UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment
(Amendment No. )
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| ☐ | | Preliminary Proxy Statement |
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| The Andersons, Inc. |
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THE ANDERSONS, INC.
1947 Briarfield Boulevard
Maumee, Ohio 43537
March 11, 202113, 2024
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of shareholdersShareholders to be held on Friday,Thursday, May 7, 20219, 2024 at 8:00 a.m.A.M. Eastern Time. In light of continuing public health concerns due to the COVID-19 pandemic, theThe Annual Meeting will be held in a virtual meeting format only, via live webcast. You will not be able to attend the Annual Meeting physically in person. To participate in the Annual Meeting at www.virtualshareholdermeeting.com/ANDE2021,ANDE2024, you must enter the 16-digit control number found on your proxy card or your voting instruction form.
This booklet includes the formal notice of the meeting and the proxy statement. The proxy statement tells you more about the meeting agenda, and how to vote your proxy and procedures for the meeting. It also describes how the Board of Directors operates and gives you information about our director candidates. A form of proxy card and our 20202023 annual report to shareholders are also included with this booklet.
It is important that your shares are represented and voted at the Annual Meeting, regardless of the size of your holdings. I urge you to vote your proxy as soon as possible so that your shares may be represented at the meeting. If you attend the Annual Meeting, you may revoke your proxy by voting your shares electronically at the annual meeting, if you wish.
Sincerely,
/s/ Michael J. Anderson, Sr.
Michael J. Anderson, Sr.
Chairman
THE ANDERSONS, INC.
1947 Briarfield Boulevard
Maumee, Ohio 43537
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
In light of continuing public health concerns due to the COVID-19 pandemic, theThe Annual Meeting will be held in a virtual meeting format only, via live webcast. You will not be able to attend the Annual Meeting physically in person. To participate in the Annual Meeting at www.virtualshareholdermeeting.com/ANDE2021,ANDE2024, you must enter the 16-digit control number found on your proxy card or your voting instruction form.
Date: May 7, 20219, 2024
Time: 8:00 A.M., Eastern Time
Place: Online at www.virtualshareholdermeeting.com/ANDE2021ANDE2024
When can I join the virtual Annual Meeting? You may begin to log intologin to the meeting platform beginning at 7:45 A.M. Eastern Time on May 7, 2021.9, 2024. The meeting will begin promptly at 8:00 A.M. Eastern Time on May 7, 2021.
How can I ask questions and vote? Shareholders may vote (although beneficial but not record owners wishing to vote electronically at the virtual meeting should contact their broker or nominee for instructions) and submit questions virtually during the meeting (subject to time restrictions). To participate in the meeting virtually, visit www.virtualshareholdermeeting.com/ANDE2021.ANDE2024. When recognized by the Chair, shareholders should identify themselves by name, company or affiliation. Shareholders will have two minutes to ask general questions or comment. Questions or comments not related to the proposal under discussion, or that are about personal concerns not shared by shareholders generally, or that use blatantly offensive language may be ruled out of order.
What if I lost my 16-digit control number?You will be able to login as a guest. To view the meeting webcast, visit www.virtualshareholdermeeting.com/ANDE2021ANDE2024 and register as a guest. If you login as a guest, you will not be able to vote your shares or ask questions at the meeting.
What if I experience technical difficulties? If shareholders encounter any difficulties accessing the Annual Meeting webcast during the check-in or meeting time, there will be a technical support number posted on the virtual meeting login page for assistance. Technical support will be available beginning at 7:45 A.M. Eastern Time on May 7, 20219, 2024 through the conclusion of the Annual Meeting.
The virtual meeting platform is fully supported across all browsers (Internet Explorer, Edge, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Shareholders should ensure they have a strong internet connection if they intend to attend and/or participate in the Annual Meeting. Shareholders should allow plenty of time to log inlogin and ensure that they can hear streaming audio prior to the start of the Annual Meeting.
If there are questions pertinent to meeting matters that cannot be answered during the Annual Meeting due to time constraints, management will post answers to a representative set of questions within the Investor Relations section of our website. The questions will remain available until the Company's 20222025 proxy statement is filed.
Matters to be voted upon:
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| 1 | The election of tennine directors identified as nominees herein to hold office for a one-year term. |
| 2 | Advisory approval of executive compensation. |
| 3 | The ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 20212024. |
| 4 | Any other matters that may properly come before the Annual Meeting and any adjournments or postponements thereof. |
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| | | | | | | | | By order of the Board of Directors |
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| Maumee, Ohio | | | | | | | | /s/ Christine M. Castellano |
March 11, 202113, 2024 | | | | | | | | Christine M. Castellano |
| | | | | | | | | Secretary |
Your vote is important. Whether or not you plan to attend the Annual Meeting electronically and regardless of the number of shares you own, please vote your shares by proxy, either by mailing the enclosed proxy card or, by telephone or via the Internet. If you attend the Annual Meeting, you may revoke your proxy by voting your shares electronically at the Annual Meeting, if you wish.
Important Notice Regarding the Availability of Proxy Materials for the ShareholderAnnual Meeting to Be Held on May 7, 20219, 2024
The Proxy Statement and Annual Report to Shareholders with the Form 10K10-K is available at www.proxyvote.com.
Table of Contents | | | | | |
| | | | | Page |
| Page |
| Introduction | |
| This Proxy Solicitation | |
| The Annual Meeting: Quorum | |
| Common Shares Outstanding | |
Important Notice Regarding the Availability of Proxy Materials for the ShareholderAnnual Meeting to Be Held on May 7, 20219, 2024 | |
| Voting | |
| How to Vote Your Shares | |
| How to Revoke Your Proxy | |
| How Your Shares Will be Voted | |
| Votes Required to Approve Each Item | |
| Householding | |
| Where to Find Voting Results | |
| Summary of Proposals | |
| Election of Directors | |
| Corporate Governance | |
| Board Meetings and Committees | |
| Code of Ethics | |
ESGEnvironmental, Social and Governance ("ESG") Highlights and Oversight | |
Review, Approval or Ratification ofCertain Relationships and Related Party Transactions with Related Persons | |
| Audit Committee Report | |
Use of Compensation Consultants | |
| Compensation / Risk Relationship | |
| Executive Officers | |
Proposal for an Equity Plans | |
| Advisory Vote on Executive Compensation | |
| Appointment of Independent Registered Public Accounting Firm | |
| Independent Registered Public Accounting Firm | |
| Audit and Other Fees | |
| Policy on Audit Committee Pre-Approval of Services Performed by the Independent Registered Public Accounting Firm | |
| Proposal to Ratify the Appointment of Independent Registered Public Accounting Firm | |
| Share Ownership | |
| Shares Owned by Directors and Executive Officers | |
| Share Ownership of Certain Beneficial Owners | |
Equity Plans | |
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports | |
| Compensation and Leadership Development Committee ("Compensation Committee") Interlocks and Insider Participation | |
| Executive Compensation | |
Compensation and Leadership Development Committee Report | |
| Compensation Discussion and Analysis | |
| Executive Summary | |
| General Principles and Procedures | |
20202023 Executive Compensation Components | |
| Director Compensation | |
CEOChief Executive Officer ("CEO") Pay Ratio | |
| Pay Versus Performance | |
| Other Information | |
Shareholders Proposals for 20222025 Annual Meeting | |
| Additional Information | |
| Appendix A | |
THE ANDERSONS, INC.
1947 Briarfield Boulevard
Maumee, Ohio 43537
PROXY STATEMENT
Annual Meeting of Shareholders
May 7, 20219, 2024
Introduction
The Board of Directors (the “Board”) of The Andersons, Inc. (the "Company") is soliciting your proxy to encourage your participation in the voting at the Annual Meeting and to obtain your support on each of the proposals described in this proxy statement. You are invited to attend the virtual Annual Meeting and vote your shares directly. However, even if you do not attend, you may vote by proxy, which allows you to direct another person to vote your shares at the meeting on your behalf. This proxy statement waswill be first mailed or otherwise delivered to shareholders on or about March 26, 2021.22, 2024. The mailing address of the Company’s principal executive officersoffices is 1947 Briarfield Boulevard in Maumee, Ohio 43537.
This Proxy Solicitation
Included in this package are, among other things, the proxy card and this proxy statement. The proxy card and the identification number on it are the means by which you authorize another person to vote your shares in accordance with your instructions.
This proxy statement provides you with information about the proposals and about The Andersons, Inc. (the “Company”)the Company that you may find useful in deciding how to vote with respect to each of the proposals. After this introduction, you will find the following twelve sections:
•Voting
•Summary of Proposals
•Election of Directors
•Corporate Governance
•Executive Officers
•Proposal for an Equity Plans
•Advisory Vote on Executive Compensation
•Appointment of Independent Registered Public Accounting Firm
•Share Ownership
•Executive Compensation
•Director Compensation
•CEO Pay Ratio
•Pay Versus Performance
•Other Information
The Annual Meeting: Quorum
The Annual Meeting will be held on Friday,Thursday, May 7, 20219, 2024 at 8:00 a.m.A.M., Eastern time,Time, online at www.virtualshareholdermeeting.com/ANDE2021.ANDE2024.
The Company’s Code of Regulations requires that a majority of our outstanding Common Shares be represented at the Annual Meeting, either in person or by proxy, in order to transact business.
Abstentions and broker non-votes will be treated as present for purposes of determining whether a majority of our Common Shares is represented at the meeting and will therefore affect whether a quorum has been achieved. A broker non-vote occurs when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker or nominee does not have discretionary voting power and has not received instructions from the beneficial owner.
There were no shareholder proposals submitted for the 20212024 Annual Meeting.Meeting.
The Andersons, Inc. | 2024 Proxy Statement | 1
Common Shares Outstanding
The record date for determining holders of the Company’s Common Shares entitled to vote at the Annual Meeting is March 9, 2021.11, 2024. As of the record date, the Company had 33,670,11834,049,783 Common Shares issued and outstanding.
Important Notice Regarding the Availability of Proxy Materials for the ShareholderAnnual Meeting to Be Held on May 7, 20219, 2024
The proxy statement and Annual Report to Shareholders with Form 10K10-K is available at www.proxyvote.com.
The Andersons, Inc. | 2024 Proxy Statement | 2
Voting
You are entitled to one vote at the Annual Meeting for each of the Company’s Common Shares that you owned of record as of the close of business on March 9, 202111, 2024 (the record date for the Annual Meeting). There is no right to cumulative voting as to any matter, including the election of directors.
How to Vote Your Shares
You may vote your shares by proxy or electronically at the Annual Meeting. Even if you plan to attend the virtual meeting, we urge you to complete and submit your proxy in advance to ensure your vote is represented. If your shares are recorded in your name, you may cast your vote in one of the following ways:
•Vote by telephone: If you received a proxy card, notice document, or email, you can vote by phone at any time by calling the toll-free number (for residents of the U.S.) listed on your proxy card, notice document or email that you received. To vote, enter the control number listed on your proxy card and follow the simple recorded instructions. If you vote by phone, you do not need to return your proxy card.
•Vote by mail: If you received a proxy card and choose to vote by mail, simply mark your proxy card, and then date, sign and return it in the postage-paid envelope provided.
•Vote via the Internet: You can vote by Internet at any time by visiting the website listed on your proxy card, notice document or email that you received. Follow the simple instructions and be prepared to enter the code listed on the proxy card, notice document or email that you received. If you vote via the Internet, you do not need to return your proxy card.
•Vote electronically at the virtual Annual Meeting.
Shareholders who hold their shares beneficially in street name through a nominee (such as a bank or a broker) may be able to vote by telephone or the Internet, as well as by mail. You should follow the instructions you receive from your nominee to vote these shares. Since a beneficial owner is not the shareholder of record, you may not vote these shares electronically at the meeting unless you obtain a “legal proxy” from your broker or nominee that holds your shares, giving you the right to vote the shares at the virtual meeting. Beneficial owners wishing to vote electronically at the virtual meeting should contact their broker or nominee for instructions.
When you vote by proxy, the shares you hold will be voted in accordance with your instructions. Your proxy vote will direct the designated persons (known as “proxies” or proxy holders) to vote your shares at the Annual Meeting in accordance with your instructions. The Board has designated Michael T. Hoelter and Catherine M. WhiteSteven D. McGrew to serve as the proxies for the Annual Meeting.
How to Revoke Your Proxy
You may revoke your proxy at any time before it is exercised by any of the following means:
•Notifying Christine M. Castellano, our Secretary, in writing delivered to our principal executive offices prior to the Annual Meeting;
•Submitting a later dated proxy card, telephone vote or Internet vote; or
•Attending the virtual Annual Meeting and voting electronically.
If your shares are held in street name, you must contact your broker or nominee to revoke your voting instructions.
The mailing address of the Company’s principal executive officersoffices is 1947 Briarfield Boulevard in Maumee, Ohio 43537.
Your attendance at the virtual Annual Meeting will not, by itself, revoke a proxy.
How Your Shares Will be Voted
Your shares will be voted at the meeting as directed by the instructions on your proxy card if: (1) you are entitled to vote, (2) your proxy was properly executed, (3) we received your proxy prior to the Annual Meeting and (4) you did not validly revoke your proxy prior to the meeting and you do not vote your shares electronically at the meeting.
If you send a properly executed proxy without specific voting instructions, the designated proxies will vote your shares
•to elect the nominated directors,
•to approve this year's advisory resolution on executive compensation, and
•to ratify the selection of the independent registered public accounting firm.
The Andersons, Inc. | 2024 Proxy Statement | 3
Votes Required to Approve Each Item
The Company’s Code of Regulations states that the nominees for director receiving the greatest number of votes shall be elected. Therefore, abstentions and broker non-votes will not count as a vote for or against the election of directors and therefore, will not have an effect on the election of directors.
The approval of the advisory vote on executive compensation requires anand the ratification of the independent public accounting firm each require the affirmative vote of the holders of a majority of the Common Shares present, virtually or by proxy,votes cast. Abstentions and entitled to vote on this matter. An abstention will count as a vote against this proposal. Brokerbroker non-votes will not count as a vote for or against this proposal.votes cast on these proposals and will not have an effect on the outcomes.
The ratification of the independent registered public accounting firm requires an affirmative vote of the holders of a majority of the Common Shares present, virtually or by proxy, and entitled to vote. An abstention will count as a vote against this proposal. A proposal to ratify the selection of auditors is considered a routine matter that brokers may vote on without instruction from beneficial owners. As a result, we do not expect any broker non-votes to occur with respect to this proposal.
Householding
The Company has adopted a procedure approved by the Securities and Exchange Commission called “householding”. Under this procedure, multiple shareholders who share the same last name and address will receive only one copy of the annual proxy materials. If the household received a printed set of proxy materials by mail, each shareholder will receive his or her own proxy card or voting instruction card by mail. We have undertaken householding to reduce our printing costs and postage fees. Shareholders who receive household materials may elect to receive individual copies of the proxy materials at the same address (and shareholders receiving multiple copies of materials may elect to receive household materials) by contacting Investor Relations in writing at 1947 Briarfield Boulevard, Maumee, Ohio 43537, or via telephone at (419) 893-5050, and we will provide a separate copycopies of the annual proxy materials according to each shareholder at your address.preference.
Where to Find Voting Results
We expect to announce the voting results at the Annual Meeting and will publish the voting results in the Company’s Form 8-K to be filed with the Securities and Exchange Commission within four business days after the Annual Meeting.
The Andersons, Inc. | 2024 Proxy Statement | 4
Summary of Proposals
The Governance / Nominating Committee and the Board, including the Board's independent directors, have nominated tennine directors, each for a one-year term.
The Board is submitting to an advisory vote on the compensation of the Company’s named executive officers ("NEOs"), as required by the rules and regulations of the Securities and Exchange Commission, and conducted in conformance with regulations promulgated by the Securities and Exchange Commission thereunder. While this vote is not binding, the Compensation and Leadership Development Committee and Board expect to take the results of this vote into consideration when making future compensation decisions.
The Audit Committee has recommended, and the Board has approved, Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2021the year ending December 31, 2024 and recommends that you vote to ratify their appointment.
At the date of this Proxy Statement, we have no knowledge of any business other than the proposals described above that will be presented at the Annual Meeting. If any other business should properly come before the Annual Meeting, the proxies will be voted on at the discretion of the proxy holders.
The Andersons, Inc. | 2024 Proxy Statement | 5
Election of Directors
The Board of Directors is currently comprised of ten directors. Patrick S. Mullin has reached the Board's mandatory retirement age of 72, and willadopted a policy that directors generally may not stand for re-election. Gary A. Douglas is nominatedre-election after attaining age 72. After decades of dedicated and valuable service to the Company and its Board, Michael J. Anderson, Sr., the current Chairman of the Board, will be retiring from the Board effective as of the 2024 Annual Meeting, having reached the age of 72. In consideration of recent transitions in Board composition and the value of retaining directors with specific areas of expertise needed by the Board, the Board determined that it would be in the best interests of the Company and its shareholders to ask Ross W. Manire to stand for re-election at the 2024 Annual Meeting, although he has also reached the age of 72. Given Mr. Manire’s background as a new director. former Chief Executive Officer, with experience as a founder, CEO and director of Information Technology companies, he brings a unique perspective and skills to the Board.
Proxies cannot be voted for a greater number of individuals than the number of nominees listed below. The Governance / Nominating Committee and the Board have nominated and recommend the election of each of the tennine nominees listed below. Each director elected will serve until the next Annual Meeting or until their earlier removal or resignation. Each of the nominees listed with the exception of Gary A. Douglas, is currently a Director of the Company. The Board expects all nominees named below to be available for election. In case any nominee is not available, the proxy holders may vote for a substitute, unless the Board reduces the number of directors as provided for in the Company’s Code of Regulations.
Directors will be elected at the Annual Meeting by a plurality of the votes cast at the Annual Meeting. The following biographical disclosures only include information regarding nominees for election or re-election at the Annual Meeting. After decades of dedicated and valuable service, Michael J. Anderson, Sr. will not stand for re-election at the Annual Meeting by the holders of sharesand is therefore not represented in person or by proxy. The followingthe below biographical information. Following is a brief biography of each nominee as well as the specific qualifications of the nominee as identified by the Board’s Governance / Nominating Committee. Information as to their ownership of the Common Shares can be found under the caption “Share Ownership” in this proxy statement. All information provided is current as of February 28, 2021.29, 2024.
| | Name | Name | | Age | | Principal Occupation, Business Experience and Other Directorships | | Director Since | Name | | Age | | Principal Occupation, Business Experience and Other Directorships | | Director Since |
| Patrick E. Bowe | Patrick E. Bowe | | 62 | | President and CEO since November 2, 2015. Prior to that, Corporate Vice President of Cargill, Inc. and a leader of Cargill's Food Ingredients and Systems business since 2007. Prior to joining Cargill's Corn Milling Division, managed the copper trading desk for Cargill Metals Division and worked as a trader and analyst for Cargill Investor Services at the Chicago Board of Trade. Worked as a cash grain merchant for Louis Dreyfus Corp. in Springfield, Ill., and Phil O'Connel Grain Co., in Stockton, California. | | 2015 | Patrick E. Bowe | | 65 | | President and Chief Executive Officer ("CEO") since November 2, 2015. Prior to that, Corporate Vice President of Cargill, Inc. and a leader of Cargill's Food Ingredients and Systems business since 2007. Prior to joining Cargill's Corn Milling Division, managed the copper trading desk for Cargill Metals Division and worked as a trader and analyst for Cargill Investor Services at the Chicago Board of Trade. Worked as a cash grain merchant for Louis Dreyfus Corp. in Springfield, Ill., and Phil O'Connell Grain Co., in Stockton, California. Former director of United Malt Group and Primient from 2022-2023. | | 2015 |
| Michael J. Anderson, Sr. | | 69 | | Chairman since 2009. Chief Executive Officer from January 1999 to October 2015. President from January 1999 through December 2012. Prior to that President and Chief Operating Officer from 1996 through 1998, Vice President and General Manager of the Retail Group from 1994 until 1996 and Vice President and General Manager Grain Group from 1990 through 1994. Currently a Director of FirstEnergy Corp. beginning in 2007 and formerly a Director of Interstate Bakeries Corp from 1998 to 2009. Director of the Company prior to it becoming publicly traded in 1996. | | 1988 |
| Gerard M. Anderson | Gerard M. Anderson | | 62 | | Executive Chairman of DTE Energy since July, 2019; Chairman and Chief Executive Officer of DTE Energy from 2014 through 2019; President and Chief Operating Officer of DTE Energy from 2005 through 2010. Joined Detroit Edison, a subsidiary of DTE Energy in 1993 and held various executive positions. Prior to this, a consultant with McKinsey & Co., Inc. Director of DTE Energy since 2009. | | 2008 | Gerard M. Anderson | | 65 | | Executive Chairman of DTE Energy from 2019 through 2022; Chairman and Chief Executive Officer of DTE Energy from 2014 through 2019; President and Chief Operating Officer of DTE Energy from 2005 through 2010. Joined Detroit Edison, a subsidiary of DTE Energy in 1993 and held various executive positions. Prior to this, a consultant with McKinsey & Co., Inc. Director of DTE Energy from 2010 - 2022. Director of The AES Corporation since 2023. Senior Adviser to ArcLight Capital, an energy-focused private equity company. | | 2008 |
| Steven K. Campbell | | Steven K. Campbell | | 60 | | Retired head of North America Grain and Group Executive Vice President at Louis Dreyfus from 2012 through 2017; Past President and CEO of Louis Dreyfus Commodities Grain Merchandising LLC from 2008 through 2017; Former Vice President with Archer Daniels Midland from 1995 through 1997; Past industry involvement includes serving as Chairman, Kansas City Board of Trade, First Vice Chairman on the North American Export Grain Association's Board of Directors and holding a position on the Commodity Markets Council Board of Directors. Guest lecturer at Auburn University, speaking on commodity trading. | | 2022 |
| Gary A. Douglas | Gary A. Douglas | | 60 | | President of Nationwide National Partners since March 2013; President and Chief Operating Officer of Nationwide Agribusiness from 2007 through 2013; Regional Vice President of Nationwide Mutual Insurance Company from 2005 through 2007. On the Development Committee of the National Urban League, on the Governance Committee of the National Association of Mutual Insurance Companies, and on the Sustainability Committee of the African American Leadership Academy. | | __ | Gary A. Douglas | | 63 | | President of Nationwide National Partners from March 2013 through September 2022 (Retired); President and Chief Operating Officer of Nationwide Agribusiness from 2007 through 2013; Regional Vice President of Nationwide Mutual Insurance Company from 2005 through 2007. On the Development Committee of the National Urban League, on the Governance Committee of the National Association of Mutual Insurance Companies, and on the Sustainability Committee of the African American Leadership Academy. | | 2021 |
| Stephen F. Dowdle | | 70 | | Retired President of Sales for PotashCorp, 1999 to 2017, which merged with Agrium, Inc. to form Nutrien in January 2018. Prior to the merger, oversaw sales, marketing and distribution of PotashCorp's potash, phosphate and nitrogen products. During the merger, served as a Senior Advisor providing transition assistance for sales operations. Also served ten years, 1989 to 1999, as Vice President and Managing Director for Canpotex Limited in Singapore. Formerly a Director of Canpotex Limited from 2010 to 2017. Formerly a Director of SinoFert Holdings Limited from 2005 to 2017. Formerly a Director of the International Plant Nutrient Institute from 2010 to 2017. | | 2018 |
| Pamela S. Hershberger | Pamela S. Hershberger | | 55 | | Retired Managing Partner from Ernst & Young. Thirty-one years of service at Ernst & Young, beginning her career in the firm's Toledo, Ohio office as a staff auditor. In 2008, named Toledo's office managing partner, a position she held until her retirement in 2018. | | 2019 | Pamela S. Hershberger | | 58 | | Retired Managing Partner of Ernst & Young LLP in Toledo, Ohio. Thirty-one years of service at Ernst & Young LLP, beginning her career in the firm's Toledo, Ohio office as a staff auditor. In 2008, named Toledo's Office Managing Partner, a position she held until her retirement in 2018. | | 2019 |
The Andersons, Inc. | 2024 Proxy Statement | 6
| | Name | Name | | Age | | Principal Occupation, Business Experience and Other Directorships | | Director Since | Name | | Age | | Principal Occupation, Business Experience and Other Directorships | | Director Since |
| Catherine M. Kilbane | Catherine M. Kilbane | | 57 | | Retired Senior Vice President, General Counsel and Secretary of The Sherwin-Williams Company, 2013 to July 2017. Prior to that, Senior Vice President, General Counsel and Secretary of American Greetings Corporation from 2003-2012. Prior to that a partner with the Cleveland law firm of Baker & Hostetler LLP. Director of The Davey Tree Expert Company. Director of Interface, Inc. Trustee of The Cleveland Clinic Foundation. | | 2007 | Catherine M. Kilbane | | 60 | | Retired Senior Vice President, General Counsel and Secretary of The Sherwin-Williams Company, 2013 to July 2017. Prior to that, Senior Vice President, General Counsel and Secretary of American Greetings Corporation from 2003-2012. Prior to that a partner with the Cleveland law firm of Baker & Hostetler LLP. Director of The Davey Tree Expert Company since 2018. Director of Interface, Inc. since 2018. Trustee of The Cleveland Clinic Foundation since 2015. | | 2007 |
| Robert J. King, Jr. | Robert J. King, Jr. | | 65 | | Senior Adviser for FNB Corp from 2013 through October 2020. Prior to that, President and Chief Executive Officer, PVF Capital Corp from 2009 to 2013; Senior Managing Director, Private Equity, FSI Group, LLC from 2006 through 2009; Managing Director, Western Reserve Partners LLC from 2005-2006; Regional President of Fifth Third Bank from 2002 through 2004 and Chairman, President and Chief Executive Officer of Fifth Third Bank (Northeastern Ohio) from 1997 through 2002. On the advisory board of Ancora Advisors September 23 to December 15, 2016. Director of MTD Corp. since 2005 and Medical Mutual of Ohio since 2012 | | 2005 | Robert J. King, Jr. | | 68 | | Advisory Director for FNB Corp from 2013 through October 2020. Prior to that, President and Chief Executive Officer, PVF Capital Corp from 2009 to 2013; Senior Managing Director, Private Equity, FSI Group, LLC from 2006 through 2009; Managing Director, Western Reserve Partners LLC from 2005-2006; Executive Vice President of Fifth Third Bank from 2002 through 2004 and Chairman, President and Chief Executive Officer of Fifth Third Bank (Northeastern Ohio) from 1997 through 2002. Director of Oak Tree Holdings LLC since 2021, Shiloh Industries, Inc. from 2005 to 2020, MTD Corp. from 2005 to 2021, and Medical Mutual of Ohio since 2012. | | 2005 |
| Ross W. Manire | Ross W. Manire | | 69 | | Retired President and Chief Executive Officer of ExteNet Systems, Inc., 2002 to 2018. Served as President, Enclosure Systems Division of Flextronics International from 2000 to 2002. Prior to that was Chief Executive Officer at Chatham Technologies, Inc., and served in several executive roles at 3Com Corporation and US Robotics (acquired by 3Com in 1997). Former Partner at Ridge Capital Corporation and Ernst & Young LLP. Director of Zebra Technologies Corporation since 2003 and Eagle Test Systems, Inc. from 2004 through 2008. | | 2009 | Ross W. Manire | | 72 | | Retired President and Chief Executive Officer of ExteNet Systems, Inc., from 2002 to 2018. Served as President, Enclosure Systems Division of Flextronics International from 2000 to 2002. Prior to that was Chief Executive Officer at Chatham Technologies, Inc., and served in several executive roles at 3Com Corporation and US Robotics (acquired by 3Com in 1997). Former Partner at Ridge Capital Corporation and Ernst & Young LLP. Director of Zebra Technologies Corporation since 2003 and Eagle Test Systems, Inc. from 2004 through 2008. | | 2009 |
| John T. Stout, Jr. | John T. Stout, Jr. | | 67 | | Chairman and Chief Executive Officer of Plaza Belmont Management Group LLC since 2014. Prior to that, Chief Executive Officer of Plaza Belmont Management Group LLC since 1998. Director and Chairman of the Board of Renwood Mills, LLC since 2016. Director and Managing Member of Renwood Appreciation & Income Fund, LLC since 2016. Director and Managing Member of Homegrown Family Foods since 2019. Previously President of Manildra Milling Corp and Manildra Energy Corp from 1991 through 1998 and Executive Vice President of Dixie Portland Flour Mills Inc. from 1984 to 1990. | | 2009 | John T. Stout, Jr. | | 70 | | Chairman and Chief Executive Officer of Plaza Belmont Management Group LLC since 2014. Prior to that, Chief Executive Officer of Plaza Belmont Management Group LLC since 1998. Director of Mennel Milling Company, Inc. since 1992. Director and Chairman of the Board of Renwood Mills, LLC from 2016 to 2022. Director and Managing Member of Renwood Appreciation & Income Fund, LLC from 2016 through 2022. Director and Managing Member of Homegrown Family Foods from 2019 through 2022. Chairman of the Board of Homegrown Family Foods since 2022. Previously President of Manildra Milling Corp and Manildra Energy Corp from 1991 through 1998 and Executive Vice President and Director of Dixie Portland Flour Mills Inc. from 1984 to 1989. Director of The Federal Reserve Bank of Kansas City from 2010 to 2015. | | 2009 |
The Andersons, Inc. | 2024 Proxy Statement | 7
Director Skills, Experience and Background
The Governance / Nominating Committee considers a variety of factors when presenting the slate of nominees for the Board – these are highlighted in the chart below and listed in detail under the caption “Corporate Governance – Board Meetings and Committees – Governance / Nominating Committee.” The Governance / Nominating Committee looks at the different skills and experiences that each nominee brings. Followingbrings and how these align with the Company's business and strategy. Below, is a Board of Directors Skill Matrix whichand a Board Diversity Matrix. The Board of Directors Skill Matrix is a summary of each nominee's skills and experience with each mark indicating an experiential strength. This matrix is a high-level summary that is not intended to be an exhaustive list of each director’s skills or contributions to the Board. Further below is a more detailed table of the specific experience, qualifications, attributes or skills that the Governance / Nominating Committee viewed as valuable to our business for the next year:year. The Board Diversity Matrix sets forth information about the diversity of the Board of Directors in accordance with the NASDAQ board diversity disclosure rules. Each of the categories listed below has the meaning as used in NASDAQ Rule 5606(f).
Board of Directors Skill Matrix
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Director Qualifications and Experience | Patrick E. Bowe | Michael J. Anderson, Sr. | Gerard M. Anderson | Steven K. Campbell | Gary A. Douglas | Stephen F. Dowdle | Pamela S. Hershberger | Catherine M. Kilbane | Robert J. King, Jr. | Ross W. Manire | John T. Stout, Jr. |
| General Management | • | • | • | • | • | • | • | • | • | • |
| Finance and M&A | • | • | • | • | • | • | • | • | • | • |
| Sales and Marketing | • | • | • | • | • | | • | • | • | • | • |
| Human Resources | • | • | • | • | • | • | • | • | • | • |
| Other Public Company Board Experience | • | • | | | | • | • | • | • |
| C-Suite Experience | • | • | | • | | | • | • | • |
| Risk Management | • | • | • | • | • | • | • | | • |
| Business Operations | • | • | • | • | • | | | • | • | • |
C-Suite ExperienceAgribusiness | • | | • | • | | | | | • | | | | • | • | • |
Risk Management | • | • | • | • | | | • | • | | • |
Business Operations | • | • | • | • | | | | | • | • |
Agribusiness | • | • | | • | • | | | | | • |
Board Diversity Matrix (as of February 29, 2024)
| | | | | | | | | | | | | | |
| Total Number of Directors | 10 |
| Female | Male | Non-Binary | Did Not Disclose Gender |
| Part I: Gender Identity | |
| Directors | 2 | 8 | — | — |
| Part II: Demographic Background |
| African American or Black | — | 1 | — | — |
| Alaskan Native or Native American | — | — | — | — |
| Asian | — | — | — | — |
| Hispanic or Latinx | — | — | — | — |
| Native Hawaiian or Pacific Islander | — | — | — | — |
| White | 2 | 7 | — | — |
| Two or More Races or Ethnicities | — | — | — | — |
| LGBTQ+ | — |
| Did Not Disclose Demographic Background | — |
The Andersons, Inc. | 2024 Proxy Statement | 8
| | | | | | | | |
| Director | | Specific experience, qualifications, attributes or skills |
| Patrick E. Bowe | | • OverMore than thirty-five years of experience in the agricultural sector •Former board member of Primient, as well as United Malt Group, both publicly traded companies •As Corporate Vice President for Cargill's Food Ingredient and Systems Platform, responsible for strategy, capital allocation decisions, customer relationship management, as well as leading key sourcing and business excellence initiatives •Has held a variety of leadership positions, both domestically and abroad, including oversight of Cargill's Corn Wet Milling operation •Extensive experience in leading large organizations with particular expertise in commodity and futures trading, acquisitions and joint ventures, process improvement, strategic sourcing, capital management, and establishing and maintaining strong customer relationships |
Michael J. Anderson, Sr. | | • Over forty-year history with the Company including leadership of the Grain business
• Specific expertise in agricultural commodities trading and hedging activities
• Intimate knowledge of all businesses
• Experience as a member and chair of other public company boards
• Three years public accounting experience
• MBA in finance and accounting
• Executive Leadership Program, Harvard Business School |
| Gerard M. Anderson | | • Currently engaged asFormer Chairman, and previously CEOChief Executive Officer and board member of DTE Energy, a publicly traded energy company •Director of The AES Corporation, also a publicly traded energy company •Senior Adviser to ArcLight Capital, an energy-focused private equity company •Energy industry expertise •MBA and MPP with a civil engineering undergraduate degree •Past experience as a consultant with McKinsey and Company |
| Steven K. Campbell | | •Retired head of North America Grain and Group Executive Vice President at Louis Dreyfus •Past President and CEO of Louis Dreyfus Commodities Grain Merchandising LLC •Former Vice President with Archer Daniels Midland •Thirty years of experience in the agricultural industry •Bachelor of Science and Master of Science in Agricultural Economics from Oklahoma State University. •Industry involvement includes serving as Chairman, Kansas City Board of Trade, First Vice Chairman on the North American Export Grain Association's Board of Directors and holding a position on the Commodity Markets Council Board of Directors •Guest lecturer at Auburn University, speaking on commodity trading |
| Gary A. Douglas | | •Over twenty years of senior management level experience across geographically diverse markets within the United States •Expertise in the areas of risk management, strategic planning, and operational effectiveness •Executive Leadership Program, Wharton School of Business •MBA with emphasis in finance |
| | | | | | | | |
Director | | Specific experience, qualifications, attributes or skills |
Stephen F. Dowdle | | • Extensive executive leadership and sales experience in the plant nutrient industry
• Wealth of business and agronomy knowledge from more than thirty years in the plant nutrient industry
• �� Experience as a member of other company boards
• Masters and doctorate degree in agronomy and soil science
|
| Pamela S. Hershberger | | •Experience managing Toledo, Ohiothe Ernst & Young LLP office in Toledo, Ohio • OverCertified public accountant with over thirty years of public accounting experience •Extensive experience in advising public and private companies on tax, accounting, audit and consulting matters in a variety of industries •Merger and acquisition experience •Ernst & Young LLP Executive Program, Kellogg School of Management, Northwestern University |
| Catherine M. Kilbane | | •Fourteen years as Secretary and General Counsel for two large companies, both publicly traded •Experience with public company regulatory requirements •Experienced public company director • Experience in an industry that supplies coating materials used in rail repair • Attorney with extensive corporate law experience, includingincluding: corporate governance, mergers and acquisitions, joint ventures, securities and compliance, real estate, environmental, and human resources
|
| Robert J. King, Jr. | | •Experience as President & Chief Executive Officer and board member of a publicly traded financial services company •MBA with a finance undergraduate degree •Expertise in banking, finance and related risk analysis with extensive senior officer experience with major banking organization •Experience as a member of other boards of directors, including Oak Tree Holdings LLC, Medical Mutual of Ohio, and Shiloh Industries, which was a publicly traded company boardsprior to its acquisition. |
The Andersons, Inc. | 2024 Proxy Statement | 9
| | | | | | | | |
| Director | | Specific experience, qualifications, attributes or skills |
| Ross W. Manire | | •Currently an Advisory Partner to several private equity firms
•Retired Chairman and CEOChief Executive Officer of a telecommunications company
•Mergers and acquisitions and international business experience
•Experience as a member of other public company boards
•Formerly a partner with an international auditing firmErnst & Young LLP and certified public accountant
•Prior service as Chief Financial Officer of public company
•MBA with economics undergraduate degree |
| John T. Stout, Jr. | | •Currently engaged as Chairman and Chief Executive Officer of a private equity fund that acquires diversified food processing companies and related businesses •Experience in the financial markets as it relates to the food industry, including analysis of agricultural commodity risk •Mergers and acquisition experience •Experience managing companies that consume of wheat, corn, soybeans, rice and other commodities •Board member for a variety of private companies in the food industry and former director of Dixie Portland Flour Mills, a subsidiary of Holly Farms •Elected to Kansas City Federal Reserve Board January 1, 2010 and again on January 1, 2013; previously six years on Kansas City Federal Reserve Board Economic Advisory Committee; served on the Compensation Committee of the Federal Reserve Bank of Kansas City from 2010 to 2015 |
The Board of Directors recommends a vote FOR the election of the tennine directors as presented.
9The Andersons, Inc. | 2024 Proxy Statement | 10
Corporate Governance
Board Meetings and Committees
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Committees of the Board effective as ofEffective December 31, 20202023 |
| Name | | Board | | BoardAudit | | Compensation | | Audit | Compensation and Leadership Development | | Governance /
Nominating | | Finance |
| Michael J. Anderson, Sr. | | C | | C | | | | | | | |
| Patrick E. Bowe | | X | | X | | | | | | | |
| Gerard M. Anderson | | X | | | | | | X | | | | | | X | | X |
Stephen F. DowdleSteven K. Campbell | | X | | | | | | | | X | | | | | | X | | X |
| Gary A. Douglas | | X | | X | | X | | | | |
| Pamela S. Hershberger | | X | | XC | | | | X | | C | X | | | | |
| Catherine M. Kilbane | | X | | X | | | | C | | X | | | C | | |
| Robert J. King, Jr. | | X | | | | X | | | | X | | | | C |
| Ross W. Manire | | X | | X | | C | | X | | C | | | |
Patrick S. Mullin | | X | | X | | | | X | | |
| John T. Stout, Jr. | | X | | | | X | | | | X | | | | X |
C - Chair, X - Member
The Board of Directors held six regular board meetings in 2020.2023. Each director attended 75% or more of the 20202023 meetings of the Board, and committees on which each such director served during each director's period of service. We encourage Board members to attend the annual meeting,, and with the exception of Jacqueline F. Woods who had reached mandatory retirement age and was not standing for re-election to the Board, all of the Board members standing for reelection at that time attended the 20202023 Annual Shareholders Meeting.
The Audit Committee, Compensation and Leadership Development Committee, Finance Committee and Governance / Nominating Committee each have written charters. Copies of such charters are available at www.andersonsinc.com under the Governance tab within the Investor RelationsInvestors section of the website.
Director Independence: The Board is made up of a majority of independent directors. Each of the Audit, Compensation, Finance and Governance / Nominating Committees is made up entirely of independent members.
An “independent” director is a director who meets the criteria for independence as required by the applicable law and the NASDAQ Corporate Governance Standards for Listed Companies and is affirmatively determined to be “independent” by the Board. The Board has determined that each of the current directors standing for re-election is independent under the corporate governance standards of the NASDAQ, with the exception of Michael J. Anderson, Sr., Chairman and Patrick E. Bowe, President and Chief Executive Officer. Michael J. Anderson, Sr. and Gerard M. Anderson are first cousins. The Board has determined that the relationship does not affect Gerard M. Anderson’s exercise of independent judgment on the Board.CEO.
Audit Committee: The Board established the Audit Committee as defined by Section 3(a)(58)A of the Securities Exchange Act of 1934. The Audit Committee is currently comprised of four independent directors (as defined in the NASDAQ Corporate Governance Standards for Listed Companies generally and as applicable to audit committee members) and, among other duties, oversees the accounting and financial reporting process of the Company, appoints the independent registered public accounting firm, reviews the internal audit and external financial reporting of the Company, reviews the scope of the independent audit and considers comments by the independent registered public accounting firm regarding internal controls and accounting procedures and management’s response to those comments.comments, and is also tasked with oversight of the Company's cybersecurity program. The Audit Committee held four regulareight meetings in 2020.2023. The BoardBoard has determined that Pamela S. Hershberger, Committee Chair, Patrick S. Mullin, and Ross W. Manire, Committee members,member, are each “audit committee financial experts” as defined in the federal securities laws and regulations.
The Andersons, Inc. | 2024 Proxy Statement | 11
Compensation and Leadership Development Committee:Committee ("Compensation Committee"): The Compensation and Leadership Development Committee, is comprised solely of four independent directors (as defined in the NASDAQ Corporate Governance Standards for Listed Companies generally and as applicable to compensation committeeCompensation Committee members). The Compensation and Leadership Development Committee reviews the recommendations of the Company’s Chief Executive OfficerCEO and Human Resources as to the appropriate compensation, which includes base salaries, short-term and long-term compensation and benefits, of the Company’s officers and determines the compensation of such officers for the ensuing year which it then recommends to the full Board for approval. The Chief Executive Officer’sCEO compensation is also determined by the Committee and then recommended
to the full Board for approval. In addition, under the Company’s
Amended and Restated 2019 Long-Term Incentive Compensation Plan (the "2019 Plan"), the Committee reviews, approves and recommends to the Board the value of grants of equity-based compensation aggregated for non-officers and individual grants for officers and reviews and approves the
“Compensation“Compensation Discussion and Analysis”Analysis” appearing in this proxy statement. The Compensation and Leadership Development Committee met four times during 2020.2023. The Compensation Committee, by charter, is authorized to retain its own independent compensation consultants and legal counsel. The role of those independent compensation consultants is more fully described in the "Use of Compensation Consultants" Committee Consultants section below.Finance Committee: The Finance Committee is comprised of four independent directors (as defined in the NASDAQ Corporate Governance Standards for Listed Companies) and is charged with monitoring and overseeing the Company’s financial resources, strategies and risks, especially those that are long-term in nature. The Finance Committee met three times in 2020.2023.
Governance / Nominating Committee: The Governance / Nominating Committee is comprised of fourthree independent directors (as defined in the NASDAQ Corporate Governance Standards for Listed Companies). The Governance / Nominating Committee met threetwo times in 2020.2023. The Committee recommends to the Board actions to be taken regarding the Board's structure, organization and functioning, selects and reviews candidates to be nominated to the Board, reports to the Board regarding the qualifications of such candidates, recommends a slate of directors to be submitted to the shareholders for approval, and proposes agenda items and recommendations to meetings of the independent directors (led by the independent Lead Independent Director) without management being present. The Governance / Nominating Committee and other members of the Board identify candidates for consideration by the Committee, and may, if it elects to, engage the services of third partythird-party search firms to identify candidates. The Governance / Nominating Committee recommended the election to the Board of each nominee named in this proxy statement.
Mr. Douglas was recommended to the Committee by the CEO and Chairman based on their knowledge of the industry and his reputation. The Committee interviewed Mr. Douglas and recommended him to the Board. No fees or charges to any third parties were incurred in connection with the identification or appointment of Mr. Douglas, nor was any such appointment made pursuant to any agreement with any third party.
It is the policy of the Governance / Nominating Committee to consider for nomination as a director any person whose name is submitted by a shareholder, provided that the submission is made prior to December 31 of the year that precedes the next annual meeting of shareholders and provided that the person is willing to be considered as a candidate.
Submission of names by shareholders is to be made to the Secretary of the Company atin writing delivered to the Company’s headquartersprincipal executive offices in Maumee, Ohio. The Secretary, in turn, submits the names to the Chair of the Governance / Nominating Committee.Committee for consideration. The shareholder’s notice mustsubmission should set forth all information relating to any nominee that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Act of 1934, as amended (including, if so required, such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected). Additionally, as
The foregoing procedures relate to submission of recommended nominees for consideration by the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, the notice must provide the name and addressGovernance / Nominating Committee.Shareholders who propose to actually nominate a director candidate should refer to Shareholder Proposals for 2024 Annual Meeting for additional information. The Andersons, Inc. | 2024 Proxy Statement | 12
Each candidate for director (no matter how nominated) is evaluated on the basis of his or hertheir ability to contribute expertise to the businesses and services in which the Company engages, to conduct himself or herself in accordance with the Company’s Statement of Principles, and to contribute to the mission and greater good of the Company. The candidate’s particular expertise, as well as existing Board expertise, as that expertise aligns with the Company's business and strategy, is taken into consideration. A candidate’s “independence,” as defined by applicable stock exchange regulations and any other applicable laws, and the Board’s ratio of independent to non-independent directors are also taken into consideration. Preferences, qualifications and specific qualities or skills considered necessary for one or more of the directors to possess include, but are not limited to, the following:
•Able to serve for a reasonable period of time
•Multi-business background preferred
•Successful career in business preferred
•Active vs.preferred over retired preferred
•Audit Committee membership potential
•Strategic thinker
•Leader / manager
•Agribusiness background, domestic and international
•Transportation background
•Brand marketing exposure
The Committee seeks nominees who provide a diverse set of backgrounds, skills, experiences and viewpoints who will contribute expertise to the Board, who will conduct themselves in accordance with the Company’s Statement of Principles and strong ethical behavior, and who will share their diverse skills and experiences for the greater good of the Company. Because the Company consists of several diverse businesses, we highly value differing viewpoints shared in the pursuit of Board actions that best balance the objectives of our customers, employees, shareholders and communities.
The Board has adopted a policy not to nominate for re-election to the Board any member reaching the age of 72 prior to the annual meeting. The Board did not make any exceptions or waivers of this policy in 2023, however, as discussed above, the Board has waived this policy to allow for re-election of Mr. Manire in 2024.
Board Leadership Structure: The Board has determined to separate In 2023 and in previous years, the positions of CEO and Chairman.Chairman were separated. Michael J. Anderson, Sr. has served as Chairman of the Board of Directors since 2009. The Board considersconsidered Mr. Anderson's experience on two other public company boards, as well as his extensive prior experience with the Company, to provide a unique resource that will serveserved the Company well. As Chairman,Since Mr. Anderson is not an independent Board member, the Board established the position of an independent Lead Director. In 2023, Catherine M. Kilbane, an independent Board member, served as Lead Director. The Chairman chairs meetings of the Board, sets Board meeting agendas, has authority to call meetings of the Board and serves as liaison with management of the Company. However, Mr. Anderson is not an independent Board member, and, for that reason, the Board has established the position of an independent Lead Director.
The Lead Director is chosen by the independent directors of the Board. The Lead Director chairs meetings of the independent directors, chairs the Governance / Nominating Committee, approves Board meeting agendas and the information available to the Board, has the authority to call meetings of the independent directors, and serves as liaison with the Chairman. In performing these functions, the Lead Director has the responsibility and authority to set the agenda and manage the meetings of the independent directors, to communicate their interests to the Chairman and to the CEO, and to assert any other concerns for the benefit of the stockholders, and in so doing serve as an institutional counterweight to the Chairman and CEO.
In 2017,
As noted above, Mr. Anderson will be retiring from the Board first designated Catherine M. Kilbaneeffective as Lead Director of the Board.2024 Annual Meeting. The Board expects to re-designate Catherine M. Kilbane as Lead Director of the Boardconsider its leadership structure at its May meeting.2024 meeting and designate a Chairman and, if the Chairman is not independent, a Lead Director. The Board also expects to consider at that time whether to continue to separate the positions of CEO and Chairman.
Board Oversight of Risk: The Board is responsible for overseeing risk management for the Company. It has delegated to each of the Audit Committee, the Finance Committee, the Compensation and Leadership Development Committee and the Governance / Nominating Committee, certain of its responsibilities in this area. For example, the
•Audit Committee: The Audit Committee has the oversight responsibility for the integrity of the Company’s financial statements and its financial reporting process;process, as well as its systems of internal accounting and financial controls, cyber-security concerns, and the performance of the Company’s internal audit function and independent auditor. The Audit Committee is tasked with oversight of the Company's cybersecurity program and receives periodic reporting on the topic throughout the year, including with regard to the Company's progress against the National Institute of Standards and Technology Cybersecurity Framework. Cybersecurity additionally is defined as a risk in the Company's Enterprise Risk Management (“ERM”) program.
The Andersons, Inc. | 2024 Proxy Statement | 13
•Finance Committee: The Finance Committee has responsibility for risks relating to capital markets including interest rate volatility and access to capital, counterparties, product liability, price volatility and general industry market risks.
•Compensation Committee: The Compensation and Leadership Development Committee has responsibility for reviewing the Company’s compensation policies to ensure that these policies are not reasonably likely to create undue risk to the Company.
•Governance / Nominating Committee: The Governance / Nominating Committee has responsibility for oversight of the Company’s ethics policies, including the Company’s Standards of Business Conduct and Response Program, board succession and regulatory / legislative issues. The Governance / Nominating Committee also has oversight responsibility for the Company's environmental, social, and governance ("ESG") activities and practices.
Although the Board has delegated certain responsibilities for risk management to its Committees, the Board retains overall responsibility for this duty. Each Committee ChairmanChair reports to the Board matters discussed or reviewed at Committee meetings. Although the Board oversees the Company’s risk management, company management is responsible for day-to-day risk management processes and provides regular updates to the Board and its Committees.
Executive Sessions of the Board: Our independent directors meet in executive session at each Board meeting. Our independent Lead Director chairs these executive sessions.
Shareholder Communications to Board: Shareholders may send communications to the Board by writing any of the Company's officers, or Christine M. Castellano, Executive Vice President, General Counsel & Corporate Secretary, at the Company’s headquartersprincipal executive offices at its Maumee, Ohio address or by calling any officer at 419-893-5050 or 800-537-3370. All appropriate shareholder communications addressed to the Board will be forwarded directly to the Board members.
Corporate Governance Guidelines: A copy of the Company’s Corporate Governance Guidelines may be found in the Company’s website under the under the Governance tab within the Investor RelationsInvestors section of the website.
Code of Ethics
The Company has adopted Standards of Business Conduct and Response Program that apply to all employees, including the principal executive officer, principal financial officer and the principal accounting officer. These Standards of Business Conduct and Response Program are available on the Company’s website (www.andersonsinc.com) under the Governance tab within the Investor Relations section of the website. To the extent disclosure would be required by Item 5.05 of Form 8-K, the Company will post amendments to, or waivers, if any, from, its Standards of Business Conduct as relatesand Response Program applicable to or granted to the Company’s Chief Executive Officer,CEO, Chief Financial Officer ("CFO") and Corporate Controller on its website.
ESG Highlights
Sustainability
Sustainability considerations are inherently embedded in the Company's strategy, and Oversightnaturally extend across the Company's business segments, as the Company serves customers, employees, and communities primarily throughout the North American agricultural supply chain. The Company's Statement of Principles, which expresses the beliefs and philosophies of the Company’s founders and is the foundation for its operations today, recognizes the need for business activities to reflect a proper concern for the health and safety of the Company's employees, customers and neighbors and for the quality of the environment. As a business based in agriculture, the Company recognizes the need for good stewardship of the social and natural resources upon which both the Company and farmers rely. The Company published its first Sustainability Review in 2020 and continues on a journey to further transparency in sustainability practices, aligned with the Global Reporting Initiative standards, Sustainable Development Goals, and the Sustainability Accounting Standards Board.
Through its portfolioEach of businesses in trade, ethanol,the Company's segments is, by necessity, focused on sustainability. The agricultural cycle starts with the Nutrient & Industrial segment, which works with farmers to help them apply the right plant nutrients at the start of the process, in the right amounts and rail,at the Company helps its customers growright time to add value to the agricultural crop without unnecessary runoff into water sources. The Trade segment provides various value-add services to farmers, who have an intrinsic interest in preserving the value of their land and market the crops that sustain our communities,of agricultural inputs like water, as well as to consumers, by efficiently transporting grains and it helps transport the resultingother products to end markets for consumptionsuch as food, feed, and fuel.fuel to end markets. The Renewables segment focuses on reducing cost through reducing the use of energy, water and other inputs, providing feedstocks for renewable diesel customers, and by working to achieve low carbon intensity scores for ethanol products, including corn and cleanup, which is a key low carbon intensity input for renewable diesel refiners.
The Andersons, Inc. | 2024 Proxy Statement | 14
Environmental Focus: The Andersons continues to recognize the importance of using resources wisely, both to ensure efficiency in our operations and to limit our environmental impact. We continued to participate in the Supplier Leadership on Climate Transformation program with Guidehouse, Inc., and are working toward setting measurable targets for various metrics, which may include targets in areas such as safety or service as well as greenhouse gas emissions. In 2023, the Company hired a third-party consultant to conduct a double materiality assessment to determine which sustainability topics are important to the Company and its sustainability goals. The results of the assessment will allow our sustainability initiatives to align to the topics most important to The Andersons, and will impact our strategic decisions as we look to create attainable goals and targets in the future. A Sustainability Committee comprised of senior leadership was created to ensure that these material topics remain the focus of the Company’s day to day operations and are incorporated into our business strategies.
To increase transparency, in 2023, the Company reported against the Sustainability Accounting Standards Board framework, in addition to the Global Reporting Initiative, acquired limited assurance of Scope 1 and 2 greenhouse gas emissions, and communicated diversity metrics, all of which were included in the 2023 Sustainability Review.
Social Focus: The Company has long recognized that operating sustainably is essential to achieving its vision of beingvalues the most nimblecommunities where it lives and innovative North American agricultural supply chain company. Inworks. Over the Company's 2020 Sustainability Review,years, the Company, highlightsdirectly and through its programs and progress on key ESG topicsfoundation, has made charitable donations in the areasmore than 130 communities in over 20 states. The Company's gift match program provides dollar-for-dollar matching for each employee of providing extraordinary serviceup to customers, helping each other improve, supporting local communities, and increasing the value$1,000 in charitable donations in a calendar year, with over $370,000 in matching support in 2023. Through this program, over 700 organizations have been supported by employees of the Company.Company who used the gift match to enhance their giving. The Company also encourages and facilitates employee volunteer activities and service on boards of not-for-profit entities.
The Company conducted an employee engagement survey in 2023 with a 98% participation rate. These surveys allow our leadership to hear from employees and maintain a culture that supports and encourages employee satisfaction. The Company seeks to provide a competitive compensation and benefits package that its employees value. In view of the growing importance of ESG topics, during the year,addition to these benefits, the Company specifically added ESG oversight responsibilityalso offers various services and opportunities for growth and development, tuition reimbursement, skills training, and retirement planning. The Company also continues to implement its safety programs, emphasizing the prevention of serious injuries and fatalities. In 2023, the Company continued to engage its supervisory employees with training opportunities on various topics through its training journeys. In addition, all managers are provided mandatory training on harassment prevention, and all employees receive training on cybersecurity awareness issues like phishing.
The Company encourages, values, and leverages the differences in people and perspectives to improve. In 2023, the Company supported six Employee Resource Groups – Working Parents, HARVEST multicultural, P.R.I.D.E (People, Respect, Inclusion, Diversity, and Education), Military and Veterans Support, L.E.A.D. (Lead, Educate, Aspire, and Develop), and Athena Society for Women. The Company seeks to include diverse candidates, including women and persons of color, when recruiting for senior roles and has expanded its recruiting tools to access a broader and more diverse talent market.
Governance / Nominating Committee Charter.
Further informationFocus:We believe transparency, integrity, and accountability are key ingredients to our success. The Corporate Governance Guidelines, the 2020 Sustainability ReviewStandards of Business Conduct and Response Program, and committee charters may be found under the Governance tab within the Investor RelationsInvestors section of the Company'sCompany’s website. The Governance / Nominating Committee oversees topics related to sustainability.
The Company’s ERM process allows the Company to identify, analyze, and manage the key risks to the business. Climate change has been added as a risk to the ERM process. Cybersecurity also is included as a risk in the Company’s ERM program.
In addition to the Statement of Principles, a robust set of written policies govern employees, contractors, customers, visitors, vendors, and other third parties. The Standards of Business Conduct and Response Program sets forth the ethical standards of behavior for employees and third parties doing business with the Company. It includes conflicts of interest, supplier relations, confidentiality, fair competition, intellectual property rights, and fraud. The policy includes the procedures for reporting concerns, including the ability to report anonymously through a third-party ethics hotline.
Review, Approval or Ratification
The Andersons, Inc. | 2024 Proxy Statement | 15
Certain Relationships and Related PersonsParty Transactions
The Board has practices and procedures to address potential or actual conflicts of interest and any appearance that decisions are based on considerations other than the best interests of the Company that may arise in connection with transactions with certain persons or entities, which includeentities. The Company’s Standards of Business Conduct and Response Program contain provisions related to conflict of interest situations, and the completioncharter of the Audit Committee provides that it will review on an annual basis and approve related party transactions required to be disclosed under Item 404 of Regulation S-K of the Securities Act of 1933, as amended, and as required under the Standards of Business Conduct and Response Program (the “Related Person Transaction Policy”). In order to implement the Related Person Transaction Policy, the Company obtains annual written questionnaires requiring disclosure of potential conflict situations, financial transactions, and annual affirmation of compliance with the Company’s Standards of Business Conduct and Statement of Principles (the “Related Person Transaction Policy”).Response Program. The Related Person Transaction Policy operates in conjunction with the Company’s Standards of Business Conduct and is applicable to all transactions, arrangements or relationships in which: (a) the aggregate amount involved is material to the individual, and in any event, to any transaction in which the amount may be expected to exceed $120,000 in any calendar year; (b) the Company is a participant; and (c) any Related Person (as that term is defined in Item 404 under Regulation S-K of the Securities Act of 1933, as amended) has or will have a direct or indirect interest (a “Related Person Transaction”).
The Governance / Nominating Committee is charged with the review of any transactions with related persons. They may utilize outside legal counsel or the Company’s general counsel to provide opinions as to the appropriateness of any potential Related Person Transaction. All directors and officers complete annual questionnaires regarding their stockholdings and transactions which may possibly be regarded as involving related parties. In considering any matter, the Governance / Nominating Committee will consider the terms of the Company’s Standards of Business Conduct, which directors and officers also commit to observe.
A Related Person Transaction is initially subject to review by the Chief Executive Officer. Matters regarding the Related Person Transaction Policy, or Related Person Transactions involving directors or officers, are submitted to the Governance / Nominating Committee for approval or ratification. As part of its review of each Related Person Transaction, the Governance / Nominating Committee will take into account, among other factors it deems appropriate, whether the transaction is on terms no less favorable than the terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the Related Person’s interest in the transaction. The Related Person Transaction Policy also provides that certain transactions, based on their nature and/or monetary amount, are deemed to be pre-approved or ratified by the Governance / Nominating Committee and do not require separate approval or ratification. The director involved inDuring 2022, Patrick E. Bowe became a Related Person Transaction will recuse himself/herself from any decision to approve or ratify such transaction.
The Governance / Nominating Committee’s activities with respect to the review and approval or ratification of all Related Person Transactions are reported periodically to the Board of Directors.
John T. Stout, who serves as a director, member of Primient, a producer of food and industrial ingredients made from plant-based sources. During the Compensation and Leadership Development Committee and memberfirst quarter of the Finance Committee, is Chairman of the Board, and with immediate family members, a greater than 5% owner, of Renwood Mills, LLC ("Renwood Mills"), in which the Company has an indirect, minority interest of approximately 7.5%. John T. Stout is also a Managing Member of Renwood Appreciation & Income Fund, LLC of which the Company is a limited partner. Renwood Mills2023, Primient purchased approximately $7.48$4.6 million of grainproducts from, and sold approximately $0.83$3.5 million of millfeedproducts to the Company in 2020. The amounts receivedCompany. In March of 2023, Mr. Bowe stepped down from suchthe Board of Primient. These transactions bydo not effect Mr. Bowe’s status as a director because, as the current CEO of the Company, and Renwood Mills, respectively, are below thresholds established by NASDAQ as standards for director non-independence. The Board has determined that such transactions will not interfere with Mr. Stout's abilityhe is already considered to serve as an independentbe a non-independent director.
There were no other Related Person Transactions with an officer or director for the year ended December 31, 2020.2023.
14The Andersons, Inc. | 2024 Proxy Statement | 16
Audit Committee Report
The Audit Committee of The Andersons, Inc.the Board of Directors operates under a written charter. In June 2020, theThe Audit Committee was reappointed withconsists of four independent directors, and in December 2020, Pamela S. Hershberger was appointed Chair of the Committee in place of Patrick S. Mullin, who remained an Audit Committee member.directors. The Audit Committee appoints, establishes fees to, reviews audit scope and plan for, pre-approves non-audit services provided by, and evaluates the performance of, the Company’s independent registered public accounting firm. The Audit Committee’s appointment of the Company’s independent registered public accounting firm is presented to the shareholders in the annual proxy statement for ratification.
Management is responsible for the Company’s internal controls, financial reporting process and compliance with laws and regulations and ethical business standards. The Company’s independent registered public accounting firm is responsible for performing an audit of the consolidated financial statements of the Company in accordance with standards established by the Public Company Accounting Oversight Board (“PCAOB”) and assessing the effectiveness of the Company’s internal controls over financial reporting and for issuing their reports. The Audit Committee is responsible for monitoring and overseeing these processes.
In this context, the Audit Committee has reviewed the Company's audited financial statements and has met and held separate discussions with management, the Company’s internal audit director (or equivalent), and the independent registered public accounting firm regarding such financial statements. Management represents to the Audit Committee that the consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles. The Audit Committee reviewed management's report on their review of the system of internal control over financial reporting, including the independent registered public accounting firm's report on the design and operating effectiveness of internal controls. The Audit Committee also discussed with the independent registered public accounting firm matters required to be discussed by PCAOB Auditing Standard 1301, Communications with Audit Committees, and reviewed all material written communications between the independent registered public accounting firm and management.
The Company’s independent registered public accounting firm also provided to the Audit Committee the written disclosures required by PCAOB Rule 3526, Communication with Audit Committees Concerning Independence, and the Audit Committee discussed with the independent registered public accounting firm that firm’s independence.
The Audit Committee has also reviewed the services provided by the independent registered public accounting firm (as disclosed below under the caption “Audit“Audit and Other Fees”Fees”) when considering their independence. Based upon the Audit Committee’s discussion with management and the independent registered public accounting firm and the Audit Committee’s review of the representations of management and the report of the independent registered public accounting firm to the Audit Committee, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20202023, filed with the Securities and Exchange Commission.
| | |
| AUDIT COMMITTEE |
Pamela S. Hershberger (chair)(Chair), Catherine M. Kilbane, Ross W. Manire and Patrick S. MullinGary A. Douglas |
Use of Compensation Consultants
In 2020, the Compensation and Leadership Development Committee of the Board of Directors retained Semler Brossy Consulting Group of Los Angeles, California as its own independent adviser. The consultant continues to act as an independent adviser to the Committee in connection with 2021 executive compensation for executive officers and non-employee independent directors.
Compensation / Risk Relationship
We believe our compensation programs are designed to establish an appropriate balance between risk and reward in relation to our overall business strategy. To that end, Company management has conducted a compensation risk assessment. The Compensation Committee reviewed and discussed the findings of the risk assessment and believes that our compensation programs established for allare appropriately balanced and do not motivate employees and determinedto take risks that certain aspects of our incentive programs may encourage the taking of undue risk positions, but that such situations are infrequent and mitigated by compensating controls. In all cases, the Company believes that it has appropriate mitigating controls and that compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. The results of this review are discussed below:
(a)Annual Incentive PlanCompany. The Company’s annual cash compensation program for management ("AIP") is based on one year of pretax income, return on invested capital and free cash flow performances, adjusted to remove certain non-operating items, as described in the 2020 Financial Performance Highlights section below. By measuring only one year of income results, an incentive can be created to maximize short-term, same year profits by making unwise credit decisions which might increase long-term counterparty risk. This incentive is mitigated by the following: (i) the Company caps AIP short-term incentive compensation at two times the targeted amount for each position; (ii) the Company’s Vice President, Treasurer must establish all credit limits above any material size (varies by business group); (iii) Company officers who participate in AIP also participate in the Company’s long-term equity compensation program, which is coupled with equity retention requirements; and (iv) losses in subsequent years from imprudent credit decisions will reduce compensation in such subsequent years. In 2014, we adopted a policy requiring the repayment or “clawback” of excess cash or equity based compensation where the payments were based on the achievement of financial results that were subsequently the subject of a financial restatement from each executive officer of the Company (regardless of the cause of the restatement) and also the group controller of the business unit involved in the restatement. If this policy proves to be incompatible with final rules adopted by the SEC implementing the requirement of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, (and, in turn, implemented by NASDAQ listing rules) we will adjust our policy accordingly.
(b)Performance Share Units. Company officers receive Performance Share Units ("PSUs") that vest based upon service and performance which is measured by three years of cumulative diluted earnings per share on a rolling basis. Company officers also receive PSUs that vest based upon relative total shareholder return ("rTSR") over a three-year period. Absent mitigating controls to monitor equity transactions and manage the Company’s leverage, these awards might otherwise induce actions to be taken to improve Company earnings per share results by creating a riskier balance sheet position by increasing the Company’s leverage or through the use of cash to purchase shares on the open market. The PSU award criteria might also encourage aggressive acquisition strategies, under which the Company might incur imprudent amounts of debt to finance riskier acquisitions in order to increase short-term earnings per share and thereby increase PSU awards. This incentive is mitigated by the following controls: (i) the Company caps PSU vesting at two times the targeted amount for each position; (ii) acquisitions of any significance require the approval of the CEO and the Board of Directors; (iii) officers have equity retention requirements, which would be negatively impacted by transactions with large inherent risk, (iv) the Company’s leverage is managed within set guidelines by the CEO and the CFO, within levels approved by the Board of Directors.
(c)Non-qualified stock options. From time to time, the Company may award non-qualified stock options ("NQSOs") to certain Company officers. NQSOs are awards which grant the rights to acquire a certain number of shares of Company stock at the market price on the date of grant for an established term - typically five or more years. The rights to acquire such shares vest to the recipient according to a schedule defined in the terms of the grant agreement. NQSOs present a long-term incentive to executives with the choice of when to exercise the right to acquire the shares under the terms of the grant agreement. In this respect, NQSOs encourage executives to enter into transactions with long-term risks which may result in short-term gains in stock price at the expense of the Company’s long-term financial performance. The temptation to engage in such transactions is mitigated by the following controls: (i) major transactions which might affect short-term stock price require the approval of the CEO and the Board, and (ii) our internal criteria for approving major investments considers several factors, including adjustments to hurdle rates so that riskier investments require higher returns, making approval more difficult to achieve.
(d)Restricted Share Awards. Restricted Share Awards (“RSAs”) are shares of Common stock delivered at grant date that vest over a three-year period. The main objective of RSAs is to promote retention. To a lesser extent, they also create focus on share price and alignment with shareholders, and the Company does not feel this is significant enough to encourage the taking of undue risk positions.
(e)Other. The Company has other group specific sales incentive plans which are managed within each business group. The Group President, Andersons Trade & Processing is currently the only NEO eligible for one of these sales incentive plans.
16The Andersons, Inc. | 2024 Proxy Statement | 17
Executive Officers
The information is furnished pursuant to Instruction 3 to Item 401(b) of Regulation S-K. The executive officers of The Andersons, Inc., their positions and ages (as of February 28, 2021)29, 2024) are presented in the table below. Three of the nine executive officers are women.
| | | | | | | | | | | | | | | | | | | | |
| Name | | Position | | Age | | | | | | | | | | | | | | | | | | Year Assumed |
| Name | | Position | | Age | | Year Assumed
| | | | | | |
| Patrick E. Bowe | | President and Chief Executive Officer
Corporate Vice President, Food Ingredients and Systems (Cargill)(Cargill, Inc.) | | 65 | | 62 | 2015
2007 |
| Christine M. Castellano | | Executive Vice President, General Counsel & Corporate Secretary
Senior Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer (Ingredion Incorporated) | | 58 | | 55 | 2020
2012 |
| Michael T. Hoelter | | Vice President, Corporate Controller
and Investor Relations
Corporate Controller
Assistant Corporate Controller
Grain Group Controller | | 41 | | 38 | 2021
2019
2017
2015 |
| William E. Krueger | | Chief Operating Officer President, The Andersons Trade and Processing
President, The Andersons Trade Group
President and Chief Executive Officer (Lansing Trade Group, LLC) | | 57 | | 54 | 2022
2020
2019
1995 |
| Joseph E. McNeely | | President, The Andersons Nutrient and Industrial
President, The Andersons Rail Group
President and Chief Executive Officer (FreightCar America, Inc.) | | 59 | | 56 | 2020
2017
2013 |
| Anne G. Rex | | Vice President, Strategy, Planning and Development
Vice President and Corporate Controller
Assistant Corporate Controller | | 59 | | 56 | 2019
2012
2002 |
| Brian A. Valentine | | Executive Vice President and Chief Financial Officer
Senior Vice President and Chief Financial Officer
Corporate Vice President and Chief Financial Officer (The Lubrizol Corporation) | | 54 | | 51 | 2020
2018
2011 |
| Brian K. Walz | | Vice President, Treasurer
Senior Director, Corporate Strategy and Development
Vice President (Lansing Trade Group, LLC) | | 54 | | 512019
2019
2010 |
| Sarah J. Zibbel | | Executive Vice President, Chief Human Resources Officer Chief Human Resources Officer (Libbey, Inc.) | | 2019
2019
201044 | | 2023 2018 |
17The Andersons, Inc. | 2024 Proxy Statement | 18
Equity Plans
The following table provides information as of December 31, 2023, about the Company's Common Shares that may be issued under all of its existing equity compensation plans.
| | | | | | | | | | | | | | | | | | | | |
| | Equity Compensation Plan Information |
| Plan category | | (a)
Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
| Equity compensation plans approved by security holders | | (1) 982,697 | | $ | — | | | (2) 4,081,314 |
| | | | | | |
(1) This number includes 367,738 total shareholder return-based performance share units at Maximum, 367,738 earnings per share-based performance share units at Maximum, 205,356 restricted stock units and 41,865 restricted share awards outstanding under the 2019 Plan.
(2) This number includes 297,324 Common Shares available to be purchased under the Employee Share Purchase Plan ("ESPP") and 3,783,990 shares available under the 2019 Plan.
The Andersons, Inc. | 2024 Proxy Statement | 19
Proposal for an Advisory Vote on Executive Compensation
As required by Section 14A of the Exchange Act, as amended by the Dodd-Frank Act, the Board is submitting a non bindingnon-binding advisory resolution to our shareholders for approval of the compensation of the Company’s named executive officersNEOs as disclosed in the Compensation Discussion and Analysis section and related tables included within this proxy statement. We believe that our executive compensation programs appropriately link pay to performance and are well aligned with the long-term interests of our shareholders. We believe that the compensation we have given, viewed in the context of our operating results, demonstrates the appropriateness of our executive compensation practices. Please refer to the Compensation Discussion and Analysis section contained in this proxy statement for a description of the philosophy and design strategy of our compensation programs, our peer group benchmarking, and the actual values given as compensation for our named executive officers.NEOs. This advisory resolution, commonly referred to as a “say-on-pay” resolution, is non-binding on the Board of Directors.Board. Although non-binding, the Board and the Compensation and Leadership Development Committee will review and consider the voting results when making future decisions regarding our executive compensation program.
Accordingly, the Board of Directors unanimously recommends a vote FOR the approval of the following advisory resolution on executive compensation:
RESOLVED, that the compensation paid to the Company’s named executive officers,NEOs, as disclosed pursuant to compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the compensation tables and any related material disclosed in this proxy statement is hereby APPROVED on an advisory basis.
18The Andersons, Inc. | 2024 Proxy Statement | 20
Appointment of Independent Registered Public Accounting Firm
Independent Registered Public Accounting Firm
Deloitte & Touche LLP ("Deloitte") has served as the Company's independent registered public accounting firm since 2015. Based on its evaluation of Deloitte's independence and performance on the recent audit, the Audit Committee has appointed Deloitte as the independent registered public accounting firm of the Company for the year ending December 31, 20212024, and now seeks the shareholders' ratification of such appointment.
Representatives of Deloitte are expected to be present virtually at the Annual Meeting and will be given the opportunity to make a statement if they desire to do so. They will also be available to respond to appropriate questions.
Audit and Other Fees
During 2020the years ended December 31, 2023, and 2019,2022, Deloitte not only acted as the Company’s independent registered public accounting firm but also rendered other services to the Company. The following table sets forth the aggregate fees for professional services rendered by Deloitte for audit audit-related,and tax and other services related to fiscal year 2020 and 2019.services:
| | | | | | | | | | | | | | |
| Fees | | 2020 | | 2019 |
Audit (1) | | $ | 3,883,039 | | | $ | 4,963,340 | |
Tax (2) | | 136,844 | | | 1,005,508 | |
| Total | | $ | 4,019,883 | | | $ | 5,968,848 | |
| | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2023 | | 2022 |
Audit (1) | | $ | 4,378,689 | | | $ | 4,241,993 | |
Tax (2) | | 278,905 | | | 148,231 | |
| Total | | $ | 4,657,594 | | | $ | 4,390,224 | |
(1)Comprises the audits of the Company’s annual consolidated financial statementsConsolidated Financial Statements and internal controls over financial reporting and reviews of the Company’s quarterly consolidated financial statements,Consolidated Condensed Financial Statements, as well as the statutory audits of the Company’s consolidated subsidiaries, attest services, due diligence, and consents to SEC filings.
(2)Amounts incurred in 2020 and 2019 were for services related to tax compliance consultations and planning projects.consultation services.
Policy on Audit Committee Pre-Approval of Services Performed by the Independent Registered Public Accounting Firm
The Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy. This policy provides that audit services engagement terms and fees, and any changes in such terms or fees, are subject to the specific pre-approval of the Audit Committee. The policy further provides that all other audit services, audit-related services, tax services, and permitted non-audit services are subject to pre-approval by the Audit Committee. All of the services Deloitte performed for usthe Company during fiscalthe years 2020ended December 31, 2023, and 20192022, were pre-approved by the Audit Committee.
19The Andersons, Inc. | 2024 Proxy Statement | 21
Proposal to Ratify the Appointment of Independent Registered Public Accounting Firm
The Audit Committee has recommended, and the Board of Directors has approved, Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2021.2024.
If the shareholders do not ratify this appointment, by a majority of the shares represented in person or by proxy at the Annual Meeting, the Audit Committee may consider other independent registered public accounting firms. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of our shareholders.
The Board of Directors recommends a vote FOR ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm.
20The Andersons, Inc. | 2024 Proxy Statement | 22
Share Ownership
Shares Owned by Directors and Executive Officers
The following table indicates the number of Common Shares beneficially owned as of February 28, 2021.29, 2024. The table displays this information for the directors and executive officers as a group, for each director individually and for each of the Named Executive OfficersNEOs (as defined hereafter). Unless otherwise indicated, each person has sole investment and voting power with respect to the shares set forth in the following table. Except as noted below, the address of the beneficial owners is The Andersons, Inc., 1947 Briarfield Boulevard, Maumee, Ohio 43537.
| | | | | | | | | | | | | | |
| Name | | Common Shares Beneficially Owned | | Percent of Common Shares Outstanding |
Michael J. Anderson, Sr. (a) | | 363,106 | | | 1.1 | % |
Gerard M. Anderson (b) | | 351,598 | | | 1.0 | % |
| Patrick E. Bowe | | 83,515 | | | * |
| Steven K. Campbell | | 1,467 | | | * |
| Christine M. Castellano | | 31,486 | | | * |
| Gary A. Douglas | | 8,706 | | | * |
| Pamela S. Hershberger | | 14,275 | | | * |
| Catherine M. Kilbane | | 44,585 | | | * |
Robert J. King, Jr. (c) | | 46,167 | | | * |
William E. Krueger (d) | | 529,640 | | | 1.6 | % |
| Ross W. Manire | | 28,123 | | | * |
| Joseph E. McNeely | | 50,398 | | | * |
John T. Stout, Jr. (e) | | 44,699 | | | * |
| Brian A. Valentine | | 70,630 | | | * |
| All directors and executive officers as a group (18 persons) | | 1,717,591 | | | 5.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Amount and Nature of Shares Beneficially Owned |
| Name | | Options (a) | | Common Shares | | Aggregate Number of Shares Beneficially Owned | | Percent of Class (b) |
Michael J. Anderson, Sr. (c) | | — | | | 559,232 | | | 559,232 | | | 1.7 | % |
Gerard M. Anderson (d) | | — | | | 345,345 | | | 345,345 | | | 1.0 | % |
Jeffrey C. Blair (h) | | — | | | 5,997 | | | 5,997 | | | * |
Valerie M. Blanchett (h) | | — | | | 12,833 | | | 12,833 | | | * |
| Patrick E. Bowe | | 325,000 | | | 162,940 | | | 487,940 | | | 1.5 | % |
| Christine M. Castellano | | — | | | 13,265 | | | 13,265 | | | * |
| Stephen F. Dowdle | | — | | | 30,292 | | | 30,292 | | | * |
| Pamela S. Hershberger | | — | | | 8,023 | | | 8,023 | | | * |
| Catherine M. Kilbane | | — | | | 38,332 | | | 38,332 | | | * |
Robert J. King, Jr. (e) | | — | | | 39,914 | | | 39,914 | | | * |
William E. Krueger (f) | | — | | | 675,051 | | | 675,051 | | | 2.0 | % |
| Joseph E. McNeely | | — | | | 30,072 | | | 30,072 | | | * |
| Ross W. Manire | | — | | | 26,870 | | | 26,870 | | | * |
| Patrick S. Mullin | | — | | | 39,299 | | | 39,299 | | | * |
John T. Stout, Jr. (g) | | — | | | 38,416 | | | 38,416 | | | * |
| Brian A. Valentine | | — | | | 32,623 | | | 32,623 | | | * |
| All directors and executive officers as a group (17 persons) | | 325,000 | | | 2,085,799 | | | 2,410,799 | | | 7.2 | % |
(a)Includes options exercisable within 60 days of February 28, 2021.
(b)An asterisk denotes percentages less than one percent.
(c)Includes 150,138 Common Shares held by Mrs. Carol H. Anderson, Mr. Anderson's spouse. Mr. Anderson disclaims beneficial ownership of such Common Shares.
(d)(b)Includes 316,497 Common Shares held by trust.
(e)(c)Includes 18,97043,092 Common Shares held by trust.
(f)(d)Includes 554,009515,539 Common Shares held by trust.
(g)(e)Includes 4,219 Common Shares held by trust.
(h)Balance is* Represents less than 1% of the issued and outstanding Common Shares of the Company as of December 31, 2020.the Table Date.
21The Andersons, Inc. | 2024 Proxy Statement | 23
Share Ownership of Certain Beneficial Owners
The following table indicates the number of Common Shares beneficially owned by each shareholder who is known to own beneficially more than 5% of our Common Shares as of December 31, 2020:2023:
| | | | | | | | | | | | | | | | | | | | |
| Title of Class | | Name and Address of Beneficial Owner | | Amount and Nature of
Common Shares Beneficially Owned | | Percent of Class as of
December 31, 2020 |
| Common Shares | | Blackrock, Inc. (a) 55 East 52nd Street New York, NY 10055 | | 4,768,186 | | 14.5% |
| Common Shares | | The Vanguard Group, Inc. (b) 100 Vanguard Boulevard Malvern, PA 19355 | | 3,463,086 | | 10.5% |
| Common Shares | | Dimensional Fund Advisors LP (c) Building One 6300 Bee Cave Road Austin, TX 78746 | | 2,457,238 | | 7.5% |
| | | | | | | | | | | | | | | | | | | | |
| Title of Class | | Name and Address of Beneficial Owner | | Amount and Nature of
Common Shares Beneficially Owned | | Percent of Class as of December 31, 2023 |
| Common Shares | | Blackrock, Inc. (a) 55 East 52nd Street New York, NY 10055 | | 5,566,850 | | 16.5% |
| Common Shares | | The Vanguard Group, Inc. (b) 100 Vanguard Boulevard Malvern, PA 19355 | | 3,975,284 | | 11.8% |
| Common Shares | | Dimensional Fund Advisors LP (c) Building One 6300 Bee Cave Road Austin, TX 78746 | | 2,818,680 | | 8.4% |
| Common Shares | | Pacer Advisors, Inc. (d) 500 Chesterfield Parkway Malvern, PA 19355 | | 2,314,734 | | 6.9% |
(a)Based upon information set forth in the Schedule 13G filed on January 26, 202122, 2024, by Blackrock, Inc. Blackrock, Inc. is a holding company or control person with the sole power to vote 4,709,0945,449,208 Common Shares and sole dispositive power over 4,768,1865,566,850 Common Shares.
(b)Based upon information set forth in the Schedule 13G filed on February 10, 202113, 2024, by The Vanguard Group, Inc. The Vanguard Group, Inc. is an investment adviser and holding company with the sole power to vote 0 Common Shares and sole dispositive power over 3,401,9073,911,799 Common Shares. Vanguard Asset Management, Limited, Vanguard Fiduciary Trust Company, Vanguard Global Advisors, LLC, Vanguard Group (Ireland) Limited, Vanguard Investments Australia Ltd, Vanguard Investments Canada Inc., Vanguard Investments Hong Kong LimitedShares; and Vanguard Investments UK, Limited are wholly owned subsidiaries of The Vanguard Group, Inc. and investment managers of collective trust accounts with the shared power to vote 33,18134,916 Common Shares and the shared power to dispose of 61,17963,485 Common Shares.
(c)Based upon information set forth in the Schedule 13G filed on February 12, 20219, 2024, by Dimensional Fund Advisors LP. Dimensional Fund Advisors LP is an investment adviser with the sole power to vote 2,368,9762,779,554 Common Shares and sole dispositive power over 2,457,2382,818,680 Common Shares.
Equity Plans
The following table gives(d)Based upon information as of December 31, 2020 aboutset forth in the Schedule 13F filed on January 16, 2024, by Pacer Advisors, Inc. Pacer Advisors, Inc. indicates that it has sole voting power with respect to the Company's Common Shares that may be issued upon the exercise of options underlisted above, and sole dispositive power with respect to all of its existing equity compensation plans.
| | | | | | | | | | | | | | | | | | | | |
| | Equity Compensation Plan Information |
| Plan category | | (a)
Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
| Equity compensation plans approved by security holders | | (1) 1,335,379 | | $ | 28.69 | | | (2) 1,143,820 |
Equity compensation plans not approved by security holders (3) | | 245,065 | | | 35.81 | | | 50,380 | |
(1) This number includes 325,000 Non-Qualified Stock Options (“Options”), 344,584 total shareholder return-based performance share units, 344,422 earnings per share-based performance share units, and 321,373 restricted shares outstanding under The Andersons, Inc. 2019 Long-Term Performance Compensation Plan. This number does not include any shares related to the Employee Share Purchase Plan. The Employee Share Purchase Plan allows employees to purchase common shares at the lower of the market value on the beginning or end of the calendar year through payroll withholdings. These purchases are completed as of December 31.
(2) This number includes 172,924 Common Shares available to be purchased under the Employee Share Purchase Plan and 970,896 shares available under equity compensation plans.
(3)In connection with the Company’s acquisition of the interests in Lansing Trade Group ("LTG") the Company did not already own, the Company established the Lansing Acquisition 2018 Inducement and Retention Award Plan (the “Inducement Plan"). The Inducement Plan is to be used exclusively for the grant of equity awards to individuals who were not previously an employee or non-employee director of the Company (or following a bona fide period of non-employment), as an inducement material to each such individual entering into employment with the Company and to replace existing LTG equity awards. The Company issued 608,680 shares of restricted stock under the Inducement Plan in multiple grants during 2019. Approximately 350,000 shares have vested as of December 31, 2020. The remaining shares have vesting dates of January 1, 2021, April 1, 2021 and January 1, 2022. All awards under the Inducement Plan are subject to each such employee’s continued employment with the Company on such vesting dates. Unvested shares of restricted stock are entitled to vote, entitled to dividends (provided that the actual payment of dividends is conditioned upon the vesting of the shares) and are not transferable.beneficially owned.
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires executive officers and directors to file reports of securities ownership and changes in such ownership with the Securities and Exchange Commission. In addition, persons that are not executive officers or directors but who beneficially own more than ten percent of Common Shares must also report under Section 16(a). Copies of all Section 16(a) forms filed by officers, directors and greater-than-10% owners are required to be provided to the Company.
We have reviewed the reports and written representations from the executive officers and directors. Based on our review, we believe that all filing requirements were met during 2020.2023, except that one Form 4 reporting a sale of the Company's Common Shares for Patrick E. Bowe was inadvertently filed late.
Compensation and Leadership Development Committee Interlocks and Insider Participation
No member of our Compensation and Leadership Development Committee has served as one of our officers or employees at any time. None of our executive officers serves as a member of the compensation committeeCompensation Committee of any other company that has an executive officer serving as a member of our Board. None of our executive officers serves as a member of the board of directors of any other company that has an executive officer serving as a member of our Compensation and Leadership Development Committee.
23The Andersons, Inc. | 2024 Proxy Statement | 24
Executive Compensation
Compensation and Leadership Development Committee Report
The Compensation and Leadership Development Committee ("the Committee") has reviewed and discussed with management the Compensation Discussion and Analysis which follows, and, based on such review and discussion, recommends to the Board of Directors of The Andersons, Inc. that it be included in this proxy statement and incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2020.2023.
COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE
Ross W. Manire (chair)(Chair), Pamela S. Hershberger,Gary Douglas, Robert J. King, Jr., John T. Stout, Jr.
Compensation Discussion and Analysis
The following section describes the components of our executive compensation program for our named executive officers (“Named Executive Officers” or “NEOs”),NEOs, whose compensation is set forth in the Summary Compensation Table and other compensation tables contained in this proxy statement. For the year ended December 31, 2020,2023, our NEOs included the following individuals:
| | | | | | | | |
| Officers | | Title as of December 31, 20202023 |
| Patrick E. Bowe | | President and Chief Executive Officer |
| Brian A. Valentine | | Executive Vice President, Chief Financial Officer |
| William E. Krueger | | President, The Andersons Trade and ProcessingChief Operating Officer |
| Christine M. Castellano | | Executive Vice President, General Counsel & Corporate Secretary |
| Joseph E. McNeely | | President, The Andersons Nutrient and Industrial |
Valerie M. Blanchett | | Former Chief Human Resources Officer* |
Jeffrey C. Blair | | Former President, Plant Nutrient Group** |
*Effective September 30, 2020, Valerie M. Blanchett retired from the Company.
**Effective July 31, 2020, Jeffrey C. Blair left the Company to pursue other interests.
Executive Summary
Rewarding Performance and Achieving Objectives
Our compensation plans and policies are structured to achieve the following goals:
•Compensation should reflect a balanced mix of short and long-term components.
•Short-term cash compensation (which is both base pay and annual incentive) should be based on annual Company, business unit and individual performance.
•Long-term equity compensation should encourage achievement of the Company’s long-term performance goals and align the interests of executives with shareholders.
•Executives should build and maintain appropriate ownership levels of Company stock ownership, so theirCompany's Common Shares, to ensure the interests of management continue to be aligned with the Company’s shareholders.
•Compensation levels should be sufficient to attract and retain highly qualified employees.
To do so, we provide: | | | | | | | | |
Base Salary | A base salary is established for each position, based upon competitive benchmarking and an understanding of each individual’s contribution, responsibilities and experience. |
Short-Term Incentive Compensation | An annual cash incentive. For 2020, 75% of the NEO's target incentive is determined by a formula based on three (3) financial metrics: 25% on pretax income of the executive’s individual business unit, 25% on the return on invested capital of the executive's individual business unit and 25% on free cash flow of the Company as a whole. The remaining 25% is awarded at the discretion of the CEO (or the Committee in the case of the CEO's own award) based on individual contributions. However, unlike the other NEO's, 64% of William E. Krueger's target incentive is determined by a formula based on pretax income of the Trade Group, 12% on the return on invested capital of the Trade Group and 12% on free cash flow of the Company as a whole. Additionally for Mr. Krueger, only 12% is awarded at the discretion of the CEO. For all NEO's, the maximum incentive pool, regardless of performance, is two times the Target bonus. |
Long-Term Incentive Compensation: | |
| Restricted Share Awards | Grants of common stock subject to vesting over a multi-year period. In 2020, fifty percent (50%) of the value of the Long-Term Incentive equity grant was in the form of RSAs for all NEOs with the exception of Mr. Bowe, who received 40% of the value as RSAs. |
| Performance Share Units | Grants of units convertible to common stock upon performance criteria being met over a three-year period. In 2020, fifty percent (50%) of the value of the Long-Term Incentive equity grant was in the form of PSUs, except for Mr. Bowe who received 60% of the grant value as PSUs. Within the grant value tied to PSUs, fifty percent (50%) will vest based on cumulative, diluted earnings per share (or "EPS") criteria and fifty percent (50%) will vest based on relative Total Shareholder Return over the 2019-2021 performance period (or "rTSR"). The details of the rTSR criteria are described in the Performance Share Units section below.
|
NEO compensation is designed to maintain a strong link between pay and performance with both short and long-term incentives. The majority of our NEO compensation varies based on performance. For 2020,2023, 79% of CEO compensation and 61%69% of all other NEO's compensation was designed to vary with Company and, where relevant, business unit performance.
Mix of Target Compensation
The Andersons, Inc. | 2024 Proxy Statement | 25
20202023 Financial Performance Highlights
The Company's financial results in 2020for the year ended December 31, 2023, are highlighted below.as follows:
•The Company reported net income attributable to the CompanyThe Andersons, Inc. common shareholders from continuing operations of $7.7 million(a)$101.2 million, or $0.23$2.94 per diluted share.
•The Trade Groupsegment reported pretax income of $24.7 million driven as stronger merchandising helped offset the lingering impacts of a weak 2019 harvest in the Eastern Corn Belt.
•The Ethanol Group recorded a pretax loss of $47.3 million and a pretax loss attributable to the company of $25.4 million (a), as the group was significantly impacted by the COVID-19 pandemic effects on lower driving demand.
•The Plant Nutrient Group recorded pretax income of $16.0 million concluding its best year since 2014 due to favorable planting conditions and cost cutting initiatives.
•The Rail Group earned $2.6 million of pretax income on decreased income from car sales.
(a) Income (loss) before income taxes attributableof $96.2 million as the segment continued to capitalize on strong agriculture fundamentals. The Andersons, Inc. is defined as net salesasset-based business benefited from strong elevation margins and merchandising revenues plus identifiable othergood space income less all identifiable operating expenses, including interest expense for carrying working capitalon a large and long-term assets and is reported netwet harvest combined with better wheat income opportunities during the year. Merchandising fundamentals were also solid during 2023, especially with a market inverse through the first part of the noncontrolling interest shareyear, but were negatively impacted from fewer merchandising opportunities in the Middle East and North Africa including losses related to the currency liquidity issues in Egypt. The premium ingredients business also delivered positive results from acquisitions and other recently deployed capital.
•The Renewables segment reported income before income taxes of income.$91.2 million, led by outstanding earnings from strong operations at the Company's ethanol plants. The onlyplants continue to run efficiently with high ethanol yields and favorable ethanol crush margins. The renewable diesel feedstock business continued to grow as it continued to add more products to its portfolio. The results also include an $87.2 million impairment charge and $6.5 million gain on deconsolidation, both related to the ELEMENT ethanol plant.
•The Nutrient & Industrial segment which is impacted by noncontrolling interestreported income isbefore income taxes of $25.0 million. The Ag Supply Chain product line experienced compressed margins in 2023 that were partially offset with increased volumes as nutrient prices moved lower throughout the Ethanol group.year providing fewer margin opportunities when compared to 2022. The Specialty Liquids and Engineered Granules product lines fell slightly behind the prior year mainly due to decreased volumes.
Summary Incentive Awards Earned
Based on these results as well as other measures of our financial performance as discussed in more detail below, NEOs were eligible for 2023 AIP performance payouts under our 2020 annual incentive plan performance that varied from 37-56%105% - 172% of their individual targets,Targets, depending on business unit,unit. NEOs were eligible for 200% payouts for both the EPS and no payout for theTSR performance-based portion of our long-term incentive plans that vested in 2020.2023. More specifically:
•All of our NEOs who were actively employed at year end received a payout as part of his or her annual cash bonus based on companyCompany, business unit, and individual performance. The President, Trade & Processing Group received a payout based on his individual and segment-specific performance with a smaller portion tied to Company performance.
•Half of the PSUs granted in 20182021 and vesting as ofin early 2024, based on the performance period ended December 31, 2020,2023, were tied to our 3-year cumulative EPS performance. No executiveExecutives received a 200% payout on these awards as our actual 3-year cumulative EPS was 258% of $3.34(2) fell below the thresholdTarget set for these awards, of $4.55.as discussed in more detail below.
•Half of the PSUs granted in 20182021 and vesting in early 2024, based on the performance period ended as of December 31, 2020,2023, were tied to our 3-year rTSRTSR performance. No executiveExecutives received a 200% payout on these awards as our actual rTSR under-performedTSR outperformed the Russell 3000 Index by 21.0%26.62%.
(2)Using an adjustment framework approved by the Committee,the EPS number used to determine compensation amounts was adjusted to remove certain items that were not representative of ongoing operations, such as those relating to acquisition costs, impact of tax reform, impairment charges and gains/losses on sales of assets.
Specifically related to COVID-19, a number of compensation and operational actions were taken:
•An internal task force comprised of Company leadership, human resources and EH&S was established to monitor the crisis and its impacts on our workforce's health and safety
•The Company implemented a remote and flexible work policy for all non-operations personnel
•The Company implemented extended COVID-19 sick pay benefits for all employees
•The Compensation Committee approved an additional funding of 2% of eligible wages to be provided to participants of the Company's Cash Profit Sharing Program, which is the short-term cash bonus plan for the hourly workforce
•The Corporate Leadership Team, comprising of the: Executive Vice President, Chief Financial Officer, Group Presidents, Chief Human Resources Officer, Executive Vice President, General Counsel & Corporate Secretary; took a base pay reduction equivalent to 10% for six months. The CEO took a reduction equivalent to 15% of his base pay for six months. These reduction amounts were taken from either their cash AIP payment or their long-term RSA grants and are reflected in the tables below
•The Board of Directors reduced two of their quarterly retainer payments by 15% during 2020
•Additionally, the Compensation Committee approved target funding of the Annual Incentive Plan discretionary pool to reward employees for extraordinary efforts through the COVID-19 crisis
The graphs below display trends in pretax income, - oneFCF, and ROIC, in each case as calculated and adjusted for purposes of performance targets under the key performance indicators of the Company's AIP, - compared to total short-term incentivesAIP payout for the Company’s NEOsCEO for each year. year presented. Each of these targets is a non-GAAP financial measure. Refer to the Executive Compensation Components discussion below for more information as to how each of these performance targets is calculated for purposes of the AIP, as well as Appendix A for a reconciliation to the nearest GAAP financial measure. The Company's annual incentive program is designed to be directly responsive to changes in earnings. Over the five-year period, changes in annual incentive compensation for NEOs were appropriately aligned with changes in pretax income.Andersons, Inc. | 2024 Proxy Statement | 26
The Andersons, Inc. | 2024 Proxy Statement | 27
The following long-term performance and compensation graphs illustrate diluted EPS and relative TSR, in each case as calculated and, in the case of EPS, adjusted for the purposes of performance targets for Performance Share Units (PSU's), and the resulting CEO equity-based compensation from Performance Share Units (PSUs)PSUs for the three-year performance periods ending on December 31 2018, 2019 and 2020.for the years presented below. EPS for these purposes is a non-GAAP financial measure. Refer to the Executive Compensation Components discussion below for more information as to how these performance targets are calculated, as well as Appendix A for a reconciliation of EPS for these purposes to the nearest GAAP financial measure. Long-Term Performance Based Compensation-Cumulative EPS
(1) CEO Compensation Based on EPS reflects target and actual amounts for Michael J. Anderson, Sr. for 2018, as PSU vesting occurs three years after the grant date.
27The Andersons, Inc. | 2024 Proxy Statement | 28
We establish both thresholdThreshold and targetTarget levels for our incentives, and cap an individual's formulaic incentive, no matter how extraordinary the performance, at twice the targetTarget incentive. We believe our standards for thresholdThreshold and targetTarget levels provide fair and challenging goals based on historical results. For the three-year period ending in 2020,ended December 31, 2023, we achieved $3.34earnings of $10.37 per diluted share, adjusted for certain items, as noted above.above, and reconciled to the Consolidated Statements of Operations in Appendix A. The relationship between performance-based pay and pay at risk is strong as evidenced by the graphs of annual and long-term NEO compensation. See the Bonus, Performance Targets & ThresholdsEquity Grants section below for greater detail.detail on the composition of bonus performance targets and thresholds.
Consideration of 20202023 Say on Pay Advisory Vote
The Company’s executive compensation plans werewas approved by 97%98% of the shareholders intotal shares voted at the 2020 proxy.2023 Annual Meeting. In view of this result, we believe there is broad support by the shareholders for the overall direction, philosophy and value of our executive compensation plans. As a result, no material changes were made to the Company’s executive compensation plans in direct response to the voting results. Consistent with our recommendation, we are submitting our executive compensation plans to an annual non-binding vote of shareholders in this proxy statement. The Company intends to continue this practice on an annual basis.
Compensation Governance Framework
In order to meet the key objectives of our executive compensation program and to mitigate risk from our compensation practices, the companyCompany has adopted a strong corporate governance framework that includes the components described below.
•Stock Ownership Guidelines - We have established stock ownership guidelines for our executive officers with target shareholding levels expressed as multiples of base salary to further align the interests of our executives with those of our shareholders. Our Directors are also subject to ownership guidelines expressed as a multiple of their annual retainer. Refer to page 37our Stock Ownership and Retention Policy for additional information.
•Share Retention Requirement - Company officers are required to retain at least 75% of the net shares acquired through incentive awards until their target shareholding level is achieved; thereafter, they are required to retain 25% of net shares until two times their target shareholding level is achieved. Refer to page 37the Stock Ownership and Retention Policy for additional information.
•Recoupment Policy - WeWith final rules adopted by the SEC and Nasdaq implementing the requirement of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we have adopted a policy requiring the repayment or “clawback” of excess cash or equity basedthe amount erroneously awarded incentive-based compensation from each executive officerin the event that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company (and alsowith any financial reporting requirement under the group controllersecurities laws, including any required accounting restatement to correct
The Andersons, Inc. | 2024 Proxy Statement | 29
an error in previously issued financial statements that is material to the relevant business unit) wherepreviously issued financial statements, or that would result in a material misstatement if the paymentserror were based on the achievement of financial results that were subsequently the subject of a financial restatement (regardless of involvementcorrected in the cause ofcurrent period or left uncorrected in the restatement).current period.
•Double-TriggerNo Automatic Single-Trigger Vesting - Both the 2014 andThe 2019 Long-Term Incentive Compensation Plans require that all equity awards have a "double-trigger"Plan does not provide for automatic single-trigger vesting following a change in control (i.e., awards do not automatically accelerate unless a participant also has a termination of employment).control.
•No Stock Option Re-Pricing - Neither the 2014 andThe 2019 Long-Term Incentive Compensation PlansPlan does not permit us to reprice stock options without shareholder approval or to grant stock options with an exercise price below fair market value.
•Minimum Vesting Period - The 2019 Long-Term Incentive Compensation Plan requires a minimum one-year vesting requirement on long-term incentive grants, subjected to limited exceptions. While not referenced in the 2014 Long-Term Incentive Compensation Plan, all stock grants made from the plan included a minimum one-year vesting.
•No Excise Tax Gross-Ups - The Company does not provide tax gross-ups for excise taxes that may be imposed under IRC Section 4999 following a change-in-control or on executive benefits and perquisites during normal employment.
•Annual Say on Pay Vote - We value the input of our shareholders and conduct a non-binding vote on our executive compensation policies and practices annually.
•No Hedging or Pledging - The Company prohibits the hedging or pledging by an Officer or Director of his/her interest in The Andersons, Inc. stock. “Hedging” is defined by the purchase or sale of derivatives or other financial instruments, most commonly (but not exclusively) futures, put options, and call options on the Company's Common Shares, in order to monetize the stock, or mitigate the risk of stock ownership. “Pledging” is defined as granting the Company's Common Shares as collateral to a creditor as security for a loan or other obligation.
General Principles and Procedures
Compensation Committee’s Role and Responsibilities
The Compensation Committee, which is composed solely of independent directors, reviews all aspects of cash and long-term incentive compensation for executive officers and makes recommendations to the Board pursuant to athe Compensation Committee charter, which is reviewed and approved by the Governance and/ Nominating Committee, and ratified by the full Board, annually.
The CEO and members of our Human Resources team make initial recommendations to the Compensation Committee and participate in Compensation Committee discussions. In the case of the CEO, compensation is determined by the Compensation Committee, without management present. The Compensation Committee then makes recommendations related to the compensation provided to all executive officers (including the CEO) to the Board of Directors for their approval.
Compensation Committee Consultants
The Compensation Committee is empowered by its charter to retain its own independent legal and compensation consultants, at the Company's expense. TheIn 2023, the Compensation Committee engaged the Semler Brossy Consulting Group, LLC ("Semler Brossy") as its own independent advisor to objectively review and make recommendations regarding 1) aspects of our Long-Term Incentive Compensation Plan and equity grants, and 2) Total Direct Compensation for executive officers and non-employee independent directors. Semler Brossy also supports the Compensation Committee in identifying an appropriate peer group for benchmarking executive pay levels and practices, annually providing the Compensation Committee with data on competitive pay levels for the senior executives and the design and calibration of our annual incentive plan, providing the Compensation Committee with regular updates on regulatory and governance considerations, and providing input into the Company's disclosures on executive compensation and other activities. Annually, the Compensation Committee reviews the independence of Semler Brossy based on the NASDAQ listing standards and has determined that Semler Brossy is independent of management. The firmconsultant continued to provideact as an independent adviceadviser to the Compensation Committee in 20202023 regarding Committee matters.matters as well as the 2024 executive compensation program for executive officers and non-employee independent directors.
Benchmarking
For NEOs, we compare our compensation to that of other companies on an annual basis. For 2020,2023, compensation was benchmarked against public market data from peer company proxies as well as based on data published in annual compensation surveys.
Peer group companies are reviewed annually by the Compensation Committee based on the recommendations of Semler Brossy. Peers are selected to best reflect our mix of businesses and economics, such as operating income, market value and operating margin. We do not reference revenue as a factor in assessing our peer group, as changes in sales in our Trade business between periods may not necessarily be indicativegroup.
The Andersons, Inc. | 2024 Proxy Statement | 30
Our approach to benchmarking combines peer group data from commodities-based businesses with general industry surveys that reflect a smaller revenue scope than our actual revenue. This approach addresses the issue that our commodities-based business may overstate our true peer size and seeks to avoid the upward compensation pressure a peer-group only approach might create.
The peer group used for NEO pay decisions in 20202023 is comprised of these 1516 companies:
| | | | | | | | |
Applied Industrial TechTechnologies | Darling Ingredients,Green Plains, Inc. | Greenbrier Cos.,DNOW Inc. |
BMC Stock Holdings,Cal-Maine Foods, Inc. | Dean Foods Co.Intrepid Potash, Inc. | Nexeo Solutions,REX American Resources Corporation |
| Calavo Growers, Inc. | John B. Sanfilippo & Son, Inc. | SpartanNash Company |
| CVR Partners, LP | Mission Produce, Inc. | The Chefs' Warehouse, Inc. |
Beacon Roofing Supply, Inc. | Fresh Del Monte Produce, Inc. | Sanderson Farms,MRC Global Inc. | Veritiv Corporation |
Cal-Maine Foods, Inc.Global Industrial Company | | Flowers Foods, Inc. | SpartanNash Co.
CVR Energy, Inc. | Green Plains, Inc. | The Chef's Warehouse, Inc. |
For 2023 pay decisions, due to the Company's increase in size and market valuations, as well as the sale of the Rail business, the peer group was changed to remove Sanderson Farms, Darling Ingredients, Beacon Roofing Supply, Flowers Foods, SiteOne Landscape Supply and Greenbrier.
Our pay strategy is to have targetTarget Total Direct Compensation (sum of base salary, short-term incentive and long-term incentive) aligned with the median of our competitive benchmark if annually established targetTarget levels for Company and business unit pretax income, return on invested capitalROIC and free cash flowFCF are achieved. While the Compensation Committee referenced the median of market data for each element, as well as the sum of all elements of total compensation when making pay decisions for NEOs, actual and targetTarget pay for each executive may vary from market median based on the Compensation Committee’s assessment of each individual’s skill, experience, performance and other contributions, as well as the overall business context of the Company and year-over-year changes in market pay levels, each assessed by the Compensation Committee in its judgment without any specific weightings or formulas.
29The Andersons, Inc. | 2024 Proxy Statement | 31
Elements of Total Direct Compensation
Following is an overview of the 20202023 components of Total Direct Compensation for Named Executive Officers:
NEOs:
| | | | | | | | | | | | | | | | | | | | |
| Total Cash Compensation |
| Element | | Description | | DescriptionObjective | | Objective | | Delivery |
| Base Salary | | Generally targeted at the median of market benchmarks.
| | Payment for day to dayday-to-day performance of job accountabilities. A market-based range allows for variation based on skills, experience, and performance. | | Cash |
| Short-term Incentive Compensation – Annual Incentive Plan | | Annual incentive opportunity calculated as percentage of base salary. Short-term incentive is based primarily upon the formula as described in Bonus, Performance Targets & ThresholdsAnnual Incentive Plan below. A discretionary award may also be awarded by the CEO.CEO (or the Compensation Committee in the case of the CEO). At Target performance in 2020,2023, the pool of funds available for discretionary awardsamount is 25% of the total incentive bonus pool, except for William E. Krueger whose discretionary award is limited to 12% of his total target opportunity.Target. Maximum incentive poolpayout for an individual, regardless of performance,the objective financial measures is two times the individual'sindividual’s Target, bonus.regardless of performance. The discretionary portion is based on a pool that will never exceed two times the collective NEO’s Target amounts. This pool is allocated to each NEO at the discretion of the CEO (or the Compensation Committee for the CEO). | | Incentive for annual pretax income, return on invested capital, free cash flowROIC, FCF performance plus other non-financial objectives. Allocation of discretionary pool based on assessment of overall individual performance and achievement of individual objectives. | | Cash |
| | | | | | | | | | | | | | | | | | | | |
| Long-term Incentive ("LTI") Compensation |
Long-term Incentive (LTI) CompensationElement | | Description | | Objective | | Delivery |
Element | | Description | | Objective | | Delivery |
| Performance Share Units | | Grant amount based onrepresents half of the NEO’s total LTI targetTarget opportunity; 60% for Mr. Bowe.Bowe and Mr. Krueger. Vesting of PSUs granted in 2020 is2023 was based upon achievement of: 1) targeted cumulative diluted Earnings Per Share (EPS) over the 3-year performance period, and 2) relative Total Shareholder Return (rTSR)TSR over the 3-year performance period. 50% of PSUs are earned based on cumulative EPS and the remaining 50% based on rTSR.TSR. | | Taken together the two equally weighted performance measures used for the PSUs reward an effective balance between consistent year-over-year earnings and shareholder return expectations.
The use of rTSRTSR strengthens the link between share price growth and long-term compensation. | | |
Restricted Stock AwardsUnits | | GrantThe 2023 grant amount based onrepresents half of the NEO's total LTI target;Target; 40% for Mr. Bowe.Bowe and Mr. Krueger. | | Promotes retention due to the multi-year vesting period. Also creates focus on share price and alignment with shareholders. | | |
30The Andersons, Inc. | 2024 Proxy Statement | 32
20202023 Executive Compensation Components
Base Pay
Generally, annual increases to base salary for each NEO are determined based upon the NEO’s current salary relative to competitive benchmark information, individual performance and the Company’s plan for overall wage increases. Larger salary increases may occur when promotions or new accountabilities create additional value for a position, benchmark data indicates that an adjustment is necessary to maintain market competitiveness or based upon considerations of internal equity with other similarly situated NEOs.
For 2020,2023, the Compensation Committee referenced the median of competitive benchmark information forwhen considering each NEOs competitive salary positioning. The Compensation Committee considers a range of plus or minus 15% from the median of the benchmark information as a competitive target range.
FollowingThe following is a table setting forth NEO annualized base salary for year-end 2020 and 2019 and the percentage change. | | | | | | | | | | | | | | | | | | | | | |
| | YE 2020 Base Salary | | YE 2019 Base Salary | | % Change in Base Salary | |
| Patrick E. Bowe | | $ | 960,000 | | | $ | 960,000 | | | — | % | |
| Brian A. Valentine | | 465,000 | | | 465,000 | | | — | % | |
| William E. Krueger | | 600,000 | | | 600,000 | | | — | % | |
| Christine M. Castellano | | 400,000 | | | — | | | N/A | |
| Joseph E. McNeely | | 400,000 | | | 360,000 | | | 11.1 | % | |
| Valerie M. Blanchett | | 310,000 | | | 310,000 | | | — | % | |
| Jeffrey C. Blair | | 300,000 | | | 300,000 | | | — | % | |
| | | | | | | | | | | | | | | | | | | | | |
| | As of December 31, | | | |
| | 2023 | | 2022 | | % Change | |
| Patrick E. Bowe | | $ | 1,000,000 | | | $ | 1,000,000 | | | 0.0 | % | |
| Brian A. Valentine | | 585,000 | | | 585,000 | | | 0.0 | % | |
| William E. Krueger | | 950,000 | | | 950,000 | | | 0.0 | % | |
| Christine M. Castellano | | 450,000 | | | 450,000 | | | 0.0 | % | |
| Joseph E. McNeely | | 450,000 | | | 450,000 | | | 0.0 | % | |
Bonus, Performance GoalsAnnual Incentive Plan
We believe that our cash bonusannual incentive plan ("AIP") encourages sound investment decisions, prudent asset management, and profitable Groupbusiness unit and Company performance. For 2020, we revised ourOur AIP plan to includeincludes three quantitative metrics, adding adjustedpretax income, return on invested capital ("ROIC") and free cash flow, ("FCF")in each case subject to our historical measure of adjusted pretax income.certain adjustments as described below. These metrics were selected to align the efforts of executives with our strategies, our shareholders and to maximize value.
The Compensation Committee approves the financial threshold, targetThreshold, Target and maximumMaximum for each of the selected metrics. Thresholds are levels of pretax income, ROIC and FCF that must be achieved before any AIP payment is earned. At thresholdThreshold performance, only minimum levels of AIP payments are earned. Targets are the levels of pretax income, ROIC and FCF at which the resulting AIP payment will equal the targeted competitive level of compensation discussed under “Benchmarking” “Benchmarking” above. Maximums are levels of pretax income, ROIC and FCF at which the maximumMaximum bonus amounts are earned.
In 2020, We establish performance goals at both the individual business groupunit and total Company level for pretax income targetsand ROIC (depending on the NEO), while FCF is measured only at the overall Company level for all participants.
For 2023, pretax income Targets were set at approximately 21% above the approved 2020 budget (24% for total company) with the higher target representing the income expectation for the business unit and the Company.2023 budget. Thresholds were set at 50% of the targets.Targets. Maximums were set at 171%approximately 172% of the targets.Target.
Adjusted ROIC goalsTargets were set at or above business unit forecasted levelsand Company planned ROIC (113% for total Company) with thresholdsThresholds set at 75%varying percentages of the target.Target in light of specific business outlook (66% - 75% for business groups, 75% for total Company). The maximumsMaximums were set at 163%129% - 178% of the targets.Targets for the business groups, and 133% for total Company. Lastly, the Company FCF targetTarget represented a desired debt reductionan amount that was above the consolidated budget. Threshold for FCF was set at 42%50% of target.Target. The maximumMaximum was set at 179%250% of target.Target.
Considering recent resultsThe performance goal ranges between Threshold and continuing headwindsTarget as well as Target and Maximum are intentionally set with a wide range to recognize the potential volatility in key businesses,of a commodity based business.
With the exception of FCF, 2023 Targets were significantly increased from 2022 Targets for all business unit and the total Company; FCF remained the same for 2023. The Compensation Committee believes the 20202023 business plan was challenging andat the addition of two metricstime it was approved and created additional alignment with our short and long termlong-term business plans and strategies.
31The Andersons, Inc. | 2024 Proxy Statement | 33
The Compensation Committee retains discretion to consider adjustments to performance results to exclude the impact of unusual or extraordinary transactions that do not reflect the on-going business operations and to avoid unintended incentives for management to make decisions solely on the basis of achieving financial results. The Compensation Committee uses a decision framework for consistency to consider the materiality and facts and circumstances of potential adjustments and has discretion as to which groupsbusiness unit and/or individuals are impacted. The financial goals and results impacting 20202023 NEO compensation were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FCF (2) | | Adjusted ROIC (3) | | Adjusted Pretax Income (4) |
| (in thousands) | Threshold | Target | Maximum | Actual | | Threshold | Target | Maximum | Actual | | Threshold | Target | Maximum | Actual |
Trade (1) | $ | — | | $ | — | | $ | — | | $ | — | | | 3.4 | % | 4.6 | % | 7.6 | % | 3.5 | % | | $ | 23,500 | | $ | 47,000 | | $ | 80,370 | | $ | 27,600 | |
| Ethanol | — | | — | | — | | — | | | 4.1 | % | 5.5 | % | 9.1 | % | (5.0) | % | | 10,650 | | 21,300 | | 36,423 | | (25,400) | |
| Plant Nutrient | — | | — | | — | | — | | | 4.1 | % | 5.4 | % | 9.0 | % | 5.9 | % | | 7,900 | | 15,800 | | 27,018 | | 16,000 | |
| Rail | — | | — | | — | | — | | | 3.9 | % | 5.2 | % | 8.6 | % | 2.8 | % | | 12,200 | | 24,400 | | 41,724 | | 5,400 | |
| Company | 70,000 | | 165,000 | | 295,000 | | 91,351 | | | 3.3 | % | 4.4 | % | 7.2 | % | 1.9 | % | | 40,250 | | 80,500 | | 137,655 | | 10,600 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | | FCF (1) | | ROIC (2) | | Pretax Income (3) |
| Business Unit | | Threshold | Target | Maximum | Actual | | Threshold | Target | Maximum | Actual | | Threshold | Target | Maximum | Actual |
| | | | | | | | | | | | | | | |
| Company | | $ | 30,000 | | $ | 60,000 | | $ | 150,000 | | $ | 116,374 | | | 4.5 | % | 6.0 | % | 8.0 | % | 8.2 | % | | $ | 53,650 | | $ | 107,200 | | $ | 184,100 | | $ | 147,976 | |
| Nutrient & Industrial | | — | | — | | — | | — | | | 6.5 | % | 8.7 | % | 14.0 | % | 7.7 | % | | 14,500 | | 29,000 | | 50,000 | | 25,735 | |
(1) Formerly Grain
(2) Free cash flowFCF is primarilya non-GAAP measure derived from the statementConsolidated Statements of cash flowsCash Flows and is calculated as Cash provided by (used in) operating activities before changes in operating assets & liabilities, plus proceeds of asset sales,asset/facility sales; less the following items: purchases of assets/property, plant, equipment and investments, less dividends. For incentive compensation purposes FCF is adjusted to exclude Trade Group’s working capital changes due to commodity price volatilitycash dividends, and reflects only the cash flowsany impacts from amounts attributable to the Company.noncontrolling interest. See reconciliation tables to the nearest GAAP measure in Appendix A for further information.(3) Total(2)ROIC is calculated as adjusted earningspretax income before interest expense and charges for factoring receivables, assuming a statutory blended tax rate of 25%, divided by total average adjustednet invested capitalcapital. Adjusted pretax income and ROIC are non-GAAP measures. See reconciliation tables to the nearest GAAP measure in Appendix A for Company ROIC calculation. Total adjusted earnings divided by average assets less non-interest bearing liabilities for the business ROIC calculations. Total adjusted earnings is derived from pre-tax income(as reported in the consolidated statement of income) before interest, may adjust for certain items not representative of ongoing operations and applies as standard 25% tax rate. Current year adjustments include exclusion of stock compensation expense incurred as part of a prior year acquisition, gains on sales of facilities, interest rate swaps termination impacts, deferred financing fee write-offs and severance expenses.further information. Total adjusted invested capital includes total equity and total debt, less cashCash and cash equivalents (as reported on the balance sheet)Consolidated Balance Sheets) and uses a five-quarter rolling average.(4) For incentive compensation purposes, pretax(3)Reflects "Income (loss) before income may adjust for certain items not representative of ongoing operations and reflects only incometaxes attributable to the Company. Current year adjustments include exclusionCompany from continuing operations" from the Company's Consolidated Statements of stock compensation expense incurred as part of a prior year acquisition, gains on sales of facilities, interest rate swaps termination impacts, deferred financing fee write-offs and severanceOperations filed in Form 10-K, adjusted for certain expenses. See reconciliation tables in Appendix A for further information.
For any individual eligible for AIP incentive awards, including the NEO,NEOs, the AIP award is broken updivided into components: three non-discretionary components based upon Company or business unit pretax income, financial performance,Company or business unit ROIC performance and FCF performance;Company FCF; and a discretionary component based upon the CEO’s assessment of individual performance (in the case of the CEO, the Compensation Committee’s assessment of individualCEO's performance). If the Company, as a whole, or an individual business unit, as applicable, exceeds Threshold, the amount available for Company or business unit incentives will be increased proportionately. If Thresholds are not met, no Company or business unit incentives are earned for the non-discretionary portions of AIP which are based on Company or business unit performance.performance, as applicable. While our expectation is that each business unit will achieve at least Threshold performance resulting in at least a minimum Company or business unit incentive, this is not always possible due to the volatility of the Company's industries.
The criteria by which each NEO is measured is shown below:
| | | | | | | | | | | | | | | | | | | | | | | |
| Formula | | Discretionary | | Total |
| Group Pretax Income | Group ROIC | Company FCF | | Individual Performance | |
| William E. Krueger | 64% | 12% | 12% | | 12% | | 100% |
| Joseph E. McNeely | 25% | 25% | 25% | | 25% | | 100% |
| Jeffrey C. Blair | 25% | 25% | 25% | | 25% | | 100% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Formula | | Discretionary | | Total |
| Company Pretax Income | | Company ROIC | | Company FCF | | Individual Performance | |
| Patrick E. Bowe | 25% | | 25% | | 25% | | 25% | | 100% |
| Brian A. Valentine | 25% | | 25% | | 25% | | 25% | | 100% |
| William E. Krueger | 25% | | 25% | | 25% | | 25% | | 100% |
| Christine M. Castellano | 25% | | 25% | | 25% | | 25% | | 100% |
| | | | | | | | | | | | | | | | | | | | | | | |
| Formula | | Discretionary | | Total |
| Company Pretax Income | Company ROIC | Company FCF | | Individual Performance | |
| Patrick E. Bowe | 25% | 25% | 25% | | 25% | | 100% |
| Brian A. Valentine | 25% | 25% | 25% | | 25% | | 100% |
| Christine M. Castellano | 25% | 25% | 25% | | 25% | | 100% |
| Valerie M. Blanchett | 25% | 25% | 25% | | 25% | | 100% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Formula | | Discretionary | | Total |
| Business Unit Pretax Income | | Business Unit ROIC | | Company FCF | | Individual Performance | |
| Joseph E. McNeely | 25% | | 25% | | 25% | | 25% | | 100% |
The Compensation Committee considers and approves all NEO AIP incentives, including the discretionary portion attributed to individual performance. For 2020,2023, the pool of dollars available to the CEO for this discretionary portion iswas based on a combination of business unit and Company pretax income performance, business unit and Company ROIC performance and the Company's FCF performance. The Compensation Committee may elect to fund a minimum amount for the discretionary performance portion of AIP even when the Company or business unit has not achieved Threshold performance. While no amount of funding is assured in this circumstance, if the Compensation Committee determines that some level of award for individual performance is appropriate, it may elect to authorize discretionary funding. In 2020, given COVID-19 impacts, the Committee exercised this discretion and elected to provide an additional 25% funding into the AIP discretionary pool.
The Andersons, Inc. | 2024 Proxy Statement | 34
As Groupbusiness unit and Company financial metric Thresholds are exceeded, the funding of the discretionary pool increases proportionately. At Target performance, the aggregate pool for discretionary awards is 25% of the total AIP cash bonus pool. The CEO bases his determination for discretionary awards on his assessment of the NEO's business unit and individual performance, unique challenges faced by such NEO's industry, as well as the size of the NEO's Company and business unit-based AIP incentive in light of the challenges and opportunities which may have impacted their ability to achieve Target income levels. The CEO has latitude in awarding discretionary awards to the executive team based on each executive's individual performance and contributions, but each discretionary award recommended by the CEO must be approved by the Compensation Committee. For 2020,2023, the CEO recommended and the Compensation Committee approved discretionary awards for the employed NEO group, excluding the CEO, thatwhich averaged 131%155% of the targetTarget value for the individual performance component of AIP incentives. In addition to the individual performance efforts of the NEOs, discretionary factors also included safety performance, successful integrationtalent management and succession efforts, managing through the COVID-19 crisis, safetystrategic leadership, strong operational and financial management, execution of merger & acquisition and growth strategy, and employee engagement efforts.
The Compensation Committee makes the determination of the individual performance award for the CEO. For 2020,2023, the Compensation Committee considered safety performance, progress and challenges in several areas: successful navigation through the COVID-19 global pandemic,paying down significant amounts of long-term debt, completionfinancial performance of the consolidationbusiness, strategic planning efforts, execution of executivestrategic components through mergers & acquisitions, leadership for its four business units to two business groups,development and succession planning, proper control and risk management, employee engagement efforts, and other performance items as determined by the board,Board, in awarding 123%172% of the discretionary targetTarget value to the CEO.
The following table includes 2020 and 2019 AIP payouts (including both formula and discretionary components) and the percentage of the total targetTarget incentive for each of the NEOs.NEOs:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2020 | | 2019 | | Target as a % of Base Salary (1) |
| Payout | | Target | | % of Target | | Payout | | Target | | % of Target | |
| Patrick E. Bowe | $ | 400,000 | | | $ | 960,000 | | | 42% | | $ | 492,000 | | | $ | 960,000 | | | 51% | | 100% |
| Brian A. Valentine | 190,000 | | | 395,250 | | | 48% | | 225,000 | | | 395,250 | | | 57% | | 85% |
| William E. Krueger | 875,393 | | | 948,000 | | | 92% | | 930,387 | | | 950,000 | | | 98% | | 158% |
Christine M. Castellano (2) | 100,000 | | | 273,770 | | | 37% | | N/A | | N/A | | —% | | 75% |
Joseph E. McNeely (3) | 150,000 | | | 282,541 | | | 53% | | 120,000 | | | 270,000 | | | 44% | | 75% |
Valerie M. Blanchett (4) | 7,537 | | | 162,454 | | | 5% | | 122,000 | | | 217,000 | | | 56% | | 70% |
Jeffrey C. Blair (5) | 80,440 | | | 130,943 | | | 61% | | 75,000 | | | 225,000 | | | 33% | | 75% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | Target as a % of Base Salary (1) |
| Payout | | Target | | % of Target | | Payout | | Target | | % of Target | |
| Patrick E. Bowe | $ | 1,720,000 | | | $ | 1,000,000 | | | 172% | | $ | 1,993,000 | | | $ | 1,000,000 | | | 199% | | 100% |
| Brian A. Valentine | 855,000 | | | 497,250 | | | 172% | | 990,000 | | | 497,250 | | | 199% | | 85% |
William E. Krueger (2) | 1,634,000 | | | 950,000 | | | 172% | | 2,379,110 | | | 562,500 | | | 423% | | 100% |
| Christine M. Castellano | 580,500 | | | 337,500 | | | 172% | | 672,000 | | | 337,500 | | | 199% | | 75% |
| Joseph E. McNeely | 354,000 | | | 337,500 | | | 105% | | 593,000 | | | 337,500 | | | 176% | | 75% |
(1) The committee feels these amountsAmounts are reflective of competitive practices based on peer group benchmarking provided by the committee'sCompensation Committee's independent compensation advisor.
(2) Ms. Castellano's 2020 target and award are proratedMr. Krueger's 2022 Target represents 75% of his original 2022 base salary of $750,000. His base salary was increased in December of 2022 upon his appointment to Chief Operating Officer. Amounts for her mid-year hire. She was not employed by the Company during 2019.
(3) Represents Mr. McNeely's prorated award for seven monthsKrueger in his former role of President, Rail Group and five months in his new role of President, Nutrient & Industrial Group.
(4) Ms. Blanchett's 2020 target represents a proration for her length of employment during the year. Her 2020 payout was reduced by $10,333, as she elected to reduce her payout by2022 also include an amount equal to 10% of her salary for four months, in responseadditional incentive payment tied to the COVID-19 pandemic.trading performance of the Trade & Processing business unit.
(5) Mr. Blair's 2020 target represents a proration for his length of employment during the year. His 2020 payout was reduced by $5,000, as he elected to reduce his payout by an amount equal to 10% of his salary for two months, in response to the COVID-19 pandemic.
2020
2023 Equity Grants
Equity was issued to our executives in 20202023 under the Company’s 2019 Long-Term Incentive Compensation Plan in the form of 50% RSAsRSUs and 50% PSUs, except for Mr. Bowe and Mr. Krueger who received an LTI grant comprisingcomprised of 40% RSAsRSUs and 60% PSUs. For all executives we target long-term compensation to be an amount on the date of grant which, when combined with base salary and targetTarget bonus, aligns the aggregate Total Direct Compensation to a level that we believe is within a competitive range (+/- 15%)and reflects each executive's level of the median Total Direct Compensation reflected in our competitive benchmark information.experience, skills, and contributions. For the 20202023 grants, the NEOs targetedTarget LTI value on the date of grant equaled 271%270% of salary for Patrick E.Mr. Bowe, 200% for Mr. Krueger, 120% of salary for Mr. Valentine and averaged 65%75% of salary for the remaining NEOs.
The methodology for determining the number of shares/units to be granted uses the Committee approved LTI dollar value for each executive officer approved by the Compensation Committee as of March 1, 2020.February 16, 2023. The actual number of shares/units granted is based on the average closing price for the month of February with a grant effective date of March 1. The Committee believes thisThis methodology is objective and avoids any recalculation of granted shares due to price volatility between an estimated price and the actual grant date price.
We generally grantapprove annual equity awards with consistent timing aligned with the Compensation Committee's first regular meeting each year. We may also issue grants of equity-based compensation to executives who join the Company during the year, but do not generally issue equity compensation to non-executive employees outside of the annual grant.
Following
The Andersons, Inc. | 2024 Proxy Statement | 35
The following are the targetTarget compensation values for the equity grants made to NEOsNEOs:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | 2022 |
| | Target | | | % of Base Salary | | Target | | | % of Base Salary |
| Patrick E. Bowe | $ | 2,700,000 | | | | 270 | % | | $ | 2,700,000 | | | | 270 | % |
| Brian A. Valentine | 702,000 | | | | 120 | % | | 702,000 | | | | 120 | % |
William E. Krueger (1) | 1,900,000 | | | | 200 | % | | 562,500 | | | | 75 | % |
| Christine M. Castellano | 337,500 | | | | 75 | % | | 337,500 | | | | 75 | % |
| Joseph E. McNeely | 337,500 | | | | 75 | % | | 337,500 | | | | 75 | % |
(1)Mr. Krueger's 2022 Target compensation value for both 2020 and 2019.
| | | | | | | | | | | | | | | | | | | |
| 2020 | | 2019 |
| | Target | | % of Base Salary | | Target | | % of Base Salary |
| Patrick E. Bowe | $ | 2,600,000 | | | 271 | % | | $ | 2,600,000 | | | 271 | % |
| Brian A. Valentine | 558,000 | | | 120 | % | | 558,000 | | | 120 | % |
| William E. Krueger | 450,000 | | | 75 | % | | 450,000 | | | 75 | % |
| Christine M. Castellano | 300,000 | | | 75 | % | | — | | | N/A |
| Joseph E. McNeely | 216,000 | | | 54 | % | | 216,000 | | | 60 | % |
| Valerie M. Blanchett | 155,000 | | | 50 | % | | 155,000 | | | 50 | % |
| Jeffrey C. Blair | 180,000 | | | 60 | % | | 180,000 | | | 60 | % |
In 2020, the LTI equity grants represents 75% of his original 2022 base salary of $750,000. His base salary was increased in December of 2022 upon his appointment to Chief Operating Officer, and his 2023 Target compensation for all NEO's approximated 100%equity grants was increased to 200% of the LTI equity targets. The Committee approves all final equity grants.his base salary for 2023.
Restricted Share AwardsUnits
RSAsRSUs promote retention and alignment with shareholder interests by tying executives'executive compensation to Company share price.the price of the Company's Common Shares. The 2020 RSAs2023 RSUs vest in three installments, - 33.3%in the amount of one-third per year starting on January 2ndMarch 1 following the year of grant and annually thereafter until 100%fully vested. Dividends on awarded RSAsRSUs are delivered in the form of additional shares as restrictions lapse equivalent to the dollar value of dividends attributable to the number of shares vesting.vested.
The CEO is granted the discretion to increase or reduce equity grants of RSAs, subject to the approval of the Committee, based on his evaluation of an individual’s performance, business unit performance and other extenuating factors he deems appropriate.
Performance Share Units
PSUs deliver Company stock based on the achievement of specific financialearnings-based goals and stock price appreciation goals. PSUs granted in 20202023 have a three-year performance period and are earned based on: 1) cumulative diluted Earnings Per Share (or "cumulative EPS")EPS and 2) relative Total Shareholder Return (or "rTSR").TSR. The number of PSUs available for issuance at targetTarget performance is based on 50% of the NEO's targetedTargeted LTI value, except for Mr. Bowe and Mr. Krueger whose PSUs available for issuance at targetTarget performance is 60%. of the Targeted LTI value. The cumulative EPS and rTSRTSR results for the performance period determine how many underlying shares are actually issued.
The PSUs granted are based 50% on cumulative EPS and 50% on rTSR.TSR. Unlike restricted stock, which requires only continued service to be earned by the executive, the PSUs are only earned when the Company achieves targets that emphasize the Company’s pay-for-performance philosophy. Dividends on awarded PSUs are delivered in the form of additional shares at the end of the performance period but only equivalent to the value of dividends on the number of shares ultimately awarded.earned and delivered.
ForIn determining cumulative EPS based PSUs, performance is measured against pre-established 3-year Threshold, Target, and Maximum performance levels, the Compensation Committee considers short and long-term business goals at the time of achievement for 3-yeargrant. The Compensation Committee also considers related factors, including recent EPS performance, and economic and industry conditions that may impact cumulative EPS.EPS performance. These levels of achievement are established based on the cumulative EPS plan in effect infor the year the grant is made plus a target growth component for the 2020next two years. For the 2023 grant, ofwe based year two performance on a 34% growth in EPS and a 7% annually for the second and third years of the performance period. We consider both the industry trends and market expectations when setting cumulativegrowth was applied to year two EPS objectives for vesting PSUs.to set year three’s Target. The Compensation Committee reviews and approves these criteria in advance of the grant.Threshold goals are a floor, so that performance below “threshold”“Threshold” results in no cumulative EPS-based PSU award delivery. Threshold goals are set at a level equal to minimally acceptable performance. Under normal market conditions, there is an expectation that Threshold goals will be met more often than not. Target goals are then set at a level which would be challenging but reasonably achievable under normal market conditions. In order to achieve the maximumMaximum PSU award, exceptional cumulative EPS growth performanceresults must be achieved over the performance period. As noted previously, however, the volatilitya downturn in our core agricultural businesses over the past several years hasagriculture significantly impacted our ability to achieve short-termshort and long-term objectives used to deliver incentive compensation.compensation from 2016-2020; this began to change in 2021 with higher product demand and global supply constraints. Cumulative EPS for LTI grants may be adjusted for unusual or non-recurring items.
In determining The cumulative EPS
threshold, target, and maximum performance levels,used for executive compensation is a non-GAAP measure, see Appendix A for a reconciliation to Diluted earnings per share from continuing operations attributable to The Andersons, Inc. shareholders within the Committee considers short and long-term business goals at the timeStatement of grant. Operations on form 10-K.The Committee also considers related factors, including recent EPS performance, and economic and industry conditions that may impact cumulative EPS performance.Andersons, Inc. | 2024 Proxy Statement | 36
The following table displays Threshold, Target and Maximum achievement levels for the EPS-based PSUs with performance periods ending over the most recent three years.years:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cumulative Diluted Earnings Per Share | | Threshold | | Target (1) | | Maximum (2) | | Actual | | Percent of Target PSU Value Earned |
| 3 years ended 2020 | | $ | 4.55 | | | $ | 6.89 | | | $ | 9.73 | | | $ | 3.34 | | | 0% |
| 3 years ended 2019 | | 4.30 | | | 6.45 | | | 7.75 | | | 4.01 | | | 0% |
| 3 years ended 2018 | | 6.74 | | | 8.77 | | | 9.64 | | | 3.13 | | | 0% |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cumulative Diluted Earnings Per Share | | Threshold | | Target (1) | | Maximum (2) | | Actual (3) | | Percent of Target PSU Value Earned |
| 3 years ended 2023 | | $ | 2.87 | | | $ | 4.02 | | | $ | 4.92 | | | $ | 10.37 | | | 200% |
| 3 years ended 2022 | | 2.99 | | | 4.66 | | | 6.78 | | | 7.46 | | | 200% |
| 3 years ended 2021 | | 4.47 | | | 6.97 | | | 10.14 | | | 5.55 | | | 56% |
| | | | | | | | | | |
(1)Level at which 100% of Target LTI based on cumulative EPS is achieved.
(2)Level at which 200% of Target LTI based on cumulative EPS is achieved.
(3)Non-GAAP measure. Using an adjustment framework approved by the Compensation Committee, the EPS number used to determine compensation amounts was adjusted to remove certain items that were not representative of ongoing operations. See reconciliation tables in Appendix A for a reconciliation to the nearest GAAP measure. The following table displays Threshold, Target and Maximum achievement levels for the EPS-based PSUs outstanding at December 31, 2020.2023:
| | | | | | | | | | | | | | | | | | | | |
| Cumulative Diluted Earnings Per Share | | Threshold | | Target (1) | | Maximum (2) |
| 3 years ended 2022 | | $ | 2.99 | | | $ | 4.66 | | | $ | 6.78 | |
| 3 years ended 2021 | | $ | 4.47 | | | $ | 6.97 | | | $ | 10.14 | |
| | | | | | | | | | | | | | | | | | | | |
| Cumulative Diluted Earnings Per Share | | Threshold | | Target (1) | | Maximum(2) |
| 3 years ended 2025 | | $ | 6.26 | | | $ | 8.76 | | | $ | 10.17 | |
| 3 years ended 2024 | | 4.64 | | | 6.49 | | | 7.67 | |
(1)Level at which 100% of targetTarget LTI based on cumulative EPS is achieved.
(2)Level at which 200% of targetTarget LTI based on cumulative EPS is achieved.
The Company also utilizes an rTSRa TSR measure in addition to cumulative EPS to achieve the following objectives:
•Create direct alignment between equity-based awards and shareholder return performance relative to the market
•Strengthen the link between share price growth and long-term compensation
•Create an effective combination of performance measures that taken together provide an effective balance between earnings and shareholder return expectation
The comparator group selected for the rTSRTSR metric is the Russell 3000® index. Index. Key selection considerations included industry, revenue, median market capitalization, business model, price volatility, future growth considerations and stock price correlation. After extensive study of alternativeconsidering alternate broad-based indexes and custom peer groups, the Company believesdetermined that a broad-based index such as the Russell 3000® index is Index was the most appropriate and objective approach. Difficulties selecting and maintaining a custom performance peer group based on key selection considerations would overly complicate the use of rTSR without improving the effectiveness of linking pay to performance.approach given our historical business model.
Our relative rTSRTSR metric uses a composite out-performance design to capture the magnitude of performance relative to the indexRussell 3000 Index and for efficient administration and communication. This design was chosen over percentile rank designs which can over or understate relative performance. The metric also includes a negative rTSR threshold which limits the vesting of units to shares when rTSRTSR is negative regardless of results relative to the index.Russell 3000 Index. The following table summarizes our rTSRTSR plan design.design:
| | Vested PSU Payout Percent |
| | | | Vested PSU Payout Percent | | | | | | Vested PSU Payout Percent |
| Goal Achievement | Goal Achievement | | Company's 3-Year Annualized rTSR Relative to Comparator Group | | % of Target PSUs if Company TSR is Positive | | % of Target PSUs if Company TSR is Negative | Goal Achievement | | Company's 3-Year Annualized TSR Relative to Comparator Group | | % of Target PSUs if Company TSR is Positive | | % of Target PSUs if Company TSR is Negative |
| Maximum | Maximum | | +18 percentage points or more above Target | | 200% | | 100% | Maximum | | +18 percentage points or more above Target | | 200% | | 100% |
| Above Target | Above Target | | For every +1 percentage points Company TSR is above Target | | 100% plus 5.56% of target | | 100% | Above Target | | For every +1 percentage points Company TSR is above Target | | 100% plus 5.56% of Target | | 100% |
| Target | Target | | Comparator Group's Annualized TSR | | 100% | | 100% | Target | | Comparator Group's Annualized TSR | | 100% |
| Below Target | Below Target | | For every -1 percentage points Company TSR is below Comparator Group | | 100% less 5% of target | | 100% less 5% of target | Below Target | | For every -1 percentage points Company TSR is below Comparator Group | | 100% less 5% of Target |
| Threshold | Threshold | | -12 percentage points below Comparator Group | | 40% | | 40% | Threshold | | -12 percentage points below Comparator Group | | 40% |
| Below Threshold | Below Threshold | | More than -12 percentage points below Comparator Group | | 0% | | 0% | Below Threshold | | More than -12 percentage points below Comparator Group | | 0% |
An averagingaverage of December closing prices preceding the performance period is used to establish the starting price of the Company's Common Shares and ending stock price andthe Russell 3000 indexIndex price for the 3-year performance period. The average of closing prices on trading days duringin the month of December immediately preceding the first January of the performance period establishes the starting point. The ending averaging period used for determining performance and the corresponding payout percentage is the average of closing prices during the lastfinal December of the 3-yearthree year performance period.period is used to determine actual performance. Pre-established averaging periods are used to alleviate market timing and volatility concerns.
The Andersons, Inc. | 2024 Proxy Statement | 37
We believe the use of the equity awards described above creates long-term incentives that balance the goals of growing stock price and strong Company earnings.
The TSR award for the 2021-2023 performance period used the same performance targets as outlined above for the awards made in 2023. Below are rTSR-basedTSR-based PSU performance results for the three-year period ending in 2020.2023:
| | Relative TSR | Relative TSR | Company Actual TSR 2018 - 2020 | | Russell 3000 Index | | Difference | | Percent of Target PSU Value Earned | Relative TSR | Company Actual TSR 2021 - 2023 | | Russell 3000 Index | | Difference | | Percent of Target PSU Value Earned |
| 3 years ended 2020 | (7.00)% | | 14.01% | | (21.01)% | | —% |
| 3 years ended 2023 | | 3 years ended 2023 | 35.06% | | 8.44% | | 26.62% | | 200.00% |
Beginning in 2024, we will change our PSU structure to a single EPS metric with TSR as a modifier to the overall PSU award. Similar to the current EPS design, the PSUs will be based on cumulative EPS, performance is measured against pre-established 3-year Threshold, Target, and Maximum levels of achievement for 3-year cumulative EPS. These levels of achievement are based on the cumulative EPS plan for the year the grant is made plus a target growth component for the next two years. The TSR modifier will use a percentile-rank design and a custom agribusiness peer group that will be approved annually by the Compensation Committee. The agribusiness peer group will ensure we are measured against the performance of others directly within our primary industry.
Other Considerations
As a publicly-tradedpublicly traded company, we are subject to Section 162(m) which limits our ability to deduct for U.S.. Section 162(m) of the Internal Revenue Code precludes the Company from taking a federal income tax purposesdeduction for compensation paid in excess of $1 million paid to our named executive officers. The Tax Cuts and Jobs Act of 2017 made significant changes to “covered employees”, including our NEOs, as defined under Section 162(m). Beginning in 2018 the exception to the $1 million deduction limitation for commission and performance-based compensation has been eliminated. However, compensation paid pursuant to a written binding agreement in effect on November 2, 2017 that has not been materially modified thereafter is grandfathered and can continue to qualify for the performance-based compensation exemption, assuming all other Section 162(m) requirements are met. Because of the ambiguities and uncertainties as to the scope of this grandfather provision, no assurance can be given that compensation originally intended to qualify for the exemption will, in fact, be fully deductible.
The Compensation Committee considers tax deductibility to be an important, but not the sole, or primary, consideration in setting executive compensation. Because the Compensation Committee also recognizes the need to maintain flexibility to make compensation decisions when necessary to enable usthe Company to continue to attract, retain, and motivate talented executive officers, it reserves the authority to approve potentially non-deductible compensation.
Stock Ownership and Retention Policy
Our Board has adopted a stock ownershipStock Ownership and retention policyRetention Policy ("Ownership Policy") that applies to NEOs, other officers and directors who receive equity compensation. The policyOwnership Policy is intended to align the interests of directors and executivesofficers with the interests of the Company’s shareholders by ensuring that executives maintain significant levels of stock in the CompanyCompany's Common Shares are maintained throughout their careers. Our policyOwnership Policy specifies both a target ownership level expressed as a multiple of base salary (thesalary. The salary multiple varies by position), as well as a percentage of additional shares which must be retained as further shares are acquired underposition for the long-term compensation plans.Company's officers. Company officers and directors are required to retain at least 75% of the net shares acquired through the planequity awards until their guideline ownership level is achieved; thereafter, they are required to retain 25% of the future net shares which they acquire, until two times their established target ownership level is achieved.
The target ownership levels for the NEOs are as follows:
| | | | | | | | |
| Position | | Multiple of Pay |
| CEO | | 6 x Salary |
| CFO and COO | | 3 x Salary |
GroupBusiness Unit Presidents | | 2 x Salary |
| Other Corporate Officers | | 1 x Salary |
| Directors | | 5 x Retainer |
The Stock OwnershipCompany prohibits hedging activities on Company stock by its officers and Retention Policy provides for a reductiondirectors, as well as the pledging of shares as described in Compensation Governance Framework. In 2022, the Compensation Committee eliminated the ability of participants to reduce their ownership requirements for participantswhen approaching retirement. This reduction beginsbegan at two years from retirement and dropsdropped the target ownership level by 1/3one-third and by another 1/3one-third at one year from normal retirement age. “Retirement” means, with respect to an employee participant,is defined as a termination of employment on or after the date that the participant has attained the age of sixty (60) and has had at least five (5) years of continuous employment with The Andersons,the Company, or any subsidiary.
The Company prohibits hedging activities on Company stock by its officers and directors, as well as the pledging of shares. For purposes of the Company’s anti-hedging policy “hedging” of an interest Beginning in stock means the buying or selling of derivatives or other financial instruments, most commonly (but not exclusively) futures, put options and call options on ANDE stock, in order to monetize the stock, or mitigate the risk of stock ownership, and “pledging” of an interest in stock means granting the stock as collateral to a creditor as security for a loan or other obligation. The policy2022, this reduction no longer applies to participants with the Company’s officers and directors, and does not applyexception of Mr. Bowe who was the only participant to employees who are not otherwise officers. have reached the definition of "retirement" at the time this policy revision was approved.
The policy applies only to ANDE stock, and not to other equity securities or equity securitiesAndersons, Inc. | 2024 Proxy Statement | 38
Compensation Recoupment Policy
In accordance2023, we adopted a compensation recoupment policy consistent with the provisionsfinal rules adopted by the SEC and Nasdaq implementing the requirement of Section 304954 of the Sarbanes-Oxley ActDodd-Frank Wall Street Reform and Consumer Protection Act. Under the policy, our executive officers are subject to recoupment of 2002, the CEO and CFO areamount of erroneously awarded incentive-based compensation in the event that the Company is required to reimburseprepare an accounting restatement due to the Company for bonuses, or other incentive-based or equity-based compensation, and profits from securities sales following certain financial restatements resulting from misconduct. We have also adopted a policy requiring the repayment or “clawback” of excess cash or equity-based compensation from each executive officermaterial noncompliance of the Company (and alsowith any financial reporting requirement under the group controller ofsecurities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the relevant business unit) wherepreviously issued financial statements, or that would result in a material misstatement if the paymentserror were based on the achievement of financial results that were subsequently the subject of a financial restatement (regardless of involvementcorrected in the cause ofcurrent period or left uncorrected in the restatement).current period.
Post-Termination Compensation/Retirement Programs
Our overall retirement philosophy is to provide plans that are competitive, cost effective and work together with Social Security and employee savings to provide meaningful retirement benefits.
We offer two separate retirement programs:
•Retirement Savings Investment Plan (401(k)("401(k) Plan")—promotes employee savings for retirement, with the Company matching a portion of the savings and non-elective contributions for participants. For 2020,2023, all NEOs are eligible for a performance-based contribution of up to 5%. The actual performance-based contribution for 20202023 was 1.0%5%.
•Deferred Compensation Plan (DCP)("DCP")—works in conjunction with the 401(k) Plan to provide additional elective deferral opportunities to key employees that would otherwise be limited due to statutory rules.
The company also previously offered a Supplemental Retirement Plan (SRP), but benefits under that plan were frozen effective July 1, 2010. None of the 2020 NEOs are eligible for this plan.
Post-Retirement Medical Benefits
We have a Retiree Health Care Plan that provides post-retirement medical benefits to all eligible full-time employees as of December 31, 2002. The Retiree Health Care Plan is not available to those individuals hired after December 31, 2002. There are no benefit differences between executives and non-executives under this plan. There are no NEO participants in this plan.
During 2017, retirees age 65 or more were transitioned from our self-insured medical plan to a private exchange with a health care reimbursement account funded by the Company. The change provides retiree flexibility and improves the economics of the plan.
Employment Agreements and Severance
Patrick E. Bowe
In connection with position as CEO, Mr. Bowe's executive employment agreement is for an indefinite term, subject to termination at any time by the Company or Mr. Bowe.
For a period of twenty-four months (thirty-six months in the event of a change-in-control) following his termination of employment, Mr. Bowe is prohibited from competing against the Company, soliciting its customers or employees, and working for a competitor. Mr. Bowe has also agreed that he will not disclose the Company’s confidential information.
William E. Krueger
The Company entered into an executive employment agreement with William E. Krueger for three years effective January 1, 2019, effective with the acquisition by the Company of Lansing Trade Group, LLC. The agreement renews automatically on a year-to-year basis unless either party gives not less than 6-month prior notice of their intent not to continue.
For a period of twenty-four months beyond the remaining term of employment agreement, Krueger is prohibited from competing against the Company, soliciting its customers or employees, and working for a competitor. Mr. Krueger has also agreed that he will not disclose the Company’s confidential information.
Valerie M. Blanchett
Effective September 30, 2020, Ms. Blanchett left employment with the Company. Terms of her Change in Control and Severance Policy Participation Agreement provided for cash severance benefits in the amount of $538,435. In addition, the Committee accelerated the vesting on 5,757 RSAs to her termination date.
Jeffrey C. Blair
Effective July 31, 2020, Mr. Blair left employment with the Company. Terms of his Change in Control and Severance Policy Participation Agreement provided for cash severance benefits in the amount of $547,026. In addition, the Committee accelerated the vesting on 12,994 RSAs to his termination date.
Other Executives
We have entered into agreements with our NEOs and certain other key employees that require us to provide compensation to them in the event of certain qualifying non-elective terminations of employment. For qualifying terminations, other than in connection with a change in control of the Company, the agreements provide that the NEOs and other key employees will receive cash severance equal to their annual base salary plus targetand their annual cash bonus.bonus at Target. For qualifying terminations in connection with a change in control of the Company, the agreements provide that the NEOs and other key employees will receive cash severance equal to two times their annual base salary plus targetand their annual cash bonus.bonus at Target. Certain vesting periods under our long-term incentive (equity) plansthe 2019 Plan may accelerate under certain termination and change in control situations, as more fully described below in “TerminationTermination / Change in Control Payments”Payments. The agreements also provide for a lump sum premium subsidy for the continuation of health care benefits for the duration of the severance period. The agreements are intended to help assure continuation of management during potential change of control situations, and to assist in recruiting and retention of key executives. In addition, the 2014 Long-term Incentive Compensation2019 Plan does not provide for the automatic acceleration of equity awardssingle-trigger vesting upon a Change in Control without a qualifying termination of employment. The 2019 Long-term Incentive Plan requires double-trigger vesting (i.e. a change-in-control plus a qualifying termination) on future equity awards. The 2019 Plan was first used for NEO LTI grants effective July, 2019.
Perquisites
Other than required executive officer physicals, there are no other significant perquisites, unusual reimbursements or non-cash rewards (other than equity).
The Andersons, Inc. | 2024 Proxy Statement | 39
Summary Compensation Table
The table below summarizes the total compensation paid or earned by each of the NEOs for the fiscal years ended December 31, 2020, 20192023, 2022 and 2018. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Position (1) | | Year | | Salary (2) | | Bonus (3)(9) | | Stock Awards (4)(9)(10) | | Option Awards (5) | | Non-Equity Incentive Plan Compensation (6)(9)(11) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings (7) | | All Other Compensation (8) | | Total |
| (a) | | (b) | | (c)($) | | (d)($) | | (e)($) | | (f)($) | | (g)($) | | (h)($) | | (i)($) | | (j)($) |
| Patrick E. Bowe | | 2020 | | 996,923 | | | — | | | 2,214,057 | | | 3,359 | | | 400,000 | | | — | | | 138,396 | | | 3,752,735 | |
| President and Chief Executive Officer | | 2019 | | 953,007 | | | — | | | 2,733,531 | | | 2,919 | | | 492,000 | | | — | | | 123,296 | | | 4,304,753 | |
| 2018 | | 923,077 | | | — | | | 2,276,267 | | | 3,100 | | | 605,000 | | | — | | | 78,156 | | | 3,885,600 | |
| Brian A. Valentine | | 2020 | | 482,885 | | | — | | | 479,593 | | | — | | | 190,000 | | | — | | | 48,783 | | | 1,201,261 | |
| Executive Vice President, Chief Financial Officer | | 2019 | | 465,000 | | | — | | | 585,080 | | | — | | | 225,000 | | | — | | | 80,904 | | | 1,355,984 | |
| 2018 | | 157,385 | | | — | | | 588,542 | | | — | | | 110,000 | | | — | | | 203,793 | | | 1,059,720 | |
| William E. Krueger | | 2020 | | 623,077 | | | — | | | 386,767 | | | — | | | 875,393 | | | — | | | 66,281 | | | 1,951,518 | |
| President, The Andersons Trade and Processing | | 2019 | | 590,193 | | | — | | | 4,822,989 | | | — | | | 930,387 | | | — | | | 19,268 | | | 6,362,837 | |
| Christine M. Castellano | | 2020 | | 361,539 | | | — | | | 436,378 | | | — | | | 100,000 | | | — | | | 172,755 | | | 1,070,672 | |
| Executive Vice President, General Counsel & Corporate Secretary | | | | | | | | | | | | | | | | | | |
| Joseph E. McNeely | | 2020 | | 390,000 | | | — | | | 335,678 | | | 3,359 | | | 150,000 | | | — | | | 40,309 | | | 919,346 | |
| President, The Andersons Nutrient and Industrial | | 2019 | | 357,692 | | | — | | | 226,494 | | | 2,919 | | | 120,000 | | | — | | | 27,642 | | | 734,747 | |
| 2018 | | 337,885 | | | — | | | 239,077 | | | 3,100 | | | 210,000 | | | — | | | 153,155 | | | 943,217 | |
| Valerie M. Blanchett | | 2020 | | 248,000 | | | — | | | 133,238 | | | — | | | 7,537 | | | — | | | 597,986 | | | 986,761 | |
| Former Chief Human Resources Officer | | | | | | | | | | | | | | | | | | |
| Jeffrey C. Blair | | 2020 | | 190,385 | | | — | | | 154,747 | | | — | | | 80,440 | | | — | | | 585,712 | | | 1,011,284 | |
| Former President, Plant Nutrient Group | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Position (1) | | Year | | Salary (2) | | Bonus (3) | | Stock Awards (4) | | Option Awards (5) | | Non-Equity Incentive Plan Compensation (6) | | Change in Pension Value & Nonqualified Deferred Compensation Earnings | | All Other Compensation (7) | | Total |
| (a) | | (b) | | (c)($) | | (d)($) | | (e)($) | | (f)($) | | (g)($) | | (h)($) | | (i)($) | | (j)($) |
Patrick E. Bowe
President and Chief Executive Officer | | 2023 | | 1,000,000 | | | — | | | 3,468,141 | | | 5,151 | | | 1,720,000 | | | — | | | 633,200 | | | 6,826,492 | |
| 2022 | | 992,308 | | | — | | | 3,512,116 | | | 3,528 | | | 1,993,000 | | | — | | | 208,541 | | | 6,709,493 | |
| 2021 | | 960,000 | | | — | | | 2,849,435 | | | 6,338 | | | 1,846,000 | | | — | | | 105,126 | | | 5,766,899 | |
Brian A. Valentine
Executive Vice President, Chief Financial Officer | | 2023 | | 585,000 | | | — | | | 882,307 | | | — | | | 855,000 | | | — | | | 230,236 | | | 2,552,543 | |
| 2022 | | 583,077 | | | — | | | 893,339 | | | — | | | 990,000 | | | — | | | 96,941 | | | 2,563,357 | |
| 2021 | | 481,154 | | | — | | | 622,691 | | | — | | | 825,000 | | | — | | | 52,091 | | | 1,980,936 | |
William E. Krueger
Chief Operating Officer | | 2023 | | 950,000 | | | — | | | 2,440,548 | | | — | | | 1,634,000 | | | — | | | 322,040 | | | 5,346,588 | |
| 2022 | | 760,192 | | | — | | | 715,825 | | | — | | | 2,379,110 | | | — | | | 253,155 | | | 4,108,282 | |
| 2021 | | 600,000 | | | — | | | 469,166 | | | — | | | 1,750,000 | | | — | | | 120,388 | | | 2,939,554 | |
Christine M. Castellano
Executive Vice President, General Counsel & Corporate Secretary | | 2023 | | 450,000 | | | — | | | 424,186 | | | — | | | 580,500 | | | — | | | 160,948 | | | 1,615,634 | |
| 2022 | | 449,039 | | | — | | | 429,442 | | | — | | | 672,000 | | | — | | | 72,382 | | | 1,622,863 | |
| 2021 | | 400,000 | | | — | | | 312,796 | | | — | | | 600,000 | | | — | | | 31,408 | | | 1,344,204 | |
Joseph E. McNeely President, Nutrient and Industrial | | 2023 | | 450,000 | | | — | | | 424,186 | | | 5,151 | | | 354,000 | | | — | | | 156,657 | | | 1,389,994 | |
| 2022 | | 450,000 | | | 50,000 | | | 429,442 | | | 3,528 | | | 593,000 | | | — | | | 99,575 | | | 1,625,545 | |
| 2021 | | 417,308 | | | 200,000 | | | 398,214 | | | 6,338 | | | 627,000 | | | — | | | 52,729 | | | 1,701,589 | |
(1)NEOs include the CEO and CFO who certify the Company's quarterly and annual reports we filefiled with the SEC. The remaining NEOs are the three next highest paid executive officers. Additionally, for 2020 Valerie M. Blanchett and Jeffrey C. Blair are NEOs, as they would have been in the top five most highly compensated had they been officers at December 31, 2020.
(2)Reflects 27 pay periods for all individuals in 2020. Salaries for Patrick E.Mr. Bowe and Joseph E.Mr. McNeely include voluntary deductions forto the Company’s qualified Section 423 employee share purchase plan (“ESPP”)ESPP which is available to all employees. Amounts withheld for both Mr. Bowe for 2020, 2019 and 2018 were $24,000, $21,144 and $23,591, respectively. Amounts withheld for Mr. McNeely for 2020, 20192023, 2022 and 20182021 were $24,000, $21,144$24,000 and $23,688,$24,000, respectively.
(3)Annual bonus is delivered through a formula-based incentive compensation program and included in column (g). Mr. McNeely received retention bonuses in 2022 and 2021 in light of the successful completion of the divestiture of the Rail business.
(4)Represents the grant date fair value of PSUs granted March 1, 2018, March 1, 2019, July 1, 20192023, 2022, and March 1, 2020 and2021; RSAs granted March 1, 2018,2021; and RSUs granted March 1, 20192022 and March 1, 2020,2023, computed in accordance with the assumptions as noteddisclosed in Note 15 to the Company’s audited financial statements included inannual report on Form 10-K, Item 8. AmountsAmount for Brian A. Valentine also include the grant date fair value of PSUs and RSAs granted on August 1, 2018, upon his hiring. Amounts for Christine M. Castellano also include the grant date fair value of RSAs granted on February 3, 2020, upon her hiring. Amounts for Joseph E.Mr. McNeely also includeincludes the grant date fair value of RSAs granted on August 1, 2020, upon2021, as a result of his appointment to President, The Andersons Nutrient and Industrial.Industrial in 2020. At each grant date, we expected to issue the targetTarget award under the PSU grants which is equal to 50% of the maximumMaximum award. Amounts for William E. Krueger also include theThe grant date fair value of RSAs granted one time on January 2, 2019 in connection with the Company's acquisitionPSU awards assuming the highest level of Lansing Trade Group, LLC.performance conditions would be higher by $2,260,051, $2,290,949 and $1,859,497 for Mr. Bowe; $489,678, $496,443 and $347,965 for Mr. Valentine; $1,590,419, $397,801 and $269,078 for Mr. Krueger; $235,422, $238,636 and $179,385 for Ms. Castellano; and $235,422, $238,636 and $143,533 for Mr. McNeely, for 2023, 2022 and 2021, respectively.
(5)Represents the fair value of the option component in the ESPP. The grant date fair value of the ESPP option was computed in accordance with the assumptions as noteddisclosed in Note 15 to the Company’s audited financial statements included in the 2020annual report on Form 10-K, Item 8.
include an additional incentive payment tied to the trading income performance of ATP. 2019 amount for Mr. Krueger also includes an additional incentive payment tied solely to the pretax income performance of the legacy Lansing Trade Group, LLC as compared to target.& Processing business unit.
(7)RepresentsSee the annual change in the NEO’s accumulated benefit obligation. Defined benefit plans included the Defined Benefit Pension Plan and Supplemental Retirement Plan in 2015. Only the Supplemental Retirement Plan is included here, as the Defined Benefit Pension Plan was terminated in 2015. See Note 6 to the Company’s audited financial statements included in Form 10-K, Item 8table below for information about assumptions used in the computation of the defined benefit plans. The deferred compensation plan is a voluntary plan allowing for deferral of compensation for officers and highly compensated employees in excess of the limits imposed by the Internal Revenue Service under the Company’s 401(k) plan. Earnings on the deferred compensation are based on actual earnings on mutual funds held in a Rabbi trust owned by the Company and do not include any above market returns.details regarding all other compensation.
(8)Represents the Company-match and performance contribution contributed to defined contribution plans (401(k) and Deferred Compensation Plan) on behalf of the named executive, life and long-term disability insurance premiums paid by the Company for each of the named executives, the cost of required executive physicals paid by the Company, service awards, and restricted share dividends. Amounts for Joseph E. McNeely in 2018, amounts for Brian A. Valentine in 2018 and 2019 and amounts for Christine M. Castellano in 2020 also include reimbursement of moving and relocation expenses. Amounts for Valerie M. Blanchett and Jeffrey C. Blair also include separation pay and the value of unused vacation in 2020. Amounts for Patrick E. Bowe for the years 2020, 2019 and 2018, respectively, consist of dividends on restricted stock of $37,237, $41,978 and $39,438; deferred compensation plan company match of $51,368, $37,484 and $7,945; performance contribution company match of $31,172, $27,872 and $15,153; 401(k) company match of $11,400, $11,200 and $11,000; executive physicals of $2,425, $2,450 and $2,950; life and long-term disability insurance premiums of $4,594, $1,812 and $1,170; and healthy lifestyles discount of $200, $500 and $500.
(9)In 2019, William E. Krueger received one-time cash and vested and un-vested Company restricted shares in consideration for his vested and un-vested equity units in Lansing Trade Group, LLC (for which he served as CEO), in connection with the Company's acquisition of Lansing Trade Group, LLC effective January 1, 2019. Mr. Krueger also received Company restricted shares in satisfaction of Lansing Trade Group, LLC's one-time retention award obligations to him and other key executives in connection with the acquisition. The Company also paid one-time bonus awards in 2019 to Mr. Krueger and other executives in satisfaction of Lansing Trade Group, LLC's bonus obligations to Mr. Krueger and other executives for 2018 performance.
(10)Excludes 12,129 restricted shares issued one time in 2019 in connection with the Lansing acquisition.
(11)In response to the COVID-19 global pandemic, the senior executives agreed to reduce either their 2020 AIP payout or 2021 equity awards by an amount equal to 10% of their salary for six months. The 2020 AIP payouts for Valerie M. Blanchett and Jeffrey C. Blair were reduced as a result. The remaining NEOs chose to take the reduction through their 2021 equity awards.
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| Name | | Year | | Dividend Equivalents | | DCP Company Match | | 401(k) Plan Performance Contribution | | 401(k) Plan Company Match | | Executive Physicals | | Life & Long-Term Disability Insurance Premiums | | | | Other | | Total Other |
| Patrick E. Bowe | | 2023 | | $ | 330,246 | | | $ | 143,535 | | | $ | 141,983 | | | $ | 13,200 | | | $ | — | | | $ | 4,236 | | | | | $ | — | | | $ | 633,200 | |
| 2022 | | 51,376 | | | 68,300 | | | 68,000 | | | 12,200 | | | 3,177 | | | 4,128 | | | | | 1,360 | | | 208,541 | |
| 2021 | | 44,955 | | | 26,442 | | | 14,891 | | | 11,600 | | | 3,110 | | | 4,128 | | | | | — | | | 105,126 | |
| Brian A. Valentine | | 2023 | | 65,011 | | | 76,858 | | | 70,471 | | | 13,200 | | | — | | | 3,116 | | | | | 1,580 | | | 230,236 | |
| 2022 | | 13,883 | | | 31,258 | | | 33,558 | | | 12,200 | | | — | | | 4,694 | | | | | 1,348 | | | 96,941 | |
| 2021 | | 14,465 | | | 14,957 | | | 7,084 | | | 11,600 | | | — | | | 3,985 | | | | | — | | | 52,091 | |
| William E. Krueger | | 2023 | | 52,034 | | | 127,128 | | | 125,577 | | | 13,200 | | | — | | | 4,101 | | | | | — | | | 322,040 | |
| 2022 | | 88,207 | | | 74,070 | | | 73,770 | | | 12,200 | | | — | | | 3,561 | | | | | 1,347 | | | 253,155 | |
| 2021 | | 63,002 | | | 27,090 | | | 15,540 | | | 11,600 | | | — | | | 3,156 | | | | | — | | | 120,388 | |
| Christine M. Castellano | | 2023 | | 40,213 | | | 49,689 | | | 52,504 | | | 13,200 | | | 2,750 | | | 2,592 | | | | | — | | | 160,948 | |
| 2022 | | 8,153 | | | 20,575 | | | 25,000 | | | 12,200 | | | 2,820 | | | 2,592 | | | | | 1,042 | | | 72,382 | |
| 2021 | | 3,479 | | | 8,400 | | | 2,850 | | | 11,600 | | | 2,770 | | | 2,309 | | | | | — | | | 31,408 | |
| Joseph E. McNeely | | 2023 | | 33,621 | | | 48,222 | | | 56,422 | | | 13,200 | | | 2,600 | | | 2,592 | | | | | — | | | 156,657 | |
| 2022 | | 9,734 | | | 32,660 | | | 38,369 | | | 12,200 | | | 2,575 | | | 2,592 | | | | | 1,445 | | | 99,575 | |
| 2021 | | 22,298 | | | 11,335 | | | 5,106 | | | 11,600 | | | — | | | 2,309 | | | | | 81 | | | 52,729 | |
The Andersons, Inc. | 2024 Proxy Statement | 40
Grants and Payments of Plan-Based Awards
During 2020, we issued grants and paid cash bonuses to2023, our NEOs pursuant towere issued equity grants under the 2019 Long-Term Incentive Compensation Plan and cash incentive awards under the AIP respectively.AIP. Information with respect to each of the awards, including estimates regarding potential payouts during the relevant performance period under each of these programs during 2020,2023, is set forth below. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Grant Date | | Date of Board Action | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | All Other Stock Awards: Number of Shares of Stock or Units (3) | | All Other Option Awards:
Number of Securities Under-lying Options | | Exercise or Base Price of Option Awards | | Grant Date Fair Value of Stock and Option Awards |
| Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | |
| (a) | | (b) | | | | (c)($) | | (d)($) | | (e)($) | | (f)(#) | | (g)(#) | | (h)(#) | | (i)(#) | | (j)(#) | | (k)($) | | (l)($) |
| Patrick E. Bowe | | 1/2/20 | | 3/1/19 | | — | | | — | | | — | | | — | | | — | | | — | | | 1,473 | | | — | | | — | | | 37,237 | |
| | 3/2/20 | | 2/21/20 | | 288,000 | | | 960,000 | | | 1,920,000 | | | 14,454 | | | 72,268 | | | 144,536 | | | 48,179 | | | — | | | — | | | 918,292 | |
| Brian A. Valentine | | 1/2/20 | | 3/1/19 | | — | | | — | | | — | | | — | | | — | | | — | | | 255 | | | — | | | — | | | 6,434 | |
| | 3/2/20 | | 2/21/20 | | 118,575 | | | 395,250 | | | 790,500 | | | 2,593 | | | 12,966 | | | 25,932 | | | 12,965 | | | — | | | — | | | 247,113 | |
William E. Krueger (4) | | 1/2/20 | | 3/1/19 | | — | | | — | | | — | | | — | | | — | | | — | | | 1,057 | | | — | | | — | | | 26,732 | |
| | 3/2/20 | | 2/21/20 | | 284,400 | | | 948,000 | | | 1,896,000 | | | 2,091 | | | 10,456 | | | 20,912 | | | 10,456 | | | — | | | — | | | 199,291 | |
| | 4/1/20 | | 12/19/18 | | — | | | — | | | — | | | — | | | — | | | — | | | 207 | | | — | | | — | | | 3,879 | |
Christine M. Castellano(5) | | 2/3/20 | | 10/9/19 | | — | | | — | | | — | | | — | | | — | | | — | | | 7,937 | | | — | | | — | | | 178,503 | |
| | 3/2/20 | | 2/21/20 | | 82,131 | | | 273,770 | | | 547,540 | | | 1,394 | | | 6,972 | | | 13,944 | | | 6,971 | | | — | | | — | | | 132,867 | |
Joseph E. McNeely(6) | | 1/2/20 | | 3/1/19 | | — | | | — | | | — | | | — | | | — | | | — | | | 83 | | | — | | | — | | | 2,096 | |
| | 3/2/20 | | 2/21/20 | | 84,762 | | | 282,541 | | | 565,082 | | | 1,004 | | | 5,020 | | | 10,040 | | | 5,019 | | | — | | | — | | | 95,662 | |
| | 8/1/20 | | 7/16/20 | | — | | | — | | | — | | | — | | | — | | | — | | | 10,549 | | | — | | | — | | | 150,007 | |
| | 12/29/20 | | 9/22/17 | | — | | | — | | | — | | | — | | | — | | | — | | | 680 | | | — | | | — | | | 16,372 | |
| Valerie M. Blanchett | | 1/2/20 | | 3/1/19 | | — | | | — | | | — | | | — | | | — | | | — | | | 106 | | | — | | | — | | | 2,672 | |
| | 3/2/20 | | 2/21/20 | | 48,736 | | | 162,454 | | | 324,908 | | | 720 | | | 3,602 | | | 7,204 | | | 3,602 | | | — | | | — | | | 68,654 | |
| Jeffrey C. Blair | | 1/2/20 | | 3/1/19 | | — | | | — | | | — | | | — | | | — | | | — | | | 69 | | | — | | | — | | | 1,739 | |
| | 3/2/20 | | 2/21/20 | | 39,283 | | | 130,943 | | | 261,886 | | | 837 | | | 4,184 | | | 8,368 | | | 4,183 | | | — | | | — | | | 79,728 | |
below: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Award Type | | Grant Date | | Date of Board Action | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | All Other Stock Awards: Number of Shares of Stock or Units (3) | | Grant Date Fair Value of Stock and Option Awards |
| Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | |
| (a) | | | | (b) | | | | (c)($) | | (d)($) | | (e)($) | | (f)(#) | | (g)(#) | | (h)(#) | | (i)(#) | | (l)($) |
| Patrick E. Bowe | | Cash Incentive | | — | | — | | 300,000 | | | 1,000,000 | | | 2,000,000 | | | — | | | — | | | — | | | — | | | — | |
| Performance Share Units | | 3/1/23 | | 2/17/23 | | — | | | — | | | — | | | 7,872 | | | 39,360 | | | 78,720 | | | — | | | 2,260,051 | |
| | Restricted Stock Units | | 3/1/23 | | 2/17/23 | | — | | | — | | | — | | | — | | | — | | | — | | | 26,240 | | | 1,208,090 | |
| | Dividend Equivalents | | 1/2/23 | | 2/19/21 | | — | | | — | | | — | | | — | | | — | | | — | | | 1,481 | | | 51,814 | |
| | | 2/16/23 | | 2/21/20 | | — | | | — | | | — | | | — | | | — | | | — | | | 6,075 | | | 271,808 | |
| | | 3/1/23 | | 2/18/22 | | — | | | — | | | — | | | — | | | — | | | — | | | 145 | | | 6,624 | |
| Brian A. Valentine | | Cash Incentive | | — | | — | | 149,175 | | | 497,250 | | | 994,500 | | | — | | | — | | | — | | | — | | | — | |
| Performance Share Units | | 3/1/23 | | 2/17/23 | | — | | | — | | | — | | | 1,706 | | | 8,528 | | | 17,056 | | | — | | | 489,678 | |
| | Restricted Stock Units | | 3/1/23 | | 2/17/23 | | — | | | — | | | — | | | — | | | — | | | — | | | 8,528 | | | 392,629 | |
| | Dividend Equivalents | | 1/2/23 | | 2/19/21 | | — | | | — | | | — | | | — | | | — | | | — | | | 403 | | | 14,090 | |
| | | 2/16/23 | | 2/21/20 | | — | | | — | | | — | | | — | | | — | | | — | | | 1,090 | | | 48,767 | |
| | | 3/1/23 | | 2/18/22 | | — | | | — | | | — | | | — | | | — | | | — | | | 47 | | | 2,153 | |
| William E. Krueger | | Cash Incentive | | — | | — | | 285,000 | | | 950,000 | | | 1,900,000 | | | — | | | — | | | — | | | — | | | — | |
| Performance Share Units | | 3/1/23 | | 2/17/23 | | — | | | — | | | — | | | 5,540 | | | 27,698 | | | 55,396 | | | — | | | 1,590,419 | |
| | Restricted Stock Units | | 3/1/23 | | 2/17/23 | | — | | | — | | | — | | | — | | | — | | | — | | | 18,465 | | | 850,129 | |
| | Dividend Equivalents | | 1/2/23 | | 2/19/21 | | — | | | — | | | — | | | — | | | — | | | — | | | 314 | | | 10,983 | |
| | | 2/16/23 | | 2/21/20 | | — | | | — | | | — | | | — | | | — | | | — | | | 879 | | | 39,326 | |
| | | 3/1/23 | | 2/18/22 | | — | | | — | | | — | | | — | | | — | | | — | | | 38 | | | 1,726 | |
| Christine M. Castellano | | Cash Incentive | | — | | — | | 101,250 | | | 337,500 | | | 675,000 | | | — | | | — | | | — | | | — | | | — | |
| Performance Share Units | | 3/1/23 | | 2/17/23 | | — | | | — | | | — | | | 820 | | | 4,100 | | | 8,200 | | | — | | | 235,422 | |
| | Restricted Stock Units | | 3/1/23 | | 2/17/23 | | — | | | — | | | — | | | — | | | — | | | — | | | 4,100 | | | 188,764 | |
| | Dividend Equivalents | | 1/2/23 | | 2/19/21 | | — | | | — | | | — | | | — | | | — | | | — | | | 370 | | | 12,955 | |
| | | 2/16/23 | | 2/21/20 | | — | | | — | | | — | | | — | | | — | | | — | | | 586 | | | 26,223 | |
| | | 3/1/23 | | 2/18/22 | | — | | | — | | | — | | | — | | | — | | | — | | | 23 | | | 1,035 | |
| Joseph E. McNeely | | Cash Incentive | | — | | — | | 101,250 | | | 337,500 | | | 675,000 | | | — | | | — | | | — | | | — | | | — | |
| Performance Share Units | | 3/1/23 | | 2/17/23 | | — | | | — | | | — | | | 820 | | | 4,100 | | | 8,200 | | | — | | | 235,422 | |
| | Restricted Stock Units | | 3/1/23 | | 2/17/23 | | — | | | — | | | — | | | — | | | — | | | — | | | 4,100 | | | 188,764 | |
| | Dividend Equivalents | | 1/2/23 | | 2/19/21 | | — | | | — | | | — | | | — | | | — | | | — | | | 392 | | | 13,706 | |
| | | 2/16/23 | | 2/21/20 | | — | | | — | | | — | | | — | | | — | | | — | | | 422 | | | 18,880 | |
| | | 3/1/23 | | 2/18/22 | | — | | | — | | | — | | | — | | | — | | | — | | | 23 | | | 1,035 | |
(1)Amounts listed for the non-equity incentive compensation plan represent the individual formula maximum, targetThreshold, Target, and thresholdMaximum payouts under the AIP. The program also providesSee the Elements of Total Direct Compensation section for an additional amount of 25% of the overall pool which is subject to and funded by Company earnings. This discretionary pool is available for award to all plan participants. Determination of this award component is made by the CEO and approved by the Committee. The CEO’s discretionary award is determined by the Committee. As noted previously, the Company has elected to limit base salaries and place more compensation dollars “at risk” which may be earned in this incentive program. The Thresholds and Targets for each business unit and the total Company are presented by the Company for each NEO (and their business unit) and are preliminarily approved by the Board in its December meeting prior to the beginning of the plan year.details. (2)Equity awards are EPS-based PSUs which will be awardedare earned based on the three-year cumulative diluted EPS for the years ended December 31, 20222025, and rTSR-basedTSR-based PSUs which will be awarded based on the relative shareholder return on the three-year performance for the three yearsperiod ended December 31, 2022.2025. These awards require employment at the end of the performance period except in the case of death, permanent disability, retirement or termination without cause as a result of a sale of the business unit. If an employee meets one of these exceptions and if the award triggers at the end of three years, the grantee will receive a pro rata award. At the end of the performance period, the appropriate number of shares will be issued along with additional shares representing equivalent dividends paid to shareholders during the period. The Company is currently expensing this EPS-based award at 10% of the maximum award level and expects that this is the most probable outcome at this time.
(3)RSA’sRSUs granted March 2, 20201, 2023, have a grant date fair value of $19.06$46.04 per share, which represents the closing price on the issuance date. Grants also includeAwards with grant date of January 2, 2023, represent shares issued for dividend equivalents on the 2017, 20182021 and 20192020 RSA grants, of which one-third of each of the grants vested as of January 1, 2020.2023. Cumulative dividends from the 20172020 grant date through the date of issuance were $1.995,$2.13, which was multiplied by the shares issued and converted to shares at the December 31, 20192022 closing price of $25.28.
(4)See Note (9), Summary Compensation Table regarding the additional RSAs granted to William E. Krueger in 2019, in connection with the Lansing Trade Group acquisition. Mr. Krueger's 2020 grants also include dividend equivalents on that 2019 RSA grant, of which a portion of the grant vested as of April 1, 2020.$34.99. Cumulative dividends from the 2021 grant date through the date of issuance were $1.03, which was multiplied by the shares issued and converted to shares at the March 31, 2020 closing price of $18.75.
(5)Christine M. Castellano received an RSA grant upon joining the Company in February 2020. RSAs granted February 3, 2020 have a grant date fair value of $22.49 per share, which represents the closing price on the issuance date.
(6)Joseph E. McNeely received an RSA grant upon joining the Company in December 2017. Mr. McNeely's 2020 grants also include dividend equivalents on that 2017 RSA grant, which vested as of December 29, 2020. Cumulative dividends from the grant date through the date of issuance were $2.04,$1.43, which was multiplied by the shares issued and converted to shares at the December 28, 202031, 2022 closing price of $24.08. Mr. McNeely also received an RSA$34.99. Awards with grant date of February 16, 2023 represent shares issued for dividend equivalents on the 2020 PSU grant, upon vesting in February 2023. Cumulative dividends from the 2020 grant date through the date of issuance were $2.13, which was multiplied by the shares issued and converted to shares at the February 15, 2023 closing price of $43.58. Awards with grant date of March 1, 2023, represent shares issued for dividend equivalents on the 2022 RSU grant, of which one-third of the grant vested as of January 1, 2023. Cumulative dividends from the 2022 grant date through the date of issuance were $0.725, which was multiplied by the shares issued and converted to shares at the February 28, 2023 closing price of $45.63.
The Andersons, Inc. | 2024 Proxy Statement | 41
in August 2020, upon his appointment to President, The Andersons Nutrient and Industrial. RSAs granted August 1, 2020 have a grant date fair value of $14.22 per share, which represents the closing price on the issuance date.
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes equity awards granted to our NEOs that were outstanding as of December 31, 2023. Columns (b) through (f) were omitted from the disclosure below as no option awards were outstanding at December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Stock Awards |
| Name | | Grant Date (1) | | Number of shares or units of stock that have not vested | | Market value of shares or units of stock that have not vested (2) | | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (3) | | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested (3) |
| (a) | | | | (g)(#) | | (h)($) | | (i)(#) | | (j)($) |
| Patrick E. Bowe | | 3/1/2023 | | — | | | — | | | 78,720 | | | 4,529,549 | |
| 3/1/2022 | | — | | | — | | | 82,216 | | | 4,730,709 | |
| 3/2/2021 | | — | | | — | | | 119,084 | | | 6,852,093 | |
| 3/1/2023 | | 26,240 | | | 1,509,850 | | | — | | | — | |
| 3/1/2022 | | 18,269 | | | 1,051,198 | | | — | | | — | |
| 3/1/2021 | | 12,312 | | | 708,432 | | | — | | | — | |
| Brian A. Valentine | | 3/1/2023 | | — | | | — | | | 17,056 | | | 981,402 | |
| 3/1/2022 | | — | | | — | | | 17,816 | | | 1,025,133 | |
| 3/2/2021 | | — | | | — | | | 22,284 | | | 1,282,221 | |
| 3/1/2023 | | 8,528 | | | 490,701 | | | — | | | — | |
| 3/1/2022 | | 5,937 | | | 341,615 | | | — | | | — | |
| 3/1/2021 | | 3,416 | | | 196,557 | | | — | | | — | |
| William E. Krueger | | 3/1/2023 | | — | | | — | | | 55,396 | | | 3,187,486 | |
| 3/1/2022 | | — | | | — | | | 14,276 | | | 821,441 | |
| 3/2/2021 | | — | | | — | | | 17,232 | | | 991,529 | |
| 3/1/2023 | | 18,465 | | | 1,062,476 | | | — | | | — | |
| 3/1/2022 | | 4,757 | | | 273,718 | | | — | | | — | |
| 3/2/2021 | | 2,488 | | | 143,160 | | | — | | | — | |
| Christine M. Castellano | | 3/1/2023 | | — | | | — | | | 8,200 | | | 471,828 | |
| 3/1/2022 | | — | | | — | | | 8,564 | | | 492,773 | |
| 3/2/2021 | | — | | | — | | | 11,488 | | | 661,020 | |
| 3/1/2023 | | 4,100 | | | 235,914 | | | — | | | — | |
| 3/1/2022 | | 2,854 | | | 164,219 | | | — | | | — | |
| 3/1/2021 | | 1,659 | | | 95,459 | | | — | | | — | |
| Joseph E. McNeely | | 3/1/2023 | | — | | | — | | | 8,200 | | | 471,828 | |
| 3/1/2022 | | — | | | — | | | 8,564 | | | 492,773 | |
| 3/1/2021 | | — | | | — | | | 9,192 | | | 528,908 | |
| 3/1/2023 | | 4,100 | | | 235,914 | | | — | | | — | |
| 3/1/2022 | | 2,854 | | | 164,219 | | | — | | | — | |
| 8/1/2021 | | 1,872 | | | 107,715 | | | — | | | — | |
| 3/1/2021 | | 1,301 | | | 74,860 | | | — | | | — | |
(1)RSU's granted in 2023 and 2022 vest one-third on March 1 following the grant date and an additional one-third each year after that. PSUs vest on January 2 following the end of fiscal 2020.the 3-year performance period. RSAs granted in 2021 vest one-third on January 2 following the grant date and an additional one-third each year after that.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of securities underlying unexercised options exercisable | | Number of securities underlying unexercised options unexercisable (1) | | Equity incentive plan awards: number of securities underlying unexercised unearned options | | Option exercise price | | Option expiration date | | Number of shares or units of stock that have not vested | | Market value of shares or units of stock that have not vested (2) | | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (3) | | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested (3) |
| (a) | | (b)(#) | | (c)(#) | | (d)(#) | | (e)($) | | (f) | | (g)(#) | | (h)($) | | (i)(#) | | (j)($) |
| Patrick E. Bowe | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 144,536 | | | 3,542,577 | |
| — | | | — | | | — | | | — | | | — | | | — | | | — | | | 86,692 | | | 2,124,821 | |
| — | | | — | | | — | | | — | | | — | | | — | | | — | | | 59,632 | | | 1,461,580 | |
| — | | | — | | | — | | | — | | | — | | | 48,179 | | | 1,180,867 | | | — | | | — | |
| — | | | — | | | — | | | — | | | — | | | 19,264 | | | 472,161 | | | — | | | — | |
| — | | | — | | | — | | | — | | | — | | | 9,938 | | | 243,580 | | | — | | | — | |
| 325,000 | | | — | | | — | | | 35.40 | | | 11/2/22 | | — | | | — | | | — | | | — | |
| Brian A. Valentine | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 25,932 | | | 635,593 | |
| — | | | — | | | — | | | — | | | — | | | — | | | — | | | 15,508 | | | 380,101 | |
| — | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,760 | | | 141,178 | |
| — | | | — | | | — | | | — | | | — | | | 12,965 | | | 317,772 | | | — | | | — | |
| — | | | — | | | — | | | — | | | — | | | 5,168 | | | 126,668 | | | — | | | — | |
| — | | | — | | | — | | | — | | | — | | | 3,611 | | | 88,506 | | | — | | | — | |
| — | | | — | | | — | | | — | | | — | | | 959 | | | 23,505 | | | — | | | — | |
William E. Krueger (4) | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 20,912 | | | 512,553 | |
| — | | | — | | | — | | | — | | | — | | | — | | | — | | | 12,504 | | | 306,473 | |
| — | | | — | | | — | | | — | | | — | | | 10,456 | | | 256,277 | | | — | | | — | |
| — | | | — | | | — | | | — | | | — | | | 73,879 | | | 1,810,774 | | | — | | | — | |
| — | | | — | | | — | | | — | | | — | | | 3,765 | | | 92,280 | | | — | | | — | |
| — | | | — | | | — | | | — | | | — | | | 4,167 | | | 102,133 | | | — | | | — | |
| Christine M. Castellano | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 13,944 | | | 341,767 | |
| — | | | — | | | — | | | — | | | — | | | 6,971 | | | 170,859 | | | — | | | — | |
| — | | | — | | | — | | | — | | | — | | | 7,937 | | | 194,536 | | | — | | | — | |
| Joseph E. McNeely | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 10,040 | | | 246,080 | |
| — | | | — | | | — | | | — | | | — | | | — | | | — | | | 6,004 | | | 147,158 | |
| — | | | — | | | — | | | — | | | — | | | — | | | — | | | 6,264 | | | 153,531 | |
| — | | | — | | | — | | | — | | | — | | | 10,549 | | | 258,556 | | | — | | | — | |
| — | | | — | | | — | | | — | | | — | | | 5,019 | | | 123,016 | | | — | | | — | |
| — | | | — | | | — | | | — | | | — | | | 2,000 | | | 49,020 | | | — | | | — | |
| — | | | — | | | — | | | — | | | — | | | 1,043 | | | 25,564 | | | — | | | — | |
| Valerie M. Blanchett | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Jeffrey C. Blair | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
(1)Options with an expiration date of November 2, 2022 became fully vested on November 2, 2018.
(2)Represents the market value of outstanding restricted sharesRSAs granted in 2021 and RSUs granted in 2022 and 2023 at the December 31, 20202023, closing price of $24.51$57.54.
(3)Equity incentive plan awards that have not vested represent PSUs as described previously. These amounts represent the maximumMaximum award for each tranche with performance periods ending December 31, 2020,2023, December 31, 20212024, and December 31, 2022,2025, respectively. The market value for these grants is based on a December 31, 20202023, closing price of $24.51. Currently the Company expects payout at 0%, 0% and 10%$57.54.
The Andersons, Inc. | 2024 Proxy Statement | 42
(4)See Note (9), Summary Compensation Table.
Option Exercises and Stock Vested
With respect to the NEOs, the following table provides information concerning stock options that were exercised and stock awards that vested during fiscal 2020.the year ended December 31, 2023. The stock awards that vested in 2023 were EPS-based and TSR-based PSUs granted in 2020, were RSAs granted in 2017, 20182020 and 2019,2021 and RSUs granted in 2022, plus dividend equivalent shares as described previously. Amount for William E. Krueger also includes RSAs grantedshares. No stock options were outstanding or exercised in January2023 under the 2019 following the Company's acquisition of Lansing Trade Group, LLC.Plan.
| | | | | Option Awards | | Stock Awards | | | Stock Awards |
| Name | Name | | Number of Shares Acquired on Exercise | | Value Realized on Exercise | | Number of Shares Acquired on Vesting | | Value Realized
on Vesting | Name | | Number of Shares Acquired on Vesting | | Value Realized on Vesting |
| (a) | (a) | | (b)(#) | | (c)($) | | (d)(#) | | (e)($) | (a) | | (d)(#) | | (e)($) |
| Patrick E. Bowe | Patrick E. Bowe | | — | | | — | | | 29,677 | | | 750,235 | |
| Brian A. Valentine | Brian A. Valentine | | — | | | — | | | 7,412 | | | 187,363 | |
| William E. Krueger | William E. Krueger | | — | | | — | | | 44,055 | | | 1,087,775 | |
| Christine M. Castellano | Christine M. Castellano | | — | | | — | | | — | | | — | |
| Joseph E. McNeely | Joseph E. McNeely | | — | | | — | | | 10,834 | | | 263,431 | |
| Valerie M. Blanchett | | — | | | — | | | 7,907 | | | 164,706 | |
| Jeffrey C. Blair | | — | | | — | | | 14,762 | | | 229,465 | |
The Company believes in effectively managing its equity compensation programs while minimizing shareholder dilution. For this reason, the Company and the Compensation & Leadership Development Committee considers both the Company’s “burn rate” and our “overhang” percentage in evaluating the impact of grants under our long-term incentive plans on our shareholders.
Overhang
Overhang (measuring the potential dilution of earnings and voting power to shareholders from the issuance of equity awards) is generally calculated as the sum of all equity awards outstanding plus shares available for future grant under a plan, divided by common shares outstanding. The table below provides a summary of our four-year historical overhang and includes for 2019 shares issued under The Andersons, Inc. Lansing Acquisition 2018 Inducement and Retention Award Plan as part of the acquisition of Lansing Trade Group, LLC.
| | | | | | | | |
Overhang | | |
Four-Year Annual Average (2017-2020) | | 7.6% |
Burn Rate
Burn rate or run rate is generally calculated as the number of shares granted divided by the total number of shares outstanding, and generally demonstrates the dilutive impact of our equity award program. The table below provides a summary of our four-year historical burn rate and includes for 2019 shares issued under The Andersons, Inc. Lansing Acquisition 2018 Inducement and Retention Award Plan as part of the acquisition of Lansing Trade Group, LLC.
| | | | | | | | |
Burn Rate | | |
Four-Year Annual Average (2017-2020) | | 1.39% |
Pension Benefits
The Company maintains a Retirement Benefits Committee, not comprised of independent directors. The Board has delegated its authority to perform certain administrative, regulatory and fiduciary duties required of management as plan sponsor to the Retirement Benefits Committee. The Retirement Benefits Committee acts as the Plan Administrator for the Supplemental Retirement401(k) Plan, Retirement Savings and Investment Plan, Deferred Compensation PlanDCP, and the Employee Share Purchase Plan. As noted previously, the SRP was frozen for employees as of July 1, 2010. None of the 2020 NEOs are eligible for retirement benefits under the non-qualified SRP, as they were hired after the plan was frozen.ESPP.
Nonqualified
Non-qualified Deferred Compensation
The Company provides a non-qualified DCP for employees whose 401(k) Plan contributions are limited by Internal Revenue Service regulations. The DCP mimics the 401(k) Plan sponsored by the Company in that participants may select the same investment options (excluding Company Common Shares) providing the potential for equivalent returns. The plan assets are held in a Rabbi Trust on the Company’s balance sheetConsolidated Balance Sheets, and a liability is included for the compensation deferred by employees. Currently, eligible employees may defer up to 30% of their base salary and up to 50% of their bonus.AIP payments. Set forth below is a table with the NEOs’ plan information for the plan for 2020.2023.
| | | For the Year Ended December 31, 2023 | | | | For the Year Ended December 31, 2023 | | As of December 31, 2023 |
| Name | Name | | Executive contribution in last FY | | Registrant contributions in last FY (1) | | Aggregate earnings in last FY (1) | | Aggregate withdrawals / distributions | | Aggregate balance at last FYE | Name | | Executive Contribution | | Company Contributions (1) | | Aggregate Earnings (losses) (2) | | Aggregate Withdrawals / Distributions | | Aggregate Balance |
| (a) | (a) | | (b)($) | | (c)($) | | (d)($) | | (e)($) | | (f)($) | (a) | | (b)($) | | (c)($) | | (d)($) | | (e)($) | | (f)($) |
| Patrick E. Bowe | Patrick E. Bowe | | — | | | 40,172 | | | 15,922 | | | — | | | 161,893 | |
| Brian A. Valentine | Brian A. Valentine | | — | | | 17,216 | | | 6,397 | | | — | | | 32,856 | |
| William E. Krueger | William E. Krueger | | — | | | 14,600 | | | 3,284 | | | — | | | 17,884 | |
Christine M. Castellano (2) | Christine M. Castellano (2) | | — | | | — | | | — | | | — | | | — | |
| Joseph E. McNeely | Joseph E. McNeely | | 51,060 | | | 10,815 | | | 40,149 | | | — | | | 265,541 | |
| Valerie M. Blanchett | | 13,211 | | | 6,732 | | | 16,893 | | | — | | | 96,262 | |
| Jeffrey C. Blair | | — | | | 2,326 | | | 2,386 | | | — | | | 9,584 | |
(2)As the investments are made in mutual funds, none of the earnings are above-market and are therefore not included in the Summary Compensation Table.
(2)Christine M. Castellano did not become eligible for the DCP until January 1, 2021.
Termination / Change in Control Payments
The Company grants severance in the event of position elimination and in the event of a change in control under the Change in Control and Severance Policy Participation Agreements entered into with NEOs and other key employees. These agreements clarifyfor NEOs. This policy clarifies that qualifying terminations within a specified period up to three months before or up to 24 months after a defined change in control of the Company or an NEO’s business unit will result in cash severance equal to two years of salary, and targetTarget bonus, plusand certain health benefits for that same two years.benefits. The severance payments will be paid out in a lump sum following a qualified termination. For qualifying terminations other than due to a change in control, NEOs will receive cash severance and certain health benefits for a one-year period. Payments under the Supplemental Retirement Plan and Deferred Compensation PlanDCP are not impacted by these agreements.
The Andersons, Inc. | 2024 Proxy Statement | 43
Under each of the Change in Control and Severance Policy, Participation Agreements, the applicable executive agrees not to divulge confidential information during or after histheir term of employment. In addition, the executive agrees not to compete with, or solicit the customers or employees of, the Company during and for a period of one year following a termination of employment without cause (for which period the executive will receive severance payments). Upon a termination of employment without cause and following a change of control of the Company, this period is extended to two years (for which period the executive will receive severance payments).
The following table presents the value of these agreements by NEO as if termination occurred on December 31, 2020.2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Cash Severance | | Health (3) | | Outplacement Services (4) | | Cash Value | | Additional Severance for Change in Control (5) | | Cash Value if Change in Control |
| Salary (1) | | Bonus (2) | | | | | |
| Patrick E. Bowe | | $ | 1,000,000 | | | $ | 1,000,000 | | | $ | 14,127 | | | $ | 9,000 | | | $ | 2,023,127 | | | $ | 6,042,215 | | | $ | 8,065,342 | |
| Brian A. Valentine | | 585,000 | | | 497,250 | | | 19,675 | | | 9,000 | | | 1,110,925 | | | 1,924,114 | | | 3,035,039 | |
| William E. Krueger | | 950,000 | | | 950,000 | | | 18,487 | | | 9,000 | | | 1,927,487 | | | 3,168,601 | | | 5,096,088 | |
| Christine M. Castellano | | 450,000 | | | 337,500 | | | 11,051 | | | 9,000 | | | 807,551 | | | 1,204,956 | | | 2,012,507 | |
| Joseph E. McNeely | | 450,000 | | | 337,500 | | | 12,281 | | | 9,000 | | | 808,781 | | | 1,173,158 | | | 1,981,939 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Cash Severance | | Health (3) | | Outplacement Services (4) | | Cash Value | | Additional Severance for Change in Control (5) | | Cash Value if Change in Control |
| Salary (1) | | Bonus (2) | | | | | |
| Patrick E. Bowe | | $ | 960,000 | | | $ | 960,000 | | | $ | 15,708 | | | $ | 9,000 | | | $ | 1,944,708 | | | $ | 1,935,708 | | | $ | 3,880,416 | |
| Brian A. Valentine | | 465,000 | | | 395,250 | | | 16,708 | | | 9,000 | | | 885,958 | | | 876,958 | | | 1,762,916 | |
| William E. Krueger | | 600,000 | | | 948,000 | | | 17,752 | | | 9,000 | | | 1,574,752 | | | 1,565,752 | | | 3,140,504 | |
| Christine M. Castellano | | 400,000 | | | 273,770 | | | 9,648 | | | 9,000 | | | 692,418 | | | 683,418 | | | 1,375,836 | |
| Joseph E. McNeely | | 400,000 | | | 282,541 | | | 16,485 | | | 9,000 | | | 708,026 | | | 699,026 | | | 1,407,052 | |
Valerie M. Blanchett (6) | | 310,000 | | | 217,000 | | | 6,435 | | | 5,000 | | | 538,435 | | | 533,435 | | | 1,071,870 | |
Jeffrey C. Blair (6) | | 300,000 | | | 225,000 | | | 17,026 | | | 5,000 | | | 547,026 | | | 542,026 | | | 1,089,052 | |
(1)Salary portion of cash severance for other than a change in control is equal to one year’s salary.
(2)Bonus is equal to targetTarget AIP bonus for 2020.2023. The individuals also get a prorated portion of their actual bonus for any partial year worked.
(3)Value of health benefits to be continued for up to 52 weeks based on years of service. All NEOs qualify for a full year of coverage. NEOs are responsible to continue their share of premium consistent with their coverage prior to termination.
(4)Value estimated for one year of service (maximum to be provided).service.
(5)If a termination is due to a change in control, participants are eligible for an additional year of cash severance and health benefits.
(6)Ms. Blanchett and Mr. Blair both terminated prior to December 31, 2020. As a result,benefits, as well as accelerated vesting of any outstanding TSR-based PSUs at target, per the amounts shown here represent their actual payments upon termination.grant agreement.
Termination due to death would result in the following company-provided group life insurance proceeds in addition to accelerated vesting of RSAsRSUs and prorated adjustment of PSUs with subsequent issuance subject to any performance vesting criteria.
| | | | | | | | |
| Name | | Life Insurance Proceeds |
| Patrick E. Bowe | | $ | $1,000,000 | | 1,000,000 |
| Brian A. Valentine | | 1,000,000 | | 930,000 |
| William E. Krueger | | 1,000,000 | | 1,000,000 |
| Christine M. Castellano | | 900,000 | | 800,000 |
| Joseph E. McNeely | | 900,000 | | 720,000 |
Valerie M. Blanchett | | N/A |
Jeffrey C. Blair | | N/A |
45The Andersons, Inc. | 2024 Proxy Statement | 44
Director Compensation
The following description of director compensation reflects the program in place for 2020.2023. Director compensation is reviewed regularly and compared to the proxy information from the same peer companies used for executive compensation.
Directors who are not employees of the Company receive an annual retainer of $60,000. In response to the COVID-19 global pandemic, the Board of Directors agreed to a 15% reduction of their retainers for the May and August quarterly payments; bringing their annual total to $55,500 for the 2020/2021 Board year.$80,000.
Committee chairpersonsChairpersons each receive an additional retainer as follows: Audit Committee, chair $15,000 annually,annually; Compensation Committee, $10,000 annually,$12,750 annually; and all other Committees, $7,500$10,000 annually. The lead directorLead Director also receives a $15,000 annual retainer. Michael J. Anderson transitioned to a non-employee Director andThe Board Chair on January 2, 2017. His director compensation as Board Chair is the same as the lead director.receives a $70,000 annual retainer. Directors may elect to receive their retainers in cash or Common Shares. Retainers are paid on a quarterly basis in May, August, November
Committee members receive an additional retainer as follows: Audit Committee, $10,000 annually; Compensation Committee, $7,500 annually; and February.
Directors are not paid for individual board meetings. Committee meetings (including those held or attended via teleconference) are paid at $1,500 for all Committees.other Committees $5,000 annually. Additional compensation may be paid to individual directors for work requiring time and effort beyond what is normally expected to prepare for and attend Board and Committee meetings including orientation for new directors and special projects.
Directors are paid their retainers on a quarterly basis and are not compensated for individual Board or Committee meetings.
Directors receive an annual equity grant of RSAs,RSUs, other than Mr.Michael J. Anderson, Sr., who received an equivalent amount of cash. The value of annual grants for 20202023 was $100,000.$130,000. Director grants of RSAsRSUs will fully vest after one year from date of grant. Directors appointed between annual meeting dates receive a prorated equity grant. Directors have an equity ownership target of five times their annual retainer ($300,000). Until reaching this ownership level, they are required to retain 75% of the shares issued through equity grants by the Company.
Patrick E. Bowe was the only employee director during 2020.2023. He received no additional compensation for his directorship.
| | Name | | Fees earned or paid in cash | | Stock awards (1)(2)(3) | | Total |
| | Fees earned or paid in cash | | | | Fees earned or paid in cash | | Stock awards (1)(2)(3) | | Total |
| (a) | (a) | | (b)($) | | (c)($) | | (d)($) | (a) | | (b)($) | | (c)($) | | (d)($) |
Gerard M. Anderson (2) | Gerard M. Anderson (2) | | 60,000 | | | 91,361 | | | 151,361 | |
| Michael J. Anderson | | 170,500 | | | — | | | 170,500 | |
Stephen F. Dowdle (2)(3) | | 4,500 | | | 146,869 | | | 151,369 | |
| Pamela S. Hershberger | | 67,500 | | | 89,905 | | | 157,405 | |
| Michael J. Anderson, Sr. | |
Steven K. Campbell (2) | |
Gary A. Douglas (2)(3) | |
Stephen F. Dowdle (2)(4) | |
Pamela S. Hershberger (2) | |
Catherine M. Kilbane (2) | Catherine M. Kilbane (2) | | 90,000 | | | 91,361 | | | 181,361 | |
Robert J. King, Jr. (2) | Robert J. King, Jr. (2) | | 73,500 | | | 91,361 | | | 164,861 | |
Ross W. Manire (2) | Ross W. Manire (2) | | 78,000 | | | 91,361 | | | 169,361 | |
Patrick S. Mullin (2) | | 84,000 | | | 91,361 | | | 175,361 | |
John T. Stout, Jr. (3)(2) | John T. Stout, Jr. (3)(2) | | 18,000 | | | 139,381 | | | 157,381 | |
Jacqueline F. Woods (2) | | 25,000 | | | 2,111 | | | 27,111 | |
(1)RSAsRSUs were granted to all Directors,directors, except Michael J. Anderson, Sr. and JacquelineStephen F. WoodsDowdle, on May 8, 20205, 2023 and are valued at $14.60$37.48 per share, the closing price on the date of issuance.
(2)RSARSU dividend equivalent shares were granted on May 1, 20205, 2023 and are valued at $16.97$36.77 per share, the closing price on the date prior to issuance.
(3)Directors can make anMr. Douglas made the election to receive common stockCommon Shares in lieu of all or 50%his retainer fees for a portion of the retainer fees.2023. All of these shares are fully vested. For purposes of determining the number of shares to be issued in lieu of such fees, the shares are valued at the closing price on the date prior to issuance which was January 31 ($22.62),issuance.
(4)Mr. Dowdle did not stand for re-election in May 8 ($14.60), July 31 ($14.22) and October 30 ($21.69) for2023, as he had reached the fees noted above.Board's mandatory retirement age of 72.
Outstanding equity awards for non-employee directors and former directors at December 31, 20202023, are as follows:
| | | | | | | | |
| Name | | Outstanding Restricted Share AwardsStock Units (#) |
| Gerard M. Anderson | | 3,074 | | 6,113
Michael J. AndersonSteven K. Campbell | | 3,074 | | —
Stephen F. DowdleGary A. Douglas | | 3,074 | | 6,113
| Pamela S. Hershberger | | 3,074 | | 6,113
| Catherine M. Kilbane | | 3,074 | | 6,113
| Robert J. King, Jr. | | 3,074 | | 6,113
| Ross W. Manire | | 3,074 | | 6,113
Patrick S. Mullin | | 6,113 |
| John T. Stout, Jr. | | 3,074 | | 6,113
Jacqueline F. Woods | | — |
47The Andersons, Inc. | 2024 Proxy Statement | 45
CEO Pay Ratio
The Company'sCEO to median employee pay ratio is calculated pursuant to Item 402(u) of Regulation S-K.
Although there were changes to our employee population in 2020 due to internal reorganizations and cost cutting initiatives, in response to, among other things, additional integration efforts and the COVID-19 pandemic, we do not believe these changes would significantly impact the pay ratio disclosure and therefore we did not identify a new median employee. We identified the median employee by examining 2018/20192021/2022 eligible compensation under the Company’s qualified and non-qualified retirement benefit plans (“Retirement Benefit Eligible Compensation”) for all individuals, excluding our CEO, who were employed by the Company on November 15, 2019.2022. We believe the use of Retirement Benefit Eligible Compensation for all employees is a consistently applied compensation measure because it takes into account base pay for all employees, hours worked and overtime for hourly employees, plus bonuses, and because this measurement excludes equity awards which the Company does not widely distribute to employees. Approximately three percent (3%)3.7% of our employees receive annual equity awards. It is important to note that Retirement Benefit Eligible Compensation was calculated and used for all employees, including those who were not actively contributing or not eligible to contribute to a retirement benefit account for the pay periods completed during the twelve (12) month period from November 16, 20182021 to November 15, 2019.2022. Except for one (1) Singapore, and 14twelve (12) United Kingdom, four (4) Mexico, and twenty-two (22) Switzerland employees out of a total population of 2,5832,283 employees, which was considered a de minimis number of non-US employees, we included all employees, whether employed on a full-time, part time, seasonal, or temporary basis. We did not make any assumptions, adjustments or estimates with respect to Retirement Benefit Eligible Compensation, but we did annualize such compensation for any full-time and part time employees that were not employed by the Company for the full twelve (12) month period from November 16, 20182021 to November 15, 2019.2022.
We have calculated the annual total compensation for the median employee using the same methodology we use for our CEO as set forth in the Summary Compensation Table in the Compensation Discussion and Analysis section of the proxy statement.. We also included amounts for Company paid non-discriminatory benefits for both the median employee and CEO in the total compensation calculations. Benefit values were based on the elections of the CEO and the median employee in effect on November 15, 2020 plus2023, in addition to the value of other non-elective benefit coverages. Based onThe 2023 annual total compensation of our CEO was $6,840,619, the methodology described2023 annual total compensation of our median compensated employee was $88,604; and the ratio of these amounts is 77 to 1. We believe this ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Securities Exchange Act of 1934.
The Andersons, Inc. | 2024 Proxy Statement | 46
Pay vs. Performance Disclosures
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Value of Initial Fixed $100 Investment Based On: | | |
| Year | | Summary Compensation Table Total for PEO | | Compensation Actually Paid to PEO | | Average Summary Compensation Table Total for Non-PEO NEOs | | Average Compensation Actually Paid to Non-PEO NEOs | | Total Shareholder Return | | Peer Group Total Shareholder Return | | Net Income (Loss) (in thousands) | | Adjusted Pretax Income (in thousands) |
| (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) |
| 2023 | | $ | 6,826,492 | | | $ | 14,853,950 | | | $ | 2,726,190 | | | $ | 4,017,469 | | | $ | 251 | | | $ | 158 | | | $ | 132,529 | | | $ | 147,976 | |
| 2022 | | 6,709,493 | | | 6,928,966 | | | 2,480,012 | | | 2,465,395 | | | 150 | | | 184 | | | 166,979 | | | 175,491 | |
| 2021 | | 5,766,899 | | | 11,692,450 | | | 1,991,571 | | | 2,971,502 | | | 163 | | | 160 | | | 135,866 | | | 132,371 | |
| 2020 | | 3,752,735 | | | 3,007,429 | | | 1,190,140 | | | 1,091,568 | | | 101 | | | 108 | | | (14,215) | | | 10,635 | |
Column (b). Reflects compensation amounts reported in the Summary Compensation Table for our Principal Executive Officer ("PEO") - CEO, Patrick E. Bowe, for the respective years shown. Column (c). Compensation actually paid ("CAP") to our CEO in 2023, 2022, 2021 and 2020 reflects the respective amounts set forth in column (b) of the table above, andadjusted as illustratedset forth in the table below, as determined in accordance with SEC rules. For information regarding the decisions made by our Compensation Committee in regards to the CEO’s compensation for each fiscal year, please see the Compensation Discussion & Analysis section of the proxy statements reporting pay for the fiscal years covered in the table above. | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PEO | | 2023 | | 2022 | | 2021 | | 2020 |
| Summary Compensation Table ("SCT") Total Compensation | | $ | 6,826,492 | | | $ | 6,709,493 | | | $ | 5,766,899 | | | $ | 3,752,735 | |
| Grant Date Fair Value of Stock Awards from SCT | | (3,468,141) | | | (3,512,116) | | | (2,849,435) | | | (2,214,057) | |
| Fair Value of Equity Awards Granted in the Year and Unvested as of Year End | | 4,383,523 | | | 3,403,594 | | | 5,496,886 | | | 2,333,253 | |
| Change in Fair Value of Outstanding and Unvested Equity Awards, Year Over Year | | 5,742,156 | | | 331,078 | | | 3,278,100 | | | (864,502) | |
| Change in Fair Value of Equity Awards Vested, Granted in a Previous Year | | 1,369,920 | | | (3,083) | | | — | | | — | |
| Compensation Actually Paid | | $ | 14,853,950 | | | $ | 6,928,966 | | | $ | 11,692,450 | | | $ | 3,007,429 | |
Column (d). The following non-CEO named executive officers are included in the average figures shown:
◦2023, 2022 and 2021: Brian A. Valentine, William E. Krueger, Christine M. Castellano and Joseph E. McNeely
◦2020: Brian A. Valentine, William E. Krueger, Christine M. Castellano, Joseph E. McNeely, Valerie M. Blanchett and Jeffrey C. Blair
Column (e). Average “compensation actually paid” for our non-CEO NEOs in 2023, 2022, 2021 and 2020 reflects the respective amounts set forth in column (d) of the table above, adjusted as set forth in the table below, as determined in accordance with SEC rules. For information regarding the decisions made by our Compensation Committee in regards to the non-CEO NEOs’ compensation for each fiscal year, see the Compensation Discussion & Analysis section of the proxy statements reporting pay for the fiscal years covered in the table above. | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Non-PEO NEOs | | 2023 | | 2022 | | 2021 | | 2020 |
| SCT Total Compensation | | $ | 2,726,190 | | | $ | 2,480,012 | | | $ | 1,991,571 | | | $ | 1,190,140 | |
| Grant Date Fair Value of Stock Awards from SCT | | (1,042,807) | | | (617,012) | | | (450,717) | | | (321,067) | |
| Fair Value of Equity Awards Granted in the Year and Unvested as of Year End | | 1,317,137 | | | 581,148 | | | 825,760 | | | 314,288 | |
| Change in Fair Value of Outstanding and Unvested Equity Awards, Year Over Year | | 839,044 | | | 21,550 | | | 602,952 | | | (57,654) | |
| Change in Fair Value of Equity Awards Vested, Granted in a Previous Year | | 177,905 | | | (303) | | | 1,936 | | | (34,139) | |
| Compensation Actually Paid | | $ | 4,017,469 | | | $ | 2,465,395 | | | $ | 2,971,502 | | | $ | 1,091,568 | |
Column (f). For the relevant fiscal year, represents the cumulative total shareholder return of The Andersons, Inc. for the measurement periods ending December 31, 2023, 2022, 2021, and 2020, respectively.
Column (g). For the relevant fiscal year, represents the cumulative TSR of the Peer Group Index disclosed in Item 5 of the Company's Annual Report on Form 10-K for the measurement periods ending December 31, 2023, 2022, 2021, and 2020, respectively. The Peer Group Index, weighted for market capitalization, consists of the following companies: Archer-Daniels-Midland Co., Alto Ingredients, Inc., Bunge Global SA, Green Plains, Inc., Ingredion Incorporated, and Nutrien Ltd.
Column (h). "Net Income (Loss)" is reported in the Consolidated Statements of Operations in the Company's Annual Report on Form 10-K for each of the years ended December 31, 2023, 2022, 2021 and 2020.
The Andersons, Inc. | 2024 Proxy Statement | 47
Column (i). "Adjusted Pretax Income" is a non-GAAP measure that reflects "Income (loss) before income taxes from continuing operations" from the Company's Consolidated Statements of Operations filed in Form 10-K, adjusted for certain items. For a reconciliation of this number to the nearest GAAP measure, see Appendix A.
Relationship Between Compensation Actually Paid and Performance Measures
a.Total Shareholder Return (TSR):The relationship between CAP and TSR for the years ended December 31, 2023, 2022, 2021 and 2020 is displayed in the graph below:
b.Net Income (Loss): The relationship between CAP and Net Income (Loss) for the years ended December 31, 2023, 2022, 2021 and 2020 is displayed in the graph below:
The Andersons, Inc. | 2024 Proxy Statement | 48
c.Adjusted Pretax Income: The relationship between CAP and Adjusted Pretax Income for the years ended December 31, 2023, 2022, 2021, and 2020 is displayed in the graph below:
The following chart assumes a $100 investment in both The Andersons, Inc. Common Shares and the Peer Group Index on December 31, 2019. The chart depicts the relationship between the Company’s 2020 ratioTSR and the TSR of CEO's paythe Peer Group Index for the periods presented:
Tabular List of Performance Measures
The most important financial performance measures used to link compensation actually paid to NEOs for the most recent fiscal year to Company performance are:
| | | | | |
| 2023 Most Important Measures (Unranked) |
| Adjusted Pretax Income Attributable to the Company from Continuing Operations | Adjusted EPS |
| Return on Invested Capital (ROIC) | Relative TSR |
| Free Cash Flow (FCF) | Net Income Attributable to the Company |
For more information about how each of these measures is used in the Company’s AIP and PSU awards, and how they are calculated, refer to the median employee's pay is estimated as 47 to 1.Compensation Discussion and Analysis section of this proxy statement.
CEO TO MEDIAN EMPLOYEE PAY RATIO
| | | | | | | | | | | | | | |
| | CEO | | Median Employee |
| Salary/Wages | | $ | 996,923 | | | $ | 58,264 | |
| Bonus | | — | | | — | |
| Stock Awards | | 2,214,057 | | | — | |
| Option Awards | | 3,359 | | | — | |
| Non-Equity Incentive Plan Compensation | | 400,000 | | | 1,165 | |
| Change in Pension Value and Nonqualified Deferred Compensation Earnings | | — | | | — | |
| Other Compensation | | 138,396 | | | 4,264 | |
| Value of non-discriminatory Company paid benefits | | 15,708 | | | 16,708 | |
| TOTAL | | $ | 3,768,443 | | | $ | 80,401 | |
48The Andersons, Inc. | 2024 Proxy Statement | 49
Other Information
Shareholder Proposals for 20222025 Annual Meeting
Shareholder proposals intended for inclusion in the Company’s proxy statement relating to its 20222025 annual meeting must be received by the companyCompany no later thanNovember 26, 202122, 2024, and must otherwise comply with the SEC’s rules, to be considered for inclusion in the Company’s proxy materials.
In addition, the Company’s Code of Regulations establishes advance notice procedures for (1) the nomination, other than by or at the direction of the Board or the Company, of candidates for election as directors and (2) business to be brought before an annual meeting of shareholders other than by or at the direction of the Board or the Company. Any shareholder who wishes to submit a proposal to be acted upon at next year’s annual meeting or who proposes to nominate a candidate for election as a director must submit such notice in compliance with such procedures. Any such proposals or nominations, as well as any questions related thereto, should be timely submitted in writing to the Company’s Secretary at the address below. The Company’s Secretary must receive any such proposals or nomination no earlier than January 7, 202210, 2025, and no later than February 6, 2022. 9, 2025. In addition to complying with all provisions of the Code of Regulations, any notice of a nomination must comply with the requirements of Rule 14a-19 under the Exchange Act.
The Company will not entertain any proposals or nominations at the annual meeting that do not meet the requirements set forth in the Company’s Code of Regulations. If the shareholder does not also comply with the requirements of Rule 14a-4(c)(2) under the Securities Exchange Act, of 1934, as amended, proxy holders may exercise discretionary voting authority under proxies that the Company solicits to vote in accordance with their best judgment on any such shareholder proposal or nomination.
Additional Information
This proxy information is being mailed with the Company’s December 31, 20202023 Summary Annual Report to Shareholders including the Annual Report on Form 10-K. You may obtain additional copies of the Company’s Annual Report on Form 10-K free of charge upon oral or written request to the Company's Secretary of the Company at 1947 Briarfield Boulevard, Maumee, Ohio 43537. You may also obtain a copy of this document at the Securities and Exchange Commission’s Internet site at http://www.sec.gov. Our Annual Report on Form 10-K was filed on February 25, 202121, 2024, and this proxy statement will be filed on or about March 11, 2021.13, 2024.
The proxies being solicited are being solicited by the Board of Directors of the Company. The cost of soliciting proxies in the enclosed form will be borne by the Company, including the charges of brokerage houses and other custodians, nominees or fiduciaries for forwarding documents to security owners. The Company reserves the right to hire proxy solicitation agents, at its expense, if deemed necessary or appropriate. Our directors, officers and other employees, without additional compensation, may also solicit proxies personally or in writing, by telephone, e-mail, or otherwise.
Please complete the enclosed proxy card and mail it in the enclosed postage-paid envelope or register your vote by phone or Internet as soon as possible.
| | |
|
| By order of the Board of Directors |
|
| /s/ Christine M. Castellano |
Christine M. Castellano
Secretary |
49The Andersons, Inc. | 2024 Proxy Statement | 50
The Andersons, Inc.
AIP Adjusted Pretax Income
A non-GAAP financial measure
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Twelve months ended December 31, |
| (in thousands) | 2023 | | 2022 | | 2021 | | 2020 | | |
| Income (loss) before income taxes from continuing operations | $ | 169,563 | | | $ | 194,582 | | | $ | 160,770 | | | (27,081) | | | |
| Income (loss) attributable to the noncontrolling interests | 31,339 | | | 35,899 | | | 31,880 | | | (21,925) | | | |
| Pretax income (loss) from continuing operations attributable to The Andersons, Inc. | 138,224 | | | 158,683 | | | 128,890 | | | (5,156) | | | |
| Adjustments: | | | | | | | | | |
| Insured inventory (recoveries) expenses | (16,080) | | | 15,993 | | | — | | | — | | | |
| Gain on deconsolidation of joint venture | (6,544) | | | — | | | — | | | — | | | |
| Gain on sale of assets and businesses | (5,643) | | | (3,762) | | | (14,619) | | | — | | | |
| Gain on cost method investment | (4,798) | | | — | | | — | | | — | | | |
| Goodwill impairment | 686 | | | — | | | — | | | — | | | |
| Transaction related compensation | 7,818 | | | — | | | 1,274 | | | 4,206 | | | |
| Asset impairment including equity and cost method investments | 45,413 | | | 13,455 | | | 11,105 | | | — | | | |
| Severance costs | — | | | — | | | — | | | 6,091 | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Total adjusting items | 20,852 | | | 25,686 | | | (2,240) | | | 10,297 | | | |
| Adjusted pretax income from continuing operations attributable to The Andersons, Inc. | $ | 159,076 | | | $ | 184,369 | | | $ | 126,650 | | | $ | 5,141 | | | |
| Adjustments for executive compensation: | | | | | | | | | |
USDA Biofuel Producer Program funds (1) | — | | | (8,878) | | | — | | | — | | | |
ELEMENT (2) | (7,100) | | | — | | | — | | | — | | | |
Property, plant, and equipment insurance recoveries (3) | (4,000) | | | — | | | — | | | — | | | |
| Gain on sale of assets | — | | | — | | | (1,979) | | | — | | | |
| Legacy Rail segment impact | — | | | — | | | 7,700 | | | 5,494 | | | |
| Total executive compensation adjusting items | (11,100) | | | (8,878) | | | 5,721 | | | 5,494 | | | |
| AIP Adjusted Pretax Income | $ | 147,976 | | | $ | 175,491 | | | $ | 132,371 | | | $ | 10,635 | | | |
(1)In 2022, the USDA as a part of the Biofuel Producer Program, created under the CARES Act, provided funding to help lower costs and support biofuel producers who faced unexpected market losses due to the COVID-19 pandemic. Under this program The Andersons Marathon Holdings LLC ("TAMH') and ELEMENT LLC ("ELEMENT") received $13.3 million and $4.3 million, respectively. As the Company owned 50.1% of TAMH and 51% of ELEMENT in 2022, this adjustment was reduced by the amount attributable to the noncontrolling interests that would already be removed through "Income (loss) attributable to the noncontrolling interests" in the table above.
(2)As a result of the deconsolidation of ELEMENT in the second quarter of 2023, management reassessed the 2023 AIP targets. The amount removed above was related to the budgeted operating losses related to ELEMENT built into the 2023 AIP targets. If these budgeted losses were not removed it would result in an overstatement of actual results solely due to the deconsolidation of the facility.
(3)The Company received property insurance recoveries in excess of losses recorded on damaged assets in 2023. The excess amount received was removed from the results above for purposes of executive compensation.
The Andersons, Inc. | 2024 Proxy Statement | 51
The Andersons, Inc.
Adjusted Pretax Income from Continuing Operations Attributable to The Andersons, Inc. - Segment Data
A non-GAAP financial measure
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Twelve months ended December 31, 2023 |
| (in thousands) | Trade | | Renewables | | Nutrient & Industrial | | Other | | Total |
| Income (loss) before income taxes from continuing operations | $ | 96,234 | | | $ | 91,175 | | | $ | 25,049 | | | $ | (42,895) | | | $ | 169,563 | |
| Income attributable to the noncontrolling interests | — | | | 31,339 | | | — | | | — | | | 31,339 | |
| Pretax income (loss) from continuing operations attributable to The Andersons, Inc. | 96,234 | | | 59,836 | | | 25,049 | | | (42,895) | | | 138,224 | |
| Adjustments: | | | | | | | | | |
| Insured inventory recoveries | (16,080) | | | — | | | — | | | — | | | (16,080) | |
| Gain on sale of assets | (5,643) | | | — | | | — | | | — | | | (5,643) | |
| Asset impairment including equity method investments | 963 | | | 44,450 | | | — | | | — | | | 45,413 | |
| Transaction related compensation | 7,818 | | | — | | | — | | | — | | | 7,818 | |
| Gain on deconsolidation of joint venture | — | | | (6,544) | | | — | | | — | | | (6,544) | |
| | | | | | | | | |
| Goodwill impairment | — | | | — | | | 686 | | | — | | | 686 | |
| Gain on cost method investment | — | | | — | | | — | | | (4,798) | | | (4,798) | |
| Total adjusting items, net of tax | (12,942) | | | 37,906 | | | 686 | | | (4,798) | | | 20,852 | |
| Adjusted pretax income (loss) from continuing operations attributable to The Andersons, Inc. | $ | 83,292 | | | $ | 97,742 | | | $ | 25,735 | | | $ | (47,693) | | | $ | 159,076 | |
| Adjustments for executive compensation: | | | | | | | | | |
ELEMENT (1) | — | | | (7,100) | | | — | | | — | | | (7,100) | |
Property, plant, and equipment insurance recoveries (2) | (4,000) | | | — | | | — | | | — | | | (4,000) | |
| Total executive compensation adjusting items | (4,000) | | | (7,100) | | | — | | | — | | | (11,100) | |
| AIP adjusted pretax income | $ | 79,292 | | | $ | 90,642 | | | $ | 25,735 | | | $ | (47,693) | | | $ | 147,976 | |
(1) As a result of the deconsolidation of ELEMENT in the second quarter of 2023, management reassessed the 2023 AIP targets. The amount removed above was related to the budgeted operating losses related to ELEMENT built into the 2023 AIP targets. If these budgeted losses were not removed it would result in an overstatement of actual results solely due to the deconsolidation of the facility.
(2) The Company received property insurance recoveries in excess of losses recorded on damaged assets in 2023. The excess amount received was removed from the results above for purposes of executive compensation.
The Andersons, Inc. | 2024 Proxy Statement | 52
The Andersons, Inc.
Adjusted Net Income from Continuing Operations Attributable to The Andersons, Inc.
A non-GAAP financial measure
(unaudited)
| | | | | | | | | | | | | | | | | | | | | |
| Twelve months ended December 31, |
| (in thousands, except for per share data) | 2023 | | 2022 | | 2021 | | | | |
| Net income from continuing operations | $ | 132,529 | | | $ | 154,954 | | | $ | 131,542 | | | | | |
| Net income attributable to noncontrolling interests | 31,339 | | | 35,899 | | | 31,880 | | | | | |
| Net income from continuing operations attributable to The Andersons, Inc. | 101,190 | | | 119,055 | | | 99,662 | | | | | |
| Adjustments: | | | | | | | | | |
| Insured inventory (recoveries) expenses | (16,080) | | | 15,993 | | | — | | | | | |
| Gain on deconsolidation of joint venture | (6,544) | | | — | | | — | | | | | |
| Gain on sale of assets and businesses | (5,643) | | | (3,762) | | | (14,619) | | | | | |
| Gain on cost method investment | (4,798) | | | — | | | — | | | | | |
| Goodwill impairment | 686 | | | — | | | — | | | | | |
| Transaction related compensation | 7,818 | | | — | | | 1,274 | | | | | |
| Asset impairment including equity and cost method investments | 45,413 | | | 13,455 | | | 11,105 | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Income tax impact of adjustments (1) | (3,775) | | | (5,308) | | | 300 | | | | | |
| Total adjusting items, net of tax | 17,077 | | | 20,378 | | | (1,940) | | | | | |
| Adjusted net income from continuing operations attributable to The Andersons, Inc. | $ | 118,267 | | | $ | 139,433 | | | $ | 97,722 | | | | | |
| | | | | | | | | |
| Diluted earnings per share attributable to The Andersons, Inc. common shareholders from continuing operations | $ | 2.94 | | | $ | 3.46 | | | $ | 2.94 | | | | | |
| | | | | | | | | |
| Impact on diluted earnings (loss) per share from continuing operations | $ | 0.50 | | | $ | 0.59 | | | $ | (0.06) | | | | | |
| Adjusted diluted earnings per share attributable to The Andersons, Inc. common shareholders from continuing operations | $ | 3.44 | | | $ | 4.05 | | | $ | 2.88 | | | | | |
(1) The income tax impact of adjustments is taken at the statutory tax rate of 25% with the exception of certain transaction related compensation, goodwill impairments, and impairments of equity method investments in both 2023 and 2022, respectively.
The Andersons, Inc. | 2024 Proxy Statement | 53
The Andersons, Inc.
Return on Invested Capital (ROIC)
A non-GAAP financial measure
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Twelve months ended December 31, 2023 | | Twelve months ended, |
| (in thousands) | Trade | | Renewables | | Nutrient & Industrial | | Other | | Total | | December 31, 2022 | | December 31, 2021 |
| Income (loss) before income taxes from continuing operations | $ | 96,234 | | | $ | 91,175 | | | $ | 25,049 | | | $ | (42,895) | | | $ | 169,563 | | | $ | 194,582 | | | $ | 160,770 | |
| Income attributable to the noncontrolling interests | — | | | 31,339 | | | — | | | — | | | 31,339 | | | 35,899 | | | 31,880 | |
| Pretax income (loss) from continuing operations attributable to The Andersons, Inc. | 96,234 | | | 59,836 | | | 25,049 | | | (42,895) | | | 138,224 | | | 158,683 | | | 128,890 | |
| Adjustments: | | | | | | | | | | | | | |
| Insured inventory (expenses) recoveries | (16,080) | | | — | | | — | | | — | | | (16,080) | | | 15,993 | | | — | |
| Gain on sale of assets and businesses | (5,643) | | | — | | | — | | | — | | | (5,643) | | | (3,762) | | | (14,619) | |
| Asset impairment including equity method investments | 963 | | | 44,450 | | | — | | | — | | | 45,413 | | | 13,455 | | | 11,105 | |
| Transaction related compensation | 7,818 | | | — | | | — | | | — | | | 7,818 | | | — | | | 1,274 | |
| Gain on deconsolidation of joint venture | — | | | (6,544) | | | — | | | — | | | (6,544) | | | — | | | — | |
| | | | | | | | | | | | | |
| Goodwill impairment | — | | | — | | | 686 | | | — | | | 686 | | | — | | | — | |
| Gain on cost method investment | — | | | — | | | — | | | (4,798) | | | (4,798) | | | — | | | — | |
| Adjusted pretax income (loss) from continuing operations attributable to The Andersons, Inc. | 83,292 | | | 97,742 | | | 25,735 | | | (47,693) | | | 159,076 | | | 184,369 | | | 126,650 | |
Interest attributable to The Andersons, Inc. (1) | 35,234 | | | 4,385 | | | 7,016 | | | (1,768) | | | 44,867 | | | 53,149 | | | 33,692 | |
| Total ROIC pretax earnings | 118,526 | | | 102,127 | | | 32,751 | | | (49,461) | | | 203,943 | | | 237,518 | | | 160,342 | |
| Less: statutory blended tax rate of 25% | (29,632) | | | (25,532) | | | (8,188) | | | 12,365 | | | (50,986) | | | (59,480) | | | (40,086) | |
| Total ROIC earnings | 88,894 | | | 76,595 | | | 24,563 | | | (37,096) | | | 152,957 | | | 178,038 | | | 120,256 | |
| | | | | | | | | | | | | |
Invested Capital (2) | 1,331,290 | | | 266,397 | | | 319,843 | | | (128,977) | | | 1,788,553 | | | 2,432,406 | | | 2,236,022 | |
| | | | | | | | | | | | | |
| ROIC | 6.7% | | 28.8% | | 7.7% | | | | 8.6% | | 7.3% | | 5.4% |
| | | | | | | | | | | | | |
Adjusting items for executive compensation, net of tax (3) | 406 | | | (5,325) | | | — | | | — | | | (4,919) | | | (6,659) | | | 4,291 | |
| Total AIP ROIC earnings | 89,300 | | | 71,270 | | | 24,563 | | | (37,096) | | | 148,037 | | | 171,379 | | | 124,547 | |
| | | | | | | | | | | | | |
AIP invested capital (2) | 1,331,290 | | | 287,907 | | | 319,843 | | | (128,977) | | | 1,810,063 | | | 2,432,406 | | | 2,236,022 | |
| | | | | | | | | | | | | |
| AIP ROIC | 6.7% | | 24.8% | | 7.7% | | | | 8.2% | | 7.0% | | 5.6% |
(1) Excludes interest attributable to the noncontrolling interest within the Renewables segment.
(2) Invested capital and AIP invested capital are comprised of total equity and debt, less cash and cash equivalents and net debt attributable to the noncontrolling interest using a five-quarter rolling average. See the tables below for a reconciliation of these amounts.
(3) In the Trade segment, approximately $4.5 million of accounts receivable factoring fees were added back to the calculation as the segment used these facilities in lieu of short-term borrowings, which was partially offset by $4.0 million of property insurance recoveries received in excess of losses recorded on damaged assets in 2023. The excess amount received was removed from the results above for purposes of executive compensation. In the Renewables segment, as a result of the deconsolidation of ELEMENT in the second quarter of 2023, management reassessed the 2023 AIP targets. The amount removed above was related to the budgeted operating losses related to ELEMENT built into the 2023 AIP targets. If these budgeted losses were not removed it would result in an overstatement of actual results solely due to the deconsolidation of the facility. The income tax impact of all adjustments presented were taken at the statutory tax rate of 25%.
The Andersons, Inc. | 2024 Proxy Statement | 54
The Andersons, Inc.
A non-GAAP financial measure
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Quarter Ended, | | Trailing Five Quarter Average |
| (In thousands) | December 31, 2022 | | March 31, 2023 | | June 30, 2023 | | September 30, 2023 | | December 31, 2023 | |
| | | | | | | | | | | |
| Short-term debt | $ | 272,575 | | | $ | 638,210 | | | $ | 102,752 | | | $ | 14,138 | | | $ | 43,106 | | | $ | 214,156 | |
| Current maturities of long-term debt | 110,155 | | | 85,567 | | | 27,511 | | | 27,535 | | | 27,561 | | | 55,666 | |
| long-term debt | 492,518 | | | 486,892 | | | 576,489 | | | 569,730 | | | 562,960 | | | 537,718 | |
| Total shareholders' equity of The Andersons, Inc. | 1,198,601 | | | 1,169,591 | | | 1,230,986 | | | 1,240,735 | | | 1,282,899 | | | 1,224,562 | |
| Less: | | | | | | | | | | | |
| Cash and Cash Equivalents | 115,269 | | | 70,853 | | | 96,293 | | | 418,055 | | | 643,854 | | | 268,865 | |
Net debt attributable to noncontrolling interest (1) | 11,227 | | | 11,983 | | | (24,939) | | | (51,288) | | | (73,565) | | | (25,316) | |
| Invested Capital | $ | 1,947,353 | | | $ | 2,297,424 | | | $ | 1,866,384 | | | $ | 1,485,371 | | | $ | 1,346,237 | | | $ | 1,788,553 | |
| Adjustments: | | | | | | | | | | | |
ELEMENT (2) | — | | | 33,338 | | | 26,173 | | | 24,953 | | | 23,086 | | | 21,510 | |
| AIP Invested Capital | $ | 1,947,353 | | | $ | 2,330,762 | | | $ | 1,892,557 | | | $ | 1,510,324 | | | $ | 1,369,323 | | | $ | 1,810,063 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Trailing Five Quarter Average |
| (In thousands) | | December 31, 2022 | | December 31, 2021 |
| | | | |
| Short-term debt | | $ | 807,702 | | | $ | 571,834 | |
| Current maturities of long-term debt | | 72,510 | | | 60,154 | |
| long-term debt | | 545,124 | | | 748,991 | |
| Total shareholders' equity of The Andersons, Inc. | | 1,144,224 | | | 1,014,784 | |
| Less: | | | | |
| Cash and Cash Equivalents | | 118,980 | | | 105,074 | |
Net debt attributable to noncontrolling interest (1) | | 18,174 | | | 54,667 | |
| Invested Capital | | $ | 2,432,406 | | | $ | 2,236,022 | |
(1)This amount is related to the net debt attributable to noncontrolling interest at the Company's joint venture ethanol plants. Net debt is calculated as the combination of both short-term and long-term debt less cash and cash equivalents then reduced by the respective ownership percentage of the minority interest.
(2)Invested capital was increased as a result of the deconsolidation of ELEMENT in the second quarter of 2023, management reassessed the 2023 AIP targets. The amount removed above was related to the budgeted invested capital related to ELEMENT built into the 2023 AIP targets. If this was not removed it would result in an overstatement of actual results solely due to the deconsolidation of the facility.
The Andersons, Inc. | 2024 Proxy Statement | 55
The Andersons, Inc.
Free Cash Flow
A non-GAAP financial measure
(unaudited)
| | | | | | | | |
| | Twelve months ended December 31, 2023 |
| (in thousands) | | |
| Cash provided by operating activities | | $ | 946,750 | |
| Less: Changes in operating assets and liabilities | | |
| Accounts receivable | | 468,968 | |
| Inventories | | 572,235 | |
| Commodity derivatives | | 111,506 | |
| Other current and non-current assets | | 6,529 | |
| Payables and other current and non-current liabilities | | (563,718) | |
| Total changes in operating assets and liabilities | | 595,520 | |
| Cash from operations before working capital changes | | 351,230 | |
| | |
| Purchases of property, plant and equipment, and capitalized software | | (150,443) | |
| Proceeds from sale of business | | 10,318 | |
| Proceeds from sale of assets and investments | | 5,101 | |
| Purchases of investments | | (1,730) | |
| Proceeds from insurance | | 7,499 | |
| Cash dividends | | (25,373) | |
Net income attributable to the noncontrolling interest, less asset impairments (1) | | (74,044) | |
| Depreciation, amortization and capital expenditures attributable to noncontrolling interest | | (25,347) | |
| Purchases of property, plant and equipment, and capitalized software attributable to noncontrolling interest | | 27,097 | |
| Free Cash Flow | | $ | 124,308 | |
| Adjustments for executive compensation: | | |
| Unrealized foreign currency losses on receivables | | (4,818) | |
| Acquisition deemed asset acquisition | | 6,100 | |
Insurance recoveries on Inventory and Property, plant and equipment (2) | | (15,080) | |
Transaction related compensation expense (2) | | 5,864 | |
| | |
| Total adjusting items, net of tax | | (7,934) | |
| AIP Free Cash Flow | | $ | 116,374 | |
(1)This amount includes an asset impairment charge associated to the ELEMENT ethanol plant of $42.7 million attributable to the noncontrolling interest as the consolidated asset impairment charge is included in the total of cash provided by operating activities.
(2)The income tax impact of these adjustments is taken at the statutory tax rate of 25%.
The Andersons, Inc. | 2024 Proxy Statement | 56
