The Audit Committee is a standing committee of the Board of Directors comprised solely of independent directors in compliance with the NYSE Corporate Governance Standards. In accordance with its written charter (which is available on our website at www.oildri.com), the Audit Committee assists the Board of Directors in fulfilling its responsibility for monitoring the integrity of our accounting, auditing, financial reporting and internal control practices, and our compliance with legal and regulatory requirements.
Our management is primarily responsible for our financial statements and reporting process, including compliance with accounting and financial reporting principles, internal control over financial reporting and disclosure controls and procedures. Grant Thornton, our independent registered public accounting firm, is responsible for auditing our consolidated financial statements in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and for issuing a report on those statements. Grant Thornton is also responsible for expressing an opinion on the effectiveness of our internal control over financial reporting. The Audit Committee oversees the financial reporting process on behalf of the Board of Directors. The Audit Committee relies on the expertise and knowledge of our management, internal auditors and independent auditor in carrying out its oversight responsibilities.
The Audit Committee reviewed and discussed our audited consolidated financial statements and related footnotes for fiscal 20172023 and our independent auditor’s report on those financial statements with our management and internal audit manager.
The Audit Committee has received the written disclosures and the letter from Grant Thornton required by the applicable requirements of the PCAOB regarding the independent auditor’s communications with the Audit Committee concerning independence and has discussed with Grant Thornton its independence.
Based on the foregoing, the Audit Committee recommended to the Board of Directors that our audited consolidated financial statements for fiscal 20172023 be included in our Annual Report on Form 10-K for fiscal 20172023 filed with the SEC.
The following table gives certain information with respect to our current executive officers.
All of our executive officers are appointed annually and serve at the pleasure of our Board of Directors.
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(1)Name | Of the persons in this table, only Mr. | Title |
Daniel S. Jaffee is also a director. Mr. Daniel Jaffee is the son | | President and Chief Executive Officer (CEO) |
Susan M. Kreh | | Chief Financial Officer (CFO) and Chief Information Officer (CIO) |
Christopher B. Lamson | | Group Vice President of our Chairman of the Board, Richard M. Jaffee.Retail and Wholesale |
Summary Compensation Table
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis presents an overview of ourThe following table summarizes the total compensation program, focusing on the elements of compensation awarded or paid toearned by the named executive officers. This Compensation Discussionofficers for services provided to the Company during the years detailed below.
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Name and Principal Position | | Fiscal Year
| | Salary ($)
| | Bonus ($)
| | Stock Awards ($) (1)(2) | | | | Non-Equity Incentive Plan Compensation ($) (3) | | Nonqualified Deferred Compensation Earnings ($) (4) | | All Other Compensation ($) (5)(6) | | Total ($)
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Daniel S. Jaffee | | 2023 | | $ | 840,533 | | | $ | — | | | $ | — | | | | | $ | 1,512,959 | | | $ | 46,574 | | | $ | 896,957 | | | $ | 3,297,023 | |
President and CEO | | 2022 | | $ | 808,836 | | | $ | — | | | $ | — | | | | | $ | 676,996 | | | $ | 43,009 | | | $ | 241,769 | | | $ | 1,770,610 | |
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Susan M. Kreh | | 2023 | | $ | 468,500 | | | $ | — | | | $ | 68,775 | | | | | $ | 655,900 | | | $ | 5,941 | | | $ | 135,955 | | | $ | 1,335,071 | |
CFO and CIO | | 2022 | | $ | 450,750 | | | $ | — | | | $ | 172,400 | | | | | $ | 315,525 | | | $ | 4,096 | | | $ | 101,356 | | | $ | 1,044,126 | |
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Christopher B. Lamson | | 2023 | | $ | 372,834 | | | $ | — | | | $ | 68,775 | | | | | $ | 447,400 | | | $ | 35 | | | $ | 64,295 | | | $ | 953,339 | |
Group Vice President of Retail and Wholesale | | 2022 | | $ | 181,364 | | | $ | — | | | $ | 1,020,600 | | | | | $ | 72,546 | | | $ | — | | | $ | 25,200 | | | $ | 1,299,710 | |
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(1) The amounts reported reflect the grant date fair value of awards computed in accordance with ASC 718. The grant date fair value is the number of shares granted multiplied by the closing price of our Common Stock on the award date. The grant date fair value of an award reflects the accounting expense and Analysis,may not represent the compensation tables and related narrative and tabular disclosures referactual value that will be realized. Stock awards granted to the named executive officers during fiscal 2023 are reflected herein.
(2) The amount reported for fiscal 2017,Ms. Kreh’s stock awards in 2022 has been corrected due to nonmaterial clerical error. This differs from what was reported in the 2022 Proxy Statement ($0). Ms. Kreh’s stock awards in 2022 were timely and properly disclosed as definedrequired by Item 402 of Regulation S-K. Our current executive officers are listed on the preceding page.
Executive Summary
Our executive compensation program is designed to attract and retain skilled executives and maintain a strong link between corporate financial performance and pay by rewarding achievement of company-wide goals. Our compensation philosophy and objectives emphasize teamwork and close collaboration between executive officers. We employ all executives at-will, without written employment agreements or a prospective severance plan. We provide modest perquisites that are designed to help executives fulfill their duties to the Company. None of our employees, including the named executive officers, are entitled to any payment or accelerated benefit upon change in controlSection 16 of the Company unless such benefits are provided to all participants in the applicable compensation plans. We emphasize our core values and belief in teamwork by focusing on one corporate financial target for all salaried employees in ourExchange Act.
(3) The 2023 amounts reflect: (i) annual incentive plan. The annual incentive plan also involves communication to employees of expectations for the Company’s performance and links Company performance and annual compensation. As a result, our annual incentive plan provides an opportunity for essentially all salaried employees (including our executive officers) to earn a performance-based cash incentive award. Through such broad-based participation, each salaried employee recognizes that he or she can contribute to our success. Finally, our compensation program provides equivalent benefits for all U.S.-based salaried employees and similar benefits for hourly-paid manufacturing employees.
Fiscal 2017 Compensation Results:
Performance-Based Cash Incentive Awards - Our fiscal 2017 corporate financial performance met the threshold for payment of a performance-based cash incentive award and exceeded the target achievement level listed below. Our adjusted, pre-tax, pre-bonus income resulted in payment of cash incentive awards equal to 105%200% of target cash bonuses; (ii) executive deferred bonuses equal to 200% of target bonus as adjusted byto our CEO for individual performance per the discretionary provisions of our annual incentive plan further described below, to eligible employees exempt from the overtime provisions of the Fair Labor Standard Act (the “FLSA”), including our named executive officers (“exempt employees”). Since our fiscal 2017 corporate financial performance met the threshold for payment of a performance-based cash incentive award, cash incentive awards were paid to eligible employees not exempt from the overtime provisions of FLSA (“non-exempt employees”) at 100% of target bonus.
Executive Deferred Bonus Awards - Our fiscal 2017 corporate financial performance also met the threshold level for earning executive deferred bonus awards and exceeded the target achievement level listed below. Our adjusted, pre-tax, pre-bonus income resulted in executive deferred bonus awards to our executive officers (other than our CEO) for fiscal 2017 at 105%; and (iii) a cash award equal to 200% of target bonus. Althoughbonus to our CEO was notintended by our Compensation Committee to be an award comparable to the executive bonus award our CEO would have received had he been a participant in the executive deferred bonus award portion of our annual incentive plan for 2017, our Compensation Committee awarded him a cash award equal to 105% of target bonus in order to provide him with a comparable award during its meeting on September 8, 2017. Annual
cash and executive deferred bonus awardsfiscal 2023. Cash bonuses are shown inpaid following the Summary Compensation Table in the column captioned “Non-Equity Incentive Plan Compensation.”
Equity Incentive Awards - During fiscal 2017, our Compensation Committee made one equity incentive award to a named executive officer under the termscompletion of the Oil-Dri Corporation of America 2006 Long Term Incentive Plan (the “Long Term Incentive Plan”). At its meeting on September 9, 2016, the Committee approved an award of 4,000 restricted shares of Common Stock to our Chief Development Officer, Michael A. McPherson, all of which will “cliff” vest in full on October 19, 2020, provided he is employed by the Company on that date.
CEO Base Salary Review - At its September 8, 2017 meeting, our Compensation Committee conducted its annual review of our CEO’s performance. The review included a report by the Chairman of our Board of Directors regarding our CEO’s performance inspecified fiscal 2017, a review of the total direct compensation our CEO received in fiscal 2017 (base salary and cash incentive awards) and company-wide compensation data. Based on such review, our Compensation Committee desired to increase our CEO’s base salary for fiscal 2018 from $650,000 to $700,000, an increase of approximately 7.7%, to better reflect our Compensation Committee’s view of compensation for similarly situated executives and our CEO’s contributions to the Company.
Compensation Philosophy and Objectives
Our compensation philosophy is to provide total compensation opportunities, which include base salary, bonus and a full benefits package, that allow us to attract, retain and motivate the people we need to carry out our strategic plan, mission, goals and values. Our Compensation Committee oversees our compensation and benefits philosophies and practices (generally with regard to all employees and specifically with regard to our executive officers). Our Compensation Committee ensures that the total compensation paid to our executive officers is fair and reasonable.
Compensation Policy
Our compensation policy is to provide our executive officers and other salaried employees with compensation opportunities that:
Are competitive with companies of comparable size;
Align compensation with the Company’s overall performance by including annual incentive opportunities based on Company performance or other pre-determined performance goals and employees’ levels of responsibility; and
Provide longer-term incentives to executive officers and other senior managers to remain with the Company and contribute to our growth.
When comparing our executive compensation with pertinent market data, we refer to publicly available salary surveys prepared and published by several large consulting firms and other information reflecting a broad range of entities. The surveys that we review provide broad-based compensation data for a vast range of positions. We review these surveys and information to obtain a general understanding of current compensation practices for specific positions. On occasion, we also consult with our outside legal counsel whose expertise is in the area of executive compensation. We do not, however, target our executive officers’ compensation at a certain level or percentage based on other companies’ compensation arrangements. Based on our review of these sources, we believe that our compensation policy approximates the median of the marketplace in base salary and the 70th percentile in total cash compensation, if full target bonus is paid under our annual incentive plan.
We follow sound compensation practices to support our compensation policy:
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What We Do | What We Don’t Do |
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Performance-based compensation - We emphasize performance-based compensation in our pay mix.
Compensation based on both annual and long-term goals - Our CEO’s cash and equity awards are contingent on meeting annual and long-term goals, and we provide longer-term incentives to executive officers to remain with the Company and contribute to our growth.
Cap on potential payout under our annual incentive plan - Awards under our annual incentive plan are capped at 200% of target bonus.
Discretion to adjust awards - Our Compensation Committee and our CEO have discretion to adjust performance-based awards if such adjustments would be appropriate based upon our interests and the interests of our stockholders.
| Employment agreements - We do not generally enter into written employment with our executive officers.
Severance arrangements - We do not have a prospective severance plan or prospective severance agreements with our executive officers.
Change in control payments - None of our executive officers are entitled to any payment or accelerated benefit upon change in control unless such benefits are provided for in compensation plans that apply to all participants in those plans.
No excessive perquisites - Consistent with a focus on performance, we do not offer excessive perquisites.
Payout of incentive awards solely on individual criteria - We do not pay incentive awards solely for achieving individual or department performance criteria but instead measure performance against a company-wide target to emphasize a focus on teamwork and collaboration.
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Overview of Executive Compensation Program and Components
Our compensation program generally provides equivalent benefits for all U.S.-based salaried employees with comparable seniority and similar benefits for hourly-paid manufacturing employees. We provide additional compensation for our senior managers, including our executive officers, designed to reward performance and provide retirement benefits commensurate with the executives’ earnings during their working lives. For fiscal 2017, the principal components of compensation for our executive officers were:
Base salary;
Annual performance-based cash incentive award;
year. Executive deferred bonus award;
Retirement benefits; and
Health and welfare benefits and perquisites.
The following charts showbonuses are awarded during the percentage breakdown of the main elements of the compensation for our named executive officers’ compensation for fiscal 2017 and whether the compensation elements are fixed or at risk.
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* | Our CEO received a multi-year award of 125,000 restricted shares of Class B Stock in fiscal 2016 which is not reflected in the pay at risk compensation shown above for fiscal 2017. Pursuant to the terms of the award, the shares shall vest in 25,000 share increments over five years, provided he is employed with us on those dates and has met certain performance goals. |
Base Salary
Prior to the beginning of each fiscal year, our human resources staff presents to our Compensation Committee, for its review and approval, proposed merit increase guidelines and proposed shifts in the mid-points of all salary ranges and any proposed change in salary ranges for the upcoming fiscal year.
Our Compensation Committee determines the base salary and other compensation to be paid to our CEO for the upcoming year and reviews and approves our CEO’s goals and objectives for that year. In connection with its review and determination, our Compensation Committee considers the input of the Chairman of our Board of Directors, who conducts a detailed review of the performance of our CEO at the end of eachspecified fiscal year and presents that reviewgenerally vest (become payable) according to a vesting schedule established by our Compensation Committee at its first regular meeting of each fiscal year. At that time, the Chairman of our Board of Directors also presents his recommendation for any change in base salary or other compensation components for our CEO and his recommendation for our CEO’s goals and objectives for the upcoming year.
Our Compensation Committee determines the reasonableness of and approves the compensation of our other executive officers as recommended by our CEO. In connection with such determinations, our CEO reviews the performance of, and proposes salary increases (if any) for, all executive officers who reported to him during the fiscal year. Any increases are generally based upon the individual’s performance during the previous year and/or any significant change in responsibilities for the upcoming year. In conducting its review and making its determinations, our Compensation Committee reviews a three-year history of base salary, cash incentive bonus targets and payouts, and gains on equity awards, prepared by our human resources staff. During the fiscal year, our CEO may change the base salary of the executive officers who report to him, without prior approval of our Compensation Committee, due to significant changes in the individual’s responsibilities, to be competitive in the market or for other business reasons. Our CEO exercised this authority during fiscal 2017 as shown below.
During fiscal 2017, changes in base salary for the named executive officers were as follows:
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Name | | Type of Change | | $ of Change (1) | | % of Change (2) |
Daniel S. Jaffee (3) | | Merit/Market Increase | | $ | 54,920 |
| | 9.23% |
Daniel T. Smith | | Merit Increase | | $ | 10,000 |
| | 4.00% |
Thomas F. Cofsky (4) | | Merit Increase | | $ | 5,180 |
| | 2.00% |
Douglas A. Graham | | Merit Increase | | $ | 10,000 |
| | 4.00% |
Mark E. Lewry | | Merit Increase | | $ | 15,000 |
| | 4.17% |
Michael A. McPherson | | Promotion | | $ | 29,844 |
| | 17.54% |
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(1) | The “$ of Change” is the difference in dollars between the base salary in effect at July 31, 2016 (the end of fiscal 2016) and the base salary in effect at the end of fiscal 2017. Not all of the salary adjustments were effective at the beginning of fiscal 2017; some were effective later in the fiscal year. |
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(2) | The “% of Change” is the dollar change as a percent of base salary in effect at the end of fiscal 2016. |
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(3) | As noted above, our Compensation Committee determines the base salary and other compensation to be paid to our CEO. |
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(4) | See footnote 6 to the Summary Compensation Table. |
Annual Incentive Plan
Our annual incentive plan provides for a target bonus equal to a percentage of each eligible employee’s annual base salary. This percentage is generally determined by salary grade, which reflects the level of responsibility and expected contribution of the employee’s position to our financial results. For employees in the higher salary grades (including our executive officers), a larger proportion of their compensation takes the form of at-risk incentive compensation than is the case for employees in the lower salary grades. For some of these employees, there is also an opportunity to earn an executive deferred bonus award, as described further below. As part of its annual review of executive compensation, our Compensation Committee sets the bonus opportunity as a percent of base salary for our CEO and determines the reasonableness of the bonus opportunity proposed by our CEO for our other executive officers.
Components of Annual Incentive Plan:
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A. | Performance-Based Cash Incentive Award: Our annual incentive plan provides for the possibility of awards based on corporate financial performance. This measure serves to unite all salaried employees to work together to improve the Company’s performance. Generally, if we meet our corporate financial performance target, a full target bonus is paid to each eligible exempt employee. If we fail to meet our corporate financial performance target but meet certain financial performance thresholds, a bonus of less than 100% of target bonus may be paid. If we exceed our corporate financial performance target, bonuses above 100% of target may be paid; however, no employee can receive a bonus greater than 200% of target under this plan. Non-exempt employees would earn 100% of target bonus at the threshold level and at the other applicable levels.
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B. | Executive Deferred Bonus Award: Our annual incentive plan also provides the opportunity for our senior managers, including our executive officers, to earn an executive deferred bonus award. This award is designed to reward and retain talented executives. Payment of executive deferred bonus awards is deferred until the vesting date established for each fiscal year’s award. The annual incentive plan also provides for payout of executive deferred bonus awards upon death, retirement, disability or a change in control of the Company. We have established bookkeeping accounts for all executive
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deferred bonus awards, which earn interest at a rate equal to our long-term cost of borrowing plus one percent (1%). At the request of our CEO, he was not eligible for an executive deferred bonus award for fiscal 2017. All of our other executive officers were eligible.Committee. Executive deferred bonus awards awarded for fiscal 2017 performanceyear 2023 are deferred and will be paid in full at the end of three years (July 31, 2020)2026), provided the named executive officer is still employed by usthe Company at that time.
(4) The amounts shown represent earnings from our executive deferred compensation plan that exceed 120% of the applicable federal rate.
(5) The amounts reported in this column for Mr. Jaffee and Ms. Kreh for 2022 have been updated and differ from what was reported in 2022. The amount for Mr. Jaffee changed from $294,778 due to a correction in the deferred compensation matching contributions for fiscal 2022. The amount for Ms. Kreh changed from $88,015 due to a correction in the interest earned on the executive deferred bonus and a charitable donation for fiscal 2022.
(6) The amounts shown in this column for fiscal 2023 are described in the following table:
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All Other Compensation Table |
Name | Perquisites ($) (A) | Dividends on Unvested Restricted Stock ($) (B) | Interest Earned on Executive Deferred Bonus ($) (C)(D) | | | 401(k) Plan Company Matching Contributions ($) | Deferred Compensation Matching Contributions ($) (E) | Pension Termination Payouts ($) (F) | | | Total ($) |
Daniel S. Jaffee | $ | 81,810 | | $ | 68,250 | | $ | — | | | | $ | 18,933 | | $ | 49,297 | | $ | 678,668 | | | | $ | 896,957 | |
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Susan M. Kreh | $ | 7,500 | | $ | 40,180 | | $ | 12,258 | | | | $ | 18,846 | | $ | 22,703 | | $ | 34,468 | | | | $ | 135,955 | |
Christopher B. Lamson | $ | 7,500 | | $ | 34,580 | | $ | — | | | | $ | 22,215 | | $ | — | | $ | — | | | | $ | 64,295 | |
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(A) Perquisites for the named executive officers generally consist of auto allowances, paid parking, directed charitable donations, airline executive club memberships, remote Internet access costs and periodical subscriptions. The amounts shown reflect the actual cost to us for providing these perquisites. The perquisites received by Mr. Jaffee consisted of the following, which were paid by the Company: auto allowance of $5,232, directed charitable donations of $76,000 and the remainder constituting remote access and related fees, airline club membership and periodical subscriptions. The perquisites received by Mr. Lamson and Ms. Kreh are related to charitable donations paid by the Company to organizations chosen by each executive officer.
(B) The amounts shown represent dividend payments on unvested shares of restricted stock held by the named executive officers that are reportable as either dividends or ordinary income.
(C) Executive deferred bonuses awarded under our annual incentive plan earn interest at a rate equal to our long-term cost of borrowing plus 1%. Any amounts shown are the interest earned on all unvested executive deferred bonus awards that do not exceed 120% of the applicable federal rate, regardless of the fiscal year in which the awards were earned.
(D) The amount shown for Mr. Jaffee was zero because he requested to not be eligible for executive deferred bonus awards. The amount shown for Mr. Lamson was zero because he did not become eligible for the executive deferred bonus award until fiscal 2023.
(E) The amounts represent discretionary Company contributions provided to eligible participants of the deferred compensation plan to help maximize their retirement savings. See "Nonqualified Deferred Compensation for Fiscal 2023" below.
(F) The amount shown include lump-sum payouts of the pension obligation as a result of the pension termination as well as the profit sharing contributions from the terminated pension plan's surplus assets to the individuals’ 401(k) plan accounts on July 21, 2023. The amounts paid to Daniel S. Jaffee for the pension obligation and surplus profit sharing were $661,293 and $17,375, respectively. The amounts paid to Susan M. Kreh for the pension obligation and surplus profit sharing were $32,647 and $1,821, respectively.
Narrative Disclosure to Summary Compensation Table
The Company’s NEOs’ compensation in fiscal year 2023 was comprised of base salary, an annual performance-based cash incentive award, retirement benefits, pension lump sum payments and pension termination surplus, as applicable, health and welfare benefits and perquisites. Additionally, the Company maintains a long-term equity incentive plan. The Company’s executive compensation structure is intended to attract, retain and reward key leaders who drive both near-term and long-term value for our stockholders. The Company also aims to, among other things, provide compensation programs for executive officers and other key employees, including NEOs, to reward both Company and individual performance and align employee interests with stockholders’ interests.
Employment Agreements and Base Salary.
We employ all executives at-will, without written employment agreements or a prospective severance plan. The base salaries of our NEOs are reviewed annually.
Annual Incentive Plan:Plan.
The Company’s annual incentive plan is comprised of opportunities for performance-based cash incentive awards and executive deferred bonus awards (with the latter available for senior managers, including the Company’s executive officers).
At the beginning of each fiscal year, our CEO presents to our Compensation Committee his proposal for the annual company-wide performance measures, targets and payout ranges that will determine the calculation of the performance-based cash incentive awardawards for that year, along with specific performance targets and payout ranges. Our General Counsel, Vice President of Human Resources and Vice President of Compensation and Benefits each participates in this presentation as well.year. Our Compensation Committee has the general authority to review and determine the reasonableness of the performance measures, targets and payout ranges (and any changes thereto) as they relate to the total compensation of our executive officers. For fiscal 2017,If we do not fully achieve our Compensation Committee approved the initial proposal presented by the CEO and then subsequently, with the CEO’s approval and in accordance with the terms of the annual incentive plan, adjusted the targets to reflect a reduction in planned spending compared to the budgeted spending and other business decisions made after the development of our fiscal 2017 adjusted corporate budget.
The performance measure under the annual incentive plan for fiscal 2017 was our adjusted pre-tax, pre-bonus income as compared with our fiscal 2017 adjusted corporate budget. Our adjusted pre-tax, pre-bonus income for fiscal 2017 was determined by adjusting pre-tax income as shown in our fiscal 2017 audited consolidated financial statements as follows: (i) adding the total amount of annual incentive plan awards, both cash and executive deferred, awarded for fiscal 2017; and (ii) subtracting the amortization for prior years’ executive deferred bonus awards. As a result of these adjustments, the financial performance measure under the annual incentive plan takes into consideration the full amounttarget but meet certain financial performance thresholds, generally, a bonus of any executive deferred bonus in the fiscal year for which it is awarded, ratherless than amortizing that bonus over its vesting period.
Under that performance measure and after the effect of the adjustments described above, exempt employees, including our executive officers, would earn bonuses as shown below:
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| | Adjusted Pre-Tax Pre-Bonus Income | | % of Target Bonus Earned |
Threshold | | $ | 13,817,000 |
| | 25 | % |
Target | | $ | 18,677,000 |
| | 100 | % |
Maximum | | $ | 24,833,000 |
| | 200 | % |
Additional targets were also specified. If performance fell between two of the specified targets, the target bonus payment percentage would be prorated. No executive deferred bonus was to be awarded unless 95%100% of target bonus was earned.may be paid. If we exceed our corporate financial performance target, generally bonuses above 100% of target may be paid; however, no employee can receive a bonus greater than 200% of target under this plan. Non-exempt employees would earn 100% of target bonuses if payouts were madebonus at any of the levels listed above.
The bonus opportunity for fiscal 2017 as a percent of base salary for the named executive officers is shown in the following table:
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| | Bonus Opportunity as a % of Base Salary |
| | Threshold | | Target | | Maximum |
| | Cash Only (1) | | Deferred (2) | | | | | | | | | | | | |
| | Cash Bonus | | Cash Bonus | | Defer Bonus | | Total Bonus | | Cash Bonus | | Defer Bonus | | Total Bonus | | Cash Bonus | | Defer Bonus | | Total Bonus |
Daniel S. Jaffee (3) | | 12.50 | % | | 37.50 | % | | N/A |
| | 37.50 | % | | 50.00 | % | | N/A |
| | 50.00 | % | | 100.00 | % | | N/A |
| | 100.00 | % |
Daniel T. Smith | | 8.75 | % | | 26.25 | % | | 15.00 | % | | 41.25 | % | | 35.00 | % | | 20.00 | % | | 55.00 | % | | 70.00 | % | | 40.00 | % | | 110.00 | % |
Thomas F. Cofsky (4) | | 10.00 | % | | 30.00 | % | | 15.00 | % | | 45.00 | % | | 40.00 | % | | 20.00 | % | | 60.00 | % | | 80.00 | % | | 40.00 | % | | 120.00 | % |
Douglas A. Graham | | 8.75 | % | | 26.25 | % | | 9.00 | % | | 35.25 | % | | 35.00 | % | | 12.00 | % | | 47.00 | % | | 70.00 | % | | 24.00 | % | | 94.00 | % |
Mark E. Lewry | | 10.00 | % | | 30.00 | % | | 15.00 | % | | 45.00 | % | | 40.00 | % | | 20.00 | % | | 60.00 | % | | 80.00 | % | | 40.00 | % | | 120.00 | % |
Michael A. McPherson (5) | | 8.54 | % | | 25.63 | % | | 11.25 | % | | 36.88 | % | | 34.17 | % | | 15.00 | % | | 49.17 | % | | 68.34 | % | | 30.00 | % | | 98.34 | % |
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(1) | The threshold for payment of a cash bonus was adjusted pre-tax, pre-bonus income corresponding to the achievement of 84% of our fiscal 2017 adjusted corporate budget. That achievement level would result in payment of 25% of target cash bonus. No executive deferred bonus would be awarded at that level of performance. |
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(2) | The threshold for earning of an executive deferred bonus award was adjusted pre-tax, pre-bonus income corresponding to the achievement of 95% of our fiscal 2017 adjusted corporate budget. That achievement level would result in an award of 75% of target bonus for both cash and executive deferred bonuses. |
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(3) | At the request of Mr. Jaffee, he was not eligible for an executive deferred bonus award for fiscal 2017. |
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(4) | See footnote 6 to the Summary Compensation Table. |
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(5) | The percentages for Mr. McPherson are blended rates calculated pro rata from the rates applying before and after his promotion in October 2016. |
Our fiscal 2017 corporate financial performance met the threshold for payment of a performance-based cash incentive awardlevel and exceededat the target achievement level listed below. Our adjusted, pre-tax, pre-bonus income resulted in payment of cash incentive awards equal to 105% of target bonus, as adjusted by our CEO for individual performance per the discretionary provisions of ourother applicable levels.
The Company’s annual incentive plan further described below, to exempt employees. Since our fiscal 2017 corporate financial performance metalso provides the threshold for payment of a performance-based cash incentive award, cash incentive awards were paid to eligible non-exempt employees at 100% of target bonus.
Our fiscal 2017 corporate financial performance also metCompany’s CEO the threshold level for earning executive deferred bonus awards and exceeded the target achievement level listed below. Our adjusted, pre-tax, pre-bonus income resulted in executive deferred bonus awards to our executive officers (other than our CEO) for fiscal year 2017 at 105% of target bonus.
Although our CEO was not a participant in the executive deferred bonus award portion of our annual incentive plan for 2017, our Compensation Committee considered the dollar value of an executive deferred bonus award that he would have received had he been a participant in that portion of our annual incentive plan as a reference in awarding him a cash award equal to 105% of target bonus in order to provide him with a comparable award during its meeting on September 8, 2017. The award fulfills the intention of the Compensation Committee, stated at its September 9, 2016 meeting, to grant Mr. Jaffee an award equal to the executive deferred bonus award that he would have received had he not chosen to be excluded from that portion of our annual incentive plan for fiscal 2017.
Annual cash and executive deferred bonus awards to our named executive officers are shown in the Summary Compensation Table in the column captioned “Non-Equity Incentive Plan Compensation.”
Our annual incentive plan gives our CEO discretion to adjust the performance measures, targets and payout ranges used for incentive purposes for executives and employees other than the CEO if ourthe CEO determinesdetermined such change is desirable in the interest of equitable treatment of ourthe Company’s employees and the Company as a result of, among other things, extraordinary or nonrecurring events, a corporate reorganization or any other change in circumstances or event; provided, however, that in no event, may any employee receive a bonus greater than 200% of target under the plan. Our CEO may also exercise discretion in determining the incentive bonusor, further, to be paid under our annual incentive plan to any employee, including our executive officers (except himself), by:address retention objectives and/or reward individual achievement.
Increasing or decreasing any participant’s percent of corporate financial performance bonus earned by up to 25 percentage points, subject to limitations specified in our annual incentive plan. For example, if according to the corporate financialThe performance measure 75% of the corporate financial performance bonus has been earned, our CEO may adjust an individual participant’s percent of corporate financial performance bonus earned to as little as 50% or as much as 100%.
Adjusting individual executive deferred bonus awards downward or upward, based on the participant’s individual performance and/or the performance of the participant’s department or division.
Awarding a bonus under the annual incentive plan of up to 25%for fiscal 2023 was our adjusted pre-tax, pre-bonus income as compared with our fiscal 2023 adjusted corporate budget set at the beginning of the total dollar amount of2023 fiscal year. Our fiscal 2023 corporate financial performance met the overall target bonus pool for all exempt employees (and up to 100% of the total dollar amount of the overall target bonus pool for all non-exempt employees) if the Company fails to achieve the minimum performance otherwise requiredthreshold for payment of an award.
Further, oura performance-based cash incentive award and exceeded the target achievement level approved by the Compensation Committee may, for a specific fiscal year, grantCommittee. Our adjusted, pre-tax, pre-bonus income resulted in payment of cash incentive awards equal to 200% of target bonus, as adjusted by our CEO for certain individuals’ performance per the discretionary authority to make additional adjustments toprovisions of our annual incentive plan.
Our annual incentive plan also provides the performance measures, targets and payout ranges, or awards to individual participants,opportunity for our senior managers, including our executive officers, provided thatto earn executive deferred bonus award. Our fiscal 2023 corporate financial
performance also met the threshold level for earning executive deferred bonus awards and exceeded the approved target achievement level. Our adjusted, pre-tax, pre-bonus income resulted in no event willexecutive deferred bonus awards to our executive officers (other than our CEO, who has elected not to participate in the executive deferred bonus award portion of the Company’s annual incentive plan) for fiscal year 2023 at 200% of target bonus.
Executive deferred bonus awards awarded for fiscal 2023 performance are deferred and will be granted authoritypaid in full at the end of three years (July 31, 2026), provided the named participant is still employed by the Company at that time.
As in the past, our CEO chose not to make total awardsbe a participant in the executive deferred bonus award portion of our annual incentive plan for 2023. However, in past years, our Compensation Committee has typically awarded him a cash award equal to anythe dollar value of an executive deferred bonus award that the CEO would have received had he been a participant which exceedin that portion of our annual incentive plan in order to provide him with a comparable award. For fiscal 2023, the Compensation Committee awarded our CEO with a cash award for fiscal 2023 equal to 200% of the participant’s target bonus.
At its September 8, 2017 meeting, our Compensation Committee also reviewed the annual incentive plan performance measure and targets suggested by our CEO for fiscal 2018. The performance measure continues to be corporate financial performance as measured by achievement of target pre-tax, pre-bonus income as specified in our fiscal 2018 annual incentive plan. Annual incentive plan target pre-tax, pre-bonus income for fiscal 2018 will be determined by adjusting pre-tax income as shown in our fiscal 2018 audited consolidated financial statements in the same manner as described above for fiscal 2017.
Retirement Benefits
We seek to retain highly qualified executives, including our executive officers, and reward them for their service, by providing the following retirement benefit plans:
Defined benefit pension plan;
Supplemental executive retirement plan (“SERP”);
Defined contribution retirement plan; and
Executive deferred compensation plan.
Retirement benefits under these plans are funded by a combination of employer and employee contributions as described below, thus encouraging employees to take an active part in saving for their own retirement years.
Defined benefit pension plan: Our executive officers participate in our Company-funded defined benefit pension plan that provides for pension benefits based on credited years of service and certain cash compensation (principally, base salary and commissions) earned during the highest paid consecutive five years during the last 10 years of employment.
Supplemental executive retirement plan: Our SERP provides benefitsbonus that would have been provided underapplicable to our pension plan absent the Code limitations on benefits and on compensation for purposes of calculating benefits, offset by the actual pension benefits. Benefits under the SERP will be paid from our general assets. All employees whose pension plan benefits are limited by the Code will participateCEO if he were a participant in the SERP. Currently, our CEO and COO are the only participants; however, our COO will not be vested in the plan until March 31, 2019.
Defined contribution retirement plan: Our executive officers are eligible to participate in our 401(k) retirement savings plan. Under the plan, employees may contribute from 2% to 50% of eligible compensation on a tax-deferred basis, subject to Code limits. We make a matching contribution of $0.50 for each $1.00 of the first 4% of compensation that employees contribute. For employees that were hired prior to May 1, 2012, our matching contribution is immediately vested. For employees that were hired on or after May 1, 2012, the Company’s matching contribution vests in accordance with the following schedule:
|
| |
Years of Service | Vested Percentage of
Company’s Matching Contribution
|
1 but less than 2 | 20% |
2 but less than 3 | 40% |
3 but less than 4 | 60% |
4 but less than 5 | 80% |
5 or more | 100% |
If an employee is subject to the above vesting schedule and retires on or after such employee’s 65th birthday, the unvested“Executive Deferred Bonus” portion if any, of the Company’s matching contribution becomes vested.
Executive deferred compensation plan: We provide an executive deferred compensation plan to assist executives and non-employee directors in saving for retirement or other financial needs. All executive officers are eligible to participate in this plan. Participating executives may defer up to 50% of base salary and 100% of annual incentive bonus into the plan. We make no contributions. Executives’ deferrals earn interest at a rate equal to our long-term costplan in lieu of borrowing plus 1%.
Retirement Benefits for the Named Executive Officers shownsuch deferred bonus. The award is reflected in the Tables:
Summary Compensation Table: The actuarial change in pension and SERP benefits and the earnings in excess of 120% of the applicable federal rate on deferred compensation plan balances are included in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table. Our contributionTable but was paid following the completion of the fiscal year.
Equity Incentive Awards.
During fiscal 2023, Ms. Kreh and Mr. Lamson received equity incentive awards under the terms of the Oil-Dri Corporation of America 2006 Long Term Incentive Plan (as amended, the “Long Term Incentive Plan”).
Ms. Kreh received a grant of 2,500 restricted shares of Common Stock on October 18, 2022 under the terms of the Long Term Incentive Plan. The 2,500 restricted shares are scheduled to vest on October 18, 2024.
Mr. Lamson received a grant of 2,500 restricted shares of Common Stock on October 18, 2022 under the terms on the Long Term Incentive Plan. The 2,500 restricted shares are scheduled to vest on October 18, 2026. On April 5, 2023, the Compensation Committee of the Board of Directors amended the vesting anniversary for Mr. Lamson’s unvested restricted stock from January 31st to January 20th. Such grant was initially made in the amount of 30,000 shares, of which 2,000 shares vested on January 31, 2023. The remaining 28,000 restricted shares shall vest as follows on the anniversaries of January 20, 2023: (i) 4,000 shares on the first anniversary; (ii) 6,000 shares on each of the second and third anniversaries; and (iii) 12,000 shares on the fourth anniversary. No other changes were made to the 401(k) retirement savings plan is included in the “Allgrant.
Retirement and Other Compensation” column of that table.
Pension Benefits Table: The present value of the accumulated benefits under the pension plan and the SERP is shown in the “Present Value of Accumulated Benefits” column of the Pension Benefits Table.
Nonqualified Deferred Compensation Table: Contributions by the named executive officers to our executive deferred compensation plan are shown in the “Executive Contributions in Last Fiscal Year” column of the Nonqualified Deferred Compensation Table. Earnings on balances in that plan are included in the “Aggregate Earnings in Last Fiscal Year” column of that table.
Other Benefits.
We provide health and welfare benefits, including medical and dental coverage and life and long-term disability insurance, which are available to our executive officers on the same terms as they are available to other employees. These benefits help us attract and retain talented employees and provide assistance to current employees and their families.
We provide limited perquisites to the named executive officersNEOs to assist them in carrying out their duties. These perquisites may include a car allowance and paid parking. The value of these benefits is includedAs noted in the “All Other Compensation” column of the Summary Compensation Table.Table, these perquisites may include a car allowance, and directed charitable donations.
Employment and Severance Arrangements
We do not generally enter into written employment or prospective severance agreements with ourThe Company maintains a 401(k) retirement savings plan in which its executive officers nor do we haveare eligible to participate. We make a prospective severancematching contribution of one hundred percent (100%) of the first six percent (6%) of compensation contributed by an employee that vests one hundred percent (100%) after two (2) years of service with the Company.
The Company also maintains a nonqualified deferred compensation plan that covers any ofis offered to certain eligible employees, including our named executive officers. Currently, our only provisionsDuring the fiscal year, the Company matched contributions of up to 6% of eligible compensation above annual tax code limits. Such contributions are discretionary. For more information, see “Nonqualified Deferred Compensation for benefits uponFiscal 2023” section.
The matching terms of the 401(k) plan were enhanced in 2020 and the vesting terms of the 401(k) plan were enhanced in 2021 in connection with the Company’s freezing of its defined benefit pension plan and termination of employment or changethe supplemental executive retirement plan, both of which were previously offered to our executives. Similarly, the Company instituted discretionary matching contributions to the nonqualfied deferred compensation plan for participants to benefit from tax advantages by deferring a greater percentage of their compensation (and current income taxes) than is allowed by the IRS in control are in existing compensation plansa qualified retirement plan, such as our 401(k) plan, following the freezing and apply to all participants in those plans. For example, our equity incentive plans contain provisions for immediate vestingtermination of benefits upon change in control,the Company’s pension and supplemental executive retirement disability or death. The Benefits Upon Termination or Change in Control Table contains additional information concerning benefits uponplan, respectively.
In connection with the termination of employmentthe Company’s pension plan, all participants’ accrued benefits were fully vested (to the extent not already vested) and participants received a lump sum payment option to the extent permitted under applicable law. Following the termination of the namedpension plan and the settlement of the plan’s obligations, the Company elected to make profit sharing contributions from the terminated pension plan’s surplus assets to the 401(k) accounts of the pension plan participants based on years of service with the Company.
Compensation Updates Following the 2023 Fiscal Year End - Fiscal Year 2024 Compensation Plan Changes
From time to time, the Compensation Committee has engaged a compensation consultant in connection with its compensation decisions. At the end of fiscal 2023, the Compensation Committee engaged Semler Brossy to advise the Committee and provide surveys and other information with respect to the compensation of the Company’s executive officers. Semler Brossy assisted the Compensation Committee in benchmarking executive officer compensation for a peer group of companies comparable to Oil-Dri Corporation of America.
Long-Term Equity IncentivesFollowing this review and in keeping with the Company’s compensation philosophy of providing compensation packages that attract, retain and motivate the people we need to carry out our strategic plan, mission, goals and values, the Compensation Committee undertook the actions described in the paragraphs below.
We generally favor performance-based cash incentives under our annual incentive plan over the use of equity incentive compensation. We continue to recognize, however, that long-term equity incentive compensation can be important in attracting and retaining key employees and outside directors.
During fiscal 2017,At its September 6, 2023 meeting, our Compensation Committee made one equityconducted its annual review of our CEO’s performance. In addition to information provided by Semler Brossy, the Compensation Committee’s annual review included a review of the total direct compensation our CEO received in fiscal 2023 (base salary and cash incentive award to a named executive officer under the Long Term Incentive Plan. At its meetingawards) and past stock incentive awards. Based on September 9, 2016, thesuch review, our Compensation Committee approved an awardincrease of 4,000 restricted shares of Common Stockour CEO’s base salary effective August 1, 2023 to $870,000, a 3.17% increase. As discussed above, our Chief Development Officer, Michael A. McPherson, all of which will “cliff” vest in full on October 19, 2020, provided he is employed by the Company on that date.
Equity incentivesCompensation Committee approved a cash award for our CEO have historically consistedfor fiscal 2023 in lieu of periodic, multi-year equity awards as well as consideration of an annual cash reward or restricted stock equityany award that mirror the value of the executive deferred bonus awards earned by our other executive officers that our CEO would have earned had he not requested to be excluded fromMr. Jaffee could receive under the executive deferred bonus portion of our annual incentive plan. Consistent with
Following the Company’s fiscal 2023 year end, at its historic practice, ourmeeting on September 6, 2023, the Compensation Committee madeapproved a multi-year awardrestricted grant of stock to Mr. Jaffee for 125,000 restricted shares of Class B Stock to our CEO under the terms of the Long Term Incentive Plan during fiscal 2016. Pursuant to the terms of the award, the shares shall vest in 25,000 share increments no earlier than on each of the five subsequent anniversaries of October 19, 2015, provided Mr. Jaffee is employed with us on those dates, and has met certain earnings performance expectations for the prior fiscal year, or has met cumulative performance expectations since the date of the initial award. The Compensation Committee confirmed that Mr. Jaffee met the required performance requirements for fiscal 2016 and fiscal 2017, and therefore, 50,000 shares have vested.
At its September 8, 2017 meeting, our Compensation Committee stated its current intention to grant to our CEO, at a meeting following the end of fiscal 2018, a cash award or an award of restricted shares ofCompany’s Class B Stock under the terms of the Long Term Incentive Plan, if he would have received anPlan. The Compensation Committee also approved restricted grants of stock for 4,000 shares of the Company’s Common Stock to each of the following executive officers: Aaron V. Christiansen, Susan M. Kreh, Christopher B. Lamson, and Laura G. Scheland. These restricted shares are scheduled to vest on October 19, 2027.
Although as in past years, our CEO has chosen not to be a participant in the executive deferred bonus award as a result of our corporate financial performance in fiscal 2018, had he been a participant in that portion of our annual incentive plan. (As was the case in fiscal years 2008 through 2017, Mr. Jaffee has requested that he not be eligible for an executive deferred bonus award in fiscal 2018.) If corporate financial performance for fiscal 2018 meets the performance threshold for an award, an award may be granted for fiscal 2018 performance. If a stock award is granted, we anticipate that the number of restricted shares awarded would be determined by dividing the value, if any, of an executive deferred bonus award Mr. Jaffee would have received under our annual incentive plan for fiscal 2018, had he been a participant in that portion of our annual incentive plan, by the average closing sale price of our Common Stock for the 30 trading days preceding the date of the grant (or other similar measure determined to be appropriate by our Compensation Committee).
Governance and Other Considerations
Equity Grant Policy
We have a formal equity grant policy, adopted by our Board of Directors in 2007 and amended in 2012 and 2015, which provides that equity awards generally should be made by2024, our Compensation Committee intends to grant him, at a regularly scheduled meeting or by our CEO under limited authority granted to him. Our CEO may make grantsfollowing the end of the Company’s fiscal year 2024, an award of either stock optionscash or restricted stock, but the total number of either stock options or shares of restricted stock that our CEO may grant is limited, and the maximum employee award is designated by the employee’s salary grade. Our CEO may generally make awards only four times each year, during the two-week period beginning the third business day following our quarterly earnings release. If the grant date is not an NYSE trading day, then the grant date will be the immediately preceding NYSE trading day.
Prior to the adoption of our formal policy, in the case of grants made by our Compensation Committee, the grant date has been determined in accordance with the requirements of ASC 718. The exercise price has always been the closing sale price of our Common Stock on the date of grant.
Stock Ownership Guidelines
Given that Richard M. Jaffee, Daniel S. Jaffee, and the Jaffee Investment Partnership, L.P. collectively ownCompany’s Class B Stock having more than 75%under the terms of the aggregate voting power of our Common Stock and Class B Stock, we do not have guidelines or requirements for stock ownership by our executive officers or our directors. See “Security Ownership of Management” below for information on beneficial ownership of our Common Stock and Class B Stock by our directors and executive officers.Long Term Incentive Plan.
Tax and Accounting Implications
Limitation on Tax Deductibility: Section 162(m) of the Code limits to $1 million the tax deduction we may take for compensation paid to our CEO and the other named executive officers unless the compensation is “performance-based” and paid under a formal compensation plan that meets the Code’s requirements. While our Compensation Committee is mindful of the benefit to us of the full deductibility of compensation, our Compensation Committee believes that it should not be constrained by the requirements of Section 162(m) where those requirements would impair flexibility in compensating our executive officers in a manner that can best promote our corporate objectives. Therefore, our Compensation Committee has not adopted a policy that requires that all compensation be deductible, and it intends to continue to compensate our executive officers in a manner consistent with the best interests of the Company and its stockholders.
Nonqualified Deferred Compensation: We intend that all of our benefit plans comply with Section 409A of the Code. We amended and restated all of our benefit plans that include deferred compensation elements in compliance with Section 409A. We believe we have been operating in good faith with Section 409A since its January 1, 2005 effective date.
Accounting for Stock-Based Compensation: We account for stock-based payments under our equity incentive plans in accordance with ASC 718.
Report of the Compensation Committee of the Board of Directors
The Compensation Committee reviewed and discussed with our management the foregoing Compensation Discussion and Analysis. Based on that review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
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| |
| COMPENSATION COMMITTEE |
| |
| Allan H. Selig, Chairman |
| Joseph C. Miller |
| Michael A. Nemeroff |
Summary Compensation Table
The following table summarizes the total compensation earned by the named executive officers for services provided to the Company during the years detailed below.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Fiscal Year | | Salary ($) | | Bonus ($) | | Stock Awards ($) (1) | | Option Awards ($) (2) | | Non-Equity Incentive Plan Compensation ($) (3) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (4) | | All Other Compensation ($) (5) | | Total ($) |
Daniel S. Jaffee | | 2017 | | $ | 650,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 477,750 |
| | $ | 135,611 |
| | $ | 84,944 |
| | $ | 1,348,305 |
|
President and Chief | | 2016 | | $ | 595,080 |
| | $ | — |
| | $ | 3,585,250 |
| | $ | — |
| | $ | 624,834 |
| | $ | 433,108 |
| | $ | 88,384 |
| | $ | 5,326,656 |
|
Executive Officer | | 2015 | | $ | 563,875 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 197,356 |
| | $ | 201,544 |
| | $ | 46,851 |
| | $ | 1,009,626 |
|
| | | | | | | | | | | | | | | | | | |
Daniel T. Smith | | 2017 | | $ | 259,167 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 149,669 |
| | $ | 98,022 |
| | $ | 16,831 |
| | $ | 523,689 |
|
Vice President, Chief | | 2016 | | $ | 248,333 |
| | $ | — |
| | $ | 177,975 |
| | $ | — |
| | $ | 204,875 |
| | $ | 116,434 |
| | $ | 16,638 |
| | $ | 764,255 |
|
Financial Officer | | 2015 | | $ | 225,833 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 55,329 |
| | $ | 50,912 |
| | $ | 11,355 |
| | $ | 343,429 |
|
| | | | | | | | | | | | | | | | | | |
Thomas F. Cofsky (6) | | 2017 | | $ | 263,748 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 171,161 |
| | $ | 60,102 |
| | $ | 18,761 |
| | $ | 513,772 |
|
Vice President of | | 2016 | | $ | 256,083 |
| | $ | — |
| | $ | 23,730 |
| | $ | — |
| | $ | 230,475 |
| | $ | 150,628 |
| | $ | 19,963 |
| | $ | 680,879 |
|
Manufacturing-Industrial | | 2015 | | $ | 254,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 64,400 |
| | $ | 70,381 |
| | $ | 18,825 |
| | $ | 407,606 |
|
| | | | | | | | | | | | | | | | | | |
Douglas A. Graham | | 2017 | | $ | 255,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 125,843 |
| | $ | 26,928 |
| | $ | 13,260 |
| | $ | 421,031 |
|
Vice President, General | | 2016 | | $ | 245,000 |
| | $ | — |
| | $ | 11,865 |
| | $ | — |
| | $ | 172,725 |
| | $ | 46,300 |
| | $ | 14,049 |
| | $ | 489,939 |
|
Counsel and Secretary | | 2015 | | $ | 225,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 55,125 |
| | $ | 19,322 |
| | $ | 13,426 |
| | $ | 312,873 |
|
| | | | | | | | | | | | | | | | | | |
Mark E. Lewry | | 2017 | | $ | 375,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 236,250 |
| | $ | 47,954 |
| | $ | 26,148 |
| | $ | 685,352 |
|
Chief Operating | | 2016 | | $ | 360,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 324,000 |
| | $ | 42,192 |
| | $ | 23,011 |
| | $ | 749,203 |
|
Officer | | 2015 | | $ | 350,000 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 98,000 |
| | $ | 23,621 |
| | $ | 25,429 |
| | $ | 497,050 |
|
| | | | | | | | | | | | | | | | | | |
Michael A. McPherson
| | 2017 | | $ | 197,513 |
| | $ | — |
| | $ | 136,760 |
| | $ | — |
| | $ | 108,722 |
| | $ | 29,540 |
| | $ | 14,187 |
| | $ | 486,722 |
|
Chief Development | | 2016 | | $ | 168,371 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 101,022 |
| | $ | 45,459 |
| | $ | 9,979 |
| | $ | 324,831 |
|
Officer | | 2015 | | $ | 163,200 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 28,560 |
| | $ | 22,135 |
| | $ | 9,531 |
| | $ | 223,426 |
|
| | | | | | | | | | | | | | | | | | |
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(1) | The amounts reported reflect the grant date fair value of awards computed in accordance with ASC 718. The grant date fair value is the number of shares granted multiplied by the closing price of our Common Stock on the award date. The grant date fair value of an award reflects the accounting expense and may not represent the actual value that will be realized. |
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(2) | There were no new option awards to the named executive officers during fiscal 2017. |
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(3) | The 2017 amounts reflect: (i) annual incentive awards equal to 105% of target cash bonuses, as adjusted by our CEO for individual performance per the discretionary provisions of our annual incentive plan; (ii) executive deferred bonuses equal to 105% of target bonus to our named executive officers (other than our CEO); and (iii) a cash award equal to 105% of target bonus to our CEO intended by our Compensation Committee to be an award comparable to the executive bonus award our CEO would have received had he been a participant in the executive deferred bonus award portion of our annual incentive plan for fiscal 2017. Cash bonuses earned are paid following completion of the specified fiscal year. Executive deferred bonuses are awarded based on performance during the specified fiscal year and generally vest (become payable) according to a vesting schedule established by our Compensation Committee for each fiscal year’s award as described under “Compensation Discussion and Analysis – Annual and Deferred Incentive Compensation.” |
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(4) | The amounts shown in this column for fiscal 2017 are described in the following table: |
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Change in Pension Value and Nonqualified Deferred Compensation Earnings Table |
Name | | Change in Pension Value ($) (A) | | Nonqualified Deferred Compensation Earnings ($) (B) | | Total |
Daniel S. Jaffee | | $ | 124,833 |
| | $ | 10,778 |
| | $ | 135,611 |
|
Daniel T. Smith | | $ | 88,993 |
| | $ | 9,029 |
| | $ | 98,022 |
|
Thomas F. Cofsky | | $ | 45,479 |
| | $ | 14,623 |
| | $ | 60,102 |
|
Douglas A. Graham | | $ | 25,329 |
| | $ | 1,599 |
| | $ | 26,928 |
|
Mark E. Lewry | | $ | 40,418 |
| | $ | 7,536 |
| | $ | 47,954 |
|
Michael A. McPherson | | $ | 28,772 |
| | $ | 768 |
| | $ | 29,540 |
|
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(A) | The amounts shown include the change in the actuarial present value of benefits under our pension plan during the fiscal year. For Messrs. Jaffee and Lewry, the amounts shown also include the change in the actuarial present value of benefits under our SERP. |
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(B) | The amount shown for Mr. Jaffee represents earnings from our executive deferred compensation plan that exceed 120% of the applicable federal rate. The amounts shown for Messrs. Smith, Cofsky, Graham and Lewry each represent earnings from our executive deferred compensation plan and the executive deferred bonus portion of our annual incentive plan that exceed 120% of the applicable federal rate. The amount shown for Mr. McPherson represents earnings from the executive deferred bonus portion of our annual incentive plan that exceed 120% of the applicable federal rate. |
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(5) | The amounts shown in this column for fiscal 2017 are described in the following table: |
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All Other Compensation Table |
Name | | Perquisites ($) (A) | | Dividends on Unvested Restricted Stock ($) (B) | | Interest Earned on Executive Deferred Bonus ($) (C) (D) | | 401(k) Plan Company Matching Contributions ($) | | Post-Termination Compensation ($) | | Total ($) |
Daniel S. Jaffee | | $ | 11,353 |
| | $ | 70,125 |
| | $ | — |
| | $ | 3,466 |
| | $ | — |
| | $ | 84,944 |
|
Daniel T. Smith | | $ | 2,820 |
| | $ | 6,600 |
| | $ | 2,183 |
| | $ | 5,228 |
| | $ | — |
| | $ | 16,831 |
|
Thomas F. Cofsky | | $ | 10,272 |
| | $ | 660 |
| | $ | 2,252 |
| | $ | 5,577 |
| | $ | — |
| | $ | 18,761 |
|
Douglas A. Graham | | $ | 6,000 |
| | $ | 440 |
| | $ | 1,293 |
| | $ | 5,527 |
| | $ | — |
| | $ | 13,260 |
|
Mark E. Lewry | | $ | 6,883 |
| | $ | 10,560 |
| | $ | 3,165 |
| | $ | 5,540 |
| | $ | — |
| | $ | 26,148 |
|
Michael A. McPherson | | $ | 5,046 |
| | $ | 2,640 |
| | $ | 1,110 |
| | $ | 5,391 |
| | $ | — |
| | $ | 14,187 |
|
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(A) | Perquisites for the named executive officers generally consist of auto allowances, paid parking, airline executive club memberships, remote Internet access costs and periodical subscriptions. The amounts shown reflect the actual cost to us for providing these perquisites. The perquisites received by Mr. Jaffee consisted of the following which were paid by the Company: $6,300 auto allowance and $5,053 for parking, remote Internet access and related fees, periodical subscriptions, and airline executive club memberships. The perquisites received by Mr. Cofsky consisted of the following which were paid by the Company: $6,300 auto allowance and $3,972 for parking. |
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(B) | Amounts shown represent dividend payments on unvested shares of restricted stock held by the named executive officers that are reportable as either dividend or ordinary income. |
| |
(C) | Executive deferred bonuses awarded under our annual incentive plan earn interest at a rate equal to our long-term cost of borrowing plus 1% as described above under “Compensation Discussion and Analysis – Annual and Deferred Incentive Compensation.” The amounts shown are the interest earned on all unvested executive deferred bonus awards that do not exceed 120% of the applicable federal rate, regardless of the fiscal year in which the awards were earned. For earnings that exceed 120% of the applicable federal rate, see the column titled “Nonqualified Deferred Compensation Earnings” in the table to footnote (4) of this Summary Compensation Table. |
| |
(D) | The amount shown for Mr. Jaffee is zero because he has requested to not be eligible for executive deferred bonus awards. |
| |
(6) | While Mr. Cofsky’s position and job responsibilities did not change, his position as Vice-President, Manufacturing - Industrial ceased to be classified as an “executive officer” under SEC Rule 3b-7 effective December 13, 2016 due to changes in the Company’s organizational structure. |
Grants of Plan-Based Awards during Fiscal 2017
The following table discloses certain information regarding grants of plan-based awards to the named executive officers during fiscal 2017.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | Equity Plan Awards (2) |
| | Threshold | | Target | | Maximum | | | | | | |
Name | | Cash Bonus ($) | | Deferred Bonus ($) | | Cash Bonus ($) | | Deferred Bonus ($) | | Cash Bonus ($) | | Deferred Bonus ($) | | Grant Date | | All Other Stock Awards: Number of Shares of Stock (#) | | Grant Date Fair Value of Stock Award ($) (3) |
Daniel S. Jaffee | | $ | 81,250 |
| | $ | — |
| | $ | 325,000 |
| | $ | — |
| | $ | 650,000 |
| | $ | — |
| | — |
| | — |
| | $ | — |
|
Daniel T. Smith | | $ | 22,677 |
| | $ | 38,875 |
| | $ | 90,708 |
| | $ | 51,833 |
| | $ | 181,417 |
| | $ | 103,667 |
| | — |
| | — |
| | $ | — |
|
Thomas F. Cofsky (4) | | $ | 26,375 |
| | $ | 39,562 |
| | $ | 105,499 |
| | $ | 52,750 |
| | $ | 210,998 |
| | $ | 105,499 |
| | — |
| | — |
| | $ | — |
|
Douglas A. Graham | | $ | 22,313 |
| | $ | 22,950 |
| | $ | 89,250 |
| | $ | 30,600 |
| | $ | 178,500 |
| | $ | 61,200 |
| | — |
| | — |
| | $ | — |
|
Mark E. Lewry | | $ | 37,500 |
| | $ | 56,250 |
| | $ | 150,000 |
| | $ | 75,000 |
| | $ | 300,000 |
| | $ | 150,000 |
| | — |
| | — |
| | $ | — |
|
Michael A. McPherson | | $ | 16,868 |
| | $ | 22,220 |
| | $ | 67,490 |
| | $ | 29,627 |
| | $ | 134,980 |
| | $ | 59,254 |
| | 10/19/2016 |
| | 4,000 |
| | $ | 136,760 |
|
| |
(1) | The amounts represent the potential range of cash bonus awards and executive deferred bonus awards targeted for fiscal 2017 performance under our annual incentive plan. The actual amounts of cash and executive deferred bonuses awarded for fiscal 2017 are disclosed in the Summary Compensation Table in the column captioned “Non-Equity Incentive Plan Compensation.” For a discussion of the performance metrics applicable to these awards, see “Compensation Discussion and Analysis – Annual and Deferred Incentive Compensation – Operation of the Annual Incentive Plan” above. |
| |
(2) | Granted by our Compensation Committee under our Incentive Plan as described in “Compensation Discussion and Analysis - Long-Term Equity Incentives” above. |
| |
(3) | Amount represents the total fair value of restricted stock granted in fiscal 2017 under ASC 718. |
| |
(4) | See footnote 6 to the Summary Compensation Table. |
Outstanding Equity Awards at Fiscal 20172023 Year End
The following table provides information on the unvested restricted stock held by the named executive officers as of July 31, 2017.2023. None of the named executive officers held any unexercised stock options as of July 31, 2017.2023.
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Stock Awards |
Name | | | | | | | | | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested ($) (1) |
Daniel S. Jaffee | | | | | | | | | | 75,000 | | (2) | | $ | 4,707,750 | |
| | | | | | | | | | | | | |
Susan M. Kreh | | | | | | | | | | 30,500 | | (3) | | $ | 1,914,485 | |
| | | | | | | | | | | | | |
Christopher B. Lamson | | | | | | | | | | 30,500 | | (4) | | $ | 1,914,485 | |
|
| | | | | | | | |
| | Stock Awards |
Name | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested ($) (1) |
Daniel S. Jaffee | | 100,000 |
| (2) | | $ | 4,136,000 |
|
| | | | | |
Daniel T. Smith | | 7,500 |
| (3) | | $ | 310,200 |
|
| | | | | |
Thomas F. Cofsky (4) | | 1,000 |
| (5) | | $ | 41,360 |
|
| | | | | |
Douglas A. Graham | | 500 |
| (6) | | $ | 20,680 |
|
| | | | | |
Mark E. Lewry | | 12,000 |
| (7) | | $ | 496,320 |
|
| | | | | |
Michael A. McPherson | | 4,000 |
| (8) | | $ | 165,440 |
|
| |
(1) | Market value of our Class B Stock and Common Stock has been calculated using the closing sale price of our Common Stock on July 31, 2017, the last trading day of fiscal 2017, which was $41.36. |
| |
(2) | Restricted shares of Class B Stock that vest in 25,000 share increments subject to performance restrictions no earlier than on each of the five subsequent anniversaries of October 19, 2015. |
| |
(3) | Restricted shares of Common Stock that are scheduled to “cliff” vest on October 19, 2020. |
| |
(4) | See footnote 6 to the Summary Compensation Table. |
| |
(5) | Restricted shares of Class B Stock that are scheduled to “cliff” vest on October 19, 2018. |
| |
(6) | Restricted shares of Common Stock that are scheduled to “cliff” vest on October 19, 2018. |
| |
(7) | Restricted shares of Common Stock that are scheduled to “cliff” vest on April 7, 2019. |
| |
(8) | Restricted shares of Common Stock that are scheduled to “cliff” vest on October 19, 2020. |
(1) Market value of our Class B Stock and Common Stock has been calculated using the closing sale price of our Common Stock on July 31, 2023, the last trading day of fiscal 2023, which was $62.77.
Option Exercises(2) Restricted shares of Class B Stock are scheduled to vest as follows: 25,000 shares on each of the subsequent anniversaries of October 19th during the years 2023-2025.
(3) Restricted shares of Common Stock that are scheduled to vest as follows: 23,000 shares on December 15, 2023, 2,500 shares on October 18, 2024 and 5,000 shares on October 19, 2025.
(4) Restricted shares of Common Stock Vested for Fiscal 2017that are scheduled to vest as follows: 4,000 shares on January 20, 2024; 6,000 shares on January 20, 2025; 6,000 shares on January 20, 2026; 2,500 shares on October 18, 2026; and 12,000 shares on January 20, 2027.
Pay Versus Performance
The following tables provide information required by new pay versus performance (“PVP”) rules adopted by the SEC in August 2022 and in effect for the first time for this Proxy Statement. The following Pay Versus Performance table (“PVP Table”) provides SEC-required information about compensation for this 2023 Proxy Statement’s named executive officers, as well as our named executive officers from our 2022 Proxy Statement (each of fiscal 2023 and fiscal 2022, referred to as a “Covered Year”). We refer to all of the named executive officers regardingcovered in the numberPVP Table below, collectively, as the “PVP NEOs”. The PVP Table also provides information about the results for certain measures of restricted sharesfinancial performance during those same Covered Years. In reviewing this information, there are a few important things we believe you should consider:
•The information in columns (b) and (d) of the Company’s stockPVP Table comes directly from this year’s Summary Compensation Table (or last year’s Summary Compensation Table), calculated in the same manner as required under SEC rules;
•As required by the SEC’s PVP rules, we describe the information in columns (c) and (e) of the PVP Table as “compensation actually paid” (or “CAP”) to the applicable PVP NEOs. However, these CAP amounts do not entirely reflect the final compensation that vestedour NEOs actually earned or walked away with for their service in the Covered Years, respectively. Instead, the SEC’s concept of CAP reflects the SEC’s particular view or formulation of a combination of realized pay (primarily for cash amounts) and realizable or accrued pay (primarily for equity awards). As a result, we urge investors to use caution when evaluating CAP amounts, as they are calculated in a manner different than any information that we have previously presented; and
•As required by the SEC’s PVP rules, we provide information in the PVP Table below about our absolute total shareholder return (“TSR”) results and our U.S. GAAP net income results (the “External Measures”) during the Covered Years.
| | | | | | | | | | | | | | | | | | | | |
Year (a) | Summary Compensation Table ("SCT") Total for PEO
($)(b)(1) | Comp. Actually Paid to PEO ($)(c)(1)(2) | Average SCT Total for Non-PEO NEOs ($)(d)(1) | Average Comp. Actually Paid to Non-PEO NEOs ($)(e)(1)(2) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return ($)(f)(3) | Net Income ($)(g) |
2023 | $ | 3,297,023 | | $ | 6,560,023 | | $ | 1,144,205 | | $ | 2,511,955 | | $ | 189.08 | | $ | 29,551,441 | |
2022 | $ | 1,770,610 | | $ | 1,091,860 | | $ | 1,171,918 | | $ | 2,200,843 | | $ | 87.80 | | $ | 5,674,097 | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
(1) Daniel S. Jaffee was our principal executive officer (“PEO”) for the full year for each of the Covered Years. Our non-PEO PVP NEOs (“Non-PEO NEOs”) were Susan M. Kreh and Christopher B. Lamson for each of the Covered Years.
(2) For each Covered Year, in determining both the CAP for our PEO and the value received upon vesting duringaverage CAP for our Non-PEO NEOs for purposes of this PVP Table, we deducted from or added back to the total amount of compensation reported in column (b) and column (d) for such Covered Year the following amounts:
| | | | | | | | | |
Item and Value Added (Deducted) | 2023 | 2022 | |
For PEO: | | | |
- SCT “Stock Awards” column value | $ | — | | $ | — | | |
- SCT “Option Awards” column value | $ | — | | $ | — | | |
+ year-end fair value of outstanding equity awards granted in Covered Year | $ | — | | $ | — | | |
+/- change in fair value of outstanding equity awards granted in prior years | $ | 2,447,250 | | $ | (543,000) | | |
+ vesting date fair value of equity awards granted and vested in Covered Year | $ | — | | $ | — | | |
+/- change in fair value of prior-year equity awards vested in Covered Year | $ | 815,750 | | $ | (135,750) | | |
- prior year-end fair value of prior-year equity awards forfeited in Covered Year | $ | — | | $ | — | | |
+ includable dividends / earnings on equity awards during Covered Year | $ | — | | $ | — | | |
Total | $ | 6,560,023 | | $ | 1,091,860 | | |
| | | |
| | | |
| | | |
| | | |
| | | | | | | | | |
Item and Value Added (Deducted) | 2023 | 2022 | |
For Non-PEO Named Executive Officers (Average): | | | |
- SCT “Stock Awards” column value | $ | 68,775 | | $ | 596,500 | | |
- SCT “Option Awards” column value | $ | — | | $ | — | | |
+ year-end fair value of outstanding equity awards granted in Covered Year | $ | 156,925 | | $ | 527,450 | | |
+/- change in fair value of outstanding equity awards granted in prior years | $ | 913,640 | | $ | (95,025) | | |
+ vesting date fair value of equity awards granted and vested in Covered Year | $ | — | | $ | — | | |
+/- change in fair value of prior-year equity awards vested in Covered Year | $ | 228,410 | | $ | — | | |
- prior year-end fair value of prior-year equity awards forfeited in Covered Year | $ | — | | $ | — | | |
+ includable dividends / earnings on equity awards during Covered Year | $ | — | | $ | — | | |
Total | $ | 2,511,955 | | $ | 2,200,843 | | |
| | | |
| | | |
| | | |
| | | |
(3) For each covered year, our cumulative TSR was calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the share price at the end and the beginning of the measurement period; by the share price at the beginning of the measurement period. The TSR assumed a fixed investment of $100 at July 31, 2021 and reinvestment of quarterly dividends at the closing price the date the dividends were paid throughout each covered fiscal 2017.year. Because the covered fiscal years are presented in the table in reverse chronological order (from top to bottom), the table should be read from bottom to top for purposes of understanding cumulative returns over time.
The shares acquired and vested by Mr. Jaffee were shares of Class B Stock. Nonefollowing charts provide, across the Covered Years, descriptions of the Company’s named executive officers exercised stock options during fiscal 2017.relationships between (1) the CAP for the PEO and the average CAP for our Non-PEO NEOs (in each case as set forth in the PVP Table above) and (2) each of the performance measures set forth in columns (f) and (g) of the PVP Table above.
|
| | | | | | | |
| | Stock Awards |
Name | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) (1) |
Daniel S. Jaffee | | 25,000 |
| | $ | 854,750 |
|
Daniel T. Smith | | — |
| | $ | — |
|
Thomas F. Cofsky (2) | | — |
| | $ | — |
|
Douglas A. Graham | | — |
| | $ | — |
|
Mark E. Lewry | | — |
| | $ | — |
|
Michael A. McPherson | | — |
| | $ | — |
|
| |
(1) | The Value Realized on Vesting represents the market price of our Common Stock on the date of vesting multiplied by the number of shares vested. |
| |
(2) | See footnote 6 to the Summary Compensation Table. |
Pension Benefits for Fiscal 20172023
Defined benefit pension plan: All U.S.-based employees participate in ourBenefit Pension Plan.
The Company has provided a non-contributory, tax-qualified, defined benefit pension plan to all U.S.-based employees. On January 9, 2020, the Company amended the pension plan to freeze participation, all future benefit accruals and accrual of benefit service, including consideration of compensation increases, effective March 1, 2020. Consequently, the Pension Plan is closed to new participants and current participants no longer earn additional benefits as of March 1, 2020.
Under this plan, employees were eligible to participate commencing on the first February 1st1st or August 1st1st that followsfollowed the date when an employee achievesachieved one year of service and age 21. For salaried employees, including the named executive officers, the pension plan provides for pensions based on credited years of service (capped at 30 years) and Final Average Compensation.
The normal form of benefit is a life annuity with five years certain, payable at normal retirement age. The standard form of payment for a participant who is married is a 50% joint and survivor annuity. Other forms of benefit are available. Each form of benefit has approximately the same relative value. The formula for computation of the normal form of benefit is:
|
| | | | | | | | | | | | | |
(0.55% of Final Average Compensation) | + | (0.55% of Final Average Compensation that exceeds Social Security Covered Compensation) | * | Years of Credited Service
|
Final Average Compensation is the monthly average of the participant’s compensation paid during the highest paid consecutive five years during the last 10 years of employment. Compensation for pension plan purposes consists of certain cash compensation, principally base salary and commissions. Social Security Covered Compensation is the average of the taxable wage bases in effect for each calendar year in the 35-year period ending with the year the participant attains Social Security retirement age.
A participant’s right to an accrued benefit becomes non-forfeitable after five years of vesting service. Normal retirement age under the plan is age 65, or the age of the participant when he or she completes five years of vesting service, if later. Salaried participants who have 10 years of service can receive actuarially reduced early retirement benefits as early as age 55. The present value of the accumulated benefit is the same regardless of whether a participant begins to receive benefits at age 65 or at an earlier age. We do not subsidize early retirement benefits.
If a married participant with a non-forfeitable benefit dies prior to commencement of benefit payments, the participant’s spouse will be entitled to a survivor annuity equal to the amount the spouse would have been entitled to receive under a 50% joint and survivor annuity.
SERP: Our SERP provides benefits that would have been provided under ourIn fiscal 2023, the Board approved the termination of its defined benefit pension plan absent Code limitations on(which had been previously frozen in 2020), effective December 31, 2022. In connection with the termination, all participants’ accrued benefits and on compensation for purposes of calculating benefits, offset bywere fully vested (to the actual pension benefits. All employees whose pension plan benefits are limited by those Code limitations may participate in the SERP. Currently, Daniel S. Jaffee, our CEO, and Mark E. Lewry, our COO, are the only participants; however, Mr. Lewry willextent not be vested in the plan until March 31, 2019. Benefits provided under the SERP are paid in five equal annual installments beginning six months after the participant’s separation from service; however, if upon termination of employment the present value of the participant’s accumulated benefits does not exceed $50,000, payment will be made inalready vested). Participants received a lump sum as soon as administratively feasible afterpayment option to the first dayextent permitted under applicable law. After settlement of the calendar month that follows six months of separation from service.
The following table showspension fund’s obligations, surplus pension funds remained and the present valueBoard approved the excess funds to be contributed to the 401(k) accounts of the accumulatedpension participants who are current employees based on years of service with the Company. Pension benefits under the pension plan and under the SERP for each of the named executive officers. No payments were made to any named executive officer under the pension plan or the SERP during fiscal 2017.will no longer be reported.
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| | | | | | | | |
Name | | Plan Name | | Number of Years of Credited Service (#) (1) | | Present Value of Accumulated Benefits ($) (2) |
Daniel S. Jaffee | | Pension Plan | | 29.75 | | $ | 634,793 |
|
| | SERP | | 29.75 | | $ | 977,391 |
|
Daniel T. Smith | | Pension Plan | | 16.79 | | $ | 359,735 |
|
Thomas F. Cofsky (3) | | Pension Plan | | 30.00 | | $ | 638,217 |
|
Douglas A. Graham | | Pension Plan | | 6.48 | | $ | 120,391 |
|
Mark E. Lewry | | Pension Plan | | 3.33 | | $ | 74,988 |
|
| | SERP | | 3.33 | | $ | 31,543 |
|
Michael A. McPherson | | Pension Plan | | 14.51 | | $ | 165,262 |
|
| |
(1) | Credited service is actual years of employment with the Company to a maximum of 30 years. |
| |
(2) | The assumed retirement age used to calculate the actuarial present value for each named executive officer’s accumulated benefits is age 65, the age at which each named executive officer would be eligible to receive unreduced benefits. The other assumptions used are the same as those used to prepare the pension disclosures in the notes to our audited consolidated financial statements included in our Annual Report on Form 10-K for fiscal year ended July 31, 2017. |
| |
(3) | See footnote 6 to the Summary Compensation Table. |
Nonqualified Deferred Compensation for Fiscal 20172023
We provide an executive deferred compensation plan in which all executive officers and other senior managers are eligible to participate. Participating executives may defer up to 50% of base salary and 100% of annual cash incentive bonus into the plan. The Company makes no contributions. Executives’ deferrals earn interest at a rate equal to our long-term cost of borrowing plus 1%. Participants are entitled to receive a distribution from their account balances at the earlier of the end of their elected deferral period or upon death or termination of employment prior to age 55. Accounts are distributed in a single lump sum, or in certain circumstances, annual installments over a period of up to 15 years as elected by the participant.
In the event of an unforeseen emergency, a participant may apply to the administrative committee of the plan for payment of an amount from the participant’s account balance sufficient to satisfy the emergency need. Further, as described above, the Company may make voluntary matching contributions on behalf of the participants in this deferred compensation plan. The plan will terminate upon a change in control of the Company. Immediately prior to such a change in control, or as soon as possible following a change in control, each participant will be paid his account balance. Our executive deferred compensation plan is unfunded and subject to the claims of our creditors.
The following table shows contributions, earnings and balances in our executive In June 2020, the Board adopted an amendment to the Company’s deferred compensation plan, which provides for discretionary employer contributions to the named executive officers duringaccounts of eligible plan participants. The amount of the Company contribution under the deferred compensation plan is determined by the Company in its sole discretion and such Company contributions may vary from participant to participant. In fiscal 2017.2023, the Company offered contributions of up to six percent (6%) of a participant’s total compensation in fiscal 2023 less the amount of matched dollars to the participant under the Company’s 401(k) plan in the year. In fiscal 2023, the Company contributed $49,297 to Mr. Jaffee and $22,703 to Ms. Kreh. Mr. Lamson did not participate in fiscal 2023.
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| | | | | | | | | | | | | | | | | | | | |
Name | | Executive Contributions in Last Fiscal Year ($) (1) | | Registrant Contributions in Last Fiscal Year ($) (2) | | Aggregate Earnings in Last Fiscal Year ($) (3) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at Last Fiscal Year End ($) |
Daniel S. Jaffee | | $ | — |
| | $ | — |
| | $ | 26,372 |
| | $ | 108,864 |
| | $ | 533,340 |
|
Daniel T. Smith | | $ | — |
| | $ | — |
| | $ | 18,393 |
| | $ | 103,782 |
| | $ | 340,871 |
|
Thomas F. Cofsky (4) | | $ | 48,155 |
| | $ | — |
| | $ | 32,542 |
| | $ | 88,267 |
| | $ | 698,003 |
|
Douglas A. Graham | | $ | — |
| | $ | — |
| | $ | 1,725 |
| | $ | — |
| | $ | 36,508 |
|
Mark E. Lewry | | $ | 152,216 |
| | $ | — |
| | $ | 13,052 |
| | $ | — |
| | $ | 472,632 |
|
Michael A. McPherson | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| |
(1) | The amounts in this column are voluntary deductions from salary and cash incentive awards by the named executive officers. |
| |
(2) | We make no contribution to the executive deferred compensation plan. |
| |
(3) | We credit the accounts under the terms of the plan with an interest rate that is equal to our long-term cost of borrowing plus 1%. The amounts shown include the following amounts exceeding 120% of the applicable federal rate and reported as compensation to the following named executive officers in the Summary Compensation Table: Mr. Jaffee $10,778, Mr. Smith $7,518, Mr. Cofsky $13,065, Mr. Graham $705, Mr. Lewry $5,346. |
| |
(4) | See footnote 6 to the Summary Compensation Table. |
Equity Compensation Plans
The following table provides information about our equity compensation plans and stock that may be issued upon the exercise of options and rights that have been or may be granted to employees or members of our Board of Directors under those plans as of July 31, 2017.
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| | | | | | | | | | | | |
Plan Category | | Number of Shares of Stock to be Issued Upon Exercise of Outstanding Options | | Weighted Average Exercise Price of Outstanding Options | | Number of Shares of Stock Remaining Available for Future Issuance Under Equity Compensation Plans (excluding those listed in the first column) |
Equity Compensation Plan Approved by our Stockholders | (1) | | — |
| Common Stock | (2) | | — |
| | 344,754 | (3) |
| |
(1) | This plan is our 2006 Long Term Incentive Plan. |
| |
(2) | There are currently no options outstanding. Under this plan, awards made to members of the Jaffee family are for shares of Class B Stock. There were no awards to the Jaffee family outstanding as of July 31, 2017. Awards made to other employees or non-employee directors are for shares of Common Stock. |
| |
(3) | Prior to issuance of awards under this plan, it is not possible to determine whether awards will be for shares of Common Stock or shares of Class B Stock. Awards made to members of the Jaffee family will be for shares of Class B Stock. Awards made to other employees or non-employee directors will be for shares of Common Stock. |
Benefits upon Termination or Change in Control
The following summaries and table set forth potential payments to the named executive officers upon termination of their employment or a change in control of the Company. None of the named executive officers meet the qualifications for normal or early retirement benefits, so those termination scenarios are not shown.
We do not have a prospective severance plan that covers any of the named executive officers and generally have no employment or prospective severance agreements with the named executive officers.
OurThe only other provisions for benefits upon termination of employment or change in control provided to our NEOs are set forth in existing compensation plans and apply to all participants in those plans.
•Our annual incentive plan provides for immediate vesting, as allowed by law, of a participant’s executive deferred bonus award account upon the participant’s death, disability, or change in control of the Company. Upon retirement, a participant’s executive deferred bonus award account shall become immediately vested if the following conditions are met: (i) the participant’s age plus years of service is equal to or greater than 80, (ii) the participant is eligible for an immediate benefit from the Company’s pension plan, and (iii) there is reasonable anticipation of no further services or services of less than 20% of the participant’s pre-retirement level to the Company.
•Our Long Term Incentive Plan and the agreements issued under it provide for immediate vesting of restricted stock and immediate vesting and exercisability of stock options upon a participant’s death, disability or a change in control of the Company. UponGenerally, upon retirement, all stock options or restricted stock, as applicable, become immediately vested and, in the case of stock options, exercisable if the following conditions are met: (i) the participant’s age plus years of service is equal to or greater than 80 (ii) the participant is eligible for an immediate benefit from the Company’s pension plan and (iii)(ii) there is reasonable anticipation of no further services or services of less than 20% of the participant’s pre-retirement level to the Company. UponWith respect to stock options, upon any of these termination events, the participant, or his beneficiary in the case of the
participant’s death, may exercise any outstanding stock options for a period of three years or until their expiration dates, whichever occurs first.
In September 2018 and September 2023, the Company granted restricted stock to Mr. Jaffee that is subject to immediate vesting upon Mr. Jaffee’s death or disability. Such restricted stock shall also immediately vest upon the following: (i) Mr. Jaffee’s termination without cause or termination of his employment for good reason (in which case, the next tranche of unvested restricted shares scheduled to vest shall vest and the remaining shall be forfeited), (ii) Mr. Jaffee’s retirement after having reached age 65, or (iii) a change of control followed by Mr. Jaffee’s termination due to his death or disability, or his termination without cause or for good reason.
The table below does not include amounts payable to the named executive officers under plans that are generally available on the same basis to all of our salaried employees, such as payments under the pension plan, the 401(k) plan, the life insurance plan, the disability insurance plan and payment of prorated annual incentive compensation. For information regarding pension plan benefits see “Pension Benefits for Fiscal 2017” above.
The table also does not include balances under our executive deferred compensation plan. Those balances and theThe circumstances under which the named executive officers may receive distributions from that plan are disclosed in the Nonqualified Deferred Compensation Table and the introduction to that table.section above.
Unless otherwise noted, the amounts shown below assume that each named executive officer’s employment terminated on July 31, 2017,2023, the last day of our most recently completed fiscal year, and when applicable, the closing sale price of our Common Stock on July 31, 2017,2023, the last trading day of fiscal 2017,2023, which was $41.36.$62.77.
| | | | | | | | | | | | | | | | | | | | |
Name | | Annual Incentive Plan Deferred Bonus Account ($) (1) | | 2006 Long Term Incentive Plan ($) (2) | | Total ($) |
Daniel S. Jaffee | | | | | | |
Change in Control, Death, Disability | | $ | — | | | $ | 4,707,750 | | | $ | 4,707,750 | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Susan M. Kreh | | | | | | |
Change in Control, Death, Disability | | $ | 283,202 | | | $ | 1,914,485 | | | $ | 2,197,687 | |
| | | | | | |
Christopher B. Lamson | | | | | | |
Change in Control, Death, Disability | | $ | — | | | $ | 1,914,485 | | | $ | 1,914,485 | |
(1) The amounts shown reflect each named executive officer’s balance in his or her executive deferred bonus account of our annual incentive plan. As explained above, our annual incentive plan provides for immediate vesting and payment, as allowed by law, of a participant’s executive deferred bonus award account upon the participant’s death, disability, retirement under certain circumstances, or change in control of the Company.
(2) The amounts shown represent the market price of any unvested shares of restricted stock as of July 31, 2023. None of the named executive officers had any unvested stock options as of July 31, 2023, the last trading day of fiscal 2023. As explained above, previously unvested shares of restricted stock and stock options become immediately vested upon the events listed and subject to the conditions described above.
|
| | | | | | | | | | | | |
Name | | Annual Incentive Plan Deferred Bonus Account ($) (1) | | 2006 Long Term Incentive Plan ($) (2) | | Total ($) |
Daniel S. Jaffee | | |
| | |
| | |
|
Change in Control, Death, Disability | | $ | — |
| | $ | 4,136,000 |
| | $ | 4,136,000 |
|
| | | | | | |
Daniel T. Smith | | |
| | |
| | |
|
Change in Control, Death, Disability | | $ | 132,620 |
| | $ | 310,200 |
| | $ | 442,820 |
|
| | | | | | |
Thomas F. Cofsky (3) | | |
| | |
| | |
|
Change in Control, Death, Disability | | $ | 136,022 |
| | $ | 41,360 |
| | $ | 177,382 |
|
| | | | | | |
Douglas A. Graham | | | | | | |
Change in Control, Death, Disability | | $ | 78,417 |
| | $ | 20,680 |
| | $ | 99,097 |
|
| | | | | | |
Mark E. Lewry | | |
| | |
| | |
|
Change in Control, Death, Disability | | $ | 192,106 |
| | $ | 496,320 |
| | $ | 688,426 |
|
| | | | | | |
Michael A. McPherson | | |
| | |
| | |
|
Change in Control, Death, Disability | | $ | 70,871 |
| | $ | 165,440 |
| | $ | 236,311 |
|
| |
(1) | The amounts shown reflect each named executive officer’s balance in his executive deferred bonus account of our annual incentive plan. The amounts include executive deferred bonuses awarded for fiscal 2017 that were approved subsequent to July 31, 2017. As explained above, our annual incentive plan provides for immediate vesting and payment, as allowed by law, of a participant’s executive deferred bonus award account upon the participant’s death, disability, retirement under certain circumstances, or change in control of the Company. |
| |
(2) | The amounts shown represent, as of July 31, 2017: (a) the market price of any unvested shares of restricted stock; and/or (b) the excess of the market price of the shares of stock underlying unvested stock options over the option exercise price. As of July 31, 2017, none of the named executive officers had any unvested stock options. As explained above, previously unvested shares of restricted stock and stock options become immediately vested upon the events listed. |
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(3) | See footnote 6 to the Summary Compensation Table. |
STOCK OWNERSHIP
Principal Stockholders
The following table sets forth information as of October 16, 2017,2023, except as noted below, regarding beneficial ownership of our Common Stock and Class B Stock by each person or group known to us to hold more than five percent of either class. See “Security Ownership of Management” below for information on beneficial ownership of our Common Stock and Class B Stock by our directors and named executive officers.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Amount and Nature of Beneficial Ownership (1) |
Name and Address of Beneficial Owner | | Title of Class | | Number of Shares of Common Stock and Class B Stock | | Percentage of Outstanding Stock of Class | | Percentage of Aggregate Voting Power of Common Stock and Class B Stock |
Daniel S. Jaffee | | Common Stock | | — | | | | | — | | | — | |
410 N. Michigan Avenue | | Class B Stock | | 634,628 | | | (2)(3) | | 29.24 | % | | 23.67 | % |
Chicago, IL 60611 | | | | | | | | | | |
| | | | | | | | | | |
Jaffee Investment Partnership, L.P. | | Common Stock | | — | | | | | — | | | — | |
410 N. Michigan Avenue | | Class B Stock | | 1,250,000 | | | (4) | | 57.59 | % | | 46.62 | % |
Chicago, IL 60611 | | | | | | | | | | |
| | | | | | | | | | |
Dimensional Fund Advisors LP | | Common Stock | | 374,969 | | | (5) | | 7.34 | % | | 1.40 | % |
Building One | | Class B Stock | | — | | | | | — | | | — | |
6300 Bee Cave Road | | | | | | | | | | |
Austin, TX 78746 | | | | | | | | | | |
| | | | | | | | | | |
GAMCO Asset Management Inc. et al. | | Common Stock | | 530,406 | | | (6) | | 10.38 | % | | 1.98 | % |
One Corporate Center | | Class B Stock | | — | | | | | — | | | — | |
Rye, NY 10580 | | | | | | | | | | |
| | | | | | | | | | |
Renaissance Technologies LLC | | Common Stock | | 256,446 | | | (7) | | 5.02 | % | | 0.96 | % |
800 Third Avenue | | Class B Stock | | — | | | | | — | | | — | |
New York, NY 10022 | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
The Vanguard Group | | Common Stock | | 233,605 | | | (8) | | 4.57 | % | | 1.18 | % |
100 Vanguard Blvd. | | Class B Stock | | — | | | | | — | % | | — | % |
Malvern, PA 19355 | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
(1) Beneficial ownership is determined according to SEC rules and generally includes any shares over which a person possesses sole or shared power to vote or to direct the disposition of a security as well as any shares that such person has the right to acquire within 60 days of October 16, 2023, including through the exercise of options or other rights or the conversion of another security. Unless otherwise indicated, all beneficial ownership in this table indicates sole voting and investment power. The applicable percentage ownership for each person listed below is based upon 5,108,734 shares of Common Stock and 2,170,415 shares of Class B Stock outstanding as of the close of business on October 16, 2023. Shares of Common Stock and Class B Stock subject to options, warrants or other rights that are exercisable or convertible within 60 days after October 16, 2023, are deemed outstanding for the purpose of
|
| | | | | | | | | | | | | |
| | | | Amount and Nature of Beneficial Ownership (1) |
Name and Address of Beneficial Owner | | Title of Class | | Number of Shares of Common Stock and Class B Stock | | Percentage of Outstanding Stock of Class | | Percentage of Aggregate Voting Power of Common Stock and Class B Stock |
Richard M. Jaffee (2) | | Common Stock | | — |
| | | | — |
| | — |
|
410 N. Michigan Avenue | | Class B Stock | | 409,558 |
| | (3)(4)(5) | | 18.77 | % | | 15.20 | % |
Chicago, IL 60611 | | | | |
| | | | |
| | |
|
| | | | | | | | | | |
Daniel S. Jaffee (2) | | Common Stock | | — |
| | | | — |
| | — |
|
410 N. Michigan Avenue | | Class B Stock | | 384,505 |
| | (5)(6) | | 17.62 | % | | 14.27 | % |
Chicago, IL 60611 | | | | |
| | | | |
| | |
|
| | | | | | | | | | |
Jaffee Investment Partnership, L.P. | | Common Stock | | — |
| | | | — |
| | — |
|
410 N. Michigan Avenue | | Class B Stock | | 1,250,000 |
| | (4) | | 57.28 | % | | 46.40 | % |
Chicago, IL 60611 | | | | |
| | | | |
| | |
|
| | | | | | | | | | |
Dimensional Fund Advisors LP | | Common Stock | | 379,403 |
| | (7) | | 7.42 | % | | 1.41 | % |
Building One | | Class B Stock | | — |
| | | | — |
| | — |
|
6300 Bee Cave Road | | | | |
| | | | |
| | |
|
Austin, TX 78746 | | | | |
| | | | |
| | |
|
| | | | | | | | | | |
GAMCO Asset Management Inc. et al. | | Common Stock | | 838,534 |
| | (8) | | 16.40 | % | | 3.11 | % |
One Corporate Center | | Class B Stock | | — |
| | | | — |
| | — |
|
Rye, NY 10580 | | | | |
| | | | |
| | |
|
| | | | | | | | | | |
Renaissance Technologies LLC | | Common Stock | | 420,773 |
| | (9) | | 8.23 | % | | 1.56 | % |
800 Third Avenue | | Class B Stock | | — |
| | | | — |
| | — |
|
New York, NY 10022 | | | | |
| | | | |
| | |
|
| | | | | | | | | | |
T. Rowe Price Associates, Inc. | | Common Stock | | 616,330 |
| | (10) | | 12.05 | % | | 2.29 | % |
100 East Pratt Street | | Class B Stock | | — |
| | | | — |
| | — |
|
Baltimore, MD 21202 | | | | |
| | | | |
| | |
|
| | | | | | | | | | |
Harvey Partners, LLC | | Common Stock | | 86,130 |
| | (11) | | 1.68 | % | | 0.32 | % |
551 Fifth Avenue, 36th Floor | | Class B Stock | | — |
| | | | — |
| | — |
|
New York, NY 10176 | | | | | | | | | | |
calculating the percentage ownership of the person holding those options, warrants or other rights but are not treated as outstanding for the purpose of calculating the percentage ownership of any other person.
(2) Does not include shares beneficially owned by Jaffee Investment Partnership, L.P.
(3) Consists of: (i) 572,484 shares of Class B Stock directly owned by Daniel S. Jaffee (200,000 of which are restricted shares); (ii) 5,625 shares of Class B Stock he owns as trustee for his children; (iii) 24,893 shares of Class B Stock he owns as trustee for the Daniel Jaffee Children's GST Exempt Trust u/a/d 07/12/1993; and (iv) 31,626 shares of Class B Stock he owns as trustee for Daniel Jaffee GST Non-Exempt Trust u/a/d 06/21/1974. 130,000 of the shares of Class B Stock held directly by Mr. Jaffee are pledged to a bank as collateral for a personal loan. The 200,000 restricted shares of Class B Stock will become non-forfeitable as follows: (a) 25,000 shares on each of the subsequent anniversaries of October 19th during the years 2023-2025, (b) 16,000 shares on each of the anniversaries of October 19th during the years 2024-25, and (c) 31,000 shares on each of the anniversaries of October 19th during the years 2026-2028.
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(1) | Beneficial ownership is determined according to SEC rules and generally includes any shares over which a person possesses sole or shared power to vote or to direct the disposition of a security as well as any shares that such person has the right to acquire within 60 days of October 16, 2017, including through the exercise of options or other rights or the conversion of another security. Unless otherwise indicated, all beneficial ownership in this table indicates sole voting and investment power. The applicable percentage ownership for each person listed below is based upon 5,114,186 shares of Common Stock and 2,182,381 shares of Class B Stock outstanding as(4) Jaffee Investment Partnership, L.P. is managed by its general partners, generally acting by a majority vote. Daniel S. Jaffee has a majority of the close of business on October 16, 2017. Shares of Common Stock and Class B Stock subject to options, warrants or other rights that are exercisable or convertible within 60 days after October 16, 2017, are deemed outstanding for the purpose of calculating the percentage ownership of the person holding those options, warrants or other rights but are not treated as outstanding for the purpose of calculating the percentage ownership of any other person. |
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(2) | Daniel S. Jaffee is Richard M. Jaffee’s son. |
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(3) | Consists of 290,895 shares held in a revocable trust of which Richard M. Jaffee is the grantor and, during his lifetime, the trustee and sole beneficiary, and 118,538 shares held in an irrevocable trust, of which he is currently the trustee. |
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(4) | Jaffee Investment Partnership, L.P. is managed by its general partners, generally acting by a majority vote. One of the general partners, Richard M. Jaffee, has eight votes. Each of the remaining four general partners, Daniel S. Jaffee, Karen Jaffee Cofsky, Susan Jaffee and Nancy E. Jaffee, all children of Richard M. Jaffee, have three votes. Richard M. Jaffee, as the managing general partner votes and therefore, generally has voting control of all of the Oil-Dri shares owned by the partnership. As a result, Mr. Jaffee, might be deemed to have, but disclaims, beneficial ownership of the partnership’s shares, which are not reflected in his share ownership shown in this table. |
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(5) | Does not include shares beneficially owned by Jaffee Investment Partnership, L.P. |
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(6) | Consists of 384,505 shares of Class B Stock directly owned by Daniel S. Jaffee (100,000 of which are restricted shares), 2 shares of Class B Stock owned by his spouse, 5,625 shares of Class B Stock he owns as trustee for his children and 125 shares of Class B Stock held in joint tenancy with his spouse. Of the 100,000 restricted shares of Class B Stock: (a) 25,000 shares became non-forfeitable on October 19, 2017 and (b) an additional 25,000 shares become non-forfeitable no earlier than on each of the three subsequent anniversaries of October 19, 2017. |
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(7) | Information is as provided by the reporting persons in a Schedule 13G/A filed with the SEC on February 9, 2017. Based on such Schedule 13G/A, Dimensional Fund Advisors LP (“Dimensional”), a registered investment adviser, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940 and serves as investment manager to certain other commingled group trusts and separate accounts. These investment companies, trusts and accounts are the “Funds.” In certain cases, subsidiaries of Dimensional may act as adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or manager, Dimensional or its subsidiaries may possess voting and/or investment power over the shares of Common Stock owned by the Funds, and may be deemed to be the beneficial owner of those shares under applicable SEC rules. Although such Schedule 13G/A identifies Dimensional as having sole voting power over 374,186 shares of Common Stock and sole dispositive power over 379,403 shares of Common Stock, Dimensional disclaims beneficial ownership of such shares and reports that all of these shares are owned by the Funds. |
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(8) | Information is as provided by the reporting persons in a Schedule 13D/A filed with the SEC on April 10, 2017. Such Schedule 13D/A filed by Gabelli Funds, LLC (“Gabelli Funds”), GAMCO Asset Management, Inc. (“GAMCO”), Teton Advisors, Inc. (“Teton Advisors”), GGCP, Inc. (“GGCP”), GAMCO Investors, Inc. (“GBL”), Associated Capital Group, Inc. (“AC”) and Mario J. Gabelli reports: (a) 138,100 shares of Common Stock beneficially owned by Gabelli Funds; (b) 570,334 shares of Common Stock beneficially owned by GAMCO; (c) 128,300 shares of Common Stock beneficially owned by Teton Advisors; (d) 300 shares of Common Stock beneficially owned by Gabelli & Company Investment Advisers, Inc. and (e) 1,500 shares of Common Stock beneficially owned by AC. The Schedule 13D/A reports that each such entity has sole voting and sole dispositive power over the shares reported as beneficially owned by it, except that: (i) GAMCO does not have the authority to vote 47,000 of the reported shares; (ii) Gabelli Funds has sole dispositive and voting power with respect to the shares held by such funds so long as the aggregate voting interest of all joint filers does not exceed 25% of their total voting interest in the Company and, in that event, the proxy voting committee of each fund shall respectively vote that fund’s shares; (iii) at any time, the proxy voting committee of each fund shall of each such fund may take and exercise in its sole discretion the entire voting power with respect to the shares held by such fund under special circumstances such as regulatory considerations; and (iv) the power of Mario J. Gabelli, AC, GBL and GGCP is indirect with respect to securities beneficially owned directly by other reporting persons. |
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(9) | Information is as provided by the reporting persons in a Schedule 13G/A filed with the SEC on February 14, 2017. Such Schedule 13G/A filed by Renaissance Technologies LLC, an investment adviser (“RTC”), and Renaissance Technologies Holdings Corporation, majority owner of RTC (“RTHC”), reports that RTC and RTHC have sole voting power over 404,125 shares of Common Stock, sole dispositive power over 415,835 shares of Common Stock, and shared dispositive power over 4,938 shares of Common Stock. |
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(10) | Information is as provided by the reporting persons in a Schedule 13G/A filed with the SEC on February 7, 2017. Such Schedule 13G/A filed by T. Rowe Price Associates, Inc., a registered investment adviser (“Price Associates”), and T. Rowe Price Small-Cap Value Fund, Inc. reports that Price Associates held sole voting power over 70,230 shares of Common Stock and sole dispositive power over 616,330 shares of Common Stock, and T. Rowe Price Small-Cap Value Fund, Inc. held sole voting power over 546,100 shares of Common Stock. Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. |
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(11) | Information is as provided by the reporting persons in a Schedule 13G/A filed with the SEC on February 14, 2017. Based on such Schedule 13G/A, Harvey Partners, LLC (“Harvey Partners”) is the investment manager of the following entities, which hold the following number of shares of Common Stock: (a) Harvey SMidCap Fund, LP, which holds 36,987 shares of Common Stock; and (b) Harvey Master Fund, L.P., which holds 49,143 shares of Common Stock. As the investment manager of such entities, Harvey Partners possesses the sole power to vote and the sole power to direct the disposition of the aggregate 86,130 shares of Common Stock held by such entities. James A. Schwartz and Jeffrey C. Moskowitz, the managing members of Harvey Partners, share voting and investment power with respect to all securities beneficially owned by Harvey Partners. |
(5) Information is as provided by the reporting persons in a Schedule 13G/A filed with the SEC on February 10, 2023. Based on such Schedule 13G/A, Dimensional Fund Advisors LP (“Dimensional”), a registered investment adviser, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940 and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts. These investment companies, trusts and accounts are the “Funds.” In certain cases, subsidiaries of Dimensional may act as adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or manager, Dimensional or its subsidiaries may possess voting and/or investment power over the shares of Common Stock owned by the Funds, and may be deemed to be the beneficial owner of those shares under applicable SEC rules. Although such Schedule 13G/A identifies Dimensional as having sole voting power over 367,941 shares of Common Stock and sole dispositive power over 374,969 shares of Common Stock, Dimensional disclaims beneficial ownership of such shares and reports that all of these shares are owned by the Funds.
(6) Information is as provided by the reporting persons in a Schedule 13D/A filed with the SEC on July 31, 2023. Such Schedule 13D/A filed by Gabelli Funds, LLC (“Gabelli Funds”), GAMCO Asset Management, Inc. (“GAMCO”), Teton Advisors, Inc. (“Teton Advisors”), GGCP, Inc. (“GGCP”), GAMCO Investors, Inc. (“GBL”), Associated Capital Group, Inc. (“AC”) and Mario J. Gabelli reports: (a) 85,700 shares of Common Stock beneficially owned by Gabelli Funds; (b) 424,406 shares of Common Stock beneficially owned by GAMCO; and (c) 15,000 shares of Common Stock beneficially owned by Teton Advisors. The Schedule 13D/A reports that each such entity has sole voting and sole dispositive power over the shares reported as beneficially owned by it, except that: (i) GAMCO does not have the authority to vote 5,300 of the reported shares; (ii) Gabelli Funds has sole dispositive and voting power with respect to the shares held by such funds so long as the aggregate voting interest of all joint filers does not exceed 25% of their total voting interest in the Company and, in that event, the proxy voting committee of each fund shall respectively vote that fund’s shares; (iii) at any time, the proxy voting committee of each fund shall of each such fund may take and exercise in its sole discretion the entire voting power with respect to the shares held by such fund under special circumstances such as regulatory considerations; and (iv) the power of Mario J. Gabelli, AC, GBL and GGCP is indirect with respect to securities beneficially owned directly by other reporting persons.
(7) Information is as provided by the reporting persons in a Schedule 13G/A filed with the SEC on February 13, 2023. Such Schedule 13G/A filed by Renaissance Technologies LLC, an investment adviser (“RTC”), and Renaissance Technologies Holdings Corporation, majority owner of RTC (“RTHC”), reports that RTC and RTHC have sole voting and dispositive power over 256,446 shares of Common Stock.
(8) Information is as provided by the reporting persons in a Schedule 13G/A filed with the SEC on February 9, 2023. Such Schedule 13G filed by The Vanguard Group, an investment adviser, reports that The Vanguard Group held sole voting power over 0 shares of Common Stock, shared voting power over 0 shares of Common Stock, sole dispositive power over 233,605 shares of Common Stock, and shared dispositive power over 2,188 shares of Common Stock.
Security Ownership of Management
The following table shows the number of shares of Common Stock and Class B Stock beneficially owned as of October 16, 20172023 by our directors, by the named executive officers and by our directors and named executive officers as a group.
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| | | | | | | | | | | | | | |
Name of Beneficial Owner (1) | | Number of Shares of Common Stock | | Percentage of Outstanding Common Stock | | Number of Shares of Class B Stock (2) | | Percentage of Outstanding Class B Stock |
Richard M. Jaffee (3) | | — |
| (4) | | * |
| | 409,558 |
| (4) | | 18.77 | % |
Daniel S. Jaffee (3) | | — |
| (4) | | * |
| | 384,505 |
| (4) | | 17.62 | % |
Thomas F. Cofsky (3) | | 586 |
| (5) | | * |
| | 64,453 |
| (6) | | 2.95 | % |
J. Steven Cole | | 28,000 |
| (7) | | * |
| | — |
| | | * |
|
Joseph C. Miller | | 20,534 |
| (8) | | * |
| | — |
| | | * |
|
Michael A. Nemeroff | | 21,901 |
| (9) | | * |
| | — |
| | | * |
|
George C. Roeth | | 1,500 |
| (10) | | * |
| | — |
| | | * |
|
Allan H. Selig | | 32,000 |
| (9) | | * |
| | — |
| | | * |
|
Paul E. Suckow | | 20,128 |
| (9) | | * |
| | — |
| | | * |
|
Lawrence E. Washow | | 8,000 |
| (11) | | * |
| | — |
| | | * |
|
Daniel T. Smith | | 9,651 |
| (12) | | * |
| | — |
| | | * |
|
Douglas A. Graham | | 3,500 |
| (13) | | * |
| | — |
| | | * |
|
Mark E. Lewry | | 12,000 |
| (14) | | * |
| | — |
| | | * |
|
Michael A. McPherson | | 4,000 |
| (15) | | * |
| | — |
| | | * |
|
All Directors and Named Executive Officers as a Group | | 161,800 |
| (16) | | 3.16 | % | | 858,516 |
| (17) | | 39.34 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name of Beneficial Owner (1) | | Number of Shares of Common Stock | | Percentage of Outstanding Common Stock | | Number of Shares of Class B Stock (2) | | Percentage of Outstanding Class B Stock |
Daniel S. Jaffee | | — | | (3) | | * | | 634,628 | | (3) | | 29.24 | % |
Ellen-Blair Chube | | 6,660 | | (4) | | * | | — | | | | * |
Paul M. Hindsley | | 7,000 | | (4) | | * | | — | | | | * |
Michael A. Nemeroff | | 27,901 | | (4) | | * | | — | | | | * |
George C. Roeth | | 7,500 | | (5) | | * | | — | | | | * |
Amy L. Ryan | | 2,000 | | (4) | | * | | — | | | | * |
Allan H. Selig | | 50,000 | | (4) | | * | | — | | | | * |
Paul E. Suckow | | 20,028 | | (4) | | * | | — | | | | * |
Lawrence E. Washow | | 14,000 | | (4) | | * | | — | | | | * |
Patricia J. Schmeda | | — | | | | * | | — | | | | * |
Susan M. Kreh | | 42,660 | | (6) | | * | | — | | | | * |
Christopher B. Lamson | | 36,500 | | (7) | | * | | — | | | | * |
All Directors and Executive Officers as a Group (14 persons) | | 259,020 | | (8) | | 5.07 | % | | 634,628 | | (9) | | 29.24 | % |
* Does not exceed 1%
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(1) | Beneficial ownership is determined according to SEC rules and generally includes any shares over which a person possesses sole or shared power to vote or to direct the disposition of a security as well as any shares that such person has the right to acquire within 60 days of October 16, 2017, including through the exercise of options or other rights or the conversion of another security. Unless otherwise indicated, the individuals listed in this table have sole voting and investment power with respect to the shares owned by them, and such shares are not subject to any pledge. The applicable percentage ownership for each person listed is based upon 5,114,186 shares of Common Stock and 2,182,381 shares of Class B Stock outstanding as of the close of business on October 16, 2017. Shares of Common Stock and Class B Stock subject to options, warrants or other rights that are exercisable or convertible within 60 days after October 16, 2017,(1) Beneficial ownership is determined according to SEC rules and generally includes any shares over which a person possesses sole or shared power to vote or to direct the disposition of a security as well as any shares that such person has the right to acquire within 60 days of October 16, 2023, including through the exercise of options or other rights or the conversion of another security. Unless otherwise indicated, the individuals listed in this table have sole voting and investment power with respect to the shares owned by them, and such shares are not subject to any pledge. The applicable percentage ownership for each person listed is based upon 5,108,734 shares of Common Stock and 2,170,415 shares of Class B Stock outstanding as of the close of business on October 16, 2023. Shares of Common Stock and Class B Stock subject to options, warrants or other rights that are exercisable or convertible within 60 days after October 16, 2023, are deemed outstanding for the purpose of calculating the percentage ownership of the person holding those options, warrants or other rights, but are not treated as outstanding for the purpose of calculating the percentage ownership of any other person. |
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(2) | Except for Richard M. Jaffee, Daniel S. Jaffee and Thomas F. Cofsky, none of our directors or named executive officers own any shares of Class B Stock. |
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(3) | Thomas F. Cofsky is Richard M. Jaffee’s son-in-law and Daniel S. Jaffee’s brother-in-law. |
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(4) | Does not include shares beneficially owned by Jaffee Investment Partnership, L.P. For information regarding the shares beneficially owned by Richard M. Jaffee and Daniel S. Jaffee, see the table under “Principal Stockholders” above and the notes thereto. |
(2) Except for Daniel S. Jaffee, none of our directors or named executive officers own any shares of Class B Stock.
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(5) | Consists of 512 shares of Common Stock owned by Mr. Cofsky and 74 shares of Common Stock owned by his spouse. |
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(6) | Consists of 11,835 shares of Class B Stock directly owned by Thomas F. Cofsky (1,000 of which are restricted shares that are scheduled to “cliff” vest in full on October 19, 2018), 42,867 shares of Class B Stock owned by his spouse, 9,375 shares of Class B Stock his spouse owns as trustee for their children, and 376 shares of Class B Stock held in joint tenancy with his spouse. |
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(7) | Consists of 26,700 shares of Common Stock owned by Mr. Cole (1,500 of which are restricted shares that are scheduled to “cliff” vest in full on December 13, 2018) and 1,300 shares of Common Stock owned by his spouse. |
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(8) | Includes 16,525 shares of Common Stock held by Mr. Miller as trustee for the benefit of his spouse and 1,500 restricted shares of Common Stock awarded on December 13, 2016, scheduled to “cliff” vest on December 13, 2018. |
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(9) | Includes 1,500 restricted shares of Common Stock awarded on December 13, 2016, scheduled to “cliff” vest on December 13, 2018. |
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(10) | Consists of 1,500 restricted shares of Common Stock awarded on December 13, 2016, scheduled to “cliff” vest on December 13, 2018. |
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(11) | Includes 1,500 restricted shares of Common Stock awarded on December 15, 2014, scheduled to “cliff” vest on December 15, 2017 and 1,500 restricted shares of Common Stock awarded on December 13, 2016, scheduled to “cliff” vest on December 13, 2018. |
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(12) | Includes 7,500 restricted shares of Common Stock awarded on September 9, 2015, scheduled to “cliff” vest on October 19, 2020. |
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(13) | Includes 500 restricted shares of Common Stock awarded on September 9, 2015, scheduled to “cliff” vest on October 19, 2018. |
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(14) | Consists of 12,000 restricted shares of Common Stock awarded on April 7, 2014, scheduled to “cliff” vest on April 7, 2019. |
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(15) | Consists of 4,000 restricted shares of Common Stock awarded on October 19, 2016, scheduled to “cliff” vest on October 19, 2020. |
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(16) | Includes 37,500 restricted shares of Common Stock: (a) 1,500 of which become non-forfeitable on December 15, 2017, (b) 500 of which become non-forfeitable on October 19, 2018, (c) 12,000 of which become non-forfeitable on December 13, 2018, (d) 12,000 of which become non-forfeitable on April 7, 2019 and (e) 11,500 of which become non-forfeitable on October 19, 2020. The number of shares of Common Stock owned beneficially by our directors and named executive officers as a group represents approximately 3.2% of the number of outstanding shares of Common Stock and approximately 0.6% of the aggregate voting power of the Common Stock and Class B Stock. |
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(17) | Includes 101,000 restricted shares of Class B Stock: (a) 1,000 of which become non-forfeitable on October 19, 2018, (b) 25,000 shares became non-forfeitable on October 19, 2017 and (c) an additional 25,000 shares become non-forfeitable no earlier than on each of the three subsequent anniversaries of October 19, 2017.(3) Does not include shares beneficially owned by Jaffee Investment Partnership, L.P. For information regarding the shares beneficially owned by Daniel S. Jaffee, see the table under “Principal Stockholders” above and the notes thereto. (4) Includes 2,000 restricted shares of Common Stock awarded on September 10, 2021, scheduled to “cliff” vest on October 19, 2023. (5) Includes (a) 5,500 shares of Common Stock held in a trust for the benefit of Mr. Roeth and his spouse and (b) 2,000 restricted shares of Common Stock awarded on September 10, 2021, scheduled to “cliff” vest on October 19, 2023.
(6) Includes restricted shares of Common Stock that are scheduled to vest as follows: (a) 23,000 shares on December 15, 2023; (b) 2,500 shares on October 18, 2024; (c) 5,000 shares on October 19, 2025; and (d) 4,000 shares on October 19, 2027. (7) Includes restricted shares of Common Stock that are scheduled to vest as follows: (a) 4,000 shares on January 20, 2024; (b) 6,000 shares on January 20, 2025; (c) 6,000 shares on January 20, 2026; (d) 2,500 shares on October 18, 2026; (e) 12,000 shares on January 20, 2027; and (f) 4,000 shares on October 19, 2027. (8) Includes 128,000 restricted shares of Common Stock: (a) 16,000 of which become non-forfeitable on October 19, 2023, (b) 43,000 of which become non-forfeitable on December 15, 2023, (c) 4,000 of which become non-forfeitable on January 20, 2024, (d) 2,500 of which become non-forfeitable on October 18, 2024, (e) 6,000 of which become non-forfeitable on January 20, 2025, (f) 10,000 of which become non-forfeitable on October 19, 2025, (g) 6,000 of which become non-forfeitable on January 20, 2026, (h) 2,500 of which become non-forfeitable on October 18, 2026, (i) 10,000 of which become non-forfeitable on October 19, 2026, (j) 12,000 of which become non-forfeitable on January 20, 2027, and (k) 16,000 of which become non-forfeitable on October 19, 2027. The number of shares of Common Stock owned beneficially by our directors and executive officers as a group represents approximately 5.1% of the number of outstanding shares of Common Stock and approximately 1.0% of the aggregate voting power of the Common Stock and Class B Stock. (9) Includes 200,000 restricted shares of Class B Stock of which become non-forfeitable as follows: (a) 25,000 shares on each of the subsequent anniversaries of October 19th during the years 2023-2025, (b) 16,000 shares on each of the anniversaries of October 19th during the years 2024-25, and (c) 31,000 shares on each of the anniversaries of October 19th during the years 2026-2028. Does not include shares beneficially owned by Jaffee Investment Partnership, L.P. For information regarding the shares held by the partnership, see the table under “Principal Stockholders” above and the notes thereto. The number of shares of Class B Stock owned beneficially by our directors and executive officers as a group represents approximately 29.2% of the number of outstanding shares of Class B Stock and approximately 23.7% of the aggregate voting power of the Common Stock and Class B Stock.
OTHER INFORMATION Website Web links throughout this Proxy Statement are provided for convenience only. These website addresses are intended to provide inactive, textual references only. The information on these websites is not part of this Proxy Statement. Forward-Looking Statements Certain statements included in this Proxy Statement are, or may be deemed to be forward-looking statements, which are based on current expectations, estimates, forecasts and projections about our future performance, our business, our beliefs and our management’s assumptions. All statements other than statements of historical or current facts, including statements regarding our environmental, sustainability and/or social plans and goals, made in this document are forward-looking. Words such as “expect,” “outlook,” “forecast,” “would,” “could,” “should,” “project,” “intend,” “plan,” “continue,” “believe,” “seek,” “estimate,” “anticipate,” “may,” “assume,” “foresee,” “commit,” “design,” “efforts,” and variations of such words and similar expressions are intended to identify such forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Because these forward-looking statements are subject to risks and uncertainties, actual results could differ materially from the expectations expressed in the forward-looking statements. Additional information concerning these and other risks is described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our reports on Forms 10-K and 10-Q that we file with the U.S. Securities and Exchange Commission. In addition, new risks emerge
from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business. Given these risks and uncertainties, the reader should not place undue reliance on these forward-looking statements. We undertake no obligation to update or revise these forward-looking statements to reflect subsequent events or circumstances.
APPENDIX A
OIL-DRI CORPORATION OF AMERICA 2006 LONG TERM INCENTIVE PLAN As Amended and Restated Effective December 13, 2023
SECTION 1. ESTABLISHMENT, PURPOSE, & EFFECTIVE DATE OF PLAN 1 1.1 Establishment 1 1.2 Purpose 1 1.3 Effective Date 1 SECTION 2. DEFINITIONS 1 2.1 Definitions 1 2.2 Gender and Number 5 2.3 Sections 5 SECTION 3. ELIGIBILITY AND PARTICIPATION 5 SECTION 4. ADMINISTRATION 6 4.1 Committee Administration 6 4.2 Board Reservation and Delegation 6 SECTION 5. STOCK SUBJECT TO PLAN 6 5.1 Aggregate Limitations 6 5.2 Individual Participant Limitations 6 5.3 Reuse 6 5.4 Adjustment in Capitalization 7 SECTION 6. DURATION OF PLAN 7 SECTION 7. STOCK OPTIONS 7 7.1 Grant of Options 7 7.2 Award Agreement 7 7.3 Option Price 8 7.4 Exercise of Options 8 7.5 Payment 8 7.6 Limitations on ISOs 8 SECTION 8. RESTRICTED STOCK OR RESTRICTED STOCK UNITS 9 8.1 Grant 9 8.2 Award Agreement 9 8.3 Events Upon Vesting 10 8.4 Legend 10 SECTION 9. GRANT OF SARS 10 9.1 Grant 10 9.2 Award Agreement 10 9.3 Exercise 10 SECTION 10. GRANT OF PERFORMANCE AWARDS 10 10.1 Grant 10 10.2 Award Agreement 10 10.3 Payment of Performance Awards 10 SECTION 11. BENEFICIARY DESIGNATION 11 SECTION 12. VESTING AND EXERCISE PERIOD UPON DISABILITY, DEATH, RETIREMENT OR OTHER TERMINATION OF EMPLOYMENT OR SERVICE 11
12.1 Disability or Death 11 12.2 Retirement 11 12.3 Other Termination of Employment or Service as an Outside Director 12 SECTION 13. RESTRICTIONS ON TRANSFERABILITY OF STOCK AND AWARDS 12 13.1 Restrictions on Stock Transferability 12 13.2 Nontransferability of Awards 12 SECTION 14. RIGHTS OF EMPLOYEES AND OUTSIDE DIRECTORS 13 14.1 Employment or Continued Service 13 14.2 Participation 13 SECTION 15. CHANGE IN CONTROL 14 SECTION 16. AMENDMENT, MODIFICATION, & TERMINATION OF PLAN 14 SECTION 17. TAX WITHHOLDING 14 17.1 Tax Withholding 14 17.2 Form of Tax Payment 14 SECTION 18. INDEMNIFICATION 15 SECTION 19. REQUIREMENTS OF LAW 15 19.1 Requirements of Law 15 19.2 Code Section 409A 15 19.3 Severability 16 19.4 Governing Law 16
OIL-DRI CORPORATION OF AMERICA 2006 LONG TERM INCENTIVE PLAN Section 1.Establishment, Purpose, and Effective Date of Plan 1.1Establishment. Oil-Dri Corporation of America, a Delaware corporation, has established the “Oil-Dri Corporation of America 2006 Long Term Incentive Plan,” which permits the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based and cash-based awards. 1.2Purpose. The purpose of the Plan is to advance the interests of the Company and its stockholders, by encouraging and providing for the acquisition by Employees and Outside Directors of an equity interest in the success of the Company and its subsidiaries, by providing additional incentives and motivation toward superior performance of the Company, and by enabling the Company to attract and retain the services of Employees and Outside Directors upon whose judgment, interest, and special effort the successful conduct of its operations is largely dependent. 1.3Effective Date. This Plan was originally amended and restated and approved by stockholders of the Company on December 5, 2006, and subsequently amended on December 19, 2007, October 15, 2015 and October 16, 2019. The Board of Directors of the Company approved this amendment and restatement of the Plan on October 4, 2023, subject to the approval by the stockholders of the Company at the 2023 Annual Meeting. The Plan, as so amended and restated, shall become effective on the date of such stockholder approval (such date, the “Amended and Restated Plan Effective Date”). Section 2.Definitions. 2.1Definitions. Whenever used herein, the following terms shall have the respective meanings set forth below: “Award” means collectively or individually a grant under this Plan of a stock option, stock appreciation right, restricted stock, restricted stock unit, performance award, or other stock-based or cash-based award. “Award Agreement” means either (i) a written agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, or (ii) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award, including any amendment or modification thereof. The Committee may provide for the use of electronic, internet or other non-paper Award Agreements, and the use of electronic, internet or other non-paper means for the acceptance thereof and actions thereunder by the Participant. “Board” means the Board of Directors of the Company.
“Cause” means (i) the Participant’s conviction of (or plea of guilty or no contest to) a felony which is, in the opinion of the Committee, likely to result in injury of a material nature to the Company or a subsidiary, or (ii) the gross and habitual negligence by the Participant in the performance of Participant’s duties to the Company or its subsidiaries. “Change in Control” means any of the following: (i)Class B Stock, together with the Common Stock held by the partnership, see the table under “Principal Stockholders” above and the notes thereto. The number of shares of Class B Stock owned beneficially by our directors and named executive officers as a group represents approximately 39.3% of the number of outstanding shares of Class B Stock and approximately 31.9% of the aggregate voting power of the Common Stock and Class B Stock. |
Section 16(a) Beneficial Ownership Reporting Compliance
Under SEC rules, our directors, executive officers and beneficial owners of the Class B Stock, has less than 50% of the voting power of the Company, and
(A)the acquisition by any person or group of beneficial ownership of stock possessing more than 10%20% of the voting power of the Company, except that (i) no such person or group shall be deemed to own beneficially (a) any securities acquired directly from the Company pursuant to a written agreement with the Company, or (b) any securities held by the Company or a subsidiary or any employee benefit plan (or any related trust) of the Company or a subsidiary, and (ii) no Change in Control shall be deemed to have occurred solely by reason of any such acquisition by a corporation with respect to which, after such acquisition, more than 60% of both the then-outstanding common shares of such corporation and the voting power of such corporation are then beneficially owned, directly or indirectly, by the persons who were the beneficial owners of the stock and voting securities of the Company immediately before such acquisition in substantially the same proportions as their ownership, immediately before such acquisition, of the then outstanding stock or the voting power of the Company, as the case may be; or
(B)individuals who, as of the effective date of the Plan, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided that any individual who becomes a director after the effective date whose election or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company (as such terms are used in Rule 14a-11 under the 1934 Act); or
(ii)approval by the stockholders of the Company of (A) a merger, reorganization or consolidation with respect to which the individuals and entities who were the respective beneficial owners of the stock and voting power of the Company immediately before such merger, reorganization or consolidation do not, immediately after such merger, reorganization or consolidation, beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding common shares and the voting power of the corporation resulting from such merger, reorganization or
consolidation, (B) a liquidation or dissolution of the Company or (C) the sale or other disposition of all or substantially all of the assets of the Company.
For purposes of this definition, “person” means the term as used in Section 13(d) of the 1934 Act; “group” means two or more persons acting together in such a way to be deemed a person for purposes of Section 13(d) of the 1934 Act; “beneficial owner,” “beneficially owned,” “beneficially owning,” and “beneficial ownership” shall have the meanings applicable under Rule 13d-3 under the 1934 Act; “stock” means the securities issued by the Company which generally entitle the holder thereof to vote for the election of directors of the Company and “voting power” means the combined voting power of securities issued by the Company which generally entitle the holder thereof to vote for the election of directors of the Company.
Notwithstanding the foregoing, a Change in Control shall be deemed not to have occurred with respect to any Participant with respect to an Award initially issued to such Participant if such Participant is, by written agreement, a participant on such Participant’s own behalf in a transaction in which the persons (or their affiliates) with whom such Participant has the written agreement cause the Change in Control to occur and, pursuant to the written agreement, the Participant has or is to acquire an equity interest in the resulting entity.
“Code” means the Internal Revenue Code of 1986, as amended.
“Committee” means the Compensation Committee of the Board of Directors or such other committee appointed from time to time by the Board of Directors to administer this Plan. The Committee shall consist of two or more members, each of whom shall qualify as a “non-employee director,” as the term (or similar or successor term) is defined by Rule 16b-3.
“Company” means Oil-Dri Corporation of America, a Delaware corporation.
“Disability” means a determination of disability under the Company’s long term disability plan, or in the case of a Participant who is not a participant in that plan, a mental or physical condition which, in the opinion of the Committee, renders a Participant unable or incompetent to carry out the job or Outside Director responsibilities which such Participant held or the duties to which such Participant was assigned at the time the disability was incurred, and which is expected to be permanent or for an indefinite duration. For purposes of extended exercisability of Incentive Stock Options under Section 12.1, or the payment to a Participant of any amount subject to Code Section 409A prior to such Participant’s Separation from Service, “disability” means a disability within the meaning of Code Section 22(e)(3).
“Employee” means an employee (including officers and directors who are also employees) of the Company or its subsidiaries, or any division thereof.
“Fair Market Value” generally means, as of any specified date, the closing price of the Stock on the New York Stock Exchange, or any other national stock exchange or national market system on which the Stock is then traded, on the specified date, or if no reported sale of Stock shall have occurred on such date, on the next preceding date on which there was such a reported sale. However:
(a)in the case of Stock which is being acquired through exercise of an Option and payment of the option price is being made through simultaneous sale through a broker of shares of unrestricted Stock acquired on exercise, as permitted under Regulation T of the Federal Reserve Board, Fair Market Value means the selling price of the Stock sold in such simultaneous sale; and
(b)in the case of Class B Stock, Fair Market Value means the Fair Market Value (as defined herein) of Common Stock.
“Jaffee Family” means Richard M. Jaffee, his spouse and his lineal descendants (including any adopted child), or the spouse of any of the forgoing.
“1934 Act” means the Securities Exchange Act of 1934, as amended.
“Option” means the right to purchase Stock at a stated price for a specified period of time. For purposes of the Plan an Option may be either (i) an “Incentive Stock Option,” or “ISO” within the meaning of Code Section 422, (ii) a “Nonstatutory (Nonqualified) Stock Option,” or “NSO,” or (iii) any other type of option allowed by the Code.
“Outside Director” means a member of the Board of Directors who is not an Employee.
“Participant” means any Employee or Outside Director designated by the Committee to participate in the Plan.
“Performance Period” is defined in Section 10.2.
“Plan” means the Oil-Dri Corporation of America 2006 Long Term Incentive Plan as set forth herein, and any amendments hereto.
“Retirement” means, (i) for a Participant who is an Employee, the Participant’s termination of employment (or Separation from Service in the case of Restricted Stock Units or any award subject to Code Section 409A) as a result of the Participant’s retirement when the Participant’s age plus years of service on the date of retirement equal at least eighty (80), and (ii) for a Participant who is an Outside Director, the Participant’s termination of service as a director that occurs after the completion of three (3) years of service (whether before or after the date of a particular Award) as a director of the Company; provided that any interval of less than one (1) year extending from the date of one annual meeting of stockholders of the Company to the date of the next such meeting shall qualify as one year for this purpose.
“Rule 16b-3” means Rule 16b-3 or any successor or comparable rule or rules promulgated by the Securities and Exchange Commission under Section 16(b) of the 1934 Act applicable to Awards granted under the Plan.
“SAR” means a stock appreciation right.
“Separation from Service” means the Participant’s death, retirement or other termination of employment with the Company and all subsidiaries. For purposes of this definition, a “termination of employment” shall occur when the facts and circumstances indicate that the Company and the employee reasonably anticipate that no further services would be performed by the employee for the Company or any subsidiary after a certain date or that the level of bona fide services the employee would perform after such date (whether as an employee or as an independent contractor), would permanently decrease to no more than 20% of the average level of bona fide services performed (whether as an employee or as an independent contractor) over the immediately preceding thirty-six (36)-month period (or full period of services to the Company and all subsidiaries if the employee has been providing services to the Company less than thirty-six (36) months).
“Specified Employee” means an employee of the Company who is a “key employee” under Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations thereunder and disregarding Code Section 416(i)(5)) at any time during the twelve (12)-month period ending on the preceding December 31. An employee as of a particular December 31 who has been determined to have satisfied the above definition of “key employee” shall be a Specified Employee during the twelve (12)-month period commencing on the April 1 next following such determination date and ending on the following March 31.
“Stock” means Class A Common Stock, or if no Class A Common Stock is issued and publicly traded on any securities market described in the definition of “fair market value,” then Common Stock, par value $0.10 per share, of the Company and, with respect to any Award made in shares of Class B Stock to a member of the Jaffee Family who is an Employee or Outside Director of the Company or one of its subsidiaries that is more than 50% owned by the Company, Class B Stock, and, with respect to any Award specifically made in shares of Common Stock, Common Stock. Class A Common Stock, Class B Stock and Common Stock shall have their respective meanings as provided in the Company’s Certificate of Incorporation, as amended.
2.2Gender and Number. Except when otherwise indicated by the context, words in the masculine gender when used in the Plan shall include the feminine gender, the singular shall include the plural, and the plural shall include the singular.
2.3Sections. Except when otherwise indicated by the context, any reference to a “Section” shall be to a Section of the Plan.
Section 3.Eligibility and Participation.
Participants in the Plan shall be selected by the Committee from among those Employees who, in the opinion of the Committee, are in a position to contribute materially to the Company’s continued growth and development and to its long-term financial success. Outside Directors shall also be eligible to participate in the Plan.
Section 4.Administration.
4.1Committee Administration. The Committee shall be responsible for the administration of the Plan. In addition to the other rights and responsibilities as set forth in the Plan, the Committee, by majority action thereof (whether taken during a meeting or by written consent), is authorized to interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to the Plan, to provide for conditions and assurances deemed necessary or advisable to protect the interests of the Company, and to make all other determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan. Determinations, interpretations, or other actions made or taken by the Committee pursuant to the provisions of the Plan shall be final and binding and conclusive for all purposes and upon all persons whomsoever.
4.2Board Reservation and Delegation. The Board may, in its discretion, reserve to itself or delegate to another committee any or all of the authority and responsibility of the Committee with respect to Awards to Participants who are not subject to Section 16 of the 1934 Act at the time any such delegated authority or responsibility is exercised. Such other committee may consist of one or more (i) officers of the Company or one of its subsidiaries, (ii) directors who may, but need not be, officers or employees of the Company or any of its subsidiaries, or (iii) a combination of individuals described in (i) and (ii) above. To the extent that the Board has reserved to itself or delegated the authority and responsibility of the Committee to such other committee, all references to the Committee in the Plan shall be to the Board or to such other committee.
Section 5.Stock Subject to Plan.
5.1Aggregate Limitations. The total number of shares of Stock subject to Awards under the Plan may not exceed 1,719,500, all of which may be issued with respect to Incentive Stock Options. Such number of shares shall be subject to adjustment upon occurrence of any of the events described in Section 5.4. The shares to be delivered under the Plan may consist, in whole or in part, of authorized but unissued Stock or treasury Stock, not reserved for any other purpose.
5.2Individual Participant Limitations. The maximum aggregate number of shares of Stock with respect to Awards granted in any calendar year under this Plan to any Participant shall be 150,000. Such number of shares shall be subject to adjustment upon occurrence of any of the events described in Section 5.4.
5.3Reuse. If, and to the extent:
(a)An Award shall expire or terminate for any reason without having become vested or having been exercised in full (including, without limitation, cancellation and re-grant), the shares of Stock subject thereto which have not become outstanding shall (unless the Plan shall have terminated) become available for issuance under the Plan; or
(b)Awards granted under the Plan become vested and/or are exercised, and shares of Stock are tendered or withheld for the payment of the exercise price or to satisfy tax withholding amounts, then such number of shares of Stock tendered or withheld for the payment of the exercise price or to satisfy tax withholding amounts shall (unless the Plan shall have terminated) become available for issuance under the Plan.
5.4Adjustment in Capitalization. In the event of any change in the outstanding shares of Stock that occurs after ratification of the Plan by the stockholders of the Company by reason of a Stock dividend or split, recapitalization, merger, consolidation, combination, separation (including a spin-off), exchange of shares, or other similar corporate change or distribution of stock or property by the Company, the number and class of and/or price of shares of Stock subject to each outstanding Award, the number and class of shares of Stock available for Awards and the number and class of shares of Stock set forth in Sections 5.1 and 5.2, shall be adjusted appropriately by the Committee, whose determination shall be conclusive; provided, however, that fractional shares shall be rounded to the nearest whole share.
5.5One-Year Minimum Vesting Condition. Notwithstanding any provision of this Plan or any Award Agreement to the contrary, from and after the Amended and Restated Plan Effective Date, no Award shall provide for vesting or exercisability earlier than 12 months after the applicable grant date, subject to any accelerated vesting and/or exercisability, as applicable, determined by the Committee in an Award Agreement or the Plan to apply upon the occurrence of a specified event.
5.6No Repricing without Stockholder Approval. Notwithstanding anything in the Plan to the contrary, no Option or SAR may be surrendered to the Company as consideration for the grant of a new Option, SAR or other Award with a lower exercise price than the Option or SAR so surrendered or exchanged, nor may any Option or SAR be repurchased by the Company for cash or other consideration that has the effect of reducing the exercise price of such Option or SAR, unless the stockholders of the Company provide prior approval for such repricing, surrender, exchange or amendment. Adjustments pursuant to Section 5.4 shall not be considered repricing.
Section 6.Duration of Plan.
The Plan shall remain in effect, subject to the Board’s right to earlier terminate the Plan pursuant to Section 16 hereof, until all Stock subject to it shall have been purchased or acquired pursuant to the provisions hereof.
Section 7.Stock Options.
7.1Grant of Options. The Committee may, in its discretion, grant Options to any Employee or Outside Director eligible under Section 3 to receive Awards. The Committee may grant any type of Option to purchase Stock that is permitted by law at the time of grant.
7.2Award Agreement. Each Option shall be evidenced by an Award Agreement that shall specify the type of Option granted, the Option price, the duration of the Option, the
number of shares of Stock to which the Option pertains, the type of Stock covered by such Option and such other provisions as the Committee shall determine; provided, however that the term of an Option shall not exceed ten (10) years.
7.3Option Price. No Option granted pursuant to the Plan shall have an Option price that is less than the Fair Market Value of the Stock on the date the Option is granted, which date may be the date on which the Committee makes the determination to grant the Option, or such later date as specified in advance by the Committee.
7.4Exercise of Options. Options awarded under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall approve, either at the time of grant of such Options or pursuant to a general determination, and which need not be the same for all Participants.
7.5Payment. Options shall be exercised by the delivery of a written notice of exercise to the Company, or otherwise in accordance with procedures established by the Committee, setting forth the number of shares of Stock with respect to which the Option is to be exercised, accompanied by full payment for the Stock. The Option price upon exercise of any Option shall be payable to the Company in full either:
(a)in cash or its equivalent (including, for this purpose, the proceeds from a cashless exercise through a broker);
(b)by tendering previously acquired Class A Common Stock, Common Stock or Class B Stock, that (i) has an aggregate Fair Market Value on the date of exercise equal to the total Option price and (ii) has been owned by the Participant for at least six (6) months prior to the date of exercise (unless otherwise permitted by the Committee);
(c)by any other means which the Committee determines to be consistent with the Plan’s purpose and applicable law; or
(d)by a combination of (a), (b), or (c).
As soon as practicable after receipt of each notice and full payment, the Company shall deliver to the Participant a certificate or certificates representing the acquired shares of Stock.
7.6Limitations on ISOs. Notwithstanding anything in the Plan to the contrary, to the extent required from time to time by the Code, the following additional provisions shall apply to the grant of Options which are intended to qualify as Incentive Stock Options (as such term is defined in Code Section 422):
(a)The aggregate Fair Market Value (determined as of the date the Option is granted) of the shares of Stock with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all plans of the Company) shall not exceed $100,000 or such other amount as may subsequently be specified by the Code;
provided that, to the extent that such limitation is exceeded, any excess Options (as determined under the Code) shall be deemed to be Nonstatutory (Nonqualified) Stock Options.
(b)Any Award Agreement pertaining to an Incentive Stock Option authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain or be deemed to contain all provisions required in order to qualify the Option as an Incentive Stock Option.
(c)No Incentive Stock Option may be granted to an Outside Director.
(d)No Incentive Stock Options may be granted after the tenth (10th) anniversary of the date on which this Plan was adopted by the Board.
(e)If an Employee owns stock representing more than 10% of the total combined voting power of all classes of stock of the Company (or, under Code Section 424(d), is deemed to own stock representing more than 10% of the total combined voting power of all such classes of stock), the purchase price per share of Stock deliverable upon the exercise of each Incentive Stock Option shall not be less than 110% of the Fair Market Value of the Stock on the date the Incentive Stock Option is granted.
(f)Unless exercised, terminated, or canceled sooner, all Incentive Stock Options shall expire no later than ten (10) years after the date of grant. If any Employee, at the time an Incentive Stock Option is granted, owns stock representing more than 10% of the total combined voting power of the classes of stock of the Company (or, under Code Section 424(d), is deemed to own stock representing more than 10% of total combined voting power of all such classes of stock), the Incentive Stock Option granted shall not be exercisable after the expiration of five (5) years from the date of grant.
(g)The Participant shall be required to file reportsnotify the Committee of their ownershipany disposition of any Stock issued pursuant to the exercise of an Incentive Stock Option under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions) within ten (10) days of such disposition.
Section 8.Restricted Stock or Restricted Stock Units.
8.1Grant. The Committee may, in its discretion, grant shares of restricted Stock or restricted stock units to any Employee or Outside Director eligible under Section 3 to receive Awards.
8.2Award Agreement. Each restricted Stock or restricted stock unit Award shall be evidenced by an Award Agreement that shall specify the period(s) of restrictions, the type of Stock covered by such Award, the number of shares of restricted Stock or number of restricted stock units granted, whether and/or how dividends will be credited under such Awards, and changessuch other provisions as the Committee shall determine.
8.3Events Upon Vesting. Upon the date that shares of restricted Common Stock become non-forfeitable, the Company shall, if on that date Class A Common Stock is issued and publicly traded on any securities market described in the definition of “fair market value,” exchange such shares of Common Stock for an equal number of shares of Class A Common Stock, unless the grant of restricted Stock was specifically made as a grant of Common Stock.
8.4Legend. Any share of restricted Stock shall bear an appropriate legend specifying that ownershipsuch share is non-transferable and subject to the restrictions set forth by the Committee. If any shares of restricted Stock become nonforfeitable, the Company shall cause certificates for such shares to be issued or reissued without such legend and delivered to the Participant or, at the request of the Participant, shall cause such shares to be credited to a brokerage account specified by the Participant.
Section 9.Grant of SARs.
9.1Grant. The Committee may grant SARs to any Employee or Outside Director eligible under Section 3 to receive Awards.
9.2Award Agreement. Each SAR shall be evidenced by an Award Agreement that shall specify the grant price, the term of the SAR, and such other provisions as the Committee shall determine; provided that the term of a SAR shall not exceed ten (10) years.
9.3Exercise. SARs may be exercised in accordance with the SEC. Based solely on our review of copies of these reports and representationsvesting schedule set forth in the Award Agreement. Upon such exercise, the Participant shall receive:
(a)the excess of the reporting persons, we believeFair Market Value of a share of Stock on the date of such exercise, over
(b)an amount equal to the Fair Market Value of a share of Stock on the grant date of such SAR, unless the Committee in the grant of the SAR specified a higher amount.
The benefit upon the exercise of a SAR shall be payable in cash, except that during the fiscal year ended July 31, 2017Committee, with respect to any particular exercise, may, in its discretion, pay benefits wholly or partly in Stock delivered to the Participant or credited to a brokerage account specified by the Participant.
Section 10.Grant of Performance Awards.
10.1Grant. The Committee may, in its discretion, grant performance Awards to any Employee or Outside Director eligible under Section 3 to receive Awards.
10.2Award Agreement. Each performance Award shall be evidenced by an Award Agreement that shall specify the performance goals, award level, the period over which performance goals are to be achieved (the “Performance Period”), the vesting provisions applicable to each performance Award, the initial value assigned to each performance Award, and such other provisions as the Committee shall determine.
10.3Payment of Performance Awards. Within 2 1/2 months after the end of each Performance Period, the Committee shall determine the extent to which the corresponding performance measures set forth in the applicable Award Agreement have been achieved and the Company shall pay to the Participant in cash or in shares of Stock (as determined by the Committee in its sole discretion) the value (if any) attributable to the performance Award. Any performance Award with respect to which the performance goals have not been achieved by the end of the applicable measuring period shall expire without any value.
Section 11.Beneficiary Designation.
Each Participant under the Plan may name, from time to time, any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his death before he receives any or all reportable transactions were reportedof such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and all required reports were timelywill be effective only when filed by the Participant in writing with the SEC except for one transactionCommittee during his lifetime. In the absence of Daniel S. Jaffee that was not reported onany such designation, benefits remaining unpaid at the Participant’s death shall be paid to his estate.
Section 12.Vesting and Exercise Period upon Disability, Death, Retirement or Other Termination of Employment or Service.
12.1Disability or Death. In the event a timely basis on a Form 4Participant’s employment or service as an Outside Director is terminated as a result of the Participant’s Disability, or as a result of the Participant’s death, all unvested Awards shall become immediately vested and Options shall become immediately exercisable; provided that the benefit payment with respect to any performance Award with respect to which the Performance Period has not ended as of the date of such termination of employment or service as an administrative error,Outside Director, shall be computed as specified in Section 15, but substituting the words “date of such termination of employment or service as an Outside Director” for the words “date of such Change in Control.” The Participant, or, in the case of a deceased Participant who has not transferred his Awards pursuant to Section 13.2, the Participant’s legal representative or beneficiary, may exercise any outstanding Option or SAR prior to the expiration date of the Option or SAR, or for three (3) years from the date of the Participant’s termination of employment or service as an Outside Director, whichever first occurs. However, in the case of Incentive Stock Options, the favorable tax treatment prescribed under Code Section 422 shall not be available (in which case such Option shall thereafter be treated as a Non-statutory (Nonqualified) Stock Option) if such Option is not exercised within twelve (12) months after the Participant’s date of termination.
12.2Retirement. In the event a Participant’s employment or service as an Outside Director is terminated as a result of the Participant’s Retirement, all unvested Awards (with the exception of restricted Stock Awards) shall become immediately vested and Options shall become immediately exercisable; provided that the benefit payment with respect to any performance Award with respect to which the Performance Period has not ended as of the date of such Retirement, shall be computed as specified in Section 15, but substituting the words “date of such termination of employment or service as an Outside Director” for the words “date of such Change in Control.” The Participant may exercise any outstanding Option or SAR prior to
the expiration date of the Option or SAR, or for three (3) years from the date of the Participant’s termination of employment or service as an Outside Director, whichever first occurs. However, in the case of Incentive Stock Options, the favorable tax treatment prescribed under Code Section 422 shall not be available (in which case such Option shall thereafter be treated as a Non-statutory (Nonqualified) Stock Option) if such Option is not exercised within three (3) months after the Participant’s date of termination. Notwithstanding anything in the foregoing to the contrary, termination of employment or service as an Outside Director on account of Retirement shall only cause a restricted Stock Award to become fully vested if the Committee at the time of Retirement approves such accelerated vesting for that restricted Stock Award.
12.3Other Termination of Employment or Service as an Outside Director.
(a)If prior to a Change in Control, the employment or service as an Outside Director of the Participant shall terminate for any reason other than death, Disability, Retirement, or for Cause, any outstanding Option or SAR which was subsequently reportedimmediately exercisable at the date of termination may be exercised at any time prior to the expiration date of the Option or SAR or ninety (90) days after such date of termination of employment or service as an Outside Director, whichever first occurs. In addition, the Committee may in any Award Agreement specify a longer period of time in which the Award may be exercised, provided that no Award may be exercised after its expiration date. Any unvested Award shall expire without value on the date of termination.
(b)If at or after a Change in Control, the employment or service as an Outside Director of a Participant shall terminate for any reason, any outstanding Option or SAR on the date of the Change in Control (including Options or SARs which became fully vested upon the Change in Control pursuant to Section 15) may be exercised at any time prior to the expiration date of the Option or SAR or three (3) years after such date of termination of employment or service as an Outside Director, whichever first occurs. However, in the case of Incentive Stock Options, the favorable tax treatment prescribed under Code Section 422 shall not be available (in which case such Option shall thereafter be treated as a Non-statutory (Nonqualified) Stock Option) if such Option is not exercised within three (3) months after the Participant’s date of termination (if such termination is for other than death or Disability), and if such Option is not exercised within one (1) year after the Participant’s date of termination (if such termination is for death or Disability).
(c)If a Participant’s employment or service as an Outside Director is terminated for Cause, then any unvested Award and any unexercised Option, SAR or other Award with exercise provisions shall be immediately forfeited.
Section 13.Restrictions on Transferability of Stock and Awards.
13.1Restrictions on Stock Transferability. The Committee shall impose such restrictions on any shares of Stock acquired pursuant to an Award under the Plan as it may deem advisable, including, without limitation, restrictions under the applicable Federal securities law, under the requirements of any stock exchange upon which such shares of Stock are then listed and under any blue sky or state securities laws applicable to such shares.
13.2Nontransferability of Awards. Except as provided below, no Award granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, otherwise than as provided in Section 11 or by will or by the laws of descent and distribution. Further, all Awards granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant. Notwithstanding the foregoing, a Participant may transfer all or a portion of the Awards (other than Incentive Stock Options or restricted Stock) granted to the Participant to:
(a)the Participant’s spouse, parent, and any lineal descendent (including any adopted child) of a parent of the Participant or of a parent of the Participant’s spouse, and any trustee, guardian or custodian for any of the foregoing (“Immediate Family Members”);
(b)a trust or trusts for the exclusive benefit of such Immediate Family Members;
(c)a partnership in which such Immediate Family Members are the only partners, and which prohibits transfer of any interest in such partnership, except to the partnership or an Immediate Family Member, or
(d)such other person or entity, and on such terms and conditions, as the Committee may in its discretion permit.
A transfer may be made under this Section 13.2, provided that:
(i)there may be no consideration for any such transfer; and
(ii)subsequent transfers of transferred Awards shall be prohibited without the consent of the Committee, except transfers back to the Participant or those in accordance with Section 11.
Following a transfer, any such Award shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer, provided that for purposes of this Plan the term “Participant” shall be deemed to refer to the transferee. The provisions of Sections 7 and 12 relating to the period of exercisability and expiration of the Award shall continue to be applied with respect to the original Participant, and the Award shall be exercisable by the transferee only to the extent, and for the periods, set forth in said Sections 7 and 12.
Section 14.Rights of Employees and Outside Directors.
14.1Employment or Continued Service. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment at any time, or of the stockholders to terminate any Outside Director’s service as an Outside Director in accordance with the Company’s Certificate of Incorporation and By-laws, as amended, nor confer upon any Participant any right to continue in the employ of the Company or service as an Outside Director.
14.2Participation. Nothing in this Plan shall give an Employee or Outside Director a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant.
Section 15.Change in Control.
In the event of a Change in Control, all Awards under the Plan shall vest 100%, and all Options shall become exercisable in full. To the extent that an Award under the Plan is subject to the provisions of Code Section 409A, and to the extent that 100% vesting results in an immediate payment of such Award, such immediate payment shall only occur if such Change in Control is also a change in the ownership or effective control of the Company (as defined in Treasury Regulation §1.409A-3(i)(5)). The benefit payable with respect to any performance Award with respect to which the Performance Period has not ended as of the date of such Change in Control shall be equal to the product of the grant value assigned to each Award multiplied successively by each of the following:
(a)a fraction, the numerator of which is the number of months (including as a whole month any partial month) that have elapsed since the beginning of the Performance Period for such Award until the date of such Change in Control and the denominator of which is the number of months (including as a whole month any partial month) in the Performance Period; and
(b)a percentage equal to the greater of the target percentage, if any, specified in the applicable Award Agreement or the maximum percentage, if any, that would be earned under the terms of the applicable Award Agreement assuming that the rate at which the performance goals have been achieved as of the date of such Change in Control would continue until the end of the Performance Period.
Section 16.Amendment, Modification, and Termination of Plan.
The Board at any time may terminate, and from time to time may amend or modify the Plan, in whole or in part, but no such action shall in any manner adversely affect any Award theretofore granted under the Plan, without the consent of the Participant. Notwithstanding the foregoing, unless approved by the stockholders of the Company, no amendment or modification of the Plan shall be effective which would increase the total amount of Stock which may be issued under the Plan, increase the maximum number of shares which may be subject to Awards granted under the Plan to a Participant during a calendar year or extend the maximum period during which Awards may be made under this Plan. For purposes of this Section 16, any adjustment under Section 5.1 or 5.2 upon the occurrence of any of the events described in Section 5.4 shall not constitute an amendment or modification of this Plan.
Section 17.Tax Withholding.
17.1Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy
Federal, state, and local taxes, whether domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan.
17.2Form 4.of Tax Payment. Except as otherwise provided by the Committee in the Award Agreement or otherwise, (i) the deduction of withholding and any other taxes required by law shall be made from all amounts paid in cash, and (ii) with respect to withholding required by law upon the exercise of Options or upon any other taxable event arising as a result of Stock-based Awards granted hereunder, the Company shall satisfy the withholding tax obligation by withholding shares of Stock having an aggregate Fair Market Value on the date the tax is to be determined equal to the amount of tax required to be withheld. In lieu of Share withholding, the Company may permit Participant to satisfy such obligation by tendering payment of cash to the Company of such required withholding amount.
Section 18.Indemnification.
To the extent permitted by law, each person who is or shall have been a member of the Committee or of the Board, or who shall have acted on behalf or under authority of the Board or Committee, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit, or proceeding to which he may be a party or in which he may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts payable by him in settlement thereof, with the Company’s approval, or paid by him in satisfaction of any judgment in any such action, suit, or proceeding against him, provided he shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such person may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify such person or hold him harmless.
Section 19.Requirements of Law.
19.1Requirements of Law. The granting of Awards and the issuance of shares of Stock upon the exercise of an Option shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
19.2Code Section 409A. To the extent applicable, it is intended that this Plan shall comply with the provisions of Code Section 409A, and this Plan shall be construed and applied in a manner consistent with this intent. In the event that any payment or benefit under this Plan is determined by the Committee to be in the nature of a deferral of compensation under Code Section 409A, the Company shall take such actions as it reasonably determines to be necessary to ensure that such payments comply with the applicable provisions of Code Section 409A and the Treasury Regulations thereunder. If the Participant is a Specified Employee, if the payment or delivery of equity under this Plan is on account of the Participant’s Separation from Service, and if the Committee determines that such payment or delivery of equity under this Plan
constitutes the payment in the nature of a deferral of compensation under Code Section 409A, the Committee shall make such payment or delivery as soon as practicable after the earlier to occur of the Participant’s death or the 6 month anniversary of such Separation from Service.
19.3Severability. If any part of the Plan is declared to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any other part of the Plan. Any part of the Plan so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such part to the fullest extent possible while remaining lawful and valid.
19.4Governing Law. The Plan, and all Award Agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to the conflict of laws principles thereof.