| 2. | To ratifyRatify the appointment of RSM US LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024;Provide advisory approval on the compensation of our named executive officers (“Say-on-Pay”); and Transact such other business as may properly come before the Annual Meeting. The Board of Directors (the “Board”) unanimously recommends that you vote FOR all of the director nominees listed in the attached Proxy Statement, FOR the ratification of the appointment of RSM US LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024, and FOR the advisory approval of the compensation of our named executive officers’ compensation, all as disclosed in the attached Proxy Statement. I would like to thank the Board for their contributions to Balchem. They play a critical and active role in our success. Our Board is intimately involved in overseeing the development and implementation of our business strategy, risk management, and corporate governance. 2023 was another successful year for Balchem. We delivered strong financial results while advancing our key strategic initiatives, in what continued to be a challenging macro-economic environment, highlighting once again the resilience of our business model. We fully integrated the Kappa Bioscience and Bergstrom Nutrition acquisitions. We completed exciting new scientific studies that support the supplementation of our portfolio of minerals, nutrients and vitamins for both human and animal nutrition, we enhanced our marketing capabilities to leverage the science behind our products and to help drive awareness and market penetration, and we expanded production capacity to better meet the rising demand for human choline, an essential nutrient well known in the supplement industry in relation to cognitive, liver and overall health. Our Board continues to monitor best practices in corporate governance, sustainability, and executive compensation and via our ongoing shareholder engagement efforts, we continue to solicit input from our shareholders on these important topics. In 2023, as part of our shareholder engagement efforts, we reached out to 52 of our largest shareholders representing over 80% of our outstanding shares to hear their views on a broad array of topics including, governance, sustainability, and executive compensation. We found these discussions incredibly helpful as we continue to lead our company forward. Based on the feedback we received from our shareholders and upon careful review, the Compensation Committee selected Pearl Meyer as their new independent compensation consultants. Additional information regarding our shareholder engagement and Say-on-Pay vote can be found on pages 35-36 of our Proxy Statement. At our 2023 Annual Meeting, we held an advisory vote on the frequency of holding a Say-on-Pay vote and based on the results, we will be holding Say-on-Pay votes each year. During this meeting, the Amended and Restated 2017 Omnibus Incentive plan which authorized the issuance of 800,000 additional shares for future grants under the plan was approved by our shareholders. We thank you for your continued strong support. We recently adopted our Incentive-Based Compensation Recovery Policy (commonly referred to as a clawback policy) which complies with the requirements under the Securities Exchange Act of 1934 and Nasdaq listing rules and is in addition to, not in lieu of, any other rights of recoupment that may be available under our equity award agreements or compensatory plans, etc. Over the last year, we also updated our Corporate Governance Guidelines to clarify the limitation on other board service (to avoid potential overboarding issues) and the Board’s oversight responsibilities, including information technology, cybersecurity and sustainability. Last year, we were pleased to welcome two new independent directors to our Board to replace two long-tenured board members who retired from our Board. Olivier Rigaud, Chief Executive Officer of Corbion N.V., a global food and biochemicals company based in the Netherlands, and Monica Vicente, Senior Vice President and Chief Financial Officer of Fresh Del Monte Produce Inc., a global agricultural and fresh food produce company based in the U.S., each bring added diversity, relevant market expertise, and strong global business acumen to the Board. We also remained focused on our 2030 environmental goals to reduce both greenhouse gas emissions and water usage by 25%, on an absolute basis from a 2020 baseline. Building on the success we had in 2022, we were pleased to announce that we again exceeded our greenhouse gas emissions goal with a 32% absolute reduction in 2023, from our 2020 baseline. This puts us in a position to execute on our strategic growth plans and achieve our 2030 emissions reduction goal. Additionally, in 2023, Balchem was named one of America’s Most Responsible Companies by Newsweek magazine for the fourth consecutive year. This list, compiled by Newsweek in partnership with Statista Inc., recognizes the most responsible companies in the U.S. across a variety of industries. We are pleased with the progress we are making as a company and we believe that we are indeed making the world a healthier place. Thank you for your continued support of Balchem and I look forward to our Annual Meeting. Sincerely, TABLE OF CONTENTS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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TABLE OF CONTENTS Notice of Annual Meeting of SHAREHOLDERS for Balchem Corporation | | | |
| DATE AND TIME: | | | Thursday, June 20, 2024, 9:00 a.m., Eastern Daylight Time (“EDT”) | | | PLACE: | | | Online, at www.virtualshareholdermeeting.com/BCPC2024 | | | ITEMS OF
BUSINESS: | | | 1. | | | Election of four Class 2 director nominees to the Board of Directors of Balchem Corporation (“Balchem” or the “Company”) to serve until the 2027 Annual Meeting of Shareholders and until their successors are duly elected and qualified; | | | 2. | | | Ratification of the appointment of RSM US LLP (“RSM”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016;2024; |
| | 3. | To hold an advisory (non-binding) vote on | | Advisory approval of the compensation of the Company’s named executive compensationofficers (“Say on Pay”Say-on-Pay”); and |
| | 4. | | | To transact such other business as may properly come before the 2024 Annual Meeting of Shareholders (the “Annual Meeting”) or any postponement or adjournment thereof. | | | | WHO CAN VOTE: | | | Shareholders of record at the close of business on April 22, 2024. | | | | HOW TO VOTE: | | | Shareholders who receive a printed copy of this Proxy Statement and who do not expect to attend the Meeting are requested to complete, date and sign the enclosed Proxy Card and promptly return the same in the stamped, self-addressed envelope enclosed for your convenience. Shareholders may also submit a Proxy Card over the Internet, at www.proxyvote.com, or by phone. You will need to input the 16-digit control number located on the Proxy Card or Notice of Internet Availability of Proxy Materials if you are submitting a Proxy Card over the Internet or by phone | | | | | | | | | If you hold your shares through a broker, bank or other nominee, please follow the instructions on the voting instruction form that you should receive from your broker, bank or other nominee. | | | | 2023 ANNUAL REPORT AND DATE OF DISTRIBUTION: | | | For more complete information, please review the Annual Report to Shareholders and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Annual Report”), a copy of which accompanies this Notice of Annual Meeting of Shareholders and Proxy Statement. This Notice of Annual Meeting of Shareholders and Proxy Statement and the Annual Report are first being made available or mailed to shareholders on or about April 26, 2024. |
| | | | | By order of the Board of Directors, | | | | | | | | | | | | | | Hatsuki Miyata | | | | April 26, 2024 | | | General Counsel and Secretary | |
TABLE OF CONTENTS Balchem is committed to making the world a healthier place by delivering trusted, innovative, and science-based solutions for the health and nutritional needs of the world. We provide the service, quality, and technology that enables our customers to win with respecttheir customers. We have built a reputation for delivering results to all of our stakeholders. Founded in 1967, Balchem, a Maryland corporation, became a publicly-traded company in 1970 and is listed on Nasdaq under the symbol “BCPC.” Our corporate headquarters is located in Montvale, New Jersey, and we have a broad network of sales offices, manufacturing sites, and R&D centers, primarily located in the U.S. and Europe. The Company consists of three business segments: Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products. Balchem employs approximately 1,300 people worldwide who are engaged in diverse activities, committed to developing, for each of our business segments, global market positions across the Company. Balchem solves today, shapes tomorrow. Human Nutrition and Health Balchem Human Nutrition and Health is a global leader in choline, chelated minerals, and microencapsulation technologies with strong positions in powder, flavor and cereal system formulation. Food or beverage, supplement or pharmaceutical, our Human Nutrition and Health business segment provides ready-made and custom nutrients, vitamins, ingredients, systems, and products that enable our customers to create better finished goods that improve all aspects of life. As the human nutrition space continues to evolve, our capabilities grow, allowing us to deliver scientifically proven health benefits and fantastic taste in applications from infant formulas to performance shakes and functional foods. Animal Nutrition and Health Balchem Animal Nutrition and Health is a global leader in choline production, nutrient encapsulation, chelated minerals, and functional ingredients. With a growing portfolio of products and a dedication to innovation and industry sustainability, Balchem Animal Nutrition and Health is leading the charge to meet the nutritional needs of ruminants, swine, poultry, and companion animals. Specialty Products Our Specialty Products business segment specializes in re-packaging and worldwide distribution of select sterilants and fumigants, especially for the sterilization of medical devices and spice and nutmeat fumigation. We have the packaging and distribution know-how to ensure the safe delivery of these products in returnable, reusable, environmentally safe containers. Our Plant Nutrition business unit, included in Specialty Products, provides chelated minerals under the trade name Metalosate® to the above matters isagricultural market. Forward-Looking Information Certain statements in this Proxy Statement, other than purely historical information, are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. We generally use the words “believe,” “expect,” “intend,” “plan,” “anticipate,” “likely,” “will,” “would,” “will be,” “will continue,” “will likely result,” “estimate,” “project,” “forecast,” “outlook,” “strategy,” “future,” “opportunity,” “may,” “should,” or the negative thereof or variations thereon or similar expressions generally intended to identify forward-looking statements. Such forward-looking statements, including those concerning our expectations, involve risks, uncertainties and other factors, some of which are beyond our control, which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The risks, uncertainties and factors that could cause our results to differ materially from our expectations and beliefs include, but are not limited to, those factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2023, and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”). The Company undertakes no obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise. No Incorporation by Reference Website references throughout this Proxy Statement which accompaniesare provided for convenience only, and the content on the referenced websites is not incorporated by reference into this Notice.Proxy Statement. The Board of Directors has set April ----20, 2016 as the record date for the Annual Meeting. This means that only stockholders of record at the close of business on that date are entitled to notice of and to vote at the Meeting or any adjournment thereof.
We hope that all stockholders who can conveniently do so will attend the Meeting. Stockholders who do not expect to be able to attend the Meeting are requested to complete, date and sign the enclosed proxy and promptly return the same in the stamped, self-addressed envelope enclosed for your convenience. Stockholders may also submit a proxy over the internet or by phone. Stockholders who are present at the Meeting may withdraw their proxies and vote in person, if they so desire.
BY ORDER OF THE BOARD OF DIRECTORS
Dated: May ___, 2016 | Dino A. Rossi, Chairman
|
New Hampton, New York 10958 Tel: 845-326-5600 Fax: 845-326-5702
TABLE OF CONTENTS
OF BALCHEM CORPORATION
GENERAL
Meeting Agenda and Recommendations This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors (the “Board“Board of Directors”Directors” or the “Board”“Board”) of Balchem Corporation (the “Company”) to be voted at the 2016 Annual Meeting of Stockholders (the “Annual Meeting” or the “Meeting”) in the Park Ridge Marriott, 300 Brae Boulevard, Park Ridge, NJ 07656, on Wednesday, June 15, 201620, 2024 at 11:9:00 a.m., local time, EDT and at any adjournment or postponement thereof. Shareholders will be able to listen, vote, and submit questions from their home or from any remote location that has Internet connectivity. Shareholders may only participate online by logging into www.virtualshareholdermeeting.com/BCPC2024 beginning at 8:45 a.m. EDT. This Proxy Statement, Proxy Card and a proxy cardNotice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) are expected to be sent to stockholdersshareholders beginning on or about May 6, 2016.
April 26, 2024.
The Board of Directors has fixedapproved the close of business on April 20, 201622, 2024 as the record date (the “Record Date”“Record Date”) for the determination of stockholdersto determine which shareholders are entitled to receive notice of, and to vote at the Annual Meeting. At the Annual Meeting, stockholdersshareholders will be asked to consider and vote upon the following matters:
| | Proposal | | | Recommendation | | | Voting Standard* | | | Page | | | | 1 | | | The election of four Class 2 director nominees to the Board of Directors to serve until the Annual Meeting of Shareholders in 2027 and until their successors are duly elected and qualified. | | | FOR
each nominee | | | Majority present
and entitled to
vote. | | | | | | | 2 | | | The ratification of the appointment of RSM US LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024. | | | FOR | | | Majority present
and entitled to
vote. | | | | | | | 3 | | | Advisory approval of the compensation of the Company’s named executive officers | | | FOR | | | Majority present
and entitled to
vote. | | | | |
*
| ● | The election of three Class 1 directorsFor all proposals, you have the choice to the Board of Directors to serve until the Annual Meeting of Stockholders in 2019 and thereafter until their respective successors are elected and qualified;vote “FOR”, “AGAINST” or “ABSTAIN.” |
Casting Your Vote Please provide your proxy by Internet, phone, or by filling in, signing, dating and promptly mailing your Proxy Card or voting instruction form. | | ●By Internet: | Ratification of the appointment of RSM US LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016; | | By Phone: | | | By Mail: | | | | www.proxyvote.com | | | 1-800-690-6903
(toll free within
U.S. and Canada) | | | Vote Processing
c/o Broadridge
51 Mercedes Way
Edgewood, NY 11717 | |
To vote at the Annual Meeting, visit www.virtualshareholdermeeting.com/BCPC2024 and enter the 16-digit control number included on your Proxy Card or Notice of Internet Availability. | ● | Approval on an advisory (non-binding) basis of the Company’s executive compensation (“Say on Pay”); and |
5
| ● | Such other matters as may properly come before the Annual Meeting or any adjournment thereof. |
You can ensure that your shares are
TABLE OF CONTENTS QUESTIONS AND ANSWERS ABOUT THE BALCHEM ANNUAL MEETING Why did I receive these materials? Our Board is soliciting proxies to be voted at the Annual Meeting by completing, signing, dating and returning the enclosed proxy cardon June 20, 2024. To participate in the envelope provided. Sending in a signed proxy will not affect your right to attend the Meeting and vote. A stockholder who gives a proxy may revoke it at any time before it is exercised by voting in person at the Annual Meeting, by submitting another proxy bearingvisit www.virtualshareholdermeeting.com/BCPC2024 and enter the 16-digit control number included on your Proxy Card or Notice of Internet Availability. You may begin to log into the virtual meeting platform (the “Meeting Platform”) at 8:45 a.m. EDT on June 20, 2024. The Annual Meeting will begin promptly at 9:00 a.m. EDT on June 20, 2024. How are these materials being distributed? On or about April 26, 2024, we began mailing this Proxy Statement and a later dateProxy Card or by notifying the Inspectorsa Notice of Election or the SecretaryInternet Availability to our shareholders of record as of the Companyclose of such revocation,business on April 22, 2024 and posted our proxy materials for shareholder access at www.proxyvote.com. As more fully described in writing, prior to the Annual Meeting. Please note, however, that ifNotice of Internet Availability, shareholders may also request printed proxy materials. The Notice of Internet Availability and website also provide information regarding how you may request proxy materials in printed or electronic form on an ongoing basis. Why am I getting these materials from my broker, bank or other nominee, and not directly from Balchem? If you hold your shares are held of record bythrough a broker, bank or other nominee, you will receive either the Notice of Internet Availability or printed proxy materials from that entity, as required by SEC rules. What is the difference between a “shareholder of record” and you wish to attend and vote in person at the Annual Meeting, you must obtain from the record holder a proxy issued in your name.
“beneficial shareholder”?
If your shares are registered in your name withon the books and records of our transfer agent, Broadridge Corporate Issuer Solutions, you are a shareholder of record. If your shares are held for you in the name of your broker, bank or other nominee, you are a beneficial shareholder and it is commonly said that your shares are held in “street name.” Who is entitled to vote at the Annual Meeting? Shareholders of record as of the Record Date will be entitled to vote at the Annual Meeting or any adjournment or postponement of the Annual Meeting. As of April 22, 2024, there were 32,423,468 outstanding shares of our Common Stock. Each share of our Common Stock is entitled to one vote on each matter to be voted on at the Annual Meeting. How do I vote my shares online at the Annual Meeting? Shareholders as of the Record Date may vote either overand submit questions while attending the internetAnnual Meeting online. Shares held in your name as the shareholder of record or beneficially in street name may be voted by you, while the polls remain open, at www.virtualshareholdermeeting.com/BCPC2024 during the Annual Meeting. You will need the 16-digit control number included on your Notice of Internet Availability or, if you received a printed copy of the proxy materials, on your proxy card or the instructions that accompanied your proxy materials in order to be able to vote and enter the meeting. You will be able to submit questions during the meeting by typing your question into the “ask a question” box on the meeting page. If you encounter any technical difficulties with the Meeting Platform on the Annual Meeting day, please call the technical support number that will be posted on the Meeting Platform. Technical support will be available starting at 8:30 a.m. EDT on June 20, 2024 and will remain available until thirty minutes after the Annual Meeting has finished. Even if you plan to attend the Annual Meeting, we encourage you to authorize your voting instructions in advance by Internet, telephone or mail so that your vote will be counted even if you later decide not to attend the Annual Meeting. If I am a shareholder of record, how do I vote my shares without attending the Annual Meeting? By Telephone, E-Mail or Internet: All shareholders of record may authorize the voting of their shares by telephone (within the United States, U.S. territories and Canada, there is no charge for the call), e-mail or by telephone. SpecificInternet, using the procedures and instructions for voting in this manner are set forthdescribed on the enclosed proxy card. These procedures are designedProxy Card or Notice of Internet Availability. A control number, located on the Proxy Card or Notice of Internet Availability, must be provided to authenticate each stockholder’sverify your identity and to allow stockholdersyou to vote theiryour shares and confirm that theiryour voting instructions have been properly TABLE OF CONTENTS QUESTIONS AND ANSWERS ABOUT THE BALCHEM ANNUAL MEETING recorded. If you vote by telephone, e-mail or Internet, you need not return your Proxy Card. If you hold your shares in “street name” (that is, through a broker or other nominee), you should instruct your broker or nominee how to vote your shares by following the voting instructions provided by your broker or nominee. In Writing: All shareholders of record also may vote by completing, signing and mailing their Proxy Card in the postage-prepaid (in the U.S.) envelope. If I am a beneficial shareholder (i.e., my shares are held in street name), how do I vote my shares without attending the Annual Meeting? If your shares are held in a brokerage account or by a bank or other holder of record, you are considered the “beneficial owner” of the shares and your shares are held in “street name.” The Notice of Internet Availability or the proxy materials, if you elected to receive a hard copy, has been forwarded to you by your broker, bank or other nominee who is the shareholder of record of those shares. As the beneficial owner, you have the right to direct your broker, bank or other holder of record on how to vote your shares by following their instructions that they should send you, including a “voting instruction form”. Please refer to information from your bank, broker or other nominee on how to submit your voting instructions. May I vote my shares by filling out and returning the Notice of Internet Availability? The Notice of Internet Availability identifies and provides notice of the items to be voted on at the Annual Meeting, but you cannot vote by marking the Notice of Internet Availability and returning it. If you would like a paper proxy card, you should follow the instructions in the Notice of Internet Availability. The paper proxy card you receive will also provide instructions as to how to authorize via the Internet or telephone your proxy to vote your shares according to your voting instructions. Alternatively, you can mark the paper proxy card on how you would like your shares voted, sign the proxy card and return it in the envelope provided. What constitutes a quorum? The presence (in person at the virtual meeting or by proxy) of shareholders entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting on any matter constitutes a quorum. If you sign and return your paper proxy card or authorize a proxy to vote electronically or telephonically, your shares will be counted to determine whether we have a quorum even if you abstain or fail to vote. Broker non-votes will also be considered present for the purpose of determining whether there is a quorum for the Annual Meeting. A “broker non-vote” is generally viewed as a vote that is not cast on a non-routine matter by a broker that is present (in person at the virtual meeting or by proxy) at a meeting at which there is at least one routine matter on the proxy card (otherwise the broker does not have authority to vote on anything and does not send in a proxy). Because the shares entitled to cast the vote are held in street name and the broker has not received voting instructions from the beneficial owner, the broker lacks discretionary authority to vote the shares on non-routine matters. What vote is required to approve each proposal? Proposal 1 (election of directors). Directors are elected by a majority vote other than in the case of a contested election in which case directors will be elected by a plurality vote. Assuming a quorum is present, the affirmative vote of a majority of all votes cast, either by attendance at the Annual Meeting or by proxy, is required to approve Proposal 1. Abstentions and broker non-votes will not be counted as votes cast and will have no effect on the outcome of the vote for Proposal 1 (non-routine matter). Under the Company’s Corporate Governance Guidelines (the “Governance Guidelines”), if an incumbent director nominee in an uncontested election receives a majority of “WITHHOLD”, that director shall promptly offer his or her resignation to the Board. The Corporate Governance and Nominating Committee (the “Governance Committee”) will then make a recommendation to the Board whether to accept or reject the resignation tendered by such director or whether other action is recommended. Proposal 2 (ratification of the appointment of RSM as the independent auditor of the Company for the fiscal year ending December 31, 2024). Assuming a quorum is present, the affirmative vote of a majority of all votes cast, either by attendance at the Annual Meeting or by proxy, is required to approve Proposal 2. Abstentions will not be counted as votes cast and will have no effect on the outcome of the vote for Proposal 2. Brokers have discretionary authority to vote on Proposal 2 (routine matter), so there will be no broker non-votes. Proposal 3 (advisory approval of the compensation of the Company’s Named Executive Officers (“NEOs”)). Assuming a quorum is present, the affirmative vote of a majority of all votes cast, either by attendance at the Annual Meeting or by proxy, is required to approve Proposal 3. Abstentions and broker non-votes will not be counted as votes cast and will have no effect on the outcome of the vote for Proposal 3 (non-routine matter). TABLE OF CONTENTS QUESTIONS AND ANSWERS ABOUT THE BALCHEM ANNUAL MEETING Will my shares be voted if I do not provide my Proxy Card or voting instructions? Shareholders of Record: If your shares are registered in your name on the books and records of our transfer agent, you are a shareholder of record. If you are a shareholder of record, your shares will not be voted if you do not properly complete, sign and return your Proxy Card or otherwise vote at the Annual Meeting. It is, therefore, important that you vote your shares. Street Name Holders: If your shares are held in a brokerage, bank or another account that bears the name of athe holder and not you—shares referred to as held in “street name”—and you do not provide your voting instructions to your broker, your shares may be voted by your broker, bank or brokerageother nominee only on certain “routine” matters, pursuant to stock exchange rules. Of the proposals to be considered and voted on at the Annual Meeting, only the ratification of RSM as our independent registered public accounting firm you(Proposal 2) is considered a “routine” matter for which brokers, banks or other nominees may also be able to vote your shares over the internet or by telephone. A large number of banks and brokerage firms are participating in online programs that allow eligible stockholders to vote over the internet or by telephone. If your bank or brokerage firm is participating in such a program, your voting form will provide instructions. If your voting form does not contain internet or telephone voting information, please complete and return the paper voting form in the self-addressed, postage-paid envelope provided by your bank or brokerage firm.
If you properly specify how a proxy isuninstructed shares. The other proposals to be voted it will be voted accordingly.on at the Annual Meeting are considered “non-routine”. If you sign a proxy card or voting form but do not provide voting instructions on a non-routine matter that appears on a proxy card with at least one routine matter (as is the case with the Annual Meeting), your broker may indicate on the proxy that it does not have discretionary voting authority and your shares will not be voted FOR the director nominees, FOR ratification of the appointment of the auditors, FOR approval of the Company’s executive compensation,on such non-routine matter, which is referred to as a “broker non-vote.” Proposals 1 and at the discretion of the proxy holders with regard to any other matter that3 on this year’s ballot are “non-routine” matters for which brokers may come before the Meeting or any adjournment thereof.
Broker non-votes are shares held by brokers or nominees that are present in person or represented by proxy, but are not voted on a particular matter becausevote absent voting instructions have not been received from the beneficial owner and the broker or nominee does not have discretion to vote without such instructions. Brokers and nominees generally do not have such discretion when the matter is deemed by the broker voting rules to be “non-routine.” The ratification of the independent registered public accounting firm is considered to be a “routine” matter with respect to which brokers and nominees have discretion to vote shares held by them in street-name in their discretion absent any instructionsowner.
How are votes counted? received from the beneficial owners of such shares. Brokers and nominees do not have such discretion withWith respect to the election of directors (Proposal 1), you may vote “FOR,” “AGAINST” or Say“ABSTAIN”. Votes that are abstained will not count as votes “FOR” or “AGAINST” a director. Proposal 1 is a “non-routine” matter for which brokers may not vote absent voting instructions from their beneficial owners. For Proposal 1, abstentions and “broker non-votes” are not considered votes cast and will not affect the outcome of this proposal.
With respect to the ratification of RSM as our independent registered public accounting firm (Proposal 2), you may vote “FOR,” “AGAINST” or “ABSTAIN.” For Proposal 2, abstentions will not affect the outcome of this proposal and, as this proposal is considered a “routine” matter, there will be no broker non-votes as brokers are permitted to exercise their discretion to vote uninstructed shares on Pay.this proposal.
With respect to the advisory vote on executive compensation of our NEOs (Proposal 3), you may vote “FOR,” “AGAINST” or “ABSTAIN.” Proposal 3 is a “non-routine” matter for which brokers may not vote absent voting instructions from their beneficial owners. For Proposal 3, abstentions and “broker non-votes” are not considered votes cast and will not affect the outcome of this proposal.
If your Proxy Card is signed and returned without specifying choices, the shares will be voted FOR all Director nominees in Proposal 1, FOR the ratification of the appointment of RSM as our independent registered public accounting firm in Proposal 2, and FOR the approval, on an advisory basis, of the compensation of the Company’s Named Executive Officers in Proposal 3. How will my shares be voted on any other matters to come before the Annual Meeting? The Board is not aware of any matter to come before the Annual Meeting other than as described above. If any matter other than as described above should properly come before the Annual Meeting, then the persons named in the enclosed form of Proxy Card will have discretionary authority to vote all proxies with respect thereto in accordance with their judgment. How Will Business Be Conducted at the Annual Meeting? The chair of the Annual Meeting will determine the order of business and all other matters of procedure at the Annual Meeting. Only nominations and other proposals brought before the Annual Meeting in accordance with the advance notice and information requirements of our Bylaws will be considered, and no such nominations or other proposals were received. May shareholders ask questions at the 2024 Annual Meeting? Yes. You may submit questions online via the link provided below. Questions must relate directly to the business of the Annual Meeting. To submit a question, log into the Meeting Platform at: www.virtualshareholdermeeting.com/BCPC2024 type your question into the “Ask a Question” field and click “Submit.” Questions pertinent to Annual Meeting matters will be answered during the meeting, subject to time constraints. Questions regarding personal matters, including those related to employment, product or service issues, or TABLE OF CONTENTS QUESTIONS AND ANSWERS ABOUT THE BALCHEM ANNUAL MEETING suggestions for product innovations, are not pertinent to Annual Meeting matters and therefore will not be answered. Any questions pertinent to Annual Meeting matters that cannot be answered during the Annual Meeting due to time constraints will be posted online and answered at https://balchem.com/our-company/investor-relations/. Who pays for this proxy solicitation? All expenses incurred relating to this solicitation will be borne by the Company. This will include the fee of D.F. King & Co., Inc. who will help us solicit proxies, for a fee of $13,000 plus expenses. Proxies may be solicited, without additional compensation, by directors, officers and other regular employees of the Company by telephone, email, fax or in person. All expenses incurred in connection with this solicitation will be borne by the Company. Brokers, nominees, fiduciaries and other custodians have been requested to forward soliciting material to the beneficial owners of shares of our Common Stock held of record by them, and such custodians will be reimbursed for their reasonable expenses.
Can I change my vote or revoke my proxy?
Yes. Whether you have voted by Internet, telephone or mail, if you are a shareholder of record, you may change your vote and revoke your proxy by: sending a written statement revoking your proxy to the Secretary of the Company, provided such statement is received no later than 11:59 p.m., EDT on June 19, 2024; voting again via the Internet or by telephone at a later time before the closing of those voting facilities at 11:59 p.m., EDT on June 19, 2024; submitting a properly signed proxy card with a later date that is received no later than 11:59 p.m., EDT on June 19, 2024; or attending the Annual Meeting (virtually) and voting at the Annual Meeting. Proxy revocation notices should be sent to 5 Paragon Drive, Montvale, NJ 07645, Attention: Secretary. New paper proxy cards should be sent to set forth above. If you are a beneficial shareholder (i.e., you hold shares in street name), you must follow the instructions provided by your broker, bank or other holder of record for changing or revoking your proxy. Beneficial shareholders may also attend the virtual Annual Meeting and vote online during the meeting, which will replace any previous votes. Your virtual attendance at the Annual Meeting will not, by itself, revoke a proxy previously authorized by you. We will honor the proxy card or authorization with the latest date. Internet Availability of Proxy Materials
The Company’s Proxy Statement and the Annual Report to stockholders for the year ended December 31, 2015 are available at http:https://proxymaterials.balchem.com.materials.
proxyvote.com/default.aspx?ticker=057665. TABLE OF CONTENTS PROPOSAL NO. 1 1. ELECTION OF DIRECTORS
The Company’s Bylaws provide for a staggered termAt the time of the Annual Meeting, our Board will consist of Directors consisting of eight (8)8 members, with the classification of the Board of Directors into three classes (Class 1, Class 2 and Class 3).
The term of the three currentour four Class 12 directors will expire at the Annual Meeting. The ClassMeeting and, assuming their election, the class 2 and Class 3 directorsDirectors will remain in office until their terms expire, at the annual meetings of stockholders to be held in the years 2018 and 2017, respectively.
Accordingly, at the 2016 Annual Meeting, three Class 1 directors are to be elected to hold office until the 2027 annual meeting of stockholders to be held in 2019 and thereaftershareholders or until their successors have been elected and qualified. The nominees and continuing directors are listed below with brief biographies and are currently directors and have been nominated for election after due consideration by the Corporate Governance and Nominating Committee and the Board. biographies.
| | Name | | | Class | | | Next Election Date* | | | | Kathleen Fish | | | 1 | | | 2025 | | | | Theodore Harris | | | 1 | | | 2025 | | | | Matthew Wineinger | | | 1 | | | 2025 | | | | Daniel Knutson | | | 2 | | | 2027 | | | | Joyce Lee | | | 2 | | | 2027 | | | | Olivier Rigaud | | | 2 | | | 2027 | | | | Monica Vicente | | | 2 | | | 2027 | | | | David Fischer | | | 3 | | | 2026 | |
*
| Subject to the Company's Director Retirement Policy. |
The Board is not aware of any reason why any such nomineeMr. Knutson, Ms. Lee, Mr. Rigaud, and Ms. Vicente may be unable to serve as a director. If any, some, or all of such nominees are unable to serve, the shares represented by all valid proxies will be voted for the election of such other person or persons, as the case may be, as the Board may recommend, or the Board may fill the vacancy or may amend the Company’s Bylaws to reduce the size of the Board. Directors Standing for Re-Election Vote Required to Elect Directors
Under the rules of the Securities and Exchange Commission (the “SEC”), boxes and a designated blank space are provided on the form of proxy for stockholders to mark if they wish to vote in favor of or withhold authority to vote for the Company’s nominees for director.
A director nominee in an uncontested election must receive a pluralitymajority of the votes cast at the Annual Meeting, assuming a quorum is present. This means thatIn the case of a contested election, directors will be elected by a plurality vote. Regardless, a broker non-vote or a vote withheld from a particular nominee will not affect the outcome of the election of directors. However, we have adopted a majority vote policy, as described below.
If for any reason any such named nominee should not be available as a candidate for director, the proxies will be voted in accordance with the authority conferred in the proxy for such other candidate as may be nominated by the Company’s Board of Directors.
Majority Vote Policy
In 2012, the Board of Directors amendedUnder the Company’s Corporate Governance Guidelines and adopted a Director Resignation Policy. This policy provides that(the “Governance Guidelines”), if aan incumbent director nominee for director in an uncontested election receives a greater numbermajority of “withhold”“WITHHOLD” votes, for election than “for” votes (“Majority of Withhold”), that director shall promptly tender to the Boardoffer his or her resignation fromto the Board of Directors. Our CorporateBoard. The Governance and Nominating Committee will then make a recommendation to the Board whether to accept or reject the resignation tendered by such director or whether other action is necessary.
Ourrecommended. The Board will act on the tendered resignation, taking into accountconsidering the recommendation of the Corporate Governance and Nominating Committee as well as other potentially relevant factors, within 90 days from the date of the certification of the election results. The director whose resignation is under consideration is not permitted to participate in the consideration or recommendation of the Corporate Governance and Nominating Committee or deliberations of the Board with respect to his or her resignation. If a director’s resignation is accepted by our Board, the Board may fill the resulting vacancy or may amend the Company’s Bylaws to decrease the size of the Board.
The Company’s Corporate Governance Guidelines are available on the CorporateLeadership & Governance page in the Investor Relations section of the Company’s website, website: www.balchem.com. Nominees for Election as
TABLE OF CONTENTS PROPOSAL 1. ELECTION OF DIRECTORS NOMINEES’ BIOGRAPHICAL INFORMATION | | Daniel Knutson
Class 2 Director
(Term expires 2024)
Age: 67
Independent Director since 2018
| | Professional Highlights | | | • Mr. Knutson served as the Executive Vice President for Special Projects at Land O’Lakes, Inc., an agribusiness and food co-operative, until his retirement at the end of 2017. | | | • From 2000 to 2017, Mr. Knutson served as Executive Vice President and Chief Financial Officer at Land O’Lakes, where he oversaw corporate finance, accounting, treasury, audit, information technology and strategy and played key roles in many of Land O’Lakes’ transactions. In addition, he was responsible for Land O’Lakes’ investment in Moark LLC. | | | Committee Assignments | | | • Audit, Chair | | | • Compensation | | | Other Current Public Company Directorships | | | • None | | | Nominee Qualifications | | | Our Company’s financial compliance programs and policies benefit from Mr. Knutson’s input and skilled guidance. Mr. Knutson’s animal feed and human food industry experience, combined with his financial and international business management experience, makes him a valuable member of our Board. Mr. Knutson has served as Chair of our Audit Committee since June 2018. | |
| | Joyce Lee
Class 2 Director
(Term expires 2024)
Age: 51
Independent Director since 2019
| | Professional Highlights | | | • President of Cobb-Vantress, Inc., a wholly owned subsidiary of Tyson Foods, Inc. (NYSE: TSN) since January 2022. Cobb-Vantress, Inc. is the world’s oldest pedigree broiler breeding company, dedicated to genetic research and innovation. | | | • From 2020 to 2021, Ms. Lee served as Executive Vice President and President of U.S. Pet Health and U.S. Commercial Operations of Elanco Animal Health Incorporated (NYSE: ELAN). | | | • From 2016 to 2020, Ms. Lee served as the president of North America for Bayer Animal Health. | | | • From 2013 to 2015, Ms. Lee was Executive Vice President and Area President of Canada and Latin America at Zoetis Inc. (NYSE: ZTS). | | | Committee Assignments | | | • Audit | | | • Governance | | | Other Current Public Company Directorships | | | • None | | | Nominee Qualifications | | | Ms. Lee’s domestic and international business management experience, particularly with respect to the development and supply of products to the animal feed and nutrition industries, makes her a valuable member of our Board. | |
Dino A. Rossi, age 61, a Class 1 director whose current term expires in 2016, has been a director of the Company since 1997 and Chairman of the Company’s Board of Directors since February 2007. Mr. Rossi is currently interim CEO and an advisor to the board of directors of Elite Comfort Solutions, a portfolio platform company of Arsenal Capital Partners, Inc. Mr. Rossi retired from his position as President and Chief Executive Officer of the Company in April 2015, which he had held since October 1997. He was Chief Financial Officer of the Company from April 1996 to January 2004 and Treasurer of the Company from June 1996 to June 2003. He was Vice President, Finance and Administration of Norit Americas Inc., a wholly-owned subsidiary of Norit N.V., a Dutch chemicals company, from January 1994 to February 1996, and Vice President, Finance and Administration of Oakite Products Inc., a specialty chemicals company, from 1987 to 1993. Mr. Rossi served as a director of Scientific Learning Corporation (NASDAQ) from February 2010 to August 2012. Mr. Rossi’s years of experience as the primary source of corporate and operational leadership for the Company and his experience with other manufacturing entities make him a valuable member of our Board of Directors.11
TABLE OF CONTENTS PROPOSAL 1. ELECTION OF DIRECTORS | | Olivier Rigaud
Class 2 Director
(Term expires 2024)
Age: 59
Independent Director since 2023
| | Professional Highlights | | | • Mr. Rigaud has been Chief Executive Officer and Chair of the Board of Management for Corbion N.V., a global food and biochemicals company based in the Netherlands, since August 2019. He also serves as a member of the Executive Committee at Corbion N.V. | | | • Chief Executive Officer of Naturex, a global specialty ingredients company for the food & beverage, nutrition & health, and personal care industries. Prior to joining Corbion N.V., Mr. Rigaud successfully finalized the sale of Naturex to Givaudan. | | | Committee Assignments | | | • Audit | | | • Governance | | | Other Current Public Company Directorships | | | • Corbion N.V. (Euronext Amsterdam) | | | Board Qualifications | | | Mr. Rigaud brings over thirty years of relevant industry expertise and strong global business acumen, including extensive M&A and strategic experience, to our Board. He is also well-versed on sustainability and corporate social responsibility matters. As CEO at Corbion N.V., he leads an organization of 2,500 employees, 16 industrial sites, and 6 R&D and Innovation centers. Mr. Rigaud is a French national working out of the Netherlands, and brings unique and diverse international perspective, relevant CEO experience, and insights to our Board. | |
| | Monica Vicente
Class 2 Director
(Term expires 2024)
Age: 58
Independent Director since 2023
| | Professional Highlights | | | • Senior Vice President and Chief Financial Officer of Fresh Del Monte Produce Inc., a global agricultural company, since April 2022. | | | • Prior to that, she served as Vice President, Corporate Finance at Fresh Del Monte for 19 years. | | | Committee Assignments | | | • Audit | | | Other Current Public Company Directorships | | | • None | | | Board Qualifications | | | Ms. Vicente’s experience as a current CFO for a global public company brings substantial financial expertise to our Board. She has extensive financial expertise across global and regional finance, financial planning and analysis, investor relations and procurement for a global public company. She has experience in SEC reporting and controlling, tax and treasury as well. Ms. Vicente brings these relevant experiences, strategic business acumen, and relevant food industry expertise to our Board. | |
Theodore L. Harris, age 51, a Class 1 director whose current term expires in 2016, has been a director, President and Chief Executive Officer of the Company since April 2015. Mr. Harris was employed by Ashland, Inc. (NYSE), in various senior management positions, serving most recently as Senior Vice President, President Performance Materials, from November of 2014 to April 2015. Prior to this position, from 2011 to 2014, he served as Senior Vice President, President Performance Materials & Ashland Supply Chain, and prior to that, Vice President, President Performance Materials & Ashland Supply Chain. Mr. Harris’ broad managerial, international, operational and sales experience, as well as his proven track record of developing and implementing strategies for delivering sustainable, profitable growth make him a valuable member of our Board of Directors.
Matthew D. Wineinger, age 49, a Class 1 director whose current term expires in 2016, has been a director of the Company since September 2015. Since June 2015, Mr. Wineinger has been the President of United Sugars Corporation, a privately held, leading marketer of sugar. Mr. Wineinger served as President of Bulk Ingredients from June 2010 to November 2014, and as President, Food and Industrial Ingredients of Tate & Lyle PLC (LSE) from March 2008 to June 2010. Mr. Wineinger’s twenty-five years of extensive global, operational and strategic industry experience, together with his previous knowledge of manufacturing operations involving many of the Company’s current raw materials, make him a valuable member of our Board of Directors, particularly as the Company focuses on development and supply of products to human food and nutrition industries.
UPON RECOMMENDATION BY THE CORPORATE GOVERNANCE AND NOMINATING COMMITTEE, THE BOARD OF DIRECTORS OF THE COMPANYUNANIMOUSLY RECOMMENDS A VOTE ‘FOR’“FOR” THE ELECTION OF THE ABOVE NOMINEES AS DIRECTORS. Directors Not Standing For Election
TABLE OF CONTENTS PROPOSAL 1. ELECTION OF DIRECTORS CONTINUING DIRECTORS’ BIOGRAPHICAL INFORMATION | | David Fischer,
Class 3 Director
(Term expires 2026)
Age: 61
Independent Director since 2010
| | Professional Highlights | | | • Retired director and President and Chief Executive Officer of Greif, Inc. (NYSE), a supplier of industrial packing systems from November 2011 to October 2015. President and Chief Operating Officer of Greif from 2007 to 2011, and from 2004 to 2007, Senior Vice President and Divisional President, Industrial Packaging & Services - Americas. | | | • A co-founder and chairman of the board of directors of 10x Engineered Materials, a manufacturer of high-tech abrasives for industrial applications. | | | Committee Assignments | | | • Executive | | | • Compensation | | | • Governance | | | Other Current Public Company Directorships | | | • Ingredion Incorporated (NYSE) | | | Board Qualifications | | | Mr. Fischer’s management and leadership skills, developed over years of responsibility for complex, global manufacturing operations, and his intimate knowledge of mergers and acquisitions, position him as a critical component of our Board as we look to grow both organically and by acquisition. | |
| | Kathleen Fish,
Class 1 Director
(Term expires 2025)
Age: 67
Independent Director since 2022
| | Professional Highlights | | | • Prior to her retirement, Ms. Fish was Chief Research, Development and Innovation Officer for The Procter & Gamble Company (NYSE: PG) (“P&G”) (NYSE) (2017 – 2020). | | | • Chief Technology Officer, P&G (2014 – 2017) | | | Committee Assignments | | | • Executive | | | • Compensation | | | • Governance, Chair | | | Other Current Public Company Directorships | | | • Origin Materials, Inc. (Nasdaq) | | | Board Qualifications | | | Ms. Fish’s executive leadership skills along with her expertise in the field of innovation, research, and new product development, including in highly regulated industries and direct to consumer markets provide valuable insights to the Board in driving growth and overseeing governance and risk. Ms. Fish has served as Chair of our Governance Committee since February 2023. | |
TABLE OF CONTENTS PROPOSAL 1. ELECTION OF DIRECTORS | | Ted Harris,
Class 1 Director,
Chairman of the Board (Term expires 2025)
Age: 59
Director since 2015, Chairman since 2017
| | Professional Highlights | | | • Director, Chief Executive Officer and President of Balchem Corporation since April 2015, and Chairman of the Board of Directors since January 2017. | | | • Prior to joining the Company, Mr. Harris was employed by Ashland Global Holdings Inc. (formerly Ashland Inc.) (NYSE), a specialty chemical company. During his tenure at Ashland, his management positions included Senior Vice President/Ashland, President, Performance Materials, from November of 2014 to April 2015, Senior Vice President/Ashland, President, Performance Materials & Ashland Supply Chain from 2011 to 2014, and Vice President/Ashland, President, Performance Materials & Ashland Supply Chain. | | | Other Current Public Company Directorships | | | • Pentair plc (NYSE) | | | Board Qualifications | | | Mr. Harris has led the Company since April 2015, effectively using his extensive knowledge and deep understanding of the Company’s global business, operations, people and strategic priorities to lead the Company in achieving its vision of “making the world a healthier place.” Mr. Harris’ broad managerial, international, operational and sales experience, as well as his proven track record of developing and implementing strategies for delivering sustainable, profitable growth, make him a valuable member and Chairman of our Board. | |
| | Matthew Wineinger,
Class 1 Director and Lead Director
(Term expires 2025)
Age: 57
Independent Director since 2015
| | Professional Highlights | | | • Since June 2015, Mr. Wineinger has been the President and Chief Executive Officer of United Sugars Producers and Refiners Cooperative (formerly, United Sugars Corporation until October 2023), a privately held, leading marketer of sugar. | | | • President, Bulk Ingredients of Tate & Lyle PLC (LSE) from June 2010 to November 2014 and prior to that, President, Food and Industrial Ingredients from March 2008 to June 2010. | | | Committee Assignments | | | • Executive, Chair | | | • Compensation, Chair | | | Other Current Public Company Directorships | | | • None | | | Board Qualifications | | | Mr. Wineinger’s over thirty years of extensive global, operational and strategic industry experience, together with his previous knowledge of manufacturing operations involving many of the Company’s current raw materials, make him a valuable member of our Board, particularly as the Company focuses on development and supply of products to human nutrition markets. Mr. Wineinger has served as Lead Director and Chair of our Compensation Committee and Executive Committee since February 2023. | |
TABLE OF CONTENTS PROPOSAL 1. ELECTION OF DIRECTORS Our directors possess a Class 2varied and balanced mix of skills, business and leadership experience, board experience and viewpoints. While each director whose current term expires in 2018, was appointedis individually qualified to make substantial contributions, collectively, our directors’ rich experience, diverse backgrounds and viewpoints enhance the quality and effectiveness of the Board’s deliberations and decision making. The following chart provides information regarding the members of our Board, including certain types of knowledge, skills, experiences and attributes possessed by one or more of our directors which our Board believes are relevant to our Boardbusiness or industry. The charts do not encompass all of Directorsthe knowledge, skills, experiences or attributes of our directors, and the fact that a particular knowledge, skill, experience or attribute is not listed does not mean that a director does not possess it. In addition, the absence of a particular knowledge, skill, experience or attribute with respect to any of our directors does not mean the director in September 2010. Fromquestion is unable to contribute to the decision-making process in that area. The type and degree of knowledge, skill and experience listed below may vary among the members of the Board. | | Knowledge Skills and Experience | | | Fischer | | | Fish | | | Harris | | | Knutson | | | Lee | | | Rigaud | | | Vicente | | | Wineinger | | | | Core Industry Experience based on experience at other companies in similar industries | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Experience based on current or prior role(s) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate Governance based on current or prior role(s) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Public Company Board Experience based on current or prior service on other public boards | | | | | | | | | | | | | | | | | | | | | | | | | | | | Environmental/Social based on current or prior role(s) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Financial / Accounting / Risk Management / Capital Markets based on experience gained as a CFO, accounting professional or risk management professional | | | | | | | | | | | | | | | | | | | | | | | | | | | | Health & Safety based on current or prior role(s) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mergers & Acquisitions / Strategy experience and knowledge in evaluating and implementing M&A transactions and business/investment strategies | | | | | | | | | | | | | | | | | | | | | | | | | |
TABLE OF CONTENTS PROPOSAL 1. ELECTION OF DIRECTORS | | Knowledge Skills and Experience | | | Fischer | | | Fish | | | Harris | | | Knutson | | | Lee | | | Rigaud | | | Vicente | | | Wineinger | | | | Research & Development based on current or prior role(s) | | | | | | | | | | | | | | | | | | | | | | | | | | | | International Markets business experience outside the United States | | | | | | | | | | | | | | | | | | | | | | | | | | | | Marketing and Sales experience in understanding, assessing, developing and implementing marketing and sales strategies | | | | | | | | | | | | | | | | | | | | | | | | | | | | Manufacturing / Supply Chain based on current or prior role(s) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Compensation / HR experience based on HR expertise or CEO/head of business role with people management responsibilities or member of Compensation Committee at a public board | | | | | | | | | | | | | | | | | | | | | | | | | |
TABLE OF CONTENTS PROPOSAL 1. ELECTION OF DIRECTORS | | Board Diversity Matrix | | | | Total Number of Directors | | | 8 | |
| | Gender | | | Male or Man | | | Female or
Woman | | | Non-Binary
(not female/
woman or male/man) | | | Other –
A gender
not listed | | | Unknown /
I choose not
to disclose | | | | | | | 5 | | | 3 | | | | | | | | | | |
| | Number of Directors who identify in any of the categories below | | | | Hispanic or Latino | | | | | | 1 | | | | | | | | | | | | | American Indian or Alaskan Native | | | | | | | | | | | | | | | | | | | Asian | | | | | | 1 | | | | | | | | | | | | | Black or African American | | | | | | | | | | | | | | | | Native Hawaiian or Other Pacific Islander | | | | | | | | | | | | | | | | | | | White | | | 5 | | | 1 | | | | | | | | | | | | | Two or More Races | | | | | | | | | | | | | | | | | | | LGBTQ+ | | | | | | | | | | | | | | | | |
TABLE OF CONTENTS PROPOSAL 1. ELECTION OF DIRECTORS The following pie charts show the independence, tenure, diversity and age range of our directors as of April 2005 until his retirement in June 2007, Mr. Coombs served26, 2024. Note: The board diversity pie chart reflects gender diversity and racial/ethnic diversity separately and so a director may be counted more than once. TABLE OF CONTENTS PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee, upon review, has appointed RSM as the Executive Vice PresidentCompany’s independent registered public accounting firm for the year ending December 31, 2024. The Company is submitting its selection of Strategic InitiativesRSM for Tetra Technologies, Inc. (NYSE), an oilratification by the shareholders at the Annual Meeting. RSM has audited the Company’s financial statements since 2004 and gas services company,has a strong understanding of our business and operations, accounting policies and financial systems, and internal control framework. Based on such understanding and their ability, and lower fee structure due to efficiencies from May 2001such knowledge, we believe RSM is best qualified to April 2005,perform this important function. Further, RSM rotates its lead audit engagement partner every five years. Neither the Company’s charters nor its Bylaws require that the shareholders ratify the selection of RSM as its Executive Vice President and Chief Operating Officer. From January 1994the Company’s independent registered public accounting firm. However, the Company is submitting the selection of RSM to May 2001, Mr. Coombs served as Tetra’s Executive Vice President – Oil & Gas. Mr. Coombs is a director of Tetra and is a member of its Audit and Corporate Governance and Nominating Committees. Mr. Coombs also servesshareholders for ratification as a directormatter of CSI Compressco GP Inc. andgood corporate governance practice. If shareholders do not ratify the general partner of CSI Compressco LP (NASDAQ),selection, the Audit Committee will reconsider whether to retain RSM. Even if the selection is ratified, the Audit Committee in its discretion may change the appointment at any time during the year if they determine that such a publicly traded limited partnership, both of which are subsidiaries of Tetra. Mr. Coombs has thirty-five years of experiencechange would be in the oil and gas service and exploration industries, which, together with his entrepreneurial approach to management, provides the Board of Directors with essential counsel and insight into this area.
Edward L. McMillan, age 70, a Class 2 director whose current term expires in 2018, has been a directorbest interests of the Company since February 2003. Mr. McMillan owns and manages McMillan, LLC,its shareholders.
Assuming a transaction-consulting firmquorum is present, the affirmative vote of a majority of all votes, by attendance at the Annual Meeting or represented by proxy, is required for approval of this proposal. Abstentions will not be counted as votes cast and will have no effect on the outcome of the vote. Brokers have discretionary authority to vote on this proposal, so there will be no broker non-votes. We expect that provides strategic consulting servicesrepresentatives of RSM will be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and facilitates mergers and/or acquisitions predominantlywill be available to respond to appropriate questions. Please refer to the foodsection titled “Information Relating to Proposal 2: Ratification of Appointment of Independent registered Public Accounting Firm” of this proxy statement for more information.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF RSM AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2024. TABLE OF CONTENTS PROPOSAL 3: ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS Since our 2017 annual meeting, at which our shareholders last approved holding advisory or “Say-on-Pay” votes on executive compensation on an annual basis, the “Say-on-Pay” vote has been held every year. Last year, our shareholders approved our “Say-on-Pay” resolution by approximately 72% of the votes cast on the executive compensation described in our 2023 Proxy Statement. Details regarding our shareholder engagement and agribusiness industry sectors. From 1988Say-on-Pay vote in 2023 are on pages 35-36 of this Proxy Statement. The Company again seeks your advisory vote and asks that you approve the compensation of the Company’s Named Executive Officers (“NEOs”) as disclosed in this Proxy Statement by voting FOR the following resolution at the Annual Meeting: “RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed pursuant to 1996, he was Presidentthe compensation disclosure rules of the SEC (which disclosure includes the Compensation Discussion and CEOAnalysis, compensation tables and any related material disclosed in this proxy statement).” Please refer to the section entitled “Compensation Discussion and Analysis”, and the tables and narratives in the Executive Compensation portion of Purina Mills, Inc., where he was involvedthis section for approximately 28 yearsthe discussion and summary of the policies of the Compensation Committee which form the basis for the compensation of our NEOs and information on the amounts paid. For reference, the pay versus performance disclosure is provided under the section titled “Pay versus Performance” of this Proxy Statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the policies and practices described in various senior level positionsthis Proxy Statement. Because this vote is advisory only, the vote is not binding; however, the Compensation Committee will consider the results of shareholder voting in marketing, strategic planning,making future compensation decisions regarding NEOs. Assuming a quorum is present, the affirmative vote of a majority of all votes cast, by attendance at the Annual Meeting or represented by proxy, is required for approval of this proposal. Abstentions and business segment management. Mr. McMillanbroker non-votes will not be counted as votes cast and will have no effect on the vote.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT. TABLE OF CONTENTS General Balchem is also Chaircommitted to adhering to sound corporate governance practices. | • | Balchem’s Governance Guidelines: |
| ○ | Include corporate governance practices to guide and assist the Board in fulfilling its responsibilities to oversee management in the operation and results of Balchem’s business and affairs. |
| ○ | Are designed to enhance the necessary authority and practices for the Board to make decisions that are in the best interests of Balchem and independent of Balchem’s management. |
| ○ | Are intended to align the interests of directors and management with the long-term interests of Balchem’s shareholders. |
| ○ | The Governance Guidelines are available on the Leadership & Governance page in the Investor Relations section of the Company’s website, www.balchem.com. |
| • | Code of Business Conduct and Ethics (our “Code of Conduct”) |
| ○ | Our Code of Conduct applies to all Balchem employees, directors and officers. |
| ○ | Our Code of Conduct is the foundation of Balchem’s Compliance and Ethics Program and embodies the first of Balchem’s Core Values, which is “Always Doing the Right Thing.” |
| ○ | Our Code of Conduct promotes honest and ethical conduct, compliance with applicable laws, rules and regulations, prompt reporting of violations of the code and full, fair, accurate, timely and understandable disclosure in reports filed with the SEC. |
| ○ | Our Code of Conduct meets the requirements of a “code of ethics” as defined by Item 406 of Regulation S-K. The Code of Conduct covers topics including, but not limited to, avoiding conflicts of interest, maintaining confidentiality of information, working with suppliers, preventing bribery and corruption, avoiding insider trading, and compliance with laws and regulations. |
| ○ | Additionally, the Company has adopted a Code of Conduct for Senior Financial Officers that applies to the Company’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Treasurer and Corporate Controller. |
| ○ | Among other things, this code requires Senior Financial Officers to provide full, fair, accurate, timely, and understandable disclosure in reports and documents that the Corporation files with or submits to the Securities and Exchange Commission and in other public communications. |
| ○ | Amendments to, or waivers of the provisions of, the Code of Conduct, if any, made with respect to any of our directors or officers will be posted on our website at www.balchem.com. |
| ○ | Both codes are available on the Leadership & Governance page in the Investor Relations section of the Company’s website at www.balchem.com. |
| ○ | We also have a Supplier Code of Conduct which our suppliers are expected to adhere to. The Supplier Code of Conduct defines our commitment to protecting human rights and ensuring safe work environments throughout our supplier chain. |
| • | Board Committee Charters |
| ○ | Balchem’s Board Committees (Audit, Compensation and Governance) have each adopted a charter defining its respective purposes and responsibilities. These charters are reviewed by the Committees annually. The charters for the Audit, Compensation and Governance Committees are available on the Leadership & Governance page in the Investor Relations section of the Company’s website, www.balchem.com. |
| ○ | Each year, the Board conducts a survey to determine the independence of its members. The Board has determined that each of the Company’s directors, other than Mr. Harris, is independent, as defined under the Nasdaq Listing Rules. |
TABLE OF CONTENTS | ○ | The Board conducts an annual self-evaluation (which includes a director self-assessment) and the Committees conduct a self-evaluation on a biennial basis. |
The Board provides general oversight of the Company’s risk management program, focusing on the most significant and material risks facing the Company and helps to ensure that management develops and implements preventative controls and appropriate risk mitigation strategies. At the direction of the Board, we have instituted an enterprise-wide risk management process that identifies potential exposure to risks that arise in the course of Trusteesour business. The Board uses our enterprise-wide risk management system as a key tool for understanding the risks facing us as well as assessing whether management’s processes, procedures and practices for mitigating those risks are effective. Our Internal Audit function is primarily responsible for the Universityplanning, assessment and reporting of Illinois, whichour risk profile and this risk management system. Although most risk oversight activities are administered through the Audit Committee, each of our Board Committees has historically focused and continues to focus on specific risks within its respective area of responsibility and regularly reports to the full Board. The Board and the Audit Committee regularly discuss the Company’s major risk exposures with management, their potential financial impact on the Company and the management thereof. (1)
| The Audit Committee receives, or arranges for the Board to receive, on a no less than annual basis, reports from management on areas of material risk to the Company, including financial, operational, legal, regulatory, information security and cybersecurity and strategic risks (the “Company Risk Reports”). |
(2)
| The Audit Committee receives the Company Risk Reports from members of management tasked with the responsibility to understand, manage and mitigate the risks (with the Company’s enterprise risk management effort being facilitated by its Internal Audit function). |
(3)
| The Chair of the Audit Committee reports on its discussion of the Company Risk Reports to the full Board during the Committee reports portion of the Board meeting following the receipt of said Company Risk Reports, which enables the Board and its Committees to coordinate the risk oversight role, particularly with respect to cross-discipline risks and interrelated risks. |
The Compensation Committee also evaluates risk in relation to our compensation program. Please refer to the discussion in the Compensation Discussion and Analysis under the section “Risk Considerations in our Compensation Program.” As part of its role in evaluating the Company’s corporate governance practices and procedures, including identifying best practices and reviewing and recommending to the Board for approval any changes to the documents, policies and procedures in the Company’s corporate governance framework, including its Articles of Incorporation and Bylaws, the Governance Committee evaluates the risks associated it with these practices and procedures. Additionally, the Governance Committee plays a critical role in mitigating the risks associated with key employee departures via its role in succession planning for the Chief Executive Officer (“CEO”) and other executives. At least once per year, usually as part of the annual talent review process, the Governance Committee and the Board discuss and review the succession plans for the CEO and other key executives. The Board also becomes familiar with potential successors via various means, including annual talent reviews, presentations to the Board, and communications outside of meetings. Our succession planning process is an organization-wide practice designed to proactively identify, develop and retain the leadership talent that is critical for our future business success. TABLE OF CONTENTS The chart below sets forth the responsibilities of the Board and its Committees for risk oversight: 6We are committed to running our business in a way that respects the overall environment in which we operate. Therefore, corporate responsibility and sustainability play an important role in our strategies and long-term value creation for our stakeholders. We believe that our sustainability practices require transparency and accountability. Our sustainability framework focuses on the most critical Environmental, Social, and Governance (“ESG”) topics relevant to our business and stakeholders, including monitoring climate risk and diversity and inclusion efforts. The Governance Committee periodically, and at least annually, reviews Balchem’s sustainability efforts, ESG strategy, initiatives, and policies.
The Company issues a sustainability report on an annual basis, which is the result of a process of engagement with Balchem’s stakeholders to understand their sustainability interests and concerns and capture Balchem’s efforts and achievements in key areas of sustainability. We are committed to reducing our greenhouse gas emissions by implementing new technologies, improving operational efficiencies, and expanding green energy usages. In addition, we are committed to reducing our global water use by reducing water usage, recycling, and investing in new technologies to improve water efficiency. For more information on our approach to sustainability, please see our sustainability report which is available on our Corporate Social Responsibility page at www.balchem.com. Our Governance Committee, in connection with its responsibility for reviewing the Company’s activities and practices regarding sustainability and ESG matters, maintains responsibility for oversight of our sustainability-related practices and monitors the Company’s progress in this area. Periodically, and at least annually, our entire Board receives information on our sustainability and ESG efforts, with a focus on the Company’s sustainability program, including performance against targets. campuses
TABLE OF CONTENTS Cybersecurity is a critical part of our enterprise risk management. The Board, through its Audit Committee, oversees enterprise risk management, including cybersecurity. To more effectively address cybersecurity threats, we have numerous security layers within our least privilege network approach which is managed by our Information Technology Department. Our cybersecurity programs align with numerous standards and continues to grow and develop as new technologies emerge. Further, we have regular user awareness testing and trainings in Champaign-Urbana, Chicago,place which helps keep all end users and Springfield, Illinois,executive leadership up-to-date on the most current threats. The global head of Information Security, possessing credentials in both information technology (“IT”) and cybersecurity, provides regular updates to senior management. Additionally, they provide at least an annual update, or more frequently if necessary, to both the Audit Committee and the full Board regarding the current threat landscape at Balchem, cybersecurity technologies, mitigation strategies, industry trends and best practices that we follow, major cybersecurity incidents (if any), and other areas of importance. The global head of Information Security has responsibility over cybersecurity management globally and reports directly to the Chief Financial Officer. Additional activities to maintain and enhance information security are discussed below. | • | Reliable, Scalable Systems and Infrastructure
|
Our information security systems, infrastructure, and processes are built on and follow the U.S. National Institute of Standards and Technology (“NIST”) framework for information security, which is a set of guidelines, accepted standards, and best practices for mitigating organization cybersecurity risks published by NIST. We continue to make significant investments in industry-leading and advanced technologies as part of our strategy to strengthen our security posture, business continuity capabilities, and ability to protect and safeguard systems and stakeholder data. Our Information Security Program and systems are tested and assessed annually by an independent third party. | • | Automation and Artificial Intelligence
|
We have implemented automated systems to proactively test attack vectors by emulating inside and outside threats resulting in the validation of our ability to detect and defend against a cyber attack. Artificial intelligence is used as part of early warning systems designed to detect, alert, and respond to potential cyber threats. Recognizing that information security, stakeholder data, and privacy principles involve more than just systems and infrastructure, we provide semi-annual cybersecurity education and training to all users with access to IT systems, devices, or applications. Internal social engineering phishing campaigns are conducted regularly with the goal of building a culture of cybersecurity, as well as raising awareness and reinforcing best practices across the organization. Third parties also Chairplay a role in our cybersecurity. We engage third-party services to conduct evaluations of our security controls, whether through penetration testing, independent audits or consulting on best practices to address new challenges. These evaluations include testing both the design and operational effectiveness of security controls. We apply a risk-based approach to mitigate cybersecurity risks associated with our use of third-party service providers and cybersecurity considerations affect the selection and oversight of these third-party service providers. We perform due diligence on third parties that have access to our most critical systems, data or facilities that house such systems or data. Corporate Strategy At least once per year, the Board and senior management engage in an in-depth strategic review of our corporate strategy and our business units’ strategic plans. These plans are designed to create long-term shareholder value and serve as the foundation upon which goals are established. Throughout the year, the Board reviews our strategy and monitors management’s progress against such goals. TABLE OF CONTENTS Board Structure & Responsibilities Role of the University of Illinois Research Park, L.L.C. in Champaign, Illinois. Mr. McMillan’s background, experienceBoard The Board oversees the management and continued involvement in the agribusiness industry are of particular value to our Board of Directors.
David B. Fischer, age 53, a Class 3 director whose current term expires in 2017, was appointed as a directorgovernance of the Company. The Board, acting directly or through its committees, monitors and oversees various matters, including, overall Company in September 2010. Currently, Mr. Fischer is retired. Prior to his retirement, he wasperformance, the integrity of the Company’s financial controls, the Company’s strategic plan, the Company’s financial statements, the Company’s management succession plan, the Company’s enterprise risk management (including information technology and cybersecurity), the Company’s sustainability initiatives, and the Company’s ethical standards and legal compliance programs – while also selecting, evaluating and compensating a director and President andwell-qualified Chief Executive Officer of Greif, Inc. (NYSE), a supplier of industrial packing systems from November 2011 to October 2015. From 2007 to 2011, Mr. Fischer washigh integrity, selecting individuals for Board membership and evaluating the President and Chief Operating Officer of Greif, and from 2004 to 2007, Mr. Fischer served as Greif’s Senior Vice President and Divisional President, Industrial Packaging & Services - Americas. He is currently a member of the Boards of Directors of Ingredion Incorporated (NASDAQ) and DOmedia LLC, a privately held company. Additionally, he serves on the Board of Habitat for Humanity International and the Wexner Medical Center of Ohio State University. Mr. Fischer holds a Bachelor of Science degree from Purdue University. Mr. Fischer’s management and leadership skills, developed over years of responsibility for complex, global manufacturing operations, and his intimate knowledge of mergers and acquisitions, position him as a critical component of our Board of Directors, as we look to grow both organically and by acquisition.
Perry W. Premdas,age 63, a Class 3 director whose current term expires in 2017, was appointed as a director of the Company in January 2008. He is currently retired. From 1999 to 2004, Mr. Premdas was Chief Financial Officer of Celanese AG, a chemical and plastics business spun-off by Hoechst AG and listed on the Frankfurt stock exchange and the NYSE. He was Senior Executive Vice President and Chief Financial Officer of Centeon LLC from 1997 to 1998. Over his career, he has led treasury, finance, audit and investor relations functions of US and international companies and had general manager, executive and director roles in various wholly-owned and joint venture operations. Mr. Premdas holds a BA from Brown University and an MBA from the Harvard University Graduate School of Business. He served as a memberperformance of the Board of Directors of Compass Minerals International, Inc. (NYSE) until May 2015. Mr. Premdas has been our Audit Committee Chairman and the Board of Director’s audit committee financial expert since 2008. The Company’s financial compliance programsindividual directors, reviewing and policies benefit from Mr. Premdas’ particular inputapproving various compensation plans and skilled guidance. Mr. Premdas’ combination of financialexecutives’ compensation, and international business management experience make him a valuable member of our Board of Directors.
Dr. John Y. Televantos, age 63, a Class 3 director whose current term expires in 2017, has been a director since February 2005,reviewing and lead director since August 2010. Dr. Televantos is a Partner at Arsenal Capital Partners, Inc., a private equity investment firm, where he leads the Chemicals and Materials practice of the firm. Dr. Televantos was formerly with Hercules, Inc., a chemical manufacturing company, as President of the Aqualon Division and as Vice President of Hercules, Inc. from April 2002 through February 2005. Dr. Televantos holds B.S. and Ph.D. degrees in Chemical Engineering from the University of London, United Kingdom. In addition to Dr. Televantos’ experience in the chemical manufacturing industry and management of publicly traded chemical manufacturing entities, Dr. Televantos is also significantly involved in private equity markets and processes involving chemical manufacturing companies. Collectively, these make Dr. Televantos a valuable member of the Board of Directors.
Director Independence
The Board of Directors has made an affirmative determination that each ofapproving the Company’s directors, other than Mr. Rossi and Mr. Harris, is independent, as such term is defined under the NASDAQ Marketplace Rules.operating budget.
Meeting Attendance
During fiscal 2015, the Board of Directors held five regular meetings and one special meeting. Each director attended at least 75% of the meetings of the Board held when he was a director and of the meetings of those Committees of the Board on which he served.
The Company has a policy of strongly encouraging directors to attend the annual meeting of stockholders. Historically, attendance has been excellent. Five members of the Board of Directors attended the Company’s 2015 annual meeting of stockholders.
Committees of the Board of Directors
The Company’s Board of Directors has a standing Audit Committee, Executive Committee, Compensation Committee, and Corporate Governance and Nominating Committee. The Board has the following standing committees, each of Directorswhich is comprised solely of independent directors:
(3)
| Compensation Committee; and |
The Board appoints the members of each Committee. In 2015,The Governance Committee evaluates and recommends to the Audit Committee held three regular meetings and four telephonic or special meetings and eachBoard the responsibilities of the Compensation CommitteeBoard committees, including composition of committees, structure of committees, and Corporate Governance and Nominating Committee held three meetings.operations. The Executive Committee did not meet in 2015.table below represents the current committee composition.
| | Name | | | Audit | | | Compensation | | | Governance | | | Executive | | | | David Fischer | | | | | | | | | | | | | | | | Kathleen Fish | | | | | | | | | Chair | | | | | | | Daniel Knutson | | | Chair | | | | | | | | | | | | | Joyce Lee | | | | | | | | | | | | | | | | Olivier Rigaud | | | | | | | | | | | | | | | | Monica Vicente | | | | | | | | | | | | | | | | Matthew Wineinger | | | | | | Chair | | | | | | Chair | | | | Number of Committee Meetings Held in 2023 | | | 7 | | | 4* | | | 3 | | | 0 | |
*
| Includes one special meeting. |
The Audit Committee is directly responsible for appointing, compensating and overseeing the work of the Company’s independent registered public accounting firm. The Audit Committee also assists the Board of Directors in fulfilling its oversight responsibilities with respect to the Company’s financial reporting, internal controls and procedures, and audit functions. The other primary duties and responsibilities of the Audit Committee are to (i) monitor the integrity of the Company’s financial reporting process and systems of internal controls regarding finance, accounting, and legal compliance, (ii) monitor the independence, qualifications and performance of the Company’s independent auditors, (iii) establish policies and procedures with respect to enterprise risk assessment and risk management, (iv) review Company procedures for identifying, monitoring, and mitigating risk exposures, and (v) provide an avenue of communication among the independent auditors, management and the Board of Directors. to: (1)
| monitor the integrity of the Company’s financial reporting process and systems of internal controls regarding finance, accounting, and legal compliance; |
(2)
| monitor the independence, qualifications, performance and compensation of the Company’s independent auditors; |
TABLE OF CONTENTS (3)
| establish policies and procedures with respect to enterprise risk assessment and risk management; |
(4)
| review Company procedures for identifying, monitoring, and mitigating risk exposures, including cybersecurity risks; and |
(5)
| provide an avenue of communication among the independent auditors, internal audit, management and the Board. |
The Audit Committee’s role with respect to the Company’s risk oversight is discussed under the section belowabove entitled below entitled “Board Role in“Corporate Risk Oversight”.Oversight.” The Audit Committee also monitors and, if necessary, investigates reports made to the Company’s hotline dedicated for the notification of potential financial fraud under the Sarbanes-Oxley Act of 2002.hotline. Responsibilities, activities and the independence of the Audit Committee are discussed in greater detail under the section of this Proxy Statementbelow entitled “Audit Committee Report.”
The Board of Directors of the Company has adopted a written charter for the Audit Committee, which is available on the Corporate Governance page in the Investor Relations section of the Company’s website, www.balchem.com. The current membersdetermined that Mr. Knutson, Chair of the Audit Committee, are Messrs. Premdas (Chair), Coombs, FischerMr. Rigaud, and McMillan. The BoardMs. Vicente all meet the qualifications of Directors of the Company has determined that the Audit Committee Chairman, Mr. Premdas, qualifies as an “audit committee financial expert,” as defined byexpert” under the applicable SEC rules, and that Ms. Lee is at least financially literate in accordance with Nasdaq Listing Rules. Further, the Board has determined all members of the Audit Committee are “independent” under the NASDAQ MarketplaceNasdaq Listing Rules and SEC independence requirements applicable to audit committee members.
The duties of the Compensation Committee are, among other things, to (i) to: (1)
| ensure that compensation and benefit plans are aligned with the interests of shareholders and meet the needs of the Company and its employees; |
(2)
| review, approve and recommend to the Board for approval various aspects of a compensation program, including incentives, for the CEO and senior executives of the Company (the CEO may not be present during deliberations or voting on his compensation); |
(3)
| recommend to the Board for approval the compensation of directors; |
(4)
| administer the Company’s equity compensation plans; and |
(5)
| interpret, construe, and administer the Company’s Incentive-Based Compensation Recovery Policy, including reviewing such policy from time to time and recommending any changes to the Board for adoption. |
The Compensation Committee solicits input from our CEO with respect to the Boardperformance of Directors for approval aour executive officers and their compensation program, including incentives, forlevels no less frequently than annually, usually in the Chief Executive Officer (“CEO”)first quarter. The members of our Compensation Committee have extensive and varied experience with various public and private corporations - as investors and shareholders, as senior executives, and as directors charged with the oversight of management and the Company (the CEOsetting of executive compensation levels. The Compensation Committee may, not be present during deliberationsin its discretion, delegate all or voting on his compensation), (ii) recommenda portion of its duties and responsibilities to a subcommittee or, to the Board of Directors for approval the compensation of directors, and (iii) administer the Company’s equity compensation plans, including the 1999 Stock Plan, as amended on June 20, 2013, for officers, directors, directors emeritus and employees of and consultantsextent permitted by applicable law, to the Company and its subsidiaries (referred to in this Proxy Statement as the “1999 Stock Plan”any other body or the “Stock Plan”).individual.
The Board of Directors of the Company has adopted a written charter forIn particular, the Compensation Committee which is available onmay delegate the Corporate Governance page in the Investor Relations sectionapproval of the Company’s website, www.balchem.com. The currentcertain transactions to a subcommittee consisting solely of members of the Compensation Committee who are Dr. Televantos (Chair)“non-employee directors” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as amended.
In setting 2023 director and Messrs. Fischerexecutive compensation, the Compensation Committee engaged Mercer, LLC (“Mercer”) from January to October 2023 and McMillan, eachPearl Meyer & Partners, LLC (“Pearl Meyer”) from October 2023 onwards, as their independent executive compensation advisory firm, to provide survey data and advice on market trends on director and executive compensation. For fiscal year 2023, aggregate fees for executive and Non-Employee Director compensation consulting services were approximately $140,000 to Mercer relating to executive and Board compensation matters. Mercer is a wholly owned subsidiary of whom isMarsh & McLennan Companies (“MMC”). In 2023, MMC and its affiliates (excluding Mercer) provided certain services to us and our affiliates unrelated to executive and Non-Employee Director compensation, primarily, insurance brokerage (from January through early March 2023) and healthcare benefits consulting services during 2023. For these services, MMC and its affiliates received compensation totaling approximately $260,000. The non-compensation-related services were recommended by management, and the services and fees are not subject to the Compensation Committee’s or the Board’s review or approval. The Mercer consultants providing services to the Compensation Committee and the Company do not market or sell to us, nor do they receive incentive or other compensation based on, these non-compensation-related services. TABLE OF CONTENTS Each year, the Compensation Committee evaluates the independence and quality of the services provided by its independent as such term is definedcompensation consultant. The Compensation Committee considered the independence of Mercer under applicable SEC rules and regulations and Nasdaq listing standards. Based on its review, the NASDAQ Marketplace Rules.Compensation Committee determined that the services provided by MMC and its affiliates and the engagement of Mercer (from January to October 2023) did not raise any conflict of interest or other issues that would adversely impact Mercer’s independence. The Compensation Committee also evaluated the independence of Pearl Meyer under applicable SEC rules and regulations and Nasdaq listing standards and determined that Pearl Meyer was independent and that there were no conflicts of interest with respect to Pearl Meyer’s work for the committee.
In early 2023, the Compensation Committee reviewed with senior management its recommendations and basis for Company performance goals for payouts of 2023 annual incentive awards and long-term compensation awards. Following this discussion, the Compensation Committee set the 2023 Company performance goals for annual incentive awards and long-term compensation awards and also approved the long-term compensation awards. For information regarding the Compensation Committee’s role, absence of conflicts and fees, among other matters, see “Compensation Discussion and Analysis.”
Corporate Governance and Nominating Committee. The duties of the Corporate Governance and Nominating Committee are, among other things, to (i) consider and make recommendations to the Board concerning the appropriate size, function and needs of the Board, (ii) determine the criteria for Board membership, oversee searches and evaluate and recommend candidates for election to the Board, (iii) evaluate and recommend to the Board responsibilities of the Board committees, (iv) annually review and assess the adequacy of the Company’s Corporate Governance Guidelines and recommend any changes to the Board for adoption, (v) annually evaluate its own performance as well as oversee an annual self-evaluation of the Board and other Board Committees, (vi) oversee compliance with the Company’s Stock Ownership Policies, (vii) consider matters of corporate social responsibility and corporate public affairs related to the Company’s employees and stockholders, (viii) recruit and evaluate new candidates for nomination by the full Board for election as directors, (ix) prepare and update an orientation program for new directors, (x) evaluate the performance of current directors in connection with the expiration of their term in office providing advice to the full Board as to nomination for reelection, and (xi) annually review and recommend policies on director retirement age.things: (1)
| considering and making recommendations to the Board concerning the appropriate size, function and needs of the Board; |
(2)
| determining the criteria for Board membership, overseeing searches, and evaluating and recommending candidates for election to the Board; |
(3)
| evaluating and recommending to the Board responsibilities of the Board committees; |
(4)
| annually reviewing and assessing the adequacy of the Governance Guidelines and recommending any changes to the Board for adoption; |
(5)
| annually evaluating its own performance as well as overseeing an annual self-evaluation of the Board (which includes a director self-assessment) and other Board Committees; |
(6)
| overseeing compliance with the Company’s Stock Ownership Policies; |
(7)
| developing and recommending to the Board for approval a CEO and other key executive succession plan (the “Succession Plan”), reviewing the Succession Plan annually with the CEO and Board, developing and evaluating potential candidates for these positions and recommending to the Board any candidates or changes to previously identified candidates under the Succession Plan; |
(8)
| considering matters of corporate social responsibility, including reviewing the Company’s activities and practices regarding sustainability, including environmental, social, and governance (“ESG”) matters that are significant to the Company and periodically reviewing the Company’s sustainability strategy, initiatives and policies; |
(9)
| recruiting and evaluating new candidates for nomination by the full Board for election as directors; |
(10)
| preparing and updating an orientation program for new directors; |
(11)
| evaluating the performance of current directors in connection with the expiration of their term in office and providing advice to the full Board as to their nomination for reelection; and, |
(12)
| annually reviewing and recommending policies on director retirement age. |
The Board of Directors of the Company has adopted a written charter for the Corporate Governance and Nominating Committee, which is available on the Corporate Governance page in the Investor Relations section of the Company’s website, www.balchem.com. The current members of the Corporate Governance and Nominating Committee are Messrs. McMillan (Chair), Premdas and Coombs and Wineinger, each of whom is independent, as such term is defined under the NASDAQ Marketplace Rules.
The Executive Committee is authorized to exercise all the powers of the Board of Directors in the interim between meetings of the Board, subject to the limitations imposed by Maryland law. The Executive Committee, convenes as needed, and is also responsible for: (i) the recruitment, evaluation and selection of suitable candidates for the position of CEO, for approval by the full Board; (ii) (1)
| the recruitment, evaluation and selection of suitable candidates for the position of CEO, for approval by the full Board; and, |
(2)
| the preparation, together with the Compensation Committee, of objective criteria for the evaluation of the performance of the CEO; and (iii) reviewing the CEO’s plan of succession for key executives of the Company. The current members of the performance of the CEO. |
Executive Committee are Dr. Televantos (Chair), Mr. Fischer and Mr. McMillan.Nominations of Directors
The Corporate Governance and Nominating Committee considers re-nominating incumbent directors who continue to satisfy the Company’s criteria for membership on the Board; whom the Board believes will continue to make contributions to the Board; and who consent to continue their service on the Board. If the incumbent directors are not nominated for re-election or if there is otherwise a vacancy on the Board, the Corporate Governance and Nominating Committee will solicit recommendations for nominees from persons that they believe are likely to be familiar with qualified candidates, including Board members and members of management. The Corporate Governance and Nominating Committee may also determine to engage a professional search firm to assist in identifying qualified candidates. The Corporate Governance and Nominating Committee also considers independent director candidates recommended by one or more substantial, long-term stockholders. Generally, stockholders who individually or as a group hold 5% or more of the Company’s common stock and have continued to do so for over one year will be considered substantial, long-term stockholders. In order to be considered by the Corporate Governance and Nominating Committee, the names of such nominees, accompanied by relevant biographical information, must be properly submitted, in writing, to the Secretary of the Company by the deadline for including shareholder proposals in the Company’s proxy materials as set forth below in “Stockholder Proposals for 2017 Annual Meeting.” Stockholder nominations that comply with these procedures and that meet the criteria outlined above will receive the same consideration that other candidates receive.
The Corporate Governance and Nominating Committee and the Board have adopted guidelines for identifying or evaluating nominees for directors, including incumbent directors and nominees recommended by stockholders. The Company’s current policy is to require that a majoritySessions of the Board of Directors be independent; at least four
The Company’s independent directors meet regularly in executive sessions following each regularly scheduled meeting of the directors haveBoard. These executive sessions are presided over by the financial literacy necessary for serviceLead Director. TABLE OF CONTENTS The Board believes that establishing the right leadership structure is key to ensuring appropriate oversight of management and creating a strategic, forward-looking Board. The right leadership structure will vary depending on the audit committeeneeds of the Company and at least onethe Board’s assessment of these directors qualifies as an audit committee financial expert.the CEO. In addition, directors may not serve onevaluating its leadership structure, the boardsBoard considers a number of more than three other public companies withoutfactors, including the approvalCEO’s experience and leadership, the Board and Committee processes and procedures, shareholder feedback and best practices. Balchem’s Governance Committee continuously reviews the functioning of the Board of Directors and directors must satisfy the Company’s age limit policy for directors, which require that a director retire at the conclusion of his or her term in which he or she reaches the age of 70. The guidelines for nomination for a position on the Board of Directors provide for the selection of nominees based on the nominee’s skills, achievementsleadership structure and knowledge, and also contemplate that the following will be considered, among other things, in selecting nominees: experience and skills in areas critical to understanding the Company and its business; personal characteristics, such as integrity and judgment; and the candidate’s ability to commitmakes recommendations to the Board of Directors ofregarding the Company. Members of the Corporate Governance and Nominating Committee (and/or the Board) also meet personally with each nominee to evaluate the candidate’s ability to work effectively with other membersCEO, Chairman of the Board while also exercising(the “Chairman”) and Lead Director. Our Corporate Governance Guidelines do not require the Chairman to be an independent judgment. Althoughdirector and do not require separation of the Chairman and CEO positions. However, per our Corporate Governance Guidelines, the Board does not have a formal diversity policy, the Board endeavors to comprise itself of members with a broad mix of professional and personal backgrounds. Further, in considering nominations, the Governance and Nominating Committee takes into account how a candidate’s professional background would fit into the mix of experiences represented by the then-current Board. Lead Director
The Board of Directors has hadappoints a Lead Director since 2005. Dr. Televantos has been the Lead Director since August 2010. The Lead Directorwho functions in general, to reinforce the independence of the Board of Directors, ofand is appointed from the independent directors.
The Board and the Governance Committee regularly consider the appropriate leadership structure for the Company and have concluded that the Company and its shareholders are best served by the Board and the Governance Committee retaining discretion to determine whether the same individual should serve as both CEO and Chairman. The Board and the Governance Committee believe it is important to retain the flexibility to make this determination based on what it believes will provide the best leadership structure for the Company at any given time. Mr. Harris, our CEO and President, has been the Chairman since January 1, 2017. The Board and the Governance Committee currently believe the Company and its shareholders are best served by having Mr. Harris serve in both positions. The Board and the Governance Committee believe several factors support this decision. These include: The combined Chairman and CEO structure promotes decisive leadership, ensures clear accountability and enhances our ability to communicate with a single and consistent voice to shareholders, employees and other stakeholders. Mr. Harris has an extensive understanding and grasp of our business and operations, competitive pressures and the challenges the Company faces in the current environment, and has demonstrated leadership and management skills, and is best situated to lead and focus discussions on those critical matters affecting the Company, which increases the effectiveness of Board meetings. Finally, the combination of the Chairman and the CEO position succeeds because of the engaged, knowledgeable involvement of our Board in combination with our culture of open communication with the CEO and senior management, enabling the CEO to be an effective conduit between management and the Board. Our board leadership structure is supported by the active function of the Lead Director, who provides and confirms the necessary independence in the functioning of the Board. Mr. Wineinger has served as Lead Director since February 2023. The Lead Director role reinforces the independence of the Board and is appointed on a rotating basis from the independent directors. The Lead Director serves at the pleasure of the Board and, in any event, only so long as that person shall beis an independent director of the Company. The Corporate Governance and Nominating Committee annually reviews annually the functions of the Lead Director and recommends to the Board any changes that it considers appropriate. The Lead Director provides a source of Board leadership complementary to that of the Chairman. The Lead Director’s responsibilities include: (1)
| working with the Chairman and other directors to set agendas for Board meetings; |
(2)
| together with the Executive Committee, providing leadership in times of crisis; |
(3)
| reviewing the individual performance of each of the directors with the Chair of the Governance Committee; |
(4)
| chairing regular meetings of independent Board members without management present (executive sessions); |
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| acting as liaison between the independent directors and the Chairman; and |
(6)
| chairing Board meetings when the Chairman is not in attendance. |
Compensation Committee Interlocks and Insider Participation Mr. Fischer, Ms. Fish, Mr. Knutson and Mr. Wineinger, each of whom is an independent director of the Board. The Lead Company, served as members of the Compensation Committee during 2023. None of Mr. Fischer, Ms. Fish, Mr. Knutson nor Mr. Wineinger: (i)
| was, during the last completed fiscal year, an officer or employee of the Company, |
(ii)
| was formerly an officer of the Company, or |
(iii)
| had any relationship requiring disclosure by the Company under Item 404 of Regulation S-K under the Securities Act of 1933, as amended. |
During 2023, there were no interlocking relationships between the Board or Compensation Committee, or the board of directors or compensation committee of any other company that are required to be disclosed under Item 407 of Regulation S-K. Related Party Transactions Policy See pages 54 of this proxy statement. Director is responsible for, among other things, (i) workingRetirement Policy In accordance with the ChairmanCompany’s Corporate Governance Guidelines, directors must satisfy the Company’s age limit policy for directors, which require that a director retire at the conclusion of the term in which the director reaches the age of 70 (the “Director Retirement Policy”). Upon completion of their terms and in accordance with the Director Retirement Policy, Dr. John Televantos and Perry Premdas retired from the Board in June 2023. The Governance Committee considers recommending that the Board re-nominate incumbent directors who continue to satisfy the Company’s criteria for membership on the Board, particularly whether the director will continue to make meaningful contributions to the Board. When vacancies occur on the Board, the Governance Committee will solicit recommendations from Board members, members of management and others likely to be familiar with qualified candidates. The Governance Committee typically engages a professional search firm to assist in identifying qualified candidates. The Company may also consider candidates recommended by one or more substantial, long-term shareholders. Generally, shareholders that individually or as a group hold 5% or more of our Common Stock for more than one year will be considered substantial, long-term shareholders. To be considered by the Governance Committee, the nomination must comply with Article II, Section 6 of our Bylaws and be properly submitted to the Secretary of the Company by the deadline for including shareholder proposals as set forth on page 66 in “Shareholder Proposals for 2025 Annual Meeting of Shareholders.” Shareholder nominations that comply with these procedures and meet the criteria outlined above and in our Bylaws will receive the same consideration as other candidates. The Governance Committee considers the following criteria when evaluating candidates: (1)
| have experience and skills in areas critical to understanding the Company and its business; |
(2)
| possess certain personal characteristics, such as integrity and judgment; |
(3)
| have a diverse background of experience and perspectives (including business experience, geographic origin, age, gender, and ethnicity); and |
(4)
| have sufficient ability to commit the necessary time and effort required to serve on the Board. |
Members of the Governance Committee (and/or the Board) also meet personally with each candidate to evaluate the candidate’s ability to work effectively with other members of the Board, while also exercising independent judgment. The Board believes that diversity within a Board promotes the inclusion of different perspectives and ideas and ensures that the Company benefits from all available talent. Therefore, the Board evaluates each candidate in the context of the Board as a whole, with the objective of recommending an individual that can best contribute to perpetuate the success of the Company and represent shareholder interests through the exercise of sound judgment based upon a diversity of background, experience and perspectives. TABLE OF CONTENTS Board Refreshment and Diversity As noted above, the Board seeks to identify a diverse talent pool of highly qualified candidates for consideration as part of board refreshment. We believe that Board membership should reflect diversity in its broadest sense and that diversity within a Board promotes the inclusion of different perspectives and ideas, mitigates against groupthink and ensures that the Company has the opportunity to benefit from all available talent. We also seek to combine the skills and experience of our long-standing Board members with fresh perspectives, insights, skills and experiences of new members. In selecting and assessing potential Board candidates, the Board, with the support of the Governance Committee, takes into consideration a broad range of factors such as skills, expertise, breadth of experience, understanding of business and financial issues, ability to exercise sound judgment, leadership, achievements and experience in matters affecting business and industry, board experience and viewpoints, including a candidate’s gender, race, ethnicity, geography and other directorsfactors that would complement the existing Board and contribute to set agendas for Board meetings; (ii) providing leadership in times of crisis together withenhancing the Executive Committee; (iii) reviewing the individual performance of eachquality of the directors withBoard’s deliberations and decisions, recognizing that our businesses and operations are diverse and global in nature. With the Chairadditions of the Corporate GovernanceMr. Rigaud and Nominating Committee; (iv) chairing regular meetings of independent Board members without management present (executive sessions); (v) acting as liaison between the independent directors and the Chairman; and (vi) chairing Board meetings when the Chairman is not in attendance.
Board Role in Risk Oversight
WhileMs. Vicente to our Board provides direct risk oversight,in September 2023, the CompanyBoard is transitioning from risk oversight throughcomprised of 8 members, three of whom are women (37.5% gender diversity). See page 18 of this Proxy Statement for pie charts with information regarding board diversity, board independence, board tenure, and board age range.During 2023: (i) the Audit and Governance Committees to primary risk oversight through the Audit Committee. The Board andheld five meetings; (ii) the Audit Committee held seven meetings; (iii) the Compensation Committee held four meetings (including one special meeting); (iv) the Governance Committee held three meetings; and (v) the Executive Committee did not meet. Each of our directors demonstrates their strong engagement, has adequate time to devote to Board matters, and will regularly discusshas high attendance. During 2023, all directors attended, on average, 100% of Board meetings and 100% of all Committee meetings on which they served during that year. No director attended less than 100% of all meetings. Note: Mr. Rigaud and Ms. Vicente were appointed to the Board effective September 6, 2023. Hence, Board and Committee meeting held prior to their appointment dates are not included for purposes of their respective attendance record. Communicating with management our major risk exposures, their potential financial impact on the Company and the management thereof. In particular, the Audit Committee receives, or arranges for the Board of Directors to receive, periodic reports fromand Shareholder Engagement We maintain an active dialogue with our shareholders. We value the opinions of our shareholders and other stakeholders and welcome their views on key issues. We engage with shareholders in a number of ways, including the following: Hold annual election of directors Hold advisory approval by shareholders of executive compensation (“Say-on-Pay” votes) annually Senior management attends major investor conferences each year Majority voting in uncontested director elections Hold “Say-on-Frequency” votes regarding advisory approval of executive compensation at least every six years (Note: Based on areasthe results of material risk tothe 2023 Say-on-Frequency vote, the Company will hold Say-on-Pay votes annually) Share information through the Company website, Annual Report, press releases, and SEC filings, including financial, operational, legal, regulatory10-K, 10-Q, 8-K, and strategic risks. The Company has initiated an enterprise risk management effort led by its Internal Audit function. The Company does not have a chief risk officer; therefore, the Audit Committee receives these reports from the member of management tasked with the responsibility to understand, manage and mitigate the particular risks. The Chairman of the Audit Committee reports on the discussion to the full Board during the Committee reports portion of the next Board meeting, which enables the Board and its Committees to coordinate the risk oversight role, particularly with respect to cross-discipline risks and interrelated risks. The Company believes that our Board leadership structure (separate Chairman of the Board and Chief Executive Officer) optimizes risk oversight. The Compensation Committee also evaluates risk, as such relates to our compensation program. Please refer to the discussion in the Compensation Discussion and Analysis under the section “Risk Considerations in our Compensation Program”.
Communicating With the Board of Directors
Proxy Statement
Members of the Board and executive officers are accessible by mail in care of the Company. Any matter intended for the Board or for any individual member or members of the Board should be directed to the General CounselSecretary with a request to forward the communication to the intended recipient. In the alternative, stockholders canshareholders may direct correspondence to the Board via the Chairman or to the attention of the Lead Director in care of the Company at the Company’s principal executive office address, 52 Sunrise Park Road,5 Paragon Drive, Montvale, New Hampton, NY 10958.Jersey, 07645. The Company will forward such communications, unless of an obviously inappropriate nature, to the intended recipient. Please see further details regarding our shareholder engagement and Say-on-Pay vote in 2023 on pages 35-36 of this Proxy Statement. TABLE OF CONTENTS The Compensation Committee periodically reviews, in consultation with their independent executive compensation advisory firm, to ensure alignment of Non-Executive Director compensation with current market and peer group practices. The non-equity components of the Boardnon-executive director compensation structure remain unchanged for 2023 compared to the prior year. For 2023, these amounts are as follows: (1)
| Annual Cash Retainer – $65,000; |
(2)
| Annual Fee for Lead Director - $20,000 |
(3)
| Annual Fee for Audit Committee Chair – $15,000; |
(4)
| Annual Fee for Compensation Committee Chair – $10,000; and |
(5)
| Annual Fee for the Governance Committee Chair – $10,000. |
Directors also received equity awards composed of Directors
Time-Based Restricted Shares and Stock Options (in each case as defined below) as more fully discussed in the table below.
The Company’s independent directors meet regularly in executive sessions following each regularly scheduled meeting oftable sets forth the Board of Directors. These executive sessions are presided over by the Lead Director. The independent directors presently consist of all current directors, except Mr. Rossifees, equity awards, and Mr. Harris.
Executive Officers
Set forth below is certain information concerning the executive officers of the Company (other than Mr. Harris, whose background is described above under the caption “Nominees for Election as Director”).
William A. Backus, CPA, age 50, has been Chief Financial Officer and Treasurer since June 2014. He was Chief Accounting Officer and Assistant Treasurer of the Company since June 2011, and was Controller of the Company from January 2006other compensation earned, paid, or awarded to June 2011. He was Controller of Stewart EFI, LLC, a precision metal component manufacturer, from 1999 through 2005.
Frank J. Fitzpatrick, CPA, age 55, has been Vice President, Administration since June 2014. He was Chief Financial Officer of the Company from January 2004 to June 2014 and Treasurer of the Company from June 2003 to June 2014, and was Controller of the Company from April 1997 to January 2004. He was Director of Financial Operations/Controller of Alliance Pharmaceutical Corp., a pharmaceuticals company, from September 1989 through March 1997.
Matthew D. Houston, age 52, has been General Counsel of the Company since January 2005 and Secretary since June 2005. He was General Counsel and Secretary of Eximias Pharmaceutical Corporation, a privately held corporation, from 2001 to 2004. Mr. Houston also held several internal counsel positions at BASF Corporation, from 1994 to 2001. Mr. Houston received a Juris Doctor degree from Saint Louis University.
David F. Ludwig, age 58, has been Vice President and General Manager, Specialty Products since July 1999 and an executive officer of the Company since June 2000. He was Vice President and General Manager of Scott Specialty Gases, a manufacturer of high purity gas products and specialty gas blends, from September 1997 to June 1999. From 1986 to 1997 he held various international and domestic sales and marketing positions with Engelhard Corporation’s Pigments and Additives Division.
Code of Business Conduct and Ethics
The Company has adopted a Code of Ethics for Senior Financial Officers that applies to the Company’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Treasurer and Corporate Controller. The Company has also adopted a Business Ethics Policy applicable to its employees and a further Policy Statement which confirms that, as and when appropriate, the Business Ethics Policy and the Code of Ethics for Senior Financial Officers are applicable to the Company’s directors and officers. Any waiver of any provision in the Code of Ethics or Business Ethics Policy in favor of members of the Board or in favor of executive officers may be made only by the Board. Any such waiver, and any amendment to such Code, will be publicly disclosed in a Current Report on Form 8-K. The Code of Ethics and Business Ethics Policy and further Policy Statement are available on the Corporate Governance page in the Investor Relations sectioneach of the Company’s website, www.balchem.com.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers and holders of more than 10% of the Company’s Common Stock to file with the Securities and Exchange Commission initial reports of ownership and reports of any subsequent changes in ownership of Common Stock and other equity securities of the Company. Specific due datesNon-Executive Directors for these reports have been established and the Company is required to disclose any failure to file by these dates.
Based upon a review of such reports furnished to the Company, or written representations that no reports were required, the Company believes that during the fiscal year ended December 31, 2015, its officers2023. Mr. Rigaud and directorsMs. Vicente were appointed to the Board effective September 6, 2023 so their fees reflect their dates of service during 2023.
| | Name | | | Retainer
& Fees | | | Stock Awards(1) | | | All Other
Compensation ($) | | | Total ($) | | | | David Fischer | | | $ 65,000 | | | $146,259 | | | $0 | | | $211,259 | | | | Kathleen Fish | | | $ 72,500 | | | $146,259 | | | $0 | | | $218,759 | | | | Daniel Knutson | | | $ 80,000 | | | $146,259 | | | $0 | | | $ 226,259 | | | | Joyce Lee | | | $ 65,000 | | | $146,259 | | | $0 | | | $211,259 | | | | Perry Premdas(2) | | | $ 32,500 | | | $0 | | | $0 | | | $ 32,500 | | | | Olivier Rigaud | | | $21,667(3) | | | $0 | | | $0 | | | $21,667 | | | | John Televantos(2) | | | $ 45,000 | | | $0 | | | $0 | | | $ 45,000 | | | | Monica Vicente | | | $21,667 | | | $0 | | | $0 | | | $21,667 | | | | Matthew Wineinger | | | $ 85,000 | | | $146,259 | | | $0 | | | $231,259 | |
(1)
| On February 8, 2023, each Non-Executive Director, was granted 530 Time-Based Restricted Shares and 1,790 Stock Options. The Time-Based Restricted Shares cliff vest after three years. The grant date fair value per share of each share of restricted stock was $138.09. The Stock Options have a strike price of $138.09 per share and expire on February 8, 2033. |
(2)
| Dr. John Televantos and Perry Premdas completed their terms on June 22, 2023. Accordingly, their respective cash retainer and fees were pro-rated based on their dates of service in 2022. |
(3)
| The retainer payment for Mr. Rigaud was processed in Q1 2024 due to administrative reasons. |
TABLE OF CONTENTS The following table shows the aggregate number of Stock Options and holdersstock awards outstanding for each outside director as of more than 10%December 31, 2023: | | Name | | | Aggregate
Stock Options Outstanding
as of 12/31/2023 | | | Aggregate
Stock Awards Outstanding
as of 12/31/2023 | | | | David Fischer | | | 15,577 | | | 1,629 | | | | Kathleen Fish | | | 3,537 | | | 1,039 | | | | Daniel Knutson | | | 15,577 | | | 1,629 | | | | Joyce Lee | | | 8,607 | | | 1,629 | | | | Olivier Rigaud | | | 0 | | | 0 | | | | Monica Vicente | | | 0 | | | 0 | | | | Matthew Wineinger | | | 15,577 | | | 1,629 | |
Under the Time-Based Restricted Shares grant agreements, restricted shares vest in full, three years from grant, or upon an earlier change in control of the Company’s Common Stock timely complied with Section 16(a) filing date requirements with respect to transactions during such year.
Compensation Committee Interlocks and Insider Participation
Messrs. Fischer and McMillan and Dr. Televantos, each of whomCompany, provided the director is a director of the Company served ason that date. The Time-Based Restricted Shares will also vest in full upon the membersdirector’s death.
In the event of the Compensation Committee during 2015. Nonedirector’s disability, retirement (in accordance with our Director Retirement Policy) or the director’s resignation due to a conflict of Messrs. Fischerinterest or McMillanserious health issue, the number of Time-Based Restricted Shares that vest equals the product of: (A)
| 1/36 of the total number of Time-Based Restricted Shares subject to the applicable grant; and
|
(B)
| the number of full months that the director has served on the Board from the date of the grant to the date of the director’s retirement or resignation, as applicable; and all Restricted Shares not so vested shall be immediately forfeited. |
Under the Stock Option grant agreements, the Stock Options have a term of ten years from the grant date and become exercisable 20% after 1 year, 40% after 2 years and 40% after 3 years, beginning on the first anniversary of the grant date, or Dr. Televantos (i) was, during the last completed fiscal year,upon an officer or employeeearlier change in control of the Company, (ii) was formerly an officerprovided the director is a director of the Company on that date. The Stock Options will also become fully exercisable in full upon the director’s death. In the event of the director’s disability, retirement (in accordance with our Director Retirement Policy) or (iii) had any relationship requiring disclosure by the Company under Item 404 of Regulation S-K underdirector’s resignation from the Securities Act of 1933, as amended. During 2015, there were no interlocking relationships between the Company’s Board of Directors due to a conflict of interest or Compensation Committee, orserious health issue, the board of directors or compensation committeeoptions continue to vest and become exercisable in accordance with the applicable vesting schedule. If a director voluntarily retires: (1)
| in accordance with the Director Retirement Policy discussed above and the combination of the Director’s age and years of service as a member of the Board is equal to or greater than 75; or |
(2)
| prior to the conclusion of his or her term in which he or she reaches the age of 70 and the combination of the Director’s age and years of service as a member of the Board is equal to or greater than 75 and he/she has given the Company one (1) year’s prior written notice to the Company of his/her intention to retire; |
then:
(A)
| all Stock Options shall continue to vest and become exercisable in accordance with their original vesting schedule; and |
(B)
| All Time-Based Restricted Shares shall continue to vest in accordance with their original vesting schedule. |
The Company does not pay any other company that are requireddirect or indirect compensation to be disclosed under Item 407 of Regulation S-K.
Compensation Committee and Processes
During the fiscal year ended December 31, 2015, our Compensation Committee held primary responsibility for determining executive compensation levels. The Compensation Committee is composed of three independent directors. The Compensation Committee solicits, receives and analyzes compensation recommendations from Company management and consultants to determine each facet of the compensation for our executive officers. The Compensation Committee also administers our 1999 Stock Plan. The Compensation Committee solicits input from our CEO with respect to the performance of our executive officers and their compensation levels no less than once per calendar year, usually in the first quarter.
The membersCompany has a Stock Ownership Policy that applies to directors. See “Stock Ownership Requirements; Trading Limitations” on page 42 of our Compensation Committee have extensive and varied experience with various public and private corporations - as investors and stockholders, as senior executives, and as directors charged with the oversight of management and the setting of executive compensation levels. In addition to the extensive experience and expertise of the Compensation Committee’s members and their familiarity with the Company’s performance and the performance of our executive officers, the Compensation Committee is able to draw on the experience of other directors and on various legal and accounting executives employed by the Company, and the Compensation Committee has access to readily available public information regarding executive compensation structure and the establishment of appropriate compensation levels.this Proxy Statement.EXECUTIVE COMPENSATION
TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”&A”) provides a detailed description of our executive compensation philosophy and programs, the compensation decisions the Compensation Committee (the “Compensation Committee”) of the Board of Directors has made under those programs and the factors considered in making those decisions. This CD&A focuses on the compensation of our named executive officers (“NEOs”)NEOs. Our NEOs for 2015, which group included all of our executive officers for 2015. Because Mr. Rossi was an NEO for a portion of 2015, we have included him throughout this CD&A.2023 are the following individuals:
| | Name | | | Position | | | | Theodore L. Harris | | | Chairman, President and Chief Executive Officer | | | | C. Martin Bengtsson | | | Executive Vice President and Chief Financial Officer | | | | Frederic Boned | | | Senior Vice President and General Manager,
Human Nutrition and Health | | | | Hatsuki Miyata | | | Executive Vice President, General Counsel and Secretary | | | | Martin L. Reid | | | Senior Vice President and Chief Supply Chain Officer | |
Compensation Objectives and GuidelinesPhilosophy
The Company’s overall compensation philosophy has beenAt Balchem, we strive to attract and retain key executives who will consistently deliver short- and long-term value to our shareholders through the realization of our specific business objectives. These include consistent, sustained growth in earnings, cash flow and return on investments. We seek to offer competitive salaries, cash incentives, equity awards and benefit plans consistent with peer entities, while also considering the Company’s financial performance. Rewarding key employees who contribute to the continued success of the Company through cash compensation and equity participation are key elements of the Company’s compensation policy.
The Company’s executive compensation policy is designed to attract and retain key executives necessary for the Company’s short and long-term success by establishingestablish a direct link between executive compensation and the performance of the Company by rewarding individual initiativeresults and the achievement of annual corporate goals through salary and cash bonus awards, and by providingto provide equity awards whereinto incentivize executives are incentivized to generate enhanced stockholdershareholder value. To effectuate Consistent with this philosophy, the Compensation Committee favors a “pay for performance” approach. As a result, our compensation program contains a mix of stable and at riskat-risk compensation components, where a significant percentage of executive compensation is variable and tied to individual and corporate performance.
TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS | | We DO | | | We DON’T | | | | Target total direct compensation for our NEOs generally at the 50th percentile as part of our annual benchmarking process against a similarly sized peer group. | | | Allow hedging or pledging of Company securities for any employee (including our NEOs) or director. | | | | Pay for performance and, accordingly, a significant portion of each NEO’s total compensation opportunity is “at risk” and dependent upon achievement of specific corporate and individual performance goals, resulting in lesser emphasis on fixed base salary. | | | Encourage unnecessary or excessive risk-taking as a result of our compensation policies and practices. | | | | Base our short-term incentive plan on explicit and quantifiable Corporate and business segment financial performance metrics that are set at the beginning of each year. | | | Have employment agreements with any of our NEOs other than as described in the section of this proxy statement titled “Executive Compensation.” | | | | Complement our annual compensation to each NEO with time-based and performance-based multi-year vesting schedules and performance cycles for equity incentive awards. | | | Provide a defined benefit pension plan for our NEOs. | | | | Have annual base salary adjustments that are based, primarily, on prior-year individual performance. | | | Provide for “gross ups” for excise taxes imposed with respect to Section 280G (change-in-control payments) or Section 409A (nonqualified deferred compensation) of Internal Revenue Code of 1986, as amended (the “Code”). | | | | Maintain a clawback provision pursuant to which the Company can seek reimbursement of either cash or equity-based incentive compensation in the event of a financial restatement, to the extent set forth in any applicable compensation recovery policy contained in the Amended 2017 Plan or implemented by the Company. | | | Except as may be provided for from time-to-time under employment agreements, provide for single-trigger vesting acceleration upon a change in control of the Company. There are currently no outstanding awards that provide for single-trigger vesting. | | | | Maintain a Compensation Committee, which is comprised solely of independent directors. | | | Allow: (i) any repricing of options and Stock Appreciation Rights (“SARs”) without shareholder approval or (ii) for the unlimited transferability of awards. | | | | Have stock ownership guidelines for our executives and non-employee directors. | | | | | | | Subject awards under the Amended 2017 Plan to minimum vesting periods and maximum annual per-person limits. | | | | | | | Ensure that a significant portion of our non-employee director compensation consists of long-term equity awards. | | | | | | | Consult with outside experts to determine the overall competitiveness of the Company’s executive compensation program. | | | | |
TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS Consideration of 2023 Shareholder Advisory Vote on Executive Compensation Shareholder Engagement and Say-on-Pay Vote We are committed to both listening and being responsive to our shareholders. The Compensation Committee carefully considers the results of the advisory vote on the approval of the compensation of our NEOs, commonly referred to as “Say-on-Pay”. Throughout the course of the year, we engage with shareholders in various ways as indicated below under “Shareholder Engagement Highlights.” In particular, during 2023 and early 2024, we actively reached out to our shareholders representing over 80% of outstanding shares in relation to executive compensation to help identify their views on our executive compensation programs and, where appropriate, implement changes. | | Shareholder Engagement Highlights | | | | Engaged with:
✔ Institutional investors
✔ Retail shareholders
✔ Pension funds
✔ Proxy advisory firms
✔ Industry associations | | | Engaged through:
✔ Quarterly earnings call
✔ Investor conferences
✔ Individual investor meetings
✔ Annual General Meeting of Shareholders
✔ Sustainability Report
✔ Data verification process of proxy advisory firms | | | Engagements include:
✔ President, Chairman
and CEO
✔ CFO and Investor Relations team
✔ Executive Officers
✔ Independent Directors
✔ Head of Global Sustainability | |
| | In 2023, engaged with shareholders representing:
Over 80% of total outstanding shares
or
Over 25.8 million shares | | | Information shared through:
• SEC filings including 10-K, 10-Q, 8-K and Proxy Statement
• Quarterly earnings call
• Press releases
• Company website
• Media and digital platforms | |
During our 2023 Annual Meeting of StockholdersShareholders, approximately 72.3% of votes were cast in 2015, amongstsupport of the compensation of our NEOs, compared to an average of approximately 95.9% support over the preceding five years. We believe this strong support in prior years is in recognition of our pay-for-performance compensation philosophy where the majority of executive compensation is tied to variable pay and payouts are aligned with the Company’s performance. As part of our 2023 shareholder outreach efforts, we invited our largest 52 shareholders, representing over 80% of shares, to discuss their views on executive compensation, board diversity, and corporate social responsibility efforts, among other proposals,things. In June 2023, we held meetings with 13 of our stockholders overwhelmingly approved (onlargest shareholders representing over 40% of outstanding shares, including 7 of our 10 largest shareholders (“June 2023 Meetings”). Further, in January 2024, we reached out to our 10 largest shareholders (representing 56% of outstanding shares) and held meetings with four of them (representing 28.8% of outstanding shares) to receive feedback on updates related to our governance and remuneration practices (“January 2024 Meetings”). Participants in the June 2023 Meetings consisted of our Lead Director and Chair of the Compensation Committee, the former Lead Director and Chair of the Compensation Committee, our Chief Financial Officer, General Counsel and Secretary, and Chief Human Resources Officer, with slight variance depending on schedules. Participants in the January 2024 Meetings consisted of our Lead Director and Chair of the Compensation Committee, our Chief Financial Officer, General Counsel and Secretary, Chief Human Resources Officer, Head of Global Sustainability, and Director of Investor Relations, with slight variance depending on schedules. During the June 2023 Meetings, we mainly sought to receive feedback and views in relation to the additional definitive proxy solicitation materials that were filed with the U.S. Securities and Exchange Commission (SEC) on June 12, 2023 (“2023 Additional Proxy Materials”). The Additional Proxy Materials provided a non-binding basis)detailed description and explanation of the one-time stock option retention grant that was provided in September 2022 (“2022 Retention Grant”) to Ted Harris, our Chairman, President and CEO. As explained in the 2023 Additional Proxy Materials, the Compensation Committee believed the 2022 Retention Grant was TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS necessary to retain the services of Mr. Harris and was consistent with the Company’s retention strategy and pay-for-performance compensation philosophy. Further, the 2022 Retention Grant, which was structured in four tranches with increasing exercise prices and with the first 25% vesting only upon the third anniversary of the grant date, was intended to further drive the financial performance of the Company to the benefit of our shareholders as a whole. During the June 2023 and January 2024 Meetings, our shareholders expressed a preference for addressing retention matters as part of the Company’s existing remuneration program instead of through a one-time retention grant. They understood the rationale behind the 2022 Retention Grant, expressed robust support for Mr. Harris’ leadership as CEO, which drove the Company’s growth and strong financial performance over the last 8 years, and recognized the need to retain his services. Further, we received positive feedback indicating strong support for the Named Executive Officers asstructure of the Company’s existing remuneration program and its alignment with the Company’s pay-for-performance compensation philosophy. This feedback was presentedconsistent with the very strong support (approval ratings in the 2015 Proxy Statement. As statedmid-to-high nineties) for Say-On-Pay that the Company has received in prior years. We have made the following clarifications and changes to our 2015 Proxy Statement, weexecutive compensation in response to shareholder feedback: The Compensation Committee does not expect to make one-time equity awards to executive officers, absent extraordinary circumstances, such as in connection with new hires or promotions. This is consistent with not otherwise having a history of granting one-time retention awards to executive officers. In October 2023, the Compensation Committee selected Pearl Meyer as its new independent compensation consultant. Pearl Meyer is a leading independent executive and board compensation consulting firm. In December 2023, the Compensation Committee completed a review and update of Balchem’s executive compensation peer group, which will be used for benchmarking purposes in 2024. The Company has enhanced its disclosure of the performance achievement metrics (TSR and EBITDA) for the Company’s 2021-2023 performance share grant cycle. The Company communicates regularly with shareholders on various matters, including executive compensation, and seeks to incorporate shareholder input into its executive compensation practices. The Compensation Committee will continue to hold annual non-binding votesconsider shareholder feedback and evolving best practices in making compensation decisions in future years and will continuously endeavor to ensure that management’s interests are aligned with those of our stockholders regarding the approval ofshareholders and support long-term value creation. Awards Under Incentive Plan In addition, and driven in part by our efforts to maintain best practices in executive compensation, program.the following features are included in the Amended and Restated Balchem Corporation 2017 Omnibus Incentive Plan (the “Amended 2017 Plan”): | • | Limitation on Shares: The maximum number of shares which may be issued under the Amended 2017 Plan is 2,400,000 shares; |
| • | No Repricing of Stock Options or SARs: No repricing (or amendments or replacements related to a repricing) of outstanding Stock Options/SARs is allowed without shareholder approval; |
| • | No Discounted Awards: The exercise price per share of stock under a Stock Option or SAR award must be not less than the fair market value of our Common Stock on the date of grant; |
| • | Minimum Vesting: Except for 5% of the shares authorized for grant under the Amended 2017 Plan and other limited exceptions, awards (other than cash performance awards) are generally subject to a minimum vesting period of one year; |
| • | Dividends or Dividend Equivalents: Dividends or dividend equivalents otherwise payable on an unvested award will accrue and be paid only when the vesting conditions applicable to the underlying award have been satisfied; |
| • | No Liberal Share Recycling: Recycling of shares used to satisfy the exercise price or taxes for any awards is prohibited; |
TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS | • | No Liberal Change in Control: The consummation of a merger or similar transaction and a minimum acquisition of 50% of the outstanding shares is required before a change-in-control occurs; |
| • | No Automatic “Single-Trigger” Vesting on Change in Control: There is no automatic acceleration of any outstanding awards upon the occurrence of a change in control; |
| • | Limitations on Awards to Non-Employee Directors: In the case of awards to non-employee directors, the maximum amount or value that may be granted in any calendar year (inclusive of cash compensation) may not exceed $800,000; and |
| • | Compensation Recovery: In the event that the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with any financial reporting requirements under the securities laws, the Compensation Committee would have the discretion to require reimbursement or forfeiture of certain excess performance-based awards received by certain executive officers of the Company during the three completed fiscal years immediately preceding the date that the Company is required to prepare an accounting restatement. |
Full Year 2023 Financial Summary Note: GAAP Net Earnings were $108.5 million for FY 2023 and $105.4 million for FY 2022. Please refer to the reconciliation of the above non-GAAP financial measures (Adjusted EBITDA, Adjusted Net Earnings, and Adjusted Earnings Per Share) to the comparable GAAP financial measures in Appendix A beginning on page A-1 of this proxy statement. Compensation Committee Methodology
NEOs Other than the CEO:
The CEO recommends to the Compensation Committee the amount of total annual compensation for each of the other Named Executive Officers. NEOs. The CEO completes an annual performance assessment for each of the other Named Executive Officers,NEOs, which is reviewed and considered by the Compensation Committee in its deliberations of compensation amounts. Committee. The CEO: The Compensation Committee conducts an annual performance appraisal of the CEO based onusing evaluation information solicited from each of the independent members of the Board of Directors,member and recommends to the Board of Directors the annual compensation package for the CEO. In determining the compensation of the Company’s Named Executive OfficersNEOs for 2015, including the compensation of the CEO,2023, the Compensation Committee considered a number ofmany quantitative and qualitative performance factors. The Compensation Committee’s considerations consisted of, but were not limited to, analysis offactors, including the following factors: financial performance of the Company, including return on equity, cash flow, return on assets, growth, of the Company, management of assets, liabilities, capital, liquidity and risk. The Compensation Committee also considered intangible factors such as the scope of responsibility of the NEO leadership within the Company, the community, the applicable industries in which the Company operates and the enhancement of shareholder value. TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS When establishing performance criteria for each of the NEOs and for the management team as a group, the Compensation Committee endeavors to balance short-term and long-term performance of the Company and cumulative shareholder value when establishing performance criteria for each of the Named Executive Officers and for the management team as a group. In formulating total compensation, the Compensation Committee also considers intangible factors such as: the scope of responsibility of the executive; leadership within the Company, the community and the applicable industries in which the Company engages; and the enhancement of shareholder value. All of these factors are considered in the context of the market for the Company’sBalchem’s products and services, and the complexity and difficulty of managing business risks in the prevailing economic conditions and regulatory environment. The analysis is conducted with respect to each of the Named Executive Officers, including the CEO. The Compensation Committee believes that the total compensation provided to the Company’s Named Executive OfficersNEOs is competitive and has been demonstrated as effective. Details regarding the NEO compensation of each of the Named Executive Officers are set forth in the tables that follow. Compensation Consultants
The Compensation Committee has authority to engage attorneys, accountants and consultants, including executive compensation consultants, to solicit input concerning compensation matters, and to delegate any of its responsibilities to one or more directors or members of management, where it deems such delegation appropriate and permitted under applicable law.
In 2014,To better understand the compensation practices of similar companies, the Compensation Committee retained Towers Watson to provide survey data and advice on market trends in executive compensation. This work enabled the Compensation Committee to: (1) confirm that the Company’s executive compensation program is competitive, and (2) discuss alternative program designs. With respect to the engagement of Towers Watson, the Compensation Committee considered each of the six independence factors adopted by the SEC and NASDAQ under Exchange Act Rule 10C-1 and concluded that Towers Watson was independent and that its services to the Compensation Committee did not raise any conflict of interest. Towers Watson’s work in 2014 focused on an analysis of the overall competitiveness of our executive compensation program. In prior years, we have reviewed compensation data for an industry peer group, but in 2014 the Compensation Committee reviewed only published compensation survey data.
Towers Watson’s 2014 benchmarking of our compensation program related to the following pay elements: base salary, annual incentives, total cash compensation, equity-based compensation, and total direct compensation. Benchmarking data was compiled from general industry data from Towers Watson’s Top Management Compensation Survey, which was adjusted to our revenue size. The Company believes that the survey data is representative for executive compensation benchmarking purposes. As a general rule, from time to time, wereviews data gathered from a custom peer group. In late 2023, the Compensation Committee, upon close consultation with Pearl Meyer, completed a review and update of Balchem’s peer group. Peer group information serves as the primary reference point for the Compensation Committee with Mercer market survey data used as a secondary reference.
COMPENSATION DISCUSSION AND ANALYSIS 2023 Peer Group Companies The following companies comprised our peer group for 2023: | | American Vanguard Corp. | | | H.B. Fuller Co. | | | NewMarket Corp. | | | | Ashland Global Corp. | | | Hain Celestial Group | | | Phibro Animal Health Corp. | | | | Cabot Corp. | | | Ingevity Corp. | | | Quaker Chemical Corp. | | | | Chase Corp. | | | Innospec Inc. | | | Sensient Technologies | | | | Element Solutions | | | J&J Snack Foods Corp. | | | The Simply Good Foods Co. | | | | Ferro Corp. | | | Kraton Corp. | | | Stepan Co. | | | | FMC Corp. | | | Lancaster Colony Corp. | | | Tootsie Roll Industries | | | | FutureFuel Corp. | | | Minerals Technologies | | | | |
This peer group was developed based on comparability to the Company in terms of industry and size, with data gathered from peer group proxy statements. We intend to continue to retain outside compensation consultants that will provide benchmarking data,data. Based on input from Pearl Meyer, the peer group was refreshed in December 2023 and a new group of peers, which includes many of the companies identified above plus certain new peers, will continue to include published survey data and may include “peer group” data.
In 2014, the Compensation Committee also retained the Mercer Group, Inc. to review and provide consulting expertise regarding the Company’s Long Term Compensation Program. Recommendations resulting from the 2014 Mercer Group work on the Company’s Long Term Compensation Program (the “LTCP”) were implementedbe used for benchmarking purposes in 2015 and are discussed in the section below entitled “Equity Based Compensation”.
2024.
Benchmarks
While compensation survey data and benchmarking are useful guides for comparative purposes, we believe that a successful compensation program also requires the application of judgment and subjective determinations, particularly with respect to individual performance. Accordingly, our Compensation Committee applies its judgment to adjust and align each individual element of our compensation program with the broader objectives of the program. For example, we consider other factors, including, but not limited to, the Company’s historical compensation trends; recommendations of the CEO; the performance of the Company, its operating units and their respective executives; market factors such as the health of the economy and of the industries served by the Company; the availability of executive talent; executives’ length of service; and internal assessments and recommendations regarding particular executives. The compensation survey analysis for 2014 was not aimed at establishing exact benchmarks for our compensation program, but rather to provide a point of reference and a “reality check” to obtain a general understanding of the current compensation levels of companies of approximately our size in industries in which we operate.
The results of the analysis of the compensation survey, as well as the other sources consulted, showed that the Company’s executive base compensation is below the market median, and the Company’s total compensation levels are consistent with the market median compensation levels giving consideration to equity awards and at-risk/performance compensation. In addition, Towers Watson’s assessment confirmed that the relationship of the total compensation of the Chief Executive Officer and the Named Executive Officers is within standards identified by prominent proxy advisors and credit organizations as appropriate.
Base Salary
Base salary representsis the fixed component of the executive compensation program. The base annual salaries we provide to our executive officers are intended as compensation forpay based on each executive officer’s ongoing contributions
to theNEO’s job responsibilities, performance of the area(s) for which they are responsible. Base salary also impacts annualand competitive benchmark data. Annual incentive cash bonus amountsbonuses and long termlong-term compensation because theyalso are based on a percentage of base salary.
In keeping with our compensation philosophy to38
TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS To ensure we attract and retain individuals of high quality, executive officerthe leadership talent required to successfully lead the Company, NEO base salaries have been setare targeted to be competitive with base salariessalary compensation paid to executive officers of comparable companies as referenced above. Thepeer group NEOs and other relevant external benchmarks derived from established market survey information. In establishing NEO base salaries, the Compensation Committee also considers: experience and industry knowledge of the Named Executive Officers; knowledge; the quality and effectiveness of their leadership at the Company; leadership; performance relative to total compensation; internal pay equity among the Named Executive OfficersNEOs and other Company senior executives; historical considerations; company strategy; retention factorsfactors; and input from our CEO regarding individual performance.
TheNEO base annual salary levels of each of our executive officerssalaries are reviewed annually and may be adjusted from time to time to recognize individual performance, promotions, competitive compensation levels, retention requirements, internal pay equity, overall budgetary considerations and other qualitative factors. As shown below in “Executive Compensation - Summary Compensation Table,” in 2015, the Compensation Committee increased the base salaries of the Named Executive Officers as a result of overall Company and individual performance in 2014.
Cash Based Incentives – Incentive Compensation Plan
Bonuses representBalchem’s Incentive Compensation Plan (“ICP”) represents a variable, at-risk, cash-based component of the executive compensation program that is tied to both Company performance and individual achievement.each NEO’s compensation. The Company’s policy is to base a meaningful portion of its executive officers’NEO cash compensation on bonus opportunities. In determining bonuses, thevariable incentive opportunities that drives year-over-year financial performance to align NEO compensation opportunities directly with Company considers factors suchfinancial performance.
ICP awards are based on two financial metrics: Company Adjusted EBITDA (defined as the individual’s contribution to the Company’s performance and the relative performance of the Company during the year.
At the end of each calendar year, the Compensation Committee of the Board of Directors approves an Incentive Compensation Program for the succeeding calendar year (the “ICP”). The ICP provides for the awarding of cash bonus compensation to executive officers and certain other employees, based upon objective levels of achievement of specific goals established for the particular officer or employee, and for the weighting of those goals to determine the amount of the bonus. The goals require an individual to stretch beyond his or her defined job description responsibilities.
The process of establishing applicable goals requires a well-defined annual business plan and targets defined therein from which most ICP goals are measured. Our annual business plan evolves from our corporate strategic plan and is approved by the Board of Directors each December for the following fiscal year. Individual goals under the ICP are a composite of certain corporate goals and key segment/individual objectives; however, no bonuses, cash or otherwise, are required to be paid under the ICP unless the Company attains at least 90% of a target minimum consolidated earnings before interest, other expense/income, taxes, depreciation, amortization, stock-based compensation, acquisition-related expenses and amortization (“EBITDA”). The Compensation Committee established such target levellegal settlements, and the fair valuation of EBITDA for the 2015 calendar yearacquired inventory); and,
Free Cash Flow (defined as part of the approval of the ICP for that year, based, amongst other things, upon the Company’s preliminary results of operations for the 2014 operating cash flow minus capital expenditures). The Company’s 2015 target EBITDA was set at $151,600,000. In addition, notwithstanding the general requirement that 90% of a target minimum EBITDA must be attained for any bonuses to be paid under the ICP, Unless the Compensation Committee in its discretion setdetermines otherwise, no ICP awards are payable unless the targetCompany attains the Compensation Committee-approved threshold minimum level at which any bonuses wouldof Adjusted EBITDA. Adjusted EBITDA and Free Cash Flow are financial measures that are not in accordance with United States generally accepted accounting principles (“GAAP”). The Company believes that the use of these measures in the executive compensation context is helpful in evaluating and comparing our past financial performance with our future results. These non-GAAP financial measures should not be paid underconsidered a substitute for, or superior to, financial measures calculated in accordance with GAAP; however, the ICP at 95% for 2015.
In addition to the EBITDA target goal, each ICP participant typically has 4-6 ICP goals, each of which constitutes a portionCompany believes that they provide useful information about certain of the individual’s targetCompany’s core operating results and thus are appropriate to enhance the overall understanding of the Company’s past financial performance and its prospects for the future in the context of evaluating the performance of our executive officers.
As part of the 2022 ICP bonus. ICP target bonuses are based upon a percentage of each executive officer’s base yearly salary. The ICP target bonus for Mr. Harris is 100% of his annual base salary; for Mr. Backus, 40% of his annual base salary; for Mr. Fitzpatrick, 45% of his annual base salary; for Mr. Ludwig, 35% of his annual base salary; for Mr. Houston, 25% of his annual base salary;design and for Mr. Rossi Prior to his retirement, 100% of his annual base salary. These percentages were selected becauseonwards, the Compensation Committee believes that they are consistentapproved the inclusion of an ESG component in the ICP structure for senior management in the form of an ESG modifier of +/- 10% in an effort to drive accountability in advancing progress towards our ESG goals, including reducing greenhouse gas emissions by 25% by 2030 (from a 2020 baseline) and reducing water withdrawal by 25% by 2030 (from a 2020 baseline). Achieving progress toward these strategic targets is a baseline expectation and the enhancement or reduction of the ICP will only be for achievement well above or below overall expected progress towards our ESG goals. Regardless of ESG performance, the maximum payout for ICP is 200% of target. Upon review by the Compensation Committee, the ESG modifier amount was 0% for 2023, considering the Company’s overall progress on ESG initiatives is in line with the custom and practice of industry peers and are appropriate to attract and retain executive talent. expectations. The Compensation Committee may in its discretion approve cash basedcash-based bonuses when ICP goals are not met, if it believes there has nevertheless been exceptional segment or individual performance. No such discretionary bonuses were approved by the Compensation Committee in 2023. The Compensation 2015
TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS Committee may also approve at its discretion ICP or discretionary cash-based awards at other times during the year in connection with new appointments or promotions. Our Compensation Committee does not time the issuance of incentive awards around our release of undisclosed material information. ICP target amounts for each NEO are expressed as a percentage of actual base salary earned during the applicable calendar year. For 2023, NEO ICP targets were: | | NEO | | | ICP Target as a Percent of Base Salary | | | | Ted Harris | | | 110% | | | | C. Martin Bengtsson | | | 65% | | | | Frederic Boned | | | 50% | | | | Hatsuki Miyata | | | 50% | | | | Martin Reid | | | 50% | |
For the 2023 plan year, the Compensation Committee established the Adjusted EBITDA and Free Cash Flow performance weighting and metrics as follows: | | Metric | | | Weighting | | | Threshold | | | Target | | | Stretch | | | Maximum | | | | Adjusted EBITDA | | | 70% | | | $216.1 | | | $244.9 | | | $257.1 | | | 269.4 | | | | Free Cash Flow | | | 30% | | | $115.4 | | | $135.8 | | | $142.6 | | | $149.4 | | | | ESG Modifier for Executive Officers | | | +/- 10% | | | | | | | | | | | | | |
2023 ICP Discussion
TheOn February 7, 2024, the Compensation Committee, determinedfollowing its review of the Company’s 2023 financial results, noted that the Company in 2015,had achieved the following results:
| | Metric | | | 2023 Result | | | Actual vs. Target | | | Payout Percentage | | | | Adjusted EBITDA | | | $230.9 million | | | 94.3% | | | 51.5% | | | | Free Cash Flow | | | $151.1 million | | | 111.3% | | | 200% | |
Based on the resulting Adjusted EBITDA of $135,512,000, which is approximately 92.5%, less than the 95% of the 2015 minimum EBITDA target necessary for the payment of ICP bonuses as stated above, in the section entitled, “Cash Based Incentives.” Acknowledging management’s dedication to the long-term success of the Company and after significant consideration of the Company’s 2015 performance in light of difficult prevailing economic factors impacting the Company’s performance,Free Cash Flow results, the Compensation Committee, determined that awarding someapproved the aggregate ICP payout level at 96.0% of cash bonuses for fiscal 2015 was appropriate. Thetarget. With respect to the ESG modifier, the Compensation Committee citedrecognized that good progress was made in 2023 and was aligned with expectations. The modifier is intended to apply only to achievement that is well above or below overall expected progress. Therefore, the following, in support of its decision to grant discretionary cash bonuses: (1)Compensation Committee did not modify the economic2023 ICP payout up or down turn inbased on progress made towards ESG goals during the global oil and gas industry disproportionately affecting a single business segment ofyear. For additional detail on the Company, while the remaining business segments performed well; (2) the Company’s stock remaining strong versus peer companies; and (3) Company EBITDA growth of 16% over 2014 EBITDA.
The following table sets forth the target ICP, bonus for each of the named NEOs for 2015, together with the 2015 discretionary cash bonus actually awarded.
| NEO | | 2015 Target Bonus | | | 2015 Discretionary Bonus | | | Ted Harris | | $ | 400,000 | | | $ | 250,000 | | | Bill Backus | | $ | 110,880 | | | $ | 75,000 | | | Frank Fitzpatrick | | $ | 129,600 | | | $ | 83,500 | | | Dave Ludwig | | $ | 88,538 | | | $ | 50,000 | | | Matthew Houston | | $ | 55,000 | | | $ | 33,500 | |
see “Summary Compensation Table – Non-Equity Incentive Plan Compensation.”
Equity Based Compensation – Long-Term Incentive Program (“LTIP”)
The Compensation Committee believes that one important goal of the executive compensation program should be to provide executives, key employees — whoOur NEOs have significant responsibility for the management, growth and futurelong-term success of the Company, and directors — with an opportunity for investment in the Company and the incentive advantages inherent in stock ownership in the Company. The goal of this approach is that the interests of the stockholders, executives, employees and directors will be closely aligned. We believe that equity awards provide a strong alignment between the interests of our executives, including the NEOs, and our stockholders. The Equity Compensation Program, or LTCP, is a complementary compensation program to the ICP and accordingly,Consequently, the Compensation Committee seeks to provide motivation to our executives through the usebelieves that a significant portion of their compensation be a variable, at-risk equity awards consistentcomponent that is aligned with the reasonable managementcreation over time of the Company's overall equity compensation expensevalue for shareholders and stockholder dilution. The Compensation Committee grants equity awards to our executives, including the NEOs, in the first quarter of each fiscal year, as a reward for past corporatestakeholders while supporting critical retention and individual performance, as an incentive for future performance, and as a retention tool. Historically, our executive equity awards consisted entirely of stock options and restricted stock awards. Based upon certain 2014 recommendations presented by the Mercer Group, the Compensation Committee, in 2015, elected to modify the LTCP and replaced restricted share grants with performance-based share grants as discussed in the section below, entitled, “LTCP Process.”key leadership development efforts.
LTCP Process
TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS The Compensation Committee establishes each LTCP participant’sNEO’s “Target Equity Value”,Multiplier,” which is multiplied by the NEOs’ base salary to determine the “Target Equity Value” and expressed as the dollar amount of equity the executive can earn upon attainmentvalue of the ICP goals at target level performance. The Compensation Committee, having reviewed the “peer group” data, has established “Target Equity Multipliers” (as a percentage of base salary) as set forth below with respect to the positions to which each Target Equity Multiplier corresponds.LTIP award. The Target Equity Multiplier for each NEO is based upon the Equity Award Level determined by the Compensation Committee, which is related to the individual participant’s position in the Company.shown below: Executive | NEO | | | Target Equity
MultipliersMultiplier
(of Base Salary) | | President & CEO (Theodore L. Harris) | Ted Harris | | 1.50 | 3.00 | | CFO (William A. Backus) | C. Martin Bengtsson | | | 1.75 | | | | Frederic Boned | | | 1.00 | | VP Administration (Frank J. Fitzpatrick) | Hatsuki Miyata | | | 1.00 | | VP/GM Specialty Products (David F. Ludwig) | Martin Reid | | | 1.00 | | General Counsel & Secretary (Matthew D. Houston) | | | 1.00 | |
The applicable Target Equity Multiplier is multiplied by the respective individual LTCP participant’s annual base salary to arrive at the Target Equity, which is subject to grant pursuant to this LTCP. The Target Equity in dollars,Value is then converted into equity awards based upon the fair value of the Company’s common stock on the date of grant under this LTCP,LTIP awards are granted, usually in February or March of each calendar year.year, as computed in accordance with FASB Accounting Standards Codification 718.
Although the Compensation Committee approves the LTIP equity in this time frame, it also reviews competitive market data for NEOs from time to time. The Compensation Committee may grant LTIP awards at other times during the year because of new appointments, promotions or other special circumstances. Our Compensation Committee does not time the grants of incentive awards around our release of undisclosed material information. The Compensation Committee may in its discretion make adjustments toadjust individual grants based upon individual performance. The Target Equity will then beValue is granted through a mix of stock options (“Stock Options”), time-based restricted shares (“Time-Based Restricted Shares”) and Performance Shares (as defined below) as follows: 25% of the 2023 Target Equity Value is awarded as Stock Options with an exercise price equal to the participant infair market value of our Common Stock on the combinationdate of (1) options to purchase common stockgrant. Stock Options have a ten-year term and (2) performance shares,vest 20% after Year 1, 40% after Year 2 and 40% after Year 3. 25% of the 2023 Target Equity Value is awarded as follows:Time-Based Restricted Shares which are granted at the fair market value of our Common Stock on the date of grant and cliff vest three (3) years from said date. | • | 1. | 50% of the Target Equity awarded each participant will be in options to purchase the Company’s common stock. Stock options vest incrementally over three years: 20% on the first anniversary of the grant date; 40% on the second anniversary of the grant date; and 40% on the third anniversary of the grant date. These options expire ten years after grant. Stock options will be granted pursuant to the terms and conditions of the Company’s stock option agreement. |
| 2. | 50% of the Target Equity granted each participant will be granted in performance shares. These granted performance shares will be split equally into performance shares based upon different performance metrics, as follows: |
| a. | 25% of the 2023 Target Equity Value is awarded as EBITDA performance shares granted(“EBITDA Performance Shares”). The number of EBITDA Performance Shares that will bevest (or not vest) is based upon the attainment of a pre-determined Company EBITDA performance target over the following three (3) fiscal years afterbeginning with the fiscal year in which the grant andwas made (“Performance Period”). The EBITDA Performance Shares will cliff vest three (3) years from date(or not vest) at the end of grant. At vesting, the grantee will earn Company common stock as follows:Performance Period. |
Performance Level | % of EBITDA Performance• | Stock Granted as a % of
Target
| Maximum | 130 % of target | 200% | Target | 100% of target | 100% | Threshold | 80% of target | 50% | Below Threshold | <80% of target | 0% |
| b. | 25% of the 2023 Target Equity Value is awarded as Total Shareholder Return performance shares granted(the “TSR Performance Shares” and collectively with the EBITDA Performance Shares, the “Performance Shares”). The number of TSR Performance Shares that will bevest (or not vest) is based upon total shareholder return (TSR) v.the relative Company TSR vs. the Russell 2000 Index over athe three (3) year period. The TSR performance shares will cliff vest three (3)fiscal years from grant datebeginning with the amount of stock granted upon vesting will be as follows: |
Performance Level | 3 Year TSR Performance | Payout as a % of Target | Maximum | 75th PercentilePeriod.
| 200% | Target | 50th Percentile
| 100% | Threshold | 25th Percentile
| 50% | Below Threshold | <25th Percentile
| 0% |
The 2023-2025 Performance Period will conclude at the end of fiscal 2025 and the awards will pay out, to the extent earned, in shares of common stock in February 2026. TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS 2021 Performance Share Payout Discussion On February 7, 2024, the Compensation Committee, following its review of the Company’s EBITDA and TSR performance from the 2021-2023 Performance Period, approved the following payout for the 2021 Performance Share grant: | | 2021 PSU GRANTS EBITDA
(50% Weight) | | | | 2020 FY EBITDA | | | 2023 FY EBITDA | | | Actual EBITDA
Growth
(2021-2023) | | | Threshold
EBITDA Growth
(50% of Target Payout) | | | Target
EBITDA Growth
(100% of Target Payout) | | | Maximum
EBITDA Growth
(200% of Target Payout) | | | EBITDA Payout
as a % of Target | | | | $162.1 | | | $213.8 | | | 31.8% | | | 10.0% | | | 24.2% | | | 31.5% | | | 200.0% | |
| | 2021 PSU GRANTS - Relative TSR
(50% Weight) | | | | Balchem TSR | | | Russell 2000
25th %'ile
(50% of Target Payout) | | | Russell 2000
50th %'ile
(100% of Target Payout) | | | Russell 2000
75th %'ile
(200% of Target Payout) | | | Balchem
%'ile Rank | | | TSR Payout
% of Target | | | | 23.8% | | | -50.4% | | | 2.0% | | | 46.5% | | | 63.5 | | | 153.9% | |
In aggregate, the 2021-23 Performance Shares (PSUs) vested in 178.5% of the target units originally granted. Stock Ownership Requirements; Trading Limitations The Company issued equity awards on February 23, 2016 under the LTCP as follows in the table below | Name | | Number of Performance Shares (EBITDA) (#)(1) | | | Number of Performance Shares (TSR) (#)(1) | | | Number of Shares Underlying Options (#)(1) | | | Exercise Price of Option Awards ($/Sh) | | | Theodore L. Harris | | 3,700 | | | 3,430 | | | 24,350 | | | $60.85 | | | William A. Backus | | 1,010 | | | 940 | | | 25,170 | | | $60.85 | | | Frank J. Fitzpatrick | | 1,150 | | | 1,070 | | | 41,080 | | | $60.85 | | | David F. Ludwig | | 1,070 | | | 990 | | | 15,730 | | | $60.85 | | | Matthew D. Houston | | 900 | | | 840 | | | 8,250 | | | $60.85 | |
(1)Because these equity awards were granted in 2016, the performance shares and options in this table are not included in the Summary Compensation Table below as 2015 compensation and will be included in the Summary Compensation Table in next year’s proxy statement as 2016 compensation.
Stock Ownership Requirements
In 2008, the Company adoptedhas formal stock ownership requirements for its directors and executive officers. According to the policy, directors are required to own shares ofThe requirements under the Company’s Common Stock at least equal to five times their annual cash retainerOwnership Policy for Directors and executive officers must own such shares as determined by a multiple of their annual base salary as follows: (1) CEO, three times; (2) Chief Financial Officer, one and one half times; and (3) Vice President/Officer, one times. Executive Officers are:
| | Director/Officer | | | Ownership Requirement
(Value of Common Stock) | | | | Directors | | | 5x multiple of annual cash retainer | | | | CEO | | | 3x multiple of annual base salary | | | | Chief Financial Officer | | | 1.5x multiple of annual base salary | | | | All Other Executive Officers | | | 1x multiple of annual base salary | |
Both directors and executive officers have five years from the later of the date of the adoption of this policy or from the date of hire or commencement of service as a director, as applicable, to attain the required level of ownership. The number of shares to be held will be calculated at the end of each fiscal year based on the closing price of the Company’s common stock on Nasdaq as of December 31 of each calendar year and submitted to the Governance Committee for review. Once the holding requirement is met, any subsequent change in the value of the shares will not affect the amount of stock that executive officers or directors should hold. In the event an executive officer’s annual base salary is increased or a director’s annual cash retainer is increased, such officer or directors will have five years from the time of increase to acquire any additional shares needed to meet the requirements under the stock ownership policy. Further, executive officers who are subsequently promoted to a higher officer level will have five years from the date of promotion to acquire any additional shares needed to meet this policy. For purposes of the stock ownership requirement, the following are included: value of shares owned separately or owned jointly with, or separately by, immediate family members residing in the same household; value of shares held in trust for the benefit of the Executive Officer or Director and immediate family members; TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS value of shares purchased on the open market; value of shares acquired and held by an Executive Officer through the Company’s 401(k) plan; value of shares obtained through stock option exercise (and not thereafter sold); and value of shares of restricted stock or performance shares, which have vested free and clear of restrictive legends. Stock ownership does not include unexercised stock options, stock appreciation rights, or the non-vested portion of any stock options, restricted stock or performance awards. Pursuant to the stock ownership policy, the Governance Committee may, at its discretion, waive the stock ownership requirement if compliance would create an undue hardship or prevent an Executive Officer or Director from complying with a court order. In such instances, the Governance Committee may make a decision to develop an alternative stock ownership program for such executive officer or director that reflects the intention of the policy and give appropriate consideration of his/her personal circumstances. All directors and officers are currently in compliance with thisour stock ownership policy. In 2023, the Company formally adopted an Incentive-Based Compensation Recovery Policy, or clawback policy, pursuant to which the Company can seek reimbursement of either cash or equity-based incentive compensation in the event of a financial restatement due to the Company’s material noncompliance with any financial reporting requirement under the securities laws. This policy, which applies to current and former executive officers, applies broadly to incentive-based compensation, including: (i)
| non-equity incentive plan awards that are earned solely or in part by satisfying a financial reporting measure performance goal; |
(ii)
| bonuses paid from a bonus pool, where the size of the pool is determined solely or in part by satisfying a financial reporting measure performance goal; |
(iii)
| other cash awards based on satisfaction of a financial reporting measure performance goal; |
(iv)
| restricted stock, stock options and performance share units that are granted or vest solely or in part on satisfying a financial reporting measure performance goal; and |
(v)
| proceeds from the sale of shares acquired through an incentive plan that were granted or vested solely or in part on satisfying a financial reporting measure performance goal. |
The amount of erroneously awarded compensation to be recovered will be the amount of incentive-based compensation received that exceeds the amount of incentive-based compensation that otherwise would have been received had it been determined based on the restated amounts, and must be computed without regard to any taxes paid. Any right of recoupment under the Company’s clawback policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company pursuant to the terms of any similar policy in any compensatory or incentive plan, employment agreement, equity award agreement, or similar plan or agreement and any other legal remedies available to the Company. The Company provides in its insider trading policy that directors and executive officers may not sell Company securities short and may not sell puts, calls or other similar derivative securities tied to our Common Stock.
indemnify any such executive officer against the loss of such recovered compensation.
Employment Agreements
The Company entered into anhas employment agreementagreements with Mr. Harris and has entered into the Bengtsson Offer Letter, which are described below under the section of this proxy statement titled “Termination of Employment and Change in April 2015. The Company had an employment agreement with Mr. Rossi prior to his retirement effective April 28, 2015.Control Arrangements.” Other than such employment agreements, there are no agreements or understandings between the Company and any executive officer whichNEO that guarantee continued employment or guarantee any level of compensation, including incentive or bonus payments. The Company does not have a written policy regarding employment agreements. There is no provision in foregoing agreements or in any employment or other arrangement with any other executive officer whereby any tax gross-up payment to cover any excise taxes on excess parachute payments will be made.
Balchem Corporation 401(k) Retirement/Profit Sharing Plan
During 2014,The Company sponsors the Company sponsored two 401(k) savings plansPlan for eligible employees. The plans allowed participants to make pretax contributions and the Company matched certain percentages of those pretax contributions. One of the plans had a discretionary profit sharing portion. The plans were merged in January 2015. Effective January 1, 2015, the merged plan was amended to adopt a Section 401(k) safe harbor design, which means that the plan automatically complies with the nondiscrimination requirements of the Internal Revenue Code Section 401.employees, including NEOs. The Company provides a fully vested match in company stock that is equal to 100% matching contribution onof participant contributions up to 6% of elective deferrals that do not exceed compensation. All amounts contributedeligible compensation, subject to Internal Revenue Service guidelines. Such share purchases are handled through the plan administrator in the open market and no shares are deposited into a trust fund administeredissued by independent trustees.
The profit-sharing portionthe company for purposes of the plan covers all active employees who have completed 1,000 hours of service, as defined, are 18 years of age or older, and are active employees ofcompany match under the Company at December 31. Eligible employees are enrolled in the profit-sharing portion on the first day of the month after they become eligible to participate and the401(k) Plan.
amount of eligible compensation used by the Company is retroactive to the date of hire for eligible employees.
TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS The amount of the Company’s contribution to the 401(k) Plan for each of the named executive officesNEO is shown in a footnote to the “All Other Compensation” section of the Summary Compensation Table.
Perquisites
Perquisites are granted to the executive officersNEOs occasionally and are generally de minimis and not a material component of compensation.
Mr. Harris is entitled to the use of an automobile owned or leased by the Company and to be reimbursed for a specified level of premiums for life and disability insurance. He is also entitled to the use of a financial planner. The Company pays to insure and maintain Mr. Harris’ automobile, as well asand reimburses Mr. Harris for auto expenses to the extentthat are related to Company business. Messrs. Backus, Fitzpatrick, LudwigMr. Bengtsson, Mr. Boned, Ms. Miyata, and HoustonMr. Reid receive or received cash allowances associated with the use of their personal automobiles. Perquisites for each NEO are shown in the “All Other Compensation” section of the Summary Compensation Table. Balchem Deferred Compensation Plan PriorBalchem offers a voluntary, non-qualified deferred compensation plan (“Deferred Compensation Plan”) for NEOs and select other executives. The Deferred Compensation Plan allows participants to his retirement, Mr. Rossi was entitleddefer up to 75% of annual base salary and up to 100% of annual ICP bonus. Compensation deferred under the use of an automobile leasedDeferred Compensation Plan is deemed invested by the participant among various mutual fund investment options. Earnings (or losses) on investments are market earnings (or losses). The Deferred Compensation Plan is not formally funded nor does the Company and toguarantee any rate of return. The Company does not match any deferral contributions. Distributions may be reimbursed for a specified level of premiums for life and disability insurance. He was also entitled to the use of a financial planner, as well as participation in a country club membership for corporate business. The Company paid to insure and maintain Mr. Rossi’s automobile,lump sum or installments as well as reimbursed Mr. Rossi for auto expenses todetermined by the extent related to Company business.
participant’s distribution election.
Risk Considerations in ourOur Compensation Program
Our Compensation Committee has discussed the concept of risk as it relates to our compensation program and does not believe our compensation program encourages excessive or inappropriate risk takingrisk-taking for the following reasons: Our compensation consists of both fixed and variable components. —
| The fixed (or salary) portion of compensation is designed to provide a steady income regardless of our stock price performance so that executives do not feel pressured to focus exclusively on stock price performance to the detriment of other important business aspects. |
—
| The variable portions of compensation (cash bonus and equity) are designed to reward both short- and long-term corporate performance. |
| ○ | For short-term performance, our cash bonus is awarded based primarily on corporate and business segment performance goals or targets. |
| ○ | For long-term performance, our Stock Options generally vest ratably over three years and are only valuable if our stock price increases over time. Our Time-Based Restricted Share grants and Performance Share grants generally cliff vest in three years. |
The fixed (or salary) portion of compensation is designed to provide a steady income regardless of our stock price performance so that executives do not feel pressured to focus exclusively on stock price performance to the detriment of other important business aspects. The variable (cash bonus and equity) portions of compensation are designed to reward both short and long-term corporate performance. For short-term performance, our cash bonus is awarded based on individual and corporate performance goals or targets. For long-term performance, our stock option awards generally incrementally vest over three years and are only valuable if our stock price increases over time. Our restricted stock grants generally “cliff vest” in four years. We feel that these variable elements of compensation are a sufficient percentage of overall compensation to motivate executives to produce superior short- and long-term corporate results, while the fixed element is also sufficiently highsufficient such that the executives are not encouraged to take unnecessary or excessive risks in doing so.
Because consolidated CompanyThe use of Adjusted EBITDA isas the contingent factor upon which ICP cash incentive and LTCP equity compensation depends, we believeencourages our executives are encouraged to take a balanced approach that focuses on corporate profitability, rather than other measures such as revenue targets, which may incentivizecreate incentives for management to drive sales levels without regard to cost structure. IfNo payout is made under the ICP program if we are not sufficiently profitable, there are no payouts under the ICP or the LTCP programs.profitable.
Our ICP and LTCPLTIP awards are capped for each participant, which mitigates excessive risk taking.risk-taking. Even if the Company dramatically exceeds its Adjusted EBITDA target, ICP and LTCPthe awards are limited. Conversely, there areis no ICP or LTCP awardsLTIP award unless minimum performance levels of applicable goals are achieved.
We haveBecause a portion of management’s personal investment portfolio consists of the Company’s stock, we believe that the stock ownership guidelines which we believehave in place provide a considerable incentive for management to consider the Company’s long-term interests because a portion ofin both their personal investment portfolio consists of the Company’s stock.short- and long-term decisions. In addition, we prohibit all hedging transactions involving our stock, so our executives and directors cannot insulate themselves from the effects of poor Company stock price performance.
Deductibility
TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS The following table sets forth fixed and variable components as a percentage of Executive Compensation
In accordance with Section 162(m)total compensation, as presented in the “Total” column of the Internal Revenue Code of 1986, as amended (the “Code”),“Summary Compensation Table for 2023,” that we paid for the deductibility for federal corporate income tax purposes of compensation paidyear ended December 31, 2023, to certain of our individual executive officers in excess of $1 million in any year may be restricted. The each NEO.
| | Name | | | Fixed Component of
Compensation | | | Variable Component of
Compensation | | | | Ted Harris | | | 20.4% | | | 79.6% | | | | C. Martin Bengtsson | | | 31.3% | | | 68.7% | | | | Frederic Boned | | | 40.7% | | | 59.3% | | | | Hatsuki Miyata | | | 43.1% | | | 56.9% | | | | Martin Reid | | | 42.1% | | | 57.9% | |
Compensation Committee considers the impact of Section 162(m) in establishing the structure, performance targets and timing of awards under the 1999 Stock Plan as well as the proportion of cash compensation attributable to base salary and performance based compensation. Although the Compensation Committee plans to evaluate and limit the impact of Section 162(m), it believes that the tax deduction is only one of several relevant considerations in setting compensation. Accordingly, where it is deemed necessary and in the best interests of the Company to attract and retain the best possible executive talent to compete successfully and to motivate such executives to achieve the goals inherent in our business strategy, the Compensation Committee may approve compensation to executive officers which exceeds the deductibility limits or otherwise may not qualify for deductibility. In this regard, certain portions of compensation paid to the Named Executive Officers may not be deductible for federal income tax purposes under Section 162(m) of the Code.
COMPENSATION COMMITTEE REPORT
Report
We have reviewed and discussed the above “Compensation Discussion and Analysis” with management.
Based upon this review and discussion, we have recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement.
COMPENSATION COMMITTEE
Submitted by the Compensation Committee of the Board of Directors.Matthew Wineinger (Chair)
David Fischer
| John Y. Televantos (Chairman) | | David B. Fischer | | Edward L. McMillan |
Kathleen Fish
Daniel Knutson SUMMARY COMPENSATION TABLE
TABLE OF CONTENTS Summary Compensation Table The following table sets forth the compensation earned by (i) our Chief Executive Officer (“Principal Executive Officer”), (ii) our Chief Financial Officer (“Principal Financial Officer”), and (iii) each of our other “Named Executive Officers” for the fiscal years ended December 31, 2015, 2014 and 2013.NEOs: Summary Compensation Table
Name and Principal Position | Year | | Salary ($) | | | Stock Awards (1) ($) | | | Option Awards (1) ($) | | | Non-Equity Incentive Plan Compensation (2) ($) | | | All Other Compensation (3) ($) | | | | Total ($) | | | Dino A. Rossi | 2015 | | $ | 200,000 | | | $ | 1,082,308 | | | $ | 764,575 | | | $ | 0 | | | $ | 190,822 | | (a) | | $ | 2,237,705 | | | Chairman, (Retired | 2014 | | $ | 702,000 | | | $ | 286,690 | | | $ | 332,750 | | | $ | 827,080 | | | $ | 40,154 | | | | $ | 2,188,675 | | | President & CEO) | 2013 | | $ | 653,352 | | | $ | 229,445 | | | $ | 347,757 | | | $ | 481,519 | | | $ | 37,226 | | | | $ | 1,749,298 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Theodore L. Harris | 2015 | | $ | 319,617 | | | $ | 241,922 | | | $ | 124,253 | | | $ | 250,000 | | | $ | 0 | | | | $ | 1,216,175 | | | President & CEO | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | William A. Backus | 2015 | | $ | 246,400 | | | $ | 255,000 | | | $ | 180,070 | | | $ | 75,000 | | | $ | 26,307 | | (b) | | $ | 782,778 | | | CFO and Treasurer | 2014 | | $ | 220,000 | | | $ | 95,740 | | | $ | 170,891 | | | $ | 96,566 | | | $ | 22,735 | | | | $ | 605,932 | | | | 2013 | | $ | 190,000 | | | $ | 55,316 | | | $ | 137,193 | | | $ | 58,551 | | | $ | 21,559 | | | | $ | 462,619 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Frank J. Fitzpatrick | 2015 | | $ | 280,000 | | | $ | 241,922 | | | $ | 124,253 | | | $ | 83,500 | | | $ | 31,831 | | (c) | | $ | 761,506 | | | Vice President | 2014 | | $ | 266,000 | | | $ | 114,087 | | | $ | 125,999 | | | $ | 132,929 | | | $ | 27,631 | | | | $ | 666,646 | | | Administration, Asst. Secretary | 2013 | | $ | 255,500 | | | $ | 96,819 | | | $ | 193,850 | | | $ | 91,808 | | | $ | 27,407 | | | | $ | 665,384 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | David F. Ludwig | 2015 | | $ | 260,000 | | | $ | 214,646 | | | $ | 87,791 | | | $ | 50,000 | | | $ | 33,062 | | (d) | | $ | 645,498 | | | VP/GM Specialty | 2014 | | $ | 252,960 | | | $ | 85,575 | | | $ | 93,592 | | | $ | 69,796 | | | $ | 29,071 | | | | $ | 530,994 | | | Products | 2013 | | $ | 248,000 | | | $ | 78,335 | | | $ | 152,635 | | | $ | 20,582 | | | $ | 28,755 | | | | $ | 528,307 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matthew D. Houston | 2015 | | $ | 222,000 | | | $ | 162,874 | | | $ | 85,077 | | | $ | 33,500 | | | $ | 29,572 | | (e) | | $ | 533,023 | | | General Counsel and | 2014 | | $ | 212,000 | | | $ | 48,793 | | | $ | 55,513 | | | $ | 74,953 | | | $ | 25,484 | | | | $ | 416,743 | | | Secretary | 2013 | | $ | 204,000 | | | $ | 36,501 | | | $ | 52,702 | | | $ | 40,877 | | | $ | 24,604 | | | | $ | 358,683 | |
| | Name and
Principal Position | | | Year | | | Salary | | | Bonus
(1) | | | Stock
Awards
(2) | | | Stock
Options
(2) | | | Non-equity
Incentive Plan
Compensation
(3) | | | Deferred
Compensation
Earnings
(4) | | | All Other
Compensation
(5) | | | Total | | | | Ted Harris,
Chairman, President and Chief Executive Officer | | | 2023 | | | $1,155,000 | | | $0 | | | $2,601,958 | | | $867,121 | | | $1,219,937 | | | $0 | | | $ 45,691 | | | $ 5,889,707 | | | | 2022 | | | $1,100,000 | | | $0 | | | $ 2,476,850 | | | $7,137,150 | | | $1,189,293 | | | $0 | | | $ 44,972 | | | $11,948,265 | | | | 2021 | | | $ 1,050,000 | | | $0 | | | $2,165,751 | | | $725,105 | | | $ 1,757,640 | | | $0 | | | $ 63,177 | | | $5,761,673 | | | | C. Martin Bengtsson,
Executive Vice President and Chief Financial Officer | | | 2023 | | | $527,337 | | | $0 | | | $671,295 | | | $224,961 | | | $ 329,433 | | | $0 | | | $ 30,600 | | | $1,783,626 | | | | 2022 | | | $ 502,226 | | | $0 | | | $ 601,307 | | | $201,299 | | | $ 329,903 | | | $0 | | | $ 32,000 | | | $1,666,735 | | | | 2021 | | | $478,311 | | | $0 | | | $521,223 | | | $175,482 | | | $ 482,627 | | | $0 | | | $31,250 | | | $1,688,893 | | | | Frederic Boned,
Senior Vice President and General Manager, Human Nutrition and Health | | | 2023 | | | $432,765 | | | $ 50,000 | | | $319,662 | | | $106,345 | | | $198,832 | | | $0 | | | $ 30,600 | | | $1,138,204 | | | | 2022 | | | $65,385 | | | $0 | | | $ 419,400 | | | $0 | | | $ 150,000 | | | $0 | | | $51,662 | | | $ 686,447 | | | | Hatsuki Miyata,
Executive Vice President, General Counsel and Secretary | | | 2023 | | | $435,870 | | | $0 | | | $319,662 | | | $106,345 | | | $ 209,399 | | | $0 | | | $46,147 | | | $1,117,423 | | | | 2022 | | | $176,539 | | | $0 | | | $ 534,000 | | | $0 | | | $218,809 | | | $0 | | | $46,319 | | | $ 975,667 | | | | Martin Reid,
Senior Vice President and Chief Supply Chain Officer | | | 2023 | | | $ 454,920 | | | $0 | | | $ 335,647 | | | $114,525 | | | $218,571 | | | $0 | | | $ 30,600 | | | $1,154,263 | | | | 2022 | | | $437,423 | | | $0 | | | $319,777 | | | $ 108,701 | | | $ 202,836 | | | $0 | | | $ 32,000 | | | $1,100,737 | | | | 2021 | | | $375,962 | | | $0 | | | $ 499,872 | | | $191,128 | | | $339,539 | | | $0 | | | $26,227 | | | $1,432,728 | |
(1)
| Reflects the value of cash sign-on bonus. |
(2)
| The amounts included in the “Stock Awards” and “Option Awards”“Stock Options” columns reflect the dollar amount recognized for financial statement reporting purposes for each reported fiscal year,aggregate grant date fair value as computed in accordance with FASB Accounting Standards Codification 718 adjusted to eliminate service-based forfeiture assumptions used for financial reporting purposes. A discussion of the assumptions used in valuation of stock and option awardsStock Options may be found in “Note 3 – Stockholders’Shareholders’ Equity” in the Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2015,2023, as filed with the SEC on February 29, 2016. See footnote 4 below16, 2024. For the fiscal years ended December 31, 2021 - 2023, the awards reported in the “Stock Awards” column above consist of Performance Shares and Time-Based Restricted Shares. The grant date fair value of the Performance Shares is reflected at target payout based on the probable outcome of the applicable performance conditions. The maximum value for additional disclosure relating to the retirementPerformance Shares is as follows: (i) for 2023: Mr. Harris – $3,189,879; Mr. Bengtsson – $823,016; Mr. Boned - $392,176; Ms. Miyata - $392,176; Mr. Reid - $411,508; (ii) for 2022: Mr. Harris – $3,523,546; Mr. Bengtsson – $856,034; Mr. Boned – N/A; Mr. Ms. Miyata - N/A; Mr. Reid - $455,631; and (iii) for 2021: Mr. Harris - $2,713,781; Mr. Bengtsson – $652,832; Mr. Boned – N/A; Ms. Miyata - N/A; Mr. Reid $402,659, with the foregoing being calculated by multiplying the number of shares that would be granted upon achievement of the highest performance conditions by the price on the grant date. For Ms. Miyata, the Stock Awards column for 2022 reflects sign-on Time-Based Restricted shares granted in part in recognition of the value in unvested equity and other benefits from her prior employer that she forfeited. In September 2022, the Compensation Committee approved a one-time retention grant comprised of 130,000 stock options with a grant date of September 15, 2022, and an estimated grant date fair value of approximately $6.3 million for Mr. Rossi.Harris as part of the Company’s retention strategy and consistent with its pay-for-performance compensation philosophy. This stock options award grant is structured in four tranches with increasing exercise prices: (a) 25% at fair market value as of grant date (“FMV”); (b) 25% at FMV plus 10% premium; (c) 25% at FMV plus 15% premium; and (d) 25% at FMV plus 20% premium. Further, the options vest over a five-year period with: (a) 25% vesting on the third anniversary of the grant date; (b) 25% vesting on the fourth anniversary of the grant date; and (c) 50% vesting on the fifth anniversary of the grant date. The options expire on the tenth anniversary of the grant date. |
(2)(3)
| Reflects the amountvalue of cash incentive bonuses earned under our ICP and any additional discretionary cash bonuses paid to our Named Executive Officers.the Company’s ICP. |
(3)(4)
| The Deferred Compensation Plan does not provide above-market or preferential earnings. |
(5)
| The amounts reflected represent employer matching contributions and profit sharing contributions made under the Company’s combined 401(k)/profit sharing plan, automobile allowance and the Company paid portion of |
life, health, and disability insurance benefits,listed in the following amounts for each Named Executive Officer for the indicated year:
| (a) | Mr. Rossi’s other compensation for 2015 consists of $15,900 for contributions under the Company’s 401(k)/profit sharing plan, $14,031 for automobile allowance, and $160,891 for life, health and disability insurance premiums. |
| (b) | Mr. Backus’s other compensation for 2015 consists of $18,550 for contributions under the Company’s 401(k)/profit sharing plan, $7,477 for automobile allowance, and $280 for life, health and disability insurance benefits. |
| (c) | Mr. Fitzpatrick’s other compensation for 2015 consists of $18,550 for contributions under the Company’s 401(k)/profit sharing plan, $12,462 for automobile allowance, and $819 for life, health and disability insurance benefits. |
| (d) | Mr. Ludwig’s other compensation for 2015 consists of $18,550 for contributions under the Company’s 401(k)/profit sharing plan, $13,708 for automobile allowance, and $804 for life, health and disability insurance benefits. |
| (e) | Mr. Houston’s other compensation for 2015 consists of $18,550 for contributions under the Company’s 401(k)/profit sharing plan, $10,592 for automobile allowance, and $430 for life, health and disability insurance benefits. |
(4) | Mr. Rossi retired as President and Chief Executive Officer, effective April 28, 2015. The Compensation Committee approved the accelerated vesting of all of Mr. Rossi’s outstanding unvested stock options and restricted shares effective with his retirement. The amount included in the 2015 “Stock Awards” and “Option Awards” columns for Mr. Rossi reflect the dollar amount recognized for financial statement reporting. Mr. Rossi and spouse are entitled to medical coverage from the date of his retirement until they are Medicare eligible. The value of these benefits as of December 31, 2015 are included under the 2015 “All Other Compensation” column.column for fiscal 2023 include actual and estimated matching by the Company under the 401(k) Plan, and other perquisites and personal benefits, and details about these amounts are set forth in the table below. |
TABLE OF CONTENTS | | Name | | | Company 401k
Plan Matching | | | Other
Perquisites | | | Total All Other
Compensation | | | | Ted Harris | | | $19,800 | | | $25,891 | | | $45,691 | | | | C. Martin Bengtsson | | | $19,800 | | | $10,800 | | | $ 30,600 | | | | Frederic Boned | | | $19,800 | | | $10,800 | | | $ 30,600 | | | | Hatsuki Miyata | | | $19,800 | | | $26,347 | | | $46,147 | | | | Martin Reid | | | $19,800 | | | $10,800 | | | $ 30,600 | |
For Mr. Harris, the amounts other than 401(k) contributions reflect: (i) an automobile allowance; (ii) the reimbursement of certain expenses related to his use of a financial planner; (iii) amounts associated with the insurance and maintenance of Mr. Harris’ automobile; and (iv) the reimbursement of automobile expenses that are related to Company business. For Ms. Miyata, the amounts other than 401(k) contributions reflect: (i) an automobile allowance and (ii) relocation expenses. For each NEO other than Mr. Harris and Ms. Miyata, the amounts other than 401(k) contributions reflect an automobile allowance. TABLE OF CONTENTS 2023 Grants of Plan BasedPlan-Based Awards for 2015
The following table provides information on restricted stock awards and options granted in 2015 to each of the Named Executive Officers and information on estimated possible payouts under our non-equity (ICP) and equity (LTCP) incentive plans for 2015.
| | | Estimated Possible Payouts under Non-Equity Incentive Plan Awards (1) | | | Estimated Possible Payouts under Equity Incentive Plan Awards (2) | | | Name | | Threshold | | | Target | | | Stretch | | | Max | | | Threshold | | | Target | | | Max | | | Theodore L. Harris | | $ | 300,000 | | | $ | 600,000 | | | $ | 780,000 | | | $ | 1,200,000 | | | $ | 450,000 | | | $ | 900,000 | | | $ | 1,800,000 | | | William A. Backus | | $ | 49,500 | | | $ | 99,000 | | | $ | 128,700 | | | $ | 198,000 | | | $ | 110,000 | | | $ | 220,000 | | | $ | 440,000 | | | Frank J. Fitzpatrick | | $ | 59,850 | | | $ | 119,700 | | | $ | 155,610 | | | $ | 239,400 | | | $ | 133,000 | | | $ | 266,000 | | | $ | 532,000 | | | David F. Ludwig | | $ | 44,268 | | | $ | 88,536 | | | $ | 115,097 | | | $ | 177,072 | | | $ | 126,480 | | | $ | 252,960 | | | $ | 506,000 | | | Matthew D. Houston | | $ | 26,500 | | | $ | 53,000 | | | $ | 68,900 | | | $ | 106,000 | | | $ | 106,000 | | | $ | 212,000 | | | $ | 424,000 | |
| | Name | | | Grant
Date | | | Grant Type | | | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1) | | | Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
| | | All Other
Stock
Awards:
Number of
Shares of
Stock
(#) | | | All Other:
Number
of
Securities
Underlying
Stock
Options
(#) | | | Exercise
Price of
Stock
Option(3)
($/Share) | | | Grant Date
Fair Value
of Stock
and
Option
Awards(4)
($) | | | | Threshold | | | Target | | | Maximum | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | | Ted Harris | | | | | | ICP | | | $0 | | | $1,270,500 | | | $2,541,000 | | | | | | | | | | | | | | | | | | | | | | | | | 02/08/2023 | | | Performance Shares | | | | | | | | | | | | 5,775 | | | 11,550 | | | 23,100 | | | | | | | | | | | | | | | | 02/08/2023 | | | Time-Based Restricted Shares | | | | | | | | | | | | | | | | | | | | | 6,280 | | | | | | | | | | | | | 02/08/2023 | | | Stock Options | | | | | | | | | | | | | | | | | | | | | | | | 21,200 | | | $138.09 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $3,469,079 | | | | C. Martin Bengtsson | | | | | | ICP | | | $0 | | | $342,769 | | | $685,538 | | | | | | | | | | | | | | | | | | | | | | | | | 02/08/2023 | | | Performance Shares | | | | | | | | | | | | 1,490 | | | 2,980 | | | 5,960 | | | | | | | | | | | | | | | | 02/08/2023 | | | Time-Based Restricted Shares | | | | | | | | | | | | | | | | | | | | | 1,620 | | | | | | | | | | | | | 02/08/2023 | | | Stock Options | | | | | | | | | | | | | | | | | | | | | | | | 5,500 | | | $138.09 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $896,255 | | | | Frederic Boned | | | | | | ICP | | | $0 | | | $216,382 | | | $432,765 | | | | | | | | | | | | | | | | | | | | | | | | | 02/08/2023 | | | Performance Shares | | | | | | | | | | | | 710 | | | 1,420 | | | 2,840 | | | | | | | | | | | | | | | | 02/08/2023 | | | Time-Based Restricted Shares | | | | | | | | | | | | | | | | | | | | | 770 | | | | | | | | | | | | | 02/08/2023 | | | Stock Options | | | | | | | | | | | | | | | | | | | | | | | | 2,600 | | | $138.09 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $426,007 | | | | Hatsuki Miyata | | | | | | ICP | | | $0 | | | $217,935 | | | $435,870 | | | | | | | | | | | | | | | | | | | | | | | | | 02/08/2023 | | | Performance Shares | | | | | | | | | | | | 710 | | | 1,420 | | | 2,840 | | | | | | | | | | | | | | | | 02/08/2023 | | | Time-Based Restricted Share Awards | | | | | | | | | | | | | | | | | | | | | 770 | | | | | | | | | | | | | 02/08/2023 | | | Stock Options | | | | | | | | | | | | | | | | | | | | | | | | 2,600 | | | $138.09 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $427,007 | | | | Martin Reid | | | | | | ICP | | | $0 | | | $227,460 | | | $454,920 | | | | | | | | | | | | | | | | | | | | | | | | | 02/08/2023 | | | Performance Shares | | | | | | | | | | | | 745 | | | 1,490 | | | 2,980 | | | | | | | | | | | | | | | | 02/08/2023 | | | Time-Based Restricted Shares | | | | | | | | | | | | | | | | | | | | | 810 | | | | | | | | | | | | | 02/08/2023 | | | Stock Options | | | | | | | | | | | | | | | | | | | | | | | | 2,800 | | | $138.09 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $450,173 | |
(1)
| Represents threshold, target, stretch andThe maximum payout levels under the ICP for 2015 performance. The actual amountamounts equal 200% of incentive bonus earned by each Named Executive Officer in 2014 is reported under the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table.target. Additional information regarding the design of the ICP is included in the Compensation Discussion and Analysis. |
(2)
| Represents threshold,The target and maximum payout levels undernumber of shares shown in the LTCP for grants made in February 2016. These were stated as dollar amounts, whichtable reflects the number of shares of our Common Stock earned if performance is achieved at target levels. All shares will be converted to equityawarded net of applicable tax withholding. Dividend equivalents accrue during the performance cycle and will be paid out in shares, net of applicable tax withholding, based on program results and stock value. the actual number of shares earned for the performance cycle, if any. |
(3)
| The actual amountexercise price equals the closing price of LTCP equity granted to each Named Executive Officerour Common Stock on the grant date except as otherwise indicated. |
(4)
| The amounts represent the grant date fair value of the awards as computed in February 2016 will be reportedaccordance with FASB ASC Topic 718. |
under the Stock Awards and Option Awards columns in the Summary
TABLE OF CONTENTS Executive Compensation Table in next year’s proxy statement. Additional information regarding the design of the LTCP, including the number of options and shares of restricted stock granted to each NEO, is included in the Compensation Discussion and Analysis.
Terms and Conditions of Awards
The Company’s2017 Omnibus Incentive Plan (the “2017 Plan”), as amended and restated in 2023 (the “Amended 2017 Plan”) provides for a variety of equity award vehicles to maintain flexibility. The Amended 2017 Plan permits the Company to grant Stock Options, Stock Appreciation Rights (“SARs”), restricted stock awards, dividend equivalents, performance awards, and other stock-based awards, and provides for the granting of cash performance awards. The Amended 2017 Plan is flexible and allows the Company to change equity grant practices from time to time. After the adoption of the Amended 2017 Plan, no further awards were granted under the Second Amended and Restated 1999 Stock Plan was adopted and approved by our stockholders(the “1999 Plan”), but outstanding awards granted under the 1999 Plan prior to the adoption of the Amended 2017 Plan continue in 1999 and was amended in 2003, 2008, 2011 and 2013. accordance with their terms. Under the 1999 Stock Plan, officersAmended 2017 Plan: 1.
| Officers and other employees of the Company may be granted Stock Options which qualify as incentive stock options (“ISOs”) under Section 422(b) of the Code; |
2.
| Directors, officers and employees may be granted Stock Options which do not qualify as ISOs (“Non-Qualified Options”); and |
3.
| Directors, officers and employees may be granted Time-Based Restricted Shares and Performance Shares. |
Generally, the Company may be granted options to purchase Common Stock of the Company which qualify as “incentive stock options” (“ISO” or “ISOs”) under Section 422(b) of the Internal Revenue Code of 1986, as amended (the “Code”); directors, officers and employees may be granted options to purchase Common Stock which do not qualify as ISOs (“non-Qualified Option” or “Non-Qualified Options”); and directors, officers and employees may be granted the right to make direct purchases of Common Stock from the Company (“Purchases”) and may also be granted restricted stock and performance award shares. Both ISOs and Non-Qualified Options are referred to in this Proxy Statement individually as an “Option” and collectively as “Options.” The exercise price per share specified toof each Stock Option granted under the 1999 StockAmended 2017 Plan may not be less than the fair market value per share of Common Stock on the date of such grant.grant and must have a term no longer than ten years. The Amended 2017 Plan expressly prohibits the repricing of stock options without shareholder approval.
Options granted vest as follows: 20% on the first anniversary of the grant date; 40% on the second anniversary of the grant date; and 40% on the third anniversary of the grant date. Options expire ten years after grant. All outstanding Options vest in this manner. The Company has not granted ISOs since 2006.
Our restricted sharesTime-Based Restricted Shares vest in full fourthree years from grant, or upon an earlier changethe date of control of the Company, provided the executive officer is employed by the Company on that date, but become fully vested upon death.grant. In the event the grantee’sNEO’s employment with the Company is terminated for cause or upon the grantee’s voluntary resignation from the Company’s employ, prior to vesting in full, the restricted sharesTime-Based Restricted Shares are forfeited. In the event of a majordeath or disability, or significant illness, restricted sharesTime-Based Restricted Shares will vest based upon the amount of time remaining until the vesting date. The
For grants in 2023, the Performance Shares are earned based on the Company’s achievement of certain performance criteria over a three year period. Performance Shares will vest based upon the amount of time remaining until the vesting date in the event of recipient’s prior death, disability or “retirement,” as such is defined in the applicable Performance Share Grant Agreement. In addition, upon a change in control or in connection with a termination of employment of the NEO without cause, the Compensation Committee may accelerate the vesting and/or payment dates of restricted stockawards in its discretion.
TABLE OF CONTENTS Outstanding Equity Awards at Fiscal Year End 2015
2023
The following table shows outstanding Option awardsStock Options classified as exercisable and unexercisablenot currently exercisable as of December 31, 20152023 for each Named Executive Officer.NEO. The table also discloses the number and value of unvested restrictedTime-Based Restricted Shares and performance stock awardsPerformance Shares as of December 31, 2015.2023. | | | Option Awards | | Stock Awards | | | Performance Awards | | | Name | | Number of Securities Underlying Unexercised Options (#) Exercisable (1) | | | Un- Exercisable (1) | | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares of Stock that Have Not Vested(2) | | | ($) | | | Number of Shares of Stock that Have Not Vested(2) | | | ($) | | | | | | | | | | | | | | | | | | | | | | | | | | | Dino A. Rossi | | | 9,134 | | | | | | $ | 29.06 | | 2/28/2022 | | | | | | | | | | | | | | | | | 22,069 | | | | | | $ | 38.10 | | 2/19/2023 | | | | | | | | | | | | | | | | | 17,160 | | | | | | $ | 50.32 | | 2/26/2024 | | | | | | | | | | | | | | | | | 23,724 | | | | | | $ | 58.52 | | 2/19/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Theodore L. Harris | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - | | | | 10,000 | | | $ | 54.87 | | 4/28/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 54,000 | | | $ | 3,283,200 | | | | 5,100 | | | $ | 310,080 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | William A. Backus | | | 12,000 | | | | - | | | $ | 21.39 | | 12/8/2019 | | | | | | | | | | | | | | | | | | | | | 14,000 | | | | - | | | $ | 32.21 | | 12/6/2020 | | | | | | | | | | | | | | | | | | | | | 5,000 | | | | - | | | $ | 40.95 | | 6/1/2021 | | | | | | | | | | | | | | | | | | | | | 12,000 | | | | - | | | $ | 29.06 | | 2/28/2022 | | | | | | | | | | | | | | | | | | | | | 2,500 | | | | - | | | $ | 31.02 | | 6/14/2022 | | | | | | | | | | | | | | | | | | | | | 8,400 | | | | 5,600 | | | $ | 38.10 | | 2/19/2023 | | | | | | | | | | | | | | | | | | | | | 3,000 | | | | 12,000 | | | $ | 50.32 | | 2/26/2024 | | | | | | | | | | | | | | | | | | | | | - | | | | 4,178 | | | $ | 58.52 | | 2/19/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,262 | | | $ | 684,730 | | | | 2,090 | | | $ | 127,072 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Francis J. Fitzpatrick | | | 2,750 | | | | - | | | $ | 32.21 | | 12/6/2020 | | | | | | | | | | | | | | | | | | | | | 6,169 | | | | 4,112 | | | $ | 38.10 | | 2/19/2023 | | | | | | | | | | | | | | | | | | | | | 1,281 | | | | 5,123 | | | $ | 50.32 | | 2/26/2024 | | | | | | | | | | | | | | | | | | | | | - | | | | 6,354 | | | $ | 58.52 | | 2/19/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,256 | | | $ | 684,365 | | | | 2,270 | | | $ | 138,016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | David F. Ludwig | | | 12,750 | | | | - | | | $ | 21.39 | | 12/8/2019 | | | | | | | | | | | | | | | | | | | | | 23,200 | | | | - | | | $ | 32.21 | | 12/6/2020 | | | | | | | | | | | | | | | | | | | | | 12,970 | | | | - | | | $ | 29.06 | | 2/28/2022 | | | | | | | | | | | | | | | | | | | | | 5,481 | | | | 3,653 | | | $ | 38.10 | | 2/19/2023 | | | | | | | | | | | | | | | | | | | | | 364 | | | | 1,456 | | | $ | 50.32 | | 2/26/2024 | | | | | | | | | | | | | | | | | | | | | - | | | | 5,385 | | | $ | 58.52 | | 2/19/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,495 | | | $ | 577,296 | | | | 2,150 | | | $ | 130,720 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matthew D. Houston | | | 5,300 | | | | - | | | $ | 32.21 | | 12/6/2020 | | | | | | | | | | | | | | | | | | | | | 5,835 | | | | - | | | $ | 29.06 | | 2/28/2022 | | | | | | | | | | | | | | | | | | | | | 2,608 | | | | 1,738 | | | $ | 38.10 | | 2/19/2023 | | | | | | | | | | | | | | | | | | | | | 716 | | | | 2,863 | | | $ | 50.32 | | 2/26/2024 | | | | | | | | | | | | | | | | | | | | | - | | | | 3,787 | | | $ | 58.52 | | 2/19/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,656 | | | $ | 343,885 | | | | 1,810 | | | $ | 110,048 | |
| | Name | | | | | | Stock Awards | | | Performance Awards | | | | # Of Securities Unexercised Underlying Options | | | | Exercisable(1) | | | Not currently
Exercisable(1) | | | Option
Exercise
Price/share | | | Option
Expiration
Date | | | Number of
Unvested
Shares | | | $(3) | | | Number of
Unvested
Shares(2)
$ | | | $(3) | | | | Ted Harris | | | 10,000 | | | 0 | | | 54.87 | | | 4/28/2025 | | | | | | | | | | | | | | | | 24,350 | | | 0 | | | 60.85 | | | 2/23/2026 | | | | | | | | | | | | | | | | 25,930 | | | 0 | | | 85.40 | | | 2/21/2027 | | | | | | | | | | | | | | | | 18,800 | | | 0 | | | 74.57 | | | 2/15/2028 | | | | | | | | | | | | | | | | 28,300 | | | 0 | | | 84.09 | | | 2/13/2029 | | | | | | | | | | | | | | | | 24,500 | | | 0 | | | 111.94 | | | 2/13/2030 | | | | | | | | | | | | | | | | 13,140 | | | 8,760 | | | 119.13 | | | 2/11/2031 | | | | | | | | | | | | | | | | 4,100 | | | 16,400 | | | 138.07 | | | 2/10/2032 | | | | | | | | | | | | | | | | 0 | | | 32,500 | | | 125.71 | | | 9/15/2032 | | | | | | | | | | | | | | | | 0 | | | 32,500 | | | 138.28 | | | 9/15/2032 | | | | | | | | | | | | | | | | 0 | | | 32,500 | | | 144.57 | | | 9/15/2032 | | | | | | | | | | | | | | | | 0 | | | 32,500 | | | 150.85 | | | 9/15/2032 | | | | | | | | | | | | | | | | 0 | | | 21,200 | | | 138.09 | | | 2/8/2033 | | | 18,320 | | | $2,725,100 | | | 35,700 | | | $5,310,375 | | | | C. Martin
Bengtsson | | | 15,000 | | | 0 | | | 85.33 | | | 2/4/2029 | | | | | | | | | | | | | | | | | | | 6,000 | | | 0 | | | 84.09 | | | 2/13/2029 | | | | | | | | | | | | | | | | | | | 4,800 | | | 0 | | | 111.94 | | | 2/13/2030 | | | | | | | | | | | | | | | | | | | 3,180 | | | 2,120 | | | 119.13 | | | 2/11/2031 | | | | | | | | | | | | | | | | | | | 1000 | | | 4,000 | | | 138.07 | | | 2/10/2032 | | | | | | | | | | | | | | | | | | | 0 | | | 5,500 | | | 138.09 | | | 2/8/2033 | | | 4,530 | | | $ 673,838 | | | 8,820 | | | $1,311,975 | | | | Frederic Boned | | | 0 | | | 2,600 | | | 138.09 | | | 2/8/2033 | | | 3,770 | | | $ 560,788 | | | 1,420 | | | $211,225 | | | | Hatsuki Miyata(4) | | | 0 | | | 2,600 | | | 138.09 | | | 2/8/2033 | | | 3,437 | | | $511,254 | | | 1,420 | | | $211,225 | | | | Martin Reid | | | 1,500 | | | 1,000 | | | 118.96 | | | 2/8/2031 | | | | | | | | | | | | | | | | | | | 1,980 | | | 1,320 | | | 119.13 | | | 2/11/2031 | | | | | | | | | | | | | | | | | | | 540 | | | 2,160 | | | 138.07 | | | 2/10/2032 | | | | | | | | | | | | | | | | | | | 0 | | | 2,800 | | | 138.09 | | | 2/8/2033 | | | 3,980 | | | $592,025 | | | 4,830 | | | $718,463 | |
| (1)
| Stock option awardsOptions granted under the Amended 2017, the 2017 Plan, and the 1999 Plan have a term of ten years from the grant date and become cumulatively exercisable 20% after one1 year, 60% after two2 years and 100% after three3 years, beginning on the first anniversary of the grant date. |
(2)
| (2)Time-Based Restricted Shares vest three years from the date of grant. Performance Shares vest in three years and are reflected at target payout based on the probable outcome of the performance conditions. The following table provides information with respect to the final vesting dates of each outstanding restricted stock award (both Time-Based Restricted Shares and Performance Shares) held by each NEO as of December 31, 2023. |
(3)
| Value is computed based on the closing price of our Common Stock on December 31, 2015,29, 2023, which was $60.80$148.75 per share. |
Restricted stock vests four years from the date of grant. Performance shares vest three years from date of grant. The following table provides information with respect to the final vesting dates of each outstanding restricted and performance stock award held by each Named 50
TABLE OF CONTENTS Executive Officer as of December 31, 2015.Compensation
| | | Mr. Harris | | | Mr. Backus | | | Mr. Fitzpatrick | | | Mr. Ludwig | | | Mr. Houston | | | 28-Feb-16 | | | | | | 2,500 | | | | 4,769 | | | | 4,142 | | | | 1,863 | | | 28-Apr-16 | | | 27,000 | | | | | | | | | | | | | | | | | | | 19-Feb-17 | | | | | | | 1,447 | | | | 2,456 | | | | 3,081 | | | | 1,466 | | | 28-Apr-17 | | | 27,000 | | | | | | | | | | | | | | | | | | | 1-Jan-18 | | | 5,100 | | | | 2,090 | | | | 2,270 | | | | 2,150 | | | | 1,810 | | | 26-Feb-18 | | | | | | | 1,000 | | | | 2,031 | | | | 577 | | | | 1,135 | | | 19-Jun-18 | | | | | | | 5,000 | | | | | | | | | | | | | | | 19-Feb-19 | | | | | | | 1,315 | | | | 2,000 | | | | 1,695 | | | | 1,192 | | | | | | 59,100 | | | | 13,352 | | | | 13,526 | | | | 11,645 | | | | 7,466 | |
| | Final Vesting Date | | | Ted
Harris | | | Martin
Bengtsson | | | Frederic
Boned | | | Hatsuki
Miyata | | | Martin
Reid | | | | Jan. 1, 2024 | | | 11,390 | | | 2,740 | | | | | | | | | 1,690 | | | | Feb. 8, 2024 | | | | | | | | | | | | | | | 1,500 | | | | Feb. 11, 2024 | | | 6,060 | | | 1,460 | | | | | | | | | 900 | | | | July 27, 2024 | | | | | | | | | | | | 1,333(4) | | | | | | | Jan. 1, 2025 | | | 12,760 | | | 3,100 | | | | | | | | | 1,650 | | | | Feb. 10, 2025 | | | 5,980 | | | 1,450 | | | | | | | | | 770 | | | | July 27, 2025 | | | | | | | | | | | | 1,334 | | | | | | | Oct. 31, 2025 | | | | | | | | | 3,000 | | | | | | | | | | Jan. 1, 2026 | | | 11,550 | | | 2,980 | | | 1,420 | | | 1,420 | | | 1,490 | | | | Feb. 8, 2026 | | | 6,280 | | | 1,620 | | | 770 | | | 770 | | | 810 | | | | Total | | | 54,020 | | | 13,350 | | | 5,190 | | | 4,857 | | | 8,810 | |
(4)
| In connection with the hiring of Ms. Miyata as Executive Vice President, General Counsel and Secretary, the Company provided in part that Ms. Miyata would receive 4,000 shares of Company Time-Based Restricted Shares, which will vest ratably over three years after the date of grant (July 27, 2022), with one third vesting each year beginning in 2023. These Time-Based Restricted Shares were granted in part in recognition of the value in unvested equity and other benefits from her prior employer that she forfeited. |
Option Exercises and Stock Vested in 2015
2023
The following table sets forth certain information regarding Optionsoptions and stock awards exercised and vested, respectively, by each of our Named Executive OfficersNEOs during the fiscal year ended December 31, 2015.2023.
| | | Option Awards | | | Stock Awards | | | Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($)(1) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($) | | | Dino A. Rossi | | | 140,538 | | | $ | 4,648,112 | | | | 37,294 | | | $ | 2,152,237 | | | Theodore L. Harris | | | - | | | $ | - | | | | - | | | $ | - | | | William A. Backus | | | - | | | $ | - | | | | 1,000 | | | $ | 56,783 | | | Frank J. Fitzpatrick | | | 84,935 | | | $ | 2,700,059 | | | | - | | | $ | - | | | David F. Ludwig | | | 120,000 | | | $ | 5,166,110 | | | | - | | | $ | - | | | Matthew D. Houston | | | - | | | $ | - | | | | - | | | $ | - | |
| | | | | Option Awards | | | Stock Awards | | | | Name | | | Number of
Shares
Acquired on
Exercise
(#) | | | Value
Realized on
Exercise
($)(1) | | | Number of
Shares
Acquired on
Vesting
(#) | | | Value
Realized on
Vesting
($) | | | | Ted Harris | | | 0 | | | N/A | | | 22,374(2) | | | $3,077,453 | | | | Martin Bengtsson | | | 0 | | | N/A | | | 4,352(2) | | | $ 598,596 | | | | Frederic Boned | | | 0 | | | N/A | | | 0 | | | N/A | | | | Hatsuki Miyata | | | 0 | | | N/A | | | 1,333(3) | | | $171,344 | | | | Martin Reid | | | 0 | | | N/A | | | 0 | | | N/A | |
| (1)
| Value realized represents the excess of the fair market value of the shares at the time of exercise over the exercise price of the options. |
(2)
| Reflects the vesting of (a) Performance Shares granted in 2020 under the Fiscal 2020 – 2022 Performance Share awards including dividend equivalent shares; and (b) Time-based Restricted Shares granted in 2020, subject to a three year vesting requirement. The Performance Shares were subject to performance goals for the performance period ended December 31, 2022, with the number of TSR Performance Shares vesting representing 181.6% of the target shares and the EBITDA Performance Shares vesting representing 200.0% of the target shares. Awards vested on February 8, 2023. See “LTIP Awards” beginning at Page 41 above). Values realized for Performance Shares earned are based on the closing share prices $138.09 on February 8, 2023, the date the Compensation Committee determined that the performance targets for the performance period ended December 31, 2022 had been met. |
(3)
| Reflects the vesting of Time-based Restricted Shares which vest ratably over three years after the grant date (July 27, 2022), with one third vesting each year beginning in 2023. These Time-Based Restricted Shares were granted in part in recognition of the value in unvested equity and other benefits from Ms. Miyata’s prior employer that she forfeited. |
TABLE OF CONTENTS Nonqualified Deferred Compensation For a description of the Balchem Deferred Compensation Plan, see “Balchem Deferred Compensation Plan” at page 44 above. Information regarding deferred elections under the Deferred Compensation Plan are included in the table below: | | Name | | | NEO
Contributions in
Last Fiscal
Year(1)
($) | | | Aggregate
Earnings in Last
Fiscal Year
($) | | | Aggregate
Withdrawals/
Distributions
($) | | | Aggregate
Balance at
Last Fiscal
Year End
($) | | | | Ted Harris | | | $0 | | | $449,444 | | | $0 | | | $4,404,848 | | | | Martin Bengtsson | | | $0 | | | $0 | | | $0 | | | $0 | | | | Frederic Boned | | | $0 | | | $0 | | | $0 | | | $0 | | | | Hatsuki Miyata | | | $0 | | | $0 | | | $0 | | | $0 | | | | Martin Reid | | | $0 | | | $0 | | | $0 | | | $0 | |
(1)
| NEO contributions include any deferrals of annual compensation, including earned awards under the ICP. These amounts are included in the NEOs’ compensation under either “Salary” or “Non-Equity Incentive Compensation”. |
Termination of Employment and Change ofin Control Arrangements
Agreement with Theodore L.Mr. Harris. We entered into an employment agreement with Mr. Harris on April 22, 2015 (the “Harris Agreement”), which provides for automatic one-year extensions of the employment term unless either party provides within 60 days of the end of the then-current term written notice of its intention not to extend the agreement within 60 daysagreement. If the Harris Agreement is terminated, either by us or by Mr. Harris, and Mr. Harris releases claims in favor of the endCompany, Mr. Harris is entitled to receive any unpaid (earned at the date of such termination) salary, vacation and/or ICP bonus which Mr. Harris earned in respect of specific objectives completed during the then-current term.fiscal year, and, in certain circumstances, other payments as more particularly described in the table below.
If we terminateFor equity awards made under the employment agreement other than for “Cause” (as defined below) orAmended 2017 Plan, in the event Mr. Harris terminates his employment under certain limited circumstances effectively amounting toof a constructive
termination, he will be entitled to severance payments of 200% of his then current annual salary,Change in Control (as defined therein) and all of his stock options would become fully vested and exercisable, plus a portion of the ICP bonus he would have received had he been employed by us through the end of the full fiscal year in which the termination occurred, to be determined by the Compensation Committee. If suchinvoluntary termination by the Company occurs within two years after a change24 months following such Change in Control, awards that are options or SARs will become fully exercisable upon the date of control event, he would be entitledsuch involuntary termination, and the restrictions in force and applicable with respect to severance payments equal to 200%any other such awards (i.e., awards other than options and SARs) will automatically lapse upon the date of the suminvoluntary termination, with any such awards that are subject to performance criteria deemed to vest at the “target” level of his then current annual salary plus the annual bonus earned by him for the fiscal year immediately preceding the year in which the change of control event occurred. If Mr. Harris were to terminate his employment prior to the second anniversary of such a change of control event, he would be entitled to severance payments equal to 100% of his then current annual salary. performance.
In the event that any of any termination by the Company entitling Mr.payments provided for in the Harris to severanceAgreement otherwise would constitute an “excess parachute payment” (as defined in Section 280G of the Code), the amount of payments the Compensation Committee may accelerate the vesting of Mr. Harris’s restricted stock. Mr. Harris's severance payments following a change of control would be reduced to the extent necessary to avoid such payments being considered an "excess parachute payment"maximum level that would not result in excise tax under Section 280G4999 of the Internal Revenue Code.
Under the employment agreement with Mr. Harris, “Cause” means: habitual absence or lateness; gross insubordination; failure to devote full time to the Company’s business; failure to comply with the obligations of confidentiality and non-competition; any action which constitutes a violation of any applicable criminal statute; or any act which frustrates or violates the fiduciary duties owed byCode, if this reduction would cause Mr. Harris to the Company. In addition, “Change in Control” means:
(a) any person or group is or becomes (including by merger, consolidation or otherwise) the beneficial owner, directly or indirectly, of 50% or more of the voting power of the total outstanding voting stock of Company;
or
(b) the sale or other disposition (otherreceive a larger after-tax amount than by way of merger or consolidation) of all or substantially all of the capital stock or assets of Company to any person or group as an entirety or substantially as an entirety in one transaction or a series of related transactions, unless the ultimate beneficial owners of the voting stock of such person immediately after giving effect to such transaction own, directly or indirectly, more than 80% of the total voting power of the total outstanding voting stock of Company immediately prior to such transaction.
if no reduction were made.
During the period of Mr. Harris’sHarris’ employment (or, in the case of a voluntary termination by Mr. Harris or a termination of his employment by the Company for cause,Cause, the balance of the term of the employment agreementHarris Agreement before giving effect to such termination) and for a period of one yeartwo years thereafter, the employment agreementHarris Agreement imposes on Mr. Harris certain non-competition and non-solicitation obligations regarding the Company and its clients, customers and its employees.
The amount of compensation payable to Mr. Harris in the event of termination of employment, assuming termination as of December 31, 2015,2023, and a share price for the Company’s common stockour Common Stock equal to the closing market price on the last trading day prior to that date, is set forth in the table below. Mr. Harris’s employment agreementThe Harris Agreement does not obligate us to provide any compensation to Mr. Harris in the case of a changeChange in controlControl that does not result in termination of employment; however,employment. The Amended 2017 Plan allows for the 1999 Stock Plan provides for full vestingdiscretionary acceleration of all Options and restricted stockoutstanding awards upon the occurrence of a changeChange in control as defined in such Plan.Control. | Benefits and Payments upon Termination | | | | | Severance | | | ICP Bonus (1) | | | Acceleration of Vesting of Options and Restricted Stock (2) | | | Total | | | Voluntary termination by Mr. Harris or termination for Cause | | $ | 0 | | | $ | 600,000 | | | $ | 0 | | | $ | 600,000 | | | Termination by Mr. Harris within 12 months after demotion by Company or as a result of constructive termination | | $ | 1,200,000 | | | $ | 600,000 | | | $ | 3,652,580 | | | $ | 5,452,580 | | | Termination by Company following a Change of Control, except for Cause(3) | | $ | 1,200,000 | | | $ | 600,000 | | | $ | 3,652,580 | | | $ | 5,452,580 | | | Voluntary termination by Mr. Harris following a Change of Control(3) | | $ | 600,000 | | | $ | 600,000 | | | $ | 3,652,580 | | | $ | 4,852,580 | | | Termination by Company for any reason other than for Cause or after receipt of notice of termination from Mr. Harris | | $ | 1,200,000 | | | $ | 600,000 | | | $ | 3,652,580 | | | $ | 5,452,580 | | | Death | | $ | 0 | | | $ | 600,000 | | | $ | 0 | | | $ | 600,000 | |
TABLE OF CONTENTS | | Benefits and Payments Upon Termination(1) | | | | Event | | | Base
Salary | | | ICP
Bonus(2) | | | Acceleration of
Vesting Stock
Options and
Restricted
Shares(3) | | | Total | | | | Voluntary termination by Mr. Harris, upon Mr. Harris’ death or termination for Cause(4) | | | $0 | | | $1,219,937 | | | $0 | | | $1,219,937 | | | | Termination by the Company for other than Cause, Mr. Harris’ death or in response to a notice from that he intends to terminate the Harris Agreement or by Mr. Harris for Good Reason(5) | | | $2,310,000 | | | $1,219,937 | | | $0 | | | $3,529,937 | | | | Termination by Company prior to the second anniversary of a Change in Control for other than for Cause, Mr. Harris’ death or in response to a notice from that he intends to terminate the Harris Agreement | | | $2,310,000 | | | $1,219,937 | | | $9,921,015 | | | $13,450,952 | | | | Voluntary termination by Mr. Harris prior to the second anniversary of a Change in Control | | | $1,155,000 | | | $1,219,937 | | | $9,921,015 | | | $12,295,952 | |
(1)
| 1.Table assumes termination occurred on December 31, 2023, and, in the case of events following a Change in Control, that the Change in Control occurred during 2023. |
(2)
| Represents the target bonus levelICP Bonus earned by Mr. Harris in fiscal year 2023. |
(3)
| While the Harris Agreement does not call for the acceleration of equity (other than the Equity Replacement Shares (as defined therein) which such Equity Replacement Shares vested by their own terms in 2016 and 2017), under the ICP. |
| 2. | Amended 2017 Plan, the Compensation Committee has discretionary authority to determine the treatment of awards thereunder and the Amended 2017 Plan calls for the acceleration of equity grants as described in the narrative above in the event of a Change in Control (as defined in the Amended 2017 Plan). Amounts in this column are calculated byby: (i) multiplying the number of shares subject to accelerated vesting (all Time-Based Restricted Shares being accelerated, and the target level of Performance Shares being accelerated) by the difference between $60.80,$148.75, which is the closing market price per share of our common stockCommon Stock on December 31, 2015,29, 2023, and (ii) the difference between (x) the per share exercisegrant price of the applicable accelerated stock award or option.Stock Options and (y) $148.75, which is the closing market price per share of our Common Stock on December 29, 2023. |
(4)
| 3. | AssumesUnder the ChangeHarris Agreement, “Cause” means: habitual absence or lateness; gross insubordination or material violation of Control occurred withinpublished material Company policies; failure to devote full time to the two year period priorCompany’s business; failure to December 31, 2015.comply with the obligations of confidentiality, non-competition and non-solicitation of the Company’s clients, customers and employees; any action which constitutes a violation of any applicable criminal statute; or any act which frustrates or violates the fiduciary duties owed by Mr. Harris to the Company. |
(5)
| Under the Harris Agreement, “Good Reason” will have occurred if Mr. Harris terminates his employment within twelve months after he has been demoted from his position as President and Chief Executive Officer or shall otherwise have suffered by reason of the Company’s intentional actions regarding the terms and nature of his employment such a fundamental change in his employment as to effectively amount to a “constructive termination” of his employment with Company (but he shall not in fact have been discharged from such employment), including a reduction of his base annual salary, or a diminution in his duties or responsibilities. |
The amounts shown in the table above do not include payments for accrued salary and vacation, or payments made under theany life insurance policy in the case of death. Amounts shown in the table are subject to reduction to the extent necessary to avoid an “excess parachute payment"payment” under Section 280G of the Internal Revenue Code.Code, if such reduction would cause the executive to receive a larger after-tax amount than if no reduction were made.
AllOffer Letter with Mr. Bengtsson. Under the terms of our Named Executive Officersthe Bengtsson Offer Letter, if the Company terminates Mr. Bengtsson’s employment for any reason other than Cause (as defined in the Bengtsson Offer Letter), Mr. Harris and Mr. Rossi priorBengtsson will receive a severance payment equal to his retirement,one year of annual base salary, which was $527,337 as of December 31, 2023, payable in twelve equal installments commencing on the month following the month in which the termination occurs.
The other NEOs are employees-at-willemployees at-will and, as such, do not have employment agreements therefore, we are not obligatedor any entitlement to provide them with any post-employment compensation or benefits. However, uponbenefits, except to the extent such officers are eligible to receive certain benefits under the Company’s Officer Retiree Program, as described below. TABLE OF CONTENTS In the event of an executive officer’s retirement in accordance with the Officer Retiree Program which requires that at the time of voluntary termination of employment, the sum of the officer’s age and years of service is at least 70, the officer has at least ten years of service and has served at least three consecutive years as an officer, then, subject to the terms of the Officer Retiree Program: (1) the retiree officer and their spouse and any eligible dependents (who are eligible to be covered under the retiring officer’s medical plan) are eligible to receive the same coverage available to an active employee (under such plan) for the retiree officer and spouse’s life, or until Medicare is available, for a changemaximum of control, as defined inten (10) years, and the 1999 Stock Plan, all unvested option grants immediatelyretiree officer or his/her spouse will be charged the portion of the coverage premiums that the Company would have paid if the retiree officer were an active employee; (2) stock options granted shall continue to vest and become exercisable all restrictions, applicable to outstanding shares ofin accordance with their original vesting schedule; (3) restricted stock lapse,grants shall continue to vest in accordance with their original vesting schedule; and all(4) performance sharesshare grants shall immediatelycontinue to vest and be deemed earned. Assuming suchin accordance with their original vesting schedule. Upon a change in control or in connection with a termination of control occurred on December 31, 2015, based on the closing market priceemployment of the Company’s common stock on that date, the amount of compensation payable to the Named Executive Officers other than Mr. Harris, are as follows: Mr. Backus, $2,724,087; Mr. Fitzpatrick, $1,215,983; Mr. Ludwig, $2,524,143; and Mr. Houston, $935,459.
Director Compensation
The Company pays each of its directors, other than Mr. Harris, an annual retainer of $30,000 and $4,000 for each Board meeting attended, plus expenses. The Chairman of the Board is paid an additional $36,000 and the Lead Director is paid an additional $16,000 annual retainer. The Chairman of the Audit Committee is paid an additional $12,000 annual retainer, the Chairman ofNEO without cause, the Compensation Committee is paid an additional $10,000 annual retainer andmay accelerate the Chairmanvesting and/or payment dates of the Corporate Governance and Nominating Committee is paid an additional $8,000 annual retainer. The Company also pays to each ofawards in its directors serving on Committees a fee of $1,000, plus expenses, for each Committee meeting attended.
The following table discloses the cash, equity awards, and other compensation earned, paid, or awarded,discretion. Except as the case may be, to each of the Company’s directors (other than Mr. Harris, whose compensation is set forthprovided in the Summary Compensation Table above) duringHarris Agreement, the fiscal year ended December 31, 2015.
| Name | | Fees Earned or Paid in Cash ($) | | | Stock Awards (1)(2) ($) | | | All Other Compensation ($) | | | Total ($) | | | Paul Coombs | | $ | 56,000 | | | | – | | | | – | | | $ | 56,000 | | | David Fischer | | $ | 51,000 | | | | – | | | | – | | | $ | 51,000 | | | Edward McMillan | | $ | 67,000 | | | | – | | | | – | | | $ | 67,000 | | | Perry Premdas | | $ | 64,000 | | | | – | | | | – | | | $ | 64,000 | | | Dino Rossi | | $ | 30,000 | | | | – | | | | – | | | $ | 30,000 | | | John Televantos | | $ | 80,000 | | | | – | | | | – | | | $ | 80,000 | | | Matthew Wineinger | | $ | 18,000 | | | | – | | | | – | | | $ | 18,000 | |
(1) | The Company has historically granted equityAmended 2017 Plan does not provide for automatic acceleration of outstanding awards to each Director in December of each year. In 2015, the Compensation Committee of the Board decided that the annual grant date for non-employee directors be changed to February, which aligns with the annual employee grant of equity. On February 23, 2016, each director, other than Mr. Harris, was granted 1,808 shares of restricted stock. [These grants were made for 2016.] The shares are subject to restrictions on transfer until they vest after four years, in accordance with the provisions of the Restricted Stock Grant Agreement, dated February 23, 2016, between the Company and each such director. The grant date fair value per share of each award was $60.85.
|
(2) | The following table shows the aggregate number of options and stock awards outstanding for each director, other than Mr. Harris, as of December 31, 2015: |
Name | | Aggregate
Stock Options
Outstanding as of
12/31/2015
| | | Aggregate
Stock Awards
Outstanding as of
12/31/2015
| | Paul Coombs | | | - | | | | 6,420 | | David Fischer | | | - | | | | 6,420 | | Edward McMillan | | | - | | | | 6,420 | | Perry Premdas | | | - | | | | 6,420 | | Dino Rossi | | | 72,087 | | | | - | | John Televantos | | | - | | | | 6,420 | | Matthew Wineinger | | | - | | | | - | |
Under the director restricted stock grant agreements, restricted shares vest in full, four years from grant, or upon an earlier change of control of the Company, provided the grantee is a director of the Company on that date. The restricted shares will also vest in full upon the grantee’s death. In the event of: (1) the grantee’s retirement from the Company’s Boardoccurrence of Directors at or after age 70; (2) the grantee’s major disability, or (3) the grantee’s resignation from the Company’s Board of Directors due to a conflict of interest or serious illness, the restricted stock will vest based upon the amount of time remaining until the vesting date. Except as set forth above, unvested restricted stock will be forfeited at the time the director ceases to be a director of the Company.change in control.
The Company does not pay any other direct or indirect compensation to directors in their capacity as such.
Related Party Transactions
Other than the compensation and employment arrangements described above, since the beginning of 2015, we have not entered into any transactions in which any of our directors or executive officers or their immediate family members have a direct or indirect interest.
The Company has adopted a related party transaction policy. Under the related party transaction policy, our Audit Committee reviews and approves proposed transactions or courses of dealings expected to exceed $120,000 in any fiscal year with respect to which holders of 5% or more of our stock, and/or our executive officers, orour directors, or members of their immediate families, have ana direct or indirect material interest. Before entering into any transaction, arrangement or relationship constituting an interesteda related party transaction, other than certain basic pre-approved transactions, the related party must notify the Company’s General Counsel in writing of all material facts are required toand circumstances of the proposed transaction. Proposed related party transactions must be reviewed by the Audit Committee, which has the authority to approve or disapprove the transaction based on appropriate factors, including whether the transaction is in the ordinary course of business, whether the transaction was initiated by the Company or the related party, whether the transaction is on terms no less favorable to the Company than terms generally available from an un-affiliated third party, andthe potential benefit to the Company, the amount of money involved, any impact on a director’s independence to serve on the board or any committees, the extent of the related person’s interest in the transaction.transaction, and any other information that would be material to investors. An Audit Committee member who is the related party does not participate in the decision to approve or disapprove the transaction. If a related party transaction will be ongoing, the Audit Committee may establish guidelines for Company management to follow in its dealings with the related party and the Audit Committee will regularly review such transactions.
The Audit Committee has preapproved the following related party transactions: (a) employment of executive officers, (b) director compensation, (c) transactions with other companies where the related party’s only relationship is as a director or owner of less than 10% of that company’s outstanding equity, (d) charitable contributions not exceeding $120,000 where the related party’s only relationship is as an employee, (e) transactions where all shareholders receive proportional benefits, and (f) indemnification pursuant to the Company’s Certificate of Incorporation or Bylaws or other agreement.
In addition, the Company’s Code of Conduct, which sets forth standards applicable to all employees, officers and directors of the Company, requires that all employees, officers and directors must disclose outside business or financial interest which could influence the discharge of their responsibilities to the Company. Any waivers of the provisions of, the Code of Conduct, if any, made with respect to any of our directors or officers will be posted on our website at www.balchem.com. No such waivers were requested or granted in 2023. During 2023, there were no Related Person Transactions in which any of our directors or officers or their immediate family members had a direct or indirect material interest. We have not made payments to our independent, non-employee directors other than the fees to which they are entitled as directors (described under the heading “Director Compensation” on page 31 of this Proxy Statement) and the reimbursement of expenses related to their services as directors. As an employee director, Mr. Harris does not receive any compensation for his services as Director and Chairman of the Board. TABLE OF CONTENTS Equity Compensation Plan Information The following table provides information, as of December 31, 2015,2023, with respect to shares of the Company’sour Common Stock that may be issued pursuant to awards under the 1999 StockAmended 2017 Plan, (described above) as well as under the Company’s prior stock option plans, which plans were replaced by2017 Plan and the 1999 Stock Plan.Plan (each described above). These plans are the Company’s only equity compensation plans approved by security holders, and there are no equity compensation plans that have not been approved by security holders. It should be noted that shares of the Company’sour Common Stock may be allocated to, or purchased on behalf of, participants in the Company’s 401(k)/Profit Sharing Plan retirement plan (described above). Consistent with Securities and Exchange CommissionSEC regulations governing equity compensation plans, information relating to shares issuable or purchased under the Company’s 401(k)/Profit Sharing Plan retirement plan is not included in the table below.
| | (a) | (b) | (c) | | Plan Category | Number of shares to be issued upon exercise of outstanding options, warrants and rights1 | Weighted-average exercise price per share of outstanding options, warrants and rights | Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a)) | | Equity compensation plans approved by security holders | 1,018,631 | $37.31 | 3,792,007 | | Equity compensation plans not approved by security holders | - | - | - | | Total | 1,018,631 | $37.31 | 3,792,007 |
| | Plan Category | | | Number of
Shares to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants
and Rights | | | Weighted-Average
Exercise Price Per
Share of
Outstanding
Options, Warrants
and Rights | | | Number of
Shares Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans (Excluding
Shares Reflected
in Column)(1) | | | | Equity compensation plans approved by security holders | | | 1,077,840 | | | 104.38 | | | 1,034,260 | | | | Equity compensation plans not approved by security holders | | | | | | | | | | | | | Total | | | 1,077,840 | | | 104.38 | | | 1,034,260 | |
(1)
| 10,813 shares of unvested Time-Based Restricted Shares granted to non-employee directors and 86,227 shares of unvested Time-Based Restricted Shares granted to NEOs are excluded from this table. |
TABLE OF CONTENTS As required by Section 953(b) of unvested restrictedthe Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, set forth below is disclosure regarding the relationship of the annual total compensation of our employees and the total annual compensation of Mr. Harris, our Chairman, President and CEO. Mr. Harris had 2023 annual total compensation of $5,889,707 as reflected in the Summary Compensation Table included in this Proxy Statement. Our median employee’s annual total compensation for 2023 was $63,793. Therefore, the ratio of Mr. Harris’ 2023 annual total compensation to that of our median employee is approximately 92 to 1. We identified the median employee by examining the 2023 total cash compensation for all individuals, excluding our CEO, who were employed by us on December 31, 2023, the last day of our payroll year. We included all employees whether they were employed on a full-time, part-time or seasonal basis. We did not make any assumptions, adjustments, or estimates with respect to total cash compensation, and annualized the compensation for any full-time employees who were not employed by the Company for all of 2023. We believe the use of total cash compensation for all employees is a consistently applied compensation measure because we do not widely distribute annual equity awards to employees. Approximately four percent of our employees receive annual equity awards. After identifying the median employee based on total cash compensation, we calculated annual total compensation for such employee using the same methodology that we use for our NEOs as set forth in the 2023 Summary Compensation Table. Given the different methodologies that various public companies will use to determine their pay ratio, the CEO Pay Ratio reported above should not be used as a basis for comparison between companies. TABLE OF CONTENTS Pay versus Performance Disclosure Pay versus Performance Disclosure The following table sets forth the compensation for our Chief Executive Officer and the average compensation for our other named executive officers, both as reported in the Summary Compensation Table and with certain adjustments to reflect the “compensation actually paid” (“CAP”) to such individuals, as defined under SEC rules, for each of 2023, 2022, 2021 and 2020. The table also provides information on our cumulative total shareholder return (“TSR”), the cumulative TSR of our peer group, Net Income (which we refer to as “Net Earnings” in the Consolidated Statements of Earnings in our Form 10-K) and Adjusted EBITDA over such years in accordance with SEC rules. | | Year | | | Summary
Compensation
Table Total for
Ted Harris(1)
$ | | | Compensation
Actually Paid to
Ted Harris(2)(2a)
$ | | | Average
Summary
Compensation
Table Total for
Non-CEO
NEOs(3)
$ | | | Average
Compensation
Actually Paid to
Non-CEO
NEOs(2)(2a)(3)
$ | | | Year-end value of $100 invested
on 12/31/2019 in(4): | | | Net
Income ($)
(in millions)
$ | | | Adjusted
EBITDA(6)
(in millions)
$ | | | | BCPC
$ | | | Peer Group
Total
Shareholder
Return
$ | | | | 2023 | | | 5,889,707 | | | 10,939,071 | | | 1,298,379 | | | 1,667,102 | | | 149.36 | | | 124.91 | | | 108.54 | | | 230.9 | | | | 2022 | | | 11,948,265 | | | 7,975,827 | | | 1,190,453 | | | 608,803 | | | 121.95 | | | 123.18 | | | 105.37 | | | 215.7 | | | | 2021 | | | 5,761,673 | | | 12,201,461 | | | 1,260,686 | | | 2,362,829 | | | 167.40 | | | 142.61 | | | 96.10 | | | 189.8 | | | | 2020 | | | 4,620,255 | | | 5,611,326 | | | 1,022,275 | | | 1,366,466 | | | 113.96 | | | 115.20 | | | 84.62 | | | 174.2 | |
1.
| The PEO for all four fiscal years is Ted Harris, the Company’s Chairman, President and Chief Executive Officer. |
2.
| CAP for the PEO and average CAP for our other NEOs in each of 2023, 2022, 2021 and 2020 reflect the respective amounts set forth in the table above, adjusted as set forth in the table below, as determined in accordance with SEC rules. CAP values reflected in the table above do not reflect the actual amount of compensation earned by or paid to the PEO and our other NEOs during the applicable year. For information regarding the decisions made by our Executive Compensation Committee in regards to the PEO and our other NEOs’ compensation for fiscal year 2023, see the section titled “Compensation Discussion and Analysis” of this proxy statement. |
| | | | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | | | | | Harris, Ted | | | Average
Non-CEO
NEOs | | | Harris, Ted | | | Average
Non-CEO
NEOs | | | Harris, Ted | | | Average
Non-CEO
NEOs | | | Harris, Ted | | | Average
Non-CEO
NEOs | | | | Total Compensation from Summary Compensation Table
| | | $5,889,707 | | | $ 1,298,379 | | | $11,948,265 | | | $1,190,453 | | | $5,761,673 | | | $ 1,260,686 | | | $ 4,620,255 | | | $ 1,022,275 | | | | Adjustments for Equity Awards | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustment for grant date values in the Summary Compensation Table | | | $(3,469,079) | | | $(549,611) | | | $(9,614,000) | | | $(520,728) | | | $(2,890,856) | | | $(513,216) | | | $(2,253,423) | | | $(371,859) | | | | Year-end fair value of unvested awards granted in the current year | | | $4,208,750 | | | $ 666,945 | | | $8,784,799 | | | $ 438,360 | | | $5,056,198 | | | $ 886,531 | | | $2,511,162 | | | $ 506,755 | | | | Year-over-year difference of year-end fair values for unvested awards granted in prior years | | | $3,744,224 | | | $213,440 | | | $(2,243,152) | | | $(345,097) | | | $4,165,417 | | | $717,164 | | | $ 622,749 | | | $175,648 | | | | Fair values at vest date for awards granted and vested in current year | | | $— | | | $— | | | $— | | | $— | | | $— | | | $— | | | $— | | | $— | | | | Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years | | | $555,762 | | | $37,239 | | | $(747,011) | | | $(141,472) | | | $93,812 | | | $9,036 | | | $104,515 | | | $30,921 | |
TABLE OF CONTENTS Pay versus Performance Disclosure | | | | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | | | | | Harris, Ted | | | Average
Non-CEO
NEOs | | | Harris, Ted | | | Average
Non-CEO
NEOs | | | Harris, Ted | | | Average
Non-CEO
NEOs | | | Harris, Ted | | | Average
Non-CEO
NEOs | | | | Forfeitures during current year equal to prior year-end fair value | | | $— | | | $— | | | $(203,699) | | | $(19,401) | | | $— | | | $— | | | $— | | | $— | | | | Dividends or dividend equivalents not otherwise included in total compensation | | | $9,708 | | | $709 | | | $50,625 | | | $6,688 | | | $15,217 | | | $ 2,628 | | | $ 6,068 | | | $2,726 | | | | Total Adjustments for Equity Awards | | | $ 5,049,364 | | | $368,723 | | | $(3,972,438) | | | $(581,650) | | | $ 6,439,788 | | | $1,102,143 | | | $991,071 | | | $344,190 | | | | Compensation Actually Paid (as calculated) | | | $10,939,071 | | | $1,667,102 | | | $7,975,827 | | | $ 608,803 | | | $12,201,461 | | | $ 2,362,829 | | | $5,611,326 | | | $1,366,466 | |
(2a)
| The following summarizes the valuation assumptions used for stock option awards included as part of Compensation Actually Paid: |
Expected life of each stock grantedoption is based on the "simplified method" using an average of the remaining vest and remaining term, as of the vest/FYE date. - Strike price is based on each grant date closing price and asset price is based on each vest/FYE closing price. - Risk free rate is based on the Treasury Constant Maturity rate closest to non-employee directorsthe remaining expected life as of the vest/FYE date. - Historical volatility is based on daily price history for each expected life (years) prior to each vest/FYE date. Closing prices provided by S&P Capital IQ are adjusted for dividends and 138,018 sharessplits. - Represents annual dividend yield on each vest/FYE date. (3)
| Non-CEO NEOs reflect the average Summary Compensation Table total compensation and average Compensation Actually Paid for the following executives by year: |
2023: Martin Bengtsson, Martin Reid, Hatsuki Miyata, Frederic Boned 2022: Martin Bengtsson, Jim Hyde, Martin Reid, Jonathan Griffin, Hatsuki Miyata 2021: Martin Bengtsson, Jim Hyde, Mark Stach, William Backus, Martin Reid 2020: Martin Bengtsson, Jim Hyde, Mark Stach, William Backus, Scott Mason (4)
| TSR is cumulative (assuming $100 was invested on December 31, 2019) for the measurement periods beginning on December 31, 2019 and ending on December 31 of each of 2023, 2022, 2021 and 2020, respectively, calculated in accordance with Item 201(e) of Regulation S-K. The peer group for purposes of this table is the Dow Jones U.S. Specialty Chemicals Index. Historic stock price performance is not necessarily indicative of future stock performance. |
(5)
| Reflects “Net Earnings” in the Company’s Consolidated Statements of Earnings included in the Company’s Annual Reports on Form 10-K for each of the years ended December 31, 2023, 2022, 2021 and 2020. |
(6)
| Adjusted EBITDA is the financial measure from the tabular list of Company Performance Metrics below which, in the Company’s assessment, represents the most important financial measure used by the Company to link compensation and performance in 2023. Adjusted EBITDA as used in this Proxy Statement is a non-GAAP financial measure calculated by adding interest, taxes, depreciation, amortization, and other expenses to earnings. Please refer to the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures in Appendix A beginning on page A-1 of this Proxy Statement. |
Most Important Financial Performance Measures The unranked list below represents the Company’s most important measures used to link compensation to performance: | | Company Performance Metrics(1) | | | | | | | Adjusted EBITDA | | | | | | | EBITDA | | | | | | | Free Cash Flow | | | | | | | Total Shareholder Return | | | | |
(1)
| For further information regarding these company performance metrics and their function in the Company’s executive compensation program, please see the “Compensation Discussion and Analysis” section of this Proxy Statement. |
TABLE OF CONTENTS Pay versus Performance Disclosure Relationship between Compensation Actually Paid and Company Performance Measures CAP vs. TSR The following graph compares compensation actually paid to our PEO and the average compensation actually paid to our other NEOs to (i) our cumulative TSR, and (ii) Dow Jones U.S. Specialty Chemicals Index TSR, for the fiscal years ended December 31, 2020, 2021, 2022 and 2023. CAP vs. GAAP Net Earnings The following graph compares (i) compensation actually paid to our PEO and the average compensation actually paid to our other NEOs to (ii) our net earnings, for the fiscal years ended December 31, 2020, 2021, 2022 and 2023. TABLE OF CONTENTS Pay versus Performance Disclosure CAP vs. Company Selected Measure The following graph compares (i) compensation actually paid to our PEO and the average compensation actually paid to our other NEOs to (ii) annual adjusted EBITDA, for the fiscal years ended December 31, 2020, 2021, 2022 and 2023. TABLE OF CONTENTS Security Ownership of unvested restricted stock granted to employees are excluded from this table.
Certain Beneficial Owners and of Management
Security Ownership of Certain Beneficial Owners and of Management
The table below sets forth as of the Record Date of April 1, 2016,22, 2024, the number of shares of Common Stock beneficially owned by (i) each director, (ii) each of the Named Executive Officers,NEO, (iii) each beneficial owner of, or institutional investment manager exercising investment discretion with respect to, 5% or more of the outstanding shares of our Common Stock known to the Company based upon filings with the Securities and Exchange Commission,SEC, and (iv) all current directors and executive officers of the Company as a group, and the percentage ownership of theour outstanding Common Stock as of such date held by each such holder and group: the Record Date. The table does not include performance-based restricted stock grantsPerformance Shares granted under the Company’s LTCPLTIP (which grants vest at the end of three years) at threshold or maximum,, as the number of shares to be awarded is not determinable at the time of grant and the recipients do not have beneficial ownership of such shares.
Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership (1) | | | Percent of Class (2) | | | | | | | | | | | Brown Capital Management, LLC (3)* | | | 3,249,721 | | | | 10.29 | % | | BlackRock Institutional Trust Company, N.A. (4)* | | | 2,749,774 | | | | 8.71 | % | | The Vanguard Group Inc. (5)* | | | 2,395,530 | | | | 7.59 | % | | Neuberger Berman, LLC (6)* | | | 1,957,920 | | | | 6.20 | % | | Dino A. Rossi (7)* | | | 184,572 | | | | | ** | | David F. Ludwig (8)* | | | 93,069 | | | | | ** | | Frank J. Fitzpatrick (9)* | | | 91,421 | | | | | ** | | William A. Backus (10)* | | | 90,144 | | | | | ** | | Theodore L. Harris (11)* | | | 54,252 | | | | | ** | | Matthew D. Houston (12)* | | | 49,737 | | | | | ** | | Perry W. Premdas (13)* | | | 45,861 | | | | | ** | | Edward L. McMillan (14)* | | | 33,134 | | | | | ** | | John Y. Televantos (15)* | | | 29,045 | | | | | ** | | Paul D. Coombs (16)* | | | 19,722 | | | | | ** | | David B. Fischer (17)* | | | 14,722 | | | | | ** | | Matthew D. Wineinger (18)* | | | 1,808 | | | | | ** | | | | | | | | | | | | Totals Executive Officers/Directors (19) | | | 707,487 | | | | 2.24 | % | | | | | | | | | | | | Shares Outstanding April 1, 2016 | | | 31,574,578 | | | | | |
| | Name and Address of Beneficial Owner | | | Amount
and
Nature of
Beneficial
Ownership | | | Beneficially
Owned(1) | | | Percent of
Class(2) | | | | BlackRock, Inc.
50 Hudson Yards, New York, NY 10001 | | | (3) | | | 4,989,247 | | | 15.39% | | | | The Vanguard Group, Inc.
100 Vanguard Blvd., Malvern, PA 19355 | | | (4) | | | 3,791,512 | | | 11.69% | | | | APG Asset Management US Inc.
666 Third Ave, 2nd Floor, New York, NY 10017 | | | (5) | | | 2,917,112 | | | 9.00% | | | | Wasatch Advisors LP
505 Wakara Way, Salt Lake City, UT 84108 | | | (6) | | | 1,910,409 | | | 5.89% | | | | Ted Harris | | | (7) | | | 183,572 | | | * | | | | Martin Bengtsson | | | (8) | | | 49,887 | | | * | | | | David Fischer | | | (9) | | | 25,876 | | | * | | | | Matthew Wineinger | | | (10) | | | 18,029 | | | * | | | | Daniel Knutson | | | (11) | | | 16,916 | | | * | | | | Martin Reid | | | (12) | | | 11,960 | | | * | | | | Joyce Lee | | | (13) | | | 7,673 | | | * | | | | Hatsuki Miyata | | | (14) | | | 1,702 | | | * | | | | Kathleen Fish | | | (15) | | | 1,406 | | | * | | | | Frederic Boned | | | (16) | | | 806 | | | * | | | | Olivier Rigaud | | | (17) | | | 0 | | | * | | | | Monica Vicente | | | (18) | | | 0 | | | * | | | | Directors and Executive Officers as a Group (16 people) | | | | | | 403,951 | | | 1.25% | | | | | | | | | | | | | | | | | Shares Outstanding as of April 22, 2024 | | | | | | 32,423,468 | | | | |
*
| Such person’s address is c/o the Company, New Hampton, New York 10958.Less than 1% |
** | Indicates less than 1%. |
(1)
| (1) | Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (“SEC”)SEC and generally includes voting or investment power with respect to securities. In accordance with SEC rules, shares which are vesting within 60 days of the Record Date or which may be acquired upon exercise of stock options which are currently exercisable, or which become exercisable within 60 days after the date of the information in the table are deemed to be beneficially owned by the optionee.owned. Except as indicated by footnote, and subject to community property laws where applicable, to the Company’s knowledge, the persons or entities named in the table above are believed to have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them. |
(2)
| (2) | For purposes of calculatingThe ownership percentages set forth in this column are based on the percentage ofCompany’s outstanding shares held byon the Record Date and assumes that each person named above, any shares which such person has the right to acquire within 60 days after the date of the informationbeneficial owners continued to own the number of shares reflected in the table are deemedabove on such date. |
(3)
| Based upon information provided in a Schedule 13G/A for such entity filed with the SEC on January 22, 2024, reporting beneficial ownership as of December 31, 2023, with sole dispositive power as to be outstanding, but not for the purpose of calculating the percentage ownership of any other person.all shares and sole voting power as to 4,935,576 shares. |
| (3)(4)
| Based upon information provided in a Schedule 13G/A for such entity filed with the SEC on February 16, 2016. Such entity’s address13, 2024, reporting beneficial ownership as reported in its Schedule 13G/A is 1201 N. Calvert Street, Baltimore, MD 21202.of December 29, 2023, with sole dispositive power as to 3,698,113 shares, shared dispositive power of 93,399 shares, and shared voting power as to 59,244 shares. |
TABLE OF CONTENTS Security Ownership of Certain Beneficial Owners and of Management | (4) | Based upon information provided in a Schedule 13G/A for such entity filed with the SEC on January 20, 2016. Such entity’s address as reported in its Schedule 13G/A is 55 East 52nd Street, New York, NY 10022. |
(5)
| (5) | Based upon information provided in a Schedule 13G/A for such entity filed with the SEC on February 10, 2016. Such entity’s address7, 2024, reporting beneficial ownership as reported in its Schedule 13G/A is 100 Vanguard Blvd, Malvern, PA 19355.of December 31, 2023, with shared dispositive and voting powers as to all shares. |
| (6)
| Based upon information provided in a Schedule 13G/A for such entity filed with the SEC on February 9, 2016. Such entity’s address2024, reporting beneficial ownership as reported in its Schedule 13G/A is 605 Third Avenue, New York, NY 10158.of December 31, 2023, with sole dispositive and voting powers as to all shares. |
| (7)
| Consists of 55,687135,970 shares such person has the right to acquire pursuant to stock options, 1,808 shares of restricted stock, 24,007Stock Options, 1,804 shares held in such person’s Company 401(k)/profit sharing plan retirement account, and 103,07045,798 shares held directly. |
| (8)
| Consists of 61,42335,200 shares such person has the right to acquire pursuant to stock options, 5,353 shares of restricted stock, 13,722Stock Options, 912 shares held in such person’s Company 401(k)/profit sharing plan retirement account and 12,57113,775 shares held directly. |
| (9)
| Consists of 21,64513,446 shares such person has the right to acquire pursuant to stock options, 6,487 shares of restricted stock, 18,968 shares held in such person’s Company 401(k)/profit sharing plan account,Stock Options, and 44,32112,430 shares held directly. |
| (10)
| Consists of 72,83613,446 shares such person has the right to acquire pursuant to stock options, 8,762 shares of restricted stock, 3,840 shares held in such person’s Company 401(k)/profit sharing plan account,Stock Options, and 4,7064,583 shares held directly. |
| (11)
| Consists of 54,000 shares of restricted stock and 252 shares held in such person’s Company 401(k)/profit sharing plan account. |
| (12) | Consists of 20,68713,446 shares such person has the right to acquire pursuant to stock options, 3,793Stock Options, and 3,470 shares held directly. |
(12)
| Consists of restricted stock, 2,9587,980 shares such person has the right to acquire pursuant to Stock Options, 530 shares held in such person’s Company 401(k)/profit sharing retirement plan account and 22,2993,450 shares held directly. |
| (13)
| Consists of 8,2286,476 shares of restricted stocksuch person has the right to acquire pursuant to Stock Options and 37,6331,197 shares held directly. |
| (14)
| Consists of 8,228520 shares of restricted stocksuch person has the right to acquire pursuant to Stock Options, 331 shares held in such person’s Company 401(k) retirement plan account and 24,906851 shares held directly. |
| (15)
| Consists of 8,2281,406 shares of restricted stock and 20,817 shares held directly.such person has the right to acquire pursuant to Stock Options. |
| (16)
| Consists of 8,228520 shares of restricted stocksuch person has the right to acquire pursuant to Stock Options, and 11,494286 shares held directly.in such person’s Company 401(k) retirement plan account. |
| (17) | Consists of 8,228 shares of restricted stock and 6,494 shares held directly. |
| (18) | Consists of 1,808 shares of restricted stock. |
| (19) | Consists of options to purchase 232,278 shares, 123,151 shares of restricted stock, 63,747 shares in accounts under the Company’s 401(k)/profit sharing plan, and 288,311 shares held by individuals directly. |
PROPOSAL NO. 2
RATIFICATION
TABLE OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLICCONTENTS Delinquent Section 16(a) Reports ACCOUNTING FIRM
The Audit Committee has selected RSM US LLP (“RSM”) (formerly McGladrey LLP)Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and officers, and persons who beneficially own more than 10% of the Company’s independent registered public accounting firmordinary shares, to file reports of ownership and reports of changes in ownership with the SEC and the NYSE. To the Company’s knowledge, based solely on its review of such forms received by the Company and written representations that no other reports were required, all Section 16(a) filing requirements were complied with for the year ending December 31, 2016. The Company is submitting its selection2023.
TABLE OF CONTENTS Information Relating to Proposal 2: Ratification of RSM for ratification by the stockholders at the Annual Meeting. RSM has audited the Company’s financial statements since 2005. RepresentativesAppointment of RSM will be present at the Annual Meeting and will have an opportunity to make a statement if they wish and will be available to respond to appropriate questions.Independent Registered Public Accounting Firm
The Company’s Bylaws do not require that the stockholders ratify the selection of RSM as the Company’s independent registered public accounting firm. However, the Company is submitting the selection of RSM to stockholders for ratification as a matter of good corporate governance practice. If stockholders do not ratify the selection, the Audit Committee will reconsider whether to retain RSM. Even if the selection is ratified, the Audit Committee in its discretion may change the appointment at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders.
Assuming a quorum is present, the affirmative vote of a majority of all votes cast on the proposal, in person or represented by proxy, is required for approval of this proposal. Abstentions will not be counted as votes cast, and will have no effect on the vote. Brokers have discretionary authority to vote on this Proposal.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF RSM US LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2016.
Principal Accountant Fees and Services
During 2015,2023, the Company retained RSM to audit the consolidated financial statements for 2015.the fiscal year ended 2023. In addition, the Company also retained RSM to provide services relating to Management’s Assessment of Internal Controls as required by Section 404 of the Sarbanes-Oxley Act, as well as for other audit-related.audit-related services. During the period covering the fiscal years ended December 31, 20152023 and 2014,2022, RSM performed the following professional services:
| | | 2015 | | | 2014 | | | Audit fees (1) | | | 923,514 | | | $ | 916,253 | | | Audit-related fees (2) | | | 97,472 | | | | 325,682 | | | Tax fees (3) | | | - | | | | 32,224 | | | Total fees | | $ | 1,020,989 | | | $ | 1,274,159 | |
| | | | | 2023 | | | 2022 | | | | Audit fees(1) | | | $1,274,671 | | | $1,362,465 | | | | Audit-related fees(2) | | | 229,970 | | | 316,136 | | | | Tax fees(3) | | | 8,400 | | | 151,000 | | | | Total fees | | | $1,513,041 | | | $1,829,601 | |
(1)
| (1) | Fees relatingAudit fees relate to audit of the annual consolidated financial statements and quarterly reviews, including out of pocket disbursements and administrative charges.charges, and fees related to foreign statutory audits. 2023 also includes fees related to S-8 filing. |
| (2)
| Audit-related fees in 2015for 2023 consist of fees paid for the employee benefit plan audit and fees incurredpaid for theunconsummated acquisition financial due diligence procedures performed in 2015 related to acquisition work.procedures. Audit-related fees in 2014for 2022 consist of:of fees paid for the employee benefit plan audit; fees related to foreign statutory audit;audit and fees paid for financial due diligence procedures related to the SensoryEffects acquisition; and fees for other accounting related questions.consummated acquisitions. |
| (3)
| Tax fees for 2023 consist of:of unconsummated acquisition tax due diligence procedures. Tax fees for 2022 consist of tax servicesdue diligence procedures related to payroll; fees for VAT returns; and fees for other tax related questions.consummated acquisitions. |
Audit Committee Financial Expert
Experts
The Board of Directors has determined that Perry W. Premdas,Mr. Knutson, the ChairmanChair of the Audit committee, is anCommittee, Mr. Rigaud and Ms. Vicente, both members of the Audit Committee, are “audit committee financial expert”experts” as defined under SEC rules.
Policy on Pre-Approval of Audit and Non-Audit Services All audit and non-audit services provided to the Company by the independent accountants are pre-approved by the Audit Committee or in certain instances by one or more of its members pursuant to delegated authority. At the beginning of each year, the Audit Committee reviews and approves all known audit and non-audit services and fees to be provided by and paid to the independent accountants. During the year, specific audit and non-audit services or fees not previously approved by the Audit Committee are approved in advance by the Audit Committee or in certain instances by one or more of its members pursuant to delegated authority. In addition, during the year the Chief Financial Officer and the Audit Committee monitor actual fees to the independent accountants for audit and non-audit services.
services, as appropriate.
The Audit Committee reviewed all audit and non-audit services provided by RSM with respect to the fiscal year ended December 31, 20152023 and concluded that the provision of such services was compatible with maintaining independence in the conduct of its auditing functions. All audit and non-audit services provided by RSM described in the table above were pre-approved by the Audit Committee.
The Board of Directors has appointed an Audit Committee consisting of four directors. Each member of the Audit Committee is independent as defined under the NASDAQ Marketplace RulesNasdaq Stock Market LLC and SEC independence requirements applicable to audit committee members. The Board of Directors has adopted a written charter with respect to the Audit Committee’s responsibilities. The Audit Committee oversees the Company’s internal and independent auditors and assists the Board of Directors in overseeing matters relating to the Company’s financial reporting process and risk exposure.
In fulfilling its responsibilities, the Audit Committee reviewed and discussed the audited financial statements for the fiscal year ended December 31, 20152023 with management and discussed with RSM: (i) the audit with RSM, the Company’s independent registered public accounting firm. The Audit Committee also discussed with the Company’s independent registered public accounting firmaudit; and, the matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”PCAOB”) Auditing Standard No. 161301 (Communications with Audit Committees). This included a discussion of the independent auditors’RSM’s judgment as to the quality, not just the acceptability, of the Company’s accounting principles as applied to TABLE OF CONTENTS the Company’s financial reporting, and such other matters that generally accepted auditing standards require to be discussed with the Audit Committee. The Audit Committee also received from RSM the written disclosures and letter required by applicable requirements of the PCAOB regarding the independent accountant’sits communications with the Audit Committee concerning independence, and theindependence. Audit Committee also discussed with RSM and management RSM’s independence.
Management is responsible for maintaining internal controls over financial reporting and assessing the effectiveness of internal control over financial reporting. The independent registered public accounting firm’sRSM’s responsibility is to express an opinion on the effectiveness of the Company’s internal control over financial reporting based on theirits audit. In fulfilling its oversight responsibilities, the Audit Committee reviewed the Company’s assessment process of internal controls over financial reporting. The Audit Committee reviewed with the independent registered public accounting firmRSM any deficiencies that had been identified during theirits engagement.
The Audit Committee also considered whether the provision of non-audit services by RSM to the Company is compatible with RSM’s independence. RSM advised the Audit Committee that RSM was, and continues to be, independent with respect to the Company.
Based upon the reviews, discussions and considerations referred to above, the Audit Committee recommended to the Board of Directors (and the Board has approved) that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 20152023 for filing with the Securities and Exchange Commission.
The Audit Committee has also recommended that the Board of Directors approve the selection ofappointed RSM as the Company’s independent auditors for 2016.2024. Submitted by the Audit Committee of the Board of Directors.Daniel Knutson (Chair)
Joyce Lee
Olivier Rigaud
Monica Vicente
| Perry W. Premdas (Chair) | | Paul D. Coombs | | David B. Fischer | | Edward L. McMillan | | being the members of the Audit | | Committee of the Board of Directors |
34
PROPOSAL NO. 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Since 2011, as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Company’s stockholders were provided with an opportunity to vote to approve, on an advisory (nonbinding) basis, the compensation of the Company’s Named Executive Officers. At our 2015 annual meeting of stockholders, our stockholders overwhelmingly approved our “say-on-pay” resolution with more than 80% of the votes cast by the holders of Common Stock approving the executive compensation described in our 2015 Proxy Statement. In response to the voting results regarding the frequency of say-on-pay vote, this year, the Company again seeks your advisory vote and asks that you approve the compensation of the Named Executive Officers as disclosed in this Proxy Statement.
Please refer to the sections entitled “Compensation Committee and Processes”, “Compensation Discussion and Analysis”, and the tables and narratives in the Executive Compensation portion of this Proxy Statement for the discussion and summary of the policies of the Compensation Committee which form the basis for the compensation of our Named Executive Officers and information on the amounts paid.
We are asking for shareholder approval of the compensation of our Named Executive Officers as disclosed in this Proxy Statement in accordance with SEC rules, which includes the disclosures under the “Compensation Discussion and Analysis,” the compensation tables and the narrative discussion accompanying the tables. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the policies and practices described in this Proxy Statement. Because this vote is advisory only, the vote is not binding; however, the Compensation Committee will consider the results of shareholder voting in making future compensation decisions regarding Named Executive Officers.
Assuming a quorum is present, the affirmative vote of a majority of all votes cast on the proposal, in person or represented by proxy, is required for approval of this proposal. Abstentions and broker non-votes will not be counted as votes cast, and will have no effect on the vote.
CONTENTS
Maryland law and the Company’s Bylaws require the presence of a quorum for the Meeting,meeting, defined as the presence in personat the Annual Meeting or represented by proxy of stockholdersshareholders entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting. Abstentions will be treated as “present” for purposes of determining whetherthe presence of a quorum has been reached.for the Annual Meeting.
Stockholders of record on April 20, 2016 (the “Record Date”) will be eligible to vote at the Meeting. The voting securities of the Company consist of its Common Stock, $.06-2/3 par value, of which 31,570,77832,423,468 shares were outstanding on the Record Date. Each share of Common Stock outstanding on the Record Date will be entitled to one vote.
StockholderShareholder Proposals for 20172025 Annual Meeting of Shareholders
From time to time, the stockholders of the Company mayShareholders who wish to submithave proposals which they believe should be voted upon by the stockholders. The Securities and Exchange Commission has adopted regulations which govern the inclusion of such proposals in the Company’s annual meeting proxy materials. In order for a proposal to be eligibleconsidered for inclusion in the Company’sProxy Statement and form of proxy statement for the 2017our 2025 annual meeting itof our shareholders pursuant to Rule 14a-8 under the Exchange Act must cause their proposals to be received in writing by theour Secretary of the Company at the Company’s principal executive offices5 Paragon Drive, Montvale, NJ 07645 no later than January 6, 2017December 27, 2024. Any proposal should be addressed to our Secretary and must satisfy the other requirementsmay be included in the SEC regulations. With respectfollowing year’s proxy materials only if such proposal complies with the rules and regulations promulgated by the SEC. Nothing in this section shall be deemed to require us to include in our Proxy Statement or our proxy relating to any stockholderannual meeting any shareholder proposal intendedthat does not meet all of the requirements for inclusion established by the SEC.
In addition, our Bylaws currently require that we be given advance written notice of nominations for election as directors and other matters that shareholders wish to present for action at an annual meeting of shareholders (other than matters included in our proxy materials in accordance with Rule 14a-8 under the Exchange Act). Our Secretary must receive such notice at 5 Paragon Drive, Montvale, NJ 07645 not later than the close of business on March 22, 2025 and no earlier than February 20, 2025 for nominations and other matters to be presented at the 20172025 Annual Meeting of our Shareholders. However, in the event that the 2025 annual meeting but not submittedis held before May 21, 2025 or after August 19, 2025, for inclusion in the Company’s proxy materials for that meeting, the proxy for such meeting will confer discretionary authoritynotice by a shareholder to vote on such proposal unless the Company is notified of such proposal not laterbe timely it must be received no earlier than March 22, 2017 (45120 days prior to the anniversarydate of the 2025 annual meeting and not later than 5:00 p.m. EDT on the later of (a) 90 days prior to the date of the 2025 annual meeting and (b) the tenth day following the day on which we first made a public announcement of the date this Proxy Statementof such meeting. Director Attendance at Annual Meetings of Shareholders Each Director is first being sentencouraged to stockholders).attend annual meetings of shareholders. All then-current directors attended the Company’s 2023 Annual Meeting of Shareholders. Mr. Rigaud and Ms. Vicente did not join the Board until September 6, 2023.
Matters Not Determined at the Time of Solicitation
The Board of Directors is not aware of any matters to come before the Annual Meeting other than as described above. If any matter other than as described above should come before the Annual Meeting, then the persons named in the enclosed form of proxyProxy Card will have discretionary authority to vote all proxies with respect thereto in accordance with their judgment.
Approval of any other matter that may come before66
TABLE OF CONTENTS Instructions for the Virtual Annual Meeting
Our Annual Meeting will be held virtually. There will be no physical meeting location. The Annual Meeting will only be conducted via live webcast. We encourage our shareholders to participate in the Annual Meeting. As described below, technical support will be available to you on the Annual Meeting is be determined bydate through the affirmative voteMeeting Platform. If you have questions about participating in the Annual Meeting prior to the meeting date, please email shareholder@broadridge.com or call at 1-855-449-0975. To participate in the Annual Meeting, visit www.virtualshareholdermeeting.com/BCPC2024 and enter the 16-digit control number included on Proxy Card or Notice of a majority of all votes castInternet Availability or on the matter, in personinstructions that accompanied your proxy materials. You may begin to log into the Meeting Platform beginning at 8:45 a.m. EDT on June 20, 2024. The Annual Meeting will begin promptly at 9:00 a.m. EDT on June 20, 2024. If you wish to submit a question, you may submit your question during the Annual Meeting, by logging into the Meeting Platform at www.virtualshareholdermeeting.com/BCPC2024, typing your question into the “Ask a Question” field, and clicking “Submit.” Questions pertinent to Annual Meeting matters will be answered during the Annual Meeting, subject to time constraints. Questions regarding personal matters, including those related to employment, product or represented by proxy. Abstentionsservice issues, or suggestions for product innovations, are not pertinent to Annual Meeting matters and broker non-votestherefore will not be countedanswered. Any questions pertinent to Annual Meeting matters that cannot be answered during the Annual Meeting due to time constraints will be posted online and answered at https://balchem.com/our-company/investor-relations/. The questions and answers will be available as votes cast,soon as practical after the Annual Meeting and will have no effectremain available until one week after posting. If you encounter any technical difficulties with the Meeting Platform on the vote.Annual Meeting day, please call the technical support number that will be posted on the Meeting Platform. Technical support will be available starting at 8:30 a.m. EDT on June 20, 2024 and will remain available until thirty minutes after the Annual Meeting has finished.
New Hampton, New York
| | | | | /s/ Hatsuki Miyata | | | | | | | | | | | | | | Hatsuki Miyata
General Counsel and Secretary | | | | | | | April 26, 2024 | | | | | | | | | | | | | | Montvale, New Jersey | |
The Annual Report to Stockholders of the Company for the fiscal year ended December 31, 2015 is being mailed or otherwise made available to stockholders with these proxy materials.shareholders. The Annual Report does not form part of these proxy materialsthis Proxy Statement for the solicitation of proxies. | | | VOTE BY INTERNET - www.proxyvote.com | | | | Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
| | BALCHEM CORPORATION | | Electronic Delivery of Future PROXY MATERIALS | | 52 SUNRISE PARK ROAD
NEW HAMPTON, NY 10958
| | If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | | | | | | | | VOTE BY PHONE - 1-800-690-6903 | | | | Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. | | | | | | | | VOTE BY MAIL | | | | Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
| KEEP THIS PORTION FOR YOUR RECORDS | THIS PROXYCARDISVALIDONLYWHENSIGNED AND DATED.
| DETACH AND RETURN THIS PORTION ONLY |
The Board of Directors recommends you vote FOR the following: | For
| Withhold
| For All
| | To withhold authority to vote for any | | | | All | All | Except | | individual nominee(s), mark “For All | | | 1. Election of Directors | | | | | Except” and write the number(s) of the | | | Nominees | ☐ | ☐ | ☐ | | nominee(s) on the line below. | | | | | | | | | | | 01 Dino A. Rossi | 02 Theodore L. Harris | 03 Matthew D. Wineinger | | | | | | | | | | | | | |
The Board of Directors recommends you vote FOR proposals 2 and 3. | For | Against
| Abstain
| | | | | 2 | Ratification of the appointment of RSM US LLP as the Company's independent registered public accounting firm for the year 2016. | ☐ | ☐ | ☐ | | | | | | 3 | Non-binding advisory approval of Named Executive Officers’ compensation as described in the Proxy Statement. | ☐ | ☐ | ☐ |
NOTE: Such other business as may properly come before the meeting or any adjournment thereof.
For address change/comments, mark here. | | | ☐ | | (see reverse for instructions) | | | | | | Yes | No | | | Please indicate if you plan to attend this meeting | ☐ | ☐ | | |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | Date | | Signature (Joint Owners) | Date | | | | | | | | | | | | | |
Important Notice Regarding
TABLE OF CONTENTS NON-GAAP FINANCIAL MEASURES
In addition to disclosing financial results in accordance with United States (U.S.) generally accepted accounting principles (GAAP), this proxy statement contains non-GAAP financial measures that we believe are helpful in understanding and comparing our past financial performance and our future results. The non-GAAP financial measures in this proxy statement include adjusted net earnings and the Availabilityrelated adjusted per diluted share amounts, EBITDA, and adjusted EBITDA. The non-GAAP financial measures disclosed by the company exclude certain business combination accounting adjustments and certain other items related to acquisitions, certain equity compensation, nonqualified deferred compensation plan expense (income), and certain one-time or unusual transactions. Detailed non-GAAP adjustments are described in the reconciliation tables below and also explained in the related footnotes. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Investors should not consider non-GAAP measures as alternatives to the related GAAP measures. Set forth below are reconciliations of Proxy Materialsthe non-GAAP financial measures to the most directly comparable GAAP financial measures. Table 1 Reconciliation of Non-GAAP Measures to GAAP
(Dollars in thousands, except per share data)
(unaudited) | | | | | Year Ended
December 31, | | | | | | | 2023 | | | 2022 | | | | Reconciliation of adjusted net earnings
| | | | | | | | | | GAAP net earnings | | | $ 108,543 | | | $105,367 | | | | Inventory valuation adjustment(1) | | | 1,419 | | | 3,057 | | | | Amortization of intangible assets and finance lease(2) | | | 28,561 | | | 27,816 | | | | Restructuring costs(3) | | | 8,365 | | | — | | | | Transaction and integration costs and unallocated legal fees(4) | | | (9,683) | | | 3,109 | | | | Net realized gain on foreign currency forward contracts(5) | | | — | | | (512) | | | | Income tax adjustment(6) | | | (7,487) | | | (8,306) | | | | Adjusted net earnings | | | $129,718 | | | $130,531 | | | | Adjusted net earnings per common share - diluted | | | $ 4.00 | | | $4.03 | |
TABLE OF CONTENTS The following table sets forth a reconciliation of Net Income calculated using amounts determined in accordance with GAAP to EBITDA and to Adjusted EBITDA for the Annual Meeting: The Notice & Proxy Statement, Annual Report is/ are available at www.proxyvote.com.years ended December 31, 2023 and 2022. Table 2
(unaudited) | | | | | Year Ended
December 31, | | | | | | | 2023 | | | 2022 | | | | Net income - as reported | | | $ 108,543 | | | $ 105,367 | | | | Add back:
| | | | | | | | | | Provision for income taxes | | | 28,718 | | | 28,382 | | | | Interest and other expenses | | | 21,932 | | | 11,437 | | | | Depreciation and amortization | | | 54,647 | | | 51,513 | | | | EBITDA | | | 213,840 | | | 196,699 | | | | Add back certain items:
| | | | | | | | | | Non-cash compensation expense related to equity awards | | | 16,052 | | | 13,224 | | | | Inventory valuation adjustment(1) | | | 1,419 | | | 3,057 | | | | Restructuring costs(3) | | | 8,365 | | | — | | | | Transaction and integration costs and unallocated legal fees(4) | | | (9,683) | | | 3,109 | | | | Nonqualified deferred compensation plan expense (income)(7) | | | 917 | | | (401) | | | | Adjusted EBITDA | | | $230,910 | | | $215,688 | |
(1)
| Inventory valuation adjustment: Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company’s cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment to our cost of sales excludes the expected profit margin component that is recorded under business combination accounting principles. We believe the adjustment is useful to investors as an additional means to reflect cost of sales and gross margin trends of our business. |
(2)
| Amortization of intangible assets and finance lease: Amortization of intangible assets and finance lease consists of amortization of customer relationships, trademarks and trade names, developed technology, regulatory registration costs, patents and trade secrets, capitalized loan issuance costs, other intangibles acquired primarily in connection with business combinations, an intangible asset in connection with a company-wide ERP system implementation, and one finance lease. We record expense relating to the amortization of these intangibles and finance lease in our GAAP financial statements. Amortization expenses for our intangible assets and finance lease are inconsistent in amount and are significantly impacted by the timing and valuation of an acquisition. Consequently, our non-GAAP adjustments exclude these expenses to facilitate an evaluation of our current operating performance and comparisons to our past operating performance. |
(3)
| Restructuring costs: Expenses related to a reorganization of the business. |
(4)
| Transaction and integration costs and unallocated legal fees: Transaction and integration costs related to acquisitions and divestitures are expensed in our GAAP financial statements. Unallocated legal fees for transaction-related non-compete agreement disputes are expensed in our GAAP financial statements. Management excludes these items for the purposes of calculating Adjusted EBITDA and other non-GAAP financial measures. We believe that excluding these items from our non-GAAP financial measures is useful to investors because these are items associated with transactions that are inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult. |
(5)
| Net realized gain on foreign currency exchange forward contracts: The net realized gain on foreign currency exchange forward contracts related to four short-term foreign currency exchange forward contracts with JP Morgan Chase, N.A. in connection with the Kappa acquisition. These contracts did not qualify for hedge accounting and the net gain was recorded as other income in our GAAP financial statements. We believe that excluding the gain from our Non-GAAP financial measures is useful to investors because such income is inconsistent in amount and frequency causing comparison of current and historical financial results to be difficult. |
(6)
| Income tax adjustment: For purposes of calculating adjusted net earnings and adjusted diluted earnings per share, we adjust the provision for (benefit from) income taxes to tax effect the taxable and deductible non-GAAP adjustments described above as they have a significant impact on our income tax (benefit) provision. Additionally, the income tax adjustment is adjusted for the impact of adopting ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” and uses our non-GAAP effective rate applied to both our GAAP earnings before income tax expense and non-GAAP adjustments described above. See Table 3 for the calculation of our non-GAAP effective tax rate. |
(7)
| Nonqualified deferred compensation plan (income) expense: Gains and losses on rabbi trust assets related to our nonqualified deferred compensation plan are recorded in other (income) expense while the offsetting increases or decreases to the deferred compensation liability are recorded within earnings from operations. The increases and decreases in the deferred compensation liability are driven by market volatility and are not a true reflection of company performance. We believe excluding these amounts from our non-GAAP financial measures is useful to investors because these items are inconsistent in amount based on market conditions causing comparison of current and historical financial results to be difficult. Adjustments have been made to the prior period (2022) to conform with the current period (2023). |
BALCHEM CORPORATION
CONTENTSFOR THE ANNUAL MEETING TO BE HELD JUNE 15, 2016
The undersigned hereby appoints Theodore L. Harris, Frank J. Fitzpatrick and William Backus, and each of them individually, as attorneys and proxies of the undersigned, with full power of substitution, at the Annual Meeting of Stockholders of Balchem Corporation scheduled to be held on June 15, 2016, and at any adjournment thereof, and to vote all shares of Common Stock of the Company which the undersigned is entitled to vote on all matters coming before said meeting. The undersigned hereby revokes all proxies previously given by the undersigned to vote at this meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed herein. If no direction is made, the proxies will vote: FOR the nominees for election as directors named on this proxy card; FOR the ratification of the appointment of RSM US LLP, as the Company’s independent registered public accounting firm for the year 2016; FOR approval of the compensation of our Named Executive Officers; and in their discretion on such other matter as may properly come before the meeting.
Address change/comments: | | | | | (If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) |
Continued and to be signed on reverse side
0000009326 3 2023-01-01 2023-12-31 0000009326 4 2023-01-01 2023-12-31 |
