by:
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each person known by us to beneficially own more than 5% of either class outstanding, and
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each director of the Company, each nominee to serve as a director, each executive officer named in the Summary Compensation Table (each a “named executive officer”) and by all directors and executive officers as a group.
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Name of Beneficial
Owner (1)
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Common Stock and Class A Common Stock
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Percentage of Total
Voting Power (3)
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Number of Shares
Beneficially Owned (2)
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Percentage of Class
Outstanding
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Common
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Class A
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Common
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Class A
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Fred R. Adams, Jr. (through
Adolphus B. Baker and Jean Morris
Adams, as his Co-Conservators) (4)
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11,674,968
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3,487,192
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26.6
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%
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72.6
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%
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50.7
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%
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Jean Morris Adams (5)
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11,674,968
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3,487,192
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26.6
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%
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72.6
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%
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50.7
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%
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Adolphus B. Baker (6)
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11,097,737
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4,800,000
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25.3
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%
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100.0
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%
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64.4
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%
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Timothy A. Dawson (7)
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24,363
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-0-
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*
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-0-
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*
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Charles J. Hardin (8)
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24,767
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-0-
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*
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-0-
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*
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Robert L. Holladay, Jr. (9)
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13,919
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-0-
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*
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-0-
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*
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Letitia C. Hughes (10)
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32,030
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-0-
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*
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-0-
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*
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Sherman L. Miller (11)
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17,021
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-0-
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*
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-0-
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*
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James E. Poole (12)
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8,430
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-0-
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*
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-0-
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*
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Steve W. Sanders (13)
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12,430
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-0-
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*
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-0-
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*
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T Rowe Price Associates, Inc.
(14)
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4,765,073
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-0-
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10.9
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%
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-0-
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5.2
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%
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BlackRock, Inc. (15)
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3,771,116
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-0-
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8.6
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%
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-0-
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4.1
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%
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The Vanguard Group, Inc. (16)
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2,728,523
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-0-
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6.2
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%
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-0-
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3.0
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%
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Janus Henderson Group plc
(17)
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2,302,309
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-0-
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5.3
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%
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-0-
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2.5
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%
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Cal-Maine Foods, Inc. KSOP (18)
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2,191,266
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-0-
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5.0
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%
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-0-
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2.4
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%
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All directors and executive officers as a group (10 persons) (19)(20)
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11,263,993
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4,800,000
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25.7
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%
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100.0
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%
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64.5
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%
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___________________
* Less than 1%
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(1)
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The mailing address of the Cal-Maine Foods, Inc. KSOP (“KSOP”), Mr. and Mrs. Adams and Mr. Baker is Cal-Maine Foods, Inc., Post Office Box 2960, Jackson, MS 39207.
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(2)
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The information as to beneficial ownership is based on information known to us or statements furnished to us by the beneficial owners. As used in this table, “beneficial ownership” has the meaning given in Rule 13d-3 under the Securities Exchange Act of 1934 (the “Exchange Act”), i.e. the sole or shared power to vote or to direct the voting of a security, or the sole or shared investment power with respect to a security (the power to dispose of or to direct the disposition of a security). For purposes of this table, a person is deemed as of any date to have “beneficial ownership” of any security that such person has the right to acquire within 60 days of such date.
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5
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(3)
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Percentage of total voting power represents voting power with respect to all shares of our common stock and Class A common stock, voting together as a single class. Each share of common stock is entitled to one vote and each share of Class A common stock is entitled to ten votes. Shares of Class A common stock are automatically converted into common stock on a share per share basis in the event the beneficial or record ownership of any such share of Class A common stock is transferred to any person or entity other than an Mr. Adams or his “Immediate Family Members” or “Permitted Transferees,” as defined in our Second Amended and Restated Certificate of Incorporation filed July 20, 2018. Each share of Class A common stock is convertible, at the option of its holder, into one share of common stock at any time.
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(4)
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Mr. Adams is our Chairman Emeritus. Includes 618,308 shares of common stock accumulated under the KSOP, and 1,110,339 shares of common stock owned by Mr. Adams’ spouse separately and as to which Mr. Adams disclaims beneficial ownership. A conservatorship was established on November 7, 2011, to manage Mr. Adams’ affairs, with Mrs. Adams and Mr. Baker as co-conservators, as a result of the impairment of Mr. Adams’ health related to his previously disclosed stroke. Mr. Adams continues to consult regularly with the Company, and it is expected that he will continue to do so for as long as he is able. Pursuant to the conservatorship, Mr. Baker and Mrs. Adams have the exclusive power to vote or direct the voting of Mr. Adams’ shares. While they also have dispositive power over such shares, disposition of such shares may require court approval in accordance with Mississippi conservatorship laws. Mr. Adams’ beneficial ownership also includes (i) 3,312,601 shares held of record by the Revocable Trust Agreement of Jean Reed Adams Trust dated as of July 20, 2018 (“Mrs. Adams’ Trust”), and (ii) 6,633,720 shares of common stock and 3,487,192 shares of Class A Common Stock held of record by the DLNL, LLC, a Delaware limited liability company (“Daughters’ LLC”), of which the Revocable Trust Agreement of Fred R. Adams, Jr. Daughters’ Trust dated as of July 20, 2018 (“Daughters’ Trust”) is a member. Mr. Adams is the settlor and Mr. Baker and Mrs. Adams are the joint trustees under both the Mrs. Adams’ Trust and the Daughters’ Trust and share voting power. In addition, Mr. Baker is the sole managing member of the Daughters’ LLC with sole voting power, provided that, during the lifetime of Mr. Adams, Mr. Baker is required to vote shares previously held by Mr. Adams’ conservatorship as directed by the trustees of the Daughters’ Trust. Mr. Adams’ beneficial ownership is reported as of August 15, 2018.
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(5)
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Mrs. Adams is the spouse of Mr. Adams, our Chairman Emeritus. She and Mr. Baker serve as co-conservators of the above referenced conservatorship established for Mr. Adams and share voting power over Mr. Adams’ shares. As a result, her beneficial ownership includes 618,308 shares of common stock accumulated under Mr. Adams’ KSOP account. While Mrs. Adams and Mr. Baker also share dispositive power over such shares, disposition of such shares may require court approval in accordance with Mississippi conservatorship laws. Mrs. Adams’ beneficial ownership also includes 3,312,601 shares held of record by Mrs. Adams’ Trust, and 6,633,720 shares of common stock and 3,487,192 shares of Class A Common Stock held of record by the Daughters’ LLC, of which the Daughters’ Trust is a member. As noted above, Mr. Baker and Mrs. Adams are the joint trustees under both the Mrs. Adams’ Trust and the Daughters’ Trust and share voting power. Mr. Baker is the sole managing member of the Daughters’ LLC with sole voting power, provided that, during the lifetime of Mr. Adams, Mr. Baker is required to vote shares previously held by Mr. Adams’ conservatorship as directed by the trustees of the Daughters’ Trust. Mrs. Adams’ beneficial ownership is reported as of August 15, 2018.
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(6)
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Mr. Baker is Chairman of the Board, a director and a director nominee, and is our Chief Executive Officer. Includes 233,320 shares of common stock owned by Mr. Baker’s spouse separately as to which Mr. Baker disclaims beneficial ownership, 4,813 shares of common stock accumulated under his spouse’s KSOP account as to which Mr. Baker disclaims beneficial ownership, 146,199 shares of common stock accumulated under Mr. Baker’s KSOP account, and 19,000 shares of unvested restricted common stock. Mr. Baker and Mrs. Adams serve as co-conservators of the above referenced conservatorship established for Mr. Adams and share voting power over Mr. Adams’ shares. As a result, Mr. Baker’s beneficial ownership also includes 618,308 shares of common stock accumulated under Mr. Adams’ KSOP account. While Mr. Baker and Mrs. Adams also share joint dispositive power over such shares, disposition of such shares may require court approval in accordance with Mississippi conservatorship laws. Mr. Baker’s beneficial ownership also includes 3,312,601 shares held of record by Mrs. Adams’ Trust, and 6,633,720 shares of common stock and 4,800,000 shares of Class A Common Stock held of record by the by the Daughters’ LLC, of which the Daughters’ Trust is a member. Mr. Baker and Mrs. Adams are the joint trustees under both the Mrs. Adams’ Trust and the Daughters’ Trust and share voting power. Mr. Baker is the sole managing member of the Daughters’ LLC with sole voting power, provided that, during the lifetime of Mr. Adams, Mr. Baker is required to vote shares previously held by Mr. Adams’ conservatorship as directed by the trustees of the Daughters’ Trust. Mr. Baker’s beneficial ownership is reported as of August 15, 2018.
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6
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(7)
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Mr. Dawson is a director and is our Vice President – Chief Financial Officer, Treasurer, and Secretary. Includes 5,764 shares of common stock accumulated under the KSOP and 6,330 shares of unvested restricted common stock.
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(8)
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Mr. Hardin is our Vice President – Sales. Includes 20,967 shares of common stock accumulated under the KSOP and 3,800 shares of unvested restricted common stock.
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(9)
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Mr. Holladay is our Vice President – General Counsel. Includes 3,628 shares of common stock accumulated under the KSOP and 6,330 shares of unvested restricted common stock.
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(10)
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Ms. Hughes is a director and a director nominee. Includes 5,530 shares of unvested restricted common stock.
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(11)
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Mr. Miller is a director and a director nominee, and is President and Chief Operating Officer. Includes 1,149 shares of common stock accumulated under his spouse’s KSOP account as to which Mr. Miller disclaims beneficial ownership, 3,283 shares of common stock accumulated under Mr. Miller’s KSOP account, and 6,330 shares of unvested restricted common stock.
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(12)
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Mr. Poole is a director and a director nominee. Includes 1,200 shares of common stock owned through Mr. Poole’s individual retirement account and 5,530 shares of unvested restricted common stock.
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(13)
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Mr. Sanders is a director and a director nominee. Includes 5,530 shares of unvested restricted common stock.
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(14)
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This information is based solely on a Schedule 13G/A filed with the Securities and Exchange Commission (the “SEC”) on or about February 14, 2018, by T Rowe Price Associates, Inc. (“Price Associates”). The Schedule 13G/A reports that Price Associates has sole voting power over 812,453 of such shares and sole dispositive power over 4,765,073 of such shares. Price Associates’ address is 100 E. Pratt Street, Baltimore, MD 21202.
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(15)
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This information is based solely on a Schedule 13G/A filed with the Securities and Exchange Commission (the “SEC”) on or about January 29, 2018, by BlackRock, Inc. (“BlackRock”). The Schedule 13G/A reports that BlackRock has sole voting power over 3,697,151 of such shares and sole dispositive power over 3,771,116 of such shares. BlackRock’s address is 55 East 52nd Street, New York, NY 10055.
|
|
(16)
|
This information is based solely on a Schedule 13G/A filed with the Securities and Exchange Commission (the “SEC”) on or about February 8, 2018, by The Vanguard Group, Inc. (“Vanguard”). The Schedule 13G/A reports that Vanguard has sole voting power over 32,314 of such shares, shared voting power over 8,089 of such shares, sole dispositive power over 2,690,631 of such shares, and shared dispositive power over 37,892 of such shares. Vanguard’s address is 100 Vanguard Blvd., Malvern, PA 19355.
|
|
(17)
|
This information is based solely on a Schedule 13G filed with the Securities and Exchange Commission (the “SEC”) on or about February 12, 2018, by Janus Henderson Group plc (“Janus Henderson”). The Schedule 13G reports that Janus Henderson has shared voting and dispositive power over all of such shares. Janus Henderson’ address is 201 Bishopsgate EC2M 3AE, United Kingdom.
|
|
(18)
|
As of August 10, 2018.
|
|
(19)
|
Includes 810,710 shares of common stock accumulated under the KSOP.
|
|
(20)
|
Includes shares of common stock as to which Messrs. Baker and Miller disclaim any beneficial ownership. See Notes (6) and (11) above.
|
The shares of common stock accumulated in the KSOP, as indicated in Notes (4), (5), (6), (7), (8), (9) and (11) above, also are included in the 2,191,266 shares shown in the table as owned by the KSOP.
7
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Our bylaws provide that the number of directors shall be fixed by resolution of the Board of Directors and that the number may not be less than three nor more than 12. The Board of Directors has fixed the number of directors at six as of the date of the Annual Meeting. Unless otherwise specified, proxies will be voted
FOR
the election of the six nominees named below to serve until the next annual meeting of stockholders and until their successors are elected and qualified. If, at the time of the Annual Meeting, any of the nominees named below is unable to serve or for good cause will not serve, the proxies will be voted for the election of such other person or persons as the Board of Directors may designate in their discretion, unless otherwise directed.
The Board of Directors has designated Adolphus B. Baker, Max P. Bowman, Letitia C. Hughes, Sherman L. Miller, James E. Poole and Steve W. Sanders as nominees for election as directors of the Company at the Annual Meeting (each a “Nominee”). As previously reported, Mr. Dawson will retire effective as of the Annual Meeting. Each Nominee other than Mr. Bowman is currently a director of the Company and all Nominees have consented to being named as a nominee in this proxy statement and to serve as a director if elected. If elected, each Nominee will serve until the expiration of his/her term at the next annual meeting of stockholders and until his/her successor is elected and qualified or until his/her earlier death, resignation or removal from office.
Under our bylaws, our directors are elected by a plurality of votes cast. For more information on the voting requirements, see “Voting Shares—Election of Directors” above.
The Board unanimously recommends a vote “FOR” the six Nominees.
8
NOMINEES FOR DIRECTORS
The table below sets forth certain information regarding the business experience and qualifications, attributes and skills of the Nominees for election to the Board of Directors:
|
Name and Tenure
|
Age
|
Business Experience, Qualifications, Attributes and Skills
|
|
Adolphus B. Baker
Director since 1991
|
61
|
Mr. Baker serves as Chairman of the Board and Chief Executive Officer of the Company. He served as President until April 7, 2018. He was elected Chairman of the Board in 2012 and President and Chief Operating Officer in 1997. Mr. Baker served as Chief Operating Officer until he was elected Chief Executive Officer in 2010. He was serving as Vice President and Director of Marketing of the Company when elected President. Previously, Mr. Baker had served as Assistant to the President since 1987 and has been employed by the Company since 1986. He is past chairman of the American Egg Board, United Egg Producers, Egg Clearinghouse, Inc. and Mississippi Poultry Association. He is a director of United Egg Producers, Eggland’s Best, Inc., Trustmark Corporation and Trustmark National Bank. He is also a member of the board of managers of Eggland’s Best, LLC. Mr. Baker is the son-in-law of Fred R. Adams, Jr., our Chairman Emeritus.
Mr. Baker brings a highly informed view of Company operations to the Board’s activities. He is active in the industry and has the depth of knowledge and experience necessary to guide the Company through a continuously changing spectrum of challenges and opportunities in the egg industry.
|
|
Max P. Bowman
|
58
|
Mr. Bowman was elected Vice President of Finance effective June 25, 2018. Mr. Bowman was Chief Financial Officer, Vice President and Secretary of Southern States Utility Trailer Sales, Inc. and H & P Leasing, Inc. from October 2014 until June 2018. From 2003 to 2014, Mr. Bowman was co-founder of Tenax LLC and Tenax Aerospace, LLC, a special mission aircraft leasing company. Mr. Bowman served in numerous leadership capacities at Tenax Aerospace including, Chief Executive Officer, Chief Financial Officer and President and served on the Board of Directors. Mr. Bowman also served as a Board member and executive officer or WGS Systems, LLC. From 1997 until 2003 Mr. Bowman served as the Chief Financial Officer for ChemFirst, Inc. (CEM) a NYSE company that was sold to DuPont, DD-B (NYSE) in December 2002.
With over 30 years of relevant business experience in finance and executive management in private and public companies, Mr. Bowman brings proven and strong leadership to the Company particularly in the areas of Accounting, Finance, Communications and Risk Management.
|
|
Letitia C. Hughes
Director since 2001 |
66
|
Ms. Hughes was associated with Trustmark National Bank, Jackson, Mississippi, in managerial positions from 1974 until her retirement in 2014. At her retirement she served as Senior Vice-President, Manager, Private Banking. She is an independent director.
Ms. Hughes’ experience in leadership positions at Trustmark National Bank, a large regional bank operating in the southeastern portion of the United States, gives her broad knowledge of the general business climate and has given the Board invaluable insights into the Company’s relationships with its banks and lenders.
|
|
Sherman L. Miller
Director since 2012 |
43
|
Mr. Miller serves as President and Chief Operating Officer of the Company. He joined the Company in 1996 and has served in various positions in operations. Mr. Miller was elected President in 2018 and Chief Operating Officer in 2011. He is a director of the U.S. Poultry and Egg Association and the American Feed Industry Association.
Mr. Miller’s more than 20 years of experience with the Company provides him with a deep knowledge and experience base regarding the Company’s operations, customers and industry.
|
9
|
Name and Tenure
|
Age
|
Business Experience, Qualifications, Attributes and Skills
|
|
James E. Poole
Director since 2004 |
69
|
Mr. Poole is a Certified Public Accountant and was a principal with the accounting firm of Grantham, Poole, Randall, Reitano, Arrington & Cunningham, PLLC of Ridgeland, Mississippi for more than five years until his retirement in 2013. Mr. Poole is an independent director.
Until his retirement in 2013, Mr. Poole served a broad scope of clients as a principal in one of the larger public accounting firms in the State of Mississippi. He brings not only accounting expertise to the Board but also a broad knowledge of the general business climate within which the Company operates.
|
|
Steve W. Sanders
Director since 2009 |
72
|
Mr. Sanders is a Certified Public Accountant. He retired in 2002 as the managing partner of the Jackson, Mississippi office of Ernst & Young LLP, certified public accountants, after over 30 years with that firm. He served as a director of Valley Services, Inc., a privately-held food services company from 2003 until its sale in 2012. He also served as a Lecturer at the Adkerson School of Accountancy, Mississippi State University, where he has taught accounting and auditing courses from 2003 until his retirement on June 30, 2017. Mr. Sanders is an independent director.
Mr. Sanders headed the Jackson, Mississippi office of Ernst & Young, where he was presented with a multitude of accounting issues raised by a client base consisting of a wide array of businesses until his retirement in 2002.
|
10
EXECUTIVE OFFICERS OF THE COMPANY
The following information sets forth the name, age, principal occupation and business experience during the last five years of each of the current executive officers of the Company. The executive officers serve at the pleasure of the Board.
ADOLPHUS B. BAKER
, age 61, is Chairman of the Board and Chief Executive Officer. See previous description under “Nominees for Directors.”
MICHAEL CASTLEBERRY
, age 60, has served as Vice President – Controller of the Company since January 1, 2014. He has been employed by the Company since November 2012, previously serving as Director of Accounting. He served as Chief Financial Officer of Maxim Production Co., Inc. from 2007 until its commercial egg assets and operations were acquired by the Company in 2012.
TIMOTHY A. DAWSON
, age 64, is Vice President – Chief Financial Officer, Treasurer and Secretary and a director. As previously reported, Mr. Dawson will retire effective as of the Annual Meeting.
CHARLES J. HARDIN
, age 59, is Vice President – Sales. He has served in such office since 2002 and has been employed by the Company since 1989.
ROBERT L. HOLLADAY, JR.
, age 42, is Vice President – General Counsel. Mr. Holladay joined the Company and was appointed to this position in 2011.
SHERMAN L. MILLER
, age 43, is President, Chief Operating Officer and a director. See previous description under “Nominees for Directors.”
JOE M. WYATT
, age 79, is Vice President – Feedmill Division. He has served in such office since 1977 and has been employed by the Company since its formation in 1969. He served as a director of the Company from 1998 to 2004.
CORPORATE GOVERNANCE
Meetings and Attendance
Our Board of Directors holds regularly scheduled quarterly meetings and may hold special meetings each year. Normally, committee meetings occur the day of the Board meeting. At each quarterly Board meeting, time is set aside for the independent directors to meet without management present. Our Board held four regularly scheduled quarterly meetings and two special meetings during fiscal year 2018. All of our directors attended 75% or more of the aggregate of all Board of Directors meetings and meetings of the committees on which they served during the last fiscal year. Directors are encouraged to attend the Annual Meeting of Stockholders, and five of the six directors attended the 2017 Annual Meeting.
Board Committees
Our Board has five standing committees: an Audit Committee, a Compensation Committee, an Executive Committee, a Long-Term Incentive Plan Committee, and a Nominating Committee. In addition, under our bylaws our Board may designate additional committees as it deems appropriate. In certain instances the Board and its committees may take action through written consent. In fiscal year 2018 the Board took action by written consent one time. The Audit and Compensation Committees have written charters which are available on the “Investors” page of our website at www.calmainefoods.com. The Executive, Long-Term Incentive Plan, and Nominating Committees do not have charters. The table below provides the current composition for each of the Board’s standing committees.
11
|
Director
|
Audit
|
Compensation
|
Executive
|
Long-Term Incentive Plan
|
Nominating
|
|
Adolphus B. Baker
|
Chair
|
Chair
|
Chair
|
||
|
Timothy A. Dawson
|
Member
|
||||
|
Letitia C. Hughes
|
Chair
|
Member
|
Member
|
Member
|
|
|
Sherman L. Miller
|
Member
|
||||
|
James E. Poole
|
Member
|
Member
|
Chair
|
Member
|
|
|
Steve W. Sanders
|
Member
|
Member
|
Member
|
Member
|
|
Audit Committee:
The Audit Committee, which is composed of three directors who are independent in accordance with applicable NASDAQ listing standards and SEC rules, including the enhanced criteria with respect to audit committee members, meets with management, internal auditors, and the Company’s independent registered public accounting firm to determine the adequacy of internal controls, recommends a registered public accounting firm for the Company to select, evaluates and oversees an internal auditor for the Company, reviews annual audited and quarterly financial statements and recommends whether such statements should be included in the Company’s annual reports on Form 10-K and quarterly reports on Form 10-Q, and oversees financial matters. The Audit Committee held four meetings in fiscal year 2018.
Compensation Committee:
The Compensation Committee discharges the responsibilities of the Board of Directors relating to compensation of the Company’s executive officers by establishing goals and reviewing general policy matters relating to compensation and benefits of employees of the Company, including the issuance of equity awards to the Company’s officers, employees and directors. It reviews and approves the compensation and benefits of officers who are members of the Executive Committee and of the Chairman Emeritus, and makes recommendations to the Board of Directors and members of the Long-Term Incentive Plan Committee with respect to the Company’s incentive compensation plans and equity-based plans. For more information on the Compensation Committee processes and procedures, see “Compensation Discussion and Analysis” below. The Compensation Committee held two meetings in fiscal year 2018.
Executive Committee:
The Executive Committee may exercise all of the powers of the full Board of Directors, except for certain major actions, such as the adoption of an agreement of merger or consolidation, the recommendation to stockholders of the disposition of substantially all of the Company’s assets or a dissolution of the Company, and the declaration of a dividend or authorization of an issuance of stock. In addition, it may not authorize single capital expenditure projects in excess of $10 million. The Executive Committee did not hold any formal meetings in fiscal year 2018, but worked closely together and took action by written consent five times.
Long-Term Incentive Plan Committee:
The Long-Term Incentive Plan Committee, which is composed of three independent directors, administers the Cal-Maine Foods, Inc. 2012 Omnibus Long-Term Incentive Plan, which role includes selection of the persons to whom awards may be made, determining the types of awards, determining the times at which awards will be made and other terms and conditions relating to awards, all in accordance with plan documents. The Long-Term Incentive Plan Committee held two meetings in fiscal year 2018.
Nominating Committee:
The Nominating Committee considers potential director nominees proposed by committee members, other members of the Board of Directors, management or our stockholders. Any stockholder desiring to submit a director candidate for consideration should submit the candidate’s name, address and detailed background information to the Secretary of the Company at the Company’s address shown above under “General Matters.” The Secretary will forward such information to the Nominating Committee for its consideration. The Nominating Committee held one meeting in fiscal year 2018.
Consideration of Director Nominees; Diversity
In recommending nominees for the Board, the Nominating Committee considers any specific criteria the Board may request from time to time and such other factors as it deems appropriate. These factors may include any special training or skill, experience with businesses and other organizations of comparable size and type, experience or knowledge with businesses that are particularly relevant to the Company’s current or future business plans, financial expertise, the interplay of the candidate’s experience with the experience of the other directors, sufficient time to devote to the responsibilities of a director, freedom from conflicts of interest or legal issues and the extent to which, in the Nominating Committee’s opinion, the candidate would be a desirable addition to the Board. Diversity is taken into account when determining how the candidates’ qualities and attributes would complement the other directors’ backgrounds. Type of advanced studies and certification, type of industry experience, area of corporate experience and gender, among other factors, are taken into consideration. The Nominating Committee believes that the different business and educational backgrounds of the directors of the Board contribute to the overall insight necessary to evaluate matters coming before the Board.
12
Each candidate brought to the attention of the Nominating Committee, regardless of who recommended such candidate, will be considered on the basis of the criteria set forth above.
Stockholder Communications
Stockholders may send communications to the Board by directing them to the Secretary in the manner described above under “General Matters.” The Secretary will forward to all members of the Board any such communications he receives which, in his reasonable judgment, he deems to be not spurious and to be sent in good faith.
Risk Oversight
The Board takes its oversight role in the Company’s risk management very seriously. The Company’s Executive Committee is primarily responsible for managing the day-to-day risks of the Company’s business, and is best equipped to assess and manage those risks. The Audit Committee also plays a prominent role in assessing and addressing risks faced by the Company with respect to financial and accounting controls, internal audit functions, pending or threatened legal matters, insurance coverage and the Company’s “whistleblower” hotline policy, among other matters. The Board and the Audit Committee receive reports on the Company’s exposure to risk and its risk management practices from members of the Executive Committee as well as other members of the Company’s management and legal counsel, including reports on the Company’s information technology standards and safeguards, financial and accounting controls and security measures, environmental compliance, human resources, litigation and other legal matters, grain purchasing strategies, and customer concentration and product mix, among other things. The Board regularly receives updates about and reassesses the management of these risks throughout the year. In addition, the Board and the Audit Committee review the Company’s risk disclosures in its draft periodic reports before they are filed and have the opportunity to question management and outside advisers about the risks presented. The Board’s role in risk oversight of the Company is consistent with the Company’s leadership structure, with the CEO and other members of senior management having responsibility for assessing and managing the Company’s risk exposure on a day-to-day basis, and the Board and its committees providing oversight in connection with those efforts.
The Board’s oversight of risks affecting the Company has not specifically affected the Board’s leadership structure. The Board believes that its current leadership structure is conducive of and appropriate for its risk oversight function. If in the future the Board believes that a change in its leadership structure is required to, or potentially could, improve the Board’s risk oversight function, it may make any change it deems appropriate.
Stock Ownership Guidelines
The Board adopted stock ownership guidelines applicable to the Company’s non-employee directors during fiscal year 2016. Under the guidelines, each non-employee director is encouraged to maintain ownership of company stock valued at two times his or her annual retainer, which is currently $45,000. All of our current non-employee directors exceed their target ownership levels. Under the stock ownership guidelines, new directors are expected to comply with the stock ownership target within five years of appointment.
Board Independence and Impact of “Controlled Company” Status
The NASDAQ stock market qualitative listing standards require that a majority of a listed company’s directors be independent and that a compensation committee and nominating committee of the Board composed solely of independent directors be established. These standards are not applicable to any company where more than 50% of the voting power is held by one individual or group. Mr. Adams, founder and Chairman Emeritus of the Company, Mr. Adam’s spouse, Mr. Baker and Mr. Baker’s spouse own in the aggregate capital stock of the Company entitling them to 65.6% of the total voting power. Accordingly, the Company is a “controlled company” and thus exempt from those NASDAQ listing standards. As executive officers of the Company, Messrs. Baker, Dawson and Miller do not qualify as independent pursuant to the NASDAQ listing standards, nor will Mr. Bowman qualify as independent if elected. Additionally, Mr. Baker serves as chair of each of the Compensation and Nominating Committees.
The Company is, however, subject to the NASDAQ listing standards requiring that the Audit Committee (i) be composed solely of independent directors; (ii) be directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm, which must report directly to the audit committee; (iii) establish procedures to receive, retain, and treat complaints regarding accounting, internal accounting controls and auditing matters, and for employees’ confidential, anonymous submissions of concerns regarding questionable
accounting or auditing matters; (iv) have the authority to engage independent counsel and other advisors when the committee determines such outside advice is necessary; and (v) be adequately funded by the Company. Our Audit
13
Committee is in compliance with these standards. In addition, our Board has determined that each member of our Audit Committee qualifies as an “audit committee financial expert,” as such term is defined by the rules of the SEC.
Executive Sessions
The Company is also subject to NASDAQ listing standards that requires the independent directors of the Board to have regularly scheduled meetings at which only independent directors are present. Such meetings were held following each regular meeting of the Board during fiscal year 2018.
Code of Ethics
NASDAQ qualitative listing standards require companies to adopt a code of business conduct and ethics applicable to all directors, officers and employees that is in compliance with certain provisions of the Sarbanes-Oxley Act of 2002. The Board of Directors adopted such a code in 2004. Our Code of Ethics is posted on the “Investors—Corporate Governance” page of our website at www.calmainefoods.com.
Board Leadership Structure
Mr. Baker, our Chief Executive Officer, serves as Chairman of the Board. The Company has not named a lead independent director. The Board recognizes that the leadership structure and the decision to combine or separate the roles of the Chief Executive Officer and Chairman of the Board are prompted by the Company’s needs at any point in time. The Company’s leadership structure has varied over time and has included combining and separating these roles. As a result, the Board has not established a firm policy requiring combination or separation of these leadership roles and the Company’s governing documents do not mandate a particular structure. This provides the Board with flexibility to establish the most appropriate structure for the Company at any given time.
The Board has determined that the Company is currently best served by having one person serve as Chairman of the Board and Chief Executive Officer as it promotes communication between management and the Board of Directors and provides essential leadership for addressing the Company’s strategic initiatives and challenges. Mr. Baker’s service as Chairman of the Board aids the Board’s decision-making process because he has firsthand knowledge of the Company’s operations and the major issues facing the Company, and he chairs the Board meetings where the Board discusses strategic and business issues.
The Board also considers the above structure appropriate due to the Company’s status as a “controlled company.” Further, due to the relatively small size of the Board and the fact that one-half of the members of the Board are independent directors, the Board has not felt it necessary to designate a lead independent director.
Chairman Emeritus
Mr. Adams, the former Chairman of the Board, has been designated Chairman Emeritus of the Company. Under the Company’s bylaws, Chairman Emeritus is an advisory position. Although the Chairman Emeritus may be invited to participate in Board of Director and committee meetings, the Chairman Emeritus is not counted for quorum purposes and has no director voting rights. The Chairman Emeritus provides such advisory services to the Board of Directors as it requests.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, such as the common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Such persons are also required to furnish us with copies of all forms they file under Section 16(a). To our knowledge, based solely on a review of the copies of such reports and amendments thereto furnished to us and representations that no other reports were required, we believe that no director, executive officer or greater than 10% stockholder failed to file on a timely basis the reports required by Section 16(a) during fiscal 2018.
Related-Party Transactions
We are the largest producer and marketer of shell eggs in the United States. We spend hundreds of millions of dollars for third-party goods and services annually, with the authority to purchase such goods and services dispersed among many different officers and managers across the United States. Consequently, there may be transactions and business arrangements with businesses and other organizations in which one of our directors or nominees, executive officers, or
14
their immediate families, or a greater than 5% owner of either class of our capital stock, may also be a director, executive officer, or investor, or have some other direct or indirect material interest. We may refer to these relationships generally as related-party transactions.
Related-party transactions have the potential to create actual or perceived conflicts of interest between the Company and its directors and executive officers or their immediate family members. The Company’s Code of Ethics prohibits directors, officers and employees of the Company from engaging in transactions which may create or appear to create a conflict of interest without disclosing all relevant facts and circumstances to, and obtaining the prior written approval of, the Company’s General Counsel. The General Counsel reports annually to the Audit Committee concerning any such disclosures. The NASDAQ listing standards require that related-party transactions be reviewed for potential conflicts of interest on an ongoing basis by the Company’s Audit Committee or another independent committee of the Board of Directors. The Audit Committee usually reviews and approves such transactions. While the Audit Committee has no specific written policy and procedures for review and approval of related-party transactions, in the past if a related-party transaction involved a director, executive officer, or their immediate family members, in evaluating such transaction the Audit Committee has considered, among other factors:
|
•
|
the goods or services provided by or to the related party,
|
|
•
|
the nature of the transaction and the costs to be incurred by the Company or payments to the Company,
|
|
•
|
the benefits associated with the proposed transaction and whether alternative goods or services are available from unrelated parties,
|
|
•
|
the advantages the Company would gain by engaging in the transaction,
|
|
•
|
whether the terms of the transaction are fair to the Company and arms-length in nature,
|
|
•
|
the materiality of the transaction to the Company and to the related party, and
|
|
•
|
management’s determination that the transaction is in the best interests of the Company.
|
At a special meeting on July 20, 2018, the Company’s stockholders approved amendments to the Company’s certificate of incorporation to change the restrictions on who may hold Class A Common Stock, with ten votes per share, without conversion into Common Stock, with one vote per share, in order to facilitate estate planning for the Company’s founder and Chairman Emeritus, Fred R. Adams, Jr, and to add certain related provisions. In relation thereto, the Company entered into an Agreement Regarding Common Stock and certain other related party transactions with Mr. Adams and his family. Refer to the discussion of these transactions in Part I, Item 1A under the caption “Risk Factors,” and Part II Item 8, Note 16, Notes to Consolidated Financial Statements, of our Annual Report.
No other reportable related-party transactions have taken place since the beginning of fiscal year 2018, and none are currently proposed.
COMPENSATION DISCUSSION AND ANALYSIS
This compensation discussion and analysis describes and analyzes our executive compensation philosophy and program in the context of the compensation paid during the last fiscal year to our named executive officers. Our named executive officers for fiscal year 2018 are:
|
•
|
Adolphus B. Baker, Chairman of the Board and Chief Executive Officer,
|
|
•
|
Timothy A. Dawson, Vice President – Chief Financial Officer, Treasurer, and Secretary,
|
|
•
|
Sherman L. Miller, President and Chief Operating Officer,
|
|
•
|
Charles J. Hardin, Vice President – Sales, and
|
|
•
|
Robert L. Holladay, Jr., Vice President – General Counsel.
|
15
Compensation Philosophy and Process
We believe we are the only publicly held company in the United States whose primary business is the commercial production, processing, and sale of shell eggs. Accordingly, there is little, if any, public information available regarding the compensation paid by our competitors. It is our intent to compensate our employees at a level that will appropriately reward them for their performance, minimize the number of employees leaving our employment because of inadequate compensation, and enable us to attract sufficient talent as our business expands.
As stock representing more than 50% of the voting power for the election of directors is owned by Mr. Adams, our founder, and members of his family, we are a controlled company as defined in Rule 5615(c)(1) of the NASDAQ listing rules. As such, we are not required to have the compensation of our named executive officers determined by a majority of our independent directors or a Compensation Committee composed entirely of independent directors. However, our independent directors, who are three of the four members of the Compensation Committee, do play a significant role in determining the compensation of certain of our named executive officers. We divide our executive officers into two categories for compensation purposes. The first are members of the Executive Committee of our Board of Directors, which during fiscal year 2018 was composed of Messrs. Baker, Dawson and Miller. The compensation of the members of the Executive Committee is approved by the Compensation Committee, after recommendation by the Executive Committee. The compensation for other executive officers, including named executive officers who are not members of the Executive Committee, is determined by the Executive Committee based on the overall compensation goals and guidance established by the Compensation Committee. Finally, incentive awards, including equity awards, are approved by the Long-Term Incentive Plan Committee, which is composed entirely of independent directors.
Compensation Practices and Risks
We do not believe any risks arise from the Company’s compensation policies and practices that are likely to have a material adverse effect on the Company.
Elements of Compensation
During fiscal 2018, our executive compensation program had the following primary components: base salary, an annual cash bonus and equity compensation in the form of restricted stock awards. Our named executive officers also received certain perquisites and certain of our named executive officers participate in our deferred compensation plan. The tables that follow give details as to the compensation of each of our named executive officers for fiscal year 2018.
Base Salary
We believe that base salaries, which provide fixed compensation, should meet the objective of attracting and retaining the executive officers needed to manage our business successfully. Base salary adjustments, if any, are approved in December of each year and become effective January 1
st
of the following calendar year. After consideration of the review of peer company compensation prepared in 2016 by Mercer (US) Inc. (“Mercer”), a compensation consulting firm engaged by our Compensation Committee, which review indicated that the base salaries of our executive officers continue to lag behind the peer group, the Compensation Committee approved base salary increases effective January 1, 2018 for the members of the Executive Committee as follows: Mr. Baker – 3%, Mr. Dawson – 3% and Mr. Miller – 2.7%. Mr. Miller’s base salary was further increased 10.7% effective April 7, 2018, when he was named President. Based on the same analysis, the Executive Committee approved base salary increases for our other named executive officers, also effective January 1, 2018, as follows: Mr. Hardin – 3% and Mr. Holladay – 3%. See “Benchmarking of Compensation” below for information regarding the Mercer report.
Annual Cash Bonus
Executive Committee Members and General Counsel Bonus Programs
For members of our Executive Committee and Mr. Holladay, our General Counsel, the bonus program is essentially subjective, rather than utilizing objective criteria. The Executive Committee recommends bonuses for its members, and these recommendations are given to the Compensation Committee for final approval. Our Chief Executive Officer determines Mr. Holladay’s bonus. Although these bonus awards are not based on objective goals, our Company’s profitability has historically been the most significant item in determining bonus amounts for the Executive Committee members and Mr. Holladay. Mr. Hardin has historically participated in the general bonus program applicable to our other
16
officers and employees. The Company considered its significantly improved profitability and each individual’s job performance in determining bonuses for the Executive Committee and Mr. Holladay for 2018.
General Bonus Program
During fiscal year 2018, Mr. Hardin was covered by our general bonus program. Under this program, the amount of bonus that could be earned was equal to 50% of the sum of the officer’s base salary plus such officer’s prior year’s bonus. This program is designed to reward both Company and individual performance during the year.
Of the potential bonus that could be earned by Mr. Hardin under this program, 50% is based on our profitability. If we earn a minimum profit, on a pre-tax basis, of five cents per dozen eggs produced, Mr. Hardin could earn the full portion of his bonus attributable to our profitability, subject to adjustment at the discretion of the Chief Executive Officer. If our profit is less than five cents per dozen eggs produced, the officer’s bonus would be reduced by a corresponding percentage. The remaining 50% is based on his individual performance as evaluated by our Chief Executive Officer in his discretion. Mr. Baker’s evaluation includes his personal assessment of the overall efficiency, cooperativeness, enthusiasm, judgment and attitude that Mr. Hardin brings to the performance of his duties.
Equity Compensation
The Company believes it is essential to provide our named executive officers with a long-term equity component of compensation in order to better align their interests with those of the Company’s stockholders.
Our named executive officers participate in our 2012 Omnibus Long-Term Incentive Plan (“2012 Plan”). The 2012 Plan is administered by the Long-Term Incentive Plan Committee of the Board (“LTIP Committee”). On December 18, 2017, the LTIP Committee authorized grants of restricted stock (the “RSAs”) to a broad base of employees of the Company, including the named executive officers, which grants were effective January 16, 2018. The RSAs vest fully on the third anniversary of the date of grant, January 16, 2021. The LTIP Committee’s use of RSAs, the level of RSAs awarded to each named executive officer, and the vesting structure of such RSAs were based in large part on the recommendations of Mercer during fiscal year 2016, and comparisons to the Company’s peer group, and were consistent with the grant levels in 2017. See the “Benchmarking of Compensation” and “Compensation Consultants” sections below.
While the LTIP Committee has not developed formal policies concerning the timing of grants and other matters, its practice has been to authorize grants of restricted shares annually in mid-December, with the grants to be made effective the following January.
Deferred Compensation Arrangements
In 2006 our Board adopted the Deferred Compensation Plan, in which all of our officers are eligible to participate if selected by the Long-Term Incentive Plan Committee. Currently, Messrs. Baker, Dawson and Hardin are the only named executive officers who participate in the plan. Under the Deferred Compensation Plan, the Company will establish an account for each officer, and each year the Board may elect to make a contribution for each participant in an amount determined by the Board. Each participant’s account will be credited with investment earnings equal to a fund selected by the Board. For fiscal year 2018, the Company contribution for Messrs. Baker, Dawson and Hardin was approximately 18% of each officer’s base salary. Currently, the index fund selected by the Board is the Vanguard 500 Index Fund Admiral Shares. Participants may elect to receive their distribution in a lump sum or in annual installments. Each of the named executive officers participating in this Deferred Compensation Plan has elected the lump sum distribution alternative. All contributions to each officer’s account are immediately vested. The Board determines which contributions, if any, will be made during December of each year. The contributions made for our named executive officers under the Deferred Compensation Plan are reflected in the “Nonqualified Deferred Compensation” table in the “Compensation Tables” section below.
Employee Benefits and Perquisites
While we do not maintain a pension plan, we do maintain the Cal-Maine Foods, Inc. KSOP (“KSOP”), which is a combination 401(k) and employee stock ownership plan. We currently contribute an amount not less than 3% of each participant’s base salary and bonus to the KSOP each year, subject to statutory limitations. All full time employees 21 years of age or older with at least one year of service, including our named executive officers, are members of the KSOP. We also sponsor an elective 401(k) component within the KSOP, but we make no contributions directly to the 401(k) component on behalf of the participants. Each of our named executive officers participates in an enhanced health plan pursuant to which we reimburse the participating officer for any eligible health expense not covered by our primary health plan, up to $10,000 per calendar year. In addition, we have a plan under which officers who meet minimum tenure
17
qualifications will be provided health coverage after their retirement. The coverage we provide is secondary to their Medicare coverage.
Each of our named executive officers is provided one automobile for which we pay the operating and maintenance costs. We also pay club dues on behalf of certain of our named executive officers as determined by the Board of Directors.
Certain officers are provided individual life insurance policies, the premiums of which are paid by the Company. Historically, the Executive Committee has made the determination of which officers would be provided such benefit on a case-by-case basis. In fiscal year 2013, the Compensation Committee authorized the Company to implement a split-dollar life insurance arrangement with Mr. Baker as to two life insurance policies, which was accomplished in fiscal year 2014. This replaced two existing term life insurance policies for Mr. Baker being funded by the Company, the premiums for which were scheduled to materially escalate. The premiums paid on behalf of the named executive officers and the imputed income relating to the split-dollar life insurance policies for Mr. Baker are set forth in the “All Other Compensation Table” in the “Compensation Tables” section below.
General Matters Regarding Executive Compensation
Employment Agreements and Severance and Change-in-Control Arrangements
None of our named executive officers has an employment agreement with the Company. In addition, no named executive officer is entitled to receive any severance or change-in-control payment; however, existing grants of restricted stock do vest on death, disability or change-in-control, and the LTIP Committee in its sole discretion may determine that such grants will vest partially or in full as of retirement. See the “Potential Payments Upon Termination or Change in Control” section below.
Stock Ownership Guidelines
The Board adopted stock ownership guidelines applicable to the Company’s executive officers during fiscal year 2016. Under the guidelines, the chief executive officer is required to maintain ownership of company stock valued at five times his or her base salary, the chief financial officer is required to maintain ownership of company stock valued at three times his or her base salary and each other executive officer is required to maintain ownership of company stock valued at two times his or her base salary. Under the stock ownership guidelines, executive officers are expected to comply with the stock ownership target by April 1, 2021, or in the case of new executives, within five years of the date of their appointment. As of the record date, all executive officers exceed their target ownership levels.
Compensation Advisors
Benchmarking of Compensation
Since fiscal year 2013 the Compensation Committee has engaged the consulting firm of Mercer (US) Inc. (“Mercer”) to periodically provide compensation analysis and consulting services regarding executive and director compensation. Part of this engagement involves benchmarking the Company’s executive pay against a peer group and published compensation surveys. During 2018, Mercer provided the Compensation Committee with an update of its prior executive compensation analysis through July 2018, including the benchmarking. The most current peer group consisted of 16 companies, all of which are publicly traded. The peer group was selected based on research by Mercer and input from management and consisted of the following companies based on size (as measured by revenues), industry focus and market capitalization:
|
Alliance One International, Inc.
|
John B. Sanfilipo & Son, Inc.
|
|
B&G Foods, Inc.
|
Lancaster Colony Corporation
|
|
Blue Buffalo Pet Products, Inc.
|
Landec Corporation
|
|
Calavo Growers, Inc.
|
Post Holdings, Inc.
|
|
Flowers Foods, Inc.
|
Sanderson Farms, Inc.
|
|
Farmer Brothers Co.
|
Seneca Foods Corporation
|
|
The Hain Celestial Group, Inc.
|
Sunopta, Inc.
|
|
J & J Snack Foods Corp.
|
Universal Corporation
|
Compensation Consultants
In addition to the services described above, the Chairman of the Compensation Committee also periodically engages Mercer to review annual and long-term incentive plan designs for competitiveness and alignment with peer companies,
18
and to update management and the Board on executive compensation trends, including director compensation. This review was last completed in fiscal 2018.
Mercer reported directly to Mr. Baker, as Chairman of the Compensation Committee, but also consulted with Mr. Dawson, Vice President and Chief Financial Officer of the Company, and Mr. Poole, an independent director and member of the Compensation Committee. During fiscal year 2018, the LTIP Committee based its grants of restricted stock to officers and directors on Mercer’s 2016 recommendations.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the above Compensation Discussion and Analysis with management of the Company and, based on the review and discussions, the Compensation Committee has recommended to the Board of Directors that the above Compensation Discussion and Analysis be included in the Company’s proxy statement on Schedule 14A for the 2018 Annual Meeting of Stockholders.
|
Adolphus B. Baker, Chairman
|
|
Letitia C. Hughes
|
|
James E. Poole
|
|
Steve W. Sanders
|
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee during fiscal year 2018 were Mr. Baker, who is Chairman of the Board and Chief Executive Officer of the Company, Ms. Hughes, Mr. Poole and Mr. Sanders. Only Mr. Baker was an officer or employee of the Company. None of Ms. Hughes, Mr. Poole and Mr. Sanders was formerly an officer of the Company.
During fiscal year 2018, none of our executive officers served as a member of the compensation committee or as a director of another entity, one of whose executive officers served on our Compensation Committee or as one of our directors.
19
COMPENSATION TABLES
SUMMARY COMPENSATION TABLE
|
Name and
Principal
Position
|
Fiscal
Year
|
Salary
($)
(1)
|
Bonus
($)
|
Stock
Awards
($)
(2)
|
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(3)
|
All Other
Compensation
($)
(4)
|
Total
($)
|
|
Adolphus B. Baker, Chairman/CEO
|
2018
2017
2016
|
413,178
416,769
|
385,000
223,989
|
286,000
279,500
|
71,443
71,644
|
126,756
141,567
|
1,282,377
1,133,469
|
|
385,999
|
615,968
|
296,340
|
6,448
|
135,875
|
1,440,630
|
||
|
Timothy A. Dawson, VP/CFO/ Treasurer/Secretary
|
2018
2017
|
309,884
314,077
|
285,000
167,805
|
95,260
93,095
|
105,616
110,400
|
89,051
90,214
|
884,811
775,591
|
|
2016
|
285,346
|
461,464
|
98,780
|
10,132
|
76,149
|
931,871
|
|
|
Sherman L. Miller, President/Chief Operating Officer
|
2018
2017
2016
|
231,430
224,423
195,027
|
225,000
108,456
287,133
|
95,260
93,095
98,780
|
-0-
-0-
-0-
|
26,908
25,360
16,214
|
578,598
451,334
597,154
|
|
Charles J. Hardin, VP/Sales
|
2018
2017
|
216,443
217,293
|
160,238
101,168
|
57,200
55,900
|
62,756
65,026
|
58,368
47,807
|
555,005
487,194
|
|
2016
|
200,661
|
263,656
|
59,268
|
5,948
|
52,497
|
582,030
|
|
|
Robert L. Holladay, Jr., VP/General Counsel
|
2018
2017
|
203,499
205,077
|
185,000
95,369
|
95,260
93,095
|
-0-
-0-
|
37,746
32,911
|
521,505
426,452
|
|
2016
|
188,846
|
248,359
|
98,780
|
-0-
|
28,798
|
564,783
|
|
___________________
(1) Salary for fiscal years 2018 and 2016 include 26 pay periods. Salary for 2017 includes 27 pay periods due to the 53 weeks in the 2017 fiscal year.
(2) The amount listed represents the aggregate grant date fair value of time-vested restricted stock grants computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 – Compensation – Stock Compensation (“FASB ASC Topic 718”).
(3) Reflects aggregate earnings on nonqualified deferred compensation based on the increase in value of the Vanguard 500 Index Fund Admiral Shares, the index fund selected by the Board to determine investment credits under the nonqualified Deferred Compensation Plan.
(4) The detail on amounts in this column is set forth in the “All Other Compensation” table below.
20
ALL OTHER COMPENSATION TABLE
(1)
|
Name
|
Fiscal
Year
|
Auto
($)
|
Deferred
Compensation
Contributions
($)
|
Club
Dues
($)
|
Payment or Imputed Income Based on Cost of Life
Insurance
Coverage
($)
(2)
|
Medical
Reimbursement
($)
|
KSOP
Contribution
($)
|
Total
($)
|
|
Adolphus B. Baker
|
2018
|
-0-
|
65,840
|
9,172
|
34,596
|
9,048
|
8,100
|
126,756
|
|
Timothy A. Dawson
|
2018
|
12,710
|
55,080
|
9,172
|
1,613
|
2,376
|
8,100
|
89,051
|
|
Sherman L. Miller
|
2018
|
9,298
|
-0-
|
2,500
|
608
|
6,402
|
8,100
|
26,908
|
|
Charles J. Hardin
|
2018
|
2,600
|
38,326
|
-0-
|
-0-
|
9,342
|
8,100
|
58,368
|
|
Robert L. Holladay, Jr.
|
2018
|
10,400
|
-0-
|
9,172
|
1,500
|
8,574
|
8,100
|
37,746
|
___________________
(1) See “Compensation Discussion and Analysis” for more information on these elements of executive compensation.
(2) For named executive officers other than Mr. Baker, the amount listed represents premiums paid on life insurance policies provided for such officer. Of Mr. Baker’s total amount listed for 2018, $26,996 represents premiums paid on non-split-dollar life insurance policies and $7,600 represents income imputed to Mr. Baker related to the split-dollar life insurance arrangements discussed in “Compensation Discussion and Analysis—Elements of Compensation—Employee Benefits and Perquisites” above.
21
GRANTS OF PLAN-BASED AWARDS
|
Name
|
Grant Date
|
Approval Date
|
All Other Stock
Awards: Number of
Shares of Stock
or Units
(#)
(1)
|
Grant Date Fair Value of
Stock and Option Awards
($)
(2)
|
|
Adolphus B. Baker
|
01/16/18
|
12/18/17
|
6,500
|
286,000
|
|
Timothy A. Dawson
|
01/16/18
|
12/18/17
|
2,165
|
95,260
|
|
Sherman L. Miller
|
01/16/18
|
12/18/17
|
2,165
|
95,260
|
|
Charles J. Hardin
|
01/16/18
|
12/18/17
|
1,300
|
57,200
|
|
Robert L. Holladay, Jr.
|
01/16/18
|
12/18/17
|
2,165
|
95,260
|
___________________
(1) Amounts shown in this column represent restricted stock grants of Company stock made in fiscal year 2018, which vest fully on the third anniversary of the date of grant, conditioned upon the grantee remaining employed by the Company. Vesting of such shares is accelerated upon a change of control of the Company or upon the death or disability of the grantee. If the grantee’s employment is terminated due to retirement, the LTIP Committee may provide for full or partial vesting of such shares in its sole discretion.
(2) The grant date fair value of the restricted stock grants set forth in this column is based on the closing price of Company common stock on the grant date, which was $44.00.
22
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
Stock Awards
|
|||
|
Name
|
Grant Date
|
Number
of Shares or Units of Stock
That Have Not Vested
(#)
(1)
|
Market Value of Shares
or Units of Stock That
Have Not Vested
($)
(2)
|
|
Adolphus B. Baker
|
01/15/16
|
6,000
|
280,800
|
|
1/16/2017
|
6,500
|
304,200
|
|
|
1/16/2018
|
6,500
|
304,200
|
|
|
Timothy A. Dawson
|
01/15/16
|
2,000
|
93,600
|
|
1/16/2017
|
2,165
|
101,322
|
|
|
01/16/18
|
2,165
|
101,322
|
|
|
Sherman L. Miller
|
01/15/16
|
2,000
|
93,600
|
|
01/16/17
|
2,165
|
101,322
|
|
|
01/16/18
|
2,165
|
101,322
|
|
|
Charles J. Hardin
|
01/15/16
|
1,200
|
56,160
|
|
1/16/2017
|
1,300
|
60,840
|
|
|
01/16/18
|
1,300
|
60,840
|
|
|
Robert L. Holladay, Jr.
|
01/15/16
|
2,000
|
93,600
|
|
1/16/2017
|
2,165
|
101,322
|
|
|
01/16/18
|
2,165
|
101,322
|
|
___________________
(1) All of these grants of restricted stock have been made under the 2012 Omnibus Long-Term Incentive Plan and shares of restricted stock under these grants vest fully on the third anniversary of the date of grant, conditioned upon the grantee remaining employed by the Company. Vesting of such shares is accelerated upon a change of control of the Company or upon the death or disability of the grantee. If the grantee’s employment is terminated due to retirement, the LTIP Committee may provide for full or partial vesting of such shares in its sole discretion.
(2) Market value is based on the closing price of Company common stock as of June 1, 2018, the last business day of the Company’s fiscal year 2018, which was $46.80.
23
STOCK VESTED
|
Restricted Stock Awards
|
|||
|
Name
|
Number of
Shares Acquired on
Vesting
(#)
(1)
|
Value
Realized
On Vesting
($)
(2)
|
|
|
Adolphus B. Baker
|
7,500
|
331,500
|
|
|
Timothy A. Dawson
|
2,500
|
110,500
|
|
|
Sherman L. Miller
|
2,500
|
110,500
|
|
|
Charles J. Hardin
|
1,500
|
66,300
|
|
|
Robert L. Holladay, Jr.
|
2,500
|
110,500
|
|
___________________
(1) The number of shares acquired is reported on a gross basis. The Company withheld the necessary number of shares of common stock in order to satisfy withholding taxes due upon vesting of the RSAs, thus the named executive officers actually received a lower number of shares of the Company’s common stock than the numbers reported in this table.
(2) The value realized on vesting of RSAs is based on the closing sale price on the date of vesting of the RSAs or, if there were no reported sales on such date, on the last preceding date on which any reported sale occurred.
24
NONQUALIFIED DEFERRED COMPENSATION
|
Name
|
Executive
Contributions
in Last FY
($)
|
Registrant
Contributions
in Last FY
($)
(1)
|
Aggregate
Earnings in
Last FY
($)
(2)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance at
Last FYE
($)
(3)
|
|
Adolphus B. Baker
|
-0-
|
65,840
|
71,443
|
-0-
|
624,583
|
|
Timothy A. Dawson
|
-0-
|
55,080
|
105,616
|
-0-
|
889,189
|
|
Sherman L. Miller
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
Charles J. Hardin
|
-0-
|
38,326
|
62,756
|
-0-
|
532,871
|
|
Robert L. Holladay, Jr.
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
___________________
(1) The entire amount reported in this column for each named executive officer is included within the amount reported as 2018 all other compensation in the Summary Compensation Table.
(2) The entire amount reported in this column for each named executive officer is included within the amount reported as 2018 change in pension value and nonqualified deferred compensation earnings in the Summary Compensation Table. This amount reflects aggregate earnings on nonqualified deferred compensation based on the increase in value of the Vanguard 500 Index Fund Admiral Shares, the index fund selected by the Board to determine investment credits under the nonqualified Deferred Compensation Plan.
(3) Amounts reported in this column for each named executive officer include amounts previously reported in the Company’s Summary Compensation Table in previous years when earned if that officer’s compensation was required to be disclosed in a previous year. Amounts previously reported in such years include previously earned, but deferred, contributions. This total reflects the cumulative value of each named executive officer’s contributions and investment experience.
For additional detail regarding these arrangements, see “Compensation Discussion and Analysis – Elements of Compensation – Deferred Compensation Arrangements.”
PENSION BENEFITS
No named executive officer participates in any pension plan.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
As described in the Compensation Discussion and Analysis, the Company has not entered into agreements with our named executive offices that provide for severance or change in control payments. Accordingly, the RSAs, which will vest upon certain terminations of employment and a change in control, as described in the footnotes to the table, are the only form of compensation reflected in the table below.
In addition, the following table does not quantify payments under plans that are generally available to all salaried employees, similarly situated to the named executive officers in age, years of service, date of hire, etc., and that do not discriminate in scope, terms or operation in favor of executive officers.
For the named executive officers, the value of the RSAs that would vest upon termination of employment due to death or disability, or a change in control of the Company as of the end of the Company’s fiscal year ended June 2, 2018, are
25
outlined below, based on the Company's closing stock price of $46.80 on June 1, 2018, the last business day of such fiscal year.
|
|
|
|
|
||
|
Name
|
Form of Compensation
|
Involuntary Termination By Company or Voluntary Termination by Employee
(1)
($)
|
Retirement
(2)
($)
|
Death or Disability
(3)
($)
|
Change in Control
(4)
($)
|
|
Adolphus B. Baker
|
RSAs
|
-0-
|
889,200
|
889,200
|
889,200
|
|
Timothy A. Dawson
|
RSAs
|
-0-
|
296,244
|
296,244
|
296,244
|
|
Sherman L. Miller
|
RSAs
|
-0-
|
296,244
|
296,244
|
296,244
|
|
Charles J. Hardin
|
RSAs
|
-0-
|
177,840
|
177,840
|
177,840
|
|
Robert L. Holladay, Jr.
|
RSAs
|
-0-
|
296,244
|
296,244
|
296,244
|
___________________
(1) Upon termination by the Company or the employee (other than termination due to a retirement, death or disability), the named executive officers’ RSA agreements provide for forfeiture of all unvested RSAs.
(
2) Upon retirement of a grantee, the LTIP Committee in its sole discretion may provide that RSAs will vest partially or in full as of the effective date of the grantee’s termination due to retirement. The amounts set forth in the column assume the LTIP Committee has exercised discretionary authority to fully vest all such RSAs.
(
3) Upon death or disability of a grantee, all RSAs will vest as of the date of such death or disability and all restrictions will lapse.
(
4) Upon the completion of a change in control of the Company, all RSAs will vest and all restrictions will lapse.
PAY RATIO DISCLOSURE
To determine the median employee compensation, we analyzed all of Cal-Maine’s employees, excluding Cal-Maine’s Chief Executive Officer, as of June 1, 2018. We annualized wages for employees that were not employed for the full year. We used year to date gross wages as the consistently applied compensation metric to determine the median employee. After identifying the median employee, we calculated annual total compensation for the median employee according to the methodology used to report the annual compensation of our named executive officers in the Summary Compensation Table on page 20.
The 2018 annual total compensation of our median employee other than Mr. Baker was $33,297. Mr. Baker’s 2018 annual total compensation was $ 1,282,377 and the resulting ratio of the CEO’s pay to the pay of the median employee is 38.5 to 1.
26
DIRECTOR COMPENSATION
For fiscal year 2018, the Company’s non-employee directors each received an annual fee of $45,000 as compensation for their services as a director. The fee is paid in quarterly installments, in advance. During fiscal 2018, Ms. Hughes and Messrs. Poole and Sanders each received an additional fee for special committee work and committee meetings. Employee directors receive no additional compensation for their services as directors of the Company, and the compensation of Messrs. Baker, Dawson and Miller is reflected in the Summary Compensation Table above. On January 16, 2018, Ms. Hughes and Messrs. Poole and Sanders, as independent directors, each received grants of 2,165 restricted shares of common stock under the Company’s 2012 Omnibus Long-Term Incentive Plan. Such restricted stock grants vest 100% on the third anniversary of the date of grant. Mercer also periodically reviews and benchmarks the Company’s director compensation program, and the last such review was completed in fiscal year 2017. See “Compensation Discussion & Analysis – Compensation Advisors” for more information regarding Mercer.
DIRECTOR COMPENSATION TABLE
|
|
|
|
|
|
|
Name
|
Fees Earned
or Paid in
Cash
($)
|
Stock
Awards
($)
|
All Other Compensation
($)
|
Total
($)
|
|
(1)
|
||||
|
Letitia C. Hughes
|
81,000
|
95,260
|
-0-
|
176,260
|
|
James E. Poole
|
75,000
|
95,260
|
-0-
|
170,260
|
|
Steve W. Sanders
|
75,000
|
95,260
|
-0-
|
170,260
|
___________________
(1) The aggregate grant date fair value of the restricted stock grants set forth in this column is computed in accordance with FASB ASC Topic 718 and based on the closing price of the Company’s common stock as of the grant date, which was $44.00. At the end of fiscal year 2018, each director listed in this table had 5,530 shares of unvested restricted stock.
27
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Committee reviewed and discussed the audited financial statements in the Annual Report on Form 10-K for the fiscal year ended June 2, 2018,
with management, including the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures.
The Committee also worked with Frost, PLLC, the Company’s independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, its judgment as to the quality, not just the acceptability, of our accounting principles and such other matters as are required to be discussed with the Committee under generally accepted auditing standards. In addition, the Committee has discussed with Frost, PLLC that firm’s independence from management and the Company and all matters required to be discussed pursuant to Public Company Accounting Oversight Board rules, and has received the written disclosures and letter from Frost, PLLC required by Public Company Accounting Oversight Board rules, and considered the compatibility of nonaudit services with Frost, PLLC’s independence.
The Committee discussed with our internal auditors and our independent registered public accounting firm the overall scope and plans for their respective audits. The Committee meets with the internal auditors and our independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of our financial reporting.
In reliance on the reviews and discussions referred to above, the Committee recommended to the Board of Directors (and the Board has approved) that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 2, 2018, for filing with the SEC.
The Board of Directors has determined that all members of the Audit Committee are “audit committee financial experts” and independent directors within the meaning of SEC regulations.
Letitia C. Hughes, Chairperson
James E. Poole
Steve W. Sanders
FEES AND RELATED DISCLOSURES FOR ACCOUNTING SERVICES
The following table discloses the aggregate fees billed by Frost, PLLC for professional services rendered during fiscal 2018 and 2017:
|
FISCAL 2018
|
FISCAL 2017
|
|||
|
Fee
|
Amount ($)
|
% of Total
|
Amount ($)
|
% of Total
|
|
Audit Fees
|
270,346
|
93
|
271,773
|
93
|
|
Audit-Related Fees
|
20,137
|
7
|
19,523
|
7
|
|
Tax Fees
|
-0-
|
-0-
|
-0-
|
-0-
|
|
All Other Fees
|
-0-
|
-0-
|
-0-
|
-0-
|
All audit and any material non-audit services provided by the Company’s independent registered public accounting firm require pre-approval by the Audit Committee or its designee. 100% of the services performed by Frost, PLLC for the fiscal years 2018 and 2017 were pre-approved by the Audit Committee.
Audit fees include fees associated with the annual audit of the Company’s financial statements and the review of the financial statements included in the Company’s quarterly reports on Form 10-Q. Audit-related fees principally include employee benefit plan audits for plan fiscal years ended December 31, 2017 and December 31, 2016.
28
PROPOSAL NO. 2: RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee selected the firm of Frost, PLLC of Little Rock, Arkansas, to serve as independent registered public accounting firm for the Company for fiscal year 2019, and the Board of Directors recommends a vote
FOR
ratification of such selection. There have been no controversies, disputes or differences of opinion with Frost, PLLC since the firm has been engaged by the Company.
Frost, PLLC has extensive experience in serving the poultry and egg industries, and, as a result, the Audit Committee felt they would be particularly well-suited to serve as independent registered public accounting firm for the Company. If the Company’s stockholders do not ratify the selection of Frost, PLLC, the Audit Committee will reconsider this selection.
Representatives of Frost, PLLC are expected to attend the Annual Meeting and be available to respond to appropriate questions, and may make a statement if they desire to do so.
Approval of this proposal requires the vote of a majority of the voting interest present in person or represented by proxy. For more information on the voting requirements, see “Voting Shares” above. Unless otherwise specified, proxies will be voted
FOR
the ratification of Frost PLLC’s selection.
The Board unanimously recommends a vote “FOR” the ratification of the selection of Frost, PLLC as independent registered public accounting firm of the Company.
STOCKHOLDER PROPOSALS
Stockholder proposals for the 2019 Annual Meeting must be received in writing by the Company no later than May 3, 2019, to be considered for inclusion in the Company’s proxy materials. Stockholder proposals should be addressed to Cal-Maine Foods, Inc., Post Office Box 2960, Jackson, Mississippi 39207, Attention: Secretary. Stockholders wishing to present a proposal at the 2019 Annual Meeting without having the proposal included in the Company’s proxy materials must submit the proposal in writing to the Company’s Secretary, at the above address, by July 17, 2019. In order to prevent controversy about the date of receipt of a proposal, the Company strongly recommends that any stockholder wishing to present a proposal submit the proposal by certified mail, return receipt requested.
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come before the Annual Meeting. However, if any other matters are properly brought before the meeting, the proxies named in the enclosed proxy will vote in accordance with their best judgment on such matters.
Holders of common stock are urged to complete, sign and date the accompanying proxy card and return it in the enclosed envelope. No postage is necessary if the proxy card is mailed in the United States.
INCORPORATION BY REFERENCE
The accompanying Annual Report on Form 10-K contains the audited consolidated balance sheets of the Company at June 2, 2018 and June 3, 2017, and related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for fiscal years ended June 2, 2018, June 3, 2017 and May 28, 2016. Such financial statements are incorporated herein by reference.
By order of the Board of Directors,
Timothy A. Dawson Secretary
Jackson, Mississippi
August 31, 2018
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