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 | | | | | (3) | Filing Party:NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF NU SKIN ENTERPRISES, INC. | | | | | | (4) | Date Filed: | | | |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
NU SKIN ENTERPRISES, INC.
June 6, 2019
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the “Annual Meeting”) of Nu Skin Enterprises, Inc., a Delaware corporation, will be held at 11:00 a.m., Mountain Daylight Time, on June 6, 2019, at our corporate offices, 75 West Center Street, Provo, Utah 84601, for2, 2021. At the Annual Meeting, you will be asked to consider and vote on the following purposes,matters, which are more fully described in the Proxy Statement:proxy statement:
| 1. | To elect the eightnine directors named in the Proxy Statement;proxy statement; |
| 2. | To hold an advisory vote to approve our executive compensation; |
| 3. | To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2019;2021; and |
| 4. | To transact such other business as may properly come before the Annual Meeting. |
The Board of Directors has fixed the close of business on April 9, 2019,5, 2021, as the record date for determining the stockholders entitled to receive notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. Attending and Voting at the Annual Meeting
Due to the COVID-19 pandemic, the Annual Meeting will be held virtually, with attendance via live audio webcast. You will not be able to attend the Annual Meeting in person.
To attend the virtual Annual Meeting, you must pre-register by visiting register.proxypush.com/nus and following the registration instructions on that website before the meeting begins. You will need to enter the control number that is provided on your proxy card or Notice of Internet Availability of Proxy Materials to be able to pre-register. Upon pre-registering, you will receive a confirmation email.
Approximately one hour before the Annual Meeting, all those who have pre-registered will receive an email with a unique website link that will allow them to access and participate in the meeting, including listening to the full webcast, submitting questions, voting and viewing a list of stockholders entitled to vote at the meeting. To view this list of stockholders during the meeting, you will need to enter your control number. You will also have the opportunity to submit questions during the pre-registration process. We plan to respond to all appropriate questions during the webcast.
Entrance to the Annual Meeting will open 15 minutes before the designated start time. We recommend that you access the meeting website prior to the designated start time to ensure that you are logged in when the meeting begins. Technical support will be available before and during the virtual Annual Meeting; if you encounter any technical difficulties accessing or participating in the meeting, please call the technical support number that will be provided in the email that will be sent approximately one hour before the meeting. The pre-registration website will also include an email address for technical support. |
You are cordially invited to attend the virtual Annual Meeting in person.Meeting. However, to ensure your representation at the Annual Meeting, please mark, sign, date and return the accompanying proxy card as promptly as possible in the enclosed postage‑prepaid envelope.postage-paid envelope, or use the internet or telephone methods that are described on the proxy card. If you attend the virtual Annual Meeting, you may, if you wish, withdraw your proxy and vote in person.at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on June 6, 2019:2, 2021: The proxy statement and annual report to stockholders are available at www.astproxyportal.com/ast/08684www.proxydocs.com/NUS.
| | By Order of the Board of Directors, | | | | | | STEVEN J. LUND | | | Chairman of the Board | | | Provo, Utah April 17, 201912, 2021 |
 |
| | | PROXY SUMMARY | |
The following summary provides quick information for purposes of Nu Skin’s 2021 Annual Meeting. It does not contain all of the information provided elsewhere in the proxy statement; therefore, you should read the entire proxy statement carefully before voting. This proxy statement and form of proxy are first being sent or given to our stockholders on or about April 21, 2021. ANNUAL MEETING INFORMATION | Date: | June 2, 2021 | | Time: | 11:00 a.m., Mountain Daylight Time | | Access: | Due to the COVID-19 pandemic, the Annual Meeting will be held virtually, with attendance via live audio webcast. You will not be able to attend the Annual Meeting in person. Details for accessing the meeting are provided in this proxy statement. | | Record date: | April 5, 2021 |
PROPOSALS | Proposal | Board Recommendation | More Information | | 1. | Election of the nine directors named in this proxy statement | For each director nominee | Page 3 | | 2. | Approval of our executive compensation* | For | Page 47 | | 3. | Ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2021* | For | Page 49 |
* Advisory vote CORPORATE GOVERNANCE AND COMPENSATION HIGHLIGHTS See pages 8 and 21, respectively. DIRECTOR NOMINEES
|  |  |  |  |  |  |  |  |  | | Skills and Experience | | | | | | | | | | | Other public company board/exec. experience | • | • | • | | | | • | • | • | | Corporate finance/transactions | | • | • | | | | • | • | • | | International experience/global operations | | • | • | • | • | | • | • | • | | Government relations | | | • | | | | | | | | Regulatory | | | • | • | | | | | | | Risk management | | • | • | | | | • | | • | | Sales/marketing | • | | | • | • | • | • | | | | Online or digital marketing | • | | | | • | • | | | | | Strategic planning | • | • | | • | • | • | • | | • | | Current Nu Skin Committee Service | | | | | | | | | | | Audit Committee | | • | | | | | • | | • | | Executive Compensation Committee | | • | • | | | • | • | | | | Nominating and Corp. Governance Committee | | | • | | | • | | • | • | | Other Characteristics | | | | | | | | | | | Independence | • | • | • | | | • | • | • | • | | Gender diversity | • | | | | | • | | | • | | Racial/ethnic diversity | • | | | | | | | • | | | Age | 60 | 66 | 69 | 67 | 47 | 63 | 76 | 41 | 69 | | Tenure (years) | 0 | 24 | 22 | 25 | 0 | 2 | 13 | 5 | 6 |
BOARD COMPOSITION | | | Current Directors | Director Nominees | | Average Tenure | | 13 years | 11 years | | Average Age | | 63 | 62 | | Independence | |  |  | | Committee Independence | |  | | | Gender Diversity | |  |  | | Racial/Ethnic Diversity | |  |  |
| 1 | | | | 2 | | 1 | | 3 | | | | 78 | | | | 78 | | | | 89 | | | | 89 | | | | 89 | | | 10 | | | 11 | | | | 911 | | | | 912 | | | | 1114 | | | | 1114 | | | | 1114 | | | | 1215 | | | | 12 | | | 15 | | 13 | | 16 | | 1518 | | | | 1518 | | | | 2122 | | | | 2423 | | | | 3229 | | | | 3431 | | | | 35 | | | 33 | | 36 | | 34 | | 4845 | | | | 4845 | | | | 48 | | | 45 | | 50 | | 47 | | 5249 | | | | 5249 | | | | 5350 | | | | 54 | | | 51 | | 55 | | 52 | | 5753 | | | | 5753 | | | | 58 | | | 54 | | 59 | | 55 | | 59 | | 55 | | 60 | | 56 | | 6056 | | |
PROXY STATEMENT
NU SKIN ENTERPRISES, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 6, 2019
The accompanying proxy is solicited on behalf of the Board of Directors of Nu Skin Enterprises, Inc. (“Nu Skin,” “we,” “us,” or “the company”) for use at the Annual Meeting of Stockholders (the “Annual Meeting”) at our corporate offices, 75 West Center Street, Provo, Utah 84601, on June 6, 2019,2, 2021, at 11:00 a.m., Mountain Daylight Time, and at any adjournment or postponement thereof, forthereof. Due to the COVID-19 pandemic, the Annual Meeting will be held virtually, with attendance via live audio webcast. You will not be able to attend the Annual Meeting in person. At the Annual Meeting, you will be asked to consider and vote on the following purposes,matters, which are more fully described in this Proxy Statement:proxy statement:
| 1. | To elect the eightnine directors named in the Proxy Statement;this proxy statement; |
| 2. | To hold an advisory vote to approve our executive compensation; |
| 3. | To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2019;2021; and |
| 4. | To transact such other business as may properly come before the Annual Meeting. |
This proxy statement and form of proxy are first being sent or given to our stockholders on or about April 21, 2021. We will bear the cost of solicitation of proxies. Expenses include reimbursements paid to brokerage firms and others for their expenses incurred in forwarding solicitation material regarding the Annual Meeting to beneficial owners of our voting stock. Our regular employees may further solicit proxies by telephone, by mail, in person or by electronic communication and will not receive additional compensation for such solicitation.
VOTING PROVISIONS Record Date; Shares Outstanding. Only stockholders of record at the close of business on April 5, 2021 are entitled to vote at the Annual Meeting. As of this record date, 50,134,073 shares of our Class A Common Stock were issued and outstanding. Each outstanding share of Class A Common Stock will be entitled to one vote on each matter submitted to a vote of the stockholders at the Annual Meeting. How Proxies Will Be Voted.All shares represented by each properly executed, unrevoked proxy received in time for the Annual Meeting will be voted as directed by the stockholder. Each stockholder may appoint only one proxy holder or representative to attend the meeting on his or her behalf. In the absence of specific instructions, proxies will be voted in accordance with the Board of Directors’ recommendations “FOR” the election of each director nominee and “FOR” Proposals 2 and 3. Although it is anticipated that each nominee will be able to serve as a director, should any nominee become unavailable to serve, proxies will be voted for such other person or persons as may be designated by the Board of Directors. If any other matters properly come before the Annual Meeting, including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place, the persons named in the accompanying proxy will vote on such matters in accordance with their best judgment.
This proxy statement and form1
Revocability of solicitation of proxies. Expenses include reimbursements paid to brokerage firms and others for their expenses incurred in forwarding solicitation material regarding the Annual Meeting to beneficial owners of our voting stock. Our regular employees may further solicit proxies by telephone, by mail, in person or by electronic communication and will not receive additional compensation for such solicitation.
Proxy.Any proxy duly given pursuant to this solicitation may be revoked by the person or entity giving it at any time before it is voted by delivering a written notice of revocation to our Corporate Secretary, by executing a later‑datedlater-dated proxy and delivering it to our Corporate Secretary, or by attendingvoting at the Annual Meeting and voting in person (although attendance at the Annual Meeting will not in and of itself constitute a revocation of the proxy). If you hold shares through a broker, bank or other nominee, you must follow the instructions of your broker, bank or other nominee to change or revoke your voting instructions Attending and if you wish to vote in personVoting at the Annual Meeting. To attend the virtual Annual Meeting, you must pre-register by visiting register.proxypush.com/nus and following the registration instructions on that website before the meeting begins. You will need to enter the control number that is provided on your proxy card or Notice of Internet Availability of Proxy Materials to be requiredable to presentpre-register. Upon pre-registering, you will receive a legal proxy from your broker, bank or other nominee. Directions to ourconfirmation email. Approximately one hour before the Annual Meeting, may be obtained by calling (801) 345‑1000.
OUTSTANDING SHARES AND VOTING RIGHTS
Only stockholders of record at the close of business on April 9, 2019 are entitled to vote at the meeting. To view this list of stockholders during the meeting, you will need to enter your control number. You will also have the opportunity to submit questions during the pre-registration process. We plan to respond to all appropriate questions during the webcast.
Entrance to the Annual Meeting. As of this record date, approximately 55,514,376 shares of our Class A Common Stock were issued and outstanding. Each outstanding share of Class A Common StockMeeting will open 15 minutes before the designated start time. We recommend that you access the meeting website prior to the designated start time to ensure that you are logged in when the meeting begins. Technical support will be entitled toavailable before and during the virtual Annual Meeting; if you encounter any technical difficulties accessing or participating in the meeting, please call the technical support number that will be provided in the email that will be sent approximately one vote on each matter submitted to a vote ofhour before the stockholders atmeeting. The pre-registration website will also include an email address for technical support. Please note that recording the Annual Meeting.Meeting will not be permitted.
Quorum.In order to constitute a quorum for the conduct of business at the Annual Meeting, a majority of the issued and outstanding shares of the Class A Common Stock entitled to vote at the Annual Meeting must be represented, either in person or by proxy, at the Annual Meeting. Under Delaware law, shares represented by proxy that reflect abstentions or “broker non‑votes”non-votes” (which are shares held by a broker or nominee that are represented at the Annual Meeting, but with respect to which such broker or nominee is not empoweredpermitted to vote on a particular proposal)proposal without instructions from the beneficial owner and instructions are not given) will be counted as shares that are present and entitled to vote for purposes of determining the presence of a quorum. However, broker non‑votesnon-votes will not be voted on proposals on which your broker or other nominee does not have discretionary authority to vote under the rules of the New York Stock Exchange (the “NYSE”), including Proposals 1 and 2.
The voting standardsVoting Standards and Effects. Pursuant to our Bylaws, for a director nominee to be elected or for a proposal to be approved, such director nominee or proposal must receive more “for” votes than “against” votes. Shares not represented in person or by proxy at the threeAnnual Meeting, abstentions and broker non-votes will have no effect on the determination of any of the proposals. Additional provisions applying to the matters to be acted upon at the meetingAnnual Meeting are as follows:
| − | Proposal 1. To be elected in an uncontested election, such as at the 2019 Annual Meeting, director nominees must receive a majority of the votes cast, meaning a nominee must receive more “for” votes than “against” votes. If an incumbent director does not receive the required majority, the director shall resign pursuant to an irrevocable resignation that was required to be tendered prior to his or her nomination and effective upon (i) such person failing to receive the required majority vote and (ii) the Board’s acceptance of such resignation. Within 90 days after the date of the certification of the election results, the Board will determine whether to accept or reject the resignation or whether other action should be taken, and the Board will publicly disclose its decision. |
| − | Proposals 2 and 3. Pursuant to our bylaws, approval of Proposals 2 and 3 are stockholder advisory votes and will requirenot be binding on the affirmative voteBoard of a majority of the votes cast affirmatively or negatively.Directors. |
Shares not represented in person or by proxy at the Annual Meeting, abstentions and broker non-votes will have no effect on the determination of any of the proposals. In addition, Proposals 2 and 3 are stockholder advisory votes and will not be binding on the Board of Directors.
PROPOSAL 1: ELECTION OF DIRECTORS
Directors are elected at each annual meeting of stockholders and hold office until their successors are duly elected and qualified at the next annual meeting of stockholders or until their earlier death, resignation or removal. Our Bylaws provide that the Board of Directors will consist of a minimum of three and a maximum of fifteen directors, with the number being designated by the Board. The current number of authorized directors is nine,eight, but it will decreaseincrease to eightnine at the time of the director elections at the Annual Meeting.
Set forth below are the name, age as of April 1, 2019,2021, business experience and other qualifications of each of our eightnine director nominees, listed in alphabetical order. AllEach of ourthe nominees is a current directors were previouslydirector and was elected to their present term of office at our 20182020 annual meeting of stockholders, and all of the director nominees are current directors of our company except for Laura Nathanson.Emma S. Battle and Ryan S. Napierski. Ms. NathansonBattle was recommended by Thomas Pisano,Edwina D. Woodbury, one of our independent directors. We are not aware of any family relationships among any of our directors, director nominees or executive officers.
Nevin AndersenAs previously disclosed, in February 2021, Ritch N. Wood notified our Board that he will step down as our Chief Executive Officer, effective September 1, 2021, and Neil Offen will therefore not stand for reelection to the Board at the Annual Meeting. Our Board extends gratitude to Messrs. Andersen and OffenMr. Wood for theirhis many years of service to Nu Skin.our company in several roles, including Chief Executive Officer, Chief Financial Officer and a member of our Board. Upon Mr. Wood's retirement, Mr. Napierski will become our Chief Executive Officer.
| Emma S. Battle | | Director nominee | |
Emma S. Battle, 60, has served as the President and Chief Executive Officer of Market Vigor, LLC, a business services company focused on strategic consulting and digital and online marketing, since she founded the company in 2003. From 2015 to 2017, Ms. Battle was Vice President of Client Success at Windsor Circle, an e-commerce marketing company. Previously, she served in executive and senior marketing and sales roles at Three Ships Media, Red Hat, Art.com, 1 Sync and Sara Lee Branded Apparel (now known as Hanesbrands Inc.). Ms. Battle has served on the board of directors of Unifi, Inc., a global textile solutions provider listed on the NYSE, since January 2021 and of Bassett Furniture Industries, Inc., a manufacturer and marketer of home furnishings listed on the Nasdaq Global Select Market, since October 2020. From 2019 to 2020, she was on the board of directors of Primo Water Corporation, a provider of drinking water products that was listed on the Nasdaq Global Market until the company was acquired in 2020. Ms. Battle pursues continuing education through online classes and membership in professional organizations like Brentwood Advisory Group, and supports and collaborates with current and aspiring board directors through UNC's Director Diversity Initiative, Onboard NC, Santa Clara University's Black Corporate Board Readiness program and the newly established Take Your Seat initiative. Ms. Battle also devotes time to charitable and civic causes; since 2017 she has served as the President and Chief Executive Officer of Higher Ed Works, a charitable organization that supports public higher education in North Carolina, and she also serves on the boards of FPG Child Development Institute, Southeastern Wind Coalition, and Elon University's School of Business. She received a B.A. degree from Duke University and a M.B.A. degree from Harvard Business School.
Ms. Battle is a successful businessperson with an extensive background in digital and online marketing, marketing analytics, and business and marketing strategy, which the Board believes will be valuable as we continue to build our digital business. She also brings to the Board her perspective from working with other large corporations and on other public company boards. In addition, the Board believes that her experience managing and consulting with smaller, entrepreneurial businesses will provide a valuable perspective in managing our business in a manner that is effective for our independent sales force. The Board also values Ms. Battle’s commitment to sustainability and social responsibility, which are two areas of focus for our company and many stockholders. |
| | | Director since 1997 | Lead Independent Director | | | | | Audit Committee | | | | | Executive Compensation Committee |
Daniel W. Campbell, 64, has been a Managing General Partner of EsNet, Ltd., a privately held investment company, since 1994. He has served on the Utah State Board of Regents for Higher Education since 2010 andDaniel W. Campbell, 66, has been a Managing General Partner of EsNet, Ltd., a privately held investment company, since 1994. He served on the Utah State Board of Regents for Higher Education from 2010 to 2019, having served as its Vice Chair from 2012 to 2014 and as Chair from 2014 to 2018. From 1992 to 1994, Mr. Campbell was the Senior Vice President and Chief Financial Officer of WordPerfect Corporation, a software company, and prior to that was a partner of Price Waterhouse LLP. He received a B.S. degree from Brigham Young University. Mr. Campbell is a recognized business leader with expertise in the areas of finance, accounting, transactions, corporate governance and management. In addition, through his experience as a partner of an international accounting firm, and later as Chief Financial Officer of a large technology company, Mr. Campbell has developed deep insight into the management, operations, finances and governance of public companies.
Mr. Campbell is a recognized business leader with expertise in the areas of finance, accounting, transactions, corporate governance and management. He has served on the boards of several other private and public companies. In addition, through his experience as a partner of an international accounting firm, and later as Chief Financial Officer of a large technology company, Mr. Campbell has developed deep insight into the management, operations, finances and governance of public companies. |
| | | Director since 1999 | Executive Compensation Committee | | | | | Nominating and Corporate Governance Committee (Chair) |
Andrew D. Lipman, 69, is a partner and head of the Telecommunications, Media and Technology Group at Morgan, Lewis & Bockius LLP, an international law firm that he joined in 2014. He previously held similar positions with Bingham McCutchen LLP from 2006 to 2014 and Swidler Berlin LLP from 1988 to 2006. From 2000 to 2013, Mr. Lipman served as a member of the board of directors of The Management Network Group, Inc., a telecommunications related consulting firm, and from 2005 to 2013, he served as a member of the board of directors of Sutron Corporation, a provider of hydrological and meteorological monitoring products. He received a B.A. degree from the University of Rochester and a J.D. degree from Stanford Law School.
Mr. Lipman is a highly experienced senior lawyer and business advisor with over 40 years of experience dealing with international regulatory, technology and marketing issues in multiple countries. In addition, he has extensive experience in corporate governance and related legal and transactional issues. Mr. Lipman has worked closely with dozens of public companies, including service on the boards of a variety of companies in several industries. His experience also includes managing and implementing strategic initiatives and launching new products and markets globally in competitive industries. |
Andrew D. Lipman, 67, is a partner and head of the Telecommunications, Media and Technology Group at Morgan, Lewis & Bockius LLP, an international law firm that he joined in 2014. He previously held similar positions with Bingham McCutchen LLP from 2006 to 2014 and Swidler Berlin LLP from 1988 to 2006. From 2000 to 2013, Mr. Lipman served as a member of the board of directors of The Management Network Group, Inc., a telecommunications related consulting firm, and from 2007 to 2013, he served as a member of the board of directors of Sutron Corporation, a provider of hydrological and meteorological monitoring products. He received a B.A. degree from the University of Rochester and a J.D. degree from Stanford Law School.
Mr. Lipman is a highly experienced senior lawyer and business advisor with over 35 years of experience dealing with international regulatory, technology and marketing issues in multiple countries. In addition, he has extensive experience in corporate governance and related legal and transactional issues. Mr. Lipman has worked closely with dozens of public companies, including service on the boards of a variety of companies in several industries. His experience also includes managing and implementing strategic initiatives and launching new products and markets globally in competitive industries.
| | Director since 1996 (includes three-year leave of absence) | Executive Chairman of the Board |
Steven J. Lund, 67, has served as the Chairman of the Board since 2012. Mr. Lund previously served as Vice Chairman of the Board from 2006 to 2012. Mr. Lund served as President, Chief Executive Officer and a director of our company from 1996, when our company went public, until 2003, when he took a three-year leave of absence. Mr. Lund was a founding stockholder of our company. Mr. Lund is a trustee of the Force for Good Foundation, a charitable organization that our company established in 1996 to help encourage and drive the philanthropic efforts of our company, its employees, its sales force and its customers to enrich the lives of others. Mr. Lund worked as an attorney in private practice prior to joining our company as Vice President and General Counsel. He received a B.A. degree from Brigham Young University and a J.D. degree from Brigham Young University’s J. Reuben Clark Law School.
Mr. Lund brings to the Board over 35 years of company and industry knowledge and experience as a senior executive, including service as our General Counsel, Executive Vice President, and President and Chief Executive Officer. He played an integral role in managing our growth from start-up through his term as President and Chief Executive Officer. Mr. Lund also served on the Executive Board of the United States Direct Selling Association. A respected leader in his business, religious and civic communities, he currently serves as a general officer of The Church of Jesus Christ of Latter-day Saints and serves on this Church's Board of Education with oversight of its institutions of higher education, including Brigham Young University. He previously served on the Utah State Board of Regents for Higher Education and as Chairman of the Board of Trustees of Utah Valley University. |
| Ryan S. Napierski | | Director nominee | |
Ryan S. Napierski, 47, has served as our company’s President since 2017. Previously, he served as President of Global Sales and Operations from 2015 to 2017. Prior to serving in that position, he served as both President of our North Asia region since 2014 and President of Nu Skin Japan since 2010. Mr. Napierski has fulfilled multiple leadership positions for Nu Skin since joining our company in 1995, including Vice President of Business Development for Nu Skin EMEA and General Manager of the United Kingdom. Mr. Napierski has a Bachelor’s degree in business, a Master's degree in business administration from Duke University and a Master's degree in international business from Goethe Universitat in Germany.
Mr. Napierski brings to the Board a strong expertise in direct sales, including through digital and social media platforms. With his service as our President, President of Global Sales and Operations, and other management roles in our markets, Mr. Napierski also has a deep understanding of our business globally, including our sales force, products and product development, markets and compensation plans. Mr. Napierski’s leadership has been integral to the success of several of our key initiatives in recent years. Mr. Napierski is also recognized as a leader in the direct selling industry and has served in a variety of industry trade association leadership roles; he currently serves as both Chairman of the United States Direct Selling Association and Chairman of the Advocacy Committee for the World Federation of Direct Selling Associations. |
Steven J. Lund, 65, has served as the Chairman5
| Laura Nathanson | | Director since 2019 | Executive Compensation Committee | | Nominating and Corporate Governance Committee |
Director nominee
Laura Nathanson, 61, has served for the past 21 years in sales and advertising positions with media divisions of The Walt Disney Company. SinceLaura Nathanson, 63, retired from The Walt Disney Company in 2019 after 21 years of service in sales and advertising positions. From 2017 to 2019, she has served as Executive Vice President of Revenue and Operations at Disney Advertising Sales, and from 2002 to 2017, she served as Executive Vice President of Sales and Marketing at ABC Family/Freeform. Prior to 2002, she served in various other sales and advertising positions with ABC Network Sales, Fox Broadcasting and media agencies. She received a B.A. degree from Wesleyan University. Ms. Nathanson is an experienced leader who brings to the Board her expertise in sales and advertising, as well as a strong customer focus that is built on a 40-year career in connecting with and communicating with customers. Business strategy is also one of Ms. Nathanson’s strengths; during her career, she has recognized and understood shifts in the business landscape, such as the rise of the millennial demographic and the trend toward digital advertising, and has quickly adapted to these shifts, enabling her companies to capitalize on them at an early stage. She also has experience in streamlining business processes and in promoting sales through digital and social media.
Ms. Nathanson is an experienced leader who brings to the Board her expertise in sales and advertising, as well as a strong customer focus that is built on a 40-year career in connecting with and communicating with customers. Business strategy is also one of Ms. Nathanson’s strengths; during her career, she has recognized and understood shifts in the business landscape, such as the rise of the millennial demographic and the trend toward digital advertising, and has quickly adapted to these shifts, enabling her companies to capitalize on them at an early stage. She also has experience in streamlining business processes and in promoting sales through digital and social media. |
| Audit Committee | | | | | Executive Compensation Committee (Chair) |
Thomas R. Pisano, 74,Thomas R. Pisano, 76, served as Chief Executive Officer and a director of Overseas Military Sales Corp. ("OMSC"), a marketer of motor vehicles, from 2005 until his retirement in 2010. From 1998 to 2004, he served as the Chief Operating Officer and a director of OMSC From 1995 to 1997, he served as Vice President and Head of the International Division for The Topps Company, Inc., a sports publications and confectionery products company. Prior to that, he served in various positions, including Vice President of Global New Business Development, for Avon Products, Inc., a direct seller of personal care products, from 1969 to 1994. He received a B.S. from the Georgia Institute of Technology and a director of Overseas Military Sales Corp., a marketer of motor vehicles, from 2005 until his retirement in 2010. From 1998 to 2004, he served as the Chief Operating Officer and a director of Overseas Military Sales Corp. From 1995 to 1997, he served as Vice President and Head of the International Division for The Topps Company, Inc., a sports publications and confectionery products company. Prior to that, he served in various positions, including Vice President of Global New Business Development, for Avon Products, Inc., a direct seller of personal care products, from 1969 to 1994. He received a B.S. from the Georgia Institute of Technology and an M.B.A. from Dartmouth College. Mr. Pisano is an experienced senior executive who is an expert in the direct selling, personal care, beauty products and other consumer goods industries. During his 25-year career at Avon Products, Inc., he was responsible for global new business development, which included new geographic market openings and launching new product lines globally. He was also responsible for the operation of international businesses in Latin America, Europe and Asia. During his international business career at Avon, Topps and OMSC, he traveled to and conducted business in 50 countries.
Mr. Pisano is an experienced senior executive who is an expert in the direct selling, personal care, beauty products and other consumer goods industries. During his 25-year career at Avon, he was responsible for global new business development, which included new geographic market openings and launching new product lines globally. He was also responsible for the operation of international businesses in Latin America, Europe and Asia. During his international business career at Avon, Topps and OMSC, he traveled to and conducted business in 50 countries. |
| Director since 2016 | Nominating and Corporate Governance Committee | Zheqing (Simon) Shen, 41, is the founding member of ZQ Capital Limited, a boutique investment and advisory firm. Prior to founding ZQ Capital in 2015, Mr. Shen was managing director and head of the China Financial Institutions Business at Barclays from 2011 to 2015. From 2004 to 2010, he worked with Goldman Sachs as an investment banker in its New York and Hong Kong offices. In addition to his service on our Board, Mr. Shen has also served since 2016 on the board of directors and the Audit, Remuneration and Nomination Committees of KFM Kingdom Holdings Limited, a precision metals engineering and manufacturing company listed on the Hong Kong Stock Exchange. Mr. Shen has a B.A. in mathematics and economics from Wesleyan University.
Zheqing (Simon) Shen, 39, is the founding member of ZQ Capital Limited, a boutique investment and advisory firm. Prior to founding ZQ Capital in 2015, Mr. Shen was managing director and head of the China Financial Institutions Business at Barclays from 2011 to 2015. From 2004 to 2010, he worked with Goldman Sachs as an investment banker in its New York and Hong Kong offices. In addition to his service on our Board, Mr. Shen has also served since 2016 on the board of directors and the Audit, Remuneration and Nomination Committees of KFM Kingdom Holdings Limited, a precision metals engineering and manufacturing company that is listed on the Hong Kong Stock Exchange. Mr. Shen has a B.A. in mathematics and economics from Wesleyan University.
Mr. Shen brings to the Board valuable expertise in helping global companies realize their growth potential in Mainland China, which is one of our company’s key markets. He has spent much of his career working in Asia capital markets, and he has a strong network in Mainland China and valuable local knowledge of Mainland China. His depth of experience with financial and investment matters is also valuable to the Board.
Ritch N. Wood, 53, was appointed to serve as our Chief Executive Officer in March 2017. He previously served as our Chief Financial Officer since 2002. He was named CFO of the Year by Utah Business Magazine in 2010. Mr. Wood joined our company in 1993 and served in various capacities before his appointment as Chief Financial Officer, including Vice President of Finance and Vice President of New Market Development. Mr. Wood is a trustee of the Force for Good Foundation, a charitable organization that our company established to help drive our philanthropic efforts. Prior to joining us, he worked for the accounting firm of Grant Thornton LLP. Mr. Wood earned a B.S. and a M.Acc. degree from Brigham Young University.
Mr. Wood brings to the Board expertise in accounting, finance, investor relations and management. With his service as our Chief Executive Officer and as our Chief Financial Officer for 14 years, Mr. Wood also has a deep understanding of our business globally, including our markets, financial matters, products and product development, personnel, compensation plans and sales force. He has played an important role in managing the growth of our business while prioritizing profitability and stockholder value; during his tenure as Chief Financial Officer from 2002 to 2017, our revenue more than doubled, our earnings per share tripled and our stock price increased fourfold. Mr. Wood’s leadership has been integral to the success of several of our key initiatives in recent years.
| Director since 2015 | Audit Committee (Chair) | | | | | Nominating and Corporate Governance Committee |
Edwina D. Woodbury, 69, has been President and Chief Executive Officer of The Chapel Hill Press, Inc., a publishing services company, since 1999. Ms. Woodbury has over 20 years of experience in the direct selling and personal care products industries, having served at Avon Products, Inc. as Chief Financial and Administrative Officer and in other finance and operations positions from 1977 to 1998. From 1998 to 2015, Ms. Woodbury served as a member of the board of directors of RadioShack Corporation, a retail consumer electronics company. In addition, from 2005 to 2010, Ms. Woodbury served as a member of the board of directors of R.H. Donnelley Corporation, a publishing and marketing company, and from 2000 to 2005, she served as a director of Click Commerce, Inc., a research solutions company. Ms. Woodbury also served on the board of directors at the nonprofit Medical Foundation of North Carolina from 2009 to 2018. She received a B.S.B.A from the University of North Carolina.
Edwina D. Woodbury, 67, has been President and Chief Executive Officer of The Chapel Hill Press, Inc., a publishing services company, since 1999. Ms. Woodbury has over 20 years of experience in the direct selling and personal care products industries, having served at Avon Products, Inc. as Chief Financial and Administrative Officer and in other finance and operations positions from 1977 to 1998. From 1997 to 2015, Ms. Woodbury served as a member of the board of directors of RadioShack Corporation, a retail consumer electronics company. In addition, from 2005 to 2010, Ms. Woodbury served as a member of the board of directors of R.H. Donnelley Corporation, a publishing and marketing company, and from 2000 to 2005, she served as a director of Click Commerce, Inc., a research solutions company. Ms. Woodbury also served on the board of directors at the nonprofit Medical Foundation of North Carolina from 2009 to 2018. She received a B.S.B.A from the University of North Carolina.
Ms. Woodbury has extensive experience and understanding of our industry. While serving in various roles of increasing responsibility during her 21 years at Avon, Products, Inc., she gained an in-depth understanding of the financial and internal control-related issues associated with global companies in our industry. She also brings to the Board valuable perspective from her service on other public company boards. While serving on the boards at Click Commerce, R.H. Donnelley and RadioShack, she (1) served on and chaired each board’s audit committee; (2) served on the compensation committee at R.H. Donnelley and chaired it at RadioShack; and (3) served on the nominating and governance committee at Click Commerce and RadioShack. |
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Each nominee was recommended by the Nominating and Corporate Governance Committee for election and has agreedconsented to being named in this proxy statement and to serve if elected. Although we do not know of any reason for which any nominee might become unavailable to serve on the Board, if that should happen, the Board may designate a substitute nominee. Shares represented by proxies will be voted for any substitute nominee so designated.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” EACH OF THE EIGHTNINE NOMINEES TO OUR BOARD OF DIRECTORS.
Corporate Governance Highlights
Board of Directors Independence and Committee Structure
| − | Separate Chairman of the Board and CEO. The positions of Chairman of the Board and CEO are filled by Mr. Lund and Mr. Wood, respectively. |
| − | Lead Independent Director. Our independent directors have designated Mr. Campbell as Lead Independent Director. |
| − | Limitation on Management Directors. All of our current directors are independent of the company and management except for Mr. Lund, who is one of our company’s founders, and Mr. Wood, our CEO. If elected, Mr. Napierski will not be independent. |
| − | Meetings of Independent Directors. All independent directors meet regularly in executive session. Mr. Campbell, the Lead Independent Director, chairs these sessions. |
| − | Independent Committees. Only independent directors serve on our Audit, Executive Compensation, and Nominating and Corporate Governance Committees. |
| − | Annual Board and Committee Performance Evaluations. The performance of the Board and each Board committee is evaluated at least annually. |
Election of Directors
| − | Annual Election of Directors. All of our directors are elected annually; we do not have a staggered board. |
| − | Majority Voting in Uncontested Director Elections and Resignation Policy. Our Bylaws provide that director nominees must be elected by a majority of the votes cast in uncontested elections. For an incumbent director to be nominated for re-election, she or he must tender an irrevocable resignation that will be effective upon (i) the failure to receive the required vote for director election at the next annual meeting at which they face re-election and (ii) Board acceptance of such resignation. |
Stock-Related Matters
| − | Equity Retention Requirements. We have equity retention requirements that apply to our directors and executive officers, designed to align directors’ and executive officers’ interests with those of stockholders. For a description of these requirements, see “Executive Compensation: Compensation Discussion and Analysis—Equity Retention Guidelines.” |
| − | Hedging Policy. Our directors and employees, including officers, are prohibited from engaging in any hedging transactions with respect to our securities, including through the use of short sales, put options and financial instruments such as prepaid variable forward contracts, equity swaps, collars and exchange funds. This prohibition applies regardless of whether the director’s or employee’s securities were granted as compensation and regardless of whether the director or employee holds the securities directly or indirectly. |
| − | Pledging Policy. Our directors and employees, including officers, are prohibited from pledging their securities in our company. |
The Board of Directors has determined that each of the current directors listed below is an “independent director” under the listing standards of the NYSE. | Daniel W. Campbell | Andrew D. Lipman | Laura Nathanson | | | | | Thomas R. Pisano | Zheqing (Simon) Shen | Edwina D. Woodbury |
The Board also has determined that Laura Nathanson,Emma S. Battle, who is a nominee not currently on the Board, will be an “independent director” under the listing standards of the NYSE if elected.
Nevin N. Andersen | Daniel W. Campbell | Andrew D. Lipman | Neil H. Offen | | | | | Thomas R. Pisano | Zheqing (Simon) Shen | Edwina D. Woodbury | |
In assessing the independence of the directors, the Board determines whether or not any director has a material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us). The Board considers all relevant facts and circumstances in making independence determinations, including the existence and scope of any commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships. For information about the Board’s assessment of Mr. Shen’s independence, see “Related-Person Transactions.”
Board Leadership Structure
We currently separate the roles of Chairman of the Board and CEO. However, the Board has not adopted a policy with regard to whether the same person should serve as both the Chairman of the Board and CEO or, if the roles are separate, whether the Chairman of the Board should be selected from the non-employee directors or should be an employee. The Board believes it is most appropriate to retain the discretion and flexibility to make such determinations at any given point in time in the way that it believes best to provide appropriate leadership for the company at that time. We have determined that our current separation of the roles of Chairman of the Board and CEO is appropriate given the differences in the roles and duties of the two positions and the individuals currently serving in these positions.
The Board has created the Lead Independent Director position to provide independent leadership of the Board’s affairs on behalf of our stockholders and to promote open communication among the independent directors. Our Corporate Governance Guidelines provide that the Lead Independent Director (i) is designated by the non-management directors; (ii) consults with the Chairman of the Board and the CEO regarding agenda items for Board meetings; (iii) chairs executive sessions of the Board’s independent directors; and (iv) performs such other duties as the Board deems appropriate.
Our Board of Directors has primary responsibility for risk oversight. Except with regard to certain strategically significant risks, the Board administers its risk oversight function through the Audit Committee, Nominating and Corporate Governance Committee and Executive Compensation Committee. The committee charters include the following subject-matter parameters for risk oversight:
| Audit Committee | | Nominating and Corporate Governance Committee | | Executive Compensation Committee | -
| | | | | − Major financial risk exposures
| -
| Corporate governance risks | -
| − Compensation practices related risks
| -
| Operational risks related to information systems and facilities − Public disclosure and investor related risks
| -
| − Corporate governance risks
− Operational risks not assigned to the Audit Committee
| -
| Human resources risks | -
| − Public disclosure and investor related risks
| -
| Compliance and regulatory risks | | | | | -
| − Reputational risks
| | − Compensation practices related risks
− Human resources risks
|
The committees, or the Board in the case of risks it determines to oversee directly, are responsible for overseeing and discussing with management our risk assessment and risk management programs and plans. Management periodically reports to the Board or applicable committee on our risks and the internal processes, practices and controls attendant to the risks. Following these reports by management, the Audit Committee periodically receives reports regarding the Nominating and Corporate Governance Committee’s and Executive Compensation Committee’s risk-oversight efforts.
Our Board directly oversees cyber and privacy-related risks and periodically receives reports from management on these risks. Because the Board and management recognize the importance of maintaining the trust and confidence of our employees, sales force, customers, vendors and other business partners, we have established an Information Security and Privacy group that has responsibility for executing a program to protect our data. This group identifies, tracks, and monitors risks in this area, and they follow standardized cybersecurity frameworks, including CIS and NIST-CSF, in measuring our security risks. We also have implemented a training program: all employees receive annual training, which is translated into multiple languages, and employees in elevated roles participate in more-frequent monthly training sessions. We also conduct unannounced phishing simulation exercises to help our employees remain vigilant against cybersecurity threats. Our Board’s committees engage with our senior management and head of Human Resources regarding human capital management on a regular basis. Working with management, our Board’s committees oversee and receive reports on matters including culture, compensation, benefits, key talent succession planning, employee engagement, and diversity, equity and inclusion. Each year, our management also reports to the Executive Compensation Committee on management’s annual assessment of risks related to our compensation policies and practices. In addition, our Nominating and Corporate Governance Committee conducts annual performance reviews for our key executive officers, and these performance reviews include their performance on human capital management initiatives. All employees are responsible for upholding the Nu Skin Code of Conduct and for striving to perpetuate the Nu Skin Way, our global culture aspiration, which includes the following principles: − A force for good − Accountable and empowered − Bold innovators − Customer obsessed | − Direct and decisive − Exceptional − Fast speed − One global team |
The Nu Skin Way forms the foundation of our human capital strategy and objectives. The three primary objectives of our human capital strategy are:
| 1. | Support the transformation of our business and culture to align with our business strategies and the Nu Skin Way; |
| 2. | Leverage global diversity and build inclusion; and |
| 3. | Simplify the employee experience through global alignment and optimization. |
To measure our progress in achieving these objectives, we conduct a quarterly global employee survey, which also gathers employee feedback for purposes of designing our talent programs, rewards and benefits. Averaging an approximately 90% response rate during 2020, this survey generates valuable information for us to analyze and to act upon when appropriate. This survey yielded more than 60,000 data points each quarter, consisting of employee responses to each survey question. We also conducted focus groups with our employees to gather their feedback on the employee experience, including diversity, equity and inclusion matters. We regularly review our employees' feedback to better align our human capital initiatives to the needs of our employees. For example, after receiving employee feedback that pointed toward a need to establish a more comprehensive diversity, equity and inclusion strategy, we hired a global head of diversity and inclusion and began conducting a periodic "Listen and Learn" series of employee panels to bring our workforce into a more inclusive experience. These and other diversity-related initiatives have helped us to achieve employee engagement scores in the top quintile of global companies of a similar size. Evidencing the success of our human capital management initiatives, in 2020 we were recognized by the Direct Selling News as one of the best places to work in direct selling, the fifth consecutive year we have received this honor. Our Board directly oversees cyber and privacy-relatedsenior management are engaged in our sustainability initiatives, and we endeavor to integrate sustainability-related risks and periodically receivesopportunities into our business strategy and operations. Our sustainability team reports from managementannually to our Board and quarterly to our senior management. Focusing on them.three key areas—product, planet and people—some of our sustainability initiatives are as follows: | −
| Assess, score and improve the environmental impact score of all of our products by 2023 | | −
| Change all of our packaging to be recycled, recyclable, reusable, reduced or renewable by 2030 | | | | Planet | − | Reduce waste at our facilities through programs that encourage reducing, reusing and recycling, as well as initiatives to reduce electricity usage | | | | People | − | Invest at least 50% of our Force for Good Foundation’s giving in communities and people that are providing essential resources to our planet and its inhabitants |
Our 2020 sustainability accomplishments include the following:
| − | Completing our previously announced goal of assessing, scoring and improving the environmental impact score of our top 20 products, as identified when we set this goal during 2019, saving an estimated 16.5 tons of paper and 21 tons of plastic during 2020; |
| − | Offering new bottles for our Nutricentials® line made from 100% post-consumer recycled plastic and tubes made from approximately 34% post-consumer recycled plastic; |
| − | Reducing by 70% the packaging materials for our Epoch® Baobab Body Butter by switching the packaging from jars to an environmentally friendly tube; |
| − | Winning nine sustainability awards for clean beauty products, sustainable sales leader efforts, and waste and packaging reductions; and |
| − | Helping build the Utah Sustainable Business Coalition as a founding member. |
Board of Directors Meetings
The Board of Directors held nineeight meetings during 2018.2020. Each director attended more than 75% of the total number ofBoard and respective committee meetings offor the Board that were held while they wereperiod in office and the total number of meetings of all committees of the Board on which they served during the period.2020. Although we encourage Board members to attend our annual meetings of stockholders, we do not have a formal policy regarding director attendance at annual stockholder meetings. SixAll eight of our directors who were in office at the time of our 20182020 annual meeting of stockholders attended that meeting.
At our 2020 annual meeting of stockholders, the proposal to re-elect Mr. Shen to our Board was approved by 68% of the votes cast "for" and "against." We understand that many of the "against" votes were due to Mr. Shen's 2019 Board and committee meeting attendance being 73%, which is below the 75% threshold required by many of our investors' voting policies. Mr. Shen lives in Hong Kong, and although he attended all regularly scheduled meetings during 2019, he was unable to attend three special meetings that had not been on the planned meeting calendar set out for 2019 Board service. In all three cases, time zone differences and prior commitments prevented him from attending. Our Board agrees that attendance is important. In response to the vote at our 2020 annual meeting, our Board took action to ensure it could serve the best interests of our stockholders, uphold its high standards of director responsibility and address the underlying reasons for the 2020 election result. In particular, our Board and committees have made it a higher priority to schedule meetings at times that are more compatible with the Hong Kong time zone, and have actually scheduled an increased proportion of meetings at such times. Mr. Shen informed us during 2020 that he plans to have at least 75% attendance going forward, and his 2020 attendance and 2021 attendance to date have exceeded that level. Our Board continues to view Mr. Shen as a strong and valuable Board member. His knowledge of Mainland China, our largest market, and his depth of experience with financial and investment matters are very beneficial to the Board. In nominating Mr. Shen for re-election at our Annual Meeting, our Board specifically considered Mr. Shen's attendance and the 2020 election results and determined that re-nominating him is in the best interests of our stockholders due to the value he adds to the Board.
We have standing Audit, Executive Compensation, and Nominating and Corporate Governance Committees. Each member of the committees is independent within the meaning of the listing standards of the NYSE. In addition, the Audit Committee and the Executive Compensation Committee are composed solely of directors who meet additional, heightened independence standards applicable to members of audit committees and compensationthese committees under the NYSE listing standards and rules of the Securities and Exchange Commission’s rules.Commission ("SEC").
The following table identifies the current membership of the committees and states the number of committee meetings held during 2018.2020.
| Director | Audit | Executive Compensation | Nominating and Corporate Governance | Audit | Executive Compensation | Nominating and Corporate Governance | | Nevin N. Andersen | ✔ | | ✔ | | | Daniel W. Campbell | ✔ | | ✔ | ✔ | | | Andrew D. Lipman | | ✔ | Chair | | ✔ | Chair | | Neil H. Offen | | ✔ | ✔ | | | Laura Nathanson | | | ✔ | ✔ | | Thomas R. Pisano | ✔ | Chair | | ✔ | Chair | | | Zheqing (Simon) Shen | | | | ✔ | | Edwina Woodbury | Chair | | ✔ | Chair | | ✔ | | Number of Meetings in 2018 | 6 | 8 | 7 | | | 2020 Meetings | | 15 | 12 | 12 |
The Board has adopted a written charter for each of the committees, which are available in the “Corporate Governance” section of our Investor Relations website at ir.nuskin.com.
Audit Committee The Audit Committee’s responsibilities include, among other things:
| − | Selecting our independent auditor; |
| − | Overseeing the performance of our internal audit function and independent auditor; |
| − | Reviewing the activities and the reports of our independent auditor; |
| − | Approving in advance the audit and non-audit services provided by our independent auditor; |
| − | Reviewing our quarterly and annual financial statements and our significant accounting policies, practices and procedures; |
| − | Reviewing the adequacy of our internal controls and internal auditing methods and procedures; |
| − | Overseeing our compliance with legal and regulatory requirements; |
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| − | Overseeing our risk assessment and risk management programs and plans related to our major financial risk exposures, operational risks related to information systems and facilities, and public disclosure and investor related risks; and |
| − | Conferring with the chairs of the nominatingNominating and corporate governance committeeCorporate Governance Committee and executive compensationExecutive Compensation Committee regarding their respective oversight of our risk assessment and risk management programs and our related guidelines and policies. |
The Board has determined that Ms. Woodbury and Mr. Campbell are Audit Committee financial experts as such term is defined in Item 407(d)(5) of Regulation S-K promulgated by the Securities and Exchange Commission.SEC.
Executive Compensation Committee The Executive Compensation Committee’s responsibilities include, among other things:
| − | Establishing and administering our executive compensation strategy, policies and practices; |
| − | Reviewing and approving corporate goals and objectives relevant to the compensation to be paid to our CEO, Executive Chairman of the Board and other executive officers, and our executive chairman of the board, evaluating the performance of these individuals in light of those goals and objectives, and determining and approving the forms and levels of compensation based on this evaluation; |
| − | Administering our equity incentive plans; |
| − | Overseeing our risk assessment and risk management programs and plans related to our compensation practices and human resources; and |
| − | Overseeing the reporting of executive compensation information in accordance with applicable rules and regulations. |
Pursuant to its charter, the Executive Compensation Committee may delegate its authority to a subcommittee or subcommittees and may delegate authority to the CEO and Chairman of the Board to approve the level of incentive awards to be granted to specific non-executive officers, employees or other grantees subject to such limitations as may be established by the Executive Compensation Committee. For a discussion of the processes and procedures for determining executive and director compensation and the role of compensation consultants in determining or recommending the amount or form of compensation, see “Executive Compensation: Compensation Discussion and Analysis” and “Director Compensation.”
Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee’s responsibilities include, among other things:
| − | Making recommendations to the Board of Directors about the size and membership criteria of the Board or any committee thereof; |
| − | Identifying and recommending candidates for the Board and committee membership, including evaluating director nominations received from stockholders; |
| − | Annually reviewing CEO succession planning as well as succession planning and management development for other executive officer positions; |
| − | Leading the process of identifying and screening candidates for a new CEO when necessary, and evaluating the performance of the CEO;CEO and Executive Chairman; |
| − | Making recommendations to the Board regarding changes in compensation of non-employee directors and overseeing the evaluation of the Board and management; |
| − | Developing and recommending to the Board a set of corporate governance guidelines and reviewing such guidelines at least annually; |
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| − | Overseeing our risk assessment and risk management programs and plans related to our corporate governance risks, operational risks not assigned to the Audit Committee, compliance and regulatory risks, and reputational risks; and |
| − | Overseeing our regulatory, legal and compliance obligations in the foreign countries in which we operate, as well as individual compliance programs developed to address specific legal and regulatory issues in the United States and foreign countries. |
Board and Committee Evaluations
Our Board believes that a strong and constructive evaluation process is an important component of good corporate governance and helps to promote Board effectiveness. Our annual evaluation process, which is led by our Nominating and Corporate Governance Committee, focuses on both the Board and the Board committees.
The Nominating and Corporate Governance Committee reviews the format of our evaluation process each year to ensure that it remains robust and relevant. In both 2017 and 2018,2020, we used a third-party facilitator to assist in conducting the evaluation in order to receive fresh perspectives on Board effectiveness and corporate governance practices and to encourage candor in the evaluation process. The facilitator conducted oral interviews withcollected feedback from each director and then led a discussion at an in-person meeting.
Compensation Committee Interlocks and Insider Participation
None of the directors who served on the Executive Compensation Committee during 20182020 was:
| − | A current or former officer or employee of our company; |
| − | A participant during 20182020 in a related-person transaction that is required to be disclosed; or |
| − | An executive officer of another entity at which one of our executive officers served during 20182020 on either the board of directors or the compensation committee, nor were any of our other directors an executive officer of another entity at which one of our executive officers served on the compensation committee. |
Our Director Nomination Process
As indicated above, the Nominating and Corporate Governance Committee of the Board of Directors oversees the director nomination process. This committee is responsible for identifying and evaluating candidates for membership on the Board and recommending to the Board nominees to stand for election.
Minimum Criteria for Members of the Board. Each candidate to serve on the Board must possess the highest personal and professional ethics, integrity and values, and be committed to serving the long‑termlong-term interests of our stockholders. In addition, our Corporate Governance Guidelines require that, to be nominated for re-election to our Board, an incumbent director must tender an irrevocable resignation that will be effective upon (i) the failure to receive the required vote for director election at the next annual meeting at which they face re-election and (ii) Board acceptance of such resignation. Other than the foregoing, there are no stated minimum criteria for director nominees, although the Nominating and Corporate Governance Committee may consider such other factors as it may deem appropriate, which may include, without limitation, professional experience,experience; diversity of backgrounds, skills and experience at policy‑makingpolicy-making levels in business, government, financial, and other areas relevant to our global operations,operations; experience and history with our company,company; and stock ownership.
We do not have a formal policy with regard toregarding the consideration of diversity in identifying Board nominees, but thenominees. However, our Board and our Nominating and Corporate Governance Committee strivesbelieve that diversity is an important consideration in Board composition, as men and women of different skills, areas of expertise and experience, races, and ethnic backgrounds can contribute different and useful perspectives to nominate individuals with a variety of complementary skills so that,help the Board, as a group, the Board will possess the appropriate talent, skills and expertise to more effectively oversee our business.
Process for Identifying, Evaluating and Recommending Candidates. The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders if properly submitted to the committee. Stockholders wishing to recommend candidates should do so in writing to the Nominating and Corporate Governance Committee, c/o Corporate Secretary, Nu Skin Enterprises, Inc., 75 West Center Street, Provo, Utah 84601. The committee may also consider candidates proposed by current directors, management, employees and others. All such candidates who, after evaluation, are then recommended by the Nominating and Corporate Governance Committee and approved by the Board will be included in our recommended slate of director nominees in our proxy statement.
Procedures for Stockholders to Nominate Director Candidates at our Annual Meetings. Stockholders of record may also nominate director candidates for our annual meetings of stockholders by following the procedures set forth in our Bylaws. Please refer to the section below titled “Stockholder Proposals for 20202022 Annual Meeting” for further information.
Communications with Directors
Stockholders or other interested parties wishing to communicate with the Board of Directors, the non‑-management directors as a group, the Lead Independent Director or any other individual director may do so in writing by addressing the correspondence to that individual or group, c/o Corporate Secretary, Nu Skin Enterprises, Inc., 75 West Center Street, Provo, Utah 84601. All such communications will be initially received and processed by our Corporate Secretary. Accounting, audit, internal accounting controls and other financial matters will be referred to our Audit Committee chair. Other matters will be referred to the Board, the non‑managementnon-management directors, or individual directors as appropriate.
Additional Corporate Governance InformationInformation
We have adopted the following:
| − | Code of Conduct. Our code of conduct applies to all of our employees, officers and directors, including our subsidiaries. Any amendments or waivers (including implicit waivers) regarding the Code of Conduct requiring disclosure under applicable SEC rules or NYSE listing standards will be disclosed in the “Corporate Governance” section of our Investor Relations website at ir.nuskin.com. |
| − | Corporate Governance Guidelines. Our corporate governance guidelines govern our company and our Board of Directors on matters of corporate governance, including responsibilities, committees of the Board and their charters, director independence, director qualifications, director compensation and evaluations, director orientation and education, director access to management, director access to outside financial, business and legal advisors and management development and succession planning. |
Both of the above are available in the “Corporate Governance” section of our Investor Relations website at ir.nuskin.com. In addition, stockholders may obtain a print copy of either of the above, free of charge, by making a written request to Investor Relations, Nu Skin Enterprises, Inc., 75 West Center Street, Provo, Utah 84601.
Our Board of Directors periodically reviews director compensation. The Nominating and Corporate Governance Committee is responsible for evaluating director compensation from time to time, and when it determines that adjustments are appropriate, it recommends them to the Board of Directors for its consideration. The Nominating and Corporate Governance Committee has retained the services of Semler Brossy Consulting Group LLC as its independent compensation consultant to assist in the review of our director compensation program, to provide compensation data and alternatives, and to provide advice as requested. Semler Brossy performed a review of our director compensation program in the second half of 2018. For additional information regarding our independent compensation consultant, see “Executive Compensation: Compensation Discussion and Analysis—Role of Compensation Consultant.”
The following table summarizes our non-employee director compensation program, which applies to each director besides Messrs. Lund and Wood because they receive compensation as executive officers of our company. The table shows the program as in effect during 20182020 and the changes that were approved in early 20192021 following the review of our director compensation program and will take effect as of June 1, 2019.2021. The elimination of meeting fees and the replacement of a fixed-share award with a fixed-value awardincreases in retainers for leadership positions aim to reduce the variability in director compensation and more closely align with competitivemarket practice. The increase in the annual equity award aims to better compensate the directors for an increased workload, particularly at the committee level, in a manner that maintains alignment with stockholder interests.
| | 2018 Program | Changes Approved In 2019 | | Annual cash retainer |
|
| | Board | $80,000 | $85,000 | | Committee | — | $10,000 per committee | | Additional annual cash retainer for leadership: |
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Unchanged | | Lead Independent Director | $20,000 | | Audit Committee Chair | $15,000 | | Other committee chairs | $10,000 | | Meeting fees: |
| | | Committee chair | $2,500 | Meeting fees eliminated(1) | | Other committee members | $1,500 | | | Annual equity compensation (restricted stock units) | Sum of 1,000 RSUs plus $85,000 value = 2,041 | $140,000 value | | | RSUs in 2018 ($164,443 value) |
| | 2020 Program | | | Changes Approved in 2021 | | Annual cash retainer Board Committee | | $85,000 $10,000 per committee | | | Unchanged | | Additional annual cash retainer for leadership: Lead Independent Director Audit Committee Chair Other committee chairs | | $20,000 $15,000 $10,000 | | | $25,000 $20,000 $15,000 | | | Meeting fees | | None(1) | | | Unchanged | | | Annual equity award (restricted stock units) | | $140,000 value | | | $150,000 value | |
| (1) | The Board maycan approve meeting fees for participation in a special committee or other extraordinary circumstances. |
In addition, we may compensate a director $1,500 per day for corporate events or travel that we require, and we may reimburse directors for certain expenses incurred in attending Board and committee meetings and other corporate events. We also provide company products to our directors for their use.
Pursuant to the terms of our SecondThird Amended and Restated 2010 Omnibus Incentive Plan, the cash compensation and the aggregate grant date fair value (computed in accordance with applicable financial accounting rules) of awards under the Plan provided to any non-employee director during any single calendar year cannot exceed $750,000.
Director Compensation Table – 20182020
The table below summarizes the compensation earned by or paid to each of our directors in 20182020 except Mr. Wood, whose compensation is reported in the executive compensation tables. Mr. Wood serves as a director, but as a company employee he receives no compensation for his services as a director.
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | | Nevin N. Andersen | 117,500 | 164,443 | — | 281,943 | | | Daniel W. Campbell | 136,000 | 164,443 | — | 300,443 | 125,000 | 135,920 | — | 260,920 | | Andrew D. Lipman | 134,500 | 164,443 | — | 298,943 | 130,000 | 135,920 | — | 265,920 | | Neil H. Offen | 117,500 | 164,443 | — | 281,943 | | | Laura Nathanson | | 114,000 | 135,920 | — | 249,920 | | Thomas R. Pisano | 134,000 | 164,443 | — | 298,443 | 124,000 | 135,920 | — | 259,920 | | Zheqing (Simon) Shen | 90,500 | 164,443 | — | 254,943 | 96,500 | 135,920 | — | 232,420 | | Edwina D. Woodbury | 134,000 | 164,443 | — | 298,443 | 129,000 | 135,920 | — | 264,920 | | Steven J. Lund | — | — | 1,255,061(3) | 1,255,061 | — | — | 1,160,484(3) | 1,160,484 |
| (1) | On June 7, 2018,3, 2020, each of the directors listed above except for Mr. Lund, who is an employee, was granted 2,0413,612 restricted stock units, which will vest on April 30, 2019.2021. The amounts reported in this column reflect the aggregate grant date fair value of the restricted stock units and do not represent amounts actually received by the director.units. For this purpose, the value of the restricted stock units is discounted to reflect that no dividends are paid prior to vesting. |
The outstanding stock and option awards held at December 31, 20182020 by each of the listed individuals are as follows:
| Name | Stock Awards | Option Awards | Stock Awards | Option Awards | | Nevin N. Andersen | 2,041 | 40,100 | | | | Daniel W. Campbell | 2,041 | 25,000 | | 3,612 | 15,000 | | Andrew D. Lipman | 2,041 | 40,100 | | 3,612 | 15,000 | | Neil H. Offen | 2,041 | 25,000 | | | | Laura Nathanson | | 3,612 | — | | Thomas R. Pisano | 2,041 | 15,000 | | 3,612 | 10,000 | | Zheqing (Simon) Shen | 2,041 | 5,000 | | 3,612 | 5,000 | | Edwina D. Woodbury | 2,041 | 5,000 | | 3,612 | 5,000 | | Steven J. Lund | — | 25,000 | | — | — |
| (2) | This column reports our incremental cost for providing perquisites and other personal benefits to those directors whose total was at least $10,000, as well as other forms of compensation. |
| (3) | Consists of Mr. Lund’s compensation as an employee of the company for 2018, including2020: $570,022 in salary; a salary of $550,000; cash incentive plan bonus of $549,252; discretionary bonuses of $623,525;$4,350 (consisting of the same payments made to corporate employees as described in footnote 2 of the Summary Compensation Table and a discretionary holiday$3,500 bonus of $23,667;for reaching a years-of-service milestone); and $36,860 in other compensation, of $57,869, including $31,692$20,623 in spouse travel ($4,346 of which was to a sales force event where his spouse was expected to attend and help entertain and participate in events with our sales force and their spouses), $11,000premiums for life insurance, $11,400 in 401(k) contributions, $4,768 in life insurance premiums, company products, home security monitoring and AAA membership.premiums for long-term disability insurance. |
COMPENSATION DISCUSSION AND ANALYSIS
Our Compensation Discussion and Analysis (“CD&A”) describes our executive compensation programs and compensation decisions in 20182020 for our named executive officers (“NEOs”), who for 20182020 were:
| Ritch N. Wood | Chief Executive Officer | | Ryan S. Napierski | President | | Mark H. Lawrence | Executive Vice President and Chief Financial Officer | | Joseph Y. Chang | Executive Vice President of Product Development and Chief Scientific Officer | | D. Matthew Dorny | Executive Vice President and General Counsel and Secretary |
20182020 Business Performance Highlights
Our business generated strongAmidst a challenging year, our revenue increased 7% in 2020 to $2.58 billion, while earnings per share improved 17% to $3.63. Both our customer and sales leader numbers improved during the year, increasing 34% and 29%, respectively. These improvements came as a result of focusing on our growth strategy and capitalizing on opportunities available to us through our prior investments in 2018. Our revenue grew 18%,product innovation, technology and manufacturing to $2.68 billion, with growth coming from all but one of our seven segments. Our customer-acquisition strategy resulted in 16% growth inbuild our customer base and whileempower our sales leader numbers declined 10% year-over-year following the introduction of our ageLOC LumiSpa skin treatment and cleansing device in the fourth quarter of 2017, we achieved 16%leaders. We experienced strong growth in sales leaders sinceour Americas/Pacific, EMEA and Manufacturing segments. Additionally, we strengthened our balance sheet, repurchased more than five million shares of stock and increased our dividend for the first quarter of 2018.19th consecutive year.
The successWe continue to believe we achievedhave the correct strategy in 2018 was driven byplace to drive sustained growth in our business. Our growth strategy that focusesremains focused on three key elements:
| − | Engaging platforms.Innovative Products. Our Sales Leaders continuedWe are building on our history of offering innovative and effective products to our customers, highlighted by the recent success of our new ageLOC Boost™ device and Nutricentials Bioadaptive Skin Care™. We have success with social sharing initiatives, particularly in our Americas/Pacific, Southeast Asiaa robust, multi-year roadmap for both beauty and EMEA segments.wellness products and a new product personalization strategy, which we refer to as EmpowerMe.
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| − | Enabling products.Empowering Programs. LumiSpa continues to generate strong salesWith COVID-19 dramatically changing the way we live, work and interact, our talented sales force engagement, particularly inadopted our Mainland China, Southeast Asiasocial commerce strategy by more efficiently and Americas/Pacific segments. This product generated more than $250 millioneffectively connecting with consumers seeking innovative beauty and wellness products. Through our opportunity platform, our sales force can access hundreds of our 2018 revenue.Nu Skin® personal care and Pharmanex® wellness products to meet their customers' personal needs, and we look forward to expanding this model across the world.
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| − | Empowering programs.Digital Platform. We believeare focused on combining our Velocity sales compensation program enhancements, which we have rolled out to mostnew social commerce business model with the best of our markets, helped drive increasestraditional person-to-person model and expanding it into a socially enabled, digital-first affiliate business. Currently, more than 90% of our revenue flows from online transactions. We are rapidly leveraging technology to scale our business to grow our customers, and our efforts are paying off, as we reached more than 1.5 million active customers in customer and sales leader activity.2020.
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Our business’s successbusiness strategy and the successes we achieved in 2018 reflects2020 reflect management’s strong motivation to achieve revenue growth and expand our customer base. Our executive compensation program and the pay-for-performance incentives that are built into it are key drivers of management’s motivation.
AlthoughCOVID-19 Response
At Nu Skin, our one-year total stockholder return (“TSR”)mission is to empower people to improve lives everywhere. This commitment was negative for 2018, it exceeded our peer median, and our three-year TSR for 2016–2018 was +21% and exceeded the 75th percentilemore important than ever in 2020 as so many of our peer group.
2018 Compensation Highlights
This CD&A discusses, among other things,customers, employees and members of our sales force managed through the COVID-19 pandemic. To this end, we took the following highlightsactions to protect and empower our community:
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