•if the candidate is an incumbent director, the director’s overall service to the Company during the director’s term, including the number of meetings attended, the level of participation and the overall quality of performance of the director.
Diversity is one of the various factors the Executive Committee may consider in identifying director candidates, but the Executive Committee does not have a formal policy regarding
boardBoard diversity. All director candidates, including candidates appropriately recommended by stockholders, are evaluated in accordance with the process described above. The Executive Committee will not recommend any potential director candidate that is not acceptable to the Controlling Stockholder.
Board Diversity
The matrices below summarize the voluntary self-identified gender and demographic background statistics for the Board as of the dates indicated. Each of the categories listed in the matrices below has the meaning as it is used in Nasdaq Rule 5605(f).
Board Diversity Matrix (As of March 10, 2023)
| | | | | | | | | | | | | | | | | | | | | | | |
Total Number of Directors | 11 |
| Female | | Male | | Non-Binary | | Did Not Disclose Gender |
Part I: Gender Identity | | | | | | | |
Directors | 3 | | 8 | | — | | — |
Part II: Demographic Background | | | | | | | |
African American or Black | — | | 1 | | — | | — |
Alaskan Native or Native American | — | | — | | — | | — |
Asian | — | | 1 | | — | | — |
Hispanic or Latinx | — | | — | | — | | — |
Native Hawaiian or Pacific Islander | — | | — | | — | | — |
White | 3 | | 6 | | — | | — |
Two or More Races or Ethnicities | — | | — | | — | | — |
LGBTQ+ | — |
Did Not Disclose Demographic Background | — |
| | | | | | | |
| | | | | | | |
Board Diversity Matrix (As of March 28, 2022)
| | | | | | | | | | | | | | | | | | | | | | | |
Total Number of Directors | 12 |
| Female | | Male | | Non-Binary | | Did Not Disclose Gender |
Part I: Gender Identity | | | | | | | |
Directors | 3 | | 9 | | — | | — |
Part II: Demographic Background | | | | | | | |
African American or Black | — | | 1 | | — | | — |
Alaskan Native or Native American | — | | — | | — | | — |
Asian | — | | 1 | | — | | — |
Hispanic or Latinx | — | | — | | — | | — |
Native Hawaiian or Pacific Islander | — | | — | | — | | — |
White | 3 | | 7 | | — | | — |
Two or More Races or Ethnicities | — | | — | | — | | — |
LGBTQ+ | — |
Did Not Disclose Demographic Background | — |
Stockholder Recommendations of Director Candidates
Stockholders may recommend a director candidate to be considered for the Company’s
20222024 Annual Meeting of Stockholders by submitting the candidate’s name in accordance with provisions of the
By-laws, which require advance notice to the Company and certain other information. Written notice must be received by the Company’s Secretary at
Coca-ColaCoca‑Cola Consolidated, Inc., 4100
Coca-ColaCoca‑Cola Plaza, Charlotte, North Carolina 28211 not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the Annual Meeting. As a result, notice of director candidates submitted by a stockholder pursuant to the provisions of the
By-laws must be received not earlier than the close of business on January
11, 202210, 2024 and not later than the close of business on February
10, 2022.9, 2024. However, in the event that the date of the
20222024 Annual Meeting of Stockholders is more than 30 days before or more than 60 days after May
11, 2022,9, 2024, notice by the stockholder to be timely must be so received not earlier than the close of business on the 120th day prior to the date of the
20222024 Annual Meeting of Stockholders and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Company.
The notice must contain certain information about the director candidate and the stockholder submitting the nomination, as set forth in the By-laws, including (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director, such nominee’s name, age, business address and, if known, residence address, principal occupation or employment, the class and number of shares of any capital stock of the Company which are beneficially owned by such person and all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors or is otherwise required by the SEC rules promulgated under the Exchange Act, and (ii) as to the stockholder giving the notice and any Stockholder Associated Person (as defined in the By-laws), the name and address of such stockholder and any Stockholder Associated Person, as they appear on the Company’s books, the class or series and number of shares of the Company which are directly or indirectly owned beneficially and of record by such stockholder or any Stockholder Associated Person and any option, warrant, convertible security, stock appreciation right or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Company or with a value derived in whole or in part from the value of any class or series of shares of the Company, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Company or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholder or any Stockholder Associated Person, and any other direct or indirect opportunity of such stockholder or any Stockholder Associated Person to profit or share in any profit derived from any increase or decrease in the value of the shares of the Company, any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder or any Stockholder Associated Person has a right to vote any shares of any security of the Company, any short interest of such stockholder or any Stockholder Associated Person in any security of the Company (for purposes of the By-laws, a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), any rights to dividends on the shares of the Company owned beneficially by such stockholder or any Stockholder Associated Person that are separated or separable from the underlying shares of the Company, any proportionate interest in shares of the Company or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder or any
Stockholder Associated Person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, and any performance-related fees (other than an asset-based fee) that such stockholder or any Stockholder Associated Person is entitled to receive, either directly or indirectly, based on any increase or decrease in the value of shares of the Company or Derivative Instruments. A stockholder who is interested in recommending a director candidate should request a copy of the By-laws by writing to the Company’s Secretary at Coca-ColaCoca‑Cola Consolidated, Inc., 4100 Coca-ColaCoca‑Cola Plaza, Charlotte, North Carolina 28211.
Universal Proxy Rules for Director Nominations
In addition to satisfying the foregoing requirements under the By-laws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees for the 2024 Annual Meeting of Stockholders must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act.
Prohibitions Against Hedging,
or Short Selling
Coke or Pledging
Coca‑Cola Consolidated maintains an Insider Trading Policy that prohibits any hedging or short selling (profiting if the market price decreases) of
CokeCoca‑Cola Consolidated securities by any director, officer or employee of the Company or any of its subsidiaries.
Coca‑Cola Consolidated’s Insider Trading Policy also prohibits any director or officer of the Company, any person holding the position of Manager or higher in the Company’s Accounting, Tax or Treasury Departments, or any member of the Company’s Audit & Advisory Services Department from using Coca‑Cola Consolidated securities as collateral in a margin account.
Policy for Review of Related Person Transactions
The Company has a written policy and procedures for the review, approval or ratification of any transactions that could potentially be required to be reported under the SEC rules for disclosure of transactions with (i) an executive officer or director of the Company, or any individual who served as an executive officer or director of the Company at any time during the current or prior fiscal year, (ii) a nominee for election as a director of the Company, (iii) a beneficial owner of at least 5% of any class of the Company’s voting securities (a “Significant Stockholder”) or (iv) an immediate family member of any of the foregoing. The Company’s General Counsel is responsible for reviewing any proposed transaction that he receives notice of to determine whether such transaction constitutes a related person transaction that is required to be presented to the Audit Committee of the Board of Directors in accordance with the policy. For any such related person transaction, the General Counsel or his designee must present to the Audit Committee information regarding each such transaction, including all material facts and circumstances relating thereto. Prior to the Company entering into any related person transaction involving a Significant Stockholder, a director, a nominee for election as a director, the Chief Executive Officer or the General Counsel and/or their immediate family members, the Audit Committee at its next regularly scheduled meeting must review the material facts of the transaction and determine whether to approve the entry by the Company into the transaction. Prior to the Company entering into any related person transaction involving any executive officer other than the Chief Executive Officer or the General Counsel and/or their immediate family members, the General Counsel must review the material facts of the transaction and determine whether to approve the entry by the Company into the transaction. All determinations by the General Counsel under the policy will be reported to the Audit Committee at its next regularly scheduled meeting.
The policy includes certain categories of
pre-approved transactions. For transactions that are not
pre-approved, the Audit Committee or the Company’s General Counsel, as applicable, in assessing a transaction with a related person, may consider all relevant facts and circumstances, including, without limitation, (i) the commercial reasonableness of the terms of the transaction and whether the transaction is on terms no more favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, (ii) the significance of the transaction to investors in light of all circumstances, (iii) the materiality of the related person’s direct or indirect interest in the transaction taking into account factors such as the importance of the interest to the related person and the amount involved in the transaction, (iv) the materiality of the transaction to the Company, (v) if the related person is a director or a nominee for election as a director or a member of their immediate families, the impact of the transaction on the director’s or director nominee’s independence under applicable guidelines and regulations and (vi) the actual or apparent conflict of interest of the related person participating in the transaction.
The Board of Directors also forms special committees, composed of independent and disinterested members of the Board, from time to time for the purpose of approving certain related person transactions.
Related Person Transactions
The Company’s business consists primarily of the distribution, marketing and manufacture of nonalcoholic beverages of
The Coca-ColaCoca‑Cola Company, which is the sole owner of the formulas under which the primary components of its soft drink products, either concentrate or syrup, are manufactured. Accordingly, the Company routinely engages in various transactions with
The Coca-ColaCoca‑Cola Company and its affiliates. As of March
15, 2021, 9, 2023, The Coca-ColaCoca‑Cola Company owned
shares of Coca‑Cola Consolidated Common Stock representing approximately
27%30% of
Coke Consolidated’sthe outstanding shares of Coca‑Cola Consolidated Common Stock and approximately 9% of the total
outstandingvoting power of Coca‑Cola Consolidated Common Stock and Class B Common Stock on a consolidated
basis, representing approximately 5% of the total voting power of Coke Consolidated Common Stock and Class B Common Stock voting together.System Transformation Transactions with The Coca-Cola Company
In October 2017, the Company completed a series of transactions with The Coca-Cola Company and CCR, a wholly owned subsidiary of The Coca-Cola Company, which were initiated in April 2013 as part of The Coca-Cola Company’s multi-year refranchising of its North American bottling territories (the “System Transformation”). Through several asset purchase and asset exchange transactions with The Coca-Cola Company and CCR, the Company significantly expanded its distribution and manufacturing operations through the acquisition and exchange of distribution territories and regional manufacturing plants. The Company now distributes, markets and manufactures nonalcoholic beverages in territories spanning 14 states and the District of Columbia, and operates a total of 13 manufacturing plants (including one plant owned by a manufacturing cooperative in which the Company is a shareholder).
basis.
Beverage Distribution and Manufacturing Agreements with
The Coca-ColaCoca‑Cola Company and CCR
The Company has (i) rights to distribute, promote, market and sell certain nonalcoholic beverages of
The Coca-ColaCoca‑Cola Company pursuant to comprehensive beverage agreements (collectively, the “CBA”) with
The Coca-ColaCoca‑Cola Company and CCR,
a wholly owned subsidiary of The Coca‑Cola Company, and (ii) rights to manufacture, produce and package certain beverages bearing trademarks of
The Coca-ColaCoca‑Cola Company at the Company’s manufacturing plants pursuant to a regional manufacturing agreement with
The Coca-ColaCoca‑Cola Company. These agreements, which are the Company’s principal agreements with
The Coca-ColaCoca‑Cola Company and its affiliates following completion of
the System Transformation,The Coca‑Cola Company’s multi-year refranchising of its North American bottling territories (the “System Transformation”), are described below.
Distribution Agreement with The Coca-Cola Coca‑Cola Company and CCR. The Company has rights to distribute, promote, market and sell certain nonalcoholic beverages of The Coca-ColaCoca‑Cola Company pursuant to the CBA with The Coca-ColaCoca‑Cola Company and CCR. The CBA requires the Company to make quarterly sub-bottling payments to CCR on a continuing basis in exchange for the grant of exclusive rights to distribute, promote, market and sell the authorized brands of The Coca-ColaCoca‑Cola Company and related products in certain of the Company’s distribution territories. The amount of these payments is based on gross profit derived from the Company’s sales of certain beverages and beverage products of The Coca-ColaCoca‑Cola Company as well as certain cross-licensed beverage brands not owned or licensed by The Coca-ColaCoca‑Cola Company. These sub-bottling payments to CCR are for the distribution territories the Company acquired in the System Transformation and are not applicable to the territories the Company served prior to the System Transformation or to those territories the Company acquired in an exchange transaction. During fiscal 2020,2022, the Company made sub-bottling payments of $43.4$36.5 million to CCR pursuant to the CBA. The Company accounts for the quarterly sub-bottling payments as contingent consideration.
For more information about the accounting treatment of the quarterly
sub-bottling payments, see Note
1614 to the
audited consolidated financial statements included in the Company’s Annual Report on
Form 10-K for fiscal
2020.2022.
The CBA contains provisions that apply in the event of a potential sale of the Company or its aggregate businesses related to the distribution, promotion, marketing and sale of beverages and beverage products of The Coca-ColaCoca‑Cola Company. Pursuant to the CBA, the Company may only sell its distribution business to either The Coca-ColaCoca‑Cola Company or third-party buyers approved by The Coca-ColaCoca‑Cola Company. The Company can obtain a list of approvedpre-approved third-party buyers from The Coca-ColaCoca‑Cola Company on an annual basis or can seek The Coca-ColaCoca‑Cola Company’s approval of a potential buyer upon receipt of a third-party offer to purchase the distribution business. If the Company wishes to sell its distribution business to The Coca-ColaCoca‑Cola Company and is unable to agree with The Coca-ColaCoca‑Cola Company on the terms of a binding purchase and sale agreement, including
the purchase price for the distribution business, the CBA provides that the Company may either withdraw from negotiations or initiate a third-party valuation process to determine the purchase price and, upon this determination, opt to continue with the potential sale to The Coca-ColaCoca‑Cola Company. If the Company elects to continue with the potential sale, The Coca-ColaCoca‑Cola Company would then have the option to (i) purchase the distribution business at the purchase price determined by the third-party valuation process and pursuant to the sale terms set forth in the CBA (including, to the extent not otherwise agreed to by the Company and The Coca-ColaCoca‑Cola Company, default non-price terms and conditions of the acquisition agreement) or (ii) elect not to purchase the distribution business, in which case the CBA would be automatically amended to, among other things, permit the Company to sell its distribution business to any third party without obtaining The Coca-ColaCoca‑Cola Company’s prior approval.
The CBA further provides:
•the right of The Coca-ColaCoca‑Cola Company to terminate the CBA in the event of an uncured default by the Company, in which case The Coca-ColaCoca‑Cola Company (or its designee) is required to acquire the Company’s distribution business;
•the requirement that the Company maintain an annual equivalent case volume per capita change rate that is not less than one standard deviation below the median of the rates for all U.S. Coca-ColaCoca‑Cola bottlers for the same period; and
•the requirement that the Company make minimum, ongoing capital expenditures in its distribution business at a specified level.
The CBA prohibits the Company from producing, manufacturing, preparing, packaging, distributing, selling, dealing in or otherwise using or handling any beverages, beverage components or other beverage products (i) other than the beverages and beverage products of
The Coca-ColaCoca‑Cola Company and certain expressly permitted cross-licensed brands and (ii) unless otherwise consented to by
The Coca-ColaCoca‑Cola Company. The CBA has a term of 10 years and is renewable by the Company indefinitely for successive additional terms of 10 years, unless earlier terminated as provided therein.
For more information about the CBA, see “Item 1. Business” in the Company’s Annual Report on
Form 10-K for fiscal
2020.2022.
Manufacturing Agreement with The Coca-Cola Coca‑Cola Company. The Company has rights to manufacture, produce and package certain beverages bearing trademarks of The Coca-ColaCoca‑Cola Company at the Company’s manufacturing plants pursuant to a regional manufacturing agreement with The Coca-ColaCoca‑Cola Company entered into on March 31, 2017 (as amended, the “RMA”). These beverages may be distributed by the Company for its own account in accordance with the CBA or may be sold by the Company to certain other U.S. Coca-ColaCoca‑Cola bottlers or to The Cola-ColaCoca‑Cola Company in accordance with the RMA. For prices determined pursuant to the RMA, The Coca-ColaCoca‑Cola Company unilaterally establishes from time to time the prices, or certain elements of the formulas used to determine the prices, that the Company charges for these sales to certain other U.S. Coca-ColaCoca‑Cola bottlers or to The Coca-ColaCoca‑Cola Company.
Under the RMA, the Company’s aggregate business primarily related to the manufacture of certain beverages of
The Coca-ColaCoca‑Cola Company and permitted third-party beverage products are subject to the same agreed upon sale process provisions in the CBA, including the obligation to obtain
The Coca-ColaCoca‑Cola Company’s prior approval of a potential purchaser of the Company’s manufacturing business, and provisions for the sale of such business to
The Coca-ColaCoca‑Cola Company. The RMA requires that the Company make minimum, ongoing capital expenditures in its manufacturing business at a specified level.
The Coca-ColaCoca‑Cola Company has the right to terminate the RMA in the event of an uncured default by the Company under the CBA or in the event of an uncured breach of the Company’s material obligations under the RMA or the Company’s national product supply governance agreement.
The RMA prohibits the Company from manufacturing any beverages, beverage components or other beverage products (i) other than the beverages and beverage products of The Coca-ColaCoca‑Cola Company and certain expressly permitted cross-licensed brands and (ii) unless otherwise consented to by The Coca-ColaCoca‑Cola Company. Subject to
The Coca-ColaCoca‑Cola Company’s termination rights, the RMA has a term that continues for the duration of the term of the CBA.
For more information about the RMA, see “Item 1. Business” in the Company’s Annual Report on
Form 10-K for fiscal
2020.2022.
Concentrates and Syrups; Marketing Programs
The Company’s agreements with
The Coca-ColaCoca‑Cola Company generally entitle the Company to purchase concentrates and syrups at prices, on terms of payment, and on other terms and conditions of supply as determined from time to time by
The Coca-ColaCoca‑Cola Company in its sole discretion.
CokeCoca‑Cola Consolidated also has entered into supplemental agreements with The
Coca-ColaCoca‑Cola Company generally providing that
The Coca-ColaCoca‑Cola Company will sell concentrates and syrups to the Company at prices no greater than those charged to other bottlers party to agreements substantially similar to those between the Company and
The Coca-ColaCoca‑Cola Company.Coke
Coca‑Cola Consolidated has an incidence-based pricing agreement with The Coca-ColaCoca‑Cola Company, which establishes the prices charged by The Coca-ColaCoca‑Cola Company to the Company for (i) concentrates of sparkling and certain still beverages produced by the Company and (ii) certain purchased still beverages. Under the incidence-based pricing agreement, the prices charged by The Coca-ColaCoca‑Cola Company are subject to quarterly adjustment as described in the agreement based on the determination of The Coca-ColaCoca‑Cola Company’s incidence revenue and are impacted by a number of factors, including the incidence rate in effect, the Company’s pricing and sales of finished products, the channels in which the finished products are sold, the package mix and, in the case of products sold by The Coca-ColaCoca‑Cola Company to the Company in finished form, the cost of goods for certain elements used in such products. The Coca-ColaCoca‑Cola Company has no rights under the incidence-basedincidence-
based pricing agreement to establish the prices, or the elements of the formulas used to
determinesdetermine the prices, at which the Company sells products, but does have the right to establish certain pricing under other agreements, including the RMA.
The CBA requires the Company to use all approved means and to spend such funds on advertising and other forms of marketing as reasonably required to create, stimulate and satisfy demand for
The Coca-ColaCoca‑Cola Company’s beverages and beverage products in the Company’s territories.
CokeCoca‑Cola Consolidated is required to meet with
The Coca-ColaCoca‑Cola Company each year to present its annual and long-range operating, marketing, management and advertising plans, including financial plans showing that
CokeCoca‑Cola Consolidated has the financial capacity to perform its duties and obligations to
The Coca-ColaCoca‑Cola Company.
Although
The Coca-ColaCoca‑Cola Company has provided
CokeCoca‑Cola Consolidated with marketing funding support in the past, the Company’s bottling agreements generally do not obligate
The Coca-ColaCoca‑Cola Company to do so.
The following table summarizes the significant
cash transactions between
CokeCoca‑Cola Consolidated and
The Coca-ColaCoca‑Cola Company during fiscal
2020: | | | | |
Transactions | | $ Amount (in millions) | |
Payments made by the Company to The Coca-Cola Company for: | | | | |
Concentrate, syrup, sweetener and other purchases | | $ | 1,174.6 | |
Customer marketing programs | | | 132.9 | |
Purchase of noncontrolling interest in Piedmont Coca-Cola Bottling Partnership | | | 100.0 | |
Cold drink equipment parts | | | 21.5 | |
Brand investment programs | | | 15.5 | |
Payments made by The Coca-Cola Company to the Company for: | | | | |
Marketing funding support payments | | $ | 83.0 | |
Fountain delivery and equipment repair fees | | | 32.8 | |
Presence marketing funding support on the Company’s behalf | | | 8.4 | |
Facilitating the distribution of certain brands and packages to other Coca-Cola bottlers | | | 4.5 | |
2022:Other Transactions Involving The Coca-Cola Company
Piedmont Coca-Cola Bottling Partnership. The Company and The Coca-Cola Company formed Piedmont Coca-Cola Bottling Partnership (“Piedmont”) in 1993
| | | | | | | | |
| | $ Amount (in millions) |
Payments made by Coca-Cola Consolidated to The Coca‑Cola Company(1) | | $1,867.7 | |
Payments made by The Coca-Cola Company to Coca-Cola Consolidated | | 256.3 | |
___________
(1)This excludes payments made by Coca‑Cola Consolidated to distribute and market nonalcoholic beverage products primarily in portions of North Carolina and South Carolina. On December 9, 2020, an indirect wholly owned subsidiary of Coke Consolidated purchased the remaining 22.7% general partnership interest in Piedmont from an indirect wholly owned subsidiary of The Coca-Cola Company, and Piedmont became an indirect wholly owned subsidiary of the Company. Piedmont was subsequently merged with and into CCBCC Operations, LLC,CCR, a wholly owned subsidiary of Coke Consolidated, effective December 28, 2020.Prior to Coke Consolidated’s purchase of the remaining general partnership interest in Piedmont, Coke Consolidated manufactured and packaged products for and managed Piedmont pursuant to a management agreement. Coke Consolidated received a management fee based on total case sales, reimbursement for out-of-pocket expenses and reimbursement for sales branch, divisional and other expenses. The management agreement was terminated in connection with the Company’s purchase of the remaining general partnership interest in Piedmont. During fiscal 2020, Coke Consolidated received management fees of $33.2 million from Piedmont. Coke Consolidated sold product at cost to Piedmont, which amounted to $138.9 million in fiscal 2020. Coke Consolidated also leased various fleet and vending equipment to Piedmont at cost, which amounted to $6.9 million in fiscal 2020.
Coca‑Cola Company.
Amended and Restated Stock Rights and Restrictions Agreement.
On February 19, 2009,
CokeCoca‑Cola Consolidated entered into an amended and restated stock rights and restrictions agreement (the “Amended and Restated Stock Rights and Restrictions Agreement”) with
The Coca-ColaCoca‑Cola Company, Carolina
Coca-ColaCoca‑Cola Bottling Investments, Inc. and J. Frank Harrison, III, the Company’s Chairman and CEO. In connection with entering into the Amended and Restated Stock Rights and Restrictions Agreement,
The Coca-ColaCoca‑Cola Company converted all of its 497,670 shares of
CokeCoca‑Cola Consolidated Class B Common Stock into an equivalent number of shares of
CokeCoca‑Cola Consolidated Common Stock. The material terms of the Amended and Restated Stock Rights and Restrictions Agreement include the following:
•so long as no person or group controls more of Coke Consolidated’sthe voting power of Coca‑Cola Consolidated than is collectively controlled by J. Frank Harrison, III, the trustees under the will of the late J. Frank Harrison, Jr. and any trust that holds shares of CokeCoca‑Cola Consolidated stock for the benefit of the descendants of the late J. Frank Harrison, Jr. (collectively, the “Harrison Family”), The Coca-ColaCoca‑Cola Company will may not purchase or acquire additional shares of CokeCoca‑Cola Consolidated stock without CokeCoca‑Cola Consolidated’s consent;
•so long as no person or group controls more of Coke Consolidated’sthe voting power of Coca‑Cola Consolidated than is controlled by the Harrison Family, the Company has a right of first refusal with respect to any proposed disposition by The Coca-ColaCoca‑Cola Company of shares of CokeCoca‑Cola Consolidated stock;
stock other than transfers to a wholly owned subsidiary of The Coca-ColaCoca‑Cola Company (i.e., any corporation 100% of the voting capital stock of which is owned by The Coca‑Cola Company);
•The Coca‑Cola Company has certain registration rights with respect to shares of CokeCoca‑Cola Consolidated stock owned by it; and
•as long as The Coca-ColaCoca‑Cola Company holds the number of shares of CokeCoca‑Cola Consolidated stock that it currently owns, it has the right to have its designee proposed by the Company for nomination to the Board, and J. Frank Harrison, III and the trustees of certain trusts established for the benefit of members of the Harrison Family have
agreed to vote shares of CokeCoca‑Cola Consolidated stock which they control in favor of such designee. Jennifer K. Mann has been The Coca‑Cola Company’s designee on the Board since May 2017.
The Amended and Restated Stock Rights and Restrictions Agreement also provides
The Coca-ColaCoca‑Cola Company the option to exchange its 497,670 shares of
CokeCoca‑Cola Consolidated Common Stock for an equivalent number of shares of
CokeCoca‑Cola Consolidated Class B Common Stock in the event any person or group acquires control of more of
Coke Consolidated’sthe voting power
of Coca‑Cola Consolidated than is controlled by the Harrison Family.
Jennifer K. Mann has been The Coca-ColaCoca‑Cola Company’s designee on the Board since May 2017. Ms. Mann didwas promoted to Corporate Senior Vice President and President of North America for The Coca‑Cola Company, effective January 1, 2023, and she will not participate in discussions or votes bybe nominated for reelection at the Annual Meeting. The Coca‑Cola Company has designated Elaine Bowers Coventry for nomination to the Board relating toat the System Transformation.Annual Meeting.
Other Related Person Transactions
Coke
Coca‑Cola Consolidated
leasespreviously leased the Snyder Production Center and an adjacent sales facility in Charlotte, North Carolina
(together, the “Snyder Production Center”) from Harrison Limited Partnership One (“HLP”), which is directly and indirectly owned by trusts of which J. Frank Harrison, III, the Company’s Chairman and CEO, and Sue Anne H. Wells, a
former director of
Coca‑Cola Consolidated, a greater than 5% beneficial owner of Coca‑Cola Consolidated, the
Company,sister of Mr. Harrison and the aunt of Morgan H. Everett, are trustees and beneficiaries and of which
Morgan H.Ms. Everett, Vice Chair of the Board of
CokeCoca‑Cola Consolidated, is a permissible, discretionary beneficiary. The lease agreement with HLP was approved by
the Audit Committee, a special committee of the Board of Directors,
the Audit Committee, as well as the remaining independent members of the Board who did not have an interest in the transaction. On June 30, 2020,
CokeCoca‑Cola Consolidated entered into an amendment to this lease with HLP to extend the term of the lease agreement by 15 years from January 1, 2021 through December 31, 2035, with an option for the Company to further extend the term for an additional five years. Total payments under the amended lease agreement with HLP were
$4.5$0.9 million in fiscal
2020. The principal balance outstanding under the amended financing lease as of December 31, 2020 was $61.9 million.2022. The first amendment to lease agreement with HLP was approved by the Audit Committee and a special committee of the Board
of Directors formed at the time to consider purchase, lease and other alternatives available to the Company in connection with the scheduled expiration of the lease agreement with HLP.
Coke On March 17, 2022, CCBCC Operations, LLC (“Operations”), a wholly owned subsidiary of the Company, entered into a definitive purchase and sale agreement with HLP, pursuant to which Operations purchased the Snyder Production Center from HLP on such date for a purchase price of $60.0 million. The amended lease agreement with HLP was terminated in connection with the purchase of the Snyder Production Center by Operations.
Coca‑Cola Consolidated leases its headquarters office facility and an adjacent office facility in Charlotte, North Carolina from Beacon Investment Corporation (“Beacon”), of which J. Frank Harrison, III is the majority stockholder and Morgan H. Everett is a minority stockholder. On December 30, 2019,
CokeCoca‑Cola Consolidated entered into a new lease agreement with Beacon for a
10-year term from January 1, 2020 through December 31, 2029, with an option for the Company to renew the lease agreement for two successive terms of five years each. Total payments under the new lease agreement with Beacon were
$3.3$3.9 million in fiscal
2020.2022. The principal balance outstanding under the new operating lease as of December 31,
20202022 was
$30.8$25.5 million. The new lease agreement
with Beacon was approved by the Audit Committee and a special committee of the Board
of Directors formed at the time to consider purchase, lease and other alternatives available to the Company in connection with the scheduled expiration of the prior lease agreement with Beacon.
Morgan H. Everett, Vice Chair of the Board of
CokeCoca‑Cola Consolidated, is the daughter of J. Frank Harrison, III, the Company’s Chairman and CEO. During fiscal
2020,2022, Ms. Everett received total compensation of
$726,493.$1,288,201. Ellison C. Glenn, Vice President
Sales and
Service for the Carolinas Market Unit
General Manager of the Central Division at
CokeCoca‑Cola Consolidated, is the
son-in-law of Mr. Harrison. During fiscal
2020,2022, Mr. Glenn received total compensation of
$201,965.$337,048. The compensation for Ms. Everett and Mr. Glenn was established by the Company in accordance with its employment and compensation practices applicable to employees with equivalent qualifications and responsibilities and holding similar positions. The Compensation Committee, which is comprised entirely of independent directors, reviewed and approved the compensation paid to Ms. Everett and Mr. Glenn during fiscal
2020.2022. Mr. Harrison does not have a financial interest in the Company’s employment relationship with Ms. Everett or Mr. Glenn, nor does he share a home with either of them.
Certain trusts
A trust of which J. Frank Harrison, III
is a co-trustee and
Sue Anne H. Wells are trustees and beneficiariesthe primary income beneficiary and Morgan H. Everett is a permissible, discretionary beneficiary
havehas the right to acquire 292,386 shares of Class B Common Stock from
CokeCoca‑Cola Consolidated in exchange for an
equalequivalent number of shares of Common Stock. In the event of such an exchange, Mr. Harrison would have sole voting and investment power over the shares of Class B Common Stock acquired. The
trusts dotrust does not own any shares of Common Stock with which to make the exchange, and any purchase of Common Stock would require approval by the trustees of the
trusts.trust.
The Board’s Role in Risk Oversight
Management is responsible for managing the risks that CokeCoca‑Cola Consolidated faces. The Board of Directors is responsible for overseeing management’s approach to risk management. The involvement of the full Board in reviewing the Company’s strategic objectives and plans is a key part of the Board’s assessment of management’s approach and tolerance to risk. While the Board of Directors has ultimate oversight responsibility for overseeing management’s risk management process, various committees of the Board assist it in fulfilling that responsibility.
The Audit Committee assists the Board in its oversight of risk management in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements. The Compensation Committee assists the Board in its oversight of the evaluation and management of risks related to
CokeCoca‑Cola Consolidated’s compensation policies and practices.
The Board believes that this division of responsibilities is the most effective risk management approach and that the Board leadership structure supports this approach. With his
in-depth knowledge and understanding of
CokeCoca‑Cola Consolidated’s business gained from his more than
4045 years of employment with the Company and his position as the Controlling Stockholder and a member of the founding family of
CokeCoca‑Cola Consolidated, Mr. Harrison is uniquely positioned to lead the Board, particularly as it focuses on identifying and managing the key strategic risks facing the Company.
In addition, the Board believes that Mr. Wicker provides leadership and helps guide the Board’s independent oversight of the Company’s risk exposures through his role as Lead Independent Director. See “—Board Leadership Structure” for a description of the responsibilities of the Lead Independent Director.
Communications with the Board of Directors
Stockholders and other interested parties can communicate directly with any of the Company’s directors by sending a written communication to a director at Coca-ColaCoca‑Cola Consolidated, Inc. c/o Secretary, 4100 Coca-ColaCoca‑Cola Plaza, Charlotte, North Carolina 28211. Stockholders and other interested parties wishing to communicate with Dennis A. Wicker, as Lead Independent Director, or with the non-employee directors as a group may do so by sending a written communication to Mr. Wicker at the above address. All communications received in accordance with these procedures will be promptly reviewed by the Company’s Secretary before being forwarded to the appropriate director or directors. The Company generally will not forward to directors a communication that the Secretary determines to be primarily commercial in nature, relates to an improper or irrelevant topic or requests general information about the Company.
The table below sets forth the compensation paid to each
non-employee director who served on the Board of Directors in fiscal
2020.2022. Directors who are also employees of
CokeCoca‑Cola Consolidated (in fiscal
2020,2022, Messrs. J. Frank Harrison, III
Henry W. Flint (until his retirement from employment with, and as a director of, the Company, effective December 31, 2019), Umesh M. Kasbekar (until his retirement from employment with the Company, effective July 5, 2020) and David M. Katz and Ms. Morgan H. Everett) do not receive compensation (other than their compensation as employees of the Company) for their service on the Board.
2020
2022 Director Compensation Table
| | | | | | | | | | | | |
Name | | Fees Earned or Paid in Cash ($)(1) | | | All Other Compensation ($) | | | Total ($) | |
Sharon A. Decker | | | 180,900 | | | | — | | | | 180,900 | |
James R. Helvey, III | | | 177,700 | | | | — | | | | 177,700 | |
William H. Jones | | | 176,100 | | | | — | | | | 176,100 | |
Umesh M. Kasbekar(2) | | | 77,826 | | | | 120,000 | | | | 197,826 | |
Jennifer K. Mann | | | 160,000 | | | | — | | | | 160,000 | |
James H. Morgan | | | 200,500 | | | | — | | | | 200,500 | |
John W. Murrey, III | | | 160,000 | | | | — | | | | 160,000 | |
Sue Anne H. Wells | | | 160,000 | | | | — | | | | 160,000 | |
Dennis A. Wicker | | | 209,500 | | | | — | | | | 209,500 | |
Richard T. Williams | | | 163,200 | | | | — | | | | 163,200 | |
(1) | The amounts shown in this column represent the aggregate amounts of all fees earned or paid in cash for services as a director in fiscal 2020. In August 2018, the Board of Directors formed a special committee of the Board, composed of Messrs. Helvey, Jones, Morgan and Wicker and Ms. Decker (all of whom are independent and disinterested members of the Board), to consider purchase, lease and other alternatives available to the Company in connection with the scheduled expiration of the Company’s leases (i) with HLP relating to the Snyder Production Center and an adjacent sales facility in Charlotte, North Carolina and (ii) with Beacon relating to the Company’s headquarters office facility and an adjacent office facility in Charlotte, North Carolina. In fiscal 2020, the Company paid each committee member $6,500 for his or her consideration of the amendment of or alternatives to the Company’s lease with HLP. These fees are included in this column. See “Corporate Governance—Related Person Transactions—Other Related Person Transactions” for additional information regarding the leases with HLP and Beacon.
|
(2) | Mr. Kasbekar retired from employment with the Company, effective July 5, 2020, and did not receive compensation (other than his compensation as an employee of the Company) for his service on the Board prior to his retirement. The amount shown in the “Fees Earned or Paid in Cash” column represents the fees Mr. Kasbekar earned for his service on the Board after he retired as an employee. Mr. Kasbekar has served as a consultant to the Company since his retirement. The amount shown in the “All Other Compensation” column represents the fees Mr. Kasbekar earned for the advisory and consulting services he provided to the Company after his retirement.
|
| | | | | | | | | | | | | | | | | | | | |
Name | | Fees Earned or Paid in Cash ($)(1) | | All Other Compensation ($) | | Total ($) |
Sharon A. Decker | | 184,600 | | — | | 184,600 |
James R. Helvey, III | | 187,900 | | — | | 187,900 |
William H. Jones | | 181,400 | | — | | 181,400 |
Umesh M. Kasbekar(2) | | 175,000 | | 275,000 | | 450,000 |
Jennifer K. Mann | | 175,000 | | — | | 175,000 |
James H. Morgan | | 212,700 | | — | | 212,700 |
John W. Murrey, III(3) | | 62,500 | | — | | 62,500 |
Sue Anne H. Wells(4) | | 43,750 | | — | | 43,750 |
Dennis A. Wicker | | 221,200 | | — | | 221,200 |
Richard T. Williams | | 184,700 | | — | | 184,700 |
___________
(1)The amounts shown in this column represent the aggregate amounts of all fees earned or paid in cash for services as a director in fiscal 2022. In March 2021, the Board of Directors formed a special committee of the Board, composed of Messrs. Helvey, Morgan and Williams (all of whom are independent and disinterested members of the Board), to consider the potential purchase of the Snyder Production Center from HLP. In fiscal 2022, the Company paid each committee member $6,500 for his consideration of the proposed transaction. These fees are included in this column. See “Corporate Governance—Related Person Transactions—Other Related Person Transactions” for additional information regarding the definitive purchase and sale agreement with HLP.
(2)Mr. Kasbekar also serves as a consultant to the Company. The amount shown in the “All Other Compensation” column represents the fees Mr. Kasbekar earned for the advisory and consulting services he provided to the Company in fiscal 2022.
(3)Mr. Murrey retired from the Board of Directors, effective May 10, 2022.
(4)Dr. Wells resigned from the Board of Directors, effective March 17, 2022.
The elements of compensation for the Company’s
non-employee directors are as follows:
| | | | |
Basic Annual Retainer for All Non-Employee Directors | | $ | 160,000 | |
Supplemental Annual Retainer for Chairman of the Audit Committee | | | 18,000 | |
Supplemental Annual Retainer for Chairman of the Compensation Committee | | | 12,000 | |
Supplemental Annual Retainer for Lead Independent Director | | | 15,000 | |
Fee for Each Audit, Compensation and Executive Committee Meeting Attended | | | 1,600 | |
| | | | | | | | |
Basic Annual Retainer for All Non-Employee Directors | | $175,000 |
Supplemental Annual Retainer for Chairman of the Audit Committee | | 20,000 |
Supplemental Annual Retainer for Chairman of the Compensation Committee | | 15,000 |
Supplemental Annual Retainer for Lead Independent Director | | 20,000 |
Fee for Each Audit, Compensation and Executive Committee Meeting Attended | | 1,600 |
The Compensation Committee reviews and approves the compensation of the members of the Board. In approving annual director compensation, the Compensation Committee considers recommendations of management and approves the recommendations with such modifications as the committee deems appropriate.
Under the Coca-Cola Consolidated, Inc. (formerly Coca-Cola Bottling Co. Consolidated)Company’s Director Deferral Plan, non-employee directors may defer payment of all or a portion of their annual retainer and meeting fees until they no longer serve on the Board.fees. Deferred fees are deemed to be invested in mutual funds selected by the directors from a predetermined list of funds. For fees deferred after 2013, a director may elect to receive a cash lump sum payment or cash installment payments as of a designated date or after the director retires or resigns.resigns, provided that if the director attains age 79, the lump sum payment or installment payments will be paid when the director attains age 79. The amount of each installment payment is based on the return on the selected investment fund(s) during the installment payment period. Fees deferred prior to 2014 are paid in a cash lump sum payment if the director’s service on the Board terminates prior to age 65. If the director retires at or after age 65, the director may elect to receive a cash lump sum payment or cash installment payments of fees deferred prior to 2014, with the amount of each installment payment based on an assumed return of 8% during the installment payment period.
Compensation Discussion and Analysis
This section explains
CokeCoca‑Cola Consolidated’s executive compensation program as it relates to the following executive officers (the “named executive officers”) of the Company:
| | | | | | | | | | | |
| J. Frank Harrison, III | | Chairman of the Board and Chief Executive Officer |
| F. Scott Anthony | | Executive Vice President and Chief Financial Officer |
| David M. Katz | | President and Chief Operating Officer |
| Robert G. Chambless | | Executive Vice President, Franchise Beverage Operations |
| E. Beauregarde Fisher III | | Executive Vice President, General Counsel and Secretary |
This discussion includes statements regarding financial and operating performance targets in the limited context of the Company’s executive compensation program. Investors should not evaluate these statements in any other context. These statements are not statements of management’s expectations of future results or guidance.
The goals for the Company’s executive compensation program are to provide compensation that is:
•competitive to attract and retain appropriate executive talent;
•affordable and appropriately aligned with stockholder interests;
•fair, equitable and consistent as to each component of compensation;
•designed to motivate the executive officers to achieve the Company’s annual and long-term strategic and financial goals and to reward performance based on the attainment of those goals;
•designed to appropriately balance risk and reward in the context of the Company’s business environment and long-range business plans;
•designed to consider individual value and contribution to the Company’s success;
•reasonably balanced across types and purposes of compensation, particularly with respect to fixed compensation objectives, short-term and long-term performance-based objectives and retention and retirement objectives;
•sensitive to, but not exclusively reliant upon, market benchmarks; and
•responsive to the Company’s succession planning objectives.
The Compensation Committee of the Board (referred to as the “Committee” in this section and the “Executive Compensation Tables” section) seeks to accomplish these goals in a way that is consistent with the purpose and core values of the Company and the long-term interests of the Company and its stockholders and employees.
In making decisions about executive compensation, the Committee relies primarily on its general experience and subjective considerations of various factors, including the Company’s strategic business goals, compensation survey data and each executive officer’s position, experience, level of responsibility, individual job performance, contributions to the Company’s corporate performance, job tenure and future potential. The Committee does not set specific targets or benchmarks for overall compensation or for allocations between different elements and types of compensation.
However, the Committee does assess whether the compensation for each of the executive officers is within a reasonably competitive range between the 50th and 75th percentiles of companies of similar size and whether any variation above or below the range is appropriate.
The Committee oversees the compensation program for the Company’s executive officers with the assistance of senior management. The Committee reviews, approves and determines all elements of compensation for each executive officer.
The following table lists the key elements of the Company’s
20202022 executive compensation program:
Key Elements of
2020the Company’s 2022 Executive Compensation Program
| | | | | | | | | | | | | | |
Element | | Description | | Purpose |
Base Salaries | | Fixed cash compensation based on position, experience, level of responsibility, individual job performance, contributions to the Company’s corporate performance, job tenure and future potential. | | Provide a fixed, baseline level of cash compensation. |
Annual Bonus Plan | | Cash payment tied to performance during the fiscal year. | | Motivate executive officers to achieve the Company’s annual strategic and financial goals. |
Long-Term Performance Plan | | Cash payment tied to performance over a three-year performance period. The CEO does not participate in this plan. | | Promote retention and motivate executive officers and other key employees to achieve the Company’s long-term strategic and financial goals. |
Long-Term Performance Equity Plan | | Incentive awards granted to the CEO with payouts based on the Company’s achievement of specified performance goals during the applicable performance period. Awards settled in cash, shares of CokeCoca-Cola Consolidated Class B Common Stock or a combination of cash and shares of CokeCoca-Cola Consolidated Class B Common Stock. | | Promote the best interests of the Company and its stockholders by providing the CEO with incentive compensation linked to the Company’s achievement of its long-term strategic and financial goals. |
Officer Retention Plan | | Supplemental nonqualified defined benefit plan providing retirement and severance benefits. | | Promote retention of executive officers hired prior to March 2014 with a long-term perspective. |
Long-Term Retention Plan | | Supplemental nonqualified defined contribution plan providing retirement and severance benefits. | | Attract executive talent and promote retention with a long-term perspective. |
Supplemental Savings Incentive Plan | | Supplemental nonqualified deferred compensation plan enabling executive officers to defer a portion of their annual salary and of their awards under the Annual Bonus Plan, the Long-Term Performance Plan and the Long-Term Performance Equity Plan. | | Promote retention, encourage executive officers to save for retirement and provide retirement savings in a tax-efficient manner. |
Other Benefits and Executive Compensation Policies | | Premiums paid for long-term disability and life insurance, annual executive allowance, personal use of corporate aircraft, and income and employment tax gross-ups. | | Attract and retain executive talent and enhance efficiency. |
Determining Executive Compensation
Discretion and Subjective Judgment of Committee
The Committee reviews, approves and determines all elements of compensation for the executive officers.
In determining base salaries, annual and long-term incentive targets and all other matters related to executive compensation, the Committee relies primarily on its general experience and subjective considerations of various factors, including the Company’s strategic business goals, compensation survey data and each executive officer’s position, experience, level of responsibility, individual job performance, contributions to the Company’s corporate performance, job tenure and future potential.
Annual Compensation Reviews
The Committee conducts an annual review of executive officer compensation to determine if changes are appropriate. As part of this review, management submits recommendations to the Committee for review and approval.
Management’s recommendations are determined based on an annual compensation review process conducted by senior management, including the named executive officers. This process includes
reviewingthe President and Chief Operating Officer and the Executive Vice President, General Counsel and Secretary meeting with each executive officer’s supervising manager to discuss self-assessments completed by each executive officer, job performance reviews completed by each executive officer’s supervising manager,
and comparative compensation data provided by management’s compensation
consultant.consultant and other information relevant to determine whether to recommend any adjustments to such executive officer’s compensation. Based on this process, the President and Chief Operating Officer and the Executive Vice President, General Counsel and Secretary make specific compensation recommendations to the CEO and the Vice Chair. The CEO and the Vice Chair review and approve the compensation recommendations for all executive officers, including the named executive officers, before they are submitted to the Committee.
Following a review of management’s recommendations, the Committee approves the compensation recommendations for the executive officers with any modifications the Committee deems appropriate. The Committee may also adjust compensation for specific individuals at other times during the fiscal year.
Role of Compensation Consultants and Market Analysis
Management retained Korn Ferry to assist with an overall review of the executive compensation program and to provide general advice and counsel regarding various executive and director compensation matters. During the first quarter of
2020,fiscal 2022, Korn Ferry completed a comparative study of the Company’s executive compensation program relative to peer companies and survey data, which was considered by the Committee in connection with its decisions regarding compensation for
2020fiscal 2022 (the
“2020“2022 Executive Compensation Review”). In
2020,fiscal 2022, a Korn Ferry representative attended the Committee’s meetings and also met in executive session with the Committee.
The 13 peer group companies used for the
20202022 Executive Compensation Review were all publicly traded companies similar in size to the Company and in the food and beverage industry. The peer group consisted of the following companies:
| | | | |
Company Name | | 2019 Net Reported Revenues ($ in billions) | |
Brown-Forman Corporation | | $ | 3.363 | |
Constellation Brands, Inc. | | | 8.344 | |
Flowers Foods, Inc. | | | 4.124 | |
Keurig Dr Pepper Inc. | | | 11.120 | |
Lancaster Colony Corporation | | | 1.334 | |
McCormick & Company, Incorporated | | | 5.347 | |
Molson Coors Beverage Company (f/k/a Molson Coors Brewing Company) | | | 10.579 | |
Monster Beverage Corporation | | | 4.201 | |
Primo Water Corporation (f/k/a Cott Corporation) | | | 2.395 | |
Sanderson Farms, Inc. | | | 3.440 | |
Seneca Foods Corporation | | | 1.336 | |
The Hain Celestial Group, Inc. | | | 2.054 | |
TreeHouse Foods, Inc. | | | 4.289 | |
| | | | |
Coke Consolidated | | | 4.827 | |
Median | | | 4.124 | |
Average | | | 4.764 | |
| | | | | | | | |
Company Name | | 2021 Net Reported Revenues ($ in billions) |
Brown-Forman Corporation | | $ 3.461 |
Constellation Brands, Inc. | | 8.821 |
Flowers Foods, Inc. | | 4.331 |
Keurig Dr Pepper Inc. | | 12.683 |
Lancaster Colony Corporation | | 1.467 |
McCormick & Company, Incorporated | | 6.318 |
Molson Coors Beverage Company | | 10.280 |
Monster Beverage Corporation | | 5.541 |
Post Holdings, Inc. | | 6.227 |
Primo Water Corporation | | 2.073 |
Sanderson Farms, Inc. | | 4.800 |
The Hain Celestial Group, Inc. | | 1.970 |
TreeHouse Foods, Inc. | | 4.328 |
Coca-Cola Consolidated, Inc. | | 5.563 |
Median | | 4.800 |
Average | | 5.562 |
Management and the Committee used the Korn Ferry study and other publicly available compensation surveys and data as a point of reference to assess whether the compensation for each of the executive officers was within a reasonably competitive range between the 50th and 75th percentiles of companies of similar size and whether any variation above or below the range was appropriate.
Base salaries are the foundation of the Company’s executive compensation program. They provide a fixed, baseline level of cash compensation based on each executive officer’s position, experience, level of responsibility, individual job performance, contributions to the Company’s corporate performance, job tenure and future potential. Base salary levels also impact amounts paid under other elements of the Company’s executive compensation program, including annual bonuses
and long-term performance awards and retirement benefits.
The Committee approved the following adjustments to the named executive officers’ base salaries effective March
30, 2020: | | | | | | | | | | | | |
Name | | 2019 Base Salary | | | 2020 Base Salary | | | % Increase | |
Mr. Harrison | | $ | 1,157,630 | | | $ | 1,186,571 | | | | 2.5% | |
Mr. Anthony | | $ | 525,000 | | | $ | 538,125 | | | | 2.5% | |
Mr. Katz | | $ | 700,000 | | | $ | 770,000 | | | | 10.0% | |
Mr. Chambless | | $ | 640,625 | | | $ | 656,641 | | | | 2.5% | |
Mr. Fisher | | $ | 574,000 | | | $ | 588,350 | | | | 2.5% | |
21, 2022:
| | | | | | | | | | | | | | | | | | | | |
Name | | 2021 Base Salary | | 2022 Base Salary | | % Increase |
Mr. Harrison | | $1,234,033 | | $1,271,054 | | 3.0% |
Mr. Anthony | | $ 551,578 | | $ 568,125 | | 3.0% |
Mr. Katz | | $ 865,000 | | $ 890,950 | | 3.0% |
Mr. Chambless | | $ 673,057 | | $ 693,248 | | 3.0% |
Mr. Fisher | | $ 603,059 | | $ 621,151 | | 3.0% |
The base salary adjustments for the named executive officers
other than Mr. Katz were in line with the
2.5%3.0% target merit salary increase for the Company’s senior officers.
Mr. Katz received an above-target increase as a result of his experience, individual job performance and future potential.
All of the named executive officers participate in the Company’s Annual Bonus Plan. The Company’s Annual Bonus Plan provides each executive officer the opportunity to receive an annual cash award based on the achievement of corporate performance goals and individual performance.
The formula for computing annual bonus payouts is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Base Salary | x | | x
| | | Target Bonus Percentage
(% of Base Salary) | x | | x
| | | Overall Goal
Achievement Factor (%)
| x | | x
| | | Individual
Performance Factor | = | | =
| | | Bonus Award Earned
|
In the first quarter of each fiscal year, the Committee approves a target bonus percentage for each executive officer, expressed as a percentage of base salary. Target bonus percentages are determined based on each executive officer’s position and level of responsibility.
The target bonus percentages for the named executive officers for
2020fiscal 2022 were as follows:
| | | | | | | | |
Name | | 20202022 Target Bonus Percentage
(% of Base Salary) |
Mr. Harrison | | 100% |
Mr. Anthony | | 75% |
Mr. Katz | | 100% |
Mr. Chambless | | 75% |
Mr. Fisher | | 75% |
The target bonus percentages for the named executive officers
(other than Mr. Anthony) remained unchanged from
2019fiscal 2021 as a percentage of base salary.
The target bonus percentage for Mr. Anthony increased to 75% (from 60%) of his base salary to account for his level of responsibility and to align with the market.
Overall Goal Achievement Factor
The overall goal achievement factor is calculated based on the Company’s achievement of annual corporate performance goals determined for each performance measure under the Annual Bonus Plan. The target performance goal for each performance measure was in each case
equal to or greater than the target performance in the Company’s
2020fiscal 2022 operating plan. The following table summarizes the performance measures and related corporate performance goals approved by the Committee for
2020:fiscal 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Performance Goals | |
Performance Measure | | Weight | | Threshold | | Target | Target | | | Maximum | |
EBIT | | 40% | | $410.0 million | 175.8 | $470.0 million | | | $ | 207.0500.0 million | | | $ | 224.8 million | |
Free Cash Flow | | 40% | | $ 75.0 million | 22.2 | $105.0 million | | | $ | 40.0135.0 million | | | $ | 57.8 million | |
Revenue | | 20% | | $ 5.472 billion | 4.573 | $ 5.672 billion | | | $ | 4.688 5.772 billion | | | $ | 4.753 billion | |
The Committee selected EBIT, Free Cash Flow and Revenue (each, as defined below) as the performance measures for
2020fiscal 2022 because the Committee believes the Revenue performance measure, together with the profitability performance measures, encourage senior management to grow
top-line revenue with a strong emphasis on profitability and generation of free cash flow. While both EBIT and Free Cash Flow measure profitability, EBIT measures the current year’s operating profitability, taking into account all cash and
non-cash expenses other than interest and taxes. Free Cash Flow, on the other hand, measures the Company’s ability to generate sufficient profit to fund spending on equipment and assets as well as changes in working capital which will support the generation of profit in future years. The Committee chose to use both profitability measures to provide a balanced assessment of the Company’s current profitability and its ability to sustain profitability over the longer term. There were no changes from
2019fiscal 2021 to
2020fiscal 2022 in the relative weights assigned to the performance measures.
The performance measures are defined as follows:
•“EBIT” is the acronym for Earnings Before Interest and Taxes and means income from operations determined on a consolidated basis in accordance with U.S. generally accepted accounting principles (“GAAP”);
| • | | “Free Cash Flow”(1) means the change in long-term debt and obligations under financing leases (both current and noncurrent) net of cash and cash equivalents; and
|
•“Free Cash Flow”(1) means the change in long-term debt and obligations under financing leases (both current and noncurrent) net of cash and cash equivalents; and
•“Revenue” means net sales revenue determined on a consolidated basis in accordance with GAAP.
| (1) | Free Cash Flow is a non-GAAP financial performance measure used solely for evaluating the Company’s performance in connection with the determination of the amount of incentive compensation earned under the 2020 Annual Bonus Plan. Non-GAAP financial measures are not an alternative for the Company’s reported results prepared in accordance with GAAP.
|
__________
(1)Free Cash Flow is a non-GAAP financial performance measure used solely for evaluating the Company’s performance in connection with the determination of the amount of incentive compensation earned under the Annual
Bonus Plan for 2022 (the “2022 Annual Bonus Plan”). Non-GAAP financial measures are not an alternative for the Company’s reported results prepared in accordance with GAAP.
The Committee also approved the threshold, target and maximum performance goals for each performance measure under the
20202022 Annual Bonus Plan. If the threshold goal is not achieved for a given measure, there will be no payout on that measure. Increasingly larger payouts will be awarded for levels of achievement between the threshold and maximum performance goals.
The following table summarizes the payout range for each performance goal:
| | | | | | | | |
Performance Goal Achievement | | | | Payout Percentage |
Less than threshold | | | | 0% |
Threshold to target | | | | 50% - 99% |
Target to maximum | | | | 100% - 149% |
Maximum and greater | | | | 150% |
In accordance with the terms of the Annual Bonus Plan, in determining the overall goal achievement factor, the Committee may make adjustments to the actual levels of achievement under each corporate performance measure to ensure that each corporate performance measure reflects the Company’s normalized operating performance in the ordinary course of business. In general, these
potential adjustments relate to unplanned or unanticipated
events.events and nonrecurring items. Examples of such adjustments would be
the mark-to-market adjustments required on the Company’s hedges for certain commodities such as fuel and aluminum,
and costs related to supply chain optimization
efforts.efforts, and facility purchases. In addition, Revenue is adjusted to exclude sales to other bottlers, because those sales are the result of supply chain decisions made by a national product supply group comprised of The
Coca-ColaCoca‑Cola Company and certain regional producing
Coca-ColaCoca‑Cola bottlers (including the Company)
(the “National Product Supply Group”) and not by Company management. Adjustments to EBIT, Free Cash Flow and Revenue in
2020fiscal 2022 totaled
$(5.8)$3.5 million,
$122.7$60.0 million and
$(388.5)$(349.8) million, respectively. The adjustment to
Free Cash Flow includes an increaseRevenue was comprised solely of
$100.0 million, which amount represents the purchase price paid by an indirect wholly owned subsidiary of the Company for the purchase on December 9, 2020 of the remaining 22.7% general partnership interest in Piedmont not owned by the Company from an indirect wholly owned subsidiary of The Coca-Cola Company. Salessales to other
bottlers comprised $(329.6) million of the total Revenue adjustment of $(388.5) million.bottlers.
The following table reflects the calculation of the overall goal achievement factor for
2020: | | | | | | | | | | | | | | | | | | |
Performance Measure | | Weight | | | Target Performance Goal | | | Adjusted Goal Achievement | | | Payout Percentage | | | Weighted Payout Percentage |
EBIT | | | 40% | | | $ | 207.0 million | | | $ | 307.6 million | | | | 150.0% | | | 60.0% |
Free Cash Flow | | | 40% | | | $ | 40.0 million | | | $ | 208.3 million | | | | 150.0% | | | 60.0% |
Revenue | | | 20% | | | $ | 4.688 billion | | | $ | 4.619 billion | | | | 69.9% | | | 14.0% |
| | | | | | | | | | | | | | | | | | |
| | | | | |
Overall Goal Achievement Factor | | | | | | | | | | | | | | | | | | 134.0% |
fiscal 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Performance Measure | | Weight | | Target Performance Goal | | Adjusted Goal Achievement | | Payout Percentage | | Weighted Payout Percentage |
EBIT | | 40% | | $470.0 million | | $644.6 million | | 150.0% | | 60.0% |
Free Cash Flow | | 40% | | $105.0 million | | $240.0 million | | 150.0% | | 60.0% |
Revenue | | 20% | | $ 5.672 billion | | $ 5.851 billion | | 150.0% | | 30.0% |
Overall Goal Achievement Factor | | | | | | | | | | 150.0% |
Individual Performance Factor
The Committee determines the individual performance factor for each named executive officer during the first quarter of each fiscal year based on its subjective judgment of the named executive officer’s performance for the prior fiscal year, including consideration of the named executive officer’s annual performance evaluation, special projects the executive was assigned during the fiscal year and management’s recommendations. The target individual performance factor is 1.0; the maximum individual performance factor is 1.5. For fiscal 2022, the Committee assigned an above-target individual performance factor of 1.45 to each of the named executive officers in view of the named executive officer’s successful management of numerous challenges faced by the business during the fiscal year which enabled the Company to achieve above-maximum performance of all of the Annual Bonus Plan goals. These efforts included helping lead the Company through the challenges related to labor shortages, inflationary pressures and supply chain constraints.
Based on the Committee’s determinations as described above, the bonus amounts paid to the named executive officers for
2020fiscal 2022 were calculated as follows:
| | | | | | | | | | | | | | | | | | | | | | |
Name | | Base Salary | | | x | | Target Bonus Percentage (% of Base Salary) | | x | | Overall Goal Achievement Factor | | x | | Individual Performance Factor | | = | | Bonus Award Earned | |
Mr. Harrison | | $ | 1,186,571 | | | x | | 100% | | x | | 134.0% | | x | | 1.20 | | = | | $ | 1,908,006 | |
Mr. Anthony | | $ | 538,125 | | | x | | 75% | | x | | 134.0% | | x | | 1.20 | | = | | $ | 648,979 | |
Mr. Katz | | $ | 770,000 | | | x | | 100% | | x | | 134.0% | | x | | 1.40 | | = | | $ | 1,444,520 | |
Mr. Chambless | | $ | 656,641 | | | x | | 75% | | x | | 134.0% | | x | | 1.20 | | = | | $ | 791,909 | |
Mr. Fisher | | $ | 588,350 | | | x | | 75% | | x | | 134.0% | | x | | 1.20 | | = | | $ | 709,550 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Base Salary | x | Target Bonus Percentage (% of Base Salary) | x | Overall Goal Achievement Factor | x | Individual Performance Factor | = | Bonus Award Earned |
Mr. Harrison | | $1,271,054 | x | 100% | x | 150.0% | x | 1.45 | = | $2,764,543 |
Mr. Anthony | | $ 568,125 | x | 75% | x | 150.0% | x | 1.45 | = | $ 926,755 |
Mr. Katz | | $ 890,950 | x | 100% | x | 150.0% | x | 1.45 | = | $1,937,816 |
Mr. Chambless | | $ 693,248 | x | 75% | x | 150.0% | x | 1.45 | = | $1,130,861 |
Mr. Fisher | | $ 621,151 | x | 75% | x | 150.0% | x | 1.45 | = | $1,013,252 |
Long-Term Performance Plan
The Long-Term Performance Plan delivers a targeted percentage of base salary to each participant based on the achievement of long-term goals of the Company. The Long-Term Performance Plan is offered to the executive officers and other key employees. A three-year performance cycle is generally established each
fiscal year for determining compensation under the Long-Term Performance Plan.
The Committee approved the Long-Term Performance Plan to promote retention of executive officers and
other key employees,
to increase the proportion of their total performance-based compensation and
to provide an incentive to achieve the Company’s long-term strategic and financial goals.
The general formula for computing awards under the Long-Term Performance Plan is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Target Award | x | x | | Long-Term Performance Factor
(%)
| = | = Award Earned | | Award
Earned
|
2020
2022 Long-Term Performance Plan
In the first quarter of
2020,fiscal 2022, the Committee established the Long-Term Performance Plan for the
2020-2022fiscal 2022 - fiscal 2024 three-year performance period (the
“2020“2022 Long-Term Performance Plan”).
The Committee approved target awards under the
20202022 Long-Term Performance Plan based on its consideration of each executive officer’s base salary, position and level of responsibility, succession planning considerations, the Company’s historical grant practices and market benchmark data provided by Korn Ferry. Payouts with respect to the target awards will be made in early
2023fiscal 2025 depending on the Company’s achievement of specified corporate performance goals during the three-year performance period.
The following table reflects the target awards granted to the named executive officers under the
20202022 Long-Term Performance Plan:
| | | | | | |
| | 2020 Long-Term Performance Plan
Target Awards |
|
Name | | % of Base Salary | | $ Amount | |
Mr. Anthony | | 75% | | $ | 403,594 | |
Mr. Katz | | 100% | | $ | 770,000 | |
Mr. Chambless | | 75% | | $ | 492,480 | |
Mr. Fisher | | 75% | | $ | 441,263 | |
| | | | | | | | | | | | | | |
| | 2022 Long-Term Performance Plan Target Awards |
Name | | % of Base Salary | | $ Amount |
Mr. Anthony | | 75% | | $ 426,094 |
Mr. Katz | | 150% | | $1,336,425 |
Mr. Chambless | | 75% | | $ 519,936 |
Mr. Fisher | | 75% | | $ 465,863 |
The target award percentages for the named executive officers
(other than Mr. Anthony) remained unchanged from
2019fiscal 2021 as a percentage of base salary.
The target award percentage for Mr. Anthony increased to 75% (from 60%) of his base salary to account for his level of responsibility and to align with the market.
The long-term performance factor is calculated based on the Company’s achievement of corporate performance goals during the three-year performance period. The following table summarizes the corporate performance measures and weights approved by the Committee for the
20202022 Long-Term Performance Plan:
| | | | | | | | |
Performance Measure | | Weight |
Leverage Ratio Free Cash Flow | | 30% |
EBIT | | 50% |
EBIT Margin | | 20% |
The
2022 Long-Term Performance Plan
for the 2019-2021 three-year performance period included Leverage Ratio,includes Free Cash Flow, EBIT and EBIT Margin (each, as defined below) weighted
50%30%,
30%50% and 20%, respectively, as performance measures.
In 2020, the Committee changed the weightings of the measures and assigned a 30% weighting to Leverage Ratio and a 50% weighting to EBIT to align with the current business environment and to incent the appropriate management behavior. The Committee included
Leverage RatioFree Cash Flow as a performance measure to encourage senior management to focus on the Company’s
debt levels.operating efficiency, cash generation and working capital management. The Committee believes the EBIT and EBIT Margin performance measures focus senior management on enhancing the efficiency and quality of earnings along with the profitability from operations. The Committee believes the achievement of goals with respect to all of these measures is consistent with the long-term interests of the Company’s stockholders.
The performance measures are defined as follows:
| • | | “Leverage Ratio”(1) means long-term debt and obligations under financing leases (both current and noncurrent) less cash and cash equivalents, divided by the sum of income from operations, depreciation and amortization, all determined on a consolidated basis in accordance with GAAP;
|
•“Free Cash Flow”(1) means the change in long-term debt and obligations under financing leases (both current and noncurrent) net of cash and cash equivalents;
•“EBIT” is the acronym for Earnings Before Interest and Taxes and means income from operations determined on a consolidated basis in accordance with GAAP; and
•“EBIT Margin” means the percentage determined by dividing EBIT by Revenue (as defined in the description of the Annual Bonus Plan beginning on page 33)35).
| (1) | Leverage Ratio is a non-GAAP financial performance measure that will be used solely for evaluating the Company’s performance in connection with the determination of the amount of incentive compensation earned under the 2020 Long-Term Performance Plan. Non-GAAP financial measures are not an alternative for the Company’s reported results prepared in accordance with GAAP.
|
__________
(1)Free Cash Flow is a non-GAAP financial performance measure used solely for evaluating the Company’s performance in connection with the determination of the amount of incentive compensation earned under the 2022 Long-Term Performance Plan. Non-GAAP financial measures are not an alternative for the Company’s reported results prepared in accordance with GAAP.
The Committee approved the threshold, target and maximum performance goals for each performance measure under the
20202022 Long-Term Performance Plan. The target performance goals are set at a level believed by management to be reasonably achievable. The economic and business environment facing the Company remains challenging and therefore the Company’s ability to achieve the target goals under the
20202022 Long-Term Performance Plan is uncertain.
If the threshold goal is not achieved for a given measure, there will be no payout on that measure. Increasingly larger payouts will be awarded for levels of achievement between the threshold and maximum performance goals.
The following table summarizes the payout range for each performance goal:
| | | | | | | | |
Performance Goal Achievement | | Payout Percentage |
Less than threshold | | 0% |
Threshold to target | | 50% - 99% |
Target to maximum | | 100% - 149% |
Maximum and greater | | 150% |
In accordance with the terms of the Long-Term Performance Plan, in determining the long-term performance factor, the Committee may make adjustments to the actual levels of achievement under each corporate performance measure to ensure that each corporate performance measure reflects the Company’s normalized operating performance in the ordinary course of business. In general, these potential adjustments relate to unplanned or unanticipated
events.events and nonrecurring items. Examples of such adjustments would be
the mark-to-market adjustments required on the Company’s hedges for certain commodities such as fuel and aluminum,
and costs related to supply chain optimization
efforts.efforts, and facility purchases.
Awards, if any, under the
20202022 Long-Term Performance Plan will be paid in early
2023fiscal 2025 based on the Company’s audited consolidated financial results for fiscal
years 20202022 through
2022fiscal 2024 and any adjustments made by the Committee. Consistent with the Company’s historical practice of compensating executive officers (other than the CEO) in cash, the awards will be paid in cash instead of equity due to the limited number of shares of
CokeCoca‑Cola Consolidated stock held by stockholders who are not affiliates of the Company and the limited trading volume of
CokeCoca‑Cola Consolidated Common Stock.
2018
2020 Long-Term Performance Plan
In the first quarter of
2018,fiscal 2020, the Committee established the Long-Term Performance Plan for the
2018-2020fiscal 2020 - fiscal 2022 three-year performance period (the
“2018“2020 Long-Term Performance Plan”). Awards under the
20182020 Long-Term Performance Plan were paid in early
2021fiscal 2023 based on the Company’s audited consolidated financial results for fiscal
years 20182020 through
2020fiscal 2022 and the adjustments made by the Committee described below. The awards were calculated as follows:
| | | | | | | | | | | | | | | | | | |
Name | | 2018 Long-Term Performance Plan Target Awards | | | x | | | Long-Term Performance Factor | | = | | | Award Earned | |
Mr. Anthony(1) | | | — | | | | | | | — | | | | | | | — | |
Mr. Katz | | $ | 468,750 | | | | x | | | 145.0% | | | = | | | $ | 679,688 | |
Mr. Chambless | | $ | 468,750 | | | | x | | | 145.0% | | | = | | | $ | 679,688 | |
Mr. Fisher | | $ | 420,000 | | | | x | | | 145.0% | | | = | | | $ | 609,000 | |
(1) | Mr. Anthony was not eligible to participate in the 2018 Long-Term Performance Plan, because he commenced employment with the Company on November 30, 2018.
|
| | | | | | | | | | | | | | | | | | | | |
Name | | 2020 Long-Term Performance Plan Target Awards | x | Long-Term Performance Factor | = | Award Earned |
Mr. Anthony | | $403,594 | x | 150.0% | = | $ 605,391 |
Mr. Katz | | $770,000 | x | 150.0% | = | $1,155,000 |
Mr. Chambless | | $492,480 | x | 150.0% | = | $ 738,720 |
Mr. Fisher | | $441,263 | x | 150.0% | = | $ 661,895 |
The following table reflects the calculation of the long-term performance factor under the
20182020 Long-Term Performance Plan:
| | | | | | | | | | | | | | | | | | |
Performance Measure | | Weight | | | Target Performance Goal | | | Adjusted Goal Achievement | | | Payout Percentage | | | Weighted Payout Percentage |
Average Earnings Per Share | | | 40% | | | $ | 6.82 | | | $ | 11.28 | | | | 150.0% | | | 60.0% |
Average Debt to Operating Cash Flow | | | 40% | | | | 3.23 | | | | 2.55 | | | | 150.0% | | | 60.0% |
Average Return on Total Assets | | | 10% | | | | 2.06 | % | | | 3.44 | % | | | 150.0% | | | 15.0% |
Average Revenue | | | 10% | | | $ | 4.881 billion | | | $ | 4.883 billion | | | | 100.0% | | | 10.0% |
| | | | | | | | | | | | | | | | | | |
Overall Goal Achievement Factor | | | | | | | | | | | | | | | | | | 145.0% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Performance Measure | | Weight | | Target Performance Goal | | Adjusted Goal Achievement | | Payout Percentage | | Weighted Payout Percentage |
EBIT | | 50% | | $652.5 million | | $1,394.6 million | | 150.0% | | 75.0% |
Leverage Ratio | | 30% | | 2.37 | | 0.89 | | 150.0% | | 45.0% |
EBIT Margin | | 20% | | 4.20% | | 8.19% | | 150.0% | | 30.0% |
Long-Term Performance Factor | | | | | | | | | | 150.0% |
In accordance with the terms of the Long-Term Performance Plan, in determining the long-term performance factor, the Committee made adjustments to the actual levels of achievement under each corporate performance measure to ensure that each corporate performance measure reflected the Company’s normalized operating performance in the ordinary course of business. Adjustments to
EBIT, indebtedness and net sales that were used to determine aggregate EBIT, average
Earnings Per Share, average Debt to Operating Cash Flow, average Return on Total AssetsLeverage Ratio and average
Revenue, averaged over the performance period,EBIT Margin totaled
$6.02 per share, 0.66, 1.84%$1.0 million, $(376.8) million and
$73.4$(58.9) million, respectively. In general, these adjustments related to unplanned or unanticipated events and nonrecurring
System Transformation items. Examples of such adjustments included the following: (i)
planned results of territory acquisitions that were never completed, (ii) impacts of sales to other bottlers related to supply chain governance decisions made out of management’s control by the National Product Supply Group, (iii) impacts of certain accounting changes made during the performance period,
(iv)(ii) mark-to-market adjustments required on the Company’s hedges for certain commodities such as fuel and aluminum,
(v) mark-to-market adjustments required on acquisition related contingent consideration, (vi)(iii) costs related to supply chain optimization efforts,
(iv) results of extra days during fiscal 2020, (v) consideration paid for the acquisition of noncontrolling interest, (vi) deferred payroll taxes under the Coronavirus Aid, Relief and Economic Security Act and (vii) the
effectacquisition of
four extra days in fiscal 2020 due to a change in the Company’s fiscal year-end.certain additional BODYARMOR distribution rights.
Long-Term Performance Equity Plan
Mr. Harrison participates in the Long-Term Performance Equity Plan. The Long-Term Performance Equity Plan permits the Committee to design and award incentive compensation to Mr. Harrison based on the Company’s achievement of performance goals that are reflective of the Company’s long-term strategic and financial goals. Awards granted to Mr. Harrison under the Long-Term Performance Equity Plan are earned based on the Company’s attainment of performance measures specified by the Committee during a performance period. Mr. Harrison may elect to have awards earned under the Long-Term Performance Equity Plan settled in cash, shares of Class B Common Stock or a combination of cash and shares of Class B Common Stock.
In February 2020,2022, the Committee approved an incentive award to Mr. Harrison under the Long-Term Performance Equity Plan with a target value of $6,700,000$6,850,000 for the 2020-2022fiscal 2022 - fiscal 2024 three-year performance period (the “2022 Long-Term Performance Equity Plan”). The performance measures and threshold, target and maximum levels of performance and weightings for the award under the 2022 Long-Term Performance Equity Plan are identical to the performance measures and threshold, target and maximum levels of performance and weightings for awards under the 2022 Long-Term Performance Plan described above. The amount of the incentive award earned will be determined by the Committee and paid to Mr. Harrison in early fiscal 2025 based on the Company’s audited consolidated financial results for fiscal 2022 through fiscal 2024 and any adjustments made by the Committee.
In the first quarter of fiscal 2020, the Committee approved an incentive award to Mr. Harrison under the Long-Term Performance Equity Plan for the fiscal 2020 - fiscal 2022 three-year performance period (the “2020 Long-Term Performance Equity Plan”). The performance measures and threshold, target and maximum levels of performance and weightings for the award under the 2020 Long-Term Performance Equity Plan
are identical to the performance measures and threshold, target and maximum levels of performance and weightings for awards under the 2020 Long-Term Performance Plan described above. The amount of the incentive award earned will be determined by the Committee and paid to Mr. Harrison in early 2023 based on the Company’s audited consolidated financial results for fiscal years 2020 through 2022 and any adjustments made by the Committee.In 2018, the Committee approved the first incentive award to Mr. Harrison under the Long-Term Performance Equity Plan (the “2018 Long-Term Performance Equity Plan”). The performance measures and threshold, target and maximum levels of performance and weightings for awards under the 2018 Long-Term Performance Equity Plan were identical to the performance measures and threshold, target and maximum levels of performance and weightings for the awardawards under the 20182020 Long-Term Performance Plan described above. The amount of the incentive award earned by Mr. Harrison under the 20182020 Long-Term Performance Equity Plan was calculated as shown in the table below. Mr. Harrison elected to receive the incentive award in cash.
| | | | | | | | | | | | | | | | |
Name | | | | 2018-2020 Award Target Value | | | x | | Overall Goal Achievement Factor | | = | | Bonus Award Earned | |
Mr. Harrison | | | | $ | 5,850,000 | | | x | | 145.0% | | = | | $ | 8,482,500 | |
| | | | | | | | | | | | | | | | | | | | |
Name | | 2020 Long-Term Performance Equity Plan Award | x | Long-Term Performance Factor | = | Bonus Award Earned |
Mr. Harrison | | $6,700,000 | x | 150.0% | = | $10,050,000 |
Officer Retention and Long-Term Retention Plans
Historically, the Committee has emphasized retention as a key objective of the Company’s executive compensation program. The Company maintains two supplemental retirement plans—the Officer Retention Plan (the “ORP”) and the Long-Term Retention Plan (the “LTRP”)—for the purpose of attracting and retaining executive talent until retirement and promoting a long-term perspective. These plans are also provided in light of the Company’s historical practice of not using equity as a significant component of compensation (except for the CEO). The material terms of the ORP and the LTRP are described on page 50 and beginning on pages 47 and 49,page 52, respectively.
Mr. Harrison ceased accruing supplemental retirement benefits under the ORP when he attained age 60.
TheFor participants who continue employment past age 60, the ORP
providesdoes not provide for
payments of a participant’s accrued retirement benefit following the participant’s retirement from the Company withoutany interest or actuarial increase
if payment of
an ORPthe participant’s fully accrued retirement benefit
is deferred due to continuedduring the period they continue employment past age 60.
Supplemental Savings Incentive Plan
The Supplemental Savings Incentive Plan (the “SSIP”) allows the executive officers to defer a portion of their annual salary and
of their awards under the Annual Bonus Plan, the Long-Term Performance Plan and the Long-Term Performance Equity Plan. The Company
may matchcurrently matches up to 50% of the first 6% of
base salary
deferred.deferred into the SSIP. The Company may also make additional discretionary contributions to
the participants’
SSIP accounts.
In connection with his recruitment by the Company and in lieu of any awards under the ORP or the LTRP, the Committee approved annual discretionary contributions to the SSIP account of Mr. Anthony of $100,000 for each of
the yearsfiscal 2019 through
fiscal 2023. In
fiscal 2020, the Committee approved additional annual discretionary contributions to the SSIP account of Mr. Anthony of $50,000 for each of
the yearsfiscal 2020 through
fiscal 2023. The annual discretionary contributions are subject to his continued employment with the Company.
Prior to 2006, participants could elect to receive a fixed annual return of up to 13% on their account balances. This election provided participants with an above-market rate of return and resulted in a long-term fixed liability for the Company that was not contingent on its corporate performance. For these reasons, the Committee eliminated the option to receive a fixed rate of return for all deferrals and Company contributions made on or after January 1, 2006. The fixed rate of return option was not eliminated for deferrals and Company contributions made before January 1, 2006. The material terms of the SSIP are described beginning on page
48.51.
Other Benefits and Executive Compensation Policies
The Company maintains a traditional,
tax-qualified defined benefit pension plan (the “Pension Plan”) for certain
non-union employees, including
certain of the named executive officers. Effective June 30, 2006, no new participants may become eligible to participate in the Pension Plan and the benefits under the Pension Plan for existing participants, including the named executive officers, were frozen. Messrs. Anthony, Katz and Fisher do not participate in the Pension Plan because their employment with the Company began after June 30, 2006.
The Company terminated the Pension Plan effective May 31, 2022 and anticipates distributing all Pension Plan benefits to participants in fiscal 2023 after the Company receives governmental approvals of the termination.
The Company maintains a
tax-qualified defined contribution plan
(the “401(k) Savings Plan”) with a cash or deferred arrangement under Section 401(k) of the Internal Revenue Code for substantially all of its employees who are not part of collective bargaining agreements, including the named executive officers. Employee elective deferral contributions to the 401(k) Savings Plan are made,
at the election of the employee, on a
pre-tax basis or Roth after-tax basis and are subject to contribution limitations in the Internal Revenue Code. The Company currently matches up to 100% of the first 4% of base salary deferred under the 401(k) Savings Plan. The Company may make an additional discretionary contribution equal to 100% of an additional 1% of base salary deferred under the 401(k) Savings Plan. The Company funded all of the discretionary matching contribution for
2020.fiscal 2022.
Severance and Change in Control
The Company’s senior executive officers, including the named executive officers, do not have employment agreements, but they are entitled to certain payments under the various plans described in this section in connection with a termination of employment or a change in control of the Company. With respect to termination of employment, each executive officer is entitled to certain payments upon termination without cause, voluntary resignation or termination due to death or disability. The terms of the severance provisions are described beginning on page 50.54.
Change in control benefits are provided to ensure that, in the event of a friendly or hostile change in control, the Company’s executive officers will be able to advise the Board about the potential transaction, without being unduly influenced by personal considerations, such as fear of losing their jobs as a result of a change in control.
The Committee does not consider the change in control provisions in determining the forms or amounts of other compensation. The terms of the change in control provisions are described beginning on page
50.54.
The Company provides personal benefits to the named executive officers that management and the Committee believe are reasonable, competitive and consistent with the Company’s overall objective of attracting and retaining executive talent. The Committee believes the value of providing these benefits to the named executive officers outweighs the cost of the benefits. The cost of these benefits to
CokeCoca-Cola Consolidated is reflected in the “All Other Compensation” column of the
20202022 Summary Compensation Table on page
42.45.
Each of the named executive officers is provided with an annual executive allowance. Each named executive officer has the flexibility to keep or spend the allowance and is not required to report to the Company how the allowance is spent. The Company provides the annual executive allowance to minimize decisions regarding the types of benefits provided,
to provide the named executive officers choice and flexibility and
to fix the Company’s expenses with respect to these types of benefits.
Each of the named executive officers received an annual executive allowance for
2020.fiscal 2022. The amount of the allowance was $45,000 for Mr. Harrison, $25,000 for Messrs. Katz and Chambless and $15,000 for Messrs. Anthony and Fisher. These amounts were determined based on the Company’s
average annual
average costs of providing historical personal benefits that were replaced by the annual executive allowance, including the costs of
prior income tax
reimbursements paid in connection with the historical benefits.reimbursements.
The Company continues to pay long-term disability and life insurance premiums for the named executive officers.
In fiscal 2022, the Company adopted an executive health assessment program for its senior management employees, including the executive officers. The program reimburses participants for the cost of an annual comprehensive physical examination. The Company encourages executive officers to participate in the program because it helps participants evaluate their current health and assists them with the prevention, early detection and management of any medical conditions.
The Board requires the CEO to use the Company’s corporate aircraft whenever reasonable for both business and personal travel. This benefit increases the level of safety and security for Mr. Harrison and his family. Making the aircraft available to Mr. Harrison also allows him to efficiently and securely conduct business during both business and personal flights and eliminates the inefficiencies of commercial travel. The Board believes that the value of making the aircraft available to Mr. Harrison and his family, in terms of convenience, security and saving time, results in an efficient form of compensation for Mr. Harrison.
Other executive officers may use the Company’s corporate aircraft for personal purposes with Mr. Harrison’s permission and subject to the oversight of the Committee and the Board. Depending on availability, family members of executive officers may travel on the corporate aircraft to accompany executives on business. There is nominal or no incremental cost to the Company for these passengers.
The Company purchases tickets to cultural, sporting and other entertainment events for business development and network building purposes and to support these activities in the communities in which we operate. Our employees, including the executive officers, may make personal use of any tickets that are not otherwise being used for business purposes. The Company incurs no or de minimis incremental cost in connection with the executive officers’ personal use of the tickets, and the Committee believes attendance at these events by our employees, including the executive officers, enhances the Company’s profile in the communities in which we operate.
For certain elements of compensation, the Company also pays income and employment tax
gross-ups to provide the full benefit of the compensation.
Tax and Accounting Considerations
The Committee considers the tax and accounting effects of compensation elements when designing the Company’s incentive and equity compensation plans. In order to maintain flexibility in compensating executive officers, however, the Committee has not adopted a policy that all compensation must be deductible for federal income tax purposes.
Under Section 162(m) of the Internal Revenue Code, as amended by the Tax Cuts and Jobs Act of 2017, the Company may not deduct compensation in excess of $1.0 million paid to “covered individuals” (as defined in Section 162(m) which includes all of the named executive officers). Therefore, compensation in excess of $1.0 million paid to the named executive officers is not deductible by the Company for federal income tax purposes.
Executive Compensation Tables
The following tables and related narratives present the compensation for the named executive officers in the format specified by the SEC.
I.
20202022 Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position (a) | | Year (b) | | | Salary ($) (c) | | | Bonus ($) (d) | | | Stock Awards ($) (e) | | | Non-Equity Incentive Plan Compensation ($) (f) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (g) | | | All Other Compensation ($) (h) | | | Total ($) (i) | |
J. Frank Harrison, III Chairman of the Board and Chief Executive Officer | |
| 2020 2019 2018 |
| |
| 1,197,590
1,151,114 1,123,859 |
| |
| — — — |
| |
| — — 7,551,200 |
| |
| 10,390,506
8,708,743 979,750 |
| |
| 473,104
402,382 117,681 |
| |
| 405,992
1,445,385 1,846,153 |
| |
| 12,467,192 11,707,624 11,618,643 |
|
F. Scott Anthony Executive Vice President and Chief Financial Officer | |
| 2020 2019 | | |
| 543,123
525,000 |
| |
| —
75,000 |
| |
| —
— |
| |
| 648,979
482,224 |
| |
| —
— |
| |
| 204,372
213,380 |
| |
| 1,396,474
1,295,604 |
|
David M. Katz President and Chief Operating Officer | |
| 2020 2019 2018 |
| |
| 764,346
700,000 617,531 |
| |
| —
— — |
| |
| —
— — |
| |
| 2,124,208
1,584,012 857,855 |
| |
| 156,250
156,250 156,250 |
| |
| 308,489
275,379 210,300 |
| |
| 3,353,293
2,715,641 1,841,936 |
|
Robert G. Chambless Executive Vice President, Franchise Beverage Operations | |
| 2020 2019 2018 |
| |
| 662,739
637,019 617,531 |
| |
| —
— — |
| |
| —
— — |
| |
| 1,471,597
1,214,505 817,191 |
| |
| 279,354
290,044 199,499 |
| |
| 204,985
194,906 193,585 |
| |
| 2,618,675
2,336,474 1,827,806 |
|
E. Beauregarde Fisher III Executive Vice President, General Counsel and Secretary | | | 2020 | | | | 593,814 | | | | — | | | | — | | | | 1,318,550 | | | | — | | | | 313,659 | | | | 2,226,023 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position (a) | | Year (b) | | Salary ($) (c) | | Non-Equity Incentive Plan Compensation ($) (d) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (e) | | All Other Compensation ($) (f) | | Total ($) (g) |
J. Frank Harrison, III | | 2022 | | 1,263,042 | | | | 12,814,543 | | | 57,692 | | | | 553,849 | | | 14,689,126 | |
Chairman of the Board and Chief Executive Officer | | 2021 | | 1,223,631 | | | | 11,706,365 | | | 289,021 | | | | 326,119 | | | 13,545,136 | |
| 2020 | | 1,197,590 | | | | 10,390,506 | | | 473,104 | | | 405,992 | | | 12,467,192 | |
F. Scott Anthony | | 2022 | | | 564,544 | | | 1,532,146 | | | | — | | | | 209,466 | | | | 2,306,156 | |
Executive Vice President and Chief Financial Officer | | 2021 | | | 548,629 | | | | 1,279,183 | | | | — | | | | 204,903 | | | | 2,032,715 | |
| 2020 | | | 543,123 | | | | 648,979 | | | | — | | | | 204,372 | | | | 1,396,474 | |
David M. Katz | | 2022 | | | 885,333 | | | | 3,092,816 | | | — | | | | 635,330 | | | | 4,613,479 | |
President and Chief Operating Officer | | 2021 | | | 844,178 | | | | 2,866,500 | | | 156,250 | | | | 618,131 | | | | 4,485,059 | |
| 2020 | | | 764,346 | | | | 2,124,208 | | | 156,250 | | | | 308,489 | | | | 3,353,293 | |
Robert G. Chambless | | 2022 | | | 688,878 | | | | 1,869,581 | | | 22,013 | | | | 212,231 | | | | 2,792,703 | |
Executive Vice President, Franchise Beverage Operations | | 2021 | | | 669,459 | | | | 1,705,048 | | | 210,437 | | | | 204,985 | | | | 2,789,058 | |
| 2020 | | | 662,739 | | | | 1,471,597 | | | 279,354 | | | | 204,985 | | | | 2,618,675 | |
E. Beauregarde Fisher III | | 2022 | | | 617,235 | | | | 1,675,147 | | | | — | | | | 316,306 | | | | 2,608,688 | |
Executive Vice President, General Counsel and Secretary | | 2021 | | | 599,835 | | | | 1,527,723 | | | | — | | | | 314,126 | | | | 2,441,684 | |
| 2020 | | | 593,814 | | | | 1,318,550 | | | — | | | | 313,659 | | | | 2,226,023 | |
The amounts shown in the “Salary” column include amounts deferred by the named executive officers under the 401(k) Savings Plan and the SSIP.
Bonus (Column (d))
The amount shown in the “Bonus” column for Mr. Anthony for 2019 represents the second installment payment of the $150,000 sign-on bonus awarded to Mr. Anthony in connection with the commencement of employment with the Company on November 30, 2018. Mr. Anthony received the first installment payment of the sign-on bonus in 2018.
Stock Awards (Column (e))
The amount shown in the “Stock Awards” column for Mr. Harrison for 2018 represents the grant date fair value of 40,000 performance units awarded to Mr. Harrison, subject to vesting, in 2018. The grant date fair value of the award was computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 based on the Committee’s expectations as of the grant date regarding the probable level of vesting of the awards. For purposes of calculating the grant date fair value, the Committee assumed the maximum level of vesting of the award. Note 20 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2018 contains more information about the Company’s accounting for the performance unit award.
Non-Equity Incentive Plan Compensation (Column
(f)(d))
The amounts shown in the “Non-Equity“Non-Equity Incentive Plan Compensation” column represent (i) for the CEO,Mr. Harrison, the performance-based cash awards earned under the 20202022 Annual Bonus Plan and the 2020 Long-Term Performance Equity
Plan
for the 2018-2020 three-year performance period and (ii) for the other named executive officers, the performance-based cash awards earned under the
20202022 Annual Bonus Plan and the
20182020 Long-Term Performance Plan, as follows:
| | | | | | | | | | | | | | | | |
Name | | 2020 Annual Bonus Plan ($) | | | 2018-2020 Long-Term Performance Equity Plan ($) | | | 2018 Long-Term Performance Plan ($) | | | Total ($) | |
Mr. Harrison | | | 1,908,006 | | | | 8,482,500 | | | | — | | | | 10,390,506 | |
Mr. Anthony | | | 648,979 | | | | — | | | | — | | | | 648,979 | |
Mr. Katz | | | 1,444,520 | | | | — | | | | 679,688 | | | | 2,124,508 | |
Mr. Chambless | | | 791,909 | | | | — | | | | 679,688 | | | | 1,471,597 | |
Mr. Fisher | | | 709,550 | | | | — | | | | 609,000 | | | | 1,318,550 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | 2022 Annual Bonus Plan ($) | | 2020 Long-Term Performance Equity Plan ($) | | 2020 Long-Term Performance Plan ($) | | Total ($) |
Mr. Harrison | | 2,764,543 | | 10,050,000 | | — | | 12,814,543 |
Mr. Anthony | | 926,755 | | — | | 605,391 | | 1,532,146 |
Mr. Katz | | 1,937,816 | | — | | 1,155,000 | | 3,092,816 |
Mr. Chambless | | 1,130,861 | | — | | 738,720 | | 1,869,581 |
Mr. Fisher | | 1,013,252 | | — | | 661,895 | | 1,675,147 |
Change in Pension Value and Nonqualified Deferred Compensation Earnings (Column
(g)(e))
The following table breaks out the amounts shown in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column for
2020: | | | | | | | | | | | | | | | | |
Name | | Pension Plan ($)(1) | | | Officer Retention Plan ($)(2) | | | Nonqualified Deferred Compensation Earnings ($)(3) | | | Total ($) | |
Mr. Harrison | | | 186,860 | | | | — | | | | 286,244 | | | | 473,104 | |
Mr. Anthony | | | — | | | | — | | | | — | | | | — | |
Mr. Katz | | | — | | | | 156,250 | | | | — | | | | 156,250 | |
Mr. Chambless | | | 70,508 | | | | 183,929 | | | | 24,917 | | | | 279,354 | |
Mr. Fisher | | | — | | | | — | | | | — | | | | — | |
(1) | The amounts shown in this column reflect the aggregate increase in the present value of each named executive officer’s benefit under the Pension Plan from the beginning of the fiscal year to the end of the fiscal year. Additional information regarding each named executive officer’s accumulated benefits under the Pension Plan is presented beginning on page 46.
|
(2) | The amounts shown in this column reflect the aggregate increase in the present value of each named executive officer’s benefit under the ORP from the beginning of the fiscal year to the end of the fiscal year. Additional information regarding each named executive officer’s accumulated benefits under the ORP is presented beginning on page 47.
|
(3) | The amounts shown in this column reflect the portion of annual earnings on each named executive officer’s principal balance under the SSIP that is deemed to be “above-market interest” under the SEC rules. Additional information regarding the SSIP is presented beginning on page 48. The SSIP was amended in 2005 to eliminate the payment of above-market interest on salary deferrals and contributions made after 2005.
|
fiscal 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Pension Plan ($)(1) | | Officer Retention Plan ($)(2) | | Nonqualified Deferred Compensation Earnings ($)(3) | | Total ($) |
Mr. Harrison | | — | | — | | 57,692 | | 57,692 |
Mr. Anthony | | — | | — | | — | | — |
Mr. Katz | | — | | — | | — | | — |
Mr. Chambless | | — | | — | | 22,013 | | 22,013 |
Mr. Fisher | | — | | — | | — | | — |
__________
(1)For fiscal 2022, the present value of Messrs. Harrison’s and Chambless’ Pension Plan benefits decreased $228,226 and $145,388, respectively (primarily due to an increase in the interest rate used to determine such present value). Additional information regarding each named executive officer’s accumulated benefits under the Pension Plan is presented beginning on page 49.
(2)For fiscal 2022, the present value of Messrs. Harrison’s, Katz’s and Chambless’ ORP benefits decreased $2,131,710, $567,344 and $209,726, respectively (primarily due to an increase in the interest rate used to determine such present value). Additional information regarding each named executive officer’s accumulated benefits under the ORP is presented on page 50.
(3)The amounts shown in this column reflect the portion of annual earnings on Messrs. Harrison’s and Chambless’ principal balance under the SSIP that is deemed to be “above-market interest” under the SEC rules. Additional information regarding the SSIP is presented beginning on page 51. The SSIP was amended in 2005 to eliminate the payment of above-market interest on salary deferrals and contributions made after 2005.
All Other Compensation (Column
(h)(f))
The table below describes each component of the “All Other Compensation” column for
2020.fiscal 2022. The amounts shown reflect the incremental cost to
CokeCoca-Cola Consolidated for each of the benefits.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Company Contributions to Defined Contribution Plans ($) | | | Life Insurance ($) | | | Tax Gross-Ups ($) | | | Executive Allowance ($) | | | Personal Use of Corporate Aircraft ($) | | | Other ($) | | | Total ($) | |
Mr. Harrison | | | 50,966 | | | | 10,668 | | | | 41,754 | | | | 45,000 | | | | 249,399 | | | | 8,205 | | | | 405,992 | |
Mr. Anthony | | | 180,901 | | | | 5,539 | | | | 1,282 | | | | 15,000 | | | | — | | | | 1,650 | | | | 204,372 | |
Mr. Katz | | | 247,263 | | | | 4,954 | | | | 7,122 | | | | 25,000 | | | | — | | | | 24,150 | | | | 308,489 | |
Mr. Chambless | | | 144,552 | | | | 9,947 | | | | 16,808 | | | | 25,000 | | | | — | | | | 8,678 | | | | 204,985 | |
Mr. Fisher | | | 290,795 | | | | 4,097 | | | | 2,117 | | | | 15,000 | | | | — | | | | 1,650 | | | | 313,659 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Company Contributions to Defined Contribution Plans ($) | | Life Insurance ($) | | Tax Gross-Ups ($) | | Executive Allowance ($) | | Personal Use of Corporate Aircraft ($) | | Other ($) | | Total ($) |
Mr. Harrison | | 53,125 | | 10,668 | | 42,462 | | 45,000 | | 394,254 | | 8,340 | | 553,849 |
Mr. Anthony | | 182,179 | | 7,016 | | 3,486 | | 15,000 | | — | | 1,785 | | 209,466 |
Mr. Katz | | 581,429 | | 6,451 | | 14,366 | | 25,000 | | 3,499 | | 4,585 | | 635,330 |
Mr. Chambless | | 145,891 | | 11,905 | | 19,716 | | 25,000 | | — | | 9,719 | | 212,231 |
Mr. Fisher | | 292,099 | | 4,820 | | 2,602 | | 15,000 | | — | | 1,785 | | 316,306 |
The following describes each of the benefits reflected in the above table:
Company Contributions to Defined Contribution Plans. The Company makes matching and discretionary contributions to the named executive officers’ accounts under the SSIP and the 401(k) Savings Plan and to the accounts of the named executive officers (other than Messrs. Harrison and Anthony) under the LTRP. The Company currently matches up to 50% of the first 6% of base salary deferred into the SSIP. The Company may also make additional discretionary contributions to participants’ SSIP accounts. The Company makes matching contributions to the named executive officers’ accounts under the 401(k) Savings Plan of up to 5% of each named executive officer’s eligible compensation based on the Company’s 2020annual performance. The Company’s matching contribution is comprised of a 4% fixed component and a 1% discretionary component. The Company funded all of the discretionary matching contribution for 2020.fiscal 2022. The amount of the annual contributionsCompany contribution to a named executive officer’s supplemental benefits account under the LTRP is determined based on eachthe named executive officer’s position and level of responsibility, performance, and job tenure and future potential, and is specified in an individual participation agreement with the named executive officer at the time the named executive officer commences participation in the LTRP.
Life Insurance. The Company pays excess group life insurance and individual life insurance for certainthe named executive officers.
Tax Gross-Ups. The Company pays income tax and employment tax gross-ups with respect to certain long-term disability and life insurance premiums, personal use of corporate aircraft and social security and Medicare tax gross-ups with respect to the increase in vested benefits in the ORP.
Executive Allowance. The annual executive allowance is intended to establish an equitable distribution among the named executive groupofficers of the monies previously spent on executive perquisites. Each named executive officer has the flexibility to keep or spend the allowance and is not required to report to the Company how the allowance is spent.
Personal Use of Corporate Aircraft. The incremental cost of personal use of the Company’s corporate aircraft is calculated based on the average cost of fuel, crew travel, on-board catering, trip-related maintenance, landing fees and trip-related hangar and parking costs and other similar variable costs. Fixed costs that do not change based on usage, such as pilot salaries, home hangar expenses and general taxes and insurance are excluded from the incremental cost calculation. If an aircraft flies empty before picking up or after dropping off a passenger flying for personal reasons, this “deadhead” segment is included in the incremental cost of the personal use.
Other. Other is comprised of premiums for supplemental long-term disability insurance and directors’ fees paid by manufacturing cooperatives comprisedthe cost of Coca-Cola bottlers in which the Company is a member to Mr. Katz for his services as a director of such cooperatives. Mr. Katz no longer serves as a director of the cooperatives and will not receive any directors’ fees in 2021.annual comprehensive physical examination.
II.
20202022 Grants of Plan-Based Awards
The following table shows grants of plan-based awards made to the named executive officers in February
2020: | | | | | | | | | | | | | | | | |
| | | | | Estimated Possible
Payouts Under Non-Equity
Incentive Plan Awards | |
Name
| | Plan(1) | | | Threshold
($)(2) | | | Target
($)(3) | | | Maximum
($)(4) | |
Mr. Harrison
| |
| ABP
LTPEP |
| |
| 118,657
670,000 |
| |
| 1,186,571
6,700,000 |
| |
| 2,669,784
10,050,000 |
|
Mr. Anthony
| |
| ABP
LTPP |
| |
| 40,359
40,359 |
| |
| 403,594
403,594 |
| |
| 908,086
605,391 |
|
Mr. Katz
| |
| ABP
LTPP |
| |
| 77,000
77,000 |
| |
| 770,000
770,000 |
| |
| 1,732,500
1,155,000 |
|
Mr. Chambless
| |
| ABP
LTPP |
| |
| 49,248
49,248 |
| |
| 492,480
492,480 |
| |
| 1,108,081
738,721 |
|
Mr. Fisher
| |
| ABP
LTPP |
| |
| 44,126
44,126 |
| |
| 441,263
441,263 |
| |
| 992,841
661,894 |
|
(1) | Incentive award opportunities were granted under the following plans in 2020:
|
| ABP | 2020 Annual Bonus Plan
|
| LTPEP | 2020 Long-Term Performance Equity Plan
|
| LTPP | 2020 Long-Term Performance Plan
|
2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards |
Name | | Plan(1) | | Threshold ($)(2) | | Target ($)(3) | | Maximum ($)(4) |
Mr. Harrison | | ABP | | 127,105 | | 1,271,054 | | 2,859,873 |
| | LTPEP | | 685,000 | | 6,850,000 | | 10,275,000 |
Mr. Anthony | | ABP | | 42,609 | | 426,094 | | 958,712 |
| | LTPP | | 42,609 | | 426,094 | | 639,141 |
Mr. Katz | | ABP | | 89,095 | | 890,950 | | 2,004,638 |
| | LTPP | | 133,643 | | 1,336,425 | | 2,004,638 |
Mr. Chambless | | ABP | | 51,994 | | 519,936 | | 1,169,857 |
| | LTPP | | 51,994 | | 519,936 | | 779,904 |
Mr. Fisher | | ABP | | 46,586 | | 465,863 | | 1,048,191 |
| | LTPP | | 46,586 | | 465,863 | | 698,795 |
__________
(1)Incentive award opportunities were granted under the following plans in fiscal 2022:
ABP 2022 Annual Bonus Plan
LTPEP 2022 Long-Term Performance Equity Plan
LTPP 2022 Long-Term Performance Plan
The material terms of each plan are described in the “Compensation Discussion and Analysis” section beginning on page
30.(2) | The threshold award amounts shown for the ABP, the LTPEP and the LTPP are equal to 50% of the lowest weighted performance measure. The lowest weighted performance measure under the ABP, the LTPEP and the LTPP was 20%.
|
(3) | The target award amounts shown for the ABP were computed using an individual performance factor of 1.0.
|
(4) | The maximum award amounts shown for the ABP were computed using the maximum individual performance factor of 1.5.
|
32.(2)The threshold award amounts shown for the ABP, the LTPEP and the LTPP are equal to 50% of the lowest weighted performance measure. The lowest weighted performance measure under the ABP, the LTPEP and the LTPP was 20%.
(3)The target award amounts shown for the ABP were computed using an individual performance factor of 1.0.
(4)The maximum award amounts shown for the ABP were computed using an individual performance factor of 1.5 and an overall goal achievement factor of 150.0%. The maximum award amounts shown for the LTPP were computed using a long-term performance factor of 150.0%.
III. Defined Benefit Plans
The Company maintains the Pension Plan, a traditional,
tax-qualified defined benefit pension plan for certain
non-union employees, including
certain of the named executive officers. On June 30, 2006, the Pension Plan stopped accepting new participants and the benefits under the Pension Plan for existing participants,
including certain of the named executive officers, were frozen.
The Company terminated the Pension Plan effective May 31, 2022 and anticipates distributing all Pension Plan benefits to participants in fiscal 2023 after the Company receives governmental approvals of the termination. The Company also maintains the ORP, a supplemental nonqualified defined benefit plan, for
some of the Company’s key executives, including certain of the named executive officers. In March 2014, the Company stopped granting new awards of supplemental retirement benefits under the ORP.
| | | | | | | | | | | | | | | | | |
Name | | Plan Name | | Number of Years Credited Service (#)(1) | | Present Value of Accumulated Benefit ($)(2) | | Payments During Last Fiscal Year ($) |
| | | | |
Mr. Harrison | | Pension Plan | | 30 | | | | 1,499,629 | | | — | |
| | Officer Retention Plan | | 25 | | | | 14,411,990 | | | — | |
| | | | |
Mr. Anthony | | Pension Plan | | — | | | | — | | | — | |
| | Officer Retention Plan | | — | | | | — | | | — | |
| | | | |
Mr. Katz | | Pension Plan | | — | | | | — | | | — | |
| | Officer Retention Plan | | 8 | | | | 1,250,000 | | | — | |
| | | | |
Mr. Chambless | | Pension Plan | | 15 | | | | 428,927 | | | — | |
| | | | |
| | Officer Retention Plan | | 15 | | | | 2,080,357 | | | — | |
| | | | |
Mr. Fisher | | Pension Plan | | — | | | | — | | | — | |
| | Officer Retention Plan | | — | | | | — | | | — | |
(1) | The amounts shown in this column are equal to the number of years of benefit service for which the executive has received credit under the plan. None of the named executive officers have received benefit credit service under the plans for years of service in addition to their actual years of service with the Company which are as follows: Mr. Harrison—43 years, Mr. Anthony—2 years, Mr. Katz—8 years,
Mr. Chambless—34 years and Mr. Fisher—3 years.
|
(2) | The amounts shown in this column are the present values of each named executive officer’s accumulated benefits under the plans as of December 31, 2020. See Note 18 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for a description of the valuation method and material assumptions used to determine the present values of the accumulated benefits under the Pension Plan. Each named executive officer’s accumulated benefits under the ORP are determined in accordance with the terms of the ORP, as discussed below.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Plan Name | | Number of Years Credited Service (#)(1) | | Present Value of Accumulated Benefit ($)(2) | | Payments During Last Fiscal Year ($) |
Mr. Harrison | | Pension Plan | | 30 | | 1,304,224 | | — |
| | Officer Retention Plan | | 27 | | 12,280,280 | | — |
Mr. Anthony | | Pension Plan | | — | | — | | — |
| | Officer Retention Plan | | — | | — | | — |
Mr. Katz | | Pension Plan | | — | | — | | — |
| | Officer Retention Plan | | 10 | | 838,906 | | — |
Mr. Chambless | | Pension Plan | | 15 | | 269,115 | | — |
| | Officer Retention Plan | | 17 | | 2,054,560 | | — |
Mr. Fisher | | Pension Plan | | — | | — | | — |
| | Officer Retention Plan | | — | | — | | — |
__________
(1)The amounts shown in this column are equal to the number of years of benefit service for which the executive has received credit under the plans. None of the named executive officers have received benefit credit service under the plans for years of service in addition to their actual years of service with the Company which are as follows: Mr. Harrison—45 years, Mr. Anthony—4 years, Mr. Katz—10 years, Mr. Chambless—36 years and Mr. Fisher—5 years.
(2)The amounts shown in this column are the present values of each named executive officer’s accumulated benefits under the plans as of December 31, 2022. See Note 16 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for fiscal 2022 for a description of the valuation method and material assumptions used to determine the present values of the accumulated benefits under the Pension Plan. Each named executive officer’s accumulated benefits under the ORP are determined in accordance with the terms of the ORP, as discussed below.
The Pension Plan is a traditional,
tax-qualified defined benefit pension plan. The benefits under the Pension Plan were frozen on June 30, 2006, and since that date no additional employees have become participants in the Pension Plan and no additional benefits have accrued. On June 30, 2006, all participants in the Pension Plan became fully vested in their accrued benefits under the Pension Plan.
Each participant’s accrued benefit is determined based on the participant’s “average compensation” (as defined in the Pension Plan) as of December 31, 2005 and “years of service” (as defined in the Pension Plan) as of June 30, 2006. As a
tax-qualified pension plan, the maximum amount of compensation taken into account for each year under the terms of the Pension Plan is limited by the Internal Revenue Code. In 2006, this limit was $220,000. On December 31,
2020,2022, the Pension Plan benefit of Messrs. Harrison and Chambless was based on the maximum average compensation permitted by the Pension Plan and provides a benefit value equal to the amount shown in the above table under the “Present Value of Accumulated Benefit” column. Messrs. Anthony, Katz and Fisher were hired after the
benefits under the Pension Plan
waswere frozen, so they are not participants in the Pension Plan.
Participants may retire at or after age 65 and receive their full benefit under the Pension Plan. Participants who have not reached age 65 but who have reached age 55 and have at least 10 years of service may retire and receive
a reduced retirement benefit. Reductions for early retirement are 7.75% per year for the first five years and 4.00% per year for each additional year retirement is earlier than age 65. Mr. Harrison is eligible to retire and receive his full benefit under the Pension Plan.
Benefits are payable as a single life annuity for participants who are single when payment of their Pension Plan benefit commences or as a 50% joint and survivor annuity over the lives of the participant and spouse for participants who are married when payment of their Pension Plan benefit commences unless an optional form of payment is elected. Available
optional forms of payment are an annuity payable in equal monthly payments over a period of 10 years and thereafter for life, or a 75% or 100% joint and survivor annuity over the lives of the participant and spouse or other beneficiary. Benefits of $50,000 or less may be distributed in a lump sum. If a participant dies before the participant begins to receive retirement benefits, the surviving spouse will receive the value of a 50% joint and survivor benefit.
The Company terminated the Pension Plan effective May 31, 2022 and anticipates distributing all Pension Plan benefits to participants in fiscal 2023 after the Company receives governmental approvals of the termination.
The Internal Revenue Code limits the amounts of compensation that may be considered and the annual benefits that may be provided under the Pension Plan. As such, the Company maintains the ORP, which is a supplemental nonqualified defined benefit plan, to provide some of the Company’s key executives, including
certain of the named executive officers, with retirement benefits in excess of Internal Revenue Code limitations as well as additional supplemental
retirement benefits.
In March 2014, the Company stopped granting new awards of supplemental retirement benefits under the ORP.
Under the ORP, the named executive officers are entitled to the full amount of their accrued benefit under the plan upon reaching age 60, the normal retirement age under the plan. The amount of each participant’s normal retirement benefit is determined based on the participant’s position and level of responsibility, performance and job tenure, and is specified in the participant’s individual agreement under the ORP.
Plan benefits are paid in the form of equal monthly installments over a period of 10, 15 or 20 years, as elected by the participant upon joining the plan. The monthly installment amounts are computed using an 8% discount rate using simple interest compounded monthly.
Participants who terminate employment prior to normal retirement age are eligible to receive a benefit based on their accrued retirement benefit if their employment is terminated due to death or total disability or their vested accrued retirement benefit if their employment is terminated other than due to death or total disability. Participants are also eligible to receive a benefit based on the benefit they would have accrued through age 60 if they are employed upon a change in control. InThe benefits payable upon death, total disability, severance or a change in control are described beginning on page 54.
Generally, plan benefits are paid in the form of equal monthly installments over a period of 10, 15 or 20 years, as elected by the participant upon joining the plan. The monthly installment amounts are computed using an 8% discount rate using simple interest compounded monthly. However, in the event of death, the benefits are payable in a lump
sum. Insum, and, in the event of a change in control, the benefits become payable in either a lump sum or in equal monthly installments over a period of five, 10 or 15 years, at the election of the participant.
The benefits payable upon death, total disability, severance or a change in control are described beginning on page 50.
As of December 31,
2020,2022, the estimated annual retirement benefit payable at retirement for each of the named executive officers was as follows:
| | | | | | |
Name | | Estimated Annual Retirement Benefit ($) | | | Number of Years Payable (#) |
Mr. Harrison | | | 1,624,991 | | | 15 |
Mr. Anthony | | | — | | | — |
Mr. Katz | | | 359,573 | | | 10 |
Mr. Chambless | | | 294,894 | | | 20 |
Mr. Fisher | | | — | | | — |
| | | | | | | | | | | | | | |
Name | | Estimated Annual Retirement Benefit ($) | | Number of Years Payable (#) |
Mr. Harrison | | 1,624,991 | | 15 |
Mr. Anthony | | — | | — |
Mr. Katz | | 359,573 | | 10 |
Mr. Chambless | | 294,894 | | 20 |
Mr. Fisher | | — | | — |
Each named executive officer (other than Messrs. Anthony and Fisher who are not eligible to participate in the ORP because they commenced employment with the Company after March 2014) will be entitled to continue participating in the ORP and earn supplemental retirement benefits thereunder until he attains age 60 as described above. However, no new awards of supplemental retirement benefits will be made under the ORP. All new supplemental
retirement benefit awards, including to Messrs. Anthony and Fisher, will be made under the LTRP or with discretionary SSIP contributions, the material terms of which are described beginning on page 49pages 52 and below,51, respectively.
IV.
20202022 Nonqualified Deferred Compensation
Supplemental Savings Incentive Plan
The Company maintains the SSIP, a
supplemental nonqualified deferred compensation plan, for its key executives, including the named executive officers. The following table provides information regarding the named executive officers’ accounts and benefits under the SSIP for
2020: | | | | | | | | | | | | | | | | | | | | |
Name | | Executive Contributions in Fiscal 2020 ($)(1) | | | Company Contributions in Fiscal 2020 ($)(2) | | | Aggregate Earnings in Fiscal 2020 ($)(3) | | | Aggregate Withdrawals/ Distributions ($) | | | Aggregate Balance at December 31, 2020 ($)(4) | |
Mr. Harrison | | | 73,432 | | | | 36,716 | | | | 2,025,243 | | | | 1,238,837 | | | | 14,119,664 | |
Mr. Anthony | | | 38,853 | | | | 166,651 | | | | 93,384 | | | | — | | | | 454,985 | |
Mr. Katz | | | 46,765 | | | | 23,383 | | | | 12,788 | | | | — | | | | 542,574 | |
Mr. Chambless | | | 263,450 | | | | 20,318 | | | | 737,069 | | | | — | | | | 2,865,800 | |
Mr. Fisher | | | 36,410 | | | | 18,205 | | | | 45,507 | | | | — | | | | 292,960 | |
(1) | All amounts shown in this column are also reported in the “Salary” column of the 2020 Summary Compensation Table.
|
(2) | All amounts shown in this column are also reported in the “All Other Compensation” column of the 2020 Summary Compensation Table.
|
(3) | Of the amounts shown in this column, the following amounts are reported as above-market earnings on deferred compensation in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the 2020 Summary Compensation Table:
Mr. Harrison—$286,244, Mr. Anthony—$0, Mr. Katz—$0, Mr. Chambless—$24,917 and Mr. Fisher—$0.
|
(4) | Of the amounts shown in this column, the following amounts were reported in the Summary Compensation Tables of the Company’s proxy statements for previous years: Mr. Harrison—$9,196,710, Mr. Anthony—$145,251, Mr. Katz—$338,985, Mr. Chambless—$715,701 and Mr. Fisher—$0.
|
fiscal 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Executive Contributions in Fiscal 2022 ($)(1) | | Company Contributions in Fiscal 2022 ($)(2) | | Aggregate Losses in Fiscal 2022 ($)(3) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at December 31, 2022 ($)(4) |
Mr. Harrison | | 75,751 | | 37,875 | | | (1,506,091) | | (7,901) | | 13,203,212 |
Mr. Anthony | | 45,145 | | 166,929 | | | (208,863) | | — | | 750,888 |
Mr. Katz | | 53,098 | | 26,549 | | | (79,106) | | — | | 632,713 |
Mr. Chambless | | 190,736 | | 20,658 | | | (1,076,846) | | — | | 2,992,908 |
Mr. Fisher | | 213,413 | | 18,509 | | | (191,083) | | (53,918) | | 664,397 |
__________
(1)All amounts shown in this column are also reported in the “Salary” column of the 2022 Summary Compensation Table.
(2)All amounts shown in this column are also reported in the “All Other Compensation” column of the 2022 Summary Compensation Table.
(3)Of the amounts shown in this column, the following amounts are reported as above-market earnings on deferred compensation in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the 2022 Summary Compensation Table: Mr. Harrison—$57,692, Mr. Anthony—$0, Mr. Katz—$0, Mr. Chambless—$22,013 and Mr. Fisher—$0.
(4)Of the amounts shown in this column, the following amounts were reported in the Summary Compensation Tables of the Company’s proxy statements for previous years: Mr. Harrison—$9,959,338, Mr. Anthony—$555,602, Mr. Katz—$485,009, Mr. Chambless—$1,372,023 and Mr. Fisher—$367,268.
The Company currently matches up to 50% of the first 6% of base salary
deferred.deferred into the SSIP. The Company may also make
additional discretionary contributions to participants’
SSIP accounts.
Participants are immediately vested in all amounts of
base salary and bonus deferred by them. The Company’s contributions to participants’ accounts, other than transition contributions, vest in 20% annual increments and become fully vested upon the completion of five years of service. The transition contributions vested in 20% annual increments from December 31, 2006 to December 31, 2010. All contributions made by the Company become fully vested upon retirement, death or a change in control.
Amounts deferred by participants and contributions made by the Company before January 1, 2006 are deemed invested in either a “fixed benefit account” or a
“pre-2006“pre-2006 supplemental account,” at the election of the participant. Balances in fixed benefit accounts earn interest at an annual rate of up to 13% (depending on the event requiring distribution and the participant’s age, years of service and initial year of participation in the SSIP). Mr. Harrison’s balance has earned interest at an annual rate of 6% since the year in which he attained age 60. For Mr. Chambless (the only other named executive officer with a fixed benefit account), the amounts reported in the above table under “Aggregate
EarningsLosses in Fiscal
2020”2022” and “Aggregate Balance at December 31,
2020”2022” were calculated assuming the maximum annual return of 13%.
Amounts deferred by participants and contributions made by the Company on or after January 1, 2006 are deemed invested in a “post-2005 supplemental account.” Balances in pre-2006 supplemental accounts and post-post-2005 supplemental
accounts are deemed invested by participants in investment choices that are made available by the Company, which are similar to the choices available under the 401(k) Savings Plan.
Balances in fixed benefit accounts and
pre-2006 supplemental accounts become payable, as elected by a participant, either upon “termination of employment” or on a date designated by the participant between the year the participant turns 55 and the year the participant turns 70. Balances in
post-2005 supplemental accounts may be distributed, as elected by a participant, either upon “termination of employment” or on a date designated by the participant that is at least two years after the year that a salary deferral or other contribution was made and not later than the year the participant turns 70. A “termination of employment” occurs upon the later of (i) a participant’s severance, retirement or attainment of age 55 while totally disabled and, (ii) at the election of the plan administrator, the date when the participant is no longer receiving severance benefits.
Balances in fixed benefit accounts are payable in equal monthly installments over a period of 10 or 15 years, at the election of the participant. The monthly payment amount for a fixed benefit account is calculated using a discount rate that is equal to the applicable rate of interest on the account, as described above. Balances in
pre-2006 supplemental accounts are payable in equal monthly installments over a period of 10 or 15 years, at the election of the participant. The monthly payment amount for a
pre-2006 supplemental account is calculated by dividing the vested account balance by the number of remaining monthly payments. Balances in post-2005 supplemental accounts are payable in either a lump sum or in equal monthly installments over a period of five, 10 or 15 years, at the election of the participant. The monthly payment amount for a post-2005 supplemental account is calculated by dividing the vested account balance by the number of remaining monthly payments.
In the event of death or a change in control, all account balances become payable in either a lump sum or in equal monthly installments over a period of five, 10 or 15 years, at the election of the participant. In each case, the account balances and monthly payments are generally computed in the same manner as described above, except participants are deemed fully vested in their account balances, and, in the case of a change in control, the account balances and monthly payments for fixed benefit accounts are computed using the maximum 13% rate of return and 13% discount rate, respectively. Additional information regarding amounts payable to each of the named executive officers upon a termination of employment, death or a change in control is provided in the following section.
The LTRP is a supplemental nonqualified defined contribution plan that provides supplemental
retirement benefits to the Company’s key executives. The LTRP was adopted in March 2014 and all new awards of supplemental retirement benefits since that date have been made under the LTRP and not the ORP.
A participant in the LTRP earns a Company contribution to a supplemental benefits account for each year of employment with the Company through age 60, the normal retirement age under the plan. The amount of the Company contribution for each participant’s contributionparticipant is determined based on the participant’s position and level of responsibility, performance, job tenure and future potential, and is specified in the participant’s individual agreement under the LTRP. The amount contributed to a participant’s supplemental benefits account is invested in investment choices that are similar to the choices available under the 401(k) Savings Plan. The balance of a participant’s supplemental benefits account is 50% vested through a participant’s attainment of age 51 while employed by the Company and becomes vested ratably for each year of continued employment thereafter through age 60. The balance of a participant’s supplemental benefits account also becomes vested in the event of the participant’s death or disability or a change in control of the Company. The vested balance of a participant’s supplemental benefits account is payable following termination of employment in either a lump sum or in equal monthly installments over a period of 10, 15 or 20 years, at the election of the participant.
The following table provides information regarding the
participants’named executive officers’ accounts
and benefits under the LTRP for
2020: | | | | | | | | | | | | | | |
Name | | Company Contributions in Fiscal 2020 ($)(1) | | | Aggregate Earnings in Fiscal 2020 ($) | | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at December 31, 2020 ($) | |
Mr. Katz | | | 209,630 | | | | 39,148 | | | — | | | 816,569 | |
Mr. Chambless | | | 109,984 | | | | 190,781 | | | — | | | 762,659 | |
Mr. Fisher | | | 258,340 | | | | 171,409 | | | — | | | 1,111,508 | |
(1) | All amounts shown in this column are also reported in the “All Other Compensation” column of the 2020 Summary Compensation Table.
|
fiscal 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Company Contributions in Fiscal 2022 ($)(1) | | Aggregate Losses in Fiscal 2022 ($) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at December 31, 2022 ($) |
Mr. Katz | | 539,630 | | | (217,066) | | — | | 1,776,446 |
Mr. Chambless | | 109,984 | | | (322,444) | | — | | 839,164 |
Mr. Fisher | | 258,340 | | | (319,812) | | — | | 1,444,450 |
__________
(1)All amounts shown in this column are also reported in the “All Other Compensation” column of the 2022 Summary Compensation Table.
V.
20202022 Potential Payments Upon Termination or Change in Control
The table below shows the estimated benefits payable to each named executive officer in the event of the named executive officer’s termination of employment under various scenarios or a change in control of the Company. The amounts shown assume termination of employment or a change in control on December 31,
2020.2022. The amounts do not include payments or benefits provided under insurance or other plans that are generally available to all salaried employees.
| | | | | | | | | | | | | | | | | | | | | | | | |
Name and Plans | | Voluntary Resignation or Termination Without Cause ($) | | | Termination for Cause ($) | | | Death ($) | | | Disability ($) | | | Retirement ($)(1) | | | Change in Control ($) | |
Mr. Harrison | | | | | | | | | | | | | | | | | | | | | | | | |
Officer Retention Plan(2) | | | 14,411,990 | | | | — | | | | 14,411,990 | | | | 14,411,990 | | | | 14,411,990 | | | | 14,411,990 | |
Supplemental Savings Incentive Plan(2) | | | 14,119,664 | | | | 14,119,664 | | | | 14,119,664 | | | | 14,119,664 | | | | 14,119,664 | | | | 14,119,664 | |
Annual Bonus Plan(3) | | | 1,908,006 | | | | — | | | | 1,908,006 | | | | 1,908,006 | | | | 1,908,006 | | | | 1,186,571 | |
Long-Term Performance Equity Plan(4) | | | 14,849,167 | | | | 14,849,167 | | | | 14,849,167 | | | | 14,849,167 | | | | 14,849,167 | | | | 14,849,167 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 45,288,827 | | | | 28,968,831 | | | | 45,288,827 | | | | 45,288,827 | | | | 45,288,827 | | | | 44,567,392 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Mr. Anthony | | | | | | | | | | | | | | | | | | | | | | | | |
Supplemental Savings Incentive Plan(2) | | | 235,804 | | | | 235,804 | | | | 454,985 | | | | 454,985 | | | | — | | | | 454,985 | |
Annual Bonus Plan(3) | | | 648,979 | | | | — | | | | 648,979 | | | | 648,979 | | | | — | | | | 403,594 | |
Long-Term Performance Plan(5) | | | — | | | | — | | | | 344,531 | | | | 344,531 | | | | — | | | | 344,531 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 884,783 | | | | 235,804 | | | | 1,448,495 | | | | 1,448,495 | | | | — | | | | 1,203,110 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Mr. Katz | | | | | | | | | | | | | | | | | | | | | | | | |
Officer Retention Plan(2) | | | 750,000 | | | | — | | | | 1,250,000 | | | | 1,250,000 | | | | — | | | | 2,500,000 | |
Long-Term Retention Plan | | | 489,942 | | | | — | | | | 816,569 | | | | 816,569 | | | | — | | | | 816,569 | |
Supplemental Savings Incentive Plan(2) | | | 542,574 | | | | 542,574 | | | | 542,574 | | | | 542,574 | | | | — | | | | 542,574 | |
Annual Bonus Plan(3) | | | 1,444,520 | | | | — | | | | 1,444,520 | | | | 1,444,520 | | | | — | | | | 770,000 | |
Long-Term Performance Plan(5) | | | 679,688 | | | | — | | | | 1,403,021 | | | | 1,403,021 | | | | — | | | | 1,403,021 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 3,906,724 | | | | 542,574 | | | | 5,456,684 | | | | 5,456,684 | | | | — | | | | 6,032,164 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Mr. Chambless | | | | | | | | | | | | | | | | | | | | | | | | |
Officer Retention Plan(2) | | | 1,560,268 | | | | — | | | | 2,080,357 | | | | 2,080,357 | | | | — | | | | 3,000,000 | |
Long-Term Retention Plan | | | 571,994 | | | | — | | | | 762,659 | | | | 762,659 | | | | — | | | | 762,659 | |
Supplemental Savings Incentive Plan(2) | | | 2,865,800 | | | | 2,865,800 | | | | 2,865,800 | | | | 2,865,800 | | | | — | | | | 2,865,800 | |
Annual Bonus Plan(3) | | | 791,909 | | | | — | | | | 791,909 | | | | 791,909 | | | | — | | | | 492,480 | |
Long-Term Performance Plan(5) | | | 679,688 | | | | — | | | | 1,164,160 | | | | 1,164,160 | | | | — | | | | 1,164,160 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 6,469,659 | | | | 2,865,800 | | | | 7,664,885 | | | | 7,664,885 | | | | — | | | | 8,285,099 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Name and Plans | | Voluntary Resignation or Termination Without Cause ($) | | | Termination for Cause ($) | | | Death ($) | | | Disability ($) | | | Retirement ($)(1) | | | Change in Control ($) | |
Mr. Fisher | | | | | | | | | | | | | | | | | | | | | | | | |
Long-Term Retention Plan | | | 611,329 | | | | — | | | | 1,111,508 | | | | 1,111,508 | | | | — | | | | 1,111,508 | |
Supplemental Savings Incentive Plan(2) | | | 260,752 | | | | 260,752 | | | | 292,960 | | | | 292,960 | | | | — | | | | 292,960 | |
Annual Bonus Plan(3) | | | 709,550 | | | | — | | | | 709,550 | | | | 709,550 | | | | — | | | | 441,263 | |
Long-Term Performance Plan(5) | | | 609,000 | | | | — | | | | 1,043,088 | | | | 1,043,088 | | | | — | | | | 1,043,088 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 2,190,631 | | | | 260,752 | | | | 3,157,106 | | | | 3,157,106 | | | | — | | | | 2,888,819 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Mr. Harrison is the only named executive officer who has satisfied the age and/or service eligibility requirements for retirement under the plans.
|
(2) | Amounts shown for the ORP and the SSIP for the named executive officers assume payment as a lump sum as of December 31, 2020. Participants in the ORP and the SSIP may elect to receive payments in equal monthly installments over a period of 10, 15 or 20 years. The amounts of the installments are based on the discount rates specified in the plans.
|
(3) | Amounts shown for the Annual Bonus Plan (other than a change in control) were calculated using the actual level of achievement of the performance goals for 2020. Amounts shown for the Annual Bonus Plan upon a change in control were calculated assuming the achievement of target performance.
|
(4) | Amounts shown for the Long-Term Performance Equity Plan were calculated assuming the achievement of target performance goals for the three-year performance periods ending in 2020, 2021 and 2022. The amounts were then prorated for the portion of the performance periods Mr. Harrison was employed prior to the date of the triggering event.
|
(5) | Amounts shown for the Long-Term Performance Plan were calculated using the actual level of achievement of the performance goals for the 2018-2020 performance period and assuming the achievement of target performance goals for the three-year performance periods ending in 2020, 2021 and 2022. The amounts for the three-year performance periods ending in 2020, 2021 and 2022 were then prorated for the portion of the performance periods the executive was employed prior to the date of the triggering event.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Plans | | Voluntary Resignation or Termination Without Cause ($) | | Termination for Cause ($) | | Death ($) | | Disability ($) | | Retirement ($)(1) | | Change in Control ($) |
Mr. Harrison | | | | | | | | | | | | |
Officer Retention Plan(2) | | 14,411,990 | | — | | 14,411,990 | | 14,411,990 | | 14,411,990 | | 14,411,990 |
Supplemental Savings Incentive Plan(2) | | 13,203,212 | | 13,203,212 | | 13,203,212 | | 13,203,212 | | 13,203,212 | | 13,203,212 |
Annual Bonus Plan(3) | | 2,764,543 | | — | | 2,764,543 | | 2,764,543 | | 2,764,543 | | 1,271,054 |
Long-Term Performance Equity Plan(4) | | 16,800,000 | | — | | 16,800,000 | | 16,800,000 | | 16,800,000 | | 13,450,000 |
Total | | 47,179,745 | | 13,203,212 | | 47,179,745 | | 47,179,745 | | 47,179,745 | | 42,336,256 |
Mr. Anthony | | | | | | | | | | | | |
Supplemental Savings Incentive Plan(2) | | 600,710 | | 600,710 | | 750,888 | | 750,888 | | — | | 750,888 |
Annual Bonus Plan(3) | | 926,755 | | — | | 926,755 | | 926,755 | | — | | 426,094 |
Long-Term Performance Plan(4) | | 605,391 | | — | | 1,023,211 | | 1,023,211 | | — | | 821,414 |
Total | | 2,132,856 | | 600,710 | | 2,700,854 | | 2,700,854 | | — | | 1,998,396 |
Mr. Katz | | | | | | | | | | | | |
Officer Retention Plan(2) | | 1,093,750 | | — | | 1,562,500 | | 1,562,500 | | — | | 2,500,000 |
Long-Term Retention Plan | | 1,243,512 | | — | | 1,776,446 | | 1,776,446 | | — | | 1,776,446 |
Supplemental Savings Incentive Plan(2) | | 632,713 | | 632,713 | | 632,713 | | 632,713 | | — | | 632,713 |
Annual Bonus Plan(3) | | 1,937,816 | | — | | 1,937,816 | | 1,937,816 | | — | | 890,950 |
Long-Term Performance Plan(4) | | 1,155,000 | | — | | 2,465,475 | | 2,465,475 | | — | | 2,080,475 |
Total | | 6,062,791 | | 632,713 | | 8,374,950 | | 8,374,950 | | — | | 7,880,584 |
Mr. Chambless | | | | | | | | | | | | |
Officer Retention Plan(2) | | 2,080,982 | | — | | 2,448,214 | | 2,448,214 | | 2,080,982 | | 3,000,000 |
Long-Term Retention Plan | | 713,290 | | — | | 839,164 | | 839,164 | | 713,290 | | 839,164 |
Supplemental Savings Incentive Plan(2) | | 2,992,908 | | 2,992,908 | | 2,992,908 | | 2,992,908 | | 2,992,908 | | 2,992,908 |
Annual Bonus Plan(3) | | 1,130,861 | | — | | 1,130,861 | | 1,130,861 | | 1,130,861 | | 519,936 |
Long-Term Performance Plan(4) | | 738,720 | | — | | 1,248,561 | | 1,248,561 | | 738,720 | | 1,002,321 |
Total | | 7,656,761 | | 2,992,908 | | 8,659,708 | | 8,659,708 | | 7,656,761 | | 8,354,329 |
Mr. Fisher | | | | | | | | | | | | |
Long-Term Retention Plan | | 938,893 | | — | | 1,444,450 | | 1,444,450 | | — | | 1,444,450 |
Supplemental Savings Incentive Plan(2) | | 664,397 | | 664,397 | | 664,397 | | 664,397 | | — | | 664,397 |
Annual Bonus Plan(3) | | 1,013,252 | | — | | 1,013,252 | | 1,013,252 | | — | | 465,863 |
Long-Term Performance Plan(4) | | 661,895 | | — | | 1,118,711 | | 1,118,711 | | — | | 898,080 |
Total | | 3,278,437 | | 664,397 | | 4,240,810 | | 4,240,810 | | — | | 3,472,790 |
__________
(1)Messrs. Harrison and Chambless are the only named executive officers who have satisfied the age and/or service eligibility requirements for retirement under the plans.
(2)Amounts shown for the ORP and the SSIP for the named executive officers assume payment as a lump sum as of December 31, 2022. Participants in the ORP and the SSIP may elect to receive payments in equal monthly installments over a period of 10, 15 or 20 years. The amounts of the installments are based on the discount rates specified in the plans.
(3)Amounts shown for the Annual Bonus Plan (other than a change in control) were calculated using the actual level of achievement of the performance goals for fiscal 2022. Amounts shown for the Annual Bonus Plan upon a change in control were calculated assuming the achievement of target performance goals.
(4)Amounts shown in all of the columns other than the “Change in Control” column for the Long-Term Performance Equity Plan and the Long-Term Performance Plan were calculated using the actual level of achievement of the performance goals for the fiscal 2020 - fiscal 2022 performance period and assuming the achievement of target performance goals for the three-year performance periods ending in fiscal 2023 and fiscal 2024. Amounts shown in the “Change in Control” column for the Long-Term Performance Equity Plan and the Long-Term Performance Plan were calculated assuming the achievement of target performance goals for the three-year performance periods ending in fiscal 2022, fiscal 2023 and fiscal 2024. The amounts for the three-year performance periods ending in fiscal 2023 and fiscal 2024 were prorated for the portion of the performance periods the executive was employed prior to the date of the triggering event.
None of the Company’s executive officers, including the named executive officers, have any special employment or severance agreements. The executive officers are entitled, however, to certain payments (as illustrated in the above table) under the terms of the Company’s existing compensation and benefit plans in connection with the termination of their employment or a change in control of the Company. The following narrative describes the terms of those plans as they relate to a termination of employment or a change in control.
The ORP, the material terms of which are described
beginning on page
47,50, contains special provisions for severance, death, total disability or a change in control.
In the event of death or total disability, each participant becomes fully vested in the amount of the participant’s accrued benefit under the ORP.
Upon termination without cause or voluntary resignation, each participant’s accrued benefit is 50% vested until age 51, with the vesting percentage increasing by 5% each year beginning at age 51 until fully vested at age 60. All rights to any benefits under the ORP are forfeited if a participant is terminated for cause.
In the event of a “change in control” of the Company, each participant is entitled to an amount equal to the normal retirement benefit otherwise payable to the participant at age 60 under the ORP. A “change in control” occurs under the ORP:
| (i) | when a person or group other than the Harrison Family acquires shares of the Company’s capital stock having the voting power to designate a majority of the Board;
|
| (ii) | when a person or group other than the Harrison Family acquires or possesses shares of the Company’s capital stock having power to cast (A) more than 20% of the votes regarding the election of the Board and (B) a greater percentage of the votes regarding the election of the Board than the shares owned by the Harrison Family;
|
| (iii) | upon the sale or disposition of all or substantially all of the Company’s assets and the assets of the Company’s subsidiaries outside the ordinary course of business other than to a person or group controlled by the Company or the Harrison Family; or
|
| (iv) | upon a merger or consolidation of the Company with another entity where the Company is not the surviving entity.
|
(i)when a person or group other than the Harrison Family acquires shares of the Company’s capital stock having the voting power to designate a majority of the Board;
(ii)when a person or group other than the Harrison Family acquires or possesses shares of the Company’s capital stock having power to cast (A) more than 20% of the votes regarding the election of the Board and (B) a greater percentage of the votes regarding the election of the Board than the shares owned by the Harrison Family;
(iii)upon the sale or disposition of all or substantially all of the Company’s assets and the assets of the Company’s subsidiaries outside the ordinary course of business other than to a person or group controlled by the Company or the Harrison Family; or
(iv)upon a merger or consolidation of the Company with another entity where the Company is not the surviving entity.
The death benefit under the ORP is payable in a lump sum. The other severance and change in control benefits are payable in equal monthly installments over a period of 10, 15 or 20 years, as elected by the participant. The amount of each monthly installment is computed using an 8% discount rate using simple interest compounded annually. The change in control benefit is also payable in a lump sum, at the election of the participant.
Under the ORP, each participant has generally agreed not to compete with the Company for three years after termination from employment for any reason. The
non-compete provision does not apply to actions occurring after both a termination of employment and a change in control of the Company.
Supplemental Savings Incentive Plan and Long-Term Retention Plan
The SSIP and the LTRP also provide for the payment of the named executive officers’ vested account balances upon termination of employment, death or a change in control. A “termination of employment” occurs under the SSIP upon a participant’s severance, retirement or attainment of age 55 while totally disabled. A “termination of employment” occurs under the LTRP upon a participant’s severance
other than for cause, retirement or total disability. The definition of a “change in control” is the same definition used for the ORP, as described above. The material terms of the SSIP and the LTRP, including
when account balances become vested and the options to receive lump sum or installment payments, are described beginning on pages
4851 and
49,52, respectively.
The Annual Bonus Plan, the material terms of which are described beginning on page
33,35, provides for certain payments to the named executive officers in the event of a termination of their employment or a change in control of the Company.
In the event of the total disability, retirement or death of a participant during any fiscal year, the participant (or the participant’s estate) is entitled to a
pro-rata bonus based on the portion of the fiscal year completed by the participant and the actual overall goal achievement factor attained for that year.
In the event of a “change in control,” each participant is entitled to a
pro-rata portion of the participant’s target award under the Annual Bonus Plan, based on the portion of the
fiscal year completed.
The term “retirement” is defined in the Annual Bonus Plan as a participant’s termination of employment other than on account of death and (i) after attaining age 60, (ii) after attaining age 55 and completing 20 years of service or (iii) as the result of total disability. The definition of a “change in control” is the same definition used for the ORP, as described above.
Long-Term Performance Plan
The Long-Term Performance Plan, the material terms of which are described beginning on page
36,38, also provides for certain payments to the named executive officers in the event of a termination of their employment or a change in control of the Company.
In the event of the total disability, retirement or death of a participant after the completion of the first year of a performance period but prior to the end of a performance period, and in the event of the subsequent attainment of the performance goals applicable to such participant, the participant (or the participant’s estate) is entitled to a
pro-rata award based on the portion of the performance period completed by the participant.
In the event of a “change in control,” each participant is entitled to a
pro-rata portion of the participant’s target award for the performance period, based on the portion of the performance period completed.
The definition of “retirement” is the same definition used for the Annual Bonus Plan, as described above. The definition of a “change in control” is the same definition used for the ORP, as described above.
Long-Term Performance Equity Plan
The Long-Term Performance Equity Plan, the material terms of which are described on page
39,41, also provides for certain payments to Mr. Harrison in the event of a termination of his employment or a change in control of the Company.
In the event of Mr. Harrison’s total disability, retirement or death after the completion of the first year of a performance period but prior to the end of a performance period, and in the event of the subsequent attainment of the performance goals applicable to him, Mr. Harrison (or his estate) is entitled to a
pro-rata award based on the portion of the performance period completed by him.
In the event of a “change in control,” Mr. Harrison is entitled to a
pro-rata portion of his target award for the performance period, based on the portion of the performance period completed.
The definition of “retirement” is the same definition used for the Annual Bonus Plan, as described above. The definition of a “change in control” is the same definition used for the ORP, as described above.
The SEC rules require the Company to disclose annually (i) the median annual total compensation of all employees of the Company (excluding Mr. Harrison, the Company’s principal executive officer); (ii) the annual total compensation of Mr. Harrison; and (iii) the ratio of Mr. Harrison’s annual total compensation to the median annual total compensation of all employees of the Company (excluding Mr. Harrison).
Based on the methodology and material assumptions described below, the Company has estimated these amounts to be as follows:
| | | | | | | | |
Median annual total compensation of all employees (excluding Mr. Harrison) | | | $ 55,940 | 71,131 |
Annual total compensation of Mr. Harrison | | | $12,467,192 | 14,689,126 |
Ratio of Mr. Harrison’s annual total compensation to the median annual total compensation of all other employees | | | 223:207:1 | |
The SEC rules permit a company to identify the median paid employee once every three years as long as there has been no change in the company’s employee population or compensation arrangements that would result in a significant change to its pay ratio disclosure. Because the Company has not had any employee population or compensation changes that the Company believes would significantly affect its pay ratio disclosure, the Company used the same median employee identified in fiscal 2020 to determine the median annual total compensation of all employees (excluding Mr. Harrison) for fiscal 2022. To determine the median employee in
fiscal 2020, the Company compiled a list of all employees (excluding Mr. Harrison) as of December 15, 2020, sorted the list of employees by their taxable compensation for federal income tax purposes from the Company’s payroll records for the
12-month period ended December 31, 2020 and selected the employee with the median taxable compensation amount. The Company annualized the taxable compensation of any full-time or part-time employees on the list who were not employed for the full year and did not include the value of
non-taxable Company-provided benefits such as retirement plan contributions and medical and life insurance benefits. As of December 31,
2020,2022, the Company had
15,83616,747 employees.
The annual total compensation of Mr. Harrison is the total amount of his compensation presented in the 20202022 Summary Compensation Table on page 42.45. The Company determined the annual total compensation of the median employee shown above using the same rules applicable to the completion of the 20202022 Summary Compensation Table for Mr. Harrison and the other named executive officers.
VII. Pay Versus Performance
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | |
Year (a) | | Summary Compensation Table Total for PEO ($) (b) | | Compensation Actually Paid to PEO ($) (c) | | Average Summary Compensation Table Total for Non-PEO Named Executive Officers ($) (d) | | Average Compensation Actually Paid to Non-PEO Named Executive Officers ($) (e) | | Total Shareholder Return ($) (f) | Peer Group Shareholder Return ($) (g) | | Net Income (in thousands) ($) (h) | | EBIT (in thousands) ($) (i) |
2022 | | 14,689,126 | | 14,689,126 | | 3,080,256 | | 3,219,288 | | 182.03 | 128.89 | | 430,158 | | 641,047 |
2021 | | 13,545,136 | | 13,512,275 | | 2,937,129 | | 2,982,161 | | 219.54 | 121.35 | | 189,580 | | 439,171 |
2020 | | 12,467,192 | | 12,280,332 | | 2,398,616 | | 2,400,346 | | 94.12 | 106.26 | | 172,493 | | 313,378 |
Compensation Actually Paid to PEO (Column (c))
The amount reported for each year in column (c) is equal to (i) the amount reported in column (b) for J. Frank Harrison, III, Coca-Cola Consolidated’s principal executive officer (“PEO”) for each of the covered years, minus (ii) the aggregate change in the present value of Mr. Harrison’s benefits under the Pension Plan and the ORP during the covered year plus (iii) the aggregate value of Mr. Harrison’s benefits under the Pension Plan and the ORP attributable to his service during the covered year. Mr. Harrison fully accrued his benefit under the ORP prior to 2020 and benefit accruals under the Pension Plan were frozen in 2006. Therefore, there were no service costs for benefit accruals by Mr. Harrison under the ORP or the Pension Plan during the covered years. Mr. Harrison did not receive any stock or option awards during the covered years.
The following table provides information regarding the calculation for the Compensation Actually Paid (“CAP”) to Mr. Harrison for fiscal years 2022, 2021 and 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Year | | Summary Compensation Table Total for PEO ($) | | Deduct Aggregate Change in Actual Present Value in Pension Plan & ORP ($) | | Add Service Costs & Prior Service Costs for ORP Plan ($) | | Compensation Actually Paid to PEO ($) |
2022 | | 14,689,126 | | — | | — | | 14,689,126 |
2021 | | 13,545,136 | | 32,861 | | — | | 13,512,275 |
2020 | | 12,467,192 | | 186,860 | | — | | 12,280,332 |
Average Compensation Actually Paid to Non-PEO Named Executive Officers (Column (e))
The amount reported for each year in column (e) is equal to (i) the amount reported in column (d) for F. Scott Anthony, David M. Katz, Robert G. Chambless and E. Beauregarde Fisher III, the non-PEO named executive officers for each of the covered years, minus (ii) average of the aggregate change in the present values of their benefits under the Pension Plan and the ORP during the covered year plus (iii) average of the aggregate value of their benefits under the Pension Plan and the ORP attributable to their service during the covered year. Benefit accruals under the Pension Plan were frozen in 2006. Therefore, there were no service costs for benefit accruals by the non-PEO named executive officers under the Pension Plan during the covered years. None of the non-PEO named executive officers received any stock or option awards during the covered years.
The following table provides information regarding the calculation for the CAP to the non-PEO named executive officers for fiscal years 2022, 2021 and 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Year | | Average Summary Compensation Table Total for Non-PEO Named Executive Officers ($) | | Deduct Average of the Aggregate Change in Actual Present Value in Pension Plan & ORP ($) | | Add Average Service Costs & Prior Service Costs for ORP ($) | | Average Compensation Actually Paid to Non-PEO Named Executive Officers ($) |
2022 | | 3,080,256 | | — | | 139,032 | | 3,219,288 |
2021 | | 2,937,129 | | 85,045 | | 130,076 | | 2,982,161 |
2020 | | 2,398,616 | | 102,672 | | 104,402 | | 2,400,346 |
Total Shareholder Return (Column (f))
The amounts shown in column (f) assume $100 was invested on January 1, 2020 in Coca-Cola Consolidated Common Stock, and that all dividends were reinvested on a quarterly basis.
Peer Group Shareholder Return (Column (g))
The amounts shown in column (g) assume $100 was invested on January 1, 2020 in each of the companies in a peer group comprised of Keurig Dr Pepper Inc., National Beverage Corp., The Coca-Cola Company, Primo Water Corporation (f/k/a Cott Corporation) and PepsiCo, Inc., and that all dividends were reinvested on a quarterly basis. The returns for the companies included in the peer group have been weighted on the basis of the total market capitalization for each company.
EBIT (Column (i))
“EBIT” is the acronym for Earnings Before Interest and Taxes and means income from operations determined on a consolidated basis in accordance with GAAP. EBIT is the highest weighted financial metric to determine payouts under Coca-Cola Consolidated’s annual and long-term incentive plans.
Pay Versus Performance Descriptive Disclosure
Relationship between CAP and Total Shareholder Return
The graph below reflects the relationship between the PEO and average non-PEO named executive officer CAP and the Company’s cumulative indexed total shareholder return (TSR) (assuming an initial fixed investment of $100 on January 1, 2020) for fiscal years 2020, 2021 and 2022:
Relationship between Compensation Actually Paid and Net Income
The graph below reflects the relationship between the PEO and average non-PEO named executive officer CAP and the Company’s net income for fiscal years 2020, 2021 and 2022:
Relationship between Compensation Actually Paid and EBIT
The graph below reflects the relationship between the PEO and average non-PEO named executive officer CAP and the Company’s EBIT for fiscal years 2020, 2021 and 2022:
Tabular List of Performance Measures
| | | | | |
Most Important Performance Measures |
1 | EBIT |
2 | EBIT Margin |
3 | Free Cash Flow |
4 | Revenue |
Equity Compensation Plan Information
The following table provides information as of December 31,
2020,2022, concerning the Company’s outstanding equity compensation arrangements as of that date:
| | | | | | | | |
Plan Category
| | Number
of securities to
be issued upon
exercise of
outstanding
options, warrants
and rights
(#)
(a) | | Weighted-average
exercise
price of
outstanding
options, warrants
and rights
($)
(b) | | Number of securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a))
(#)
(c) | |
Equity compensation plans approved by security holders
| | — | | — | | | 550,000 | (1) |
Equity compensation plans not approved by security holders
| | — | | — | | | — | |
| | | | | | | | |
Total
| | — | | — | | | 550,000 | (1) |
| | | | | | | | |
(1) | Represents the sum of (i) 250,000 shares of Coke Consolidated Common Stock reserved for issuance pursuant to awards that may be made in the future under the Coca-Cola Consolidated, Inc. Amended and Restated Long-Term Performance Plan and (ii) 300,000 shares of Coke Consolidated Class B Common Stock reserved for issuance pursuant to awards that may be made in the future under the Coca-Cola Consolidated, Inc. Long-Term Performance Equity Plan.
|
| | | | | | | | | | | | | | | | | | | | | | | |
Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (#) (a) | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights ($) (b) | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (#) (c) |
Equity compensation plans approved by security holders | | — | | — | | 300,000 | (1) |
Equity compensation plans not approved by security holders | | — | | — | | — | |
Total | | — | | — | | 300,000 | (1) |
__________
(1)Represents 300,000 shares of Coca‑Cola Consolidated Class B Common Stock reserved for issuance pursuant to awards that may be made in the future under the Long-Term Performance Equity Plan.
Consideration of Risk Related to Compensation Programs
The Company has considered its compensation policies and practices for all employees and determined that any risks arising from such policies and practices are not reasonably likely to have a material adverse effect on
CokeCoca‑Cola Consolidated. As described in the “Compensation Discussion and Analysis” section beginning on page
30,32, the Compensation Committee and management have designed
CokeCoca‑Cola Consolidated’s executive compensation program to achieve a number of goals, including the following:
•Motivating the executive officers to achieve CokeCoca‑Cola Consolidated’s annual and long-term strategic and financial goals and rewarding performance based on the attainment of those goals;
•Appropriately balancing risk and reward in the context of the Company’s business environment and long-range business plans;
•Being affordable and appropriately aligned with stockholder interests; and
Achieving a reasonable balance
•Being reasonably balanced across types and purposes of compensation, particularly with respect to fixed compensation objectives, short-term and long-term performance-based objectives and retention and retirement objectives.
In light of these goals, the Compensation Committee, senior management and human resources personnel
have considered risk as they designed the various elements of the Company’s compensation programs.
The Company notes the following factors with respect to the determination that any risks arising from the compensation policies and practices are not reasonably likely to have a material adverse effect on
CokeCoca‑Cola Consolidated:
•The belief that the Company’s compensation programs are reasonably balanced across types of compensation and the various objectives they are designed to reward;
•While CokeCoca‑Cola Consolidated does not engage in compensation benchmarking, the Company does retain a compensation consultant to conduct comparative studies of the Company’s executive compensation relative to peer companies and survey data;
•The Annual Bonus Plan, the Long-Term Performance Plan and the Long-Term Performance Equity Plan provide for payouts based on the achievement of key financial goals under CokeCoca‑Cola Consolidated’s annual and long-range strategic plan and provide for increased payout as financial performance increases and less or no payout as financial performance decreases. Awards under these plans do not provide for payouts based on individual transactions that could transfer liability to CokeCoca‑Cola Consolidated beyond the award date;
•The specific corporate performance goals for the Annual Bonus Plan, the Long-Term Performance Plan and the Long-Term Performance Equity Plan are initially developed based on the Company’s annual budget. The Executive Vice President and Chief Financial Officer and the Executive Vice President, General Counsel and Secretary of CokeCoca‑Cola Consolidated then use financial models to determine the appropriate award criteria and target goals for each plan. The financial models and plan goals are reviewed with and approved by the Chairman and Chief Executive Officer and the President and Chief Operating Officer of CokeCoca‑Cola Consolidated before being presented to, reviewed with and approved by the Compensation Committee;
•Performance goals are generally based on corporate and individual performance and are not based on other goals that may create increased risk such as the performance of individual business units or the accomplishment of particular tasks where the income and risk from the tasks extend over a significantly longer period of time; and
•The Company has adopted an Incentive Compensation Recovery Policy that authorizes the Compensation Committee, within 12 months of any restatement of the Company’s financial results due to material noncompliance by the Company with any financial reporting requirement under the federal securities laws, to
seek to recover from any executive officers whose intentional misconduct, gross negligence or fraud led to the restatement all or any portion of any performance-based compensation received by such executive officers within the three years preceding such restatement. The Incentive Compensation Recovery Policy also authorizes the Compensation Committee to seek to recover from the Chief Executive Officer, the Chief Financial Officer and the Chief Operating Officer all or any portion of the performance-based compensation that would not have been awarded or earned during the three years preceding the restatement had it been calculated on the basis of the restated financial results.
| negligence or fraud led to the restatement all or any portion of any performance-based compensation received by such executive officers within the three years preceding such restatement. The Incentive Compensation Recovery Policy also authorizes the Compensation Committee to seek to recover from the Chief Executive Officer, the Chief Financial Officer and the Chief Operating Officer all or any portion of the performance-based compensation that would not have been awarded or earned during the three years preceding the restatement had it been calculated on the basis of the restated financial results.
|
Compensation Committee Interlocks and Insider Participation
Sharon A. Decker, James H. Morgan, Dennis A. Wicker and Richard T. Williams served on the Compensation Committee in fiscal
2020.2022. None of the directors who served on the Compensation Committee in fiscal
20202022 has ever served as one of the Company’s officers or employees or had any relationship with the Company or any of its subsidiaries since the beginning of fiscal
20202022 pursuant to which disclosure would be required under the SEC rules pertaining to the disclosure of transactions with related persons. During fiscal
2020,2022, none of the Company’s executive officers served as a director or a member of the compensation committee (or other committee performing
similarequivalent functions) of any other entity of which an executive officer of such other entity served on the Board or its Compensation Committee.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” section included in this Proxy Statement with management and, based on such review and discussions, recommended to the Board that the “Compensation Discussion and Analysis” section be included in this Proxy Statement and in
CokeCoca‑Cola Consolidated’s Annual Report on
Form 10-K for fiscal
2020.2022.
Submitted by the Compensation Committee of the Board.
Dennis A. Wicker, Chairman
The primary purpose of the Audit Committee is to assist the Board in its oversight of all material aspects of the accounting and financial reporting processes, internal controls and internal audit function of the Company, including its compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Management has primary responsibility for the Company’s consolidated financial statements and reporting processes, including its internal controls and disclosure controls and procedures. The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, is responsible for performing an independent auditaudits of the Company’s consolidated financial statementsand the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board and expressing an opinionopinions on the conformity of those auditedthe Company’s consolidated financial statements with GAAP.GAAP
and the effectiveness of the Company’s internal control over financial reporting based upon those audits.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited consolidated financial statements included in the Company’s Annual Report on
Form 10-K for fiscal
2020.2022. This review included a discussion of the quality and acceptability of the Company’s financial reporting and internal controls. During the past fiscal year, the Audit Committee discussed with the Company’s independent registered public accounting firm the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board and the SEC. The Audit Committee also received during the past fiscal year the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm its independence.
Based on the reviews, discussions and disclosures referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements of the Company for fiscal
20202022 be included in its Annual Report on
Form 10-K for such fiscal year.
Submitted by the Audit Committee of the Board.
James H. Morgan, Chairman
Dennis A. Wicker
Advisory Vote to Approve Named Executive Officer Compensation
As required by Section 14A of the Exchange Act, this proposal, commonly known as a “say-on-pay” proposal, gives the Company’s stockholders the opportunity to vote to approve or not approve, on an advisory basis, the compensation of the named executive officers, which is described in the “Compensation Discussion and Analysis” and “Executive Compensation Tables” sections of this Proxy Statement. This vote is not intended to address any specific item or element of compensation or the compensation of any particular officer, but rather the overall compensation of the named executive officers and the philosophy, principles and policies used to determine compensation.
Coca‑Cola Consolidated currently holds its say-on-pay vote every third year. Stockholders were most recently asked to approve the compensation of Coca‑Cola Consolidated’s named executive officers at the Company’s 2020 Annual Meeting of Stockholders, and stockholders approved the Company’s named executive officer compensation with more than 98% of the votes cast in favor. Stockholders will also have an opportunity to cast an advisory vote on the frequency of future say-on-pay votes at the Annual Meeting (see Proposal 3) and at least every six years thereafter.
As described in detail in the “Compensation Discussion and Analysis” section of this Proxy Statement, the Company’s executive compensation program is designed to balance the goals of attracting and retaining appropriate executive talent who are motivated to achieve the Company’s annual and long-term strategic and financial goals while keeping the program affordable and appropriately aligned with stockholder interests. The Compensation Committee and the Board believe that the Company’s executive compensation program accomplishes these goals in a way that is consistent with the purpose and core values of Coca‑Cola Consolidated and the long-term interests of the Company and its stockholders and employees. Stockholders are urged to read the “Compensation Discussion and Analysis” and “Executive Compensation Tables” sections of this Proxy Statement, which more thoroughly discuss the Company’s compensation principles and policies. The Compensation Committee and the Board believe that these principles and policies are effective in implementing the Company’s overall compensation philosophy.
Accordingly, the Company is asking stockholders to vote, on an advisory basis, “FOR” the following resolution at the Annual Meeting:
RESOLVED, that the compensation paid to the named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, including the “Compensation Discussion and Analysis” section, the compensation tables and the related narrative discussion, is hereby approved.
This vote is advisory, which means that the stockholder vote on this proposal will not be binding on Coca‑Cola Consolidated, the Compensation Committee or the Board. However, the Compensation Committee and the Board value the opinions of Coca‑Cola Consolidated’s stockholders and will carefully consider the outcome of the vote when making future compensation decisions for the named executive officers of the Company.
The Board of Directors unanimously recommends that you vote “FOR” the approval, on an advisory basis, of the compensation of the named executive officers in fiscal 2022 as disclosed in this Proxy Statement. Unless otherwise specified, proxies will be voted “FOR” the approval, on an advisory basis, of the compensation of the named executive officers in fiscal 2022 as disclosed in this Proxy Statement.
Proposal 3:
Advisory Vote on the Frequency of Future Advisory Votes
to Approve Named Executive Officer Compensation
As required by Section 14A of the Exchange Act, Coca‑Cola Consolidated also is providing its stockholders with the opportunity to cast an advisory vote to express a preference regarding the frequency of future stockholder advisory votes to approve the compensation of the Company’s named executive officers. Coca‑Cola Consolidated currently holds its say-on-pay vote every three years. In voting on this proposal, you will be asked to select from the following four options: whether the advisory vote should occur every one, two or three years, or to abstain from voting on the proposal. For the reasons explained below, the Board of Directors recommends that you vote for a three-year frequency, a continuation of the Company’s current policy.
After careful consideration, the Board of Directors has determined that holding an advisory vote to approve the compensation of Coca‑Cola Consolidated’s named executive officers every three years is the most appropriate policy for the Company and its stockholders at this time. The Board is making this recommendation based on several considerations, including the fact that holding the advisory vote every three years will give the Board sufficient time to thoughtfully consider the results of the previous advisory vote and to implement any desired changes to the Company’s executive compensation policies and procedures. A three-year voting cycle will also provide stockholders with enough time to evaluate the effectiveness of the Company’s short- and long-term compensation strategies and the related business outcomes for Coca‑Cola Consolidated before being asked to cast the next advisory vote.
The option of every one, two or three years that receives the most votes will be considered to be the frequency for the advisory vote to approve named executive officer compensation that has been selected by the Company’s stockholders. The Compensation Committee and the Board of Directors will consider the stockholder vote when deciding how often an advisory vote to approve named executive officer compensation will be requested from the Company’s stockholders. Because this vote is advisory, and not binding on Coca‑Cola Consolidated, the Compensation Committee or the Board of Directors, the Board may decide that it is in the best interests of the Company and its stockholders to hold an advisory vote to approve named executive officer compensation more or less frequently than the option selected by the Company’s stockholders.
The Board of Directors unanimously recommends that you vote in favor of a frequency of every “3 YEARS” for future advisory votes to approve Coca‑Cola Consolidated’s named executive officer compensation. Unless otherwise specified, proxies will be voted in favor of a frequency of every “3 YEARS” for future advisory votes to approve Coca‑Cola Consolidated’s named executive officer compensation.
Proposal 4:
Ratification of the Appointment of
Independent Registered Public Accounting Firm
The Audit Committee of the Board of Directors has appointed PricewaterhouseCoopers LLP to serve as
the Company’sCoca‑Cola Consolidated’s independent registered public accounting firm for fiscal
2021.2023. The Audit Committee reviewed and discussed the performance of PricewaterhouseCoopers LLP for fiscal
20202022 prior to its appointment of PricewaterhouseCoopers LLP to serve as
the Company’sCoca‑Cola Consolidated’s independent registered public accounting firm for fiscal
2021.2023.
The Company expects that representatives of PricewaterhouseCoopers LLP will participate in the Annual Meeting, and the representatives will have an opportunity to make a statement if they desire to do so. The Company also expects that
the representatives
of PricewaterhouseCoopers LLP will be available to respond to appropriate questions from stockholders.
Stockholder ratification of the Audit Committee’s appointment of PricewaterhouseCoopers LLP to serve as
the Company’sCoca‑Cola Consolidated’s independent registered public accounting firm for fiscal
20212023 is not required by the
By-laws or otherwise. Nevertheless, the Board is submitting the appointment of PricewaterhouseCoopers LLP to the Company’s stockholders for ratification as a matter of good corporate governance. If the Company’s stockholders fail to ratify the appointment, the Audit Committee will reconsider its appointment of PricewaterhouseCoopers LLP. Even if this appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the fiscal year if the Audit Committee determines that such a change would be in the best interests of the Company and its stockholders.
The Board of Directors unanimously recommends that you vote “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP to serve as the Company’sCoca‑Cola Consolidated’s independent registered public accounting firm for fiscal 2021. 2023. Unless otherwise specified, proxies will be voted “FOR”the ratification of the appointment of PricewaterhouseCoopers LLP to serve as the Company’sCoca‑Cola Consolidated’s independent registered public accounting firm for fiscal 2021.2023.
Fees Paid to Independent Registered Public Accounting Firm
The following table presents fees for professional audit services rendered by PricewaterhouseCoopers LLP for the audit of the Company’s consolidated financial statements for fiscal
20202022 and fiscal
20192021 and fees billed for other services rendered by PricewaterhouseCoopers LLP during those periods:
| | | | | | | | |
| | Fiscal 2020 ($) | | | Fiscal 2019 ($) | |
Audit Fees(1) | | | 1,740,700 | | | | 1,768,500 | |
Audit-Related Fees(2) | | | — | | | | 72,000 | |
Tax Fees | | | — | | | | — | |
All Other Fees(3) | | | 665,740 | | | | 40,000 | |
| | | | | | | | |
Total | | | 2,406,440 | | | | 1,880,500 | |
| | | | | | | | |
(1) | Audit Fees consist of the aggregate fees billed for the respective fiscal year for professional services rendered by the independent registered public accounting firm for the audit of the Company’s annual consolidated financial statements and reviews of the Company’s interim consolidated financial statements. Audit Fees also consist of the aggregate fees billed for the respective fiscal year for services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements.
|
(2) | Audit-Related Fees consist of the aggregate fees billed for fiscal 2019 related to permitted services rendered by the independent registered public accounting firm associated with various initiatives by the Company, including assurance and related services provided for a consolidated subsidiary.
|
(3) | All Other Fees consist of the aggregate fees billed for the respective fiscal year for travel and other out-of-pocket expenses of the independent registered public accounting firm and, for fiscal 2020, for a non-assurance consulting project.
|
| | | | | | | | | | | | | | |
| | Fiscal 2022 ($) | | Fiscal 2021 ($) |
Audit Fees(1) | | 1,818,243 | | 1,670,100 |
Audit-Related Fees | | — | | — |
Tax Fees | | — | | — |
All Other Fees | | — | | — |
Total | | 1,818,243 | | 1,670,100 |
__________
(1)Audit Fees consist of the aggregate fees billed for the respective fiscal year for professional services rendered by the independent registered public accounting firm for the audit of the Company’s annual consolidated financial statements and the review of the Company’s interim consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q. Audit Fees also consist of the aggregate fees billed for the respective fiscal year for services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements.
Audit Committee
Pre-Approval of Audit and
Non-Audit Services
The Audit Committee’s policy is to
pre-approve all audit and permissible
non-audit services to be performed by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. All such services provided in fiscal
20202022 were
pre-approved by the Audit Committee.
Pre-approval is generally provided for up to one year and any
pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the full Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this
pre-approval, and the fees for the services performed to date.
The Audit Committee has delegated pre-approval authority to its chairmanChairman when necessary due to timing considerations. Any services pre-approved by such chairmanChairman must be reported to the full Audit Committee at its next scheduled meeting.
Proposal
3:Stockholder Proposal
Coke Consolidated has been notified that the International Brotherhood of Teamsters General Fund (the “Proponent”) intends to present the proposal set forth below for consideration at the Annual Meeting. The address and number of shares of Coke Consolidated Common Stock held by the Proponent will be promptly provided upon oral or written request made to the Company’s Secretary. The Company is not responsible for the content5:
Approval of the
stockholder proposal, which is printed below exactly as it was submitted.RESOLVED,that stockholdersAmendment to Coca‑Cola Consolidated’s Restated Certificate of Coca-Cola Consolidated, Inc. (the “Company”), request that the Board of Directors retain an investment banker to develop a plan for recapitalization to result in one vote per share for all outstanding common stock.
SUPPORTING STATEMENT:
According to the 2020 proxy statement, the Company had 7,141,447 shares of common stock outstanding, carrying one vote per share, and 2,232,242 shares of Class B common stock, which entitle the holder to 20 votes per share. Members of the Harrison family, including chairman and CEO J. Frank Harrison III, hold 99.99% of all of the outstanding Class B common shares, granting Harrison family members control of 86% of the voting power despite holding less than 24% of the common equity. This imbalance between ownership and control may further be exacerbated by the use of Class B common shares to compensate CEO Harrison; and, the right of Harrison family members to acquire an additional 292,386 Class B shares in exchange for an equal number of common shares.
A 2008 study by Harvard’s Paul Gompers, et al., (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=562511) found that dual-class structures with disparate voting rights were correlated with lower firm value. The study cautioned that a majority owner “can rationally choose to sacrifice some firm value in order to maintain private benefits of control.”
The Company’s 2019 Annual Report (10-K) acknowledged that the concentration of ownership could result in the “Company making decisions that stockholders outside the Harrison family may not view as beneficial.”
We believe these risks are heightened by the Board, which, as of last year’s annual shareholder meeting included: six non-independent directors; lacked a standing nominating committee; had a combined CEO-chairman; and, paid non-employee directors entirely in cash, resulting in five of the seven independent directors holding no equity stake whatsoever in the Company.
We believe the current dual-class stock structure makes it difficult for the Board to oversee the stewardship of the Company for the benefit of all shareholders.
We, thus, urge the Board to retain an investment banking firm to make appropriate recommendations on methods to move towards creating a single class of common stock. At last year’s shareholder meeting, this proposal won the support of a majority of common share votes cast.
Board of Directors’ Statement in Opposition to the Proposal
Incorporation
The Board of Directors
has unanimously
adopted, and recommends that
you vote “AGAINST” this stockholder proposal. The Board believes that adopting this proposal would not be in the best interests of Coke Consolidated or itsCoca-Cola Consolidated’s stockholders
and opposes it for the reasons discussed below. The Company’s stockholders defeated a virtually identical proposal submitted by the Proponent at the Company’s 2019 and 2020 Annual Meetings of Stockholders with more than 93% of the votes cast against each of the proposals.Coke Consolidated’s capital structure, with two classes of common stock outstanding (Common Stock with one vote per share and Class B Common Stock with 20 votes per share), has been in place since 1984. Every investor purchasing shares of Coke Consolidated Common Stock since then has had notice of this capital structure, which
is disclosed in detail in the Company’s public filings with the SEC. The Board of Directors believes that many of Coke Consolidated’s investors are attractedapprove, an amendment to Coke Consolidated Common Stock because of the long-term stability that the Harrison family provides to the Company. Members of the Harrison family have played an important role in the Company since its formation in 1902. J. Frank Harrison, III not only is the great-grandson of Coke Consolidated’s founder as well as the Controlling Stockholder but he also is the Company’s Chairman and Chief Executive Officer and has been an employee of the Company since 1977. With more than 40 years of experience with Coke Consolidated, Mr. Harrison possesses a vital understanding and appreciation of the Company’s business.
The Board of Directors believes that Coke Consolidated’s capital structure has contributed, and continues to contribute, to the Company’s stability and long-term stockholder returns. Coke Consolidated’s capital structure has helped protect the Company from short-term pressures and the disruption associated with efforts by activists to challenge control of the Company, thereby allowing the Board and senior management to focus on the Company’s long-term success. The Board believes that Coke Consolidated’s capital structure and the stability it promotes have driven, and will continue to drive, long-term value for the Company’s stockholders.
In addition, Coke Consolidated has a well-developed governance structure that demonstrates the Board of Directors’ commitment to fostering independence, avoiding conflicts of interest and providing for strong and independent oversight of the Company’s business. Seven of the 13 members of the Board are independent under applicable SEC rules and NASDAQ listing standards and only independent directors serve on the Audit Committee and the Compensation Committee. All directors are elected annually and are required to act in the best interests of all stockholders in accordance with their fiduciary duties under Delaware law. Additionally, the Board of Directors has a Lead Independent Director elected annually by the Board. The independent members of the Board meet at least twice each year in executive session without the other directors. Any transactions that could potentially be required to be reported under the SEC rules for disclosure of transactions with related persons, including transactions with the Company’s executive officers or directors, nominees for election as directors of the Company, beneficial owners of at least 5% of any class of the Company’s voting securities, or immediate family members of any of the foregoing, must be reviewed and approved or ratified pursuant to the Company’s written policy and procedures for the review, approval or ratification of related person transactions.
Finally, any plan for a recapitalization as contemplated by this stockholder proposal would, under Delaware law and the Company’s Restated Certificate of Incorporation, as amended require approval(the “Restated Certificate of Incorporation”), to limit the personal liability of certain senior officers of Coca-Cola Consolidated as permitted by recent amendments to the holders of Class B Common Stock voting separately as a class. Mr. Harrison controls approximately 99.99%DGCL (the “Proposed Amendment”). Article ELEVENTH of the outstanding sharesRestated Certificate of Class B Common StockIncorporation currently limits the personal liability of directors for monetary damages for breaches of their fiduciary duty of care pursuant to, and has informedconsistent with, Section 102(b)(7) of the DGCL. This is referred to as “exculpation.” Effective August 1, 2022, Section 102(b)(7) of the DGCL was amended to permit a corporation to extend exculpation to certain senior officers. In order to extend the protections of the recently amended Section 102(b)(7) of the DGCL to its officers, a Delaware corporation must affirmatively amend its certificate of incorporation to include such a provision, as the protections do not apply automatically.
The Board believes that amending the Restated Certificate of Incorporation to add the liability protection for senior officers is necessary in order to (i) continue to attract and retain experienced and qualified executives, as similar officer exculpation provisions are likely to be adopted by Coca-Cola Consolidated’s peers and others with whom the Company competes for executive talent, and (ii) reduce personal legal exposure and help curb corporate litigation and associated insurance costs. Furthermore, the Proposed Amendment would more generally align the protections available to Coca‑Cola Consolidated’s senior officers with those protections currently available to its directors.
Amended Section 102(b)(7) of the DGCL provides that he doesonly certain officers may be entitled to exculpation; namely: (i) the corporation’s president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer or chief accounting officer; (ii) an individual identified in the corporation’s public filings with the SEC as one of the most highly compensated executive officers of the corporation (i.e., the named executive officers); and (iii) an individual who, by written agreement with the corporation, has consented to be identified as an officer for purposes of accepting service of process (collectively, the “covered officers”).
The Proposed Amendment would permit the exculpation of the covered officers for personal liability for monetary damages in connection with direct claims brought by stockholders for breach of fiduciary duty of care, including class actions, but would not intendexculpate such officers’ personal liability for monetary damages for breach of fiduciary duty of care claims brought by Coca-Cola Consolidated itself or for derivative claims brought by stockholders in the name of the Company. Accordingly, Coca-Cola Consolidated and its stockholders would still have the ability to approve this stockholder proposal,hold officers accountable for wrongdoing. In addition, as is currently the case for directors under the Restated Certificate of Incorporation, the Proposed Amendment would not limit the liability of the covered officers for: (i) a breach of the duty of loyalty; (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; or (iii) any transaction from which the recapitalization plan contemplated by this proposal. Consequently,officer derived an improper personal benefit.
In determining the
proposal cannot accomplishadvisability of the
result intended by the Proponent and would therefore needlessly consume corporate resources.After considering the above,Proposed Amendment, the Board of Directors unanimouslyconsidered the narrow class and type of claims from which the covered officers would be exculpated from liability pursuant to amended Section 102(b)(7) of the DGCL, the limited number of Coca-Cola Consolidated’s officers to which the protections would apply, and the benefits the Board believes would accrue to the Company by extending exculpation protection to its senior officers in addition to its directors.
The full text of Article ELEVENTH of the Restated Certificate of Incorporation, as proposed to be amended, is as follows:
ELEVENTH. To the fullest extent permitted by the General Corporation Law of the State of Delaware, no director or officer of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, provided that such provision shall not eliminate or limit the liability of (a) a director or officer for any breach of the director’s or officer’s duty of loyalty to the Corporation or its stockholders, (b) a director or officer for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) a director under Section 174 of the General Corporation Law of the State of Delaware, (d) a director or officer for any transaction from which the director or officer derived an improper personal benefit or (e) an officer in any action by or in the right of the Corporation. If the General Corporation Law of the State of Delaware is hereafter amended to authorize corporate action further eliminating or limiting the liability of directors or officers, then the liability of a director or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware, as so amended.This Article ELEVENTH of this Restated Certificate of Incorporation shall not eliminate or limit the liability of a director or officer for any act or omission occurring prior to the date that it becomes effective. Any amendment to, modification of, or repeal of this Article ELEVENTH of this Restated Certificate of Incorporation by the stockholders of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing hereunder with respect to any act or omission of such director or officer occurring prior to such amendment, modification or repeal.
If the Proposed Amendment is approved
this statement in opposition.by Coca-Cola Consolidated’s stockholders, it will become effective immediately upon the filing of a Certificate of Amendment to the Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, which the Company expects to do promptly after the Annual Meeting. Other than the replacement of the existing Article ELEVENTH with the proposed Article ELEVENTH, the remainder of the Restated Certificate of Incorporation will remain unchanged after effectiveness of the Proposed Amendment. If the Proposed Amendment is not approved by Coca-Cola Consolidated’s stockholders, the Restated Certificate of Incorporation will remain unchanged.
The Board of Directors unanimously recommends that you vote “AGAINST” this stockholder proposal.“FOR” the approval of the Proposed Amendment to the Restated Certificate of Incorporation. Unless otherwise specified, proxies will be voted “AGAINST” this stockholder proposal.FOR” the approval of the Proposed Amendment to the Restated Certificate of Incorporation.
Stockholder Proposals for the
20222024 Annual Meeting of Stockholders
Any stockholder proposal intended to be included in
CokeCoca‑Cola Consolidated’s proxy statement and form of proxy relating to the
20222024 Annual Meeting of Stockholders must be in writing and received by the Company not later than November
22, 2021., 2023. Any such stockholder proposal must also comply with
Rule 14a-8 of the Exchange Act, which lists the requirements for the inclusion of stockholder proposals in company-sponsored proxy materials. Stockholder proposals should be addressed to the attention of the Company’s Secretary at
Coca-ColaCoca‑Cola Consolidated, Inc., 4100
Coca-ColaCoca‑Cola Plaza, Charlotte, North Carolina 28211. Pursuant to the SEC rules, submitting a proposal will not guarantee that it will be included in the Company’s proxy materials.
In addition, any stockholder proposal intended to be presented at the
20222024 Annual Meeting of Stockholders, but that will not be included in
CokeCoca‑Cola Consolidated’s proxy statement and form of proxy relating to the
20222024 Annual Meeting of Stockholders, must be in writing and received by the Company’s Secretary at
Coca-ColaCoca‑Cola Consolidated, Inc., 4100
Coca-ColaCoca‑Cola Plaza, Charlotte, North Carolina 28211 not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the Annual Meeting. As a result, any proposals submitted by a stockholder pursuant to the provisions of the
By-laws (other than proposals submitted pursuant to
Rule 14a-8 of the Exchange Act) must be received not earlier than the close of business on January
11, 202210, 2024 and not later than the close of business on February
10, 2022.9, 2024. However, in the event that the date of the
20222024 Annual Meeting of Stockholders is more than 30 days before or more than 60 days after May
11, 2022,9, 2024, notice by the stockholder to be timely must be so received not earlier than the close of business on the 120th day prior to the date of the
20222024 Annual Meeting of Stockholders and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Company. Stockholder proposals must include the specified information concerning the proposal and the stockholder submitting the proposal as set forth in the
By-laws. A copy of the
By-laws may be obtained by writing to the Company’s Secretary at
Coca-ColaCoca‑Cola Consolidated, Inc., 4100
Coca-ColaCoca‑Cola Plaza, Charlotte, North Carolina 28211.
2020
2022 Annual Report to Stockholders
This Proxy Statement is accompanied by the 20202022 Annual Report to Stockholders, and these materials are also available at www.proxyvote.com and the investor relations portion of the Company’s website,www.cokeconsolidated.com. The 20202022 Annual Report to Stockholders, which contains the audited consolidated financial statements and other information about the Company, is not incorporated in this Proxy Statement and is not to be deemed a part of the proxy soliciting material.
Annual Report on Form
10-K
The Company will provide without charge to each person solicited pursuant to this Proxy Statement, upon the written request of any such person, a copy of the Company’s Annual Report on Form 10-K10‑K for fiscal 2020,2022, including the financial statements and the financial statement schedules, required to be filed with the SEC, or any exhibit thereto. Requests should be in writing and addressed to the attention of F. Scott Anthony, the Company’s Executive Vice President and Chief Financial Officer, at Coca-ColaCoca‑Cola Consolidated, Inc., P.O. Box 31487, Charlotte, North Carolina 28231.
The SEC has adopted rules permitting companies to mail one proxy statement and annual report, or notice of internet availability of proxy materials, as applicable, in one envelope to all stockholders residing at the same address if certain conditions are met. This is called “householding” and can result in significant savings of paper and mailing costs. The Company has not implemented householding with respect to its stockholders of record; however, a number of brokerage firms have instituted householding that may impact certain beneficial owners of shares held in street name. If members of your household have multiple accounts through which they hold Coke
Coca‑Cola Consolidated stock, you may have received a householding notification from the stockholder of record (e.g., your bank, broker or other nominee).
Please contact the stockholder of record directly if you have any questions or wish to revoke your decision to household or to receive an additional copy of this Proxy Statement, the 20202022 Annual Report to Stockholders or the Notice of Internet Availability for members of your household.
COCA-COLA CONSOLIDATED, INC. 4100 COCA-COLA PLAZA CHARLOTTE, NC 28211-3481 VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern Time, on May 10, 2021. Have your proxy card in hand when you access the website and then follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/COKE2021 You may attend the meeting via the internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and then follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern Time, on May 10, 2021. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by Coca-Cola Consolidated, Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the internet. To sign up for electronic delivery, please follow the instructions above to vote using the internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D31452-P48251 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY COCA-COLA CONSOLIDATED, INC. Coke Consolidated’s Board of Directors recommends that you vote “FOR ALL” of the nominees named in Proposal 1: 1. Election of Directors Nominees: 01) J. Frank Harrison, III 02) Sharon A. Decker 03) Morgan H. Everett 04) James R. Helvey, III 05) William H. Jones 06) Umesh M. Kasbekar 07) David M. Katz 08) Jennifer K. Mann 09) James H. Morgan 10) John W. Murrey, III 11) Sue Anne H. Wells 12) Dennis A. Wicker 13) Richard T. Williams For All Withhold All For All Except [] [] [] To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. Coke Consolidated’s Board of Directors recommends that you vote “FOR” Proposal 2: 2. Ratification of the appointment of PricewaterhouseCoopers LLP to serve as Coke Consolidated’s independent registered public accounting firm for fiscal 2021. Coke Consolidated’s Board of Directors recommends that you vote “AGAINST” Proposal 3: 3. Stockholder proposal regarding development of a recapitalization plan. NOTE: In their discretion, the proxy holders are authorized to vote on such other business as may properly come before the meeting or any adjournment or postponement thereof. EACH OF PROPOSALS 1 AND 2 HAS BEEN PROPOSED BY COCA-COLA CONSOLIDATED, INC. For Against Abstain [] [] [] [] [] [] Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice of Annual Meeting and Proxy Statement and the 2020 Annual Report to Stockholders are available at www.proxyvote.com. D31453-P48251 COCA-COLA CONSOLIDATED, INC. 2021 Annual Meeting of Stockholders May 11, 2021 This proxy is solicited on behalf of Coke Consolidated’s Board of Directors. The undersigned hereby appoint(s) J. Frank Harrison, III, David M. Katz and E. Beauregarde Fisher III, and each of them, as attorneys-in-fact, each with the power to appoint his substitute, and hereby authorize(s) each of them to represent and to vote, as designated on the reverse side of this proxy card, all of the shares of Common Stock and Class B Common Stock of Coca-Cola Consolidated, Inc. that the undersigned is/are entitled to vote at the 2021 Annual Meeting of Stockholders to be held at 9:00 a.m., Eastern Time, on Tuesday, May 11, 2021 via live audio webcast at www.virtualshareholdermeeting.com/COKE2021, and any adjournment or postponement thereof. The proxy holders are authorized to vote on such other business as may properly come before the meeting or any adjournment or postponement thereof, exercising their discretion as set forth in the Notice of Annual Meeting and Proxy Statement. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED “FOR ALL” OF THE NOMINEES NAMED IN PROPOSAL 1, “FOR” PROPOSAL 2, “AGAINST” PROPOSAL 3, AND IN THE DISCRETION OF THE PROXY HOLDERS WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE, OR FOLLOW THE INSTRUCTIONS TO VOTE BY INTERNET OR PHONE. Continued and to be signed on reverse side