UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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THE J. M. SMUCKER COMPANY | ||||
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Preliminary Copy - Subject to Completion
THEIn accordance with Rule 14a-6(d) under Regulation 14A of the Securities Exchange Act of 1934, please be advised that The J. M. SMUCKER COMPANY
2019Smucker Company intends to release definitive copies of this Proxy Statement andto shareholders beginning on or about July 7, 2022.
Notice of Annual Meeting of Shareholders
THE J. M. SMUCKER COMPANY
June 28, 2019July 7, 2022
Dear Shareholder:Fellow Shareholders,
As a shareholder in our Company, you are aan important partner in our continued success. We are pleased to invite you to attend our Annual Meeting of Shareholders on Wednesday, August 14, 2019.17, 2022. The meeting will beginbe held virtually at 11:12:00 a.m.p.m. Eastern Time, atTime.
Our fiscal year 2022 performance was delivered amid continued challenges and disruption. The Ritz-Carlton, 1515 West Third Street, Cleveland, Ohio 44113.strong results we achieved this year were thanks to the hard work of our dedicated employees, the strength of our strategy, and the continued momentum of our brands. The successful balance in operating efficiently while investing in the growth of our brands allowed us to realize financial results meeting or exceeding expectations. Of note:
Net sales of $8.0 billion;
Adjusted earnings per share of $8.88*;
Free cash flow of $718.8 million*; and
Capital returned to shareholders via cash dividends and share repurchases was $688.5 million.
Along with the strong financial results we delivered, we also continued to make important progress on our executional priorities to drive commercial excellence, streamline our cost infrastructure, reshape our portfolio, and unleash our organization to win. Some highlights from fiscal year 2022:
Continued to deliver bold marketing that gives our brands cultural relevance while enhancing in-store execution, supported by our improved utilization of data and analytics;
Maintained progress on streamlining our cost infrastructure through a focus on cost management and productivity enhancements, complemented by successful implementation of inflation-related net pricing actions;
Optimized our portfolio, including the divestiture of our natural beverage and grains businesses and our private label dry pet food business;
Prioritized activities that supported our commitment to win in the marketplace, helping our employees focus on what matters most to the business; and
Continued to evolve our environmental, social, and governance (“ESG”) initiatives, reporting, and oversight, including our efforts with respect to inclusion, diversity, and equity.
Fiscal Year 2023
As we enter fiscal year 2023, we do so having made progress against our objectives in a dynamic environment. We are concluding a periodalso well positioned thanks to the continued momentum of necessaryour brands and exciting transformation that has positioned usthe progress we have made on our proven strategy. As always, our strongest and most important asset is our employees.
To focus our employees around clear objectives to deliver sustained growth. We achieved many important milestones toward this objective in the past year, including transforming our brand portfolio to better align with consumer preferences, launching a new innovation model, enhancing our efforts to deliver world-class marketing, making crucial investments to further our technology capabilities, and continuing to deliver against our established environmental sustainability goals. Following this tremendous evolution, we truly feel the best is yet to come.
Included with this letter is our Notice of the 2019 Annual Meeting of Shareholders and our proxy statement, which is first being mailed to our shareholders on or about June 28, 2019. Please review this material for information about the nominees named in the proxy statement for election as Directors and the Company’s appointed Independent Registered Public Accounting Firm. In addition, details regarding executive officer and Director compensation, corporate governance matters, and the business to be conducted at the annual meeting are also described.
Whether or not you plan to attend the annual meeting, please cast your vote, at your earliest convenience, as instructed in the Notice of Internet Availability of Proxy Materials or in the proxy card. Your vote is very important.Your vote before the annual meeting will ensure representation of your common shares at the annual meeting even if you are unable to attend.
We are eager to demonstrate we can build on the momentum we have created in fiscal year 20192023, I’ve outlined the following priorities:
Nurture and invest in our culture;
Drive prioritization and best-in-class execution;
Improve profitability and cost discipline;
Transform our portfolio; and
Improve diversity and foster inclusion and equity.
I am confident in the strength of our strategy and vision and energized by the opportunity we have to continue delivering value on your investment and look forward to sharing more information about the Company’s performance and our plans at the annual meeting.achieve long-term, sustainable success.
Sincerely,
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Mark T. Smucker | President and Chief Executive Officer |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 17, 2022
* | Please see Appendix A for a reconciliation of financial measures presented under generally accepted accounting principles in the United States (“GAAP”) to non-GAAP financials measures. |
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This proxy statement and the |
July 7, 2022
Dear Fellow Shareholders,
Our fiscal year 2022 was a successful one thanks to the strong financial performance we delivered as well as our ability to maintain our commitment to responsible ESG practices.
Delivering on Our Purpose and Commitment to Thrive Together
We are inspired by our Purpose, Feeding Connections That Help Us Thrive – Life Tastes Better Together, and guided by our Thriving Together agenda, which allows us to sharpen our focus on the issues impacting the quality of life for people and pets, specifically around the need for Quality Food, Education, Equitable and Ethical Treatment, Community Resources, and a Healthier Planet.
Through this focused approach, we are able to maximize our resources to make the most meaningful impact in the areas we are best equipped to support. Highlights from this past year:
Supported access to nearly 17 million meals for people and pets in need;
Donated to humanitarian relief efforts, including support of those impacted by the conflict in Ukraine, augmenting our existing contributions to long-term partners such as the Red Cross and United Way;
Introduced our Advocate Alliance and Employee Resource Groups to support employees, encourage allyship, and provide further opportunities to play a greater role in encouraging necessary changes in society;
Announced new environmental impact benchmarks focused on climate action (including establishing greenhouse gas emissions goals developed using the Science-Based Targets Initiative protocol), responsible sourcing, operational excellence, and sustainable packaging; and
Served as founding sponsor of Opening Track, a music education program by the Boys & Girls Clubs of Northeast Ohio aimed at leveraging the unique value of music to encourage the growth and overall well-being of area children.
In addition to delivering results, we understand the importance of ensuring transparency to keep all stakeholders apprised of our progress against stated commitments. In support of this, we shared the latest Environmental, Social, and Governance Disclosure Report as part of our Corporate Impact Report and the Task Force on Climate Related Financial Disclosure Report.
Our Continued Journey to Realize Inclusion, Diversity, and Equity
Our Board remains passionately committed to supporting our Company’s journey on inclusion, diversity, and equity. In fiscal year 2022, we made progress while positioning the organization for further growth. Some notable highlights include:
Introduced our initial Employee Resource Groups, including Black Leadership and Ally Council; Pride Alliance; Community for Asians, Pacific Islanders and Allies; Greater Resources and Opportunities for Women; and Armed Forces Veterans and Allies;
Invested in enhancing our diversity recruiting practices to support more inclusive processes across the hiring experience; and
Distributed an Equal Employment Opportunities Report to provide greater transparency on the diversity of our current workforce.
Recent Board Activity
During fiscal year 2022, we announced the election of Jonathan E. Johnson III to our Board. Jonathan currently serves as the CEO for online retailer Overstock.com. He brings his extensive retail and ecommerce experience to the Board and has offered his counsel in support of our strategy, as well as the continued advancement of our digital capabilities, financial technology, and innovation.
Additionally, we have announced that Tim Smucker will be retiring from our Board and transitioning to a new non-director Chairman Emeritus role, as of August 17, 2022. In this role, Tim will continue to be invited to attend board meetings but will not participate in voting. We want to express our sincere appreciation for Tim’s dedicated service and leadership on the Board and as Co-Chief Executive Officer. His innumerable contributions have played a critical role in the Company we have become and provided a tremendous foundation for continued growth.
As a Board, we remain committed to keeping our shareholders informed. We understand that an ongoing and open line of communication on all matters is critical to your investment in the Company, including our operational and financial strategy, risk management, corporate responsibility, compliance, and ESG programs, and we are dedicated to ensuring you have knowledge of these efforts.
Thank you for your continued investment and support of our Company.
Sincerely,
Richard K. Smucker | Executive Chairman |
NOTICE OF
2022 ANNUAL MEETING OF SHAREHOLDERS
DATE AND TIME |
Wednesday, August 17, 2022 | 12:00 p.m. Eastern Time |
LIVE WEBCAST |
Wednesday, August 14, 2019
11:00 a.m. Eastern Time
The Ritz-Carlton
1515 West Third Street
Cleveland, Ohio 44113
www.virtualshareholdermeeting.com/SJM2022 |
The Annual Meeting of Shareholders of The J. M. Smucker Company (the “Company,” “we,” “us,” or “our”) will be held for the following purposes:
1 | To elect as Directors the | |
2 | To ratify the appointment of Ernst & Young LLP as the Company’s Independent Registered Public Accounting Firm (the “Independent Auditors”) for the | |
3 | To approve, on anon-binding, advisory basis, the Company’s executive compensation as disclosed in these proxy materials; |
4 | To consider and adopt amendments to the Company’s Amended Articles of Incorporation (the “Articles”) to eliminate the time | |
phased voting provisions and give all outstanding common shares one vote on matters properly submitted to our shareholders for their vote; and |
5 | To consider and act upon any other matter that may properly come before the annual meeting. |
Shareholders of record at the close of business onJune 17, 2019 21, 2022 are entitled to vote at the annual meeting. You may cast your vote via the Internet, as instructed in the Notice of Internet Availability of Proxy Materials, or if you received your proxy materials by mail, you may also vote by mail or by telephone.
All shareholders are invited to attend the virtual annual meeting. However, seating at the annual meeting will be on a first-come, first-served basis, and we cannot guarantee seating for all shareholders.
Jeannette L. Knudsen | Chief Legal and Compliance Officer and Secretary
Senior Vice President, General Counsel and SecretaryVoting Methods:
VIA THE INTERNET | BY MAIL | |||||||||||
Visit www.proxyvote.com | Complete, sign, date, and return | |||||||||||
and follow instructions | the enclosed proxy card |
BY TELEPHONE | LIVE | |||||||||||
Call toll-free (U.S. or Canada) | By attending the virtual annual meeting | |||||||||||
1-800-690-6903 | and voting |
THE J. M. SMUCKER COMPANY
Potential Payments to Executive Officers | ||||
PROPOSAL 4 – APPROVAL OF THE COMPANY’S AMENDED ARTICLES OF INCORPORATION | 81 | |||
A-1 | ||||
APPENDIX B: PROPOSED AMENDMENTS TO AMENDED ARTICLES OF INCORPORATION | B-1 |
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider. Please carefully read the entire proxy statement before voting.
20192022 Annual Meeting of Shareholders
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Wednesday, August
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LIVE WEBCAST |
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WHO CAN VOTE | ||
Shareholders of record at the close of business onJune 21, 2022 are entitled to vote at the virtual annual meeting.
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Voting Recommendations of the Board
Proposal | Proposal Summary | FOR | AGAINST | Page | ||||
1 |
Election of the Board nominees named in this proxy statement with terms expiring at the 2020 annual meeting of shareholders
| 14 | ||||||
2 |
Ratification of appointment of Ernst & Young LLP as the Company’s Independent Registered Public Accounting Firm for the 2020 fiscal year
| 31 | ||||||
3 |
Advisory approval of the Company’s executive compensation
| 32 | ||||||
Performance Highlights
Proposal | Proposal Summary | Voting Recommendation | Page | ||||||||||||
| Election of the Board nominees named in this proxy statement with terms expiring at the 2023 annual meeting of shareholders |
| 20 | ||||||||||||
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| Ratification of appointment of Ernst & Young LLP as the Company’s Independent Registered Public Accounting Firm for the 2023 fiscal year |
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| Advisory approval of the Company’s executive compensation | 41 | |||||||||||||
| Approval of Amended Articles of Incorporation to eliminate the time phased voting provisions |
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Fiscal Year 2022 Performance Highlights
* | For a reconciliation of adjusted earnings per share and free cash flow, seeAppendix A. For a description of how we calculate adjusted earnings per share and free cash flow, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in our |
The J. M. Smucker Company | 2022 Proxy Statement | 1 |
PROXYSUMMARY
Director Nominees
The following table provides summary information about each of our Director nominees.
Board Committees | ||||||||||||||||||
Name
| Age
| Director
| Professional Background
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AC
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ECC
|
NGCR
| Other Public Company Boards
| |||||||||||
Kathryn W. Dindo* |
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70 |
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1996 |
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Retired Vice President and
| F |
ALLETE, Inc. | |||||||||
Paul J. Dolan* |
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60 |
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2006 |
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Chairman and CEO,
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MSG Networks Inc. | ||||||||||
Jay L. Henderson* |
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63 |
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2016 |
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Retired Vice Chairman,
| F |
Illinois Tools Works Inc. Northern Trust Corp. | |||||||||
Gary A. Oatey* |
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70 |
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2003 |
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Executive Chairman,
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Kirk L. Perry* |
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52 |
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2017 |
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President, Brand Solutions, Google Inc.
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e.l.f. Beauty, Inc. | ||||||||||
Sandra Pianalto* |
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64 |
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2014 |
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Retired President and CEO, Federal Reserve Bank of Cleveland
| F |
Eaton Corporation plc Prudential Financial Inc. FirstEnergy Corp. | |||||||||
Nancy Lopez Russell* |
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62 |
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2006 |
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Founder, Nancy Lopez Golf Company
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Alex Shumate* |
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69 |
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2009 |
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Managing Partner, North America,
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CyrusOne Inc. | ||||||||||
Mark T. Smucker |
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49 |
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2009 |
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President and CEO,
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Richard K. Smucker |
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71 |
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1975 |
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Executive Chairman,
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Timothy P. Smucker |
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75 |
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1973 |
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Chairman Emeritus,
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Dawn C. Willoughby* |
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50 |
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2017 |
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Former Executive Vice President and Chief Operating Officer,
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Director Since
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Professional Background
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Board Committees |
Other Public Company Boards
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Name
| Age
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AC*
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ECC†
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NGCR‡
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Susan E. Chapman-Hughes
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53 |
2020 |
Former Executive Vice President and General Manager, Global Head of Digital Capabilities, Transformation, and Operations, Global Commercial Services American Express Company
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— |
|
— |
• Toast, Inc. | |||||||
Paul J. Dolan
| 63 | 2006 | Chairman and Chief Executive Officer Cleveland Guardians | — | — | • Madison Square Garden Sports Corporation • Madison Square Garden Entertainment Corporation
| ||||||||
Jay L. Henderson
| 66 | 2016 | Retired Vice Chairman, Client Service PricewaterhouseCoopers LLP
|
| — | — | • Illinois Tool Works Inc. • Northern Trust Corporation | |||||||
Jonathan E. Johnson III
| 56 | 2022 | Chief Executive Officer Overstock.com, Inc.
| —
| — | • Overstock.com, Inc. | ||||||||
Kirk L. Perry
| 55 | 2017 | President and Chief Executive Officer Information Resources, Inc. (“IRI”)
| — | — | • e.l.f. Beauty, Inc. | ||||||||
Sandra Pianalto
| 67 | 2014 | Retired President and Chief Executive Officer Federal Reserve Bank of Cleveland
|
| — | — | • Eaton Corporation plc • Prudential Financial Inc. | |||||||
Alex Shumate
| 72 | 2009 | Senior Partner and Ohio Strategic Relationship Partner Squire Patton Boggs (US) LLP
| — | — | |||||||||
Mark T. Smucker | 52 | 2009 | President and Chief Executive Officer The J. M. Smucker Company
| — | — | — | • Kimberly-Clark Corporation | |||||||
Richard K. Smucker | 74 | 1975 | Executive Chairman The J. M. Smucker Company
| — | — | — | — | |||||||
Jodi L. Taylor
| 59 | 2020 | Retired Chief Financial and Administrative Officer The Container Store Group, Inc.
|
| — | • Mister Car Wash, Inc. | ||||||||
Dawn C. Willoughby
| 53 | 2017 | Former Executive Vice President and Chief Operating Officer The Clorox Company
| — | — | • TE Connectivity Ltd. |
* Independent Director ChairF Financial Expert Member
AC = Audit Committee;ECC =Committee † Executive Compensation Committee;NGCR =Committee ‡ Nominating, Governance, and Corporate Responsibility Committee
Chair Financial Expert Independent Director Lead Independent Director Member
* | If all of the Director nominees are re-elected to the Board, the Board intends to appoint Susan E. Chapman-Hughes as the Chair of the Executive Compensation Committee (the “Compensation Committee”), Jodi L. Taylor as the Chair of the Audit Committee, and Dawn C. Willoughby as the Chair of the Nominating, Governance, and Corporate Responsibility Committee (the “Nominating Committee”). In addition, Jonathan E. Johnson III will be removed from the Nominating Committee and appointed to the Compensation Committee; Kirk L. Perry will be removed from the Compensation Committee and appointed to the Nominating Committee; and Jodi L. Taylor will be removed from the Nominating Committee. |
2 | The J. M. Smucker Company | 2022 Proxy Statement |
PROXYSUMMARY
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ESG AND CORPORATE RESPONSIBILITY
We believe success is driving business growth while helping those associated with our Company thrive. And, for more than 125 years, we have done just that. Our philosophy of corporate responsibility builds on the wisdom of our founder, Jerome Monroe Smucker, a deeply principled and forward-thinking man. For our Company, being responsible means doing the right thing for our consumers, customers, employees, suppliers, communities, and shareholders. Our commitment to being a good corporate citizen allows us to positively impact the lives of our employees and business partners, as well as the communities and planet we all share.
We are inspired by our Purpose, Finding Connections That Help Us Thrive – Life Tastes Better Together. And we deliver on that Purpose through the guidance of our Thriving Together agenda, which is focused on supporting:
Access to Quality Food |
Access to Education |
Making Connections to Community Resources |
Promoting Equitable and Ethical Treatment for All |
Supporting a Healthier Planet |
Through this focused approach, we maximize our resources to make the most meaningful impact in the areas we are best equipped to support.
ESG Reporting
This year, we will issue our twelfth public report on the positive impact we are having on the environment, animals, consumers, employees, and our communities. In addition, last year, we published our second Environmental, Social, and Governance Disclosure Report, which provides an overview of our ESG initiatives and metrics, using the Sustainability Accounting Standards Board (SASB) Food & Beverage – Processed Foods and Non-Alcoholic Beverages industry standards. Throughout that report, we highlight how our ESG efforts support select United Nations Sustainable Development Goals. Earlier this year, we also issued our second Task Force on Climate-Related Financial Disclosures Report, which aligns with the recommendations set by the Task Force on Climate-Related Financial Disclosures (TCFD), and documents how we evaluate and manage climate-related risks and opportunities.
ESG Oversight
Our ESG journey has evolved over time to become more comprehensive across our business. Our Vice President, ESG, Deputy General Counsel, and Assistant Secretary (“Vice President of ESG”), has the highest level of direct responsibility for ESG matters within the Company and is the executive sponsor of our Sustainability Steering Committee, which was established in 2006. The Committee, which is chaired by our Director of Sustainability and is comprised of key leaders from various functional areas, leads our sustainability goalsetting efforts and monitoring of activities. Our Chief Legal and Compliance Officer and Secretary (“Chief Legal and Compliance Officer”) has the highest level of direct responsibility for governance, ethics, compliance, and enterprise risk management within the Company, and our Chief Financial Officer and Chief Strategy and International Officer provide additional leadership and guidance for enterprise risk management.
During fiscal year 2022, we continued to build and improve on our ESG efforts by expanding our ESG Governance Council, comprised of key leaders from various functional areas, which, together with certain members of our executive leadership team, is responsible for our evolving ESG strategy and efforts. Our Chief Legal and Compliance Officer and our Vice President of ESG, along with members of their teams who are on the ESG Governance Council, report on such activities to our executive leadership team, the Nominating Committee, and the Board, which in turn provide further direction on the prioritization of activities and resources. The Nominating Committee assists the full Board and oversees our ESG program. In addition, and as noted below, the Compensation Committee holds our Chief Executive Officer responsible for achieving our ESG objectives and, beginning in fiscal year 2022, all of our executive officers had 10% of their short-term incentive compensation based on the achievement of ESG objectives.
The J. M. Smucker Company | 2022 Proxy Statement | 3 |
PROXY SUMMARY
ESG Areas of Focus
Our ESG areas of focus include (i) environmental impact, (ii) employee impact, (iii) community impact, (iv) consumer impact, (v) supply chain impact, and (vi) governance and ethics.
Environmental Impact We are committed to improving the environmental footprint of our operations. We integrate the principles of advancing resource conservation into our ESG practices through our focus on three elements of environmental stewardship – energy efficiency, water efficiency, and landfill avoidance. We have: Announced new environmental impact benchmarks focused on climate action (including establishing greenhouse gas emissions goals developed using the Science-Based Targets Initiative protocol), responsible sourcing, operational excellence, and sustainable packaging; Maintained our commitment to conservation practices in partnership with the World Wildlife Fund, National Fish and Wildlife Foundation, and Pollinator Partnership; and Continued to evaluate and implement more efficient production processes across our manufacturing footprint to support our environmental impact goals. | ||
Employee Impact We take proactive steps to ensure we meet our employees’ physical, emotional, and financial needs. Notably, we: Conduct an employee engagement survey every two to three years to provide an opportunity for open and confidential feedback from employees and to identify opportunities for improvement; Foster an environment of growth for our people and we support and challenge our employees to increase their knowledge, skills, and capabilities through all phases of their career; Provide market competitive pay and benefit programs which promote and foster the overall well-being of our employees, including introducing new benefits to help meet the evolving needs of our employees and their families; Ensure workforce health and safety through education and training, which is provided at all locations. These efforts resulted in our Company achieving a total recordable incident rate during 2022 that was three times below the national average; and Promote an inclusive culture and diverse workforce while leveraging our voice and position to promote societal equity. In support of these pillars, we have introduced our Advocate Alliance and our initial Employee Resource Groups to promote understanding, community, and allyship. In addition, we are implementing changes to our recruiting, hiring, and retention programs to improve diversity at all levels within our Company. |
4 | The J. M. Smucker Company | 2022 Proxy Statement |
PROXYSUMMARY
Community Impact We are passionate about being good citizens in the communities where we live and work. Through our many partnerships, we understand the needs and support required in our local communities and leverage these relationships to make the necessary connections to offer critical assistance to those in need. Notably, we: Collaborate with our partners, including Feeding America and Rescue Bank to help feed people and pets in need; Support community organizations, including the Red Cross and United Way, which provide critical disaster relief; Promote education and development through our work with several partners, including the LeBron James Family Foundation and its I PROMISE School, notably supplying the school’s on-site food pantry, donating to the school’s library, and developing the I PROMISE School’s J.M. Smucker Hometown Hall, a community gathering space; and Empower employee volunteerism and financial donations, including offering our Company Match program. | ||
Consumer Impact We make consumers’ lives better by delivering food people and pets love. We recognize the opportunity to serve consumers is earned and we are honored nearly 90% of U.S. homes have a Smucker product in their pantries. While proud of this distinction, we are focused on our commitment to earn their trust every day and with every product. We realized this by: Producing safe, quality food through our experienced Quality Assurance team in partnership with our Operations, Supply Chain, Procurement, Commodities, and Contract Manufacturing teams; Maintaining a commitment to responsible marketing practices, including substantiating claims and not leveraging any media channel primarily targeting children 13 and under; and Helping ensure consumers have an understanding of the ingredients in our products through our labeling and brand web sites. | ||
Supply Chain Impact We are committed to ensuring the sustainability of our supply chain while supporting those connected to it by strategically investing in our suppliers’ ability to continuously deliver the quality ingredients used in our products. This supports livelihoods for our suppliers and their families, while ensuring we meet our expectation of ethical and responsible sourcing. This is realized by: Communicating our expectations with regard to labor practices and human rights, business integrity, responsible environmental practices, and reporting and enforcement standards through our Global Supplier Code of Conduct; Reinforcing our Animal Welfare Policy to reflect our commitment to not conduct or sponsor any harmful animal testing, our expectations for the humane treatment of animals in our supply chain, and our efforts to improve the lives of, and relationships with, our pets in the United States and Canada; and Steadily expanding our Global Responsible Sourcing Program to drive positive impact across the supply chain through enhanced collaboration including streamlining processes, engaging internal and external stakeholders, and launching a training module available to all suppliers. |
The J. M. Smucker Company | 2022 Proxy Statement | 5 |
Governance HighlightsPROXY SUMMARY
Our Governance Philosophy
Governance and Ethics We place a strong focus on our governance
Board Makeup We consider the skills and expertise of our Directors, along with our Board makeup,
We also believe that periodic rotations of our Directors are important. Since 2017, we have added five new Directors to our Board. We will continue to consider the appropriate timing for Director rotations to ensure we have the |
Following the annual meeting:
BOARD SIZE | ||
11 Directors Since 2022 | ||
BOARD REFRESHMENT | ||
5 new Directors Since 2017 | ||
BOARD DIVERSITY | ||
4of 11 are women 2of 11 are racially or ethnically diverse | ||
BOARD INDEPENDENCE | ||
9of 11 are independent |
appropriate mix of skills based on our strategic goals and challenges, and to ensure we maintain a diverse Board in regard to expertise, gender, race, ethnicity, race,sexual orientation, gender identity, age, and cultural and other backgrounds because a strong, diverse Board provides differing perspectives that yield better decisions.
To facilitate our Director succession planning, in August 2022, we rotatedwill rotate and appointedappoint new Committee members and chairs for the Audit Committee, Executive Compensation Committee, (the “Compensation Committee”), and Nominating Governance, and Corporate Responsibility Committee (the “Nominating Committee” and, collectively with the Audit Committee and the Compensation Committee,(collectively, the “Committees”) in August 2017. Each. During fiscal year 2023, each independent Director sitswill sit on only one Committee. We are focused on orienting new Committee members appropriately for their roles, and we will continue to provideon-going ongoing education sessions for all our Directors. We also encourage our Directors to attend at least one external director educational session each year, and the Company provides reimbursement of expenses for such sessions.
6 | The J. M. Smucker Company | 2022 Proxy Statement |
PROXY SUMMARY
We consider the ratio between independent andnon-independent Directors and will have nine independent Directors and threetwo non-independent Directors if our current Director nominees are elected. Since 2015, we have reduced the number ofnon-independent Directors from five members to threetwo members. The threetwo non-independent Directors are allboth Smucker family members, and we believe that including Smucker family members strengthens our Board because of their deep knowledge of the Company, their commitment to the Company and ourBasic BeliefsofQuality, People, Ethics, Growth, ,People,Ethics,Growth, andIndependence (our “Basic Beliefs”(our “Basic Beliefs”), their passion for ensuring continued growth for the Company bearing their namesake,name, and their vested interest in ensuring shareholder value.
interest.
Following the annual meeting:
BOARD SIZE
12 Directors
Since 2019
BOARD REFRESHMENT
4 new Directors
Since 2013
BOARD DIVERSITY
4of12are women
2of12are ethnically diverse
BOARD INDEPENDENCE
9of12are independent
PROXY SUMMARY
How We View Risk Management
Our Company has always understood the importance of having strong compliance and enterprise risk management practices to protect our business and employees. In fact,Ethics is one of ourBasic Beliefsand is core to our culture. Over the past several years, we have taken a more formal approach to managing these two important areas and have expanded the Compliancecompliance and Enterprise Riskenterprise risk functions to bring additional focus and visibility to our management and the Board. TheThese functions report to the Senior Vice President, General CounselChief Legal and Secretary,Compliance Officer, and the Vice Chair and Chief Financial Officer providesand the Chief Strategy and International Officer provide additional leadership and guidance for the Enterprise Riskenterprise risk function. We believe that these leaders have the appropriate expertise and visibility within the organization to best develop and execute these programs, and such individuals have strong relationships and trust with, as well as direct access to, our Board. Our Enterprise Risk Committee, which is comprised of our executive leadership team, has completed its annual assessment of our enterprise risks, led by our Enterprise Riskenterprise risk team with input from leadership and numerous cross-functional teams. Leaders within our organization have been assigned responsibility for each key risk identified, and we have developed a system for monitoring and reporting these risks to the Board and its Committees. Each Committee is assigned responsibility for specific risks, which we have outlined in our Committee charters and which are further described in this proxy statement.
Our Corporate Responsibility Philosophy
Our philosophy of corporate responsibility builds upon the wisdom of our founder, J. M. Smucker, a deeply principled man also known for his forward thinking. For our Company, being responsible meansdoing the right things anddoing things right for our consumers, customers, employees, suppliers, communities, and shareholders. We take our responsibility as global citizens seriously and, with ourBasic Beliefs as guideposts and a continuous improvement mindset, we strive to have a positive impact on the lives and livelihoods of those we serve. We consider environmental, economic, and social sustainability and responsibility to be among our many roles as a good corporate citizen. This year, we will issue our ninth public report updating constituents on the positive impact we are having on the environment, animals, consumers, employees, and our communities. Similar to previous years, it will provide an update on the progress we have achieved in our sustainability strategy that calls for us to create a better tomorrow by focusing on: preserving our culture, ensuring our long-term economic viability, driving positive environmental impact, and being socially responsible. We are proud to advance our business goals while respecting the environment, people, and animals and supporting the communities we serve. We continue to make progress in such areas as responsible sourcing, sustainable agriculture, environmental responsibility, animal welfare, and community impact. To learn more, we invite you to read about our corporate responsibility efforts on our website atwww.jmsmucker.com.
OUR KEY GOVERNANCE PRACTICES
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No poison pill
Regular rotation of Committee chairs and members | Annual Board and Committee self-assessment evaluations
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The J. M. Smucker Company | 2022 Proxy Statement | 7 |
PROXYSUMMARY
Our People and Culture
We believe our approximately 6,700 employees are our most important asset. Our founder, Jerome Monroe Smucker, established a culture that puts people at the core of everything we do. Preserving the essence of that culture and ensuring the well-being of our employees remains a critical business priority and responsibility of the Board. Our Basic Beliefs include fair treatment of employees, personal responsibility within the organization, and an inclusive environment and diverse organization that strengthens our Company and enables all employees to reach their full potential. The Board’s role includes ensuring that we continue to implement these beliefs, which support the growth, safety, and well-being of our employees and are essential to driving a successful and sustainable business.
We Value Your Feedback
As we head further into fiscal year 2023, one of the Board’s key areas of focus is an increased level of direct engagement with our shareholders. We understand that an ongoing and open line of communication on all matters is critical to your investment in the Company, including our operational and financial strategy, compliance and risk management, corporate responsibility, and ESG programs. We encourage you to share your views with us.
If you would like to write to us, you may do so by addressing your correspondence to:
Corporate Secretary The J. M. Smucker Company One Strawberry Lane Orrville, Ohio 44667 | You can also call our Shareholder Services number at 330-684-3838. |
Our Basic Beliefs include fair treatment of employees, personal responsibility within the organization, and an inclusive environment and diverse organization that strengthens our Company and enables all employees to reach their full potential.
The J. M. Smucker Company | 2022 Proxy Statement |
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST
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Corporate Governance Guidelines
Our Corporate Governance Guidelines (the “Guidelines”) are designed to formalize the Board’s role and to confirm its independence from management and its role of aligning management and Board interests with the interests of shareholders. The Guidelines provide in pertinent part that:
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All members of the Committees and the chairs of the Committees will be appointed by the Board on the recommendation of the Nominating Committee, and the Board intends to rotate the chairs of the Committees every five years; |
The independent Directors will meet in executive session on a regular basis in conjunction with regularly scheduled meetings of the Board and the Committees, and such meetings will be chaired by |
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The J. M. Smucker Company | 2022 Proxy Statement | 9 |
CORPORATE GOVERNANCE
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CORPORATE GOVERNANCE
The Guidelines are posted on our website atwww.jmsmucker.comwww.jmsmucker.com.. A copy of the Guidelines is available free of charge to any shareholder who submits a written request to the Corporate Secretary, The J. M. Smucker Company, One Strawberry Lane, Orrville, Ohio 44667.
Shareholder Recommendations for Director Nominees
The Nominating Committee is responsible for identifying, evaluating, and recommending qualified candidates to the Board for nomination. The Nominating Committee considers all suggestions for membership on the Board, including nominations made by our shareholders.shareholders, and all candidates are evaluated consistent with our policy of nondiscrimination. Shareholders’ nominations for Directors must be made in writing and include the nominee’s written consent to the nomination and detailed background information sufficient for the Nominating Committee to evaluate the nominee’s qualifications. Nominations should be submitted to the Corporate Secretary, The J. M. Smucker Company, One Strawberry Lane, Orrville, Ohio 44667. The Corporate Secretary will then forward nominations to the Chair of the Nominating Committee. All recommendations must include qualifications that meet, at a minimum, the following criteria:
Director candidates must be committed to our culture and ourBasic Beliefs and will be individuals of integrity, intelligence, and strength of character having a balance of skills, knowledge, diversity, background, and experience beneficial to the Company; |
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Director candidates should have either significant experience in a senior executive role with a major business organization or relevant experience from other professional backgrounds; |
Director candidates should have a working knowledge of |
Director candidates should have a firm commitment to attend and participate in Board meetings and related Board activities; |
Director candidates should not have any affiliations or relationships with competitive businesses or organizations or other activities, in each case which could lead to a real or perceived conflict of interest; and |
Director candidates should not serve on more than three public company boards, including that of the Company, at any one time without |
The J. M. Smucker Company | 2022 Proxy Statement |
CORPORATE GOVERNANCE
Board Diversity
We greatly value diversity and the varying perspectives and experiences that emerge from a diverse group of people. Therefore,people, and the Board and the Nominating Committee believe the value of diversity extends to the boardroom and that diversity strengthens the composition of the Board. Therefore, the Board and the BoardNominating Committee seek to consider a diverse group of experiences, characteristics, attributes, and skills, including diversity in gender, race, ethnicity, race, age, sexual orientation, gender identity, and cultural and other backgrounds, in determining whether anconsidering potential Director candidates and individual Director qualifications. To further this goal, the Nominating Committee recently amended its Charter to specify that the Nominating Committee is committed to seeking out qualified diverse candidates who meet the applicable search criteria, including women and minority candidates, to serve as a Director ofinclude in the Company. Whilepools from which nominees for the Board does not maintain a formal policy regarding diversity, it does considerare considered, invited for interviews, and ultimately offered the diversity ofopportunity to be appointed to the Board when evaluatingor stand for election to the Board. In the event a third-party search firm is engaged for a particular Director nominees.search, the Nominating Committee would expect, and would plan to instruct, such firm to include diverse individuals, including as to gender, race, ethnicity, sexual orientation, and gender identity, meeting the search criteria in the initial pool or lists of potential Director candidates submitted to the Nominating Committee for consideration. Diversity is important because a variety of viewpoints contribute to a more effective decision-making process. The Nominating Committee and the Board also consider the composition of the Board as a whole in evaluating whether a particular individual should serve on the Board, as the Board seeks to comprise itself of members who, collectively, possess a range of relevant skills, experience, and expertise. The below graphs summarize the tenure, age, gender, and racial or ethnic diversity breakdown of our Director nominees:
The J. M. Smucker Company | 2022 Proxy Statement |
CORPORATE GOVERNANCE
Experience, Qualifications, Attributes, Skills, and Diversity of Director Nominees
As mentioned above, in considering each Director nominee and the composition of the Board as a whole, the Nominating Committee looks for a diverse group of experiences, characteristics, attributes, and skills that relate directly to our management and operations. Success in specific categories is a key factor in our overall operational success and creating shareholder value. The Nominating Committee believes that Directors who possess some or all of the following experiences, characteristics, attributes, and skills are better able to provide oversight of our management and long-term and strategic objectives.
Adherence to the Company’s Basic Beliefs |
We seek Directors who
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Leadership Experience |
We seek Directors who have significant leadership
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Independence |
We require that a majority of our Directors satisfy the independence requirements of the NYSE and the SEC.
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Finance Experience |
We believe that it is important for Directors to
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Public Company
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We seek Directors who have experience serving on the boards of other large, publicly traded companies and who have knowledge with respect to public company board governance issues. This experience prepares the Directors to
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and Experience |
We seek Directors who have knowledge of and experience with
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Operations Experience in Consumer Goods |
We seek Directors with relevant general management or operations experience in the consumer goods industry.
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We greatly value diversity and the varying perspectives and experiences that emerge from a diverse group of people. Because of this, we believe diversity in our Board is important, including, for example, with respect to their gender, race, ethnicity,
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Marketing, Digital, Innovation, or Public Relations Experience |
As a manufacturer and marketer of branded food products, we seek Directors who have a diverse range of marketing, digital, innovation, or public relations experience.
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Mergers and Acquisitions Experience |
We have been, and believe we will continue to be, active in acquiring other companies that fit our strategy and, therefore, seek Directors with relevant mergers and acquisitions experience.
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The J. M. Smucker Company | 2022 Proxy Statement |
CORPORATE GOVERNANCE
The Board believes that all of the Directors are highly qualified and have specific employment and leadership experiences, qualifications, and skills that qualify them for service on the Board. The specific experiences, qualifications, and skills that the Board considered in determining that each such person should serve as a Director are included in their individual biographies and also summarized further in the following table:
Director Qualifications and Experience |
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Adherence to the Company’sBasic Beliefs
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Leadership Experience | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||||||
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Finance Experience | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||||||
Public Company Board Experience | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||
Environmental, Social, and Governance Experience | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||||||||||
Operations Experience in Consumer Goods | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||||||
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The J. M. Smucker Company | 2022 Proxy Statement |
CORPORATE GOVERNANCE
Director Resignation Policy
In connection with the adoption of a majority voting standard for uncontested elections of Directors, the Board adopted a Director resignation policy to address the situation in which one or more incumbent Directors fail to receive the required majority vote forre-election in an uncontested election. Under Ohio law, an incumbent Director who is notre-elected would remain in office as a “holdover” Director until his or her successor is elected. This Director resignation policy provides that an incumbent Director who is notre-elected with more “for” votes than “against” votes in an uncontested election will be expected to tender to the Board his or her resignation as a Director promptly following the certification of the election results. The Nominating Committee would then consider each tendered resignation and recommend to the Board whether to accept or reject each such tendered resignation. The Board would act on each tendered resignation, taking into account its fiduciary duties to the Company and our shareholders and the Nominating Committee’s recommendation, within 90 days following the certification of the election results. The Nominating Committee, in making its recommendation, and the Board in making its decision, may consider any factors or other information with respect to any tendered resignation that they consider appropriate, including, without limitation:
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Following the Nominating Committee’s recommendation and the Board’s decision, the Board will promptly and publicly disclose its decision whether to accept or reject each tendered resignation and, if applicable, the reasons for rejecting a tendered resignation. If a Director’s tendered resignation is rejected, he or she would continue to serve until his or her successor is elected, or until his or her earlier resignation, removal from office, or death. If a Director’s tendered resignation is accepted, then the Board would have the sole discretion to fill any resulting vacancy or decrease the number of Directors, in each case pursuant to the provisions of and to the extent permitted by the Company’s Amended Regulations (the “Regulations”). Any Director who tenders his or her resignation pursuant to this policy would abstain from providing input or voting on the Nominating Committee’s recommendation or the Board’s action regarding whether to accept or reject the tendered resignation. While this description reflects the terms of the Board’s current Director resignation policy, the Board retains the power to amend and administer the policy as the Board, in its sole discretion, determines is appropriate. The Director resignation policy is posted on our website atwww.jmsmucker.com and a copy will be provided free of charge to any shareholder submitting a written request to the Corporate Secretary, The J. M. Smucker Company, One Strawberry Lane, Orrville, Ohio 44667.
Director Independence
We require that a majority of our Directors be “independent” as defined by the rules of the NYSE and the SEC. We may, in the future, amend the Guidelines to establish such additional criteria as the Board determines to be appropriate. The Board makes a determination as to the independence of each Director on an annual basis. The Board has determined that the following ninenon-employee Directors are independent Directors: Kathryn W. Dindo,Susan E. Chapman-Hughes, Paul J. Dolan, Jay L. Henderson, Gary A. Oatey,Jonathan E. Johnson III, Kirk L. Perry, Sandra Pianalto, Nancy Lopez Russell, Alex Shumate, Jodi L. Taylor, and Dawn C. Willoughby.
In general, “independent” means that a Director has no material relationship with us or any of our subsidiaries. The existence of a material relationship is determined upon a review of all relevant facts and circumstances and, generally, is a relationship that might reasonably be expected to compromise the Director’s ability to maintain his or her independence from our management.
The Board considers the issue of materiality from the standpoint of the persons or organizations with which the Director has an affiliation, as well as from the standpoint of the Director.
The J. M. Smucker Company | 2022 Proxy Statement |
CORPORATE GOVERNANCE
The following standards will be applied by the Board in determining whether individual Directors qualify as “independent” under the rules of the NYSE and the SEC. To the extent that these standards are more stringent than the rules of the NYSE or the SEC, such standards will apply. References to the Company include our consolidated subsidiaries.
No Director will be qualified as independent unless the Board affirmatively determines that the Director has no material relationship with us, either directly or as a partner, shareholder, or officer of an organization that has a relationship with us. We will disclose these affirmative determinations on an annual basis. |
No Director who is a former employee of ours can be deemed independent until three years after the end of his or her employment relationship with us. |
No Director whose immediate family member is a former executive officer of the Company can be deemed independent until three years after the end of such executive officer’s relationship with us. |
No Director who receives, or whose immediate family member receives, more than $120,000 in direct compensation from the Company in any twelve-month period within the past three years, other than Director and Committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), can be |
No Director can be deemed independent if the Director (i) is a current partner or employee of a firm that is our internal or external auditor; (ii) has an immediate family member who is a current partner of such a firm; (iii) has an immediate family member who is a current employee of such a firm and personally works on our audit; or (iv) was, or an immediate family member was, within the last three years, a partner or employee of such a firm and personally worked on our audit within that time. |
No Director who is employed, or whose immediate family member is employed, as an executive officer of another company where any of our present executive officers serve on that company’s compensation committee can be independent until three years after the end of such service or employment relationship. |
No Director who is an executive officer or employee, or whose immediate family member is an executive officer, of a company (excluding charitable organizations) that makes payments to, or receives payments from, us for property or services in an amount which, in any single fiscal year, exceeds the greater of $1,000,000 or 2% of such other company’s consolidated gross revenues can be deemed independent until three years after falling below such threshold. |
No Director can be deemed independent if we have made charitable contributions to any charitable organization in which such Director serves as an executive officer if, within the preceding three years, contributions by us to such charitable organization in any single fiscal year of such charitable organization exceeded the greater of $1,000,000 or 2% of such charitable organization’s consolidated gross revenues. |
In its review and application of the criteria used to determine independence, the Board considered the fact that we do business with organizations directly or indirectly affiliated with Paul J. Dolan and Kirk L. Perry, and affirmatively determined that the amounts paid to the entities affiliated with these individuals do not meet the threshold which would create an issue under the standards for determining independence.
The value of advertising and promotional activities sponsored with the Cleveland IndiansGuardians organization, of which Mr. Dolan is the Chairman and Chief Executive Officer, in fiscal year 20192022 was approximately $371,000$0.4 million and does not exceed the greater of $1,000,000 or 2% of the consolidated gross revenues of the Cleveland Indians.Guardians.
The value of advertising services provided to us by Google LLC, a wholly-owned subsidiary of Alphabet Inc. (“Google”), of which Kirk L. Perry iswas the President, Brand Solutions inuntil May 14, 2021, was approximately $7.3 million for the first quarter of fiscal year 20192022 (i.e., the quarter during which Mr. Perry was approximately $12,257,000an officer of Google) and does not exceed the greater of $1,000,000 or 2% of the consolidated gross revenues of Google Inc.Google.
The J. M. Smucker Company | 2022 Proxy Statement |
CORPORATE GOVERNANCE
The value of consumer data, analytics, and insights services provided to us by IRI, of which Kirk L. Perry is the President and Chief Executive Officer, in fiscal year 2022 was approximately $11.1 million and does not exceed the greater of $1,000,000 or 2% of consolidated gross revenues of IRI.
Structure of the Board of Directors
Executive ChairmanChair of the Board and Chief Executive Officer as Directors
The Regulations provide that one person may hold the positions of Executive ChairmanChair of the Board and Chief Executive Officer. However, our Executive ChairmanChair of the Board and Chief Executive Officer roles are currently held by different individuals. In addition, a majority of our Directors are independent, and commencing in fiscal year 2020, the Board has a Lead Independent Director. Richard K. Smucker, our former Chief Executive Officer, currently serves as Executive Chairman. Effective August 17, 2022, Richard K. Smucker will retire as Executive Chairman, and Mark T. Smucker will serve as both Chief Executive Officer and Chair of the Board. The Board believes that a current or former Chief Executive Officer is best situated to serve as Executive ChairmanChair of the Board, because he is one of the Directors most familiar with our business and industry. The Board also believes that having a current or former Chief Executive Officer serve as Executive ChairmanChair of the Board provides an efficient and effective leadership model for us by fostering clear accountability, effective decision-making, and alignment of corporate strategy. The Board’s independent Directors bring experience, oversight, and expertise from outside the Company and industry, while the Executive ChairmanChair of the Board and the Chief Executive Officer bring Company and industry-specific experience and expertise. One of the key responsibilities of the Board is to develop strategic direction and hold management accountable for the execution of its strategy once it is developed. The Board believes that its current management structure, together with independent Directors having the duties described above and the Lead Independent Director having the duties described below, is in the best interests of shareholders because it strikes an appropriate balance for us; with a current or former Chief Executive Officer serving as Executive Chairman,Chair of the Board, there is unified leadership and a focus on strategic development and execution, while the independent Directors help assure independent oversight of management.
Chairman Emeritus
Any member of the Smucker family who has previously served in the role of Chair of the Board may be appointed by the Board as a non-director Chairman Emeritus at such time as such individual ceases to be a member of the Board. The purpose of the Chairman Emeritus position is to permit the Company to continue to benefit from the participation and input of the Chairman Emeritus after such person has ceased to be a Director and to permit the Chairman Emeritus to provide such participation and input to the Company and the Board. The term of a Chairman Emeritus will be one year from appointment, renewable annually by the Board, provided that the term of a Chairman Emeritus will not be renewed beyond the expiration of the term during which the Chairman Emeritus reaches the age of 80. Subject to any different determinations of the Board, a Chairman Emeritus:
Will receive notice of and may participate in Board meetings, but will generally not attend Board sessions that are limited to independent Directors only; |
May be invited to attend and participate in Committee meetings as determined by the Board or the applicable Committee, but will generally not attend Committee sessions that are limited to independent Directors only; |
Will not be entitled to vote and will not be counted for quorum purposes at Board or Committee meetings; |
To the extent requested by the Company or the Board and agreed to by the Chairman Emeritus, will act as an advisor to the Company, including (i) participating in Company communications, (ii) participating in Company meetings, (iii) serving as a spokesperson with external constituents, and (iv) serving as an advisor to the Chief Executive Officer; and |
Will provide such other advice and services and engage in such other activities as may be agreed between the Board and the Chairman Emeritus. |
16 | The J. M. Smucker Company | 2022 Proxy Statement |
CORPORATE GOVERNANCE
A Chairman Emeritus will be entitled to reimbursement of expenses incurred in connection with service in the role of Chairman Emeritus and to indemnification and insurance in connection with such service. Any additional compensation or other perquisites will be as determined by the Board. A Chairman Emeritus will remain subject to Section 16 reporting requirements, the Company’s Code of Conduct (as defined below) and Insider Trading and Disclosure Policy, and the confidentiality and similar obligations applicable to a Director of the Company but will not be considered a Director or officer of the Company under the Company’s Articles or Regulations, under the Ohio General Corporation Law, or otherwise. Following the end of his or her final term, a Chairman Emeritus may retain the title of Chairman Emeritus as an honorific, without any rights, responsibilities, or obligations attaching thereto. However, at the request of the Chief Executive Officer and upon mutual agreement, a Chairman Emeritus may engage in activities to enhance and support the culture of the Company and its constituents. Following Timothy P. Smucker’s retirement as a Director of the Company on August 17, 2022, the Board will appoint him as a Chairman Emeritus.
Board’s Role in Risk Oversight
Risk is inherent in any business, and our management is responsible for theday-to-day management of risks that we face. The Board, on the other hand, has responsibility for the oversight of risk management. In that role, the Board has the responsibility to evaluate the risk management process to ensure its adequacy and that it is implemented properly by management.
The Board believes that full and open communication between management and the Board is essential for effective risk management and oversight. The Board meets regularly with senior management, including executive officers, to discuss strategy and risks facing the Company.Company, including new and potentially disruptive risks such as those posed by the novel coronavirus (“COVID-19”) pandemic, supply chain disruptions, and the recent conflict between Russia and Ukraine. Senior management attends the Board’s quarterly meetings, as well as certain Committee meetings, to address any questions or concerns raised by the Board on risk management and any other matters. The Company’s Senior Vice President, General CounselChief Legal and SecretaryCompliance Officer manages the Company’s compliance function and, along with the Vice Chair and Chief Financial Officer and the Chief Strategy and International Officer, oversees the enterprise risk function, chairs the Risk Management Committee, attends all Board meetings and Committee meetings that do not overlap, and provides periodic updates on risks and compliance issues facing the Company and the industry. Each quarter, the Board receives presentations from senior management on business operations, financial results, and strategic, risk, and compliance issues. In addition, senior management holds an annual strategic planning retreat, as well as periodicregular strategic planning sessions to discuss strategies, key challenges, and risks and opportunities for the Company. Senior management then reviews the results of each strategic planning session with the Board.
The Committees assist the Board in fulfilling its oversight responsibilities in certain areas of risk. The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to management of major financial risk exposures, including in the areas of financial reporting, internal controls, hedging strategies, cybersecurity, and reviewing potential conflicts of interest. Risk assessment reports are regularly provided by management, and our internal auditors, and compliance professionals to the Audit Committee.
In particular, the Audit Committee receives an update on cybersecurity matters at each regularly scheduled meeting and reports to the Board on key activities. The Board also receives an update on cybersecurity matters at least once a year. The Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from the Company’s human capital management and compensation policies and programs, including overseeing the Company’s compensation-related risk assessment described further below in this proxy statement and developing stock ownership and clawback guidelines for our executive officers. The Nominating Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks associated with Board organization, membership, and structure, succession planning for Directors and executive officers, and corporate governance, including the annual monitoring of corporate governance issues, overseeing the Company’s ESG processes, policies, commitments, and activities, and developing Director self-evaluations.evaluations for the Board and the Committees. The Risk Management Committee, along with members from various functions across the Company, meets quarterly to review enterprise risk issues, including top risk activities and changes, emerging risks, risk mitigation activities, and program maturity.
The J. M. Smucker Company | 2022 Proxy Statement | 17 |
CORPORATE GOVERNANCE
All Committees report back to the full Board at Board meetings as to the Committee’s activities and matters discussed and reviewed at the Committee’s meeting. In addition, the Board is encouraged to participate in internal and external Director education courses as described further in our Board Education Policy, to keep apprised of current issues, including areas of risk. External advisors also periodically present to the Board and the Committees on risks impacting the Company and the food industry.
Communications with the Board
Shareholders and other interested partiesothers who wish to communicate with members of the Board as a group, withnon-employee Directors as a group, or with individual Directors, may do so by writing to Board Members c/o Corporate Secretary, the following address:
The J. M. Smucker Company
c/o Corporate Secretary
One Strawberry Lane
Orrville, Ohio 44667. 44667
The Directors have requested that the Corporate Secretary act as their agent in processing any communications received. All communications that relate to matters within the scope of responsibilities of the Board and its Committees will be forwarded to the appropriate Directors. Communications relating to matters within the responsibility of one of the Committees will be forwarded to the Chair of the appropriate Committee. Communications relating to ordinary business matters are not within the scope of the Board’s responsibility and will be forwarded to the appropriate executive officer at the Company. Solicitations, advertising materials, and frivolous or inappropriate communications will not be forwarded.
Commitment to Integrity: Our Code of Business Conduct and Ethics
Ethics is one of ourBasic Beliefsand is fundamental to our business. We emphasize that ethical conduct is vital to ensure successful, sustained business and business relationships.
Our Commitment to Integrity: Our Code of Business Conduct and Ethics (the “Code of Conduct”) is an extension of our long-standing principles and values. It applies to our employees officers, Directors, and contingent workers.Directors. The Code of Conduct is a resource which guides daily conduct in the workplace, and employees are expected to reference it frequently. The Code of ConductoutlinesConductoutlines our expectations across numerous areas and situations in which ethical choices might be necessary, such as creating a positive work environment; embracing inclusion, diversity, and equity; engaging with customers, suppliers, and competitors; handling confidential information and conflicts of interest; the exchange of gifts, meals, and entertainment; avoiding bribery and corruption and insider trading; our commitment to community, including ESG matters and philanthropic activities; and rules regarding food safety, advertising, and product labeling. Employees and Directors are required to review and acknowledge the Code of Conduct on an annual basis and receive training at least once every three years. Additionally, employees receive annual compliance training on key topics throughout the year.
Any amendments of the Code of Conduct and any waivers of the Code of Conduct for or on behalf of any Director, executive officer, or senior financial officer of the Company must be approved by the Board or by a Committee of the Board to which authority to issue such waivers has been delegated by the Board. Any amendments or waivers of the Code of Conduct will be promptly disclosed to the public, as required by applicable law, and will be disclosed on our website atwww.jmsmucker.com. Waivers of the Code of Conduct for any other employee may be made only by an authorized officer of the Company. As of the date of this proxy statement, there have been no such waivers.
The Code of Conduct is posted on our website atwww.jmsmucker.com and a copy will be provided free of charge to any shareholder submitting a written request to theto: Corporate Secretary, The J. M. Smucker Company, One Strawberry Lane, Orrville, Ohio 44667.
18 | The J. M. Smucker Company | 2022 Proxy Statement |
CORPORATE GOVERNANCE
Procedures for Reporting Ethical, Accounting, Auditing, and Financial Related Issues
The Board has established procedures for employees to report violations of the Code of Conduct or complaints regarding accounting, auditing, and financial-related matters to their manager or supervisor, to the General Counsel,Chief Legal and Compliance Officer, or directly to the Audit Committee. Reports to the General CounselChief Legal and Compliance Officer may be made in writing, by telephone, in person, or may be submitted anonymously through the Smucker’s Voice Line,Company’s Integrity Portal, which is managed by an independent third-party service provider and is available 24 hours a day, 7seven days a week, in multiple languages, and can be accessed via phone or through the Internet atwww.jmsmucker.ethicspoint.comJMSIntegrity.com. Specifically, via phone in the U.S. and Canada, employees or concerned individuals can call toll-free1-844-319-9352; in other countries, employees or concerned individuals can access the applicable country number atwww.jmsmucker.ethicspoint.comJMSIntegrity.com.. We forbid retaliation, or threats of retaliation, against our employees who, in good faith, report violations of the Code of Conduct.
The J. M. Smucker Company | 2022 Proxy Statement |
(Proposal 1 on the proxy card)
The Board currently has 1312 Directors, but Elizabeth Valk LongTimothy P. Smucker will not be up forre-election when herhis current term expires on August 14, 2019.17, 2022. Effective on that date, the number of Directors will be set at 1211 pursuant to the Regulations, and all remaining Directors will be up for election at this annual meeting to hold office for a term of one year. Unless instructed otherwise, the proxies intend to vote FOR the election of these 12 nominees.
After many years of distinguished service, Elizabeth Valk LongTimothy P. Smucker will be retiring from the Board on August 14, 2019,17, 2022, at the expiration of herhis current term. We appreciate Ms. Long’sMr. Smucker’s years of service as both an officer and Director and thank herhim for her valuable guidance during her tenure withhis leadership and innumerable contributions, which have played a critical role in the Company.Company we have become and provided a tremendous foundation for continued growth.
Each nominee has agreed to serve if elected. If any nominee declines, is unable to accept such nomination, or is unable to serve (an event which is not expected), the Board reserves the right in its discretion to substitute another person or nominee or to reduce the number of nominees. In this event, the proxy, with respect to such nominee or nominees, will be voted for such other person or persons as the Board may recommend.
The members of the Board, including those who are listed in this proxy statement as nominees for election, with information about each of them based on data furnished to us by these persons as of June 28, 2019,July 7, 2022, are as follows:
Nominees for Election as Directors Whose Proposed Terms Would Expire at the 20202023 Annual Meeting
HUGHES
Age:
Director Since:
Committee: |
Professional Experience
Ms.
Skills and Qualifications
The Board concluded that Ms.
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The J. M. Smucker Company | 2022 Proxy Statement |
ELECTION OF DIRECTORS
PAUL J. DOLAN
Age:
Director Since:2006
Committee:
Compensation (Chair) |
Professional Experience
Mr. Dolan has been the Chairman and Chief Executive Officer of the Cleveland
Skills and Qualifications
The Board concluded that Mr. Dolan should serve as a Director primarily due to his long experience in managing businesses and people, his experience serving on the boards of other companies and numerousnon-profit organizations, and his significant knowledge of the evolving needs and preferences of consumers. Specifically, Mr. Dolan has gained significant leadership, operating, and marketing experience in his positions with the Cleveland
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JAY L. HENDERSON
Age:
Director Since:2016
Committee: Audit (Chair) |
Professional Experience
Mr. Henderson retired as Vice Chairman, Client Service at PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) in June 2016, a position he held since 2007. He also served as PricewaterhouseCoopers’ Managing Partner of the Greater Chicago Market from 2003 through 2013 and Managing Partner of the Cleveland Office from 1993 through 2002. During his career at PricewaterhouseCoopers, Mr. Henderson gained significant experience working with the boards and audit committees of Fortune 500 companies and has managed major client relationships across multiple markets and industry sectors. He is the lead director and a member of the corporate governance, audit,
Skills and Qualifications
The Board concluded that Mr. Henderson should serve as a Director primarily due to his extensive experience in managing and overseeing businesses, his experience working with the boards and audit committees of large public companies, and his experience serving as a director of public companies andnon-profit organizations. Specifically, Mr. Henderson brings leadership and operating skills through his former roles with PricewaterhouseCoopers. He has also been a Certified Public Accountant since 1977. Mr. Henderson’s background enables him to provide valuable insights to the Board, particularly in overseeing the Company’s finances.
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The J. M. Smucker Company | 2022 Proxy Statement |
ELECTION OF DIRECTORS
Age:
Director Since:
Committee:
|
Professional Experience
Mr.
Skills and Qualifications
The Board concluded that Mr.
|
KIRK L. PERRY
Age:
Director Since:2017
Committee:
Compensation |
Professional Experience
Mr. Perry has been the President and Chief Executive Officer and a member of the board of directors of IRI, a global provider of technology, data, and predictive analytics for the consumer, retail, and media sectors since May 2021. Prior to joining IRI, he was the President, Brand Solutions of Google,
Skills and Qualifications
The Board concluded that Mr. Perry should serve as a Director primarily due to his extensive operational experience in marketing and brand management and his experience serving as a director of other organizations. Specifically, Mr. Perry brings leadership and operating skills through his current and former roles with IRI, Google,
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The J. M. Smucker Company | 2022 Proxy Statement |
ELECTION OF DIRECTORS
SANDRA PIANALTO
Age:
Director Since:2014
Committee: Audit |
Professional Experience
Ms. Pianalto retired in May 2014 as President and Chief Executive Officer of the Federal Reserve Bank of Cleveland, a position she held since February 2003. Prior to that time, she served as First Vice President and Chief Operating Officer, since 1993, Vice President and Secretary to the Board of Directors, since 1988, and Assistant Vice President of Public Affairs, since 1984. Prior to retiring, Ms. Pianalto also chaired the Federal Reserve’s Financial Services Policy Committee, which is a committee of senior Federal Reserve Bank officials responsible for overall direction of financial services and related support functions for the Federal Reserve Banks and for leadership in the evolving U.S. payment system. She
Skills and Qualifications
The Board concluded that Ms. Pianalto should serve as a Director primarily due to her vast experience in monetary policy and financial services and her experience serving as a director of other public companies. Specifically, Ms. Pianalto brings leadership and operating skills through her former roles with the Federal Reserve Bank of Cleveland. As the President and Chief Executive Officer of the Federal Reserve Bank of Cleveland, she oversaw 950 employees in Cleveland, Cincinnati, and Pittsburgh who conducted economic research and supervised financial institutions. Ms. Pianalto’s background enables her to provide valuable insights to the Board, particularly in overseeing the Company’s finances.
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|
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ELECTION OF DIRECTORS
ALEX SHUMATE
Lead Independent Director Age:
Director Since:2009
Committee: Nominating (Chair) |
Professional Experience
Mr. Shumate is a Senior Partner and the
Skills and Qualifications
The Board concluded that Mr. Shumate should serve as a Director primarily due to his significant legal background and his experience in managing a business and serving as a director of other public companies and as a trustee of severalnon-profit organizations. Mr. Shumate has practiced law for nearly 40 years and was named a Lawyer of the Year
|
The J. M. Smucker Company | 2022 Proxy Statement | 23 |
ELECTION OF DIRECTORS
MARK T. SMUCKER
Age:
Director Since:2009
Committee:None |
Professional Experience
Mr. Smucker has been our President and Chief Executive Officer since May 2016. Prior to that time, he served as President and President, Consumer and Natural Foods, from April 2015 through April 2016, President, U.S. Retail Coffee, from May 2011 through March 2015, President, Special Markets, from August 2008 through April 2011, Vice President, International, from July 2007 through July 2008, and Vice President, International and Managing Director, Canada, from May 2006 through June 2007. He has been a director and member of the audit committee of Kimberly-Clark Corporation, a publicly traded global company that manufactures and sells consumer products, since September 2019. Mr. Smucker is the son of Timothy P. Smucker, who serves as a Director of the Company, and the nephew of Richard K. Smucker, who serves as a Director and executive officer of the Company.
Skills and Qualifications
The Board concluded that Mr. Smucker should serve as a Director largely due to his role as our President and Chief Executive Officer, his significant knowledge of the Company gained from more than 20 years of experience in various positions within the Company, and his experience serving as a director of the
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ELECTION OF DIRECTORS
RICHARD K. SMUCKER
Age:
Director Since:1975
Committee:None |
Professional Experience
Mr. Smucker has been our Executive Chairman since May 2016. He served as Chief Executive Officer from August 2011 through April 2016,Co-Chief Executive Officer from February 2001 through August 2011, Executive Chairman from August 2008 through August 2011, and President from August 1987 through April 2011. He was a director of The Sherwin-Williams Company, a publicly traded manufacturer of coatings and related products, from September 1991 through April 2016. Mr. Smucker also served as a director of the Cleveland Federal Reserve Bank from January 2010 through December 2015. Mr. Smucker is the brother of Timothy P. Smucker, who serves as a Director of the Company, and the uncle of Mark T. Smucker, who serves as a Director and executive officer of the Company.
Skills and Qualifications
The Board concluded that Mr. Smucker should serve as a Director largely due to his role as our Executive Chairman and former Chief Executive Officer, his intimate knowledge of the Company, his experience serving as a director of other private and public companies, and his financial knowledge and experience. The Board believes that Mr. Smucker’s extensive experience in and knowledge of our business gained as a result of his long-time service as a member of management is essential to the Board’s oversight of the Company and our business operations. The Board also believes that continuing participation by qualified members of the Smucker family on the Board is an important part of our corporate culture that has contributed significantly to our long-term success.
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24 | The J. M. Smucker Company | 2022 Proxy Statement |
ELECTION OF DIRECTORS
Age:
Director Since:
Committee: Audit and Nominating |
Professional Experience
Skills and Qualifications
The Board concluded that
|
The J. M. Smucker Company | 2022 Proxy Statement |
ELECTION OF DIRECTORS
DAWN C. WILLOUGHBY
Age:
Director Since:2017
Committee: Nominating |
Professional Experience
Ms. Willoughby was the Executive Vice President and Chief Operating Officer of The Clorox Company, a manufacturer and marketer of consumer and professional products, from September 2014 through January 2019. She also served as the company’s Senior Vice President and General Manager, Clorox Cleaning Division; Vice President and General Manager, Home Care Products; and Vice President and General Manager, Glad Products, along with several other positions since she was initially hired in 2001. Prior to her career at The Clorox Company, Ms. Willoughby spent nine years with The Procter & Gamble Company, where she held several positions in sales management. In May 2013,
Skills and Qualifications
The Board concluded that Ms. Willoughby should serve as a Director primarily due to her extensive leadership experience at consumer goods companies and her experience serving as a director of
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The Board unanimously recommends a vote FOR each of the nominees named in this proxy statement for election to the Board.
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The J. M. Smucker Company | 2022 Proxy Statement |
Board Meetings
During fiscal year 2019,2022, there were sixeight meetings of the Board. All Directors are required to attend at least 75% of the total number of Board and Committee meetings for which they were eligible. During fiscal year 2019,2022, all Directors attended at least 75% of the total number of Board and Committee meetings for which they were eligible. We have not adopted a formal policy requiring Directors to attend the annual meeting of shareholders. However, all Directors attended the 20182021 virtual annual meeting of shareholders.
The Board has a Nominating Committee, a Compensation Committee, and an Audit Committee. All Committees are comprised entirely of independent Directors in accordance with the NYSE listing standards. Each Committee operates under a written charter, which is posted on our website atwww.jmsmucker.com. A copy of each charter will be provided free of charge to any shareholder submitting a written request to the Corporate Secretary, The J. M. Smucker Company, One Strawberry Lane, Orrville, Ohio 44667. Each Committee believes that its charter is an accurate and adequate statement of such Committee’s responsibilities, and each Committee reviews its charter on an annual basis to confirm that it continues to be an accurate and adequate statement of such responsibilities. Each Committee amended its charter in fiscal year 2022.
The table below shows current members of each of the Committees and the number of meetings held by each Committee in fiscal year 2019.2022.
Name
| Audit Committee
| Compensation Committee |
Nominating Committee | Audit Committee
| Compensation Committee |
Nominating | ||||||
Kathryn W. Dindo | F | |||||||||||
Susan E. Chapman-Hughes |
| |||||||||||
Paul J. Dolan |
| |||||||||||
Jay L. Henderson | F | F | ||||||||||
Elizabeth Valk Long | ||||||||||||
Gary A. Oatey | ||||||||||||
Jonathan E. Johnson III |
| |||||||||||
Kirk L. Perry |
| |||||||||||
Sandra Pianalto | F | F | ||||||||||
Nancy Lopez Russell | ||||||||||||
Alex Shumate |
| |||||||||||
Alex Shumate |
| |||||||||||
Jodi L. Taylor | F |
| ||||||||||
Dawn C. Willoughby |
| |||||||||||
Number of Meetings | 12 | 4 | 3 | 11 | 5 | 4 | ||||||
Chair Member F Financial Expert |
Chair Member F Financial Expert |
Chair Member F Financial Expert |
If all of the Director nominees are re-elected to the Board, the Board intends to appoint Susan E. Chapman-Hughes as the Chair of the Compensation Committee, Jodi L. Taylor as the Chair of the Audit Committee, and Dawn C. Willoughby as the Chair of the Nominating Committee. In addition, Jonathan E. Johnson III will be removed from the Nominating Committee and appointed to the Compensation Committee; Kirk L. Perry will be removed from the Compensation Committee and appointed to the Nominating Committee; and Jodi L. Taylor will be removed from the Nominating Committee.
Director Compensation
We use a combination of cash and stock-based compensation to attract, compensate, and retainnon-employee Directors who serve on the Board. The Compensation Committee engages its outside compensation consultant, Semler Brossy Consulting Group (“Semler Brossy”), to perform an annual review of Director compensation in order to remain aware of current trends in Director compensation. At the Compensation Committee’s January 20192022 meeting, Semler Brossy presented a competitive review of Director compensation (which is evaluated against the peer group set forth on page 4051 of
The J. M. Smucker Company | 2022 Proxy Statement | 27 |
BOARD AND COMMITTEE MEETINGS
this proxy statement) and Director compensation trends. Based on this review, the Compensation Committee and the Board approved an increase in the compensation to be paid to ournon-employee Directors, as set forth below, which became effective as of May 1, 2019.2022. Employee Directors do not receive compensation for their services as Directors.
For fiscal year 2023, non-employee Directors will be eligible to receive the following compensation:
| Amount | |||
Annual Retainer | $100,000 per year | |||
Additional Annual Retainer for Lead Independent Director | $ 30,000 per year | |||
Additional Annual Retainer for Audit Committee Members | $ 5,000 per year | |||
Additional Annual Retainer for Audit Committee Chair | $ 15,000 per year | |||
Additional Annual Retainer for Compensation Committee Chair | $ 15,000 per year | |||
Additional Annual Retainer for Nominating Committee Chair | $ 15,000 per year | |||
Annual Grant of Deferred Stock Units | $160,000 in deferred stock units |
The annual grant of deferred stock units having a value of $160,000 is made in October of each year. The deferred stock units are awarded under The J. M. Smucker Company 2020 Equity and Incentive Compensation Plan (the “2020 Plan”), which was approved by our shareholders at our 2020 annual meeting. The deferred stock units vest immediately upon grant and are entitled to dividends in an amount paid to all shareholders. These dividends are reinvested in additional deferred stock units.
During fiscal year 2023, BOARD AND COMMITTEE MEETINGSnon-employee
Directors may elect to receive a portion of their annual retainer in the form of deferred stock units. Such amounts are deferred under the Nonemployee Director Deferred Compensation Plan, which was initially adopted by the Board on January 1, 2007 and most recently amended and restated on January 1, 2021 (the “Nonemployee Director Deferred Compensation Plan”). All deferred stock units, together with dividends credited on those deferred stock units, will be paid out in the form of common shares upon termination of service as a non-employee Director (subject to a waiting period for deferred stock units granted in certain years).
For fiscal year 2020,2022, non-employee Directors will bewere eligible to receive the following compensation:
Type of Compensation
|
Amount
| |
Annual Retainer | $100,000 per year | |
Additional Annual Retainer for Lead Independent Director | $ 20,000 per year | |
Additional Annual Retainer for Audit Committee Members | $ 5,000 per year | |
Additional Annual Retainer for Serving on More Than One Committee | $ 5,000 per year | |
Additional Annual Retainer for Audit Committee Chair | $ 15,000 per year | |
Additional Annual Retainer for Compensation Committee Chair | $ 15,000 per year | |
Additional Annual Retainer for Nominating Committee Chair | $ 15,000 per year | |
Annual Grant of Deferred Stock Units | $150,000 in deferred stock units |
The annual grant of deferred stock units having a value of $150,000 is made in October of each year. The deferred stock units are awarded under The J. M. Smucker Company 2010 Equity and Incentive Compensation Plan (the “2010 Plan”), which was approved by our shareholders at our 2010 and 2015 annual meetings. The deferred stock units vest immediately upon grant and are entitled to dividends in an amount paid to all shareholders. These dividends are reinvested in additional deferred stock units.
During fiscal year 2020,non-employee Directors may elect to receive a portion of their annual retainer in the form of deferred stock units. Such amounts are deferred under the Nonemployee Director Deferred Compensation Plan, which was initially adopted by the Board on January 1, 2007 and amended and restated on January 1, 2014 (the “Nonemployee Director Deferred Compensation Plan”). All deferred stock units, together with dividends credited on those deferred stock units, will be paid out in the form of common shares upon termination of service as anon-employee Director (subject to a waiting period for deferred stock units granted in certain years).
For fiscal year 2019,non-employee Directors were eligible to receive the following compensation:
|
| |
|
| |
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| |
|
| |
|
| |
|
| |
|
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The annual grant of deferred stock units having a value of $135,000 was issued out of the 20102020 Plan. The deferred stock units vested immediately upon grant and are entitled to dividends in an amount paid to all shareholders. These dividends are reinvested in additional deferred stock units.
During fiscal year 2019,2022, non-employee Directors could have elected to receive a portion of their annual retainer in the form of deferred stock units. Such amounts wereare deferred under the Nonemployee Director Deferred Compensation Plan.
28 | The J. M. Smucker Company | 2022 Proxy Statement |
BOARD AND COMMITTEE MEETINGS
All deferred stock units, together with dividends credited on those deferred stock units, will be paid out in the form of common shares upon termination of service as anon-employee Director (subject to a waiting period for deferred stock units granted in certain years).
BOARD AND COMMITTEE MEETINGS
The following table reflects compensation earned by thenon-employee Directors for fiscal year 2019:2022:
20192022 Director Compensation
Name (1)(2) | Fees Earned or Paid in Cash ($) | Stock Awards ($) (3) | Option Awards ($) (4) | All Other Compensation ($) (5) (6) | Total ($) |
Fees Earned or Paid in Cash ($)
|
Stock Awards ($) (3)
|
Option Awards ($) (4)
|
All Other Compensation ($) (5) (6)
| Total ($)
| ||||||||||
Kathryn W. Dindo | $105,000 | $135,000 | — | $2,500 | $242,500 | |||||||||||||||
Susan E. Chapman-Hughes | $100,000 | $150,000 | — | — | $250,000 | |||||||||||||||
Paul J. Dolan | $115,000 | $135,000 | — | — | $250,000 | $115,000 | $150,000 | — | — | $265,000 | ||||||||||
Jay L. Henderson | $120,000 | $135,000 | — | — | $255,000 | $120,000 | $150,000 | — | — | $270,000 | ||||||||||
Elizabeth Valk Long (7) | $100,000 | $135,000 | — | $2,500 | $237,500 | |||||||||||||||
Gary A. Oatey | $100,000 | $135,000 | — | — | $235,000 | |||||||||||||||
Jonathan E. Johnson, III | $ 25,000 | $ 37,500 | — | — | $ 62,500 | |||||||||||||||
Kirk L. Perry | $100,000 | $135,000 | — | — | $235,000 | $100,000 | $150,000 | — | — | $250,000 | ||||||||||
Sandra Pianalto | $105,000 | $135,000 | — | $2,500 | $242,500 | $105,000 | $150,000 | — | $ 2,500 | $257,500 | ||||||||||
Nancy Lopez Russell | $100,000 | $135,000 | — | — | $235,000 | |||||||||||||||
Nancy Lopez Russell (7) | $ 16,667 | — | — | — | $ 16,667 | |||||||||||||||
Alex Shumate | $112,500 | $135,000 | — | — | $247,500 | $135,000 | $150,000 | — | — | $285,000 | ||||||||||
Timothy P. Smucker | $100,000 | $135,000 | — | $76,760 | $311,760 | |||||||||||||||
Timothy P. Smucker (8) | $100,000 | $150,000 | — | $54,586 | $304,586 | |||||||||||||||
Jodi L. Taylor | $110,000 | $150,000 | — | — | $260,000 | |||||||||||||||
Dawn C. Willoughby | $100,000 | $135,000 | — | — | $235,000 | $100,000 | $150,000 | — | $ 2,500 | $252,500 |
(1) | Mark T. Smucker and Richard K. Smucker are not included in this table as they are employees of the Company and receive no compensation for their services as Directors. The compensation received by Mark T. Smucker and Richard K. Smucker as employees of the Company is shown in the “Summary Compensation Table” on page |
(2) | As of April 30, |
Name |
Deferred Stock Units |
| ||
|
|
| ||
Paul J. Dolan |
|
| ||
Jay L. Henderson | | |||
Jonathan E. Johnson III |
| |||
|
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|
|
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Kirk L. Perry |
|
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Sandra Pianalto |
|
| ||
|
|
| ||
Alex Shumate |
|
| ||
Timothy P. Smucker | | |||
Jodi L. Taylor |
| |||
Dawn C. Willoughby | |
The J. M. Smucker Company |
| 2022 Proxy Statement | 29 |
BOARD AND COMMITTEE MEETINGS
(3) | The amounts set forth in this column reflect the aggregate grant date fair value, as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”), for stock awards granted to thenon-employee Directors in the fiscal year ended April 30, |
BOARD AND COMMITTEE MEETINGS
(4) | No stock options were awarded tonon-employee Directors in fiscal year |
(5) | The amounts set forth in this column for |
(6) | Non-employee Directors occasionally receive perquisites provided by or paid by us. During fiscal year |
(7) | After many years of distinguished service, |
(8) | After many years of distinguished service, Timothy P. Smucker will be retiring from the Board on August |
Stock Ownership Requirements
The Board has established a minimum share ownership requirement fornon-employee Directors equal in value to five times the annual cash retainer paid to eachnon-employee Director. The Board policy also provides that eachnon-employee Director should attain this ownership threshold within five years of joining the Board. Allnon-employee Directors have met or exceeded the ownership requirement, with the exception of Dawn C. Willoughby (whoJonathan E. Johnson III, who was elected to the Board in February 2022, and Susan E. Chapman-Hughes and Jodi L. Taylor, both of whom were elected to the Board in August 2017 and has until August 2022 to meet the ownership threshold).2020.
Executive Sessions and Lead Independent Director
On a regular basis, the independent Directors hold meetings in executive session without the presence of management. In fiscal year 2019,2022, the Board held four regularly scheduled executive sessions, as well as two executive session following special meetings, in which only the independent Directors were present. As provided in the Guidelines, (prior to their amendment effective April 17, 2019), these meetings were chaired by Alex Shumate, the Chair of the Nominating Committee.Lead Independent Director.
Commencing in fiscal year 2020, meetings of the independent Directors will beare chaired by the Lead Independent Director, who will beis selected by the Chair of one of the Committees on a rotating term of two years, commencingindependent Directors with input from the Chair of the Nominating Committee, followed byBoard and the Chair of the Compensation Committee, and then the Chair of the Audit Committee.Chief Executive Officer. The Lead Independent Director will coordinateserves at the pleasure of the Board for a term of five years or such other term as the Board may decide or until he or she is no longer a Director. The Lead Independent Director coordinates the activities of the other independent Directors and performperforms such other duties and responsibilities as the Board may determine, including the following:
Preside at all meetings of the Board at which the |
Serve as a liaison between the |
30 | The J. M. Smucker Company | 2022 Proxy Statement |
BOARD AND COMMITTEE MEETINGS
Call executive sessions or meetings of the independent |
Provide input regarding meeting materials sent to the Board, including the quality, quantity, appropriateness, and timeliness of such information; |
Provide input regarding meeting agendas and schedules for the Board meetings; and |
Serve as an advisor to the Committee chairs in fulfilling their designated roles and responsibilities to the Board. |
The J. M. Smucker Company | 2022 Proxy Statement | 31 |
BOARD AND COMMITTEE MEETINGS
Nominating, Governance, and Corporate Responsibility Committee
Meetings in fiscal year
Current Committee
Alex Shumate (Chair)
Jodi L. Taylor Dawn C. Willoughby * If Dawn C. Willoughby is re-elected to the Board, the Board intends to appoint her as the Chair of the Nominating Committee immediately upon such re-election. In addition, Jonathan E. Johnson III will be removed from the Nominating Committee and appointed to the Compensation Committee; Kirk L. Perry will be removed from the Compensation Committee and appointed to the Nominating Committee; and Jodi L. Taylor will be removed from the Nominating Committee. |
Primary Responsibilities
Reviewing shareholder proposals relating to corporate governance and other matters and recommending responses to the Board Developing and implementing an annual self-evaluation process of the
Reviewing annually, or more frequently if necessary, succession planning
Making recommendations to the Board regarding Director orientation and continuing training and reviewing annually a report on the educational programs attended and reported by each Director
Performing other functions or duties deemed appropriate by the Board
|
32 | The J. M. Smucker Company | 2022 Proxy Statement |
BOARD AND COMMITTEE MEETINGS
Executive Compensation Committee
Meetings in fiscal year
Current Committee
Paul J. Dolan (Chair)
Kirk L. Perry
* |
Primary Responsibilities
Reviewing and approving the annual base salaries and incentive compensation opportunities of our executive officers Reviewing and approving any proposed employment, consulting, change-in-control, or other agreement, or any proposed benefit, severance, or retention plan with our executive officers Approving and administering the terms and policies of our
Overseeing regulatory compliance with respect to compensation matters
Overseeing shareholder votes on executive compensation, including the frequency of such votes, and assessing the results of shareholder advisory votes on executive compensation
|
The J. M. Smucker Company | 2022 Proxy Statement | 33 |
BOARD AND COMMITTEE MEETINGS
Additional information about the Compensation Committee and related topics is provided in the “Compensation Discussion and Analysis” section of this proxy statement.
Report
The Compensation Committee Report is set forth on page
|
The J. M. Smucker Company | 2022 Proxy Statement |
BOARD AND COMMITTEE MEETINGS
Audit Committee
Meetings in fiscal year
(includes
Current Committee Members:
Jay L. Henderson (Chair)
* If Jodi L. Taylor is re-elected to the Board, the Board intends to appoint her as the Chair of the Audit Committee immediately upon such re-election. |
Primary Responsibilities
Overseeing the Internal Audit function, including approving the appointment and annual compensation of the lead internal auditor, reviewing summaries and reports from Internal Audit, and approving the annual Internal Audit plan
Reviewing and approving the independent auditors of our pension plans and reviewing the pension plans’ audit results
|
The J. M. Smucker Company | 2022 Proxy Statement | 35 |
BOARD AND COMMITTEE MEETINGS
Financial Literacy and Independence
The Audit Committee reviewed the financial literacy of each of its members, as required by the listing standards of the NYSE, and determined that each of its members meets the criteria established by the NYSE. The Audit Committee also reviewed the definition of an “audit committee financial expert” as set forth in RegulationS-K and determined that all members,
Report
The Report of the Audit Committee
|
36 | The J. M. Smucker Company | 2022 Proxy Statement |
The Audit Committee Members
The Audit Committee is composed of three independent Directors, each of whom satisfies the independence requirement of Rule10A-3 under the Securities Exchange Act of 1934, as amended. The Board has determined that all of our Audit Committee members, Mr. Henderson, Ms. Dindo,Pianalto, and Ms. Pianalto,Taylor, satisfy the financial expertise requirements of the NYSE and have the requisite experience to be designated an “audit committee financial expert” as that term is defined by the rules of the SEC.
Roles and Responsibilities
The Audit Committee operates under a written charter adopted by the Audit Committee and approved by the Board. The charter was most recently amended in April 2019.January 2022. The Audit Committee oversees our financial reporting process on behalf of the Board and serves as the primary communication link between the Board as the representative of our shareholders, the Independent Auditors Ernst(Ernst & Young LLP,LLP), and our internal auditors. Our management is responsible for the preparation, presentation, and integrity of our financial statements and for maintaining appropriate accounting and financial reporting policies and practices, and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The Independent Auditors are responsible for auditing our consolidated financial statements and expressing an opinion as to their conformity with generally accepted accounting principles and on the effectiveness of the Company’s internal controls over financial reporting in accordance with the requirements of the Public Company Accounting Oversight Board (the “PCAOB”).
Required Disclosures and Discussions
In fulfilling its responsibilities during the fiscal year, the Audit Committee reviewed and discussed with management and the Independent Auditors the financial statements and related financial statement disclosures included in our Quarterly Reports onForm 10-Q and the audited financial statements and related financial statement disclosures included in our Annual Report on Form10-K for the fiscal year ended April 30, 2019.2022. The Audit Committee also reviewed with the Independent Auditors their judgments as to the Company’s internal controls over financial reporting and the quality and acceptability of our accounting policies, management judgments, and accounting estimates. The Audit Committee’s review with the Independent Auditors included a discussion of other matters required to be discussed under Auditing Standards promulgated by the PCAOB. The Independent Auditors have provided the Audit Committee with the written disclosures required by the PCAOB standards regarding communications with the Audit Committee concerning independence and has discussed those disclosures with the Independent Auditors. The Audit Committee also considered the compatibility ofnon-audit services with the Independent Auditors’ independence andpre-approved allnon-audit services to be provided by the Independent Auditors in accordance with the Audit Committee’s policies and procedures and applicable laws and regulations.
Committee Recommendation to Include Financial Statements in Annual Report
The Audit Committee discussed with our internal auditors and Independent Auditors the overall scope and plans for their respective audits. The Audit Committee met with the internal auditors and Independent Auditors, with and without management present, to discuss the results of the auditors’ examinations, their evaluations of our internal controls, including a review of the disclosure control process, and the overall quality of our financial reporting. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report onForm 10-K for the fiscal year ended April 30, 2019.2022.
AUDIT COMMITTEE
Jay L. Henderson, Chair
Kathryn W. Dindo
Sandra Pianalto
Jodi L. Taylor
The J. M. Smucker Company | 2022 Proxy Statement | 37 |
SERVICE FEES PAID TO THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The following table summarizes the aggregate fees, including out of pocket expenses, paid to the Independent Auditors for the fiscal years ended April 30, 20192022 and April 30, 2018:2021:
2019 Fees (in thousands) | 2018 Fees (in thousands) | Description | ||||||||||||||||||||||
2022 Fees (in thousands) | 2021 Fees (in thousands) | Description | ||||||||||||||||||||||
Audit Fees | $ | 4,277 | $ | 3,676 | Audit fees primarily relate to (i) the audit of our consolidated financial statements as of and for the fiscal years ended April 30, 2019 and April 30, 2018; (ii) statutory audits of certain international subsidiaries; (iii) the audit of the effectiveness of internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002; and (iv) the reviews of our unaudited condensed consolidated interim financial statements as of July 31, October 31, and January 31 for fiscal years 2019 and 2018. The increase in audit fees in fiscal year 2019 is primarily due to the work required related to acquisitions. These procedures did not occur in fiscal year 2018.
| $ | 3,882 | $ | 3,680 | Audit fees primarily relate to (i) the audit of our consolidated financial statements as of and for the fiscal years ended April 30, 2022 and April 30, 2021; (ii) statutory audits of certain international subsidiaries; (iii) the audit of the effectiveness of internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002; (iv) the reviews of our unaudited condensed consolidated interim financial statements as of July 31, October 31, and January 31 for fiscal years 2022 and 2021.
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Audit-Related Fees | $ | 175 | $ | 193 | Fees for services that are related to the performance of the audit or review of financial statements and are not included in “Audit Fees,” including financial reporting advisory services, acquisition-related due diligence, audits of certain employee benefit plans, subscription toon-line research services, and other attest services.
| $ | 251 | $ | 407 | Fees for services that are related to the performance of the audit or review of financial statements and are not included in “Audit Fees,” including financial reporting advisory services, acquisition-related due diligence, audits of financial statements of divested businesses, audits of certain employee benefit plans, subscription to on-line research services, and other attest services. The decrease in audit-related fees in fiscal year 2022 was primarily attributable to the audit of the divested Crisco business in 2021, of which $225,000 was reimbursed to the Company by the buyer.
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Tax Fees | $ | 2,121 | $ | 1,110 | Tax fees are primarily for tax work in connection with strategic transactions and for tax compliance, preparation, and planning services. The increase in tax fees in fiscal year 2019 is primarily due to an increased amount of tax work for domestic tax advisory and acquisition related services during such fiscal year.
| $ | 2,090 | $ | 1,595 | Tax fees are primarily for tax work in connection with strategic transactions and for tax compliance, preparation, and planning services. The increase in tax fees in fiscal year 2022 was primarily due to an increased amount of tax work for acquisition and divestiture-related services during such fiscal year.
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All Other Fees | $ | 0 | $ | 423 | Fees for services that are not included in the above categories. The fees for fiscal year 2018 were primarily for strategic transactions.
| $ | 0 | $ | 33 | Fees for services that are not included in the above categories. The “all other fees” in fiscal year 2021 relate to an internal audit assessment.
| ||||||||||||||
TOTAL
|
$
|
6,573
|
|
$
|
5,402
|
|
$
|
6,223
|
|
$
|
5,715
|
|
AUDIT COMMITTEEPRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee charter, as well as the policies and procedures adopted by the Audit Committee, require that all audit and permittednon-audit services provided by the Independent Auditors bepre-approved by the Audit Committee. These services may include audit services, audit-related services, tax services and, in limited circumstances, other services. In determining whether topre-approve any such services, the Audit Committee considers whether such services are consistent with the SEC’s and PCAOB’s rules on auditor independence and whether the provision of such services by an independent auditor would impair the independent auditor’s independence. The Audit Committee’spre-approval identifies with particularity the type of service to be provided and the fixed amount or range of estimated fees. Such service descriptions contain sufficient detail so that management is not required to exercise discretion in interpreting the scope of thepre-approved service.
Should it be necessary to engage the Independent Auditors for additional services between scheduled Audit Committee meetings, the Chair of the Audit Committee has been delegated the authority to approve such permitted services up to $250,000 for a specific engagement. The Chair of the Audit Committee then reports suchpre-approval at the next Audit Committee meeting. The approval policies and procedures of the Audit Committee do not include delegation of the Audit Committee’s responsibility to our management.
All of the services described above werepre-approved by the Audit Committee, or the Chair of the Audit Committee, before the Independent Auditors were engaged to render the services and in accordance with the approval policies and procedures adopted by the Audit Committee.
38 | The J. M. Smucker Company | 2022 Proxy Statement |
INDEPENDENT AUDITOR REVIEW AND APPOINTMENT PROCESS
The Audit Committee has the primary responsibility for the appointment, compensation, and oversight of the Independent Auditors and the approval and ratification of the lead audit partner selected by the Independent Auditors. The Audit Committee evaluates the performance of the Independent Auditors, including the senior audit engagement team members, each year and determines whether tore-engage the current Independent Auditors or consider other audit firms. The Audit Committee has implemented a formal written evaluation process to evaluate the performance of the current Independent Auditors. The evaluation includes, among other things:
A review of the audit planning process, the overall audit scope and plans, and the results of internal and external audit examinations; |
The experience, knowledge, capabilities, technical expertise, and skills of the firm, engagement partner, and audit team and the quality and efficiency of the audit services provided; |
The communications, interaction, and accessibility of the engagement partner and audit team with the Audit Committee and the Chair of the Audit Committee; |
The independence, objectivity, integrity, and professional skepticism of the firm, engagement partner, and audit team; |
The development and management of the audit budget and audit fees paid; and |
Other questions related to the independence of the Independent Auditors and the ability of the Independent Auditors to remain independent. |
Based on these evaluations, the Audit Committee decided that it was in the best interest of the Company and its shareholders to engage Ernst & Young LLP as our Independent Auditors for fiscal year 2020.2023. Although the Audit Committee has the sole authority to appoint the Independent Auditors, the Audit Committee has continued its long-standing practice of recommending that the Board ask our shareholders to ratify the appointment of the Independent Auditors at our annual meeting of shareholders.
BENEFITS OF A LONG-TENURED AUDITOR
The Audit Committee considered the tenure of the Independent Auditor and determined that a number of benefits of a long-tenured auditor exist, including:
Through more than 60 years of experience with the Company, the Independent Auditors have gained a deep understanding of the Company and its businesses, the industry in which it operates, accounting policies and practices, internal controls over financial reporting, and risks; |
Efficiencies have been gained in the audit process, resulting in an efficient fee structure that is competitive with our peer companies; and |
Appointing a new auditor would require a significant amount of management’s time for onboarding activities. |
COMMUNICATIONS WITH THE AUDIT COMMITTEE
The Code of Conduct has established procedures for receiving confidential, anonymous complaints by employees and from third parties regarding accounting, internal accounting controls, or auditing matters. The SeniorChief Legal and Compliance Officer and Vice President, General Counsel and Secretary and Director, Internal Audit advise the Audit Committee regarding any reports or investigations related to accounting, internal accounting controls, or auditing matters. The Chair of the Audit Committee receives an automatic notification if a significant financial issue is reported. The Code of Conduct is posted on our website atwww.jmsmucker.com and is available free of charge to any shareholder submitting a written request to the Corporate Secretary, The J. M. Smucker Company, One Strawberry Lane, Orrville, Ohio 44667.
The J. M. Smucker Company | 2022 Proxy Statement | 39 |
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Proposal 2 on the proxy card)
The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent external audit firm retained to audit our financial statements. The Audit Committee has appointed Ernst & Young LLP as our independent external auditor for the fiscal year ending April 30, 2020.2023. Ernst & Young LLP has served as our independent external auditor continuously since fiscal year 1955. The Audit Committee is responsible for the audit fee negotiations associated with the retention of Ernst & Young LLP. In order to ensure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent external audit firm. The members of the Audit Committee and the Board believe that the continued retention of Ernst & Young LLP to serve as our independent external auditor is in the best interests of our shareholders. The Audit Committee has requested that our shareholders ratify this decision.
A representative of Ernst & Young LLP will be present at the annual meeting with an opportunity to make a statement, if so desired, and to respond to appropriate questions with respect to that firm’s examination of our financial statements for the fiscal year ended April 30, 2019.2022.
Although shareholder ratification is not required under the laws of the State of Ohio, we are submitting the appointment of Ernst & Young LLP to our shareholders for ratification at the annual meeting as a matter of good corporate practice and in order to provide a means by which shareholders may communicate their opinion to the Audit Committee. If our shareholders fail to vote on an advisory basis in favor of the selection, the Audit Committee will reconsider whether to retain Ernst & Young LLP and may retain that firm or another firm withoutre-submitting the matter to our shareholders. Even if our shareholders ratify the appointment, the Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in ourthe best interests andof the interests ofCompany and our shareholders.
The affirmative vote of the holders of a majority of the votes cast on this proposal, based upon one vote for each common share owned as of the record date, is necessary to ratify the appointment of Ernst & Young LLP as our Independent Registered Public Accounting Firm. Abstentions, brokernon-votes, and shares not in attendance and not voted at the annual meeting will have no effect on the vote for this proposal. Unless otherwise directed, common shares represented by proxy will be voted “FOR” the approval of this proposal.
The Board unanimously recommends a vote FOR ratification of the appointment of Ernst & Young LLP as our Independent Registered Public Accounting Firm.
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40 | The J. M. Smucker Company | 2022 Proxy Statement |
ADVISORY VOTE ON EXECUTIVE COMPENSATION(“SAY-ON-PAY”)
(Proposal 3 on the proxy card)
The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010, (the “Dodd-Frank Act”), requires that we provide our shareholders with the opportunity to vote to approve, on anon-binding, advisory basis, the compensation of our Chief Executive Officer, Chief Financial Officer, and three other most highly compensated executive officers (collectively, the “Named Executive Officers”) as disclosed in this proxy statement in accordance with the compensation disclosure rules of the SEC under Section 14A of the Securities Exchange Act of 1934, as amended. In 2017, our shareholders voted to conduct this advisory vote on an annual basis until at least 2023.
As described in detail under the heading “Compensation Discussion and Analysis,” we seek to closely align the interests of the Named Executive Officers with the interests of our shareholders. Our compensation programs are designed to reward the Named Executive Officers for the achievement of short-term and long-term strategic and operational goals and the creation of long-term shareholder value, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking.
The vote on this resolution is not intended to address any specific element of compensation; rather, the vote relates to the compensation of the Named Executive Officers, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC. The vote is advisory, which means that the vote is not binding on us, the Board, or the Compensation Committee. To the extent there is any significant vote against the Named Executive Officers’ compensation as disclosed in this proxy statement, the Board and the Compensation Committee will evaluate what actions, if any, may be necessary to address the concerns of our shareholders.
At our 20182021 annual meeting, our executive compensation program received approval from approximately 95%92% of the votes cast on such proposal.cast. We believe that this result demonstrates our shareholders’ endorsement of the Compensation Committee’s executive compensation decisions and policies. Nonetheless, we have continued to make improvements to our short-term and long-term incentive awards programs, as set forth in more detail below in the “Compensation Discussion and Analysis” section of this proxy statement.
The affirmative vote of the holders of a majority of the votes cast on this proposal, based upon one vote for each common share owned as of the record date, is necessary to approve, on an advisory basis, our executive compensation. Abstentions, brokernon-votes, and shares not in attendance and not voted at the annual meeting will have no effect on the vote for this proposal. Unless otherwise directed, common shares represented by proxy will be voted “FOR” the approval of this proposal. Under our Amendedthe Articles, of Incorporation (the “Articles”), shareholders are entitled to cast ten votes per share on any matter relating to any stock option plan, stock purchase plan, executive compensation plan, executive benefit plan, or other similar plan, arrangement, or agreement. Because the vote on this proposal is anon-binding, advisory vote, we have determined that suchten-votes-per-share provisions will not apply to this proposal. Accordingly, we ask our shareholders to vote on the following resolution at our annual meeting:
“RESOLVED, that our shareholders approve, on an advisory basis, the compensation of our Named Executive Officers, as disclosed in our proxy statement for the 20192022 Annual Meeting of Shareholders pursuant to Item 402 of RegulationS-K, including the Compensation Discussion and Analysis, the 20192022 Summary Compensation Table, and the other related tables and disclosures.”
KEY COMPENSATION PRACTICES
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✓ Performance-based pay makes up
✓ Varied metrics for short-term and long-term incentive awards
✓
✓ Compensation practices do not encourage excessive risk taking
✓ Compensation consultant only provides services to Compensation Committee
✓ Use of tally sheets to approve Named Executive Officers’ compensation
✓ No taxgross-ups policy
✓ Clawback policy
✓ No hedging and no pledging policies
✓
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The Board unanimously recommends a vote FOR the approval of the compensation of our Named Executive Officers, as disclosed in this proxy statement.
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The J. M. Smucker Company | 2022 Proxy Statement | 41 |
Compensation Discussion and Analysis
The Compensation Committee regularly reviews our compensation philosophy and objectives. The Compensation Committee is also responsible for reviewing and approving compensation for our executive officers on an annual basis. A description of the Compensation Committee’s responsibilities is set forth in detail in its charter, which is posted on our website atwww.jmsmucker.com. Our Named Executive Officers for fiscal year 2022 are listed below:
Named Executive Officer | Title | |
Mark T. Smucker | President and Chief Executive Officer | |
Tucker H. Marshall | Chief Financial Officer | |
John P. Brase | Chief Operating Officer | |
Jeannette L. Knudsen | Chief Legal and Compliance Officer and Secretary | |
Richard K. Smucker | Executive Chairman |
Set forth below is a detailed discussion of our compensation program for our executive officers organized as follows:
Page | ||||
COMPENSATION DISCUSSION AND ANALYSIS | ||||
Components of Our Compensation Program for Executive Officers | ||||
What Our Short-Term Incentive Compensation Program is Designed to Reward and How it Works | ||||
Description of Compensation Policies and Agreements with Executive Officers | ||||
We manage our business with the long-term objective of providing value to all of our constituents — namely, consumers, customers, employees, suppliers, communities in which we have a presence, and shareholders. Our compensation philosophy is that compensation for all employees, including our executive officers, should be:
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We have designed our compensation programs to reflect each of these characteristics. The performance-based incentives (comprised of corporate performance, and in some cases, individual performance, and strategic business area performance)performance, and progress on ESG objectives) seek to reward both short-term and long-term results and to align the interests of our executive officers and other participants with the interests of our shareholders. Our executive officers receive a compensation package that primarily consists of an annual base salary, short-term incentive awards, and long-term incentive awards.
42 | The J. M. Smucker Company | 2022 Proxy Statement |
EXECUTIVE COMPENSATION
Beginning in fiscal year 2022, all executive officers, including the Named Executive Officers, had annual cash incentive awards based on the achievement of our annual performance targets for adjusted operating income and net sales, as well as ESG objectives, in replacement of the prior performance target based solely on adjusted operating income with a net sales modifier that was introduced in fiscal year 2021. Such awards for executive officers in fiscal year 2022 were based 70% on the achievement of the adjusted operating income target, 20% on the achievement of the net sales target, and 10% based on the achievement of the ESG objectives, which were focused on our inclusion, diversity, and equity efforts. Net sales was added as an absolute metric into our short-term incentive compensation program for all participants to incentivize top-line performance, a critical driver of growth for our business, and the net sales threshold was established at 98% of the target with a maximum payout if performance meets or exceeds 103% of the target.
The Compensation Committee generally sets performance targets for participants, including executive officers, in June of each year for the fiscal year commencing the prior May 1st. The targets for the short-term incentive compensation program for fiscal year 2022 were modified to exclude the operating income and net sales targets of the divested natural beverage and grains and private label dry pet food businesses for the months that we did not own such businesses during fiscal year 2022. We believe that the performance targets established by the Compensation Committee based onfor both our short-term and long-term incentive awards for fiscal year 2022, including adjusted operating income, net sales, adjusted earnings per share, free cash flow,return on invested capital, and, in some cases, strategic business area performance, requirerequired participants, including executive officers, to perform at a high level. During the five-year period from fiscal year 2015 through fiscal year 2019, our annual compounded growth rate in adjusted earnings per share (excluding the impacts described on the following page) was approximately 6%, with a total shareholder return of approximately 8%. In addition, we increased our dividend rate payable to shareholders every year during this period.
EXECUTIVE COMPENSATION
In addition, beginning with awards made in June 2019 for fiscal year 2020, the Compensation Committee has approved significant changes to our long-term incentive compensation program in order to strengthen the alignment of our management incentives with our long-term business objectives, to better align the interests of management with the interests of our shareholders, and to increase the market competitiveness of our long-term plan design, as set forth below under the heading “Changes to Long-Term Incentive Compensation Program.”
Fiscal Year 20192022 Financial Performance
The chart below summarizes our key financial results for fiscal year 20192022 compared to fiscal year 2018.2021. Our fiscal year 2022 performance was delivered amid continued business challenges, including the COVID-19 pandemic, cost inflation, and supply chain disruptions, and also reflects the financial impact of businesses divested in fiscal years 2022 and 2021. The strong results we achieved this year were thanks to the hard work of our dedicated employees, the strength of our strategy, and the continued momentum of our brands. The successful balance in operating efficiently while investing in the growth of our brands allowed us to realize financial results meeting or exceeding expectations.
Dollars in millions, except per share data | Fiscal 2019 | Fiscal 2018 | Change (%) | Fiscal 2022 | Fiscal 2021 | Change (%) | ||||||||||||||||||
Net Sales | $ | 7,838.0 |
| $ | 7,357.1 |
|
| 7 | % | |||||||||||||||
Net Sales* | $ | 7,998.9 |
| $ | 8,002.7 |
|
| 0% |
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Adjusted Operating Income* | $ | 1,492.3 |
| $ | 1,439.7 |
|
| 4 | % | $ | 1,440.1 |
| $ | 1,528.8 |
|
| (6)% |
| ||||||
Adjusted Earnings Per Share (as modified)* | $ | 8.29 |
| $ | 7.76 |
|
| 7 | % | |||||||||||||||
Adjusted Earnings Per Share* | $ | 8.88 |
| $ | 9.12 |
|
| (3)% |
| |||||||||||||||
Free Cash Flow* | $ | 781.4 |
| $ | 896.1 |
|
| -13 | % | $ | 718.8 |
| $ | 1,258.3 |
|
| (43)% |
| ||||||
Fiscal Year End Stock Price | $ | 122.63 |
| $ | 114.08 |
|
| 7 | % | $ | 136.93 |
| $ | 130.99 |
|
| 5% |
|
* | Adjusted operating income and adjusted earnings per share exclude certain items affecting comparability that can significantly affect the year-over-year assessment of operating results, which include amortization expense and impairment charges related to intangible |
The J. M. Smucker Company | 2022 Proxy Statement | 43 |
EXECUTIVE COMPENSATION
Generally, adjusted operating income and adjusted earnings per share and free cash flow are calculated as defined for incentive compensation purposes, but, as permitted by the plan, may be modified to exclude other items as determined by the Compensation Committee to adjust for any undue benefit or unintended detriment as a result of significant unplannedone-time items. Fiscal year 20192022 and 2021 financial results have not been modified; however, in fiscal year 2018, adjusted earnings per share was modified, to partially exclude the unplanned earnings benefit resulting from the lower effective tax rate associated with U.S. tax reform legislation. For fiscal year 2018,but the Compensation Committee useddid modify the target corporate adjusted earnings per share (as modified) amountoperating income and net sales goals for fiscal year 2022 to evaluate our performance in relation to ourexclude the operating income and net sales targets of the divested natural beverage and grains and private label dry pet food businesses for the months that we did not own such businesses during fiscal year 2022. The Compensation Committee also modified the target corporate adjusted earnings per shareoperating income goal for fiscal year 2021 to exclude the operating income targets of the divested Crisco and Natural Balance businesses for the months that we did not own such businesses during fiscal year.year 2021.
For a reconciliation of adjusted operating income, adjusted earnings per share, (as modified), and free cash flow for fiscal years 20192022 and 2018,2021, seeAppendix A. For a description ofadditional information on how we calculate adjusted operating income, adjusted earnings per share, and free cash flow see Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form10-K, which can be found on our website atwww.jmsmucker.com/investor-relationsinvestors.jmsmucker.com.
EXECUTIVE COMPENSATION
Our fiscal year 20192022 performance was one of the key factors in the compensation decisions for the fiscal year, as more specifically discussed below.
Elements of Executive Officers’ Compensation for Fiscal Year 20192022
Target Pay Mix Summary
Target Pay Mix-CEO | Target Pay Mix-NEOs | |
Annual Base Salary
Salary ranges are determined in the same manner for each of our salaried employees, including each executive officer. The base salaries paid to all employees, including each executive officer, are intended to fall within an established range based on market practice. Actual pay within the range reflects the experience of the executive officer, his or her performance, and the scope of his or her responsibility.
Short-Term Incentive Awards for Fiscal Year 20192022 (Cash-Based)
Our short-term, performance-based incentive compensation program is cash-based and is designed to reward key employees, including executive officers, for their contributions to the Company based on clear, measurable criteria. The Compensation Committee evaluates the following criteria and information when approving the short-term incentive awards for executive officers:
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44 | The J. M. Smucker Company | 2022 Proxy Statement |
EXECUTIVE COMPENSATION
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The Compensation Committee reviews attainment of relevant profit goals for these areas each year. Short-termAll executive officers, including the Named Executive Officers, had their annual cash incentive awards for fiscal year 2022 based on the achievement of our annual performance targets for adjusted operating income and net sales, as well as ESG objectives. Such awards for executive officers were based 70% on the achievement of the adjusted operating income target, 20% on the achievement of the net sales target, and 10% based on the achievement of the ESG objectives, which were focused on our inclusion, diversity, and equity efforts.
The adjusted operating income portion of the short-term incentive awards can range from 0% of the target award amount if we fail to achieve at least 80% of our adjusted operating income goal, to a maximum of 200% of the target award amount if we achieve or exceed 110% of our adjusted operating income goal. Executive officers’ targetThe net sales portion of the short-term incentive awards can range from 40%0% of the target award amount if we fail to 125%achieve at least 98% of base salary dependingour net sales goal, to a maximum of 200% of the target award amount if we achieve or exceed 103% of our net sales goal. Finally, the ESG portion of the short-term incentive awards will be paid out at 0% or 100%, as determined by the Compensation Committee, based on the responsibilitiesCompany’s achievement of its qualitative ESG objectives, which included the following for fiscal year 2022: (i) launching the Company’s inclusion, diversity, and experienceequity organization model; (ii) fostering an inclusive and equitable workplace; (iii) increasing People of Color at every level and women in leadership; and (iv) sharing our efforts with our external communities and customers.
The short-term incentive targets for the executive officer. Named Executive Officers for fiscal years 2021 and 2022 are set forth in the following table:
Short-Term Incentive Targets
Specifically, with respect to fiscal year 2019,2022, the Compensation Committee approved the target corporate adjusted operating income goal of $1,511$1,468.4 million and we achievedthe target corporate net sales goal of $7,844.3 million in June 2021. The decrease in the target goals from prior year actual results reflected continued uncertainty and expected impact resulting from the COVID-19 pandemic, as well as the impact of the divestitures of the Crisco and Natural Balance businesses. Following our divestitures of the natural beverage and grains and private label dry pet food businesses, the Compensation Committee modified the target corporate adjusted operating income of $1,492goal to $1,466.6 million representing 99%and the target corporate net sales goal to $7,774.8 million to exclude the operating income and net sales targets of the target amount. As a result of exceedingdivested businesses for the adjusted operating income threshold but not achieving the target, the corporate performance portion of the awards paid at 95% of the target for all participants.
Short-Term Award Snapshot (Cash-Based)
The J. M. Smucker Company | 2022 Proxy Statement |
EXECUTIVE COMPENSATION
months that we did not own such businesses during fiscal year 2022, as permitted by our plan. We achieved adjusted operating income of $1,440.1 million, representing 98% of the target amount, and net sales of $7,998.9 million, representing 103% of the target amount. Finally, with respect to the ESG portion of the short-term incentive awards, the table below sets forth our accomplishments with respect to each ESG objective noted above for fiscal year 2022. In light of these achievements, the Compensation Committee determined that the executive officers satisfied the qualitative ESG objectives, and, therefore, that portion of the award paid out at 100% of the target amount.
ESG Objectives | FY22 Accomplishments | |
Launch New Inclusion, Diversity, and Equity Organization Model | • We created a diverse team comprised of four new roles focused on inclusion, diversity, and equity. • Through this team, we established a holistic organization model by identifying leaders from across the Company to engage on issues of inclusion, diversity, and equity. | |
Foster an Inclusive and Equitable Workplace | • Introduced Advocate Alliance and Employee Resource Groups to promote understanding, community, and allyship. • Continued to raise awareness of our inclusion, diversity, and equity efforts through our monthly Reasons to Celebrate and Conversations that Elevate programs. • Enhanced our benefits programs by adding new features to support members of our LGBTQ+ community and enhanced surrogacy and fertility benefits. | |
Increase People of Color at Every Level and Women in Leadership | • Updated our Nominating Committee Charter to include more robust diversity criteria to be considered when selecting Director candidates. • Invested in enhancing our diversity recruiting practices to ensure objectivity and support more inclusive processes across the hiring experience. • Established many new and expanded sourcing partnerships and sponsorship of diversity focused recruiting events. | |
Share Our Efforts With Our External Communities and Customers | • Included more diverse selection considerations across many external partnerships, including selection of talent in our advertising campaigns, supplier diversity, scholarship recipients, and charitable giving beneficiaries. • Distributed an Equal Employment Opportunities Report to provide greater transparency on the diversity of our current workforce. |
46 | The J. M. Smucker Company | 2022 Proxy Statement |
EXECUTIVE COMPENSATION
As a result of falling short of the adjusted operating income target, exceeding the net sales target, and achieving the ESG objectives, the corporate performance portion of the awards paid at 113% of the target for the executive officers.
Short-Term Award Snapshot (Cash-Based)
| Weight | Threshold (25%) | Target (100%) | Maximum (200%) | Actual Short-Term Incentive (113%) | |||||||||||||||||||||||||||||||
$ | % of Plan | $ | % of Plan | $ | % of Plan | $ | % of Plan | |||||||||||||||||||||||||||||
Adjusted Operating income | 70% | $1,173.3 | 80% | $1,466.6 | 100% | $1,613.3 | 110% | $1,440.1 | 98% | |||||||||||||||||||||||||||
Net Sales | 20% | $7,619.3 | 98% | $7,774.8 | 100% | $8,008.0 | 103% | $7,998.9 | 103% | |||||||||||||||||||||||||||
ESG1 | 10% |
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1 | The ESG portion of the short-term incentive awards for executive officers is paid our at 0% or 100%. The Compensation Committee determined that the executive officers satisfied the qualitative ESG objectives and the award paid out at 100% of the target amount. |
Long-Term Incentive Awards for Fiscal Year 20192022 (Stock-Based)
Our long-term, performance-based compensation is stock-based and is designed to align the interests of management with the interests of our shareholders. ActualParticipants receive two separate long-term incentive awardsawards. The first award consists of performance units that will generally vest at the end of three years and are based 75% on the achievement of our annualthree-year performance target for adjusted earnings per share and 25% on the achievement of our annualthree-year performance target for free cash flow compared to plan,return on invested capital, as established by the Compensation Committee at the previous June. beginning of the three-year period. The second award consists of stock options for executive officers (which further align our executive officers with shareholders by creating value through share price appreciation) and restricted stock for all other non-executive officer participants (or restricted stock units for certain non-executive officer participants who reside outside of the United States in order to comply with local laws and to provide favorable tax treatment to foreign recipients) that are not performance based and will generally ratably vest in equal tranches over a three-year period. Executive officers receive 75% of their long-term incentive award in performance units and 25% in stock options.
The J. M. Smucker Company | 2022 Proxy Statement | 47 |
EXECUTIVE COMPENSATION
The long-term incentive targets for the Named Executive Officers for fiscal years 2021 and 2022 are set forth in the following table:
Long-Term Incentive Targets
Long-term incentive targets were increased for certain Named Executive Officers to ensure they are competitive with peers in similar roles and aligned with our long-term business objectives and the interests of our shareholders.
Awards can range from 0% of the restricted sharesperformance units target if we fail to achieve 80%90% of our adjusted earnings per share goal, to a maximum of 150%200% of the restricted sharesperformance units target award amount if we achieve or exceed 120%115% of our adjusted earnings per share and free cash flowreturn on invested capital goals.
Long-Term Award Snapshot (Stock Based)
48 | The J. M. Smucker Company | 2022 Proxy Statement |
EXECUTIVE COMPENSATION
Long-Term Incentive Awards — Three-Year Performance Period Ending Fiscal Year 2022
For the fiscal year 2020 performance units that were granted in June 2019 and to be settled in June 2022 based on the performance of the Company for the three fiscal year period commencing May 1, 2019 and ending April 30, 2022, the Compensation Committee approved the target corporate adjusted earnings per share goal of $8.50$9.60 and the target corporate free cash flowreturn on invested capital goal of $825 million. Our executive officers’ long-term incentive award targets for fiscal year 2019 range from 60% to 420% of base salary depending on the responsibilities and experience of the executive officer.6.75%. Specifically, with respect to the three fiscal year period commencing May 1, 2019 and ending April 30, 2022, we achieved 98%adjusted earnings per share of our$8.88, representing 93% of the target amount, and return on invested capital of 5.32%, representing 79% of the target amount. Since we achieved the threshold of the adjusted earnings per share goal and 95% of our free cash flow goal, resulting in long-term incentive awards of 93.13%(providing for a payout at 72.5% for the adjusted earnings per share portion of the target.performance units) but not the return on invested capital goal (providing no payout for the return on invested capital portion of the performance units), 54.4% of the performance units granted in June 2019 vested in June 2022.
Long-Term Award Snapshot (Stock-Based)Awards – Three-Year Performance Period Ending Fiscal Year 2022
Target Pay Mix Summary
The J. M. Smucker Company | 2022 Proxy Statement | 49 |
EXECUTIVE COMPENSATION
Significant Compensation Practices and Recent Modifications
Our compensation programs, practices, and policies are reviewed and reevaluated on an ongoing basis. We modify our compensation programs and practices to address evolving best practices and changing regulatory requirements. Listed below are some of our more significant practices and recent modifications.
Practices
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Recent Modifications
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Performance-Based Pay | As discussed above, we abide by a strong pay for performance philosophy. For fiscal year | |
No Tax Gross-Ups Policy | We have a Payment of TaxGross-Ups Policy that prohibits taxgross-up payments to our executive officers. | |
Significant Stock Ownership | The minimum stock ownership requirement for our Executive Chairman and Chief Executive Officer is a multiple of six times their annual base salaries. Our other executive officers must own stock with a value of at least two times their annual base salaries. All of the Named Executive Officers exceed the minimum stock ownership guidelines, thereby strongly aligning each Named Executive Officer’s long-term interests with our shareholders. | |
Clawback Policy | We have a Clawback of Incentive Compensation Policy that allows us to recoup incentive-based compensation from our current or former executive officers under certain circumstances. Pursuant to | |
Compensation Risk Assessment | With not likely to have a material adverse effect on the Company. | |
Independent Compensation
| Each member of the Compensation Committee is independent as defined in the corporate governance listing standards of the NYSE and our | |
Outside Compensation Consultant | The Compensation Committee utilizes the services of Semler Brossy, an independent compensation consultant, which performs services solely in support of the Compensation Committee. | |
No Hedging Policy | We have a “no hedging” policy that prohibits Directors, executive officers, and employees from engaging in hedging transactions in our common shares or from purchasing our common shares “on margin.” | |
No Pledging Policy | We have a “no pledging” policy that prohibits Directors, executive officers, and employees from pledging any common shares as collateral for a margin loan or otherwise. | |
Use of Tally Sheets | The Compensation Committee annually reviews a tally sheet for each Named Executive Officer to inform total compensation decisions. | |
Double Trigger Change in Control Provision in Long-Term Incentive Award Agreements | Beginning with long-term incentive awards made in June 2022 for fiscal year 2023, our incentive award agreements include a double-trigger change in control provision, pursuant to which such awards will immediately vest if we have a change in control and the participant’s employment is terminated or the participant resigns for good reason. | |
Incentive Award
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50 | The J. M. Smucker Company | 2022 Proxy Statement |
EXECUTIVE COMPENSATION
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20182021 Say-on-Pay Advisory Vote Outcome
At our 20182021 annual meeting, our executive compensation program received approval from approximately 95%92% of the votes cast on such proposal.cast. We believe that this result demonstrates our shareholders’ endorsement of the Compensation Committee’s executive compensation decisions and policies. This shareholder vote was one of many factors contributing to the Compensation Committee’s decision not to refrain from makingmake significant changes to our compensation mix, peer group, or target levels. Nonetheless, we have continued to make improvements to our short-term and long-term incentive awards programs, as set forth in this “Compensation Discussion and Analysis” section of this proxy statement. The Compensation Committee will continue to consider results from future shareholder advisory votes, which will continue to be held annually unless shareholders select a different frequency of future votes on executive compensation, in its ongoing evaluation of our executive compensation programs and practices.
Executive Officers’ Compensation for Fiscal Year 2023
For fiscal year 2022, all executive officers received 75% of their long-term incentive award in performance units and 25% in stock options. Beginning with awards made in June 2022 for fiscal year 2023 performance, all executive officers, including the Named Executive Officers, will receive 60% of their long-term incentive award in performance units, 20% in stock options, and 20% in restricted stock in order to ensure such awards are retentive and continue to drive long-term performance. In addition, beginning with long-term incentive awards made in June 2022 for fiscal year 2023, our incentive award agreements include a double-trigger change in control provision, pursuant to which such awards will immediately vest if we have a change in control and the participant’s employment is terminated or the participant resigns for good reason.
For fiscal year 2023, all executive officers will continue to have annual cash incentive awards based on the achievement of our annual performance targets for adjusted operating income and net sales, as well as ESG objectives. Such awards for executive officers will continue to be based 70% on the achievement of the adjusted operating income target, 20% on the achievement of the net sales target, and 10% based on the achievement of expanded ESG objectives, which will continue to be focused on our inclusion, diversity, and equity objectives. For future fiscal years, the Compensation Committee will continue to consider additional ESG objectives for both the short-term and long-term incentive compensation programs.
In addition, the Compensation Committee generally approves performance targets for participants in June of each year for the fiscal year commencing the prior May 1st. However, due to the economic uncertainty caused by the COVID-19 pandemic, cost inflation, and supply chain disruptions, including the recent Jif peanut butter product recall, the Compensation Committee decided to delay the approval of the performance targets for the short-term and long-term incentive compensation programs for fiscal year 2023 until July 2022. At such time, management has also recommended that the Compensation Committee approve basing 10% of the short-term incentive compensation for all employees at or above the Senior Director level on the achievement of our fiscal year 2023 ESG objectives focused on inclusion, diversity, and equity.
The J. M. Smucker Company | 2022 Proxy Statement | 51 |
EXECUTIVE COMPENSATION
Components of Our Compensation Program for Executive Officers
Our executive officers receive a compensation package which consists of the following components:
Components | Description | |
Cash | •
•
•
•
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Equity | •
• In order to promote the retention of elected officers and align the compensation of elected officers with our long-term success, the Compensation Committee awards newly elected officers 2,000 shares of restricted stock upon election. Such awards cliff vest five years from the grant date but would be accelerated in the event of a change in control or the death or permanent disability of the elected officer; and
•
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EXECUTIVE COMPENSATION
Health and Retirement Benefits | •
•
•
•
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Other Benefits | •
•
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52 | The J. M. Smucker Company | 2022 Proxy Statement |
EXECUTIVE COMPENSATION
Role of Our Outside Compensation Consultant
Pursuant to the Compensation Committee charter, the Compensation Committee has the sole authority to (i) engage compensation consultants to assist in the evaluation ofnon-employee Director and executive officer compensation, (ii) set the fees and other retention terms of such compensation consultants, and (iii) assess the independence of such compensation consultants. Such consultants report directly to the Compensation Committee and do not perform any services directly on behalf of our management team.
Before selecting a compensation consultant, the Compensation Committee takes into account all factors relevant to assessing such compensation consultant’s independence, including the following six factors:
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The Compensation Committee has retained, and has confirmed the independence of, Semler Brossy as an outside consultant to assist, as directed, in the fulfillment of various aspects of itsthe Compensation Committee’s charter. Semler Brossy reports directly to the Compensation Committee and participates in executive sessions with the Compensation Committee, without members of our management present. Our Executive Chairman, Chief Executive Officer, Senior Vice President, Human ResourcesChief People and Corporate Communications,Administrative Officer, and Senior Vice President, General CounselChief Legal and SecretaryCompliance Officer also attend thenon-executive session portions of the Compensation Committee meetings.
In accordance with its corporate governance model, the Compensation Committee makes all decisions concerning compensation and benefits for our executive officers, and the Compensation Committee relies on Semler Brossy for advice, data, and market information regarding executive officer and directorDirector compensation.
EXECUTIVE COMPENSATION
During fiscal year 2019,2022, Semler Brossy attended all Compensation Committee meetings either in person or by telephone,virtually and assisted the Compensation Committee with:
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The Compensation Committee authorized Semler Brossy staff members working on the Compensation Committee’s behalf to interact with our management, as needed, to obtain or confirm information for presentation to the Compensation Committee. Semler Brossy has never performed any additional services for the Company other than the types of services mentioned herein.
Determination of Compensation for Executive Officers
We believe that the compensation paid to our executive officers must be fair, equitable, and competitive enough to attract and retain qualified individuals. We also believe that there are certainnon-financial, intangible elements of the overall compensation program that provide a positive work environment and provide value for our employees.
The J. M. Smucker Company | 2022 Proxy Statement | 53 |
EXECUTIVE COMPENSATION
Compensation Market Assessment
In an effort to provide competitive, fair, and equitable compensation, target compensation opportunities for our executive officers are evaluated annually based on a compensation market assessment. To inform its decisions regarding establishing target compensation opportunities for our executive officers for fiscal years 20192022 and 2020,2023, the Compensation Committee used market data for hundreds of general industry companies that participated in two major executive compensation surveys.
The two survey databases used included the Willis Towers Watson 20172020 and 20182021 U.S. CDB General Industry Executive Database (the “Towers Survey”) and the AON HewittAON-Radford U.S. Total Compensation Measurement 20172020 and 20182021 Executive Survey (the “Hewitt“Aon Survey” and, together with the Towers Survey, the “Compensation Study”). The information for all companies reporting data for a specific job from the Compensation Study was used when the Compensation Committee reviewed compensation. This data was thensize-adjusted using regression analysis to reflect our annual revenues and, where appropriate, the size of a specific business area. The Compensation Study for fiscal year 2023 also included publicly available proxy data compiled by Semler Brossy for the following peer group:
Campbell Soup Company | Ingredion Incorporated | |
Church & Dwight Co., Inc. | Kellogg Company | |
The Clorox Company | Keurig Dr Pepper Inc. | |
Colgate-Palmolive Company | The Kraft Heinz Company | |
Conagra Brands, Inc. | McCormick & Company, Incorporated | |
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Flowers Foods, Inc. | Post Holdings, Inc. | |
General Mills, Inc. | Spectrum Brands Holdings, Inc. | |
The Hershey Company |
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Hormel Foods Corporation |
EXECUTIVE COMPENSATION
The peer group was selected by the Compensation Committee, with the assistance of Semler Brossy, using the following criteria:
U.S. companies in the same or similar line of business; |
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The Compensation Committee approved the addition of Treehouse Foods, Inc. to the peer group for the Compensation Study conducted during fiscal year 2019.
The Compensation Committee targets all compensation relative to a range around the 50th50th percentile (“Target Range”) of the competitive market data for the applicable fiscal year discussed above, (the “Target Range”).although compensation may be slightly above or below the Target Range based on time in role, experience, and performance. We used the Target Range plus or minus 20% of the midpoint, for assessing the pay for each salaried employee, including the Named Executive Officers, for fiscal year 2019.2022. The Compensation Committee’s objective is to progress the Named Executive Officers’ compensation, including our Chief Executive Officer’s compensation, to the 50th50th percentile of the competitive market over a reasonable period of time, with that progress being informed by our performance and other factors as noted below. The Compensation Study indicated that for fiscal year 2019,2022, total compensation for each of the Named Executive Officers was generally within the Target Range, andRange. Similar to the mix of compensation was in line withprior year, the market. In addition, the Compensation Study indicated that the current long-term incentive targets were below the market median for many of the executive officers. The Compensation Committee’s intent is to increase the long-term incentive targets and other compensation components that fall below the 50th percentile of the competitive market over time to ensure that we are providing a competitive, attractive, and retentive compensation opportunity to each of the Named Executive Officers.
54 | The J. M. Smucker Company | 2022 Proxy Statement |
EXECUTIVE COMPENSATION
When approving compensation for executive officers, the Compensation Committee also considers:
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EXECUTIVE COMPENSATION
Base Salary and Compensation Determination
Salary ranges are determined in the same manner for each of our salaried employees, including each executive officer. The base salaries paid to each executive officer are designed to fall within an established range based on market practice. Actual base salary reflects the experience of the executive officer and the scope of his or her responsibility.
It is the normal practice that each April, the Compensation Committee requests that management submit compensation recommendations for executive officers, other than for the Executive Chairman and the Chief Executive Officer, using all of the considerations outlined above. In addition, the recommendations have been focused on increasing the market competitiveness of long-term incentive awards. These recommendations generally result in salary increases for the executive officers that are aligned with our salary increase budget for other salaried employees. The Compensation Committee reviews all of the above considerations with no single factor necessarily weighted more heavily than another.
The J. M. Smucker Company | 2022 Proxy Statement | 55 |
EXECUTIVE COMPENSATION
In setting and approving compensation for the Executive Chairman and the Chief Executive Officer, the Compensation Committee holds the Executive Chairman and the Chief Executive Officer responsible for ensuring that each of the objectives set forth above are achieved and each is assessed in their respective roles in regard to:
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The |
EXECUTIVE COMPENSATION
At the Compensation Committee’s June 2019 meeting, the Compensation Committee considered these factors when determining the base salary, Cash Incentive Award target, and long-term incentive award target for the Executive Chairman and the Chief Executive Officer.Officer for fiscal year 2022. The Compensation Committee determined that the fiscal year 20202022 salary for Mark T. Smucker would be $1,010,000,$1,105,000, a 3.6%2.8% increase over his fiscal year 20192021 salary to align him closer to the market median and our peer group, and that the fiscal year 20202022 salary for Richard K. Smucker would be $750,000, which is the same as$600,000, a 20% decrease to his fiscal year 2019 salary.2021 salary as part of his retirement transition plan.
What Our Short-Term Incentive Compensation Program Is Designed to Reward and How It Works
Our short-term, performance-based incentive compensation program is cash-based and is designed to reward key employees, including executive officers, for their contributions to the Company based on clear, measurable criteria.
After the end of each fiscal year, the Compensation Committee reviews management’s recommendations for Cash Incentive Awards for executive officers (other than for the Executive Chairman and the Chief Executive Officer for whom management makes no recommendation). The Compensation Committee evaluates the following criteria and information in approving Cash Incentive Awards for executive officers:
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Our performance in relation to our ESG objectives for such fiscal year; |
In general, if an executive officer has responsibility for a specific strategic business area, a percentage of the Cash Incentive Award is tied to that strategic business area’s performance in relation to its annual net sales and profit |
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Incentive target awards for executive officers under the short-term incentive compensation program are also approved by the Compensation Committee and are represented as a percentage of each executive officer’s base salary. The target award percentage for each executive officer is reviewed regularly by the Compensation Committee with input from Semler Brossy. Named Executive officers’Officers’ target awards ranged from 40%80% to 125%140% of base salary depending on the responsibilities and experience of the executive officer.Named Executive Officer. For fiscal year 2019,2022, the most an executive officera Named Executive Officer was eligible to receive in such fiscal year was twice190% of the target award (i.e.i.e.,between 80%152% and 250%266% of base salary).
56 | The J. M. Smucker Company | 2022 Proxy Statement |
EXECUTIVE COMPENSATION
Participants in the short-term incentive compensation program receive a percentage of their target award based on our performance as shown in the following table. No awards are made unless we first achieve at least 80% of our adjusted operating income goal, and no awards are made with respect to the net sales portion of the award unless we achieve at least 98% of our net sales goal.
Ranges | Performance Level Achieved | Percentage of Target Award Earned | Net Sales Performance Level | AOI Performance Level | ESG Performance Level | Percentage Award | ||||||||||||
Below Threshold | <80% | 0% | <98% | <80% | 0% | 0% | ||||||||||||
Threshold | 80% | 25% | 98% | 80% | — | 25% | ||||||||||||
Target | 100% | 100% | 100% | 100% | 100% | 100% | ||||||||||||
Maximum | 110% | 200% | 103% | 110% | — | 200% |
(1) | The ESG portion of the short-term incentive awards for executive officers will be paid out at 0% or 100%, as determined by the Compensation Committee. |
In the event adjusted operating income performance is between the ranges set forth in the table above, the Compensation Committee determines the percentage of the award that is earned by mathematical interpolation:interpolation for each such range as follows: (i) for each increase of 1% above the threshold performance level but at or below 90% of the target performance level, the percentage of the target award earned increases by 2.5%; (ii) for each increase of 1% above 90% of the target performance level but below the target performance level, the percentage of the target award earned increases by 5%; and (iii) for each increase of 1% above
EXECUTIVE COMPENSATION
the target performance level and up to the maximum performance level, the percentage of target award earned increases by 10%.
In the event net sales performance is between the ranges set forth in the table above, the Compensation Committee determines the percentage of the award that is earned by mathematical interpolation for each such range as follows: (i) for each increase of 0.5% above the threshold performance level but below the target performance level, the percentage of the target award earned increases by 18.75%; and (ii) for each increase of 0.5% above the target performance and up to the maximum performance level, the percentage of target award earned increases by 16.67%.
Finally, the ESG portion of the short-term incentive awards for executive officers will be paid out at 0% or 100%, as determined by the Compensation Committee, based on the Company’s achievement of its qualitative ESG objectives, which included the following for fiscal year 2022: (i) launching the Company’s inclusion, diversity, and equity organization model; (ii) fostering an inclusive and equitable workplace; (iii) increasing People of Color at every level and women in leadership; and (iv) sharing our efforts with our external communities and customers. Our progress made toward each of these objectives is detailed in the “FY22 ESG Accomplishments” table on page 46. For the Named Executive Officers, the target award is tied solely to the corporate adjusted operating income and net sales performance target or a combination of the strategic business area and the corporate performance targets. If a Named Executive Officer manages or has significant influence over a strategic business area, 50% of the target award is generally tiedtargets, in addition to the performance of the strategic business area. In other words, individualESG objectives. Individual performance is not a factor in determining Cash Incentive Awards for the Named Executive Officers. The Compensation Committee, however, does have discretion to reduce a Named Executive Officer’s award but did not reduce any Named Executive Officer awarddo so in fiscal year 2019.
A chart illustrating this allocation is as follows:2022.
Weighting of Target Award For Named Executive Officers | ||||||||||
Performance Categories |
Corporate |
Strategic Business | ||||||||
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For fiscal year 2019, all of the executive officers included in the “Summary Compensation Table” were participants in the short-term incentive compensation program, and the weighting of the target award for each Named Executive Officer is set forth in the table below:
The J. M. Smucker Company | 2022 Proxy Statement | 57 |
Short-Term Incentive Compensation Program
Weighting of Target Award for Named Executive Officers for
Fiscal Year 2019EXECUTIVE COMPENSATION
Weighting of Target Award | ||||||||||
Executive Officer |
Corporate |
Strategic Business | ||||||||
Mark T. Smucker |
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Mark R. Belgya |
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Jeannette L. Knudsen |
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David J. Lemmon |
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Richard K. Smucker |
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Set forth below is an example of the calculation of a Cash Incentive Award for a corporate participant:
Example: An executive officer with corporate responsibilities, an annual base salary of $200,000, and a Cash Incentive Award target award of 50% of base salary would receive the following Cash Incentive Award based on achievement of target performance levels for all categories as shown below:
Ranges | Performance Level Achieved | Percentage of Target Award Earned | Cash Incentive Award Earned | ||||||||||||
Below Threshold | < 80% | 0% | $ | 0 | |||||||||||
Threshold | 80% | 25% | $ | 25,000 | |||||||||||
Target | 100% | 100% | $ | 100,000 | |||||||||||
Maximum | 110% | 200% | $ | 200,000 |
Weight | Threshold (25%) | Target (100%) | Maximum (200%) | |||||||||||||||||||||
Performance Level Achieved | Cash Incentive Award Earned ($) | Performance Level Achieved | Cash Incentive Award Earned ($) | Performance Level | Cash Earned ($) | |||||||||||||||||||
Adjusted Operating Income | 70% |
| 80% |
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| 100% | $ | 70,000 |
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| 110 | % | $ | 140,000 |
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Net Sales | 20% |
| 98% |
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| 100% | $ | 20,000 |
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ESG1 | 10% |
| <100% |
| $ | 0 |
| 100% | $ | 10,000 |
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Total | $ | 22,500 |
| $ | 100,000 |
| $ | 190,000 |
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The |
EXECUTIVE COMPENSATION
Specifically, with respect to fiscal year 2019,2022, the Compensation Committee approved the target corporate-adjustedcorporate adjusted operating income goal of $1,511 million. In order to receive 100%$1,468.4 million and the target corporate net sales goal of $7,844.3 million in June 2021. The decrease in the target goals from prior year actual results reflected continued uncertainty and expected impact resulting from the COVID-19 pandemic, as well as the impact of the target opportunity under the corporate componentdivestitures of the short-term incentive compensation program, we had to achieveCrisco and Natural Balance businesses. Following our divestitures of the natural beverage and grains and private label dry pet food businesses, the Compensation Committee modified the target corporate adjusted operating income goal to $1,466.6 million and the target corporate net sales goal to $7,774.8 million to exclude the operating income and net sales targets of $1,511 million, representing approximately 5% growth over the prior year.divested businesses for the months that we did not own such businesses during fiscal year 2022, as permitted by our plan. For fiscal year 2019,2022, we achieved adjusted operating income of $1,492,$1,440.1 million, representing 99%98% of the target amount, and net sales of $7,998.9 million, representing 103% of the target amount. Finally, with respect to the ESG portion of the short-term incentive awards, the Compensation Committee determined that the executive officers satisfied the qualitative ESG objectives noted above, and, therefore, that portion of the award paid out at 100% of the target amount. As a result of exceedingfalling short of the adjusted operating income threshold but nottarget, exceeding the net sales target, and achieving the ESG objectives, the corporate performance portion of the awards was paid at 95%113% of the target award for all participants. the executive officers.
The short-term incentive compensation program corporate performance goals for fiscal year 20192022 were as shown in the following table:
Short-Term Incentive Compensation Program
Corporate Performance Goals for
Fiscal Year 20192022
Ranges | Performance Level Achieved (Adjusted Operating Income) (In Millions) | Percentage of Cash Incentive Award Opportunity Earned | Performance Level Achieved (Adjusted Operating Income) (in Millions) | Performance Level Achieved (Net Sales) (in Millions) | Percentage of Cash Incentive Award Opportunity Earned | ||||||||
Below Threshold | Below $1,209 (80% of Target) | 0% | Below $1,173.3 (80% of Target) | Below $7,619.3 (98% of Target) | 0% | ||||||||
Threshold | $1,209 (80% of Target) | 25% | $1,173.3 (80% of Target) | $7,619.3 (98% of Target) | 25% | ||||||||
Target | $1,511 | 100% | $1,466.6 | $7,774.8 | 100% | ||||||||
Maximum | $1,662 (110% of Target) | 200% | $1,613.3 (110% of Target) | $8,008.0 (103%) | 200% |
We believe that the performance targets established by the Compensation Committee for fiscal year 20192022 required participants, including executive officers, to perform at a high level in order to achieve the target performance levels. During
58 | The J. M. Smucker Company | 2022 Proxy Statement |
EXECUTIVE COMPENSATION
the five-year period from fiscal year 20152018 through fiscal year 2019,2022, we achieved performance in excess ofabove the target level but below the maximum level two times (and did not achieve the maximum performance level) and failed to achievebelow the target performancelevel but above the threshold level three times. During the same time period, our annual compounded growth rate in adjusted earnings per share was approximately 6%, with a total shareholder return of approximately 8%. Generally, the Compensation Committee sets the minimum, target, and maximum levels such that the relative difficulty of achieving the target level is consistent from year to year.
What Our Long-Term Incentive Compensation Program (Performance-Based Restricted Stock) Is Designed to Reward and How It Works
Our long-term, performance-based compensation is stock-based and designed to align the interests of management with the interests of our shareholders.
Restricted Stock Awards
Equity awards are currently issued under the 20102020 Plan. We grant restricted stock units (in lieu of restricted shares) to certain participants who reside outside of the United States in order to comply with local laws and to
EXECUTIVE COMPENSATION
provide favorable tax treatment to foreign recipients. For fiscal year 2019, none of the Named Executive Officers received restricted stock units. Discussion in this “Compensation Discussion and Analysis” relating to restricted shares also applies to the limited awards of restricted stock units granted to participants residing outside of the United States. For fiscal year 2019, the long-term incentive compensation program is a five-year program, with aone-year performance period followed by a four-year vesting period. In general, Restricted Stock Awards vest at the end of four years and, in certain limited circumstances, some or all shares will vest immediately upon a job or position elimination or upon a change of control. Restricted Stock Awards that have not yet vested are generally forfeited in the event that an employee voluntarily leaves employment with the Company.
The essential features of the Restricted Stock Awards are as follows:
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Ranges | Achievement of Target Performance* | Percentage of Target Award Earned | ||
Below Threshold | <80% | 0% | ||
Threshold | 80% | 50% | ||
Target | 100% | 100% | ||
Maximum | 120% | 150% |
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EXECUTIVE COMPENSATION
In order to receive a Restricted Stock Award, participants must be employed by the Company at the time of the grant. With respect to the Restricted Stock Awards made to executive officers:
Following the end of fiscal year 2019, the Compensation Committee determined the number of performance units that were earned by the Named Executive Officers. Specifically, with respect to fiscal year 2019, we achieved 98% of our adjusted earnings per share goal and 95% of our corporate free cash flow goal, resulting in a Restricted Stock Award of 93.13% of the fiscal year 2019 performance unit award target. The performance units were paid in the form of restricted shares out of the 2010 Plan. The performance units, each worth $1.00, were converted to a number of restricted shares based on the average closing stock price for the final five trading days of fiscal year 2019 and the first five trading days of fiscal year 2020. The restricted shares earned were delivered to the Named Executive Officers pursuant to the same terms as the restricted shares granted to the other participants in the long-term incentive compensation program and are subject to a four-year vesting period. However, as with other participants, once any of the Named Executive Officers reaches the age of 60 and has a minimum of 10 years of service with the Company, his or her restricted shares will vest immediately, with 50% of such restricted shares available for settlement of taxes due and the remainder subject to a four-year retention period. Based on age and length of service, the restricted shares granted to Richard K. Smucker vested immediately upon grant, with 50% of such shares available for settlement of taxes due and the remainder subject to the four-year retention period. This retention period continues into retirement.
EXECUTIVE COMPENSATION
Changes to Long-Term Incentive Compensation Program for Fiscal Year 2020
Beginning with awards made in June 2019 for fiscal year 2020, the Compensation Committee has approved significant changes to our long-term incentive compensation program in order to strengthen the alignment of our management incentives with our long-term business objectives, to better align the interests of management with the interests of our shareholders, and to increase the market competitiveness of our long-term plan design. For fiscal year 2020,Under our long-term incentive compensation program, participants will receive two separate long-term incentive awards. The first award consists of performance units that will generally vest at the end of three years and will beare based 75% on the achievement of our three-year performance target for adjusted earnings per share and 25% on the achievement of our three-year performance target for return on invested capital.capital, although awards only vest if we achieve at least 90% of our adjusted earnings per share target. The following table below summarizes the actual performance units which vest at various achievement levels.
Ranges | Achievement of Target Performance* | Percentage of Target Award Earned | Achievement of Target Performance | Percentage of Target Award Earned | ||||||||||
Below Threshold | <90% | 0% | <90% | 0% | ||||||||||
Threshold | 90% | 50% | 90% | 50% | ||||||||||
Target | 100% | 100% | 100% | 100% | ||||||||||
Maximum | 115% | 200% | 115% | 200% |
In the event performance is between the ranges set forth in the table above, the Compensation Committee determines the percentage of the performance units that are earned by mathematical interpolation for each such range as follows: (i) for each increase of 1% from 90% of the target performance level to and including 95% of the target performance level, the percentage of the target award earned increases by 7.5%; (ii) for each increase of 1% from 95% of the target performance level to and including 105% of the target performance level, the percentage of the target award earned increases by 2.5%; (iii) for each increase of 1% from 105% of the target performance level to and including 110% of the target performance level, the percentage of the target award earned increases by 5%; and (iv) for each increase of 1% above 110% of the target performance level but below the maximum performance level, the percentage of the target award earned increases by 12.5%.
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The J. M. Smucker Company | 2022 Proxy Statement | 59 |
EXECUTIVE COMPENSATION
The second award consists of stock options for electedexecutive officers and restricted stock for all othernon-elected officer participants (or restricted stock units for certainnon-elected officer participants who reside outside of the United States in order to comply(which further align our executive officers with local laws and to provide favorable tax treatment to foreign recipients)shareholders by creating value through share price appreciation) that willare not be performance based and will generally ratably vest in equal tranches over a three-year period. ElectedExecutive officers, willincluding all of the Named Executive Officers, receive 75% of their long-term incentive award in performance units and 25% in stock options.Non-elected officer participants will receive a mix of performance units and restricted stock (or restricted stock units), depending on their respective level and award target.
In addition, the new awards include restrictive covenants, including confidentiality obligations andnon-solicit,non-interference, andnon-competition covenants. In addition to other remedies which may be available, violations of those covenants may result in forfeiture of any awards and repayment of any proceeds from any awards.
The table below provides a high-level summaryother essential features of the changes to the long-term incentive compensation program:equity awards are as follows:
Subject to Compensation Committee approval for elected officers and authorized executive officer approval for other participants, grants of equity awards are generally made each June; |
Equity awards that a participant is eligible to receive are computed based on a participant’s base salary and long-term incentive target at the time of the grant of the award for the fiscal year in which the equity award is being measured; |
In order to receive an equity award, participants must be employed by the Company at the time of the grant; |
Upon participants reaching the age of 60 with at least 10 years of service (or the age of 60 with at least five years of service for John P. Brase), all restricted stock vests on the later of the first anniversary of the grant date and the date that the participant meets such age and service requirements, and all stock options vest when the participant retires from the Company after reaching such age and service requirements so long as such date is after the first anniversary of the grant date; |
If a participant retires from the Company upon reaching the age of 60 with at least 10 years of service (or the age of 60 with at least five years of service for John P. Brase) and such retirement occurs after the first anniversary of the beginning of the performance period, the participant vests in the total number of the performance units that become “vesting eligible units” (based on actual performance at the end of the three-year period); |
If a participant leaves the Company following two years after the grant date under circumstances determined by the Compensation Committee to be for the convenience of the Company, the remaining stock options and restricted stock from that grant vest immediately; |
If a participant leaves the Company following the first anniversary of the beginning of the performance period under circumstances determined by the Compensation Committee to be for the convenience of the Company, the participant vests in such number of performance units that become “vesting eligible units” (based on actual performance at the end of the three-year period) multiplied by a fraction, the numerator of which is the number of months from the beginning of the performance period through the termination of employment, and the denominator of which is 36; |
Upon the occurrence of a change in control, all of the stock options and restricted stock granted during or prior to fiscal year 2022 vest immediately, and the performance units granted during or prior to fiscal year 2022 vest at the target number of units upon the consummation of the change in control; |
If a participant dies or his or her employment with the Company is terminated due to a disability, all of the stock options and restricted stock vest immediately, and the performance units vest at the target number of units multiplied by a fraction, the numerator of which is the number of months from the beginning of the performance period through the participant’s death or termination for disability, and the denominator of which is 36; |
Unvested equity awards are generally forfeited upon an employee’s voluntary departure from the Company; and |
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The J. M. Smucker Company | 2022 Proxy Statement |
EXECUTIVE COMPENSATION
The equity awards include restrictive covenants, including confidentiality obligations and non-solicit, non-interference, and non-competition covenants. In addition to other remedies which may be available, violations of those covenants may result in forfeiture of any awards and repayment of any proceeds from any awards. |
One-Time Awards
In June 2018,Management makes no recommendation regarding long-term incentive awards for the Executive Chairman or the Chief Executive Officer. However, the Compensation Committee, approved specialone-time awardsafter considering input from Semler Brossy regarding the external market and other factors, makes grants to certain recipients, including Mark R. Belgya, Jeannette L. Knudsen, and David J. Lemmon, who had a significant role in one or more of the Company’s transformational strategic initiatives for fiscal year 2019, including, without limitation, the acquisition and integration of Ainsworth Pet Nutrition, LLC (“Ainsworth”), the divestiture and transition of the U.S. baking business, and the organization optimization program. Theone-time awards included a cash award, which was paid in July 2018, and aone-year performance-based restricted stock award target, which was to be awarded in June 2019 based 50% on the achievement of certain “synergy realization” and Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) performance criteria for fiscal year 2019 and 50% on the achievement of certain business performance criteria, although no portion of the business performance criteria would be awarded if we did not achieve the threshold EBITDA performance criteria. If such criteria were met and any portion of the restricted stock awards were granted, such restricted stock awards would vest 100% at the end of a three-year period so long as a participant remains an employee of the Company. We did not achieve the targeted performance criteria (although we did achieve the threshold performance criteria) for “synergy realization” or EBITDA for fiscal year 2019, but we did achieve substantially all of the business performance criteria, including the completion of the acquisition and integration of Ainsworth (with the plant and customer integration being completed in less than nine months from the closing date), the divestiture and continuing transition of the U.S. baking business, and the closure and consolidation of seven domestic and international office locations into our corporate headquarters in Orrville, Ohio. Therefore, in June 2019 (subsequent to fiscal year end), the Compensation Committee approved the grant of restricted stock awards up to 50% of the restricted stock award target amount to each participant in such special one time-awards, including the Named Executive Officers noted above as more specifically set forth in the below table:
Name | Cash Award Paid in July 2018 | Target Performance- Based Equity Award | Synergy and EBITDA Target | Synergy and EBITDA Award | Business Achievement Target | Business Achievement Award | % of Target Performance- Based Equity Award | |||||||
David J. Lemmon | $62,589 | $187,500 | $ 93,750 | $0 | $93,750 | $75,000 | 40% | |||||||
Mark R. Belgya | $37,500 | $112,500 | $56,250 | $0 | $56,250 | $50,625 | 45% | |||||||
Jeannette L. Knudsen | $31,250 | $ 93,750 | $46,875 | $0 | $46,875 | $42,188 | 45% |
Stock Ownership Guidelines
All of our executive officers are required to meet minimum stock ownership guidelines within a five-year period of being named an executive officer of the Company. The Executive Chairman and the Chief Executive Officer have a stock ownership guideline of six times their annual base salaries. Our other executive officers have a stock ownership guideline of two times their annual base salaries. All of the Named Executive Officers, including the Executive Chairman and the Chief Executive Officer exceed these ownership requirements.based on the same performance standards as used for the other participants.
Following the end of fiscal year 2022, the Compensation Committee determined the number of performance units that were earned by the Named Executive Officers. For the performance units granted in June 2019 and to be settled in June 2022 based on the performance of the Company for the three fiscal year period commencing May 1, 2019 and ending April 30, 2022, the Compensation Committee approved the target corporate adjusted earnings per share goal of $9.60 and the target corporate return on invested capital goal of 6.75%. Specifically, with respect to the three fiscal year period commencing May 1, 2019 and ending April 30, 2022, we achieved adjusted earnings per share of $8.88, representing 93% of the target amount, and return on invested capital of 5.32%, representing 79% of the target amount. Since we achieved the threshold of the adjusted earnings per share goal (providing for a payout at 72.5% for the adjusted earnings per share portion of the performance units) but not the return on invested capital goal (providing no payout for the return on invested capital portion of the performance units), 54.4% of the performance units granted in June 2019 vested in June 2022.
Following the end of fiscal year 2022, the three-year performance periods for the grant of performance units in fiscal years 2021 and 2022 were not complete, so no performance units were earned by the Named Executive Officers.
We provide executive officers with health and welfare plans upon substantially the same terms as available to most of our other salaried employees. These benefit plans include medical, dental, vision, life, and disability insurance coverage. We also provide executive officers with periodic physical examinations upon the same terms as available to all of our employees at or above the functional vice presidentSenior Director level.
Pension and Retirement Plans, theNon-Qualified Supplemental Retirement Plan, and the Voluntary Deferred Compensation Plan
The Named Executive Officers participate in The J. M. Smucker Company Employee Savings Plan (the “401(k) Plan”) and, except for David J. Lemmon,John P. Brase and Tucker H. Marshall, also participate in The J. M. Smucker Company Employees’ Retirement Plan (the “Qualified Pension Plan”) and The J. M. Smucker Company Employee Savings Plan (the “401(k) Plan”)., which was frozen for all participants on December 31, 2017. Participation in the 401(k) Plan (and, for employees hired prior to December 31, 2007, the Qualified Pension Plan) is an important component of the overall compensation package for substantially all of our employees,
EXECUTIVE COMPENSATION
including our executive officers. In addition, the Named Executive Officers, except for Jeannette L. KnudsenMark T. Smucker and David J. Lemmon,Richard K. Smucker participate in The J. M. Smucker Company Top Management Supplemental Retirement Benefit Plan (as amended, the “SERP”), although Richard Smucker’s benefits under the SERP were frozen in 2016, as further described below, and are eligible to participate in The J. M. Smucker Company Voluntary Deferred Compensation Plan (the “Deferred Compensation Plan”). Certain other executive officers, including , which plans were closed to new participants in 2007.
Jeannette L. Knudsen participated in The J. M. Smucker Company Defined Contribution Supplemental Executive Retirement Plan (the “New SERP”). In August 2016, the Compensation Committee approved the closure of the previously frozen New SERP, effective December 31, 2017. On January 1, 2018, the participants in the New SERP, including Jeannette L. Knudsen, became eligible to participate in The J. M. Smucker Companythe Restoration Plan (the “Restoration Plan”). The Qualified Pension Plan was frozen for all participants on December 31, 2017.Plan. John P. Brase and Tucker H. Marshall also participate in the Restoration Plan.
David J. Lemmon participated in The J. M. Smucker Company Canadian Merged Pension Plan (the “Canadian Registered Plan”), The Smucker Foods of Canada Corp. Restoration Plan (the “Canadian Restoration Plan”), and The Smucker Foods of Canada
The J. M. Smucker Company | 2022 Proxy Statement | 61 |
Non-RegisteredEXECUTIVE COMPENSATION Savings Plan (the “Canadian Savings Plan”) during his assignment in Canada.
The following chart provides an overview of the key components of each of the plans:
Plan Name | Components | |
401(k) Plan | • Is the primary Company-provided retirement plan for certain eligible employees, providing a 150% match on employees’ contributions on the first 2% of eligible earnings and 100% on contributions on the next 4% of
• Both employee eligible earnings and employee contributions are subject to federal tax limitations | |
Qualified Pension Plan | • Provides a pension benefit based upon years of service with the Company and upon final average pay (average base salary compensation for the five most highly compensated consecutive years of employment)
• Benefits under the Qualified Pension Plan are 1% of final average earnings times the participant’s years of service with the Company
• Employees under the age of 40 as of December 31, 2007 will not earn future additional benefits under the Qualified Pension Plan, but employees age 40 and over as of December 31, 2007 will continue to earn future benefits
•
• Effective December 31, 2017, benefits under the Qualified Pension Plan were frozen for all participants, including executive officers | |
SERP | • In addition to retirement benefits under the Qualified Pension Plan and 401(k) Plan,
• Benefits are based upon years of service and are 55% (reduced for years of service less than 25) of the average of base salary, holiday bonus, and Cash Incentive Award for the five most highly compensated, consecutive years of employment, less any benefits received under the Qualified Pension Plan and Social Security
• |
EXECUTIVE COMPENSATION
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Restoration Plan | • Became effective on May 1, 2012 and provides a benefit for certain executive officers not participating in the SERP or, prior to January 1, 2018, the New SERP
• Restores contributions that would have been received under the 401(k) Plan but are not permitted due to federal tax limitations
• Participants are entitled to contribute between 0% and 50% of their eligible pay over the qualified plan compensation limit and are entitled to receive a 401(k)-type match on contributions (i.e., a maximum Company match of 7% of pay over the compensation limit)
• |
• Jeannette L. Knudsen became eligible to participate in the Restoration Plan on January 1, 2018, and David
62 | The J. | 2022 Proxy Statement |
EXECUTIVE COMPENSATION
Plan Name | Components | |
Deferred Compensation Plan | • U.S.-based executive officers who are not eligible to participate in the Restoration Plan may elect to defer up to 50% of salary and up to 100% of the Cash Incentive Award in the Deferred Compensation Plan
• The amounts deferred are credited to notional accounts selected by the executive officer that mirror the investment alternatives available in the 401(k) Plan. At the time a deferral election is made, participants elect to receive payout of the deferred amounts upon termination of employment in the form of a lump sum or equal annual installments ranging from
• The SERP, the New SERP, the Restoration Plan, and the Deferred Compensation Plan arenon-qualified deferred compensation plans and, as such, are subject to the rules of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), which restrict the timing of distributions |
EXECUTIVE COMPENSATION
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Other Benefits Executive Officers Receive
For fiscal year 2019,2022, the executive officers, like all of our salaried and hourlynon-represented employees, received an annual holiday bonus equal to 2% of their base salary.
The executive officers are provided certain personal benefits not generally available to all employees. The Compensation Committee believes these additional benefits are reasonable and enable us to attract and retain outstanding employees for key positions. These benefits include personal use of our aircraft (primarily by the Executive Chairman and the Chief Executive Officer)Officer for fiscal year 2022 and by the Chief Executive Officer for fiscal year 2023, which the Board encourages for the safety and well-being of such officers and their families), periodic physical examinations (which are provided to all employees at or above the vice presidentSenior Director level), financial and tax planning assistance, tickets to entertainment events, and reimbursementa fixed flexible perquisite of $10,000 intended to be used for specifiedhealth, wellness, social, or travel club dues and expenses.expenses, and an additional $2,500 in charitable matching gifts under our matching gift program (which is available to all executive officers and Directors). The value of personal travel on our aircraft is calculated in accordance with applicable regulations under the Code and is included in the applicable individual’s taxable income for the year. The value of these personal benefits for each of the Named Executive Officers, to the extent the aggregate value based on incremental cost to us equaled or exceeded $10,000 for fiscal year 2019,2022, is included in the “Summary Compensation Table” (and in the “2019“2022 Director Compensation Table” for the Chairman Emeritus). The Compensation Committee reviews, on an annual basis, the types of perquisites and other benefits provided to executive officers, as well as the dollar value of each perquisite paid to executive officers.
Description of Compensation Policies and Agreements with Executive Officers
Anti-Hedging and Anti-Pledging Policies
Our Insider Trading and Disclosure Policy prohibits Directors, executive officers, and employees from (i) engaging in hedging or monetization transactions that suggest the person is speculating in our common shares (that is, that such person is trying to profit in short-term movements, eitherincreases or decreases, in our stock price), including through the use of financial instruments such as prepaid variable forward contracts, equity swaps, collars, and exchange funds; (ii) engaging in any short sale, “sale against the box,” or any equivalent transaction involving our common shares; and (iii) purchasing our common shares “on margin.” Our Insider Trading and Disclosure Policy also prohibits Directors, executive officers, and employees from pledging any common shares as collateral for a margin loan or otherwise.
Stock Ownership Guidelines
All of our executive officers are required to meet minimum stock ownership guidelines within a five-year period of being named an executive officer of the Company. The Executive Chairman and the Chief Executive Officer have a stock ownership guideline of six times their annual base salaries. Our other executive officers have a stock ownership guideline of two times their annual base salaries. Eligible securities include common shares held through the 401(k) Plan and any
The J. M. Smucker Company | 2022 Proxy Statement | 63 |
EXECUTIVE COMPENSATION
unvested stock-based equity awards held by the executive officer (other than unvested performance units and unexercised stock options, whether vested or not). All of the Named Executive Officers, including the Executive Chairman and the Chief Executive Officer, exceed these ownership requirements.
Employment Agreements
Except as set forth below, we do not have employment agreements with any of our executive officers. If we have a change ofin control, all outstanding equity awards for all participants granted during or prior to fiscal year 2022 will immediately vest. Beginning with equity awards granted in June 2022 for fiscal year 2023, such awards will immediately vest if we have a change in control and the participant’s employment is terminated or the participant resigns for good reason. The definition of change ofin control for purposes of accelerating the vesting of equity awards is set forth in the 20102020 Plan.
John P. Brase Employment Offer Letter
In connection with the hiring of John P. Brase as our Chief Operating Officer, the Company entered into an employment offer letter, dated February 28, 2020, with Mr. Brase (the “Brase Employment Letter”). The Brase Employment Letter outlined Mr. Brase’s base salary of $700,000, his short-term cash incentive target opportunity of 100% of his base salary, and his long-term equity incentive target opportunity of 300% of his base salary, as well as the other employee plans and benefits that Mr. Brase would be provided consistent with other senior executives of the Company. It also included the following one-time awards, which were provided to Mr. Brase in light of the compensation and retirement benefits that he would have been entitled to if he remained in his prior role with The Procter & Gamble Company: (i) a signing bonus of $400,000 cash; (ii) a grant of 25,000 restricted shares, which will cliff vest three years from the grant date, assuming that he is still employed by the Company on such date; and (iii) a grant of 7,500 restricted shares, which will cliff vest on the date that Mr. Brase turns 60 years of age in 2028, assuming that he is still employed by the Company on such date. Pursuant to the terms of the Brase Employment Letter, Mr. Brase will be required to immediately repay a pro-rated portion of the $400,000 cash signing bonus if he voluntarily resigns or if his employment is terminated by the Company for cause (as defined in the Brase Employment Letter) during his first two years of employment.
Change in Control Severance Agreements
In connection with our ongoing efforts to align our compensation program with competitive market practices, we have entered into Change in Control Severance Agreements (the “Severance Agreement”) with several of our key employees, including all of the Named Executive Officers. The term of the Severance Agreement is two years, with automaticone-year renewals on eachone-year anniversary of the effective date. Subject to limited exceptions, the Board may terminate the Severance Agreement at its discretion. Generally, the Severance Agreement only entitles key employees to severance benefits upon a termination by the Company without “cause” or by the key employee for “good reason” in connection with a “change in control” (each as defined in the Severance Agreement), within a24-month period after a change in control event. Under those limited circumstances, an eligible employee will receive severance benefits consisting of: (i) alump-sum payment equal to two times the sum of annual base salary and the target annual bonus;(ii) pro-rata target bonus for the year of termination; (iii) a lump sum amount equal to COBRA premiums for 18 months; and (iv) if requested by the employee, outplacement services not to exceed $25,000. In order to receive severance payments, the employee must execute a general release of claims in favor of the Company. The Severance Agreement includesnon-competition andnon-solicitation of employee’semployees covenants, which apply during the employee’s term of
EXECUTIVE COMPENSATION
employment with the Company and for a period of 18 months following the date of the employee’s termination of employment for any reason, whether before or after a change in control.
The Severance Agreement does not provide forgross-up payments to be made in the event any payment or benefit due to an employee would be subject to the excise tax under Section 4999 of the Code, based on such payments being classified as “excess parachute payments” under Section 280G of the Code. However, in the event any payment or benefit due to an employee would be subject to such excise tax, then the amounts payable to such employee will be reduced to the maximum amount that does not trigger the excise tax, unless the applicable employee would be better off (on anafter-tax basis) receiving all such payments and benefits and paying all applicable income and excise tax thereon.
64 | The J. M. Smucker Company | 2022 Proxy Statement |
EXECUTIVE COMPENSATION
Tax and Accounting Considerations
The Compensation Committee has considered the potential impact on our compensation plans of the $1,000,000 cap on deductible compensation under Section 162(m) of the Code. The exemption for performance-based compensation was repealed on December 22, 2017 for tax years beginning after December 31, 2017, such that compensation to our covered executive officers in excess of $1,000,000 will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.
Compensation-Related Risk Assessment
During fiscal year 2019,2022, the Compensation Committee oversaw a risk assessment of our compensation policies and practices to ascertain any material risks that may be created by our compensation programs. In March 2019,2022, members of our human resources, internal audit, legal, and enterprise risk departments, along with Semler Brossy, reviewed and assessed the potential risks arising from our compensation policies and practices based on the risk assessment process developed and refined over the past several years, along with a comparison of current industry best practices. The assessment process included a review of risks related to strategy, culture, governance,pay-mix, performance measures, annual short-term and long-term incentives, equity ownership, and trading, along with other compensation risks and management of those risks. The results of management’s review and Semler Brossy’s assessment were presented to the Compensation Committee in April 20192022 for its review and final assessment. Based on the Compensation Committee’s review of the risk assessment, we determined that our compensation policies and practices do not create any risks that are reasonably likely to have a material adverse effect on the Company. This conclusion was supported by our risk mitigating practices, including our clawback policy, “no hedging” policy, “no pledging” policy, holdbacks of a portion of incentive payments for certain sales team participants, caps on incentive compensation awards, incentive modifiers based upon business unit performance, and the use of discretionary adjustments. In addition, we have a stock ownership requirement for our executive officers.
The J. M. Smucker Company | 2022 Proxy Statement |
The following table provides information concerning the compensation of the Named Executive Officers for fiscal year 2019years 2022 and 2021 and, where required, fiscal years 2018 and 2017.year 2020. Please read the “Compensation Discussion and Analysis” in conjunction with reviewing this table.
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) | ||||||||||||||||||||||||||||||||||||
Name and Principal Position (1)
| Fiscal
| Salary
| Bonus
| Stock
| Option
| Non-Equity
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Change in ($) (6)
| All Other
| Total ($)
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Mark T. Smucker President and Chief Executive Officer |
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2019 2018 2017
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969,615 933,846 900,000
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19,500 18,800 18,000
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4,095,000 3,760,000 3,600,000
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— — —
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1,157,813 972,900 1,089,000
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1,747,522 1,000,570 1,295,376
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67,440 59,823 47,251
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8,056,890 6,745,939 6,949,627
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Mark R. Belgya Vice Chair and Chief Financial Officer
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2019 2018 2017
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621,154 596,154 618,125
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50,000 12,000 11,500
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1,406,250 1,200,000 1,150,000
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— — —
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534,375 486,000 569,250
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816,054 428,354 861,358
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33,905 20,651 30,969
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3,461,738 2,743,159 3,241,202
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Jeannette L. Knudsen Senior Vice President, General Counsel and Secretary
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2019 2018
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497,692 481,923
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41,250 9,700
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800,000 703,250
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— —
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308,750 283,725
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4,301 500
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41,000 60,558
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1,692,993 1,539,656
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David J. Lemmon President, Pet Food and Pet Snacks
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2019
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486,657
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80,218
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875,500
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—
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348,771
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69,474
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175,904
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2,036,524
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Richard K. Smucker Executive Chairman
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2019 2018 2017 |
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750,000 750,000 767,308 |
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15,000 15,000 15,000 |
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1,500,000 1,500,000 1,500,000 |
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— — — |
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712,500 675,000 825,000 |
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1,837,197 1,176,472 1,328,450 |
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123,664 99,938 93,918 |
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4,938,361 4,216,410 4,529,676 |
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(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
Name and Principal Position (1) | Fiscal | Salary | Bonus | Stock | Option | Non-Equity | Change in ($) (6) | All Other | Total ($) | |||||||||||||||||||||||||||
Mark T. Smucker President and Chief Executive Officer | 2022 | 1,100,385 | 22,100 | 4,143,838 | 1,381,245 | 1,748,110 | — | 115,961 | 8,511,639 | |||||||||||||||||||||||||||
Tucker H. Marshall Chief Financial Officer | 2022 | 591,154 | 11,900 | 1,004,064 | 334,676 | 537,880 | — — | 111,413 | 2,591,087 | |||||||||||||||||||||||||||
John P. Brase Chief Operating Officer | 2022 | 709,308 | 14,220 | 1,599,758 | 533,245 | 803,430 | — — — | 191,163 | 3,851,124 | |||||||||||||||||||||||||||
Jeannette L. Knudsen Chief Legal and Compliance Officer and Secretary | 2022 | 552,385 | 11,140 | 939,941 | 313,317 | 503,528 | — — 14,175 | 130,833 | 2,451,144 | |||||||||||||||||||||||||||
Richard K. Smucker Executive Chairman | 2022 | 623,077 | 12,000 | 900,113 | 299,998 | 678,000 | — | 127,019 | 2,640,207 |
(1) |
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Included in column (d) for all of the Named Executive Officers is a holiday bonus representing 2% of annual base salary at the time of |
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The J. M. Smucker Company | 2022 Proxy Statement |
COMPENSATION TABLES
$3,199,516; Jeannette L. Knudsen, $1,879,882; and Richard K. Smucker, |
If a Named Executive Officer retires from the Company upon reaching the age of 60 with at least |
For Jeannette L. Knudsen, the amounts reported in column (e) also include a special one-time restricted stock award grant of $42,458. Such grant was approved by the Compensation Committee in June 2019 for participants who had a significant role in one or more of the Company’s transformational strategic initiatives for fiscal |
John P. Brase joined the Company on April 13, 2020 and, therefore, |
For a description of the assumptions made in the valuation of such awards, see the note entitled “Share-Based Payments” to the Consolidated Financial Statements in our Annual Report on Form 10-K. |
(4) | The amounts reported in column (f) reflect the aggregate grant date fair value computed in accordance with ASC Topic 718 of stock option awards granted on June 15, 2021 pursuant to our long-term incentive compensation program. The estimated value of stock options is calculated using the Black-Scholes model. The options granted on June 15, 2021 have an exercise price of $135.53. Such options generally ratably vest in equal tranches over a three-year period. |
(5) | The amounts shown in column (g) for all of the Named Executive Officers represent performance-based awards under |
(6) | The amounts shown in column (h) represent the increase in present value of accumulated benefits accrued under the Qualified Pension Plan and the SERP. A discussion of the assumptions made in determining this increase is included below under the heading “Pension Benefits.” |
(7) | Column (i) includes payments made by us to defined contribution plans for the Named Executive Officers. |
The Named Executive Officers |
The | 2022 Proxy Statement | 67 |
COMPENSATION TABLES
All Named Executive Officers |
The following table provides a breakdown of the Company-provided benefits included in column (i): |
Name | Use of Aircraft | Flexible Perquisite | Financial and Tax Planning Assistance | Executive Physical | Employer Matching Funds under 401(k) Plan | Company Contributions to Deferred Compensation Accounts | Charitable Matching Gifts under Gift Matching Program | |||||||||||||||||||||
Mark T. Smucker | $ | 82,111 | $ | 10,000 | — | — | 21,350 | — | $ | 2,500 | ||||||||||||||||||
Tucker H. Marshall | $ | 2,342 | $ | 10,000 | — | — | 20,838 | 78,233 | — | |||||||||||||||||||
John P. Brase | $ | 18,915 | $ | 10,000 | $ | 10,000 | $ | 1,001 | 20,537 | 123,210 | $ | 7,500 | ||||||||||||||||
Jeannette L. Knudsen | $ | 15,918 | $ | 10,000 | 5,400 | — | 20,946 | 71,069 | $ | 7,500 | ||||||||||||||||||
Richard K. Smucker | $ | 72,449 | $ | 10,000 | $ | 20,000 | — | 17,069 | — | $ | 7,500 |
68 | The J. M. Smucker Company | 2022 Proxy Statement |
COMPENSATION TABLES
20192022 GRANTS OF PLAN-BASED AWARDS
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Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Possible Payouts Under Equity Incentive Plan | (j)
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(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||||||||||||||||||
Name | Grant Date | Award Type | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||
Mark T. Smucker | — | Cash | 386,750 | 1,547,000 | 2,939,300 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
6/15/2021 | Performance Units | — | — | — | 15,607 | 31,213 | 62,426 | — | — | — | 4,143,838 | |||||||||||||||||||||||||||||||||
6/15/2021 | Options | — | — | — | — | — | — | — | 61,498 | 135.53 | 1,381,245 | |||||||||||||||||||||||||||||||||
Tucker H. Marshall | — | Cash | 119,000 | 476,000 | 904,400 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
6/15/2021 | Performance Units | — | — | — | 3,782 | 7,563 | 15,126 | — | — | — | 1,004,064 | |||||||||||||||||||||||||||||||||
6/15/2021 | Options | — | — | — | — | — | — | — | 14,901 | 135.53 | 334,676 | |||||||||||||||||||||||||||||||||
John P. Brase | — | Cash | 177,750 | 711,000 | 1,350,900 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
6/15/2021 | Performance Units | — | — | — | 6,025 | 12,050 | 24,100 | — | — | — | 1,599,758 | |||||||||||||||||||||||||||||||||
6/15/2021 | Options | — | — | — | — | — | — | — | 23,742 | 135.53 | 533,245 | |||||||||||||||||||||||||||||||||
Jeannette L. Knudsen | — | Cash | 111,400 | 445,600 | 846,640 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
6/15/2021 | Performance Units | — | — | — | 3,540 | 7,080 | 14,160 | — | — | — | 939,941 | |||||||||||||||||||||||||||||||||
6/15/2021 | Options | — | — | — | — | — | — | — | 13,950 | 135.53 | 313,317 | |||||||||||||||||||||||||||||||||
Richard K. Smucker | — | Cash | 150,000 | 600,000 | 1,140,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
6/15/2021 | Performance Units | — | — | — | 3,390 | 6,780 | 13,560 | — | — | — | 900,113 | |||||||||||||||||||||||||||||||||
6/15/2021
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| 13,357
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(1) | Estimated possible payouts included in theNon-Equity Incentive Plan Awards columns relate to cash payments eligible under our short-term incentive compensation program. |
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COMPENSATION TABLES
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(4) | The amounts shown in column (m) shows the grant date fair value of: (i) the performance units granted in June 2021 calculated in accordance with ASC Topic 718 based on the probable outcome of the performance conditions as of the grant |
OUTSTANDING EQUITY AWARDS AT 2019 FISCAL YEAR END
The J. M. Smucker Company |
| 2022 Proxy Statement |
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COMPENSATION TABLES
OUTSTANDING EQUITY AWARDS AT 2022 FISCAL YEAR END
| Option Awards |
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(b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||||||||||||||||||||||||||
(a)
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) (1) | Equity (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (2) (3) | Market Value of Shares or Units of Stock That Have Not Vested ($) (4) | Equity (#) (5) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) (6) | |||||||||||||||||||||||||||||||
Mark T. Smucker |
| 30,000 |
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| $ | 111.86 |
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| 89,308 |
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| 12,228,944 |
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| 40,410 |
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| 20,201 |
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| $ | 123.68 |
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| 6/13/2029 |
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| 65,984 |
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| 9,035,189 |
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| 28,280 |
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| 56,541 |
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| $ | 108.90 |
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| 6/17/2030 |
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| 61,498 |
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| $ | 135.53 |
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| 6/15/2031 |
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Tucker H. Marshall |
| 4,993 |
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| 2,496 |
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| $ | 103.20 |
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| 12/30/2029 |
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| 18,339 |
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| 2,511,159 |
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| 7,392 |
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| 14,779 |
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| $ | 108.90 |
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| 6/17/2030 |
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| 3,818 |
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| 522,799 |
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| 14,901 |
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| $ | 135.53 |
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| 6/15/2031 |
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John P. Brase |
| 12,379 |
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| $ | 108.90 |
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| 6/17/2030 |
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| 25,621 |
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| 23,742 |
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| $ | 135.53 |
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| 6/15/2031 |
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| 32,500 |
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| 4,450,225 |
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Jeannette L. Knudsen |
| 10,000 |
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| $ | 111.86 |
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| 18,187 |
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| 7,682 |
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| $ | 123.68 |
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| 6/13/2029 |
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| 16,643 |
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| 5,433 |
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| $ | 108.90 |
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| 13,950 |
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| $ | 135.53 |
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| 6/15/2031 |
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Richard K. Smucker |
| 62,500 |
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| $ | 111.86 |
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| 3/19/2025 |
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| 25,620 |
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| 3,508,147 |
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| 13,640 |
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| 6,818 |
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| $ | 123.68 |
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| 6/13/2029 |
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| 8,843 |
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| 17,678 |
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| $ | 108.90 |
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| 13,357 |
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| $ | 135.53 |
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(1) |
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Name | 6/13/2022 | 6/15/2022 | 6/17/2022 | 12/30/2022 | 6/15/2023 | 6/17/2023 | 6/15/2024 | |||||||||||||||||||||
Mark T. Smucker | 20,201 | 20,504 | 28,271 | — | 20,497 | 28,270 | 20,497 | |||||||||||||||||||||
Tucker H. Marshall | — | 4,968 | 7,390 | 2,496 | 4,967 | 7,389 | 4,966 | |||||||||||||||||||||
John P. Brase | — | 7,916 | 12,375 | — | 7,913 | 12,375 | 7,913 | |||||||||||||||||||||
Jeannette L. Knudsen | 3,840 | 4,651 | 5,431 | — | 4,650 | 5,430 | 4,649 | |||||||||||||||||||||
Richard K. Smucker | 6,818 | 4,454 | 8,839 | — | 4,452 | 8,839 | 4,451 |
(2) | Restricted shares or units outstanding at year end have vested or will vest on the following dates: |
Name
| 6/12/2019
| 6/8/2020
| 8/2/2020
| 6/15/2021
| 6/14/2022
| 9/1/2026
| 6/13/2022 | 6/14/2022 | 4/14/2023 | 6/13/2023 | 9/27/2023 | 12/30/2024 | 9/1/2026 | 1/27/2028 | ||||||||||||||||||||||||||||||||||||||||||
Mark T. Smucker | 5,467 | 15,493 | — | 26,759 | 34,986 | — | — | 34,986 | — | 30,998 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Mark R. Belgya | 5,522 | 11,645 | 19,714 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Tucker H. Marshall | 63 | 1,073 | — | 682 | 1,000 | 1,000 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
John P. Brase | — | — | 25,000 | — | — | — | — | 7,500 | ||||||||||||||||||||||||||||||||||||||||||||||||
Jeannette L. Knudsen | 3,087 | 6,122 | — | 4,839 | 6,544 | 3,700 | — | 6,887 | — | 6,056 | — | — | 3,700 | — | ||||||||||||||||||||||||||||||||||||||||||
David J. Lemmon | 1,304 | 2,380 | — | 1,666 | 3,406 | 1,900 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Richard K. Smucker | — | — | — | — | — | — | — | — | — | — | — | — | — |
(3) | Restricted shares granted prior to the changes to our long-term incentive compensation program in fiscal year 2020 generally vest at the end of the four-year period from the date of grant or, if earlier, upon the attainment of age 60 and 10 years of service with the Company (provided that 50% of such restricted shares will be available for settlement of taxes due and the remainder will be subject to a four-year retention period). |
70 | The J. M. Smucker Company | 2022 Proxy Statement |
COMPENSATION TABLES
(4) | The market value of restricted shares was computed using |
(5) | The |
(6) |
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20192022 OPTION EXERCISES AND STOCK VESTED
(a)
Name |
Option Awards
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Stock Awards
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Option Awards
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Stock Awards
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(b) Number of Shares | (c) Value Realized on Exercise ($) | (d) Number of Shares | (e) Value Realized on Vesting | (b) Number of Shares | (c) Value Realized on Exercise ($) | (d) Number of Shares | (e) Value Realized on Vesting ($) (1) | |||||||||
Mark T. Smucker | — | — | 8,115 | 855,727 | — | — | 26,759 | 3,626,647 | ||||||||
Mark R. Belgya | — | — | 8,115 | 855,727 | ||||||||||||
Tucker H. Marshall | 10,000 | 261,550 | 654 | 88,648 | ||||||||||||
John P. Brase | — | — | — | — | ||||||||||||
Jeannette L. Knudsen | — | — | 4,409 | 464,929 | — | — | 4,839 | 665,830 | ||||||||
David J. Lemmon | — | — | 2,189 | 230,830 | ||||||||||||
Richard K. Smucker | — | — | 13,958 (2) | 1,449,678 | — | — | — | — |
(1) | The market price used in determining the value realized was calculated using the average of the high and low share prices on the NYSE on the date of vesting. |
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We maintain two defined benefit plans in the U.S. and one in Canada that cover the Named Executive Officers. One is the Qualified Pension Plan, which provides funded,tax-qualified benefits (up to the limits on compensation and benefits under the Code) to some of our U.S.-based salaried employees as discussed in the “Qualified Pension Plan” summary on page 5062 of this proxy statement. The second is the SERP, which provides unfunded,non-qualified benefits to certain executive officers. All of the Named Executive Officers included in the “2019“2022 Pension Benefits Table” participate in both of these plans,Table,” except for Jeannette L. KnudsenJohn P. Brase and David J. Lemmon, who do notTucker H. Marshall, participate in the SERP.Qualified Pension Plan. Mark T. Smucker and Richard K. Smucker are the only Named Executive Officers who participate in the SERP, although Richard Smucker’s benefits under the SERP were frozen in 2016, as further described below.
Qualified Pension Plan
The benefit provided under the Qualified Pension Plan is defined as an annuity beginning at normal retirement age, which is 65. It can be paid out in the form of an annuity or lump sum. The Qualified Pension Plan benefit expressed as an annual single life annuity at normal retirement age is 1% times final average earnings times years of service. All accrued benefits under the Qualified Pension Plan have been frozen for all participants, including the Named Executive Officers, effective December 31, 2017.
COMPENSATION TABLES
In addition, Named Executive Officers who, prior to 1991, participated in the old employee contributory portion of the Qualified Pension Plan may also have a frozen contributory benefit based on their participant contributions made prior to April 30, 1991. Those frozen benefits, included as part of the total Qualified Pension Plan benefit, are as follows: $48,100 for Richard K. Smucker and $1,400 for Mark R. Belgya.
Early retirements under the Qualified Pension Plan are subject to the following rules:
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The J. M. Smucker Company | 2022 Proxy Statement | 71 |
COMPENSATION TABLES
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As of April 30, 2019, each of2022, Richard K. Smucker and Mark R. Belgya had already completed 30 years of service with the Company. All accrued benefits under the Qualified Pension Plan have been frozen for all participants, including the Named Executive Officers, effective December 31, 2017.
David J. Lemmon participated in the Canadian Registered Plan during his assignment in Canada. This plan provides the following benefits:
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SERP
The benefit provided under the SERP is defined as an annuity beginning at normal retirement age. It can be paid out in the form of an annuity or lump sum. The SERP benefit expressed as an annual single life annuity is equal to (A) 2.5% times final average earnings, times years of service up to 20 years, plus (B) 1.0% times final average earnings, times years of service from 20 to 25 years, minus (C) the basic benefit provided under the Qualified Pension Plan, minus (D) the Company paid portion of the contributory benefit in the Qualified Pension Plan that was frozen April 30, 1991, and minus (E) an estimate of the Social Security benefit that would be payable at the later of age 62 or actual retirement. Final average earnings are equal to average compensation (base salary, holiday bonus, and Cash Incentive Award) over the five consecutive years of employment that produces the highest average.
Early retirements under the SERP are subject to the following rules:
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COMPENSATION TABLES
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On April 21, 2011, we amended the SERP to provide that, to the extent payment of any benefit under the SERP is delayed beyond the latter of the participant reaching age 55 or the participant’s separation from service, such benefit will be adjusted (i) with interest, if payable as a lump sum, and (ii) actuarially, if payable as an annuity, all as determined in accordance with the SERP. This change takes into account the fact that Section 409A of the Code imposes a delay on benefit commencement in certain cases.
Richard K. Smucker’s benefits under the SERP were frozen in 2016. Richard K. Smucker began receiving the SERP benefit on April 1, 2019, and he receives monthly annuity payments under the SERP, which are approximately the same monthly annuity payments he would have received under the SERP had he retired on March 31, 2016.
Determination of Value
The amounts shown in the “2019“2022 Pension Benefits Table” are based on the value at age 62 (a prior date for Richard K. Smucker), which is the earliest age at which an unreduced retirement benefit is payable under both plans. Other key assumptions used to determine the amounts are as follows:
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72 | The J. M. Smucker Company | 2022 Proxy Statement |
COMPENSATION TABLES
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The years of credited service for the Named Executive Officers are based only on their years of service while an employee of the Company during the time they were eligible participantsto accrue benefits in the plans.
COMPENSATION TABLES
The “2019“2022 Pension Benefits Table” below shows the Named Executive Officers’ number of years of credited service, present value of accumulated benefit, and payments during the last fiscal year under each of the plans.
(a) | (b) | (c) | (d) | (e) | ||||||||||||
Name | Plan Name | Years of
(#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | ||||||||||||
Mark T. Smucker | Qualified Pension Plan SERP Total | 10.3
| $ $ $ | 179,823
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| Qualified Pension Plan SERP Total | —
| —
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| — | — | ||||||||||
John P. Brase | Qualified Pension Plan SERP Total | — — | — — | — — | ||||||||||||
Jeannette L. Knudsen | Qualified Pension Plan SERP Total | 5.3 — | $ $ | 53,353 —
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Richard K. Smucker | Qualified Pension Plan SERP Total | 45.2 43.6 | $ $ $ | 1,734,049 9,744,596 11,478,645 |
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| $139,580 |
| $923,960 |
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The J. M. Smucker Company | 2022 Proxy Statement |
COMPENSATION TABLES
20192022 NONQUALIFIED DEFERRED COMPENSATION
(a) | (b) | (c) | (d) | (e) | (f) | (b) | (c) | (d) | (e) | ||||||||||||||||||||||||||||||||
Name | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings ($)(1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance Fiscal Year End ($) | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings ($) (1) | Aggregate Balance at Last Fiscal Year End ($) | ||||||||||||||||||||||||||||||||
Mark T. Smucker |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
— | — | — | ||||||||||||||||||||||
Tucker H. Marshall Restoration Plan (2) | $ 89,409 | $ 78,233 | $ | (36,411 | ) | $ | 362,820 | ||||||||||||||||||||||||||||||||||
John P. Brase Restoration Plan (2) | $176,014 | $123,210 | $ | (43,403 | ) | $ | 397,890 | ||||||||||||||||||||||||||||||||||
Mark R. Belgya |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| ||||||||||||||||||||||||||
Jeannette L. Knudsen New SERP (2) Restoration Plan (3) | | — 17,475 | | — 20,387 | | 38,426 3,645 | | — — | | 563,830 74,167 | |||||||||||||||||||||||||||||||
David J. Lemmon Canadian Nonqualified Plans (4) | 16,966 | 36,592 | 23,110 | — | 503,478 | ||||||||||||||||||||||||||||||||||||
Jeannette L. Knudsen Restoration Plan (2) New SERP (3) | $ 60,916 — | $ 71,069 — | $ $ | (40,304 (71,387 | ) ) | $ $ | 410,715 761,963 |
| |||||||||||||||||||||||||||||||||
Richard K. Smucker Deferred Compensation Plan Vested but Unreleased Shares
|
| — —
|
|
| — —
|
|
| 412,136 —
|
|
| — —
|
|
| 6,037,318 7,177,657
| (5) (6)
| — — | — — | $
| (578,045 — | )
| $ $ | 8,162,274 1,732,986 | (4) (5) |
(1) | No portion of the amounts shown in column (d) are reported in the “Summary Compensation Table” as no earnings are considered to be above market. |
(2) | The |
|
|
This aggregate balance includes the amounts reported as compensation in the “Summary Compensation Table” in previous fiscal years. For Richard K. Smucker, this amount is $2,475,085. This aggregate balance also includes earnings on prior contributions. |
COMPENSATION TABLES
Executive officers who do not participate in the Restoration Plan may elect to defer up to 50% of salary and up to 100% of the Cash Incentive Award in the Deferred Compensation Plan. The amounts deferred are credited to notional accounts selected by the executive officer that mirror the investment alternatives available in the 401(k) Plan.
The Deferred Compensation Plan is anon-qualified deferred compensation plan and, as such, is subject to the rules of Section 409A of the Code, which restrict the timing of distributions. At the time a deferral election is made, participants elect to receive payout of the deferred amounts upon termination of employment in the form of a lump sum or in annual installments ranging from 2two to 10 years.
Upon participants reaching the age of 60 with 10 years of service, all |
74 | The J. M. Smucker Company | 2022 Proxy Statement |
POTENTIAL PAYMENTS TO EXECUTIVE OFFICERS UPON TERMINATION OR CHANGE IN CONTROL
Broad-BasedExecutive Severance Plan
All of our elected officers, including the Named Executive Officers, are eligible for benefits under The J. M. Smucker Company Executive Severance Plan (the “Severance Plan”), which provides for the payment of severance and other benefits in the event of a broad-based severance plan. If a Named Executive Officer is terminatedtermination of employment with the Company without cause he(as defined in the Severance Plan) or shefor certain other specified reasons (each, a “Qualifying Termination”). In the event of a Qualifying Termination and subject to the employee’s execution of a general release of liability against the Company, the Severance Plan provides the following payments and benefits to elected officers:
Severance in an amount equal to 52 times the elected officer’s weekly base salary in effect immediately prior to the date of the Qualifying Termination; |
Provided that the elected officer worked at least six months in the fiscal year of the Qualifying Termination, a prorated annual bonus as calculated pursuant to the terms of Section 4.01(b) of the Severance Plan; |
An additional lump sum payment equivalent to approximately 12 months’ premiums on the elected officer’s Company-sponsored medical coverage in effect on the date of the Qualifying Termination; and |
Company-paid outplacement assistance—and not any cash equivalent—provided by the Company’s third-party provider identified in its sole discretion for a period of up to six months. |
Any nonvested awards under the Company’s long-term incentive plans will be eligible for a severance benefittreated as provided under the plans and applicable award agreements; however, any restricted stock or restricted stock unit awards that were granted prior to May 1, 2020 and are at least two-years old as of up to one yearthe date of base salary based on service requirements.the Qualifying Termination will become fully vested.
Long-Term Disability
In the event of a qualified long-term disability, participants continue to earn Qualified Pension Plan benefit service up to the earlier of age 65 or termination of employment. Also, 60% of base salary is continued, up to $20,000 per month, until the earlier of age 65 or the end of the disability period.
Termination Payments
The Severance values in the following table represent potential payments to the Named Executive Officers based on certain possible termination events. These payments are based on the broad-based severance planSeverance Plan that covers substantially all of our salaried employees.elected officers.
The Cash Incentive Award values in the following table represent potential payments to each Named Executive Officer who is eligible to receive an award under the short-term incentive compensation program based on our actual performance if he or she is actively employed on the last day of the fiscal year. Except as set forth in the Severance Plan, Named Executive Officers who are not eligible to retire must be employed by the Company on the date of payment in order to receive an award.
The Value of Restricted Shares amounts in the following table reflect the immediate vesting of outstanding equity awards based on the type of termination that has occurred or in the event of a change in control. If we have a change in control, all outstanding equity awards granted during or prior to fiscal year 2022 will immediately vest based on the terms of the existing equity plans and the applicable award agreements. No restricted shares are awarded if an employee is not actively employed with us on the date of the grant. The Restricted Stock Award for fiscal year 2019 that would have been forfeited based on the assumed April 30, 2019 termination date is not reflected in the termination scenario tables.
The Retiree Healthcare Benefit values in the following table are shown only for those Named Executive Officers who are eligible for retirement as of the end of the fiscal year. These values represent the balance as of April 30, 20192022 of the employee’s Healthcare Retirement Account. The Named Executive Officer may use this balance in retirement to cover healthcare costs and premiums.
Potential Change in Control Payments
We have entered into Change in Control Severance Agreements with several of our key employees, including all of the Named Executive Officers, as a retention tool in order to provide for severance benefits in connection with a change in
The J. M. Smucker Company | 2022 Proxy Statement | 75 |
POTENTIAL PAYMENTS TO EXECUTIVE OFFICERS UPON TERMINATION OR CHANGE IN CONTROL
control. The term of the Severance Agreement is two years, with automaticone-year renewals on eachone-year anniversary of the effective date. Subject to limited exceptions, the Board may terminate the Severance Agreement at its discretion.
Generally, the Severance Agreement only entitles the Named Executive Officers to severance benefits upon a termination by the Company without “cause” or by the Named Executive Officer for “good reason” in connection with a “change in control” (each as defined in the Severance Agreement), within a24-month period after a change in control event. If so terminated, a Named Executive Officer will receive severance benefits consisting of: (i) alump-sum payment equal to two times the sum of the Named Executive Officer’s annual base salary and the target annual bonus;(ii) pro-rata target bonus for the year of termination; (iii) a lump sum amount approximately equal to the cost of COBRA coverage for 18 months; and (iv) if requested by the Named Executive Officer, outplacement services not to exceed $25,000. In order to receive severance payments, the Named Executive Officer must execute a general release of claims in favor of the Company. The Severance Agreement includesnon-competition andnon-solicitation of employee’semployees covenants, which apply during the Named Executive Officer’s term of employment with the Company and for a period of 18 months following the date of the Named Executive Officer’s termination of employment for any reason, whether before or after a change in control.
POTENTIAL PAYMENTS TO EXECUTIVE OFFICERS UPON TERMINATION OR CHANGE IN CONTROL
In the event that any payment or benefit due to a Named Executive Officer would be subject to the excise tax under Section 4999 of the Code, based on such payments being classified as “excess parachute payments” under Section 280G of the Code, then the amounts payable to such Named Executive Officer will be reduced to the maximum amount that does not trigger the excise tax, unless the Named Executive Officer would be better off (on anafter-tax basis) receiving all such payments and benefits and paying all applicable income and excise tax thereon.
Termination Analysis Table
The following table and footnotes describe the estimated potential payment obligations under various termination events. The table assumes termination of employment occurs on the last day of the fiscal year. A closing stock price of $122.63,$136.93, as of the last business day of the fiscal year, is assumed for all equity values.
Voluntary ($) (1) | Death ($) | Involuntary for ($) | Involuntary ($) | Change in ($) | Voluntary ($)(1) | Death ($) | Involuntary for Cause ($) | Involuntary ($) | Change in ($) | |||||||||||||||||||||||||||||||
Mark T. Smucker | ||||||||||||||||||||||||||||||||||||||||
Severance (2) |
| — |
|
| — |
|
| — |
|
| 792,000 |
|
| 4,387,500 |
|
| — |
|
| — |
|
| — |
|
| 1,123,000 |
|
| 5,304,000 |
| ||||||||||
Medical & Outplacement Benefits |
| — |
|
| — |
|
| — |
|
| — |
|
| 54,278 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 52,000 |
| ||||||||||
Cash Incentive Award |
| — |
|
| 1,157,813 |
|
| — |
|
| 1,157,813 |
|
| 1,157,813 |
|
| — |
|
| 1,748,110 |
|
| — |
|
| 1,748,110 |
|
| 1,748,110 |
| ||||||||||
Value of Restricted Shares (3) |
| — |
|
| 10,142,144 |
|
| — |
|
| 10,142,144 |
|
| 10,142,144 |
|
| — |
|
| 9,035,189 |
|
| — |
|
| 9,035,189 |
|
| 9,035,189 |
| ||||||||||
Retirement Benefits (4) |
| 7,321,948 |
|
| 3,686,650 |
|
| 7,321,948 |
|
| 7,321,948 |
|
| 7,321,948 |
| |||||||||||||||||||||||||
Value of Performance Units (4) |
| — |
|
| 7,964,533 |
|
| — |
|
| 7,964,533 |
|
| 12,228,944 |
| |||||||||||||||||||||||||
Value of Options (5) |
| — |
|
| 1,938,605 |
|
| — |
|
| — |
|
| 1,938,605 |
| |||||||||||||||||||||||||
Retirement Benefits (6) |
| 13,597,771 |
|
| 6,799,246 |
|
| 13,597,771 |
|
| 13,597,771 |
|
| 13,597,771 |
| |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
TOTAL |
| 7,321,948 |
|
| 14,986,607 |
|
| 7,321,948 |
|
| 19,413,905 |
|
| 23,063,683 |
|
| 13,597,771 |
|
| 27,485,683 |
|
| 13,597,771 |
|
| 33,468,603 |
|
| 43,904,619 |
| ||||||||||
Mark R. Belgya | ||||||||||||||||||||||||||||||||||||||||
Tucker H. Marshall | ||||||||||||||||||||||||||||||||||||||||
Severance (2) |
| — |
|
| — |
|
| — |
|
| 629,500 |
|
| 2,375,000 |
|
| — |
|
| — |
|
| — |
|
| 613,000 |
|
| 2,142,000 |
| ||||||||||
Medical & Outplacement Benefits |
| — |
|
| — |
|
| — |
|
| — |
|
| 50,808 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 52,000 |
| ||||||||||
Cash Incentive Award |
| — |
|
| 534,375 |
|
| — |
|
| 534,375 |
|
| 534,375 |
|
| — |
|
| 537,880 |
|
| — |
|
| 537,880 |
|
| 537,880 |
| ||||||||||
Value of Restricted Shares (3) |
| — |
|
| 4,522,717 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 522,799 |
|
| — |
|
| 522,799 |
|
| 522,799 |
| ||||||||||
Retirement Benefits (4) |
| 7,941,102 |
|
| 3,989,400 |
|
| 7,941,102 |
|
| 7,941,102 |
|
| 7,941,102 |
| |||||||||||||||||||||||||
Retiree Healthcare Benefits (5) |
| 47,750 |
|
| 47,750 |
|
| 47,750 |
|
| 47,750 |
|
| 47,750 |
| |||||||||||||||||||||||||
Value of Performance Units (4) |
| — |
|
| 1,450,865 |
|
| — |
|
| 1,450,865 |
|
| 2,511,159 |
| |||||||||||||||||||||||||
Value of Options (5) |
| — |
|
| 468,189 |
|
| — |
|
| — |
|
| 468,189 |
| |||||||||||||||||||||||||
Retirement Benefits (6) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
TOTAL |
| 7,988,852 |
|
| 9,094,242 |
|
| 7,988,852 |
|
| 9,152,727 |
|
| 10,949,035 |
|
| — |
|
| 2,979,733 |
|
| — |
|
| 3,124,544 |
|
| 6,234,027 |
| ||||||||||
Jeannette L. Knudsen | ||||||||||||||||||||||||||||||||||||||||
Severance (2) |
| — |
|
| — |
|
| — |
|
| 312,192 |
|
| 1,650,000 |
| |||||||||||||||||||||||||
Medical & Outplacement Benefits |
| — |
|
| — |
|
| — |
|
| — |
|
| 54,278 |
| |||||||||||||||||||||||||
Cash Incentive Award |
| — |
|
| 308,750 |
|
| — |
|
| 308,750 |
|
| 308,750 |
| |||||||||||||||||||||||||
Value of Restricted Shares (3) |
| — |
|
| 2,978,928 |
|
| — |
|
| 2,978,928 |
|
| 2,978,928 |
| |||||||||||||||||||||||||
Retirement Benefits (4) |
| 45,166 |
|
| 16,586 |
|
| 45,166 |
|
| 45,166 |
|
| 45,166 |
| |||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
TOTAL |
| 45,166 |
|
| 3,304,264 |
|
| 45,166 |
|
| 3,645,036 |
|
| 5,037,122 |
| |||||||||||||||||||||||||
David J. Lemmon | ||||||||||||||||||||||||||||||||||||||||
Severance (2) |
| — |
|
| — |
|
| — |
|
| 496,692 |
|
| 1,751,000 |
| |||||||||||||||||||||||||
Medical & Outplacement Benefits |
| — |
|
| — |
|
| — |
|
| — |
|
| 33,635 |
| |||||||||||||||||||||||||
Cash Incentive Award |
| — |
|
| 348,771 |
|
| — |
|
| 348,771 |
|
| 348,771 |
| |||||||||||||||||||||||||
Value of Restricted Shares (3) |
| — |
|
| 1,306,745 |
|
| — |
|
| 1,306,745 |
|
| 1,306,745 |
| |||||||||||||||||||||||||
Retirement Benefits (4) |
| 624,482 |
|
| 624,482 |
|
| 624,482 |
|
| 677,596 |
|
| 677,596 |
| |||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
TOTAL |
| 624,482 |
|
| 2,279,998 |
|
| 624,482 |
|
| 2,829,804 |
|
| 4,117,747 |
|
76 | The J. M. Smucker Company | 2022 Proxy Statement |
POTENTIAL PAYMENTS TO EXECUTIVE OFFICERS UPON TERMINATION OR CHANGE IN CONTROL
Voluntary ($) (1) | Death ($) | Involuntary for ($) | Involuntary ($) | Change in ($) | ||||||||||||||||||||||||||||||||||||
Voluntary ($)(1) | Death ($) | Involuntary Cause ($) | Involuntary ($) | Change in ($) | ||||||||||||||||||||||||||||||||||||
John P. Brase | ||||||||||||||||||||||||||||||||||||||||
Severance (2) |
| — |
|
| — |
|
| — |
|
| 729,000 |
|
| 2,844,000 |
| |||||||||||||||||||||||||
Medical & Outplacement Benefits |
| — |
|
| — |
|
| — |
|
| — |
|
| 52,000 |
| |||||||||||||||||||||||||
Cash Incentive Award |
| — |
|
| 803,430 |
|
| — |
|
| 803,430 |
|
| 803,430 |
| |||||||||||||||||||||||||
Value of Restricted Shares (3) |
| — |
|
| 4,450,225 |
|
| — |
|
| 4,450,225 |
|
| 4,450,225 |
| |||||||||||||||||||||||||
Value of Performance Units (4) |
| — |
|
| 1,788,854 |
|
| — |
|
| 1,788,854 |
|
| 3,508,284 |
| |||||||||||||||||||||||||
Value of Options (5) |
| — |
|
| 726,981 |
|
| — |
|
| — |
|
| 726,981 |
| |||||||||||||||||||||||||
Retirement Benefits (6) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
TOTAL |
| — |
|
| 7,769,490 |
|
| — |
|
| 7,771,509 |
|
| 12,384,920 |
| |||||||||||||||||||||||||
Jeannette L. Knudsen | ||||||||||||||||||||||||||||||||||||||||
Severance (2) |
| — |
|
| — |
|
| — |
|
| 569,000 |
|
| 2,005,200 |
| |||||||||||||||||||||||||
Medical & Outplacement Benefits |
| — |
|
| — |
|
| — |
|
| — |
|
| 43,000 |
| |||||||||||||||||||||||||
Cash Incentive Award |
| — |
|
| 503,528 |
|
| — |
|
| 503,528 |
|
| 503,528 |
| |||||||||||||||||||||||||
Value of Restricted Shares (3) |
| — |
|
| 2,278,926 |
|
| — |
|
| 2,278,926 |
|
| 2,278,926 |
| |||||||||||||||||||||||||
Value of Performance Units (4) |
| — |
|
| 1,572,185 |
|
| — |
|
| 1,572,185 |
|
| 2,490,346 |
| |||||||||||||||||||||||||
Value of Options (5) |
| — |
|
| 374,844 |
|
| — |
|
| — |
|
| 374,844 |
| |||||||||||||||||||||||||
Retirement Benefits (6) |
| 46,817 |
|
| 19,580 |
|
| 46,817 |
|
| 46,817 |
|
| 46,817 |
| |||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
TOTAL |
| 46,817 |
|
| 4,749,063 |
|
| 46,817 |
|
| 4,970,456 |
|
| 7,742,661 |
| |||||||||||||||||||||||||
Richard K. Smucker | ||||||||||||||||||||||||||||||||||||||||
Severance (2) |
| — |
|
| — |
|
| — |
|
| 753,000 |
|
| 3,000,000 |
|
| — |
|
| — |
|
| — |
|
| 612,000 |
|
| 2,400,000 |
| ||||||||||
Medical & Outplacement Benefits |
| — |
|
| — |
|
| — |
|
| — |
|
| 42,234 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 43,000 |
| ||||||||||
Cash Incentive Award |
| 712,500 |
|
| 712,500 |
|
| — |
|
| 712,500 |
|
| 712,500 |
|
| 678,000 |
|
| 678,000 |
|
| — |
|
| 678,000 |
|
| 678,000 |
| ||||||||||
Value of Restricted Shares (3) |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||
Retirement Benefits (4) |
| 13,432,027 |
|
| 11,480,833 |
|
| 13,432,027 |
|
| 13,432,027 |
|
| 13,432,027 |
| |||||||||||||||||||||||||
Retiree Healthcare Benefits (5) |
| 61,515 |
|
| 61,515 |
|
| 61,515 |
|
| 61,515 |
|
| 61,515 |
| |||||||||||||||||||||||||
Value of Performance Units (4) |
| 2,579,761 |
|
| 2,446,757 |
|
| — |
|
| 2,446,757 |
|
| 3,508,147 |
| |||||||||||||||||||||||||
Value of Options (5) |
| 604,553 |
|
| 604,553 |
|
| — |
|
| — |
|
| 604,553 |
| |||||||||||||||||||||||||
Retirement Benefits (6) |
| 11,478,645 |
|
| 9,694,470 |
|
| 11,478,645 |
|
| 11,478,645 |
|
| 11,478,645 |
| |||||||||||||||||||||||||
Retirement Health Benefits (7) |
| 69,681 |
|
| 69,681 |
|
| 69,681 |
|
| 69,681 |
|
| 69,681 |
| |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
TOTAL |
| 14,206,042 |
|
| 12,254,848 |
|
| 13,493,542 |
|
| 14,959,042 |
|
| 17,248,276 |
|
| 15,410,640 |
|
| 13,493,461 |
|
| 11,548,326 |
|
| 15,285,083 |
|
| 18,782,026 |
|
(1) | This amount assumes the Named Executive Officer voluntarily terminates or retires. Other than Richard K. Smucker, none of the Named Executive Officers are currently eligible for retirement. |
(2) | In the event of an involuntary termination without cause, the amount equals |
(3) | In the event of a change in control, death, or permanent disability, all unvested |
(4) | In the event of death or permanent disability, the Named Executive Officer will be eligible for pro-rated vesting at the target number of units. If the Named Executive Officer has worked more than a year of the performance period and is involuntarily terminated without cause, he or she will be eligible for pro-rated vesting at target (based on actual performance at the end of the three-year period). In the event of a change in control, all unvested performance units would automatically vest at the target number of units upon the consummation of the change in control. |
The J. M. Smucker Company | 2022 Proxy Statement | 77 |
POTENTIAL PAYMENTS TO EXECUTIVE OFFICERS UPON TERMINATION OR CHANGE IN CONTROL
(5) | In the event of a change in control, death, or permanent disability, all unvested options would automatically vest. |
(6) | For all the Named Executive Officers, Retirement Benefits represent the total value of such benefits assuming the termination event occurs on April 30, |
This amount includes the current balance of the Named Executive Officer’s employer-provided Healthcare Retirement Account. |
The J. M. Smucker Company | 2022 Proxy Statement |
The SEC requires us to disclose the annual total compensation of Mark T. Smucker, our Chief Executive Officer, and our median employee, as well as the ratio of their respective annual total compensation to each other. The annual total compensation values are calculated in accordance with SEC rules applicable to the Summary Compensation Table. The values are as follows for fiscal year 2019,2022, our last completed fiscal year:
Mark T. Smucker’s annual total compensation: |
Our median employee’s annual total compensation: |
Ratio of Mark T. Smucker’s annual total compensation to our median employee’s annual total compensation: |
Pay Ratio Methodology
To prepare the pay ratio analysis, SEC rules allow us to select a methodology for identifying our median employee in a manner that is most appropriate based on our size, organizational structure, and compensation plans, policies, and procedures.
As permitted under SEC rules, and regulations, we may identify our median employee for purposes of providing pay ratio disclosure once every three years, provided that there has been no change in the employee population or employee compensation arrangements that we reasonably believe would result in a significant change to the 20182021 pay ratio disclosure. Due to the acquisition of Ainsworth and the divestituredivestitures of the U.S. baking business,natural beverage and grains and private label dry pet food businesses, we performed the pay ratio analysis of our employee population for fiscal year 2019.
2022. In determining our median employee, we chose April 1, 20192022 as the determination day to review our global employee population, which date is within the last three months of our last completed fiscal year. We selected this date to allow us sufficient time to identify the median employee.population. As of that date, we employed 7,539 persons6,676 people in 5four countries.
Consistent with our approach used last year, ourOur median employee was selected using wages received by each employee (excluding our Chief Executive Officer), as reflected in our payroll records and reported to the Internal Revenue Service on FormW-2 and the Canada Revenue Agency on Form T4 for the calendar year ended December 31, 2018.2021. As permitted under SEC rules, we excluded 4five employees in Brazil, 2 employees in Hong Kong, and 2two employees in Vietnam, as they represent less than 1% of our total employee population. In determining our median employee, we did not use any of the other exemptions permitted under SEC rules, and we used the employee population as of April 1, 20192022 to determine eligibility to identify the median employee. Similarly, we did not rely on any material assumptions, adjustments (e.g.,cost-of-living adjustments), or estimates (e.g., statistical sampling) to identify our median employee or to determine annual total compensation or any elements of annual total compensation for our median employee or Mark T. Smucker.
Once we identified our median employee, we calculated suchthe median employee’s annual total compensation for fiscal year 2022 as described above for purposes of determining the ratio of Mark T. Smucker’s annual total compensation to suchthe employee’s annual total compensation.
The J. M. Smucker Company | 2022 Proxy Statement |
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of RegulationS-K with management. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into our Annual Report on Form10-K for the year ended April 30, 2019.2022.
EXECUTIVE COMPENSATION COMMITTEE
Paul J. Dolan, Chair
Elizabeth Valk Long
Gary A. OateySusan E. Chapman-Hughes
Kirk L. Perry
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Each of the followingnon-employee Directors served as a member of the Compensation Committee during fiscal year 2019:2022: Paul J. Dolan, Elizabeth Valk Long, Gary A. Oatey,Susan E. Chapman-Hughes, and Kirk L. Perry. During fiscal year 2019,2022, no Company executive officer or Director was a member of the board of directors of any other company where the relationship would be construed to constitute a committee interlock within the meaning of the rules of the SEC.
Paul J. Dolan, the Chair of the Compensation Committee, is Chairman and Chief Executive Officer of the Cleveland Indians,Guardians, the Major League Baseball team operating in Cleveland, Ohio. Mr. Dolan’s family also owns the Cleveland IndiansGuardians organization, but the Company has determined that the Dolan family’s ownership interest in the Cleveland IndiansGuardians does not disqualify Mr. Dolan from being an “outside director” under Section 162(m) of the Code. We incurred approximately $371,000$0.4 million in advertising and promotional activities expenses related to our sponsorship with the Cleveland IndiansGuardians organization, along with purchases of season tickets and a partial season for a luxury box, in fiscal year 2019.2022.
Kirk L. Perry, a member of the Compensation Committee, is the President and Chief Executive Officer of IRI. We incurred approximately $11.1 million in expenses for consumer data, analytics, and insights services provided to us by IRI in fiscal year 2022. In addition, Mr. Perry was the President, Brand Solutions of Google Inc.until May 14, 2021. We incurred approximately $12,257,000 in expenses$7.3 million for advertising services provided to us by Google Inc. infor the first quarter of fiscal year 2019.2022 (i.e., the quarter during which Mr. Perry was an officer of Google).
The J. M. Smucker Company | 2022 Proxy Statement |
PROPOSAL TO APPROVE AND ADOPT AMENDMENTS TO OUR AMENDED ARTICLES OF INCORPORATION TO ELIMINATE THE TIME PHASED VOTING PROVISIONS AND GIVE ALL OUTSTANDING COMMON SHARES ONE VOTE ON MATTERS PROPERLY SUBMITTED TO OUR SHAREHOLDERS FOR THEIR VOTE
(PROPOSAL 4 ON THE PROXY CARD)
The Board unanimously recommends that the shareholders approve and adopt amendments to the Articles that would eliminate the time phased voting provisions and give all outstanding shares of our common stock one vote on matters properly submitted to our shareholders for their vote. The text of the proposed amendments (collectively, the “Amendment”) is set forth in Appendix B to this proxy statement.
The Articles currently provide that, except as set forth below, each outstanding common share entitles the holder to one vote on each matter properly submitted to the shareholders for their approval, including any vote or consent for the election or removal of our Directors. Notwithstanding the foregoing, holders of our outstanding common shares who have held their common shares for at least four years without a change in beneficial ownership are entitled to ten votes on certain matters properly submitted to the shareholders, to the extent those matters are required to be submitted to the shareholders under Ohio law, the Articles or the Regulations, stock exchange rules, or are otherwise submitted or presented to our shareholders for their vote, consent, waiver, or other action. For additional information regarding the matters for which common shares are currently entitled to ten votes per share, see “Voting Rights of Common Shares” on page 91.
Upon any change of beneficial ownership of our common shares, the new holder would be entitled to only one vote on the matters listed above until that holder has held the shares for four years without a further change in beneficial ownership. Furthermore, no holder of our common shares would be entitled to exercise more than one vote on any matter listed above if the aggregate voting power that holder otherwise would be entitled to exercise (disregarding the voting power of any holder on August 20, 1985 or acquired by the holder in a transaction not involving a change in beneficial ownership as determined pursuant to the Articles) would constitute one-fifth or more of our voting power and our common shareholders have not authorized the ownership of common shares by that holder as and to the extent contemplated by Article Seventh (control share provision) of the Articles.
The Amendment would eliminate this time phased voting structure. Under the Amendment, the current provisions of Division II of Article Fourth of the Articles would be eliminated in their entirety. A new Division II of Article Fourth of the Articles would replace the eliminated provisions and read as follows:
DIVISION II
Express Terms of Common Shares
SECTION 1. Each outstanding Common Share shall entitle the holder thereof to one vote on each matter properly submitted to the shareholders for their vote, consent, waiver, release, or other action, including any vote or consent for the election or removal of Directors.
SECTION 2. Each Common Share shall be identical to all other Common Shares in all respects, and together the Common Shares shall constitute a single class of shares of the Company.
In addition, the Amendment removes references in Article Seventh to the former provisions of Division II of Article Fourth that will be eliminated by the Amendment and makes certain immaterial changes, such as deleting references to our former Rights Agreement, which we terminated in 2018.
Purpose of the Amendment
Our current voting structure gives holders of common stock ten votes for every share of common stock owned continuously for four years or more. We adopted this time phased voting structure over 35 years ago when several other similarly-situated public companies were implementing time phased voting provisions. This type of time phased voting structure has since been discouraged by the NYSE. Further, Institutional Shareholder Services, a proxy advisory firm, has stated that beginning in February 2023 it will generally recommend against or withholding votes from directors individually, committee members, or entire boards at companies that employ common stock voting structures with unequal voting rights like time phased voting. Finally, approval of the Amendment would make our voting structure consistent with the prevailing voting structure for public companies.
The J. M. Smucker Company | 2022 Proxy Statement | 81 |
PROPOSAL TO APPROVE AND ADOPT AMENDMENTS TO AMENDED ARTICLES OF INCORPORATION
Potential Adverse Effects of the Amendment
Although our Board believes that adoption of the Amendment is in the best interests of our Company and our shareholders, the Board recognizes that there are disadvantages to shareholders who currently have ten votes per share. If the Amendment is approved by the requisite vote, those shareholders who have ten votes per share will experience an immediate dilution of their voting power. This will reduce the ability of ten-vote shareholders to influence the outcome of many matters submitted to a vote of shareholders, including the approval or disapproval of amendments to the Articles, mergers or other extraordinary transactions that may involve a change in control of us, or approval of other proposals of the Board or shareholders. On the other hand, holders of one-vote shares will experience an increase in their relative voting power.
Adoption of the Amendment will affect those shares held by our Directors and executive officers in the same manner as it effects the shares held by other shareholders. For all shares, including those held by our Directors and executive officers, the voting power of those shares held less than four years will increase relative to the voting power of those shares held for four years or more.
Anti-Takeover Effects of Other Provisions in the Articles and the Regulations
In addition to the time phased voting provision described above, other existing provisions of the Articles and the Regulations may be deemed to have an anti-takeover effect and may delay, defer, or prevent a tender offer or takeover attempt.
Control Share Acquisitions. TheArticles contain provisions opting out of Ohio’s control share acquisition law. We have, however, adopted similar provisions in the Articles requiring that notice and informational filings and special shareholder meetings and voting procedures must be followed prior to consummation of a proposed “control share acquisition.”
In general, a control share acquisition is the acquisition, directly or indirectly, by any person of our common shares that, when added to all other common shares in respect of which that person, directly or indirectly, may exercise or direct the exercise of voting power as provided in the Articles, would entitle the person, immediately after the acquisition, directly or indirectly, to exercise or direct the exercise of the voting power in the election of Directors of a number of our outstanding shares (as distinguished from the number of votes to which the holder of the shares is entitled) within any of the following ranges:
One-fifth or more but less than one-third of outstanding shares; |
One-third or more but less than a majority of outstanding shares; and |
A majority or more of outstanding shares. |
Assuming compliance with the notice and information filings, the proposed control share acquisition may be made only if both of the following occur:
Shareholders who hold shares entitling them to vote in the election of Directors authorize the acquisition at a special meeting held for that purpose at which a quorum is present by an affirmative vote of a majority of the voting power of the Company in the election of Directors represented at the meeting in person or by proxy and a majority of the portion of the voting power excluding the voting power of interested shares represented at the meeting in person or by proxy; and |
The acquisition is consummated, in accordance with the terms authorized, not later than 360 days following shareholder authorization of the control share acquisition. |
In general, “interested shares” means shares of which any of the following persons may exercise or direct the exercise of the voting power of the in the election of directors:
The acquiring person; |
Any officer elected by the board of directors; |
Any employee who is also a director; |
82 | The J. M. Smucker Company | 2022 Proxy Statement |
PROPOSAL TO APPROVE AND ADOPT AMENDMENTS TO AMENDED ARTICLES OF INCORPORATION
Any person who acquires our common shares during the period beginning with the first public disclosure of the proposed control share acquisition and ending with the record date established for the special meeting, if either of the following applies: |
The aggregate consideration paid by such person, and any persons acting in concert therewith, exceeds $250,000; or |
The number of shares acquired by such person, and any persons acting in concert therewith, exceeds one-half of one percent (1/2%) of the outstanding shares of the Company entitled to vote in the election of Directors; and |
any person who transfers shares after the record date for the special meeting, if accompanied by voting power in the form of a blank proxy, an agreement to vote as instructed by the transferee or otherwise. |
Transactions with Interested Shareholders. We are subject to Chapter 1704 of the Ohio Revised Code, which generally prohibits certain business combinations and transactions with “interested shareholders” for a period of three years after the interested shareholder acquired 10% or more of the voting power of the corporation in the election of directors, unless prior to the interested shareholder’s acquisition of 10% or more of the corporation’s shares, the directors of the corporation approved the business combination or other transaction or the purchase of shares by the interested shareholder on the date the shareholder acquired 10% or more of the corporation’s shares.
In general, subsequent to the three-year period, a transaction subject to Chapter 1704 may take place provided that at least one of the following is satisfied:
Prior to the date the interested shareholder acquired 10% or more of the corporation’s shares, the board of directors approved the purchase of shares by the interested shareholder; |
The transaction is approved, at a meeting held for that purpose, by the affirmative vote of the holders of shares of the corporation entitling them to exercise at least two-thirds of the voting power of the corporation in the election of directors, or of such different proportion as the articles of incorporation may provide, provided that the transaction is also approved by the affirmative vote of the holders of at least a majority of the disinterested shares; or |
The transaction results in shareholders, other than the interested shareholder, receiving a fair price (as described in Chapter 1704) plus interest for their shares. |
In addition, the Articles provide that any business combination between us and any person that beneficially owns more than 30% of shares entitled to vote in the election of Directors (or at any time owned more than 30% of shares entitled to vote in the election of Directors) must be approved by the affirmative vote of 85% of all shares entitled to vote in the election of Directors. The 85% voting requirement is not applicable if:
The cash, or fair market value of other consideration, to be received per share by our common shareholders in the business combination is at least an amount equal to the highest per share price paid by the other entity in acquiring any of its holdings of our common shares plus the aggregate amount, if any, by which 5% per annum of the per share price exceeds the aggregate amount of all dividends paid in cash, in each case since the date on which the other entity acquired the 30% interest; |
After the other entity has acquired a 30% interest and prior to the consummation of the business combination (1) the other entity has taken steps to ensure that the Board included at all times representation by continuing Directors proportionate to the shareholdings of the public holders of our common shares not affiliated with the other entity (with a continuing Director to occupy any resulting fractional board position), (2) the other entity has not acquired any newly issued shares, directly or indirectly, from us (except upon conversion of convertible securities acquired by it prior to obtaining a 30% interest or as a result of a pro rata share dividend or share split), and (3) the other entity has not acquired any additional outstanding common shares or |
The J. M. Smucker Company | 2022 Proxy Statement | 83 |
PROPOSAL TO APPROVE AND ADOPT AMENDMENTS TO AMENDED ARTICLES OF INCORPORATION
securities convertible into common shares except as part of the transaction that resulted in the other entity’s acquiring its 30% interest; |
The other entity has not (1) received the benefit, directly or indirectly (except proportionately as a shareholder), of any loans, advances, guarantees, pledges, or other financial assistance or tax credits provided by us or (2) made any major change in our business or equity capital structure without in either case the approval of at least a majority of all the Directors and at least two-thirds of the continuing Directors, in either case prior to the consummation of the business combination; and |
A proxy statement responsive to the requirements of the Securities Exchange Act of 1934, as amended, has been mailed to our public shareholders for the purpose of soliciting shareholder approval of the business combination and has contained at the front, in a prominent place, any recommendations as to the advisability (or inadvisability) of the business combination that the continuing Directors, or any of them, may choose to state and, if deemed advisable by a majority of the continuing Directors, an opinion of a reputable investment banking firm as to the fairness (or not) of the terms of the business combination, from the point of view of our remaining public shareholders (the investment banking firm to be selected by a majority of the continuing Directors and to be paid a reasonable fee for their services by us upon receipt of the opinion). |
Continuing Directors are Directors elected by our public shareholders prior to the time when the other such entity acquired more than 5% of the shares entitled to vote in the election of Directors, or a person recommended to succeed a continuing Director or by a majority of continuing Directors.
Required Vote
The affirmative vote of the holders of common shares entitling them to exercise two-thirds of the total voting power of the Company, giving effect to the existing ten-votes-per-share provisions of the Articles, is necessary to approve the Amendment to the Articles to eliminate time phased voting and give all outstanding common shares one vote on matters properly submitted to our shareholders for their vote. Therefore, abstentions, broker non-votes, and shares not in attendance and not voted at the annual meeting will have the same effect as votes against this proposal. Unless otherwise directed, common shares represented by proxy will be voted “FOR” the approval of this proposal.
The Board unanimously recommends that the shareholders vote FOR adoption of the Amendment to the Articles to eliminate the time phased voting provisions and give all outstanding common shares one vote on matters properly submitted to our shareholders for their vote. |
84 | The J. M. Smucker Company | 2022 Proxy Statement |
The Board has long recognized that transactions with Related Persons (as defined below) present a potential conflict of interest (or the perception of a conflict) and, together with our senior management, the Board has enforced the conflict of interest provisions set forth in the Code of Conduct. All employees and members of the Board sign and agree to be bound by the Code of Conduct. In addition, Ethics has been, and will continue to be,is one of ourBasic Beliefs. and is core to our culture.
Related Party Transaction Approval Policy
In order to formalize the process by which we review any transaction with a Related Person, the Board has adopted a written policy addressing our procedures with respect to the review, approval, and ratification of “related person transactions” that are required to be disclosed pursuant to Item 404(a) of RegulationS-K. Under the policy, our General Counselthe Chief Legal and Compliance Officer initially determines if a transaction or relationship constitutes a transaction that requires compliance with the policy. The policy provides that any transaction, arrangement, or relationship, or series of similar transactions, with any Director, nominee for Director, executive officer, 5% beneficial owner, or any of their immediate family members, or any entity which is owned or controlled by such persons, or in which such persons have a substantial ownership interest or control of such entity (collectively, “Related Persons”) in which we have or will have a direct or indirect material interest and which exceeds $120,000 in the aggregate will be subject to review, approval, or ratification by the Audit Committee. In its review of related person transactions, the Audit Committee will review the material facts and circumstances of the transaction.
Transactions with Directors and Executive Officers
Timothy P. Smucker, Chairman Emeritus for the Company, is the brother of our Executive Chairman, Richard K. Smucker, and the father of our President and Chief Executive Officer, Mark T. Smucker. For fiscal year 2019,2022, Timothy P. Smucker was compensated as anon-employee Director, and such compensation is included in the “2019“2022 Director Compensation Table.” After many years of distinguished service, Timothy P. Smucker will be retiring from the Board on August 17, 2022, at the expiration of his current term. At such time, the Board will appoint him as a Chairman Emeritus for an initial one-year term, and the Company will enter into a Chairman Emeritus Agreement with him, pursuant to which Mr. Smucker will be entitled to (i) administrative resource and office support, (ii) reimbursement of reasonable business expenses, and (iii) an annual retainer of $100,000 payable in quarterly installments.
Paul J. Dolan, a member of the Board, is Chairman and Chief Executive Officer of the Cleveland Indians,Guardians, the Major League Baseball team operating in Cleveland, Ohio. Mr. Dolan’s family also owns the Cleveland IndiansGuardians organization, but the Company has determined that the Dolan family’s ownership interest in the Cleveland IndiansGuardians does not disqualify Mr. Dolan from being an “outside director” under Section 162(m) of the Code. We incurred approximately $371,000$0.4 million in advertising and promotional activities expenses related to our sponsorship with the Cleveland IndiansGuardians organization, along with purchases of season tickets and a partial season for a luxury box, in fiscal year 2019.2022.
Kirk L. Perry, a member of the Board, is the President and Chief Executive Officer of IRI. We incurred approximately $11.1 million in expenses for consumer data, analytics, and insights services provided to us by IRI in fiscal year 2022. In addition, Mr. Perry was the President, Brand Solutions of Google Inc.until May 14, 2021. We incurred approximately $12,257,000 in expenses$7.3 million for advertising services provided to us by Google Inc. infor the first quarter of fiscal year 2019.2022 (i.e., the quarter during which Mr. Perry was an officer of Google).
Related party transactions regarding members of the Compensation Committee are also disclosed under the “Compensation Committee Interlocks and Insider Participation” section of this proxy statement.
The J. M. Smucker Company | 2022 Proxy Statement |
Beneficial Ownership of Company Common Shares
The following table sets forth, as of June 17, 201921, 2022 (unless otherwise noted), the beneficial ownership of our common shares by:
|
|
|
Unless otherwise noted, the shareholders listed in the table below have sole voting and investment powers with respect to the common shares beneficially owned by them. The address of each Director, nominee for Director, and executive officer is One Strawberry Lane, Orrville, Ohio 44667. As of June 17, 2019,21, 2022, there were 114,039,401106,558,261 common shares outstanding.
Name |
Number of Common Shares Beneficially Owned (1)(2)(3)(4)(5)
| Percent of Outstanding Common Shares | Number of Common Shares Beneficially | Percent of Outstanding Common Shares | ||||||||
The Vanguard Group, Inc.
|
|
13,119,485 (6)
|
|
11.5%
|
|
12,558,903 (6) |
|
11.6% | ||||
BlackRock, Inc.
|
|
10,239,722 (7)
|
|
9.0%
| 9,508,353 (7) | 8.8% | ||||||
State Street Corporation
|
|
7,513,115 (8)
|
|
6.6%
| 8,046,161 (8) | 7.4% | ||||||
Richard K. Smucker
|
|
2,575,521
|
|
2.3%
| 2,633,592 | 2.5% | ||||||
Timothy P. Smucker
|
|
1,942,675
|
|
1.7%
| 1,960,054 | 1.8% | ||||||
Mark R. Belgya
|
|
106,442
|
|
*
| ||||||||
Kathryn W. Dindo
|
|
41,114
|
|
*
| ||||||||
John P. Brase | 68,304 | * | ||||||||||
Susan E. Chapman-Hughes | 2,650 | * | ||||||||||
Paul J. Dolan
|
|
35,867
|
|
*
| 46,649 | * | ||||||
Tina R. Floyd
|
|
16,894
|
|
*
| ||||||||
Amy C. Held
|
|
26,924
|
|
*
| ||||||||
Jay L. Henderson
|
|
6,701
|
|
*
| 11,230 | * | ||||||
Kevin G. Jackson
|
|
38,734
|
|
*
| ||||||||
Jonathan E. Johnson III | 286 | * | ||||||||||
Jeannette L. Knudsen
|
|
43,538
|
|
*
| 62,155 | * | ||||||
David J. Lemmon
|
|
23,211
|
|
*
| ||||||||
Elizabeth Valk Long
|
|
63,920
|
|
*
| ||||||||
Gary A. Oatey
|
|
45,402
|
|
*
| ||||||||
Jill R. Penrose
|
|
47,288
|
|
*
| ||||||||
Tucker H. Marshall | 33,736 | * | ||||||||||
Kirk L. Perry
|
|
4,356
|
|
*
| 11,634 | * | ||||||
Sandra Pianalto
|
|
6,490
|
|
*
| 11,269 | * | ||||||
Nancy Lopez Russell
|
|
20,873
|
|
*
| ||||||||
Alex Shumate
|
|
14,724
|
|
*
| 20,337 | * | ||||||
Mark T. Smucker
|
|
245,915
|
|
*
| 358,056 | * | ||||||
Joseph Stanziano
|
|
15,176
|
|
*
| ||||||||
Jodi L. Taylor | 2,650 | * | ||||||||||
Dawn C. Willoughby
|
|
3,195
|
|
*
| 8,531 | * | ||||||
21 Directors and executive officers as a group
|
|
4,167,301
|
|
3.7%
| ||||||||
18 Directors and executive officers as a group
|
| 4,145,560
|
| 3.9%
|
* | Less than 1% |
OWNERSHIP OF COMMON SHARES
(1) | In accordance with SEC rules, each beneficial owner’s holdings have been calculated assuming full exercise of outstanding stock options covering common shares, if any, exercisable by such owner within 60 days after June |
86 | The J. M. Smucker Company | 2022 Proxy Statement |
OWNERSHIP OF COMMON SHARES
(2) | The beneficial ownership information set forth above also includes the following number of restricted shares beneficially owned by the persons identified below: Mark T. Smucker, |
(3) | Beneficial ownership of the following common shares included in the table is disclaimed by Richard K. Smucker: 1,433,392 common shares held by trusts for the benefit of family members (including Timothy P. Smucker) of which Richard K. Smucker is a trustee with sole investment power or aco-trustee with shared investment power; 202,062 common shares owned by the Willard E. Smucker Foundation of which Richard K. Smucker is a trustee with shared investment power; and |
Beneficial ownership of the following common shares included in the table is disclaimed by Timothy P. Smucker: 477,798 common shares held by trusts for the benefit of family members of which Timothy P. Smucker is a trustee with sole investment power or aco-trustee with shared investment power; 202,062 common shares owned by the Willard E. Smucker Foundation of which Timothy P. Smucker is a trustee with shared investment power; and |
Beneficial ownership of the following common shares included in the table is disclaimed by Mark T. Smucker: |
The number of common shares beneficially owned by all Directors and executive officers as a group has been computed to eliminate duplication of beneficial ownership. |
(4) | This number includes common shares held for the benefit of the individual named under the terms of the Amended and Restated Nonemployee Director Stock Plan (“Nonemployee Director Stock Plan”), the Nonemployee Director Deferred Compensation Plan, The J. M. Smucker Company 2006 Equity Compensation Plan (the “2006 Plan”), The J. M. Smucker Company 2010 Equity and Incentive Compensation Plan (the “2010 Plan”), and the |
(5) | Because, under the Articles, shareholders may be entitled, on certain matters, to cast ten votes per share with regard to certain common shares and only one vote per share with regard to others, there may not be a correlation between the percentage of outstanding common shares owned and the voting power represented by those common shares. The total voting power of all the common shares can be determined only at the time of a shareholder meeting due to the need to obtain certifications as to beneficial ownership of common shares not held as of record in the name of individuals. There |
(6) | The number of shares beneficially owned is based on information set forth in a Schedule 13G/A of The Vanguard Group, Inc. (“Vanguard”), 100 Vanguard Blvd., Malvern, PA 19355, filed with the SEC on February |
(7) | The number of shares beneficially owned is based on information set forth in a Schedule 13G/A of BlackRock, Inc. (“BlackRock”), 55 East 52nd Street, New York, NY 10055, filed with the SEC on February |
OWNERSHIP OF COMMON SHARES
U.S. company organized under the laws of the State of Delaware. BlackRock’s Schedule 13G/A indicated that, as of December 31, |
(8) | The number of shares beneficially owned is based on information set forth in a Schedule 13G of State Street Corporation (“State Street”), State Street Financial Center, One Lincoln Street, Boston, MA 02111, filed with the SEC on February 11, |
The J. M. Smucker Company | 2022 Proxy Statement | 87 |
OWNERSHIP OF COMMON SHARES
Delinquent Section 16(a) Reports
Under the U.S. securities laws, our Directors, executive officers, and beneficial owners of more than 10% of our common shares are required to report their initial ownership of common shares and any subsequent changes in that ownership to the SEC and the NYSE. Due dates for the reports are specified by those laws, and we are required to disclose in this proxy statement any failure in the past year to file by the required dates. Based solely on written representations of our Directors and executive officers and on copies of the reports that they have filed with the SEC, it is our belief that all of our Directors and executive officers complied with all Section 16(a) filing requirements applicable to them with respect to transactions in our equity securities during fiscal year 2019, except that a Form 3 for Amy C. Held was filed late due to a failure to receive her EDGAR codes on a timely basis and a Form 5 for Nancy Lopez Russell was filed late due to a delay in notifying the Company of an open market purchase of the Company’s common shares by her husband.2022.
The J. M. Smucker Company | 2022 Proxy Statement |
EQUITY COMPENSATION PLAN INFORMATION
The table below sets forth certain information with respect to the following equity compensation plans of the Company as of April 30, 2019: The J. M. Smucker Company 1998 Equity and Performance Incentive Plan (the “1998 Plan”),2022: the 2006 Plan, the 2010 Plan, the 2020 Plan, the Nonemployee Director Stock Plan, and the Nonemployee Director Deferred Compensation Plan. All of these equity compensation plans have been approved by our shareholders, with the exception of the Nonemployee Director Deferred Compensation Plan, which was initially adopted by the Board on January 1, 2007 and most recently amended and restated on January 1, 2014.2021.
Plan Category | Number of Securities Upon Exercise of | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) |
Number of Securities (c) | Number of Securities Upon Exercise of | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) | Number of Securities (c) | ||||||||||||||||||
Equity compensation plans approved by security
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1,519,167
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$112.84
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5,380,499
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Equity compensation plans not approved by security holders (6)
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50,800
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—
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—
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Equity compensation plans approved by security holders (4)
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| 1,401,974
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| $
| 118.37
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| 4,247,728
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Equity compensation plans not approved by security holders
| — | — | — | |||||||||||||||||||||
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Total
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1,569,967
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$112.84
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5,380,499
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| 1,401,974
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| $
| 118.37
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| 4,247,728
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(1) | As of April 30, |
(2) | Upon approval of the |
(3) |
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(4) | This amount includes (i) 211,755 deferred stock units and restricted stock units outstanding under the Nonemployee Director Stock Plan, the 2006 Plan, the 2010 Plan, and the 2020 Plan, and (ii) 462,477 performance units outstanding under the 2010 Plan and the 2020 Plan. The number included for performance units reflects grant date performance units awarded. Assuming maximum payout for performance unit grants that have not completed the required performance period, the number of securities to be issued as set forth in column (a) would increase by 462,477. The weighted-average exercise price of outstanding options, warrants and rights in column (b) does not take these deferred stock units, restricted stock units, or performance units into account. The number of securities remaining available for future issuance in column (c) does not take the performance units into account until such performance units vest upon achievement of the applicable performance targets. |
The J. M. Smucker Company | 2022 Proxy Statement |
Our annual report for the fiscal year ended April 30, 20192022 was mailed to each shareholder on or about June 28, 2019.July 7, 2022.
20202023 SHAREHOLDER PROPOSALS
Any shareholder who intends to present a proposal at the Company’s 20202023 annual meeting and who wishes to have the proposal included in our proxy statement and form of proxy for that annual meeting must deliver the proposal to our Corporate Secretary so that it is received no later than February 29, 2020.March 9, 2023. In addition, according to the Regulations, if a shareholder intends to present a proposal (including with respect to Director nominations) at our 20202023 annual meeting without the inclusion of that proposal or nomination in our proxy materials, the proposal or nomination must comply with the requirements set forth in the Regulations, and the shareholder must deliver thesuch proposal or nomination to our Corporate Secretary so that it is received no later than May 16, 2020,19, 2023, which is 90 calendar days before the first anniversary of the date of the preceding year’s annual meeting, and no earlier than April 16, 2020,19, 2023, which is 120 days before the first anniversary of the date of the preceding year’s annual meeting. AfterBefore April 19, 2023 and after May 16, 2020,19, 2023, the notice would be considered untimely. If, however, the date of our 20202023 annual meeting of shareholders is more than 30 days before or more than 60 days after the first anniversary of the date of the preceding year’s annual meeting, then the deadline for shareholders to notify us will be no earlier than the close of business on the 120th day prior to the date of such annual meeting and no later than the close of business on the later of the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by us.
We do not know of any matters to be brought before the meeting except as indicated in this notice. However, if any other matters properly come before the meeting for action, it is intended that the person authorized under solicited proxies may vote or act thereon in accordance with his or her own judgment.
“HOUSEHOLDING” OF PROXY MATERIALS
In accordance with the notices we have sent to registered shareholders, we are sending only one copy of our annual report and proxy statement to shareholders who share the same last name and mailing address, unless they have notified us that they want to continue receiving multiple copies. Each shareholder will continue to receive a separate proxy card or Notice of Internet Availability of Proxy Materials. We understand that the brokerage community has mailed similar notices to holders of common shares who hold their common shares in street name. This practice, known as “householding,” is permitted by the SEC and is designed to reduce duplicate mailings and save printing and postage costs, as well as conserve natural resources.
Shareholders who currently receive multiple copies of the annual report and proxy statement at their address and would like to request “householding” of their communications should contact their broker if they are a street name shareholder or, if they are a registered shareholder, should contact Computershare Investor Services, LLC (“Computershare”) by calling1-800-456-1169, or inform them in writing at Computershare Investor Services, P.O. Box 505000, Louisville, Kentucky 40233. Shareholders who are “householding” their communications, but who wish to begin to receive separate copies of the annual report and proxy statement in the future, may also notify their broker or Computershare. We will promptly deliver a separate copy of the annual report and proxy statement at a shared address to which a single copy was delivered upon written or oral request to Shareholder Services, The J. M. Smucker Company, One Strawberry Lane, Orrville, Ohio 44667,1-330-684-3838.330-684-3838.
The J. M. Smucker Company | 2022 Proxy Statement |
ELECTRONIC DELIVERY OF COMPANY SHAREHOLDER COMMUNICATIONS
If you are a registered shareholder, we encourage you to conserve natural resources, as well as reduce printing and mailing costs, by signing up to receive your shareholder communications from us electronically. Through participation in the eTree program sponsored by Computershare, we will have a tree planted on your behalf if you elect to receive your shareholder materials and documents electronically. The tree will be planted by American Forests, a leading conservation organization, to support revegetation and reforestation efforts in the United States. You will receive your shareholder information faster and will be able to access your documents, reports, and informationon-line at the Investor CentreCenter on Computershare’s website at www.computershare.com/investor. With your consent, we will stop mailing paper copies of these documents and will notify you bye-mail when the documents are available to you, where to find them, and how to quickly submit your voteon-line. Your election to receive shareholder communications electronically will be effective until you cancel it.
Please note that, although there is no charge for accessing our annual meeting materialson-line, you may incur costs from service providers such as your Internet access provider and your telephone company. If you have any questions or need assistance, please call1-866-602-0762.
VOTING RIGHTS OF COMMON SHARES
Under Article Fourth of the Articles, the holder of each outstanding common share is entitled to one vote on each matter submitted to a vote of our shareholders, except for the following specific matters:
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On the matters listed above, common shares are entitled to ten votes per share if they meet the requirements set forth in the Articles. Common shares entitled to ten votes per share must meet one of the following criteria:
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VOTING RIGHTS OF COMMON SHARES
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The J. M. Smucker Company | 2022 Proxy Statement | 91 |
VOTING RIGHTS OF COMMON SHARES
In the event of a change in beneficial ownership, the new owner of that common share will be entitled to only one vote with respect to that share on all matters until four years pass without a further change in beneficial ownership of the share. There are no proposalsis one proposal on this year’s ballot for which theten-votes-per-share provisions apply.
The express terms of the common shares provide that a change in beneficial ownership occurs whenever any change occurs in the person or group of persons who has or shares voting power, investment power, the right to receive sale proceeds, or the right to receive dividends or other distributions in respect of those common shares. In the absence of proof to the contrary, a change in beneficial ownership will be deemed to have occurred whenever common shares are transferred of record into the name of any other person. Moreover, corporations, general partnerships, limited partnerships, voting trustees, banks, trust companies, brokers, nominees, and clearing agencies will be entitled to only one vote per share on common shares held of record in their respective names unless written proof is provided to establish that there has been no change in the person or persons who direct the exercise of any of the rights of beneficial ownership of such shares, including the voting of common shares. Thus, shareholders who hold common shares in street name or through any of the other indirect methods mentioned above must be able to submit written proof of beneficial ownership in form and substance satisfactory to us in order to be entitled to exercise ten votes per share.
The foregoing is merely a summary of the voting terms of the common shares and this summary should be read in conjunction with, and is qualified in its entirety by reference to, the express terms of those common shares, as set forth in the Articles. A copy of the Articles is posted on our website atwww.jmsmucker.com and is available free of charge to any shareholder submitting a written request to the Corporate Secretary, The J. M. Smucker Company, One Strawberry Lane, Orrville, Ohio 44667.
We are furnishing this document to you in connection with the solicitation by the Board of the enclosed form of proxy for our annual meeting to be held on August 14, 2019.17, 2022. In addition to solicitation by mail, we may solicit proxies in person, by telephone, facsimile, ore-mail. We will bear all costs of the proxy solicitation and have engaged a professional proxy solicitation firm, D.F. King & Co., Inc., to assist us in soliciting proxies. We will pay a fee of approximately $20,000 (including expenses) for such services.
We pay for the preparation and mailing of the Notice of 20192022 Annual Meeting of Shareholders and proxy statement, and we have also made arrangements with brokerage firms and other custodians, nominees, and fiduciaries for the forwarding of this proxy statement and other annual meeting materials to the beneficial owners of our common shares at our expense. This proxy statement is dated June 28, 2019July 7, 2022 and is first being mailed to our shareholders on or about June 28, 2019.July 7, 2022.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Why did I receive these proxy materials?
You received these proxy materials because you are a shareholder of the Company. The Board is providing these proxy materials to you in connection with our virtual annual meeting to be held on August 14, 2019.17, 2022. As a shareholder of the Company, you are entitled to vote on the important proposals described in this proxy statement. Since it is not practical for all shareholders to attend the virtual annual meeting and vote in person, the Board is seeking your proxy to vote on these matters.
What is a proxy?
A proxy is your legal designation of another person (“proxy”) to vote the common shares you own at the annual meeting. By completing and returning the proxy card(s), which identifies the individuals or trustees authorized to act as your proxy, you are giving each of those individuals authority to vote your common shares as you have instructed. By voting via proxy, each shareholder can cast his or her vote without having to attend the virtual annual meeting in person.
The J. M. Smucker Company | 2022 Proxy Statement |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Why did I receive more than one proxy card?
You will receive multiple proxy cards if you hold your common shares in different ways (e.g.,trusts, custodial accounts, joint tenancy) or in multiple accounts. If your common shares are held by a broker or bank (i.e., in “street name”), you will receive your proxy card and other voting information from your broker, bank, trust, or other nominee. It is important that you complete, sign, date, and return each proxy card you receive, or vote using the telephone, or by using the Internet (as described in the instructions included with your proxy card(s) or in the Notice of Internet Availability of Proxy Materials).
Why didn’t I receive paper copies of the proxy materials?
As permitted by the SEC, we are making this proxy statement and our annual report available to our shareholders electronically via the Internet. We believe this delivery method expedites your receipt of materials, while also lowering costs and reducing the environmental impact of our annual meeting. The Notice of Internet Availability of Proxy Materials contains instructions on how to access this proxy statement and our annual report and how to vote online.
If you received a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials unless you request one in accordance with the instructions provided in the notice. The Notice of Internet Availability of Proxy Materials has been mailed to shareholders on or about June 28, 2019July 7, 2022 and provides instructions on how you may access and review the proxy materials on the Internet.
What is the record date and what does it mean?
The Board has established June 17, 201921, 2022 as the record date for the annual meeting of shareholders to be held on August 14, 2019.17, 2022. Shareholders who own common shares of the Company at the close of business on the record date are entitled to notice of and to vote at the virtual annual meeting.
What is the difference between a “registered shareholder” and a “street name shareholder”?
These terms describe how your common shares are held. If your common shares are registered directly in your name with Computershare, our transfer agent, you are a “registered shareholder.” If your common shares are held in the name of a brokerage,broker, bank, trust, or other nominee as a custodian, you are a “street name shareholder.”
How many common shares are entitled to vote at the annual meeting?
As of the record date, there were 114,039,401106,558,261 common shares outstanding and entitled to vote at the virtual annual meeting.
How many votes must be present to hold the annual meeting?
A majority of the Company’s outstanding common shares as of the record date must be present in order for us to hold the annual meeting. This is called a quorum. Broker“non-votes” and abstentions are counted as present for purposes of determining whether a quorum exists. A broker“non-vote” occurs when a nominee, such as a bank or broker holding shares for a beneficial owner, does not vote on a particular proposal because the nominee does not have discretionary voting power for the particular item and has not received instructions from the beneficial owner. Proposal 2 is the only routine matter on this year’s ballot that may be voted on by brokers.
Who will count the votes?
A representative from Broadridge Financial Solutions, Inc. (“Broadridge”), or its designee, will determine if a quorum is present, tabulate the votes, and serve as our inspector of election at the annual meeting.
What vote is required to approve each proposal?
Under ourthe Articles, shareholders may be entitled, on certain matters, to cast ten votes per share with regard to certain common shares and only one vote per share with regard to others. The total voting power of all of the common shares can be determined only at the time of a shareholder meeting due to the need to obtain certifications as to beneficial ownership of common shares not held as of record in the name of individuals. There are no proposalsis one proposal on this year’s ballot for which theten-votes-per-share provisions apply.
The J. M. Smucker Company | 2022 Proxy Statement |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Abstentions, brokernon-votes, and shares not in attendance and not voted at the annual meeting will not be counted as votes cast “for” or “against” a candidate and will have no effect with regard to the election of Directors in Proposal 1 (See “Corporate Governance—Director Resignation Policy”). In addition, abstentions, brokernon-votes (if any), and shares not in attendance and not voted at the annual meeting will not be counted as votes cast “for” or “against” Proposals 2, and 3, or 4 and, therefore, will have no effect on the vote for those proposals.
Proposal 1: Because this is an uncontested election, a candidate will be elected as a Director only if the votes cast for the candidate exceed the votes cast against the candidate, based upon one vote for each common share owned as of the record date. A plurality voting standard would be used if this were a contested election. Under the plurality voting standard, the candidates receiving the most “for” votes would be elected.
Under our Director resignation policy, in an uncontested election, any nominee for Director who receives a greater number of “against” votes than “for” votes is required to tender his or her resignation for consideration by the Nominating Committee. We have provided more information about our Director resignation policy under the heading “Corporate Governance—Director Resignation Policy.”
Proposal 2: The affirmative vote of the holders of a majority of the votes cast on this proposal, based upon one vote for each common share owned as of the record date, is necessary to ratify the appointment of the Independent Registered Public Accounting Firm (the “Independent Auditors”).Firm.
Proposal 3: The affirmative vote of the holders of a majority of the votes cast on this proposal, based upon one vote for each common share owned as of the record date, is necessary to approve, on an advisory basis, the Company’s executive compensation. This vote is advisory and not binding on the Company, the Board, or the Compensation Committee in any way. To the extent there is any significant vote against the executive compensation as disclosed in this proxy statement, the Board and the Compensation Committee will evaluate what actions, if any, may be necessary to address the concerns of our shareholders. Under the Articles, shareholders are entitled to cast ten votes per share on any matter relating to any stock option plan, stock purchase plan, executive compensation plan, executive benefit plan, or other similar plan, arrangement, or agreement. Because the vote on this proposal is anon-binding, advisory vote, we have determined that suchten-votes-per-share provisions will not apply to this proposal.
Proposal 4: The affirmative vote of the holders of common shares entitling them to exercise two-thirds of the total voting power of the Company, giving effect to the ten-votes-per-share provisions of the Articles, is necessary to adopt the amendments to the Articles to eliminate the time phased voting provisions and give all outstanding common shares one vote on matters properly submitted to our shareholders for their vote.
Where will I be able to find voting results of the annual meeting?
We will announce preliminary voting results at the annual meeting. We will also publish final voting results in a Current Report on Form8-K to be filed with the SEC within four business days after the annual meeting.
How do I vote my common shares?
If you are aregistered shareholder and you received your proxy materials by mail, you can vote your shares in one of the following manners:
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Please refer to the specific instructions set forth on the proxy card(s) that you received.
If you are a registered shareholder and you received a Notice of Internet Availability of Proxy Materials, you can vote your shares in one of the following manners:
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94 | The J. M. Smucker Company | 2022 Proxy Statement |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Please refer to the specific instructions set forth in the Notice of Internet Availability of Proxy Materials.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
If you are a street name shareholder, your broker, bank, trustee, or other nominee will provide you with materials and instructions for voting your common shares. If you wishshares, including instructions to be able to vote in personelectronically at the annual meeting, you must contact your broker and request a document called a “legal proxy.” You must bring this legal proxy obtained from your broker, bank, trust, or other nominee to the annual meeting in order to vote in person.meeting.
Can I change my vote after I have mailed in my proxy card(s) or submitted my vote using the Internet or telephone?
Yes, if you are aregistered shareholder and you received your proxy materials by mail, you can change your vote in any one of the following ways:
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Yes, if you are aregistered shareholder and you received a Notice of Internet Availability of Proxy Materials, you can change your vote in any one of the following ways:
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Requesting a paper copy of the materials by calling1-800-579-1639, and then signing and dating the proxy card(s) and submitting the proxy card(s) to Broadridge so that it is received prior to the annual meeting. |
Your mere presence at the virtual annual meeting will not revoke your proxy. You must vote in person at the annual meeting in order to revoke your proxy.
If you are a street name shareholder, you must contact your broker, bank, trust, or other nominee in order to revoke your proxy.
How will my proxy be voted?
If you complete, sign, date, and return your proxy card(s) or vote by telephone or by using the Internet, your proxy will be voted in accordance with your instructions. If you sign and date your proxy card(s) but do not indicate how you want to vote, your common shares will be voted for each of the proposals as the Board recommends.
What if my common shares are held in “street name” by my broker?
You should instruct your broker how you would like to vote your shares by using the written instruction form and envelope provided by your broker. If you do not provide your broker with instructions, under the rules of the NYSE, your broker may, but is not required to, vote your common shares with respect to certain “routine” matters. However, on other matters, when the broker has not received voting instructions from its customers, the broker cannot vote the shares on the matter and a “brokernon-vote” occurs. Proposal 2 is the only routine matter on this year’s ballot to be voted on by our shareholders. Proposals 1, 3, and 34 are not considered routine matters under the NYSE rules. This means that brokers may not vote your common shares on such proposals if you have not given your broker specific instructions as to how to vote. Please be sure to give specific voting instructions to your broker so that your vote can be counted. If your shares are held in the name of a broker, bank, trust, or other nominee, you hold your common shares in your broker’s name and wishshould follow the instructions provided by them to be able to vote in personelectronically at the annual meeting, you must contact your broker and request a document called a “legal proxy.” You must bring this legal proxy to the annual meeting in order to vote in person.meeting.
The J. M. Smucker Company | 2022 Proxy Statement |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
What are the Board’s recommendations on how I should vote my common shares?
The Board recommends that you vote your common shares as follows:
Proposal | Proposal Summary | FOR | |||||
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1 | Election of the Board nominees named in this proxy statement with terms | ✓ | |||||
2 | Ratification of appointment of Ernst & Young LLP as the Company’s | ✓ | |||||
3 | Advisory approval of the Company’s executive compensation | ✓ | |||||
4 | Adoption of amendments to the Company’s Articles to eliminate the time phased voting provisions | ✓ |
Does the Company have cumulative voting?
No. In 2009, the shareholders of the Company amended the Articles to eliminate cumulative voting.
Who may attendHow can I vote my common shares during the virtual annual meeting?
The annual meeting will be a virtual meeting conducted on the following website: www.virtualshareholdermeeting.com/SJM2022 (the “Annual Meeting Website”). If you would like to vote at the annual meeting?
All shareholders are eligible to attendmeeting, please follow the instructions that will be available on the Annual Meeting Website during the annual meeting. If your shares are held in the name of a broker, bank, trust, or other nominee, you should follow the instructions provided by them to be able to vote electronically at the meeting. Voting by proxy, whether by internet, telephone, or mail, will not limit your right to vote electronically at the virtual annual meeting. However, only thoseif you vote by proxy and participate in the meeting, there is no need to vote electronically at the virtual annual meeting, unless you would like to change your vote.
How can I participate in the virtual annual meeting?
Due to the continuing COVID-19 pandemic and to support the health and well-being of our shareholders, Directors, employees, and their families, the annual meeting will be held in a virtual meeting format, conducted via live webcast, beginning promptly at 12:00 p.m. Eastern Time on Wednesday, August 17, 2022. We recommend you log in at least 15 minutes before the annual meeting to ensure ample time to complete the check-in procedures.
Shareholders of record at the close of business on Tuesday, June 17, 201921, 2022 are entitledeligible to attend the virtual annual meeting. You will have the same rights and opportunities to participate as you would have at a physical annual meeting.
You will be able to participate in the virtual annual meeting, vote atyour shares electronically, and submit your questions during the meeting by visiting the Annual Meeting Website. To participate in the virtual annual meeting, you will need the 16-digit control number that is printed in the box marked by the arrow on your Notice of Internet Availability or your proxy card (if you received a printed copy of the proxy materials). If your shares are held in the name of a broker, bank, trust, or other nominee, you should follow the instructions provided by them in order to participate in the virtual annual meeting.
For those unable to attend the virtual annual meeting, a recorded version of the webcast will be made available on our website for a period of one year after the annual meeting.
DoWhat if I need an admission ticket to attendhave technical difficulties or trouble accessing the virtual annual meeting?
Admission tickets are not required to attend the annual meeting. If you are a registered shareholder, properly mark your proxy to indicate that youencounter any technical difficulties accessing the Annual Meeting Website or during the virtual annual meeting, please call: 1-844-986-0822 (US) or 303-562-9302 (International). Technical support will be attending the annual meeting. If you hold your common shares through a nominee or you are a street name shareholder, you are required to bring evidence of share ownership to the annual meeting (e.g.,account statement, broker verification). Seating at the annual meeting will be on a first-come, first-served basis, and we cannot guarantee seating for all shareholders.
What type of accommodations can the Company make at the annual meeting for people with disabilities?
We can provide reasonable assistance to help you participate in the annual meeting if you notify the Corporate Secretary in writing at The J. M. Smucker Company, One Strawberry Lane, Orrville, Ohio 44667, or by telephone, by calling330-684-3838 at least two weeksavailable 30 minutes prior to the start time of the virtual annual meeting.
How can I ask a question during the virtual annual meeting?
You will be able to submit written questions during the virtual annual meeting about your disabilityby following the instructions that will be available on the Annual Meeting Website. As part of the virtual annual meeting, we will hold a live question and how you plananswer session, during which we intend to attend.answer questions submitted in accordance with the Annual Meeting’s Rules of Conduct
96 | The J. M. Smucker Company | 2022 Proxy Statement |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
(which will be available on the Annual Meeting Website) that are pertinent to the Company and the meeting matters, as time permits. Questions and answers will be grouped by topic, and substantially similar questions will be grouped and answered once.
Who can answer my questions?
If you need additional copies of the proxy materials, you should contact:
Broadridge Financial Solutions, Inc. 51 Mercedes Way Edgewood, New York 11717 Call Toll Free:1-800-579-1639 |
If you have any questions about the proxy materials or the virtual annual meeting, or need assistance in voting your common shares, you should contact:
D.F. King & Co., Inc. 48 Wall Street New York, New York 10005 Call Toll Free: Call Collect:212-269-5550 |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
If you have any questions about the proxy materials or the virtual annual meeting, you may also contact:
Shareholder Services The J. M. Smucker Company One Strawberry Lane Orrville, Ohio 44667 Telephone:330-684-3838 Call Toll Free:1-866-362-5369 |
The J. M. Smucker Company | 2022 Proxy Statement |
APPENDIX A: RECONCILIATION OF ADJUSTED OPERATING INCOME, ADJUSTED EARNINGS PER SHARE, AND FREE CASH FLOW TO THE RELATED GAAP MEASURES
Year Ended April 30, | Year Ended April 30, | |||||||||||||||
(Dollars and shares in millions, except per share data) | 2019 | 2018 | 2022 | 2021 | ||||||||||||
Operating income reconciliation: |
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Operating income | $ | 928.6 |
| $ | 1,044.0 |
| $ | 1,023.8 |
| $ | 1,386.8 |
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Amortization |
| 240.3 |
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| 206.8 |
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| 223.6 |
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| 233.0 |
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Goodwill impairment charges |
| 97.9 |
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| 145.0 |
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Other intangible assets impairment charges |
| 107.2 |
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| 31.9 |
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| 150.4 |
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| 3.8 |
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Unallocated derivative losses (gains) |
| 54.2 |
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| (37.3) |
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Cost of products sold - special project costs |
| - |
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| 3.9 |
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Other special project costs |
| 64.1 |
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| 45.4 |
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Gain on divestitures—net |
| (9.6 | ) |
| (25.3 | ) | ||||||||||
Change in net cumulative unallocated derivative gains and losses |
| 23.4 |
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| (93.6 | ) | ||||||||||
Cost of products sold—special project costs (A) |
| 20.5 |
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| 3.4 |
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Other special project costs (A) |
| 8.0 |
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| 20.7 |
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Adjusted operating income | $ | 1,492.3 |
| $ | 1,439.7 |
| $ | 1,440.1 |
| $ | 1,528.8 |
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Net income reconciliation: |
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Net income | $ | 514.4 |
| $ | 1,338.6 |
| $ | 631.7 |
| $ | 876.3 |
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Income tax expense (benefit) |
| 187.2 |
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| (477.6) |
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Income tax expense |
| 212.1 |
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| 295.6 |
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Amortization |
| 240.3 |
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| 206.8 |
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| 223.6 |
|
| 233.0 |
| ||||
Goodwill impairment charges |
| 97.9 |
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| 145.0 |
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Other intangible assets impairment charges |
| 107.2 |
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| 31.9 |
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| 150.4 |
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| 3.8 |
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Unallocated derivative losses (gains) |
| 54.2 |
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| (37.3) |
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Cost of products sold - special project costs |
| - |
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| 3.9 |
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Other special project costs |
| 64.1 |
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| 45.4 |
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Gain on divestitures—net |
| (9.6 | ) |
| (25.3 | ) | ||||||||||
Change in net cumulative unallocated derivative gains and losses |
| 23.4 |
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| (93.6 | ) | ||||||||||
Cost of products sold—special project costs (A) |
| 20.5 |
|
| 3.4 |
| ||||||||||
Other special project costs (A) |
| 8.0 |
|
| 20.7 |
| ||||||||||
Other one-time items: |
|
| ||||||||||||||
Pension plan termination settlement charges (B) |
| — |
|
| 29.6 |
| ||||||||||
Adjusted income before income taxes | $ | 1,265.3 |
| $ | 1,256.7 |
| $ | 1,260.1 |
| $ | 1,343.5 |
| ||||
Income taxes, as adjusted(A) |
| 322.6 |
|
| 352.1 |
| ||||||||||
Income taxes, as adjusted |
| 297.9 |
|
| 318.5 |
| ||||||||||
Adjusted income | $ | 942.7 |
| $ | 904.6 |
| $ | 962.2 |
| $ | 1,025.0 |
| ||||
Weighted-average shares - assuming dilution |
| 113.7 |
|
| 113.6 |
| ||||||||||
Adjusted earnings per share - assuming dilution | $ | 8.29 |
| $ | 7.96 |
| ||||||||||
Adjusted earnings per share - assuming dilution reconciliation: | ||||||||||||||||
Adjusted earnings per share - assuming dilution | $ | 8.29 |
| $ | 7.96 |
| ||||||||||
Less: Partial earnings benefit from reduced effective tax rate |
| - |
|
| 0.20 |
| ||||||||||
Adjusted earnings per share (as modified) | $ | 8.29 |
| $ | 7.76 |
| ||||||||||
Weighted-average shares—assuming dilution |
| 108.4 |
|
| 112.4 |
| ||||||||||
Adjusted earnings per share—assuming dilution | $ | 8.88 |
| $ | 9.12 |
| ||||||||||
|
|
| ||||||||||||||
Free cash flow reconciliation: |
|
| ||||||||||||||
Net cash provided by (used for) operating activities | $ | 1,141.2 |
| $ | 1,218.0 |
| $ | 1,136.3 |
| $ | 1,565.0 |
| ||||
Additions to property, plant, and equipment |
| (359.8) |
|
| (321.9) |
|
| (417.5 | ) |
| (306.7 | ) | ||||
Free cash flow | $ | 781.4 |
| $ | 896.1 |
| $ | 718.8 |
| $ | 1,258.3 |
|
(A) Income taxes,
(A) | Special project costs include certain divestiture, acquisition, integration, and restructuring costs, which are recognized in cost of products sold and other special project costs. For more information, see Note 2: Integration and Restructuring Costs and Note 4: Reportable Segments in our 2022 Annual Report on Form 10-K. |
(B) | Represents the nonrecurring pre-tax settlement charges of $29.6 related to the purchase of an irrevocable group annuity contract to transfer our Canadian defined benefit pension plan obligation to an insurance company. For additional information, see Note 8: Pensions and Other Post Retirement Benefits in our 2022 Annual Report on Form 10-K. |
The J. M. Smucker Company | 2022 Proxy Statement | A-1 |
APPENDIX B: PROPOSED AMENDMENTS TO AMENDED ARTICLES OF INCORPORATION
Article Fourth, Division I-A, Section 5 of the Amended Articles of Incorporation of the Company is proposed to be amended as adjustedfollows:
SECTION 5. (a) In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the Company (hereinafter referred to as a “Liquidation”), no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon Liquidation) to the Series A Junior Participating Preferred Shares, unless, prior thereto, the holders of Series A Junior Participating Preferred Shares shall have received at least an amount per share equal to100 times the then applicable Purchase Price as defined in the Rights Agreement dated as of May 20, 2009, between the Company and Computershare Trust Company, N.A., as the same may be from time to time amended in accordance with its terms (which Purchase Price is any accrued and based upon our GAAP effective tax rate$140.00 as of May 20, 2009), subject to adjustment from time to time as provided in the Rights Agreement, plus an amount equal toreflectsunpaid dividends and distributions thereon, whether or not earned or declared, to the impactdate of items excludedsuch payment, provided that the holders of Series A Junior Participating Preferred Shares shall be entitled to receive at least an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of Common Shares (the “Series A Junior Participating Preferred Shares Liquidation Preference”).
Article Fourth, Division II, Sections 1 through 4 of the Amended Articles of Incorporation of the Company are proposed to be amended as follows:
SECTION 1. Except as expressly set forth in Section 2 of this Division II, eEach outstanding Common Share shall entitle the holder thereof to one vote on each matter properly submitted to the shareholders for their vote, consent, waiver, release, or other action, including any vote or consent for the election or removal of Ddirectors.
SECTION 2. (a) Notwithstanding Section 1 of this Division II, each outstanding Common Share shall entitle the holder thereof to ten votes on each of the following matters properly submitted to the shareholders to the extent such matters (x) are required under the Ohio Revised Code, any provisions of these Amended Articles of Incorporation or the Regulations of the Company or applicable stock exchange rules, to be submitted to the shareholders for their vote, consent, waiver or other action or (y) are submitted or presented to the shareholders for their vote, consent waiver or other action: (1) any matter that relates to or would result in the dissolution or liquidation of the Company, whether voluntary or involuntary, and whether pursuant to Section 1701.86 or 1701.91 of the Ohio Revised Code or otherwise, (2) the adoption of any amendment to these Amended Articles of Incorporation, or the Regulations of the Company, or the adoption of Amended Articles of Incorporation, other than the adoption of any amendment or Amended Articles of Incorporation that increases the number of votes to which holders of Common Shares are entitled or expand the matters to which this Section 2(a) applies, (3) any proposal or other action to be taken by the shareholders of the Company, whether or not proposed by the shareholders of the Company, and whether proposed by authority of the Board of Directors or otherwise, relating to the Amended and Restated Rights Agreement, dated as of August 28, 2000, as it may be amended from GAAP net incometime to derive adjusted income. Income taxes,time pursuant to its terms, or any successor plan, (4) any matter relating to any stock option plan, stock purchase plan, executive compensation plan, executive benefit plan, or other similar plan, arrangement or agreement, (5) adoption of any agreement or plan of or for the merger, consolidation, or majority share acquisition of the Company or any subsidiary with or into any other person, whether domestic or foreign, corporate, or noncorporate, or the authorization of the lease, sale, exchange, transfer or other disposition of all, or substantially all, of the Company’s assets, (6) any matter submitted to the shareholders pursuant to Article Fifth or Article Seventh of these Amended Articles of Incorporation, as adjustedthey may be further amended, or any issuance of shares of the Company for which shareholder approval is required by applicable stock exchange rules or (7) any matter relating to the issuance of shares of the Company, or the repurchase of shares of the Company that the Board of Directors determines is required or appropriate to be submitted to the shareholders under the Ohio Revised Code or applicable stock exchange rules, except that:
(i) no holder of Common Shares shall be entitled to exercise more than one vote on any such matter in respect of any Common Share with respect to which there has been further adjusteda change in beneficial ownership following the Effective Time of the Merger (as such terms are defined in the Transaction Agreement, dated as of June 4, 2008, as it may be amended from time to reflect the exclusion of certainone-time discrete tax adjustments related to U.S. tax reformtime (the “Transaction Agreement”), by and among The Procter & Gamble Company, The Folgers Coffee Company, Moon Merger Sub, Inc. and the goodwill impairment charges recordedCompany) and during fiscalthe four years 2019immediately preceding the date on which a determination is made of the shareholders who are entitled to take any such action; and 2018.
The J. M. Smucker Company | 2022 Proxy Statement | B-1 |
APPENDIX B: PROPOSED AMENDMENTS TO AMENDED ARTICLES OF INCORPORATION
A-1(ii) no holder shall be entitled to exercise more than one vote on any such matter in respect of any Common Share if the aggregate voting power such holder otherwise would be entitled to exercise as of the date of such a determination (disregarding the voting power of any Common Shares held by such holder on August 20, 1985 or acquired by such holder in a transaction not involving any change in beneficial ownership by reason of Section 2(c) of this Division II) would constitute one-fifth or more of the voting power of the Company and the holders of the Common Shares have not authorized the ownership of Common Shares by such person as and to the extent contemplated by Article Seventh hereof.
(b) A change in beneficial ownership of an outstanding Common Share shall be deemed to have occurred whenever a change occurs in any person or group of persons who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares (1) voting power, which includes the power to vote, or to direct the voting of such Common Share, (2) investment power, which includes the power to direct the sale or other disposition of such Common Share, (3) the right to receive or retain the proceeds of any sale or other disposition of such Common Share, or (4) the right to receive any distributions, including cash dividends, in respect of such Common Share.
(A) In the absence of proof to the contrary provided in accordance with the procedures referred to in Section 2(d) of this Division II, a change in beneficial ownership shall be deemed to have occurred whenever a Common Share is transferred of record into the name of any other person.
(B) In the case of a Common Share held of record in the name of a corporation, general partnership, limited partnership, voting trustee, bank, trust company, broker, nominee or clearing agency, if it has not been established pursuant to the procedures referred to in Section 2(d) of this Division II that there has been no change in the person or persons who direct the exercise of the rights referred to in clauses (b)(1) through (b)(4) of Section 2 of this Division II with respect to such Common Share during the period of four years immediately preceding the date on which a determination is made of the shareholders who are entitled to take any action, then a change in beneficial ownership shall be deemed to have occurred during such period.
(C) In the case of a Common Share held of record in the name of any person as a trustee, agent, guardian or custodian under the Uniform Gifts to Minors Act as in effect in any state, a change in beneficial ownership shall be deemed to have occurred whenever there is a change in the beneficiary of such trust, the principal of such agent, the ward of such guardian or the minor for whom such custodian is acting or in such trustee, agent, guardian or custodian.
(D) In the case of Common Shares beneficially owned by a person or group of persons who, after acquiring directly or indirectly the beneficial ownership of five percent of the outstanding Common Shares, failed to notify the Company of such ownership, a change in beneficial ownership of such Common Shares shall be deemed to occur on each day while such failure continues.
(c) Notwithstanding anything in this Section 2 of this Division II to the contrary, no change in beneficial ownership shall be deemed to have occurred solely as a result of:
(1) any event that occurred prior to August 20, 1985 or pursuant to the terms of any contract (other than a contract for the purchase and sale of Common Shares contemplating prompt settlement), including contracts providing for options, rights of first refusal and similar arrangements in existence on such date to which any holder of Common Shares is a party;
(2) any transfer of any interest in a Common Share pursuant to a bequest or inheritance, by operation of law upon the death of any individual, or by any other transfer without valuable consideration, including a gift that is made in good faith and not for. the purpose of circumventing this Article Fourth;
(3) any change in the beneficiary of any trust, or any distribution of a Common Share from trust, by reason of the birth, death, marriage or divorce of any natural person, the adoption of any natural person prior to age 18 or the passage of a given period of time or the attainment by any natural person of a specific age, or the creation or termination of any guardianship or custodial arrangement;
B-2 | The J. M. Smucker Company | 2022 Proxy Statement |
APPENDIX B: PROPOSED AMENDMENTS TO AMENDED ARTICLES OF INCORPORATION
(4) any appointment of a successor trustee, agent, guardian or custodian with respect to a Common Share if neither such successor has nor its predecessor had the power to vote or to dispose of such Common Share without further instructions from others;
(5) any change in the person to whom dividends or other distributions in respect of a Common Share are to be paid pursuant to the issuance or modification of a revocable dividend payment order; or
(6) any issuance of a Common Share by the Company or any transfer by the Company of a Common Share held in treasury unless otherwise determined by the Board of Directors at the time of authorizing such issuance, or transfer, including without limitation those Common Shares issued pursuant to the Transaction Agreement.
(d) For purposes of Section 2 of this Division II, all determinations concerning changes in beneficial ownership, or the absence of any such change, shall be made by the Company or, at any time when a transfer agent is acting with respect to the Common Shares, by such transfer agent on the Company’s behalf. Written procedures designed to facilitate such determinations shall be established by the Company and refined from time to time. Such procedures shall provide, among other things, the manner of proof of facts that will be accepted and the frequency with which such proof may be required to be renewed. The Company and any transfer agent shall be entitled to rely on all information concerning beneficial ownership of the Common Shares coming to their attention from any source and in any manner reasonably deemed by them to be reliable, but neither the Company nor any transfer agent shall be charged with any other knowledge concerning the beneficial ownership of the Common Shares.
(e) In the event of any stock split or stock dividend with respect to the Common Shares, each Common Share acquired by reason of such split or dividend shall be deemed to have been beneficially owned by the same person continuously from the same date as that on which beneficial ownership of the Common Share, with respect to which such Common Share was distributed, was acquired.
SECTION 3. No reference to any matter in this Division II shall be deemed to entitle any shareholder of the Company the right to vote thereon, consent thereto, grant a waiver or release in respect thereof, or take any other action with respect thereto.
SECTION 2 4. Each Common Share, whether at any particular time the holder thereof is entitled to exercise ten votes or one vote pursuant to Section 2 of this Division II,shall be identical to all other Common Shares in all respects, and together the Common Shares shall constitute a single class of shares of the Company.
Article Seventh, Section (A)(5) of the Amended Articles of Incorporation of the Company is proposed to be amended as follows:
(5) “Interested Shares” means the shares of the Company in respect of which any of the following persons may exercise or direct the exercise of the voting power of the Company in the election of Directors:
(a) An Acquiring Person;
(b) Any officer of the Company elected or appointed by the Directors, provided, however, that shares which, as of the record date of any special meeting held pursuant to this Article Seventh, have been owned beneficially by such person for four or more years shall not be deemed to be “Interested Shares” for purposes of any vote at such meeting;
(c) Any employee of the Company who is also a Director, provided, however, that shares which, as of the record date of any special meeting held pursuant to this Article Seventh, have been owned beneficially by such person for four or more years shall not be deemed to be “Interested Shares” for purposes of any vote at such meeting; and
(d) Any Person that acquires such shares for valuable consideration during the period beginning with the date of the first public disclosure of a proposed Control Share Acquisition of the Company or any proposed merger, consolidation, or other transaction that would result in a change in control of the Company or all or substantially all of its assets, and ending on the record date established by the directors pursuant to Section 1701.45 of the Ohio Revised Code and Section (D) of this Article Seventh, if either of the following applies:
(i) The aggregate consideration paid or given by the Person who acquired the shares, and any other Persons acting in concert with the Person, for all such shares exceeds two hundred fifty thousand dollars; or
The J. M. Smucker Company | 2022 Proxy Statement | B-3 |
APPENDIX B: PROPOSED AMENDMENTS TO AMENDED ARTICLES OF INCORPORATION
(ii) The number of shares acquired by the Person who acquired the shares, and any other Persons acting in concert with the Person, exceeds one-half of one per cent of the outstanding shares of the Company entitled to vote in the election of Directors.
(e) Any Person that transfers such shares for valuable consideration after the record date described in paragraph 5(d) of this Section (A) as to shares so transferred, if accompanied by the voting power in the form of a blank proxy, an agreement to vote as instructed by the transferee, or otherwise.
Article Seventh, Section (B) of the Amended Articles of Incorporation of the Company is proposed to be amended as follows:
(B) Any Person who proposes to make a Control Share Acquisition, or seeks to exercise one-fifth or more of the voting power of the Company under paragraph (a) of Division II of Article Fourth hereof, shall deliver an Acquiring Person Statement to the Company’s principal executive offices. The Acquiring Person Statement shall set forth all of the following to the extent appropriate to the authorization such Person is seeking:
(1) The identity of the Acquiring Person;
(2) A statement that the Acquiring Person Statement is given pursuant to this Article Seventh;
(3) The number and class of shares of the Company owned, directly or indirectly, by the Acquiring Person and the date or dates when such shares were acquired;
(4) The Range under which the proposed Control Share Acquisition would, if consummated, fall;
(5) A description in reasonable detail of the terms of the proposed Control Share Acquisition; and
(6) Representations of the Acquiring Person, together with a statement in reasonable detail of the facts upon which they are based, that the proposed Control Share Acquisition, if consummated, will not be contrary to law and that the Acquiring Person has the financial capacity to make the proposed Control Share Acquisition.
B-4 | The J. M. Smucker Company | 2022 Proxy Statement |
Preliminary Copy - Subject to Completion
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