•Business - The companies in the primary peer group represent multiple industry segments, including packaged foods, non-food related specialty and online retailers, other non-food related wholesalers and distributors, and trucking and warehousing. The foodservice distribution industry is a highly fragmented industry with several very large national players and numerous small, privately-held local players; accordingly, it was necessary to select our primary peer group from various industry segments.
•ISS Selection - For our primary peer group, we also considered companies listed in our ISS-selected peer group and companies which used our Company as a peer.group.
Reflecting the factors outlined above, our primary peer group for fiscal 20192020 compensation decisions consisted of the following 18 companies:
|
| | | | | | | |
1-800-FLOWERS.COM, Inc | Cal-Maine Foods, Inc. | J&J Snack Foods Corp. |
AMCON Distributing Company | DXP Enterprises, Inc. | John B. Sanfilippo & Son, Inc. |
The Andersons, Inc. | Farmer Bros. Co.DXP Enterprises, Inc. | Lancaster Colony Corporation |
Applied Industrial Technologies, Inc. | Foundation Building Materials, Inc. | NOW Inc. |
B&G Foods, Inc. | Foundation Building Materials,GMS Inc. | Pool Corporation |
BlueLinx Holdings Inc. | GMSThe Hain Celestial Group, Inc. | SiteOne Landscape Supply, Inc. |
Calavo Growers, Inc. | The Hain Celestial Group, Inc.J&J Snack Foods Corp. | SunOpta Inc. |
In November of 2018, for fiscal 2019 compensation decisions, FW Cook reviewed the peer group with the Compensation Committee and the Compensation Committee approved the addition of five companies (The Andersons, Inc., GMS Inc., BlueLinx Holdings Inc., Foundation Building Materials, Inc. and SiteOne Landscape Supply, Inc.) to the primary peer group and the removal of four companies (Celadon Group, Inc., Myers Industries, Inc., Tootsie Roll Industries, Inc. and Voxx International Corporation) from the primary peer group. These changes were recommended to enhance the size-comparability of the group in terms of revenue, profitability, and market capitalization, and realign the peer group with the aim being that the Company fell near the median in revenue and market capitalization, and with EBITDA near the 25th percentile.
In November of 2019, for fiscal 2020 compensation decisions, FW Cook reviewed the peer group with the Compensation Committee and the Compensation Committee did not make any changes in our primary peer group from fiscal 2019 to fiscal 2020. In January of 2020, for fiscal 2020 compensation decisions, FW Cook again reviewed the peer group with the Compensation Committee in light of estimated adjusted assumptions in revenue and market capitalization following our acquisition of substantially all of the assets of Sid Wainer & Son, Inc. and Cambridge Packing, Company, Inc., and, in the context of the new parameters, the Compensation Committee approved the addition of two companies (Applied Industrial Technologies, Inc. and NOW Inc.) to the primary peer group and the removal of two companies (AMCON Distributing Company and Farmer Bros. Co.) from the primary peer group to enhance the size-comparability of the group in terms of
revenue, profitability, and market capitalization, and to realign the peer group with the Company falling near the median in pro forma revenue as well as above-median in market capitalization, which would be balanced by below-median EBITDA and net income.
In November of 2020, for fiscal 2021 compensation decisions, FW Cook reviewed the peer group with the Compensation Committee and the Compensation Committee did not make any changes in our primary peer group from fiscal 2020 to fiscal 2021.
The Compensation Committee did not make any changes in our secondary peer group from fiscal 20182019 to fiscal 20192020 or from fiscal 20192020 to fiscal 2020.2021. The secondary peer group was used to test compensation design and performance metrics as theirthese companies' compensation practices are an important reference point due to their status as the Company’s key competition; however, due to the size of these companies, they were not considered appropriate to reference in determining fiscal 20192020 pay levels of our named executive officers. For fiscal 2020,2021, FW Cook reviewed the secondary peer group with the Compensation Committee and the Compensation Committee approved the retention of the current group:
|
| | | | | | | |
Core-Mark Holding Company, Inc. | SpartanNash Company | United Natural Foods, IncInc. |
Performance Food Group Company | Sysco Corporation | US Foods Holding Corp. |
We do not benchmark compensation in the traditional manner, as we do not directly tie individual components of compensation to particular benchmarks. In general, the Compensation Committee references the 25th and 75th percentiles and the median of the competitive compensation marketplace, as well as data regarding compensation design and performance metrics. Market data, however, is only one factor among many considered by the Compensation Committee when making determinations regarding executive compensation. Other factors considered include individual performance, scope of responsibilities, tenure, criticality of the position, retention concerns and the need to recruit new officers.
Components of Named Executive Officer Compensation
Taking into account the above-described objectives and our peer group comparisons, when setting fiscal 20192020 compensation, the Compensation Committee focused on designing a compensation package for our named executive officers that consisted of base salaries, performance-based annual cash incentive awards and long-term equity awards, as well as retirement and other welfare benefits and termination protection.
|
| | | | | | | | | | |
Element | Description & Objective | Form | Performance Metrics2020 Approach |
Base Salary | The guaranteed part of our executives’ pay. Base salary reflects the different levels of responsibility within the Company, the skills and experience required for the job, individual performance and labor market conditions. Provides a competitive level of fixed compensation. | • Cash | Not applicable50% of the base salary, prorated from March 23, 2020 through the end of fiscal 2020, was paid in time-based restricted stock for purposes of liquidity preservation by the Company. |
Annual Bonus | Performance-based payments to incentivize top- and bottom-line growth. | • Cash or time-based restricted stock | Targets relating to fiscal 20192020 were originally set to be revenue and adjusted EBITDA (“AEBITDA”). Due to the effects of the COVID-19 pandemic, the original performance metrics set in early 2020 were rendered obsolete and we revised our performance criteria with respect to 2020 to recognize achievement of strategic priorities to keep the Company well-capitalized, our employees safe and our customers with product. |
Long-Term Incentives | Equity-based incentives earned based on the attainment of performance objectives and/or continued service with the Company to align the interests of our executives with stockholders and reward performance that enhances long-term value. | • Performance-based restricted stock (50%) • Time-based restricted stock (50%)
| A portionDue to the effects of the COVID-19 pandemic, the performance-based restricted stock component for named executed officers is earnedgrants made in 2020 and the financial goal performance-based grants made in 2019 were canceled. Long-term incentive grants governing the 2018-2020 period were based on attainment of AEBITDA and ROIC targets overand vested at a three-year measurement period. Additionally, named executive officers have a portionblended rate of the performance-based restricted stock component which is earned upon achievement of challenging Company share price goals. |
| | | |
|
| | | |
Element | Description & Objective | Form | Performance Metrics83%. |
Retirement and Other Welfare Benefits | Health and welfare benefits and methods for individuals to save for retirement to align with market practice and provide for the wellness of our executives and their families. | • 401(k) savings plan • Health, dental, and vision insurance
• Short-term disability coverage
• Life insurance
| Not applicableConsistent with historic approach. |
Termination Benefits | Severance, termination benefits, and accelerated vesting of equity upon qualifying terminations and in connection with changes in control of the Company in order to retain our executives and help enable them to focus on executing our business plans. | • Cash severance • Accelerated equity
• In kind termination benefits
| Not applicableEnhanced severance and change in control benefits to provide stability and help retain management. |
Limited Perquisites | Limited perquisites targeted to be market competitive. | • Transportation • Cash
| Not applicableConsistent with historic approach. |
The Compensation Committee also from time to time authorizes off-cycle awards that recognize and reward special contributions made to the success of the Company. The Compensation Committee did not make any off-cycleone-time awards to named executive officers in fiscal 2019. However, due2020. Due to market changes discussed in further detail in “Compensation Discussion and Analysis - Certain Changes in 2020Components of Named Executive Officer Compensation - Base Salary” and “Compensation Discussion and Analysis - Components of Named Executive Officer Compensation - Annual Cash Incentive Compensation,” certain equity awards not historically part of our compensation program have been granted in lieu of payments that have historically been made in cash.
Each of the components of our compensation program is discussed in greater detail below.
Base Salary
We provide our named executive officers with a base salary to compensate them for performing their daily responsibilities. We believe that base salaries must be competitive, based upon the named executive officer’s scope of
responsibilities and what we believe to be market rates of compensation for executives performing similar functions for comparable companies within our peer groups. We also periodically review the performance of our named executive officers and, in some instances, award merit-based base salary increases as a result of these reviews.
The annual base salaries for our named executive officers for fiscal 20192020 were as follows: | | | 2019 Base Salary | Increase from 2018 Base Salary | | 2020 Base Salary | Increase from 2019 Base Salary | |
Name | ($) | | Name | ($) | | |
Christopher Pappas | 843,415 | 3 % | Christopher Pappas | 927,757 | 10 % | |
John Pappas | 463,500 | 3 % | John Pappas | 509,850 | 10 % | |
James Leddy | 386,250 | 3 % | James Leddy | 424,875 | 10 % | |
Alexandros Aldous | 360,500 | 3 % | Alexandros Aldous | 396,550 | 10 % | |
Patricia Lecouras | 281,190 | 3 % | Patricia Lecouras | 309,309 | 10 % | |
ForPrior to the COVID-19 pandemic, for fiscal 2019,2020, the Compensation Committee had made the decision to raise base salaries for each of our named executive officers following discussions with our chief financial officer, our chief human resources officer, and FW Cook. Such increases in base salary were based on market increases, peer group comparisons and Company and individual performance in fiscal 2018. For fiscal 2020, the Compensation Committee made the decision to raise base salaries for each of our named executive officers following discussions with our chief financial officer, our general counsel, and FW Cook. Such increases in base salary were based on market increases, peer group comparisons and Company and individual performance in fiscal 2019. Further,Later, in light of the current economic climate,COVID-19 pandemic and its impact on the restaurant industry, the Compensation Committee determined that a portion of the fiscal 2020 base salaries were to be provided in the
form of time-vesting restricted stock.
On March 17, 2020, the Board decided, in light of the COVID-19 pandemic and after discussions with, and the support of, the named executive officers, led by Chief Executive Officer, Mr. C. Pappas, to convert 50% of the portion of the fiscal 2020 base salaries of the Company’s named executive officers paid after March 22, 2020 into time-based restricted stock awards that vested on March 18, 2021 (one year from the date of grant). These time-based restricted stock awards were consistent with the terms and had the same restrictions (other than vesting) as the time-based restricted stock awards granted to the named executive officers earlier in fiscal 2020.
As a result of these changes, are further described within the section captioned “named executive officers had their base salaries paid in cash and in restricted stock for fiscal 2020 as follows:
| | | | | | | | | | | |
Named Executive Officer | 2020 Base Salary ($) | 2020 Cash ($) | Number of Time-Based Restricted Stock Shares(1) |
Christopher Pappas | 927,757 | 573,476 | 98,411 |
John Pappas | 509,850 | 315,155 | 54,082 |
James Leddy | 424,875 | 262,269 | 45,068 |
Alexandros Aldous | 396,550 | 245,120 | 42,064 |
Patricia Lecouras | 309,309 | 191,194 | 32,810 |
(1)Compensation Discussion and Analysis - Certain Changes in 2020 Named Executive Officer Compensation” below.Number of shares based on the closing market price of the Company’s common stock on the date of grant.
Annual Cash Incentive Compensation
To closely align our named executive officers’ compensation to our business objectives, we believe that a significant portion of a named executive officer’s compensation should be performance-based. Accordingly, in fiscal 2019,2020, we utilizedput in place an annual cash incentive compensation program that provided our named executive officers with the opportunity to earn substantial cash incentive compensation for the achievement of annual performance goals related to our performance.business. The Company sets ambitious performance targets and emphasizes a pay for performance culture. As further described below, in light of the current economic climate, the Company chose to pay the bonuses earned for this year in time-vesting restricted stock.culture.
Each of our named executive officers was eligible to receive performance-based cash incentive payments in the first quarter of fiscal 20202021 under our 20192020 Cash Incentive Plan (the “2019“2020 Plan”) upon (i), with targets expressed as a percentage of the annual base salary as set forth below with a maximum possible payout of 200% of target.
| | | | | | |
Name | Target Award as a Percentage of Base Salary | |
Christopher Pappas | 100% | |
John Pappas | 100% | |
James Leddy | 75% | |
Alexandros Aldous | 75% | |
Patricia Lecouras | 75% | |
In light of the current economic climate and the Company’s achievementbusiness being materially and adversely affected by federal, state and municipal COVID-19 related shutdowns and other restrictions (the “COVID Challenges”), in August of 2020, the Compensation Committee began a review process of the performance goals set at the beginning of fiscal 2020 for the 2020 Plan (which are described below) to determine if those goals continued to be relevant and evaluated alternatives for recognizing executive contributions to surviving the pandemic and positioning the Company for recovery and future growth post-pandemic. During this review process, the Compensation Committee considered resetting the targets relatedfor the performance metrics it initially selected for the 2020 Plan but determined not to do so given continued economic uncertainty. In December of 2020, the Compensation Committee determined to evaluate performance under the 2020 Plan based on factors shown in the table below. Based on evaluation of the factors below, the Compensation Committee ultimately determined to fund bonuses at 50% of target.
| | | | | |
Actions to Survive | Actions to Emerge Stronger |
•Financial – Cash flow and liquidity preservation •Employees – Enabled efficient remote work and kept frontline workers safe •Customers & Suppliers – Continued to serve customers, instituted policies and practices for safety of the customers and suppliers, and adapted distribution (business to consumer model) •Other – Public policy efforts and engagement, performance relative to peers, establishment of a market appropriate shareholder rights plan and shareholder experience | •Pivoting to new customer segments ◦Pivot to retail and specialty retail (grocery) ◦Pivot to business to consumer model •Equity raise of approximately $86 million •Balance Sheet work ◦Pay down approximately $37 million of debt ◦Extend 87% of outstanding debt balance from 2022 to 2025 ◦Pay down $60 million of asset-based loan facility (“ABL”) and maintain $40 million of ABL availability •Generated approximately $43 million of cash flow from operations primarily due to effective working capital management •Organizational enhancements to build the team of the future |
The aggregate target award and payout amounts under the 2020 Plan for each of our fiscal 2019named executive officers are set forth in the table below:
| | | | | | | | |
Name | Target Award ($) | Actual Payout under 2020 Plan ($) |
Christopher Pappas | 927,757 | 463,879 |
John Pappas | 509,850 | 254,925 |
James Leddy | 318,656 | 159,328 |
Alexandros Aldous | 297,413 | 148,707 |
Patricia Lecouras | 231,982 | 115,991 |
Prior to the COVID-19 pandemic, the Compensation Committee had selected revenue and AEBITDA, each of which were to be weighted equally.equally, as the performance measures for the 2020 Plan. The Compensation Committee selected revenue and AEBITDA as performance metrics because they measure top- and bottom-line growth, which the Compensation Committee views as being key drivers of long-term growth in stockholder value. For fiscal 2019,2020, AEBITDA was determined as EBITDA adjusted for fiscal 20192020 acquisitions and other exclusions and adjustments specifically identified in the 20192020 Plan. In choosing performance metrics for the 20192020 Plan prior to the COVID-19 pandemic, the Compensation Committee considered our specific corporate goals and budgetary considerations. The target awards under the 2019 Plan, expressed as a percentage of the annual base salary, are as set forth below, with a maximum possible payout of 200% target.
|
| |
Name | Target Award as a Percentage of Base Salary |
Christopher Pappas | 100% |
John Pappas | 100% |
James Leddy | 75% |
Alexandros Aldous | 75% |
Patricia Lecouras | 75% |
In setting the corporate performance targets under the 20192020 Plan prior to the COVID-19 pandemic, the Compensation Committee considered historic levels of our performance for revenue and AEBITDA, taking into consideration our acquisitions in fiscal 2018,2019, and based the corporate performance targets on results that were improvements over the prior fiscal year’s results. Furthermore, the Compensation Committee set the corporate performance targets at levels that required successful implementation of corporate operating objectives for meaningful payouts to occur. TheWhen the metrics were set prior to the COVID-19 pandemic in early 2020, the Compensation Committee believed that the targets related to threshold performance were highly achievable in light of budgeted expectations, but the payouts for maximum performance required significant improvement over the prior fiscal year’s comparable performance.
For all of our named executive officers, payouts under the 20192020 Plan related to AEBITDA were originally tiered as follows:
A (1) a maximum payout equal to 200% of that portion of the officer’s target award based on the AEBIDTAAEBITDA corporate goal would be made for AEBIDTAAEBITDA of $94$120 million or more;
A (2) a payout equal to 100% of that portion of the officer’s target award based on the AEBIDTAAEBITDA corporate goal would be made for AEBIDTAAEBITDA of $87$106 million;
No (3) no payout on the portion of the officer’s target award based on the AEBIDTAAEBITDA corporate goal would be made for AEBITDA of less than $83$102 million; and
The (4) the payout percentage for AEBITDA between the amounts indicated above would be interpolated on a straight-line basis.
The targets and possible payouts under the 2019 Plan related to AEBITDA for each of our named executive officers, based on their annual base salary for fiscal 2019, is set forth in the table below: |
| | | | | |
2019 AEBITDA Target | C. Pappas ($) | J. Pappas ($) | J. Leddy ($) | A. Aldous ($) | P. Lecouras ($) |
Equal to $94 million or greater | 843,415 | 463,500 | 289,688 | 270,375 | 210,893 |
Equal to $87 million or greater but less than $94 million | 421,708 | 231,750 | 144,844 | 135,188 | 105,447 |
Less than $83 million | — | — | — | — | — |
For all of our named executive officers, payouts under the 20192020 Plan related to revenue were originally tiered as follows:
A (1) a maximum payout equal to 200% of that portion of the officer’s target award based on the revenue corporate goal would be made for revenue of $1,600$2,000 million or more;
A (2) a payout equal to 100% of that portion of the officer’s target award based on the revenue corporate goal would be made for revenue of $1,545$1,920 million;
No (3) no payout for that portion of the officer’s target award based on the revenue corporate goal would be made for revenue of less than $1,500$1,890 million; and
The pay (4) the payout percentage for revenue between the amounts indicated above would be interpolated on a straight-line basis.
The targets and possible payouts under the 20192020 Plan related to revenue for each of our named executive officers, based on their annual base salary for fiscal 2019, is set forth in the table below: |
| | | | | |
2019 Revenue Target | C. Pappas ($) | J. Pappas ($) | J. Leddy ($) | A. Aldous ($) | P. Lecouras ($) |
Equal to $1,600 million or greater | 843,415 | 463,500 | 289,688 | 270,375 | 210,893 |
Equal to $1,545 million or greater but less than $1,600 million | 421,708 | 231,750 | 144,844 | 135,188 | 105,447 |
Less than $1,500 million | — | — | — | — | — |
The 2019 Planoriginally provided that if we achieved below or equal to threshold performance on either the AEBITDA or the revenue measure, the payout under the other measure would be limited to 100% of target.
No award distributions were to be made under the 2019 Plan unless we achieved either AEBITDA of equal to or above $83.0 million or revenue of equal to or above $1,500 million for fiscal 2019.
Our fiscal 2019 AEBITDA, as we determined for purposes of the 2019 Plan, was lower than the threshold level of AEBITDA required for payouts under the 2019 Plan. Each of our named executive officers earned an award distribution under the 2019 Plan at 0% of target based upon our achievement of AEBITDA below the threshold level required under the 2019 Plan.
Our fiscal 2019 revenue, as we determined for purposes of the 2019 Plan, was higher than the threshold level of revenue required for payouts under the 2019 Plan but below target for this measure. Each of our named executive officers earned an award distribution under the 2019 Plan at approximately 98% of target based upon our achievement of revenue above the threshold level of revenue required under the 2019 Plan.
We define AEBITDA, which is not a measurement determined in accordance with the U.S. generally accepted accounting principles, or GAAP, as the aggregate of the following GAAP measures: net income, interest expense, depreciation, amortization, provision for income taxes, stock compensation, duplicate rent, integration and deal costs, third party transaction costs, change in fair value of earn-out obligation, loss on asset disposal, one-time executive management costs and moving expenses, if any. We use AEBITDA, together with financial measures prepared in accordance with GAAP,
such as revenue and cash flows from operations, to assess our historical and prospective operating performance and to enhance our understanding of our core operating performance. The use of AEBITDA as a performance measure permits a comparative assessment of our operating performance relative to our performance based upon GAAP results while isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. Additionally, for purposes of the 20192020 Plan, adjustments to AEBITDA include acquisitions.
For additional information regarding our determination of AEBITDA, please refer to Exhibit 99.1 to our Current Report on Form 8-K filed on February 12, 2020.
10, 2021.
The blended earned payout percentage under both measures was approximately 49% of target. In light of the current economic climate, on March 25, 2020, the Compensation Committee approved a grant of time-vesting restricted stock with a grant date value equal to the amount earned under the 2019 Plan in lieu of cash payment. The aggregate target award and payout amounts under the 2019 Plan for each of our named executive officers are set forth in the table below:
|
| | |
Name | Target Award ($) | Actual Payout under 2019 Plan(1) ($) |
Christopher Pappas | 843,415 | 413,274 |
John Pappas | 463,500 | 227,115 |
James Leddy | 289,688 | 141,947 |
Alexandros Aldous | 270,375 | 132,484 |
Patricia Lecouras | 210,893 | 103,337 |
| |
(1) | The amounts reflect the grant date value of the grant of time-vesting restricted stock, which will vest 50% on the first anniversary of the grant date and 50% on the second anniversary of the grant date, subject to the restrictions and terms set forth in the respective time-based restricted share award agreements. These time-based restricted share award agreements are generally consistent with the terms of, and have the same restrictions as, the time-based restricted share awards granted to the named executive officers in fiscal 2019, other than (i) the vesting provisions described above, (ii) pro-rata vesting of any unvested shares if the named executive officer resigns for good reason or the employment ends as a result of death or disability, (iii) full vesting of any unvested shares if the named executive officer is terminated without cause, and (iv) forfeiture of the award if the named executive officer does not timely file a Section 83(b) election. |
Long-Term Equity Compensation
To ensure that our executives are incentivized to achieve or exceed financial and other performance targets that our Board believes will contribute to increased stockholder value, and after evaluating peer group data and survey information, during2020 Awards
During the first quarter of fiscal 2019,2020, prior to the COVID-19 pandemic, the Compensation Committee, in consultation with FW Cook and management, approved the granting of long-term equity incentive (“LTI”) compensation consisting of time-based restricted stock awards and performance-based restricted stock awards to each of our named executive officers. When granting these awards, the Compensation Committee determined that it would be in the interest of the Company, including, among other interests, to support retention in a competitive market while maintaining a strong performance orientation, to increase the
The target LTI awards toopportunity was set at 200% of base salary for Mr. C. Pappas and Mr. J. Pappas and to 150% of base salary for the other named executive officers (fromofficers. Once the previous target LTIamount was established, the Compensation Committee decided that a significant percentage of the awards of 100% of base salary for Mr. C. Pappas and Mr. J. Pappas and 75% of base salary for the other named executive officers), while adjustingofficers should be performance-based. Accordingly, the Compensation Committee determined the mix of LTI awards towould consist of 50% time-based restricted stock awards, to support retention objectives, and 50% performance-based restricted stock awards, (fromto motivate the previous mix of 30% time-based restricted stock awardsexecutives to achieve our
corporate objectives and 70% performance-based restricted stock awards). Further, the Company’s share price was added as a performance measureenhance stockholder value. The measures for the performance-based restricted stock awards included the Company’s share price (30% of the award target), with AEBITDA (replacing the previous EBITDA margin performance measure) and ROIC was also included as a performance measure for the performance-based restricted stock awards (each 35%(35% of the award target, respectively). This rebalancingtarget) and return on invested capital (“ROIC”) (35% of the LTI award grant size, mix and performance targets resulted in an overall increase in the value of performance-based awards and provided a broader range of performance indicators to tie compensation to stockholder value. When viewing this change together with the other components of fiscal 2019 total target direct compensation (salary and annual bonus), fiscal 2019 total target direct compensation for our named executive officers as a group was 60% tied to company performance (including the time-based restricted stock awards, which are directly linked to our stock performance)target). Assuming annual accrual of one-third of the fiscal 2019 LTI award (which, in the case of half of the LTI award target, cliff-vests entirely after three years upon certification by the Compensation Committee of the aforementioned performance measures, or, in the case of the other half of the LTI award target, vests over a period of three years) and target performance achievement with respect to the performance-based portion,
fiscal 2019 total realized direct compensation for our named executive officers as a group was forecasted to increase approximately 14% when comparing the hypothetical continued use of our prior LTI award mix to the actual use of our new LTI award mix, with 30% of such increase coming from performance-based LTI awards.
The respective target values and numbersnumber of shares (determined based onupon a grant date share price of $32.10)$33.00) of time-based vesting restricted stock and performance-based vesting restricted stock, granted in fiscal 2020 at target and at maximum (200% of target), were as follows:
| | | | | | | | | | | | | | | | | | | | |
Name | | RSA Value ($) | RSA Shares (#) | PSA Target Value ($)(1) | PSA Shares at Target (#)(1) | PSA Shares at Max (#)(1) |
Christopher Pappas | 927,757 | 28,114 | 927,757 | 28,114 | 47,793 |
John Pappas | 509,850 | 15,450 | 509,850 | 15,450 | 26,265 |
James Leddy | 318,656 | 9,656 | 318,656 | 9,656 | 16,416 |
Alexandros Aldous | 297,413 | 9,013 | 297,413 | 9,013 | 15,322 |
Patricia Lecouras | 231,982 | 7,030 | 231,982 | 7,030 | 11,951 |
(1) The performance-based vesting restricted stock awards granted in 2020 were canceled. |
|
| | | | | |
Name | RSA Value ($) | RSA Shares (#) | PSA Target Value ($) | PSA Shares at Target (#) | PSA Shares at Max (#) |
Christopher Pappas | 843,428 | 26,275 | 843,428 | 26,275 | 44,667 |
John Pappas | 463,492 | 14,439 | 463,492 | 14,439 | 24,547 |
James Leddy | 289,703 | 9,025 | 289,703 | 9,025 | 15,342 |
Alexandros Aldous | 270,378 | 8,423 | 270,378 | 8,423 | 14,319 |
Patricia Lecouras | 210,897 | 6,570 | 210,897 | 6,570 | 11,169 |
The time-based vesting restricted stock awarded in fiscal 20192020 vests in equal one-third installments on the first through third anniversary dates of the date set forth in the named executive officers’ respective time-based restricted share award agreements.
The goals set with respect to performance-based vesting restricted stock awarded in fiscal 2020 were designed to be market-driven, based on peer group data, survey information and input from the advisors to the Compensation Committee. However, in reassessing these goals in December of 2020 in light of the economic climate and the COVID Challenges, the Compensation Committee, with the support of the named executive officers, canceled the performance-based restricted stock awards granted to the named executive officers in fiscal 2020. The number of shares of performance-based vesting restricted stock that would have been eligible to vest ishad the awards not been canceled was based uponon the Company’s achievement of certain ROIC, (return on invested capital), AEBITDA and challenging share price targets for the performance period beginning on the first day of fiscal 20192020 and ending on December 31, 2021.30, 2022. ROIC measures our ability to generate earnings or returns on our invested capital base.base, AEBITDA measures our operating performance and profitability and the share price target measures our performance as evaluated by the market. Our long-term goal is to generate returns on our invested capital in excess of our weighted average cost of capital on a consistent basis. ROIC will beand AEBITDA would have been measured in the final year of the performance period. AEBITDA measures our operating performance and profitability. ROIC will be measured in the final year of the performance period. The share price target measures our performance as evaluated by the market and is achievable upon the twenty (20) day trading average share price being attained at any point during the performance period. Earned performance-based restricted stock immediately vests upon the Compensation Committee’s certification of the attainment of the three targets for such three-year period. Performance-based restricted stock awarded in fiscal 2019 had a maximum payout of 170% of the target award. The ROIC and AEBITDA goals are weighted equally, so that (i) achievement of the ROIC metric at target would result in 35% of the target number of performance-based restricted shares being earned and (ii) accordingly, achievement of the AEBITDA metric at target would also result in 35% of the target number of performance-based restricted shares being earned (with the maximum which can be achieved with respect to either metric being 200% of the target). Additionally, the share price goal is weighted at 30% of the target number of performance-based restricted shares so that achievement of the share price metric at target would result in 30% of the target number of performance-based restricted shares being earned (with the target being the maximum which can be achieved with respect to the share price metric). The relevant targets are as follows:
|
| | | | | | |
Metric | Performance | Percentage of Target Earned | Performance | Percentage of Target Earned | Performance | Percentage of Target Earned |
ROIC | 9% | 0% | 10% | 100% | 11% | 200% |
AEBITDA | $105 million | 0% | $120 million | 100% | $135 million | 200% |
Share Price | Equal to $36.91 or less | 0% | Equal to $36.92 or greater | 100% | N/A | N/A |
With respect to ROIC and AEBITDA, the number of shares earned for performance between these thresholds illustrated above isperiod determined on a sliding scale, with no interpolation or pro-ration between levels of performance, with targets as follows:
|
| | | |
AEBITDA Threshold (in millions $) | Percentage of Performance Shares Attained | ROIC Threshold | Percentage of Performance Shares Attained |
105.00 or less | 0% | 9.00% or less | 0% |
108.75 | 25% | 9.25% | 25% |
112.50 | 50% | 9.5% | 50% |
116.25 | 75% | 9.75% | 75% |
120.00 | 100% | 10.00% | 100% |
123.75 | 125% | 10.25% | 125% |
127.50 | 150% | 10.50% | 150% |
131.25 | 175% | 10.75% | 175% |
135.00 or more | 200% | 11.00% or more | 200% |
With respect toperformance. The share price goal would have been achieved upon the number of shares earned for performance between the20-day trading average share price thresholds illustrated above isbeing attained at any point during the performance period and would have been determined as either achieved or not achieved, with no sliding scale and no interpolation or pro-ration between levels of performance, withachieved. The relevant targets of 0% or 100% (for example, a twenty (20) day average share price of $37.00 would result in 100% of the target shares of performance-based vesting restricted stock for the share price metric being earned).were as follows:
| | | | | | | | | | | | | | | | | | | | |
Metric | Performance | Percentage of Target Earned | Performance | Percentage of Target Earned | Performance | Percentage of Target Earned |
ROIC | 9% | 0% | 10% | 100% | 11% | 200% |
AEBITDA | $115 million | 0% | $130 million | 100% | $145 million | 200% |
Share Price | Less than $37.95 | 0% | Equal to $37.95 or greater | 100% | N/A | N/A |
All equity incentive awards granted in fiscal 2019 contain2020 contained “double trigger” change in control provisions, so that, in the event of a change in control, vesting of the award is accelerated only if the executive experiences an involuntary termination of employment without “cause” or resigns for “good reason.” If a change in control occurs during the performance period for performance-based restricted stock, the award willwould be converted to time-based restricted stock based on target.
2019 Awards
Due to COVID Challenges, the Compensation Committee also canceled the portions related to AEBITDA and ROIC of the performance-based restricted stock awards granted to the named executive officers in fiscal 2019 (70% of the target award) and certified performance at target for the portion related to share price of the performance-based restricted stock awards granted to the named executive officers in fiscal 2019 (30% of the target award), which was achieved in October of 2019. The earned portion will vest at the end of fiscal 2021, subject to satisfaction of the applicable service-based conditions.
2018 Awards
With respect to the performance-based restricted stock awards granted to the named executive officers in fiscal 2018, the Compensation Committee certified performance achievement at a blended rate of 83% of target, covering the performance period beginning on the first day of fiscal 2018 and ending on the last day of fiscal 2020. With respect to fiscal 2018 and 2019, the Compensation Committee based the determination on the fact that the award’s ROIC and EBITDA margin performance metrics were tracking at 100% in both fiscal 2018 and 2019. In making the determination for fiscal 2020, the Compensation Committee used the same performance factors as were used in determining the 2020 annual cash incentive compensation payout as disclosed in “EXECUTIVE COMPENSATION - Compensation Discussion and Analysis - Components of Named Executive Officer Compensation - Long-Term Equity Compensation - 2020 Awards.” The ROIC and EBITDA margin performance metrics were not met when 2020 was included in the calculation. The modification to the performance-based restricted stock awards resulted in an incremental expense for the awards and the amount of such expense is disclosed in the “Summary Compensation Table - Fiscal Years 2018-2020.” The performance-based restricted stock awards and the time-based restricted stock awards granted during fiscal 2018 vested on December 17, 2020, upon satisfaction of the applicable service-based conditions.
Retirement Plans and Other Welfare Benefits
We believe that an important aspect of attracting and retaining qualified individuals to serve as executive officers involves providing health and welfare benefits as well as methods for those individuals to save for retirement. Accordingly, we provide our named executive officers with the following benefits:
•Health Insurance. We provide each of our named executive officers and their spouses and children the same health, dental, and vision insurance coverage we make available to our other eligible employees. For our named executive officers, we pay both our portion and the executive’s portion of the premiums for these benefits.
•Disability Insurance. We provide each of our named executive officers with short-term disability insurance.
•Life Insurance. For each of our named executive officers, we pay the premiums for life insurance in an amount equal to their annual base salary, up to $300,000.
•Retirement Benefits. We do not provide pension arrangements or post-retirement health coverage for our named executive officers or employees; however, our named executive officers and other eligible employees are eligible to participate in our 401(k) defined contribution plan. We make matching contributions for each of our employees, including our named executive officers, in an amount equal to 50% of any employeeemployee contributions up to 6% of the employee’s salary, with a maximum matching contribution of $2,500. In light of the COVID Challenges, matching contributions were suspended for a portion of fiscal 2020.
•Nonqualified Deferred Compensation. We do not currently provide any nonqualified defined contribution or other deferred compensation plans to any of our employees.
Termination Protection Benefits
We believe that an important aspect of attracting and retaining qualified individuals to serve as executive officers involves providing market termination protection benefits. We have entered into employment agreements with our named executive officers pursuant to which they are entitled to certain benefits upon qualifying terminations of employment and have
implemented a change in control severance program in which they participate. In fiscal 2020, the Compensation Committee approved certain enhancements to severance arrangements payable to the current named executive officers, absent a change in control, to provide stability and to help retain management. These arrangements arechanges were documented through severance agreements and discussed in further detail in “Potential Payments Upon Termination or Change in Control.Compensation Discussion and Analysis - Employment Agreements, Offer Letters and Severance Benefits.”
Our executive officers generally have long tenure with the Company and have provided the vision and leadership that have built the Company into the successful enterprise that it is today. The Compensation Committee believes that the interests of stockholders are best served by ensuring that the interests of our senior management are aligned with those of our stockholders. Change in control benefits are intended to eliminate, or at least reduce, the reluctance of senior management to pursue potential change in control transactions that may be in stockholders’ best interests. The security of competitive change in control arrangements serves to eliminate distraction caused by uncertainty about personal financial circumstances during a period in which the Company requires focused and thoughtful leadership to ensure a successful outcome. Accordingly, the
Executive Change in Control Plan (the “Executive CIC Plan”) was adopted to provide “double trigger” severance benefits to the covered executives in the event of their termination under certain circumstances following a change in control. “Double trigger” benefits also require that two events occur in order for severance to be paid: a change in control followed by the executive’s involuntary termination of employment. The Compensation Committee believes a “double trigger” severance benefit provision is most appropriate, as it provides an incentive for greater continuity in management following a change in control.
In addition to the previously discussed equity incentive awards granted in fiscal 2019,2020, all equity incentive awards granted in fiscal 20202021 also contain “double trigger” change in control provisions, so that in the event of a change in control vesting of the award is accelerated only if the executive experiences an involuntary termination of employment “without cause” or resigns for “good reason.” If a change in control occurs during the performance period for performance-based restricted stock, the award will be converted to time-based restricted stock based on target.
Perquisites
The Company provides limited personal benefits to certain of our named executive officers for competitive reasons. Mr. C. Pappas, as our CEO,Chief Executive Officer, and Mr. J. Pappas, as our Vice Chairman, are permitted to use the Company’s aircraft in certain instances. In addition, Mr. C. Pappas and Mr. J. Pappas receive a monthly automobile allowance. Our named executive officers also receive tax reimbursements related to imputed income on Company-paid life insurance benefits. These arrangements are discussed in the footnotes to the “Summary Compensation Table - Fiscal Years 2017-20192018-2020.”.
Certain Changes in 20202021 Named Executive Officer Compensation
ConsistentIn fiscal 2020, the Board approved a temporary substitution of the named executive officers' base salaries with time-based restricted share awards of equivalent value until the Board reevaluated such named executive officers' cash compensation for the fiscal 2019,2021. The Compensation Committee restored the named executive officers' base salaries to those levels prior to such temporary substitution as of the first day of fiscal 2021 as described on the Form 8-K filed on December 4, 2020. We did not increase the annual base salaries of our named executive officers for fiscal 2021. Thus, all of our named executive officers will earn the same salary for fiscal 2021 as reported for fiscal 2020 on page 25.
For fiscal 2021, the Compensation Committee, based on peer group data, survey information, input from the advisors to the Compensation Committee and in Februarylight of the continuing COVID Challenges, selected performance measures and weighting for the named executive officers' annual cash incentive compensation program to be (i) combined AEBITDA in the third and fourth quarter of fiscal 2021 and (ii) liquidity and strategic initiatives, each of which are weighted equally. Liquidity and strategic initiatives were further divided equally, each being weighted at 25% of the total target. The maximum payout under the annual cash incentive for the named executive officers was capped at 100% of target.
On December 3, 2020, the Compensation Committee in consultation with FW Cook and management,had approved base salary,the cancellation of a portion of the performance-based cash incentive and LTI compensation increases of 10% (consisting of an increase of (i) 3% on the basis of merit and (ii) 7% as a result of an increase in the Company’s revenue and market capitalization) while retaining the same framework asrestricted stock awards granted in fiscal 2019.
In2019 (other than the component related to stock price which was certified by the Compensation Committee as achieved) and the performance-based restricted share awards granted in fiscal 2020. On February 23, 2021, the Compensation Committee, in light of the significant impact on the global economy, and the food service industry in particular, from the effects of the COVID-19 novel coronavirus, the Company made the following changes in March of 2020 to the compensation arrangements of the named executive officers:
Base Salaries. With the supportsuccess of the named executive officers led by Chief Executive Officer, Mr. C. Pappas, on March 17, 2020,in managing the Board determined, after discussionsCOVID Challenges and to provide retention commensurate with what would have been provided had those performance-based restricted stock awards not been canceled, approved new grants with respect to the number of shares underlying the canceled awards as a component of the named executive officers,officers' restricted share awards granted in fiscal 2021. Unlike the 2019 and 2020 awards that were canceled, these new awards are 50% of the portion of their fiscal 2020 base salaries of the Company’s named executive officers paid after March 22, 2020 would be converted into time-based restricted stock awards that would vest on March 18, 2021 (one year from the date of grant). These time-basedand 50% performance-based restricted stock, awards are consistent with the terms and haveperformance tranche having a maximum payout of 100% of the same restrictions (other than vesting) astarget award (as opposed to a maximum payout of 200% of the time-based restricted stocktarget award). In addition to these new awards, granted to the named executive officers in fiscal 2019. This change is intended to be temporary for fiscal 2020 and will be reevaluated by the Board when determining fiscal 2021 compensation.
As a result of these changes, the named executive officers will have their base salaries paid in cash and in restricted stock for fiscal 2020 as follows:
|
| | | |
Named Executive Officer | 2019 Base Salary ($) | 2019 Cash ($) | Number of Time-Based Restricted Stock Shares(1) |
Christopher Pappas | 927,757 | 573,476 | 98,411 |
John Pappas | 509,850 | 315,155 | 54,082 |
James Leddy | 424,875 | 262,269 | 45,068 |
Alexandros Aldous | 396,550 | 245,120 | 42,064 |
Patricia Lecouras | 309,309 | 191,194 | 32,810 |
| |
(1) | Number of shares based on the closing market price of the Company’s common stock on the date of grant. |
Severance Arrangements. On March 25, 2020, the Compensation Committee approved certain enhancementsannual 2021 LTI awards at the same grant date fair value as the LTI awards granted in fiscal 2020, with the performance-based portion payable up to severance arrangements payable to its current named executive officers, absent a change in control, to provide stability and to help retain management. These changes were documented through severance agreements that provide that, during the term200% of the severance agreement, if the named executive officer is terminated without cause or resigns for good reason not in connectiontarget award (consistent with a change in control of the Company, and subject to an execution of a release of claims, the named executive officer would be entitled to the following:
A cash amount, to be paid in the form of salary continuation, equal to the named executive officer’s base salary and annual bonus for the year of termination multiplied by an applicable severance multiple (2x for Mr. C. Pappas and 1.5x for other named executive officers);
A lump-sum cash payment in lieu of benefits continuation;
A lump-sum cash payment in lieu of reimbursement for outplacement services; and
Any earned but unpaid annual bonus with respect to the year prior to the year of termination.
The severance agreements each have an initial term of two years that automatically renews on an annual basis unless and until terminated by the Board prior to any renewal in accordance with the terms of the severance agreement.
On March 25,fiscal 2020 awards). For fiscal 2021, the Compensation Committee also approved certain changesselected share price (achievement based on ratable interpolation) and AEBITDA (weighted equally) as the performance measures for the performance-based restricted stock awards based on peer group data, survey information, input from the advisors to the Executive CIC Plan for certain senior executivesCompensation Committee and in light of the Company, including the named executive officers. These changes include (i) providing a lump-sum cash amount equal to the named executive officer’s target annual bonus for the year of termination multiplied by the same severance multiple that applies to base salary rather than a payment of a reference bonus (which was the average of the annual bonuses earned for the two calendar years immediately preceding the change in control) multiplied by the same severance multiple that applies to base salary and (ii) adding a lump-sum cash payment in lieu of reimbursement for outplacement services. For more information about the Executive CIC Plan see “continuing COVID Challenges.
Potential Payments upon Termination or Change in Control”.
Tax and Accounting Implications
Our Compensation Committee considers the accounting and tax treatment of executive compensation in determining the amount and form of compensation that we pay our named executive officers. For instance, our Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Code, which generally disallows tax deductions to public companies for certain compensation in excess of $1 million that is paid in any one tax year to our named executive officers (other than the chief financial officer). Prior to the effectiveness of the Tax Cuts and Jobs Act
of 2017 (the “Tax Act”), there was an exception to the $1 million limitation for performance-based compensation meeting certain requirements as defined by the IRS. The Tax Act mandates that for tax periods beginning in 2018, the chief financial officer is no longer excluded from this limitation and performance-based compensation is no longer exempted. Transition rules under the Tax Act will allow certain payments to be deductible based on the pre-Tax Act rules if the payments are made pursuant to binding arrangements in effect as of November 2, 2017.
Annual incentive awards, stock option awards and performance-based restricted stock awards granted for periods through November 2, 2017 were generally structured as performance-based compensation and, as such, are expected to be fully deductible under the grandfather provisions of the Tax Act; however, no assurance can be given that any such compensation will in fact be fully deductible under all circumstances. The Compensation Committee balances the desirability to qualify for such deductibility with the Company’s need to maintain flexibility in compensating executive officers in a manner designed to promote its corporate goals and compensation objectives. As a result, the Compensation Committee may elect to provide compensation that is not deductible in order to achieve these goals and objectives.
The accounting implications of the modifications made to the 2018-2020 performance-based restricted share awards are discussed in further detail in “EXECUTIVE COMPENSATION - Compensation Discussion and Analysis - Components of Named Executive Officer Compensation - Long-Term Equity Compensation - 2018 Awards.”
CEO Stock Ownership Guidelines
To instill an ownership culture, our Board requires that our chief executive officer own shares of our common stock with a value equal to at least six times his annual salary. Our chief executive officer, Mr. C. Pappas, satisfies this requirement.
Hedging, Pledging and Short Sales Policy
Under our Insider Trading Policy, we prohibit hedging and short sales of Company securities by all of our employees and directors and their affiliates. Subject to certain limited exceptions, we also generally prohibit the pledging of Company securities by all of our employees and directors and their affiliates.
Clawback
Participants in our 20192020 Plan are required, at the Company’s request, to return to the Company all or a portion of any awards paid to the participant pursuant to the 20192020 Plan based upon financial information or performance metrics later found to be materially inaccurate. The amount to be recovered will equal the excess amount paid out over the amount that would have been paid out had such financial information or performance metric been fairly stated at the time the payout was made. A similar requirement is included in our 20202021 Cash Incentive Plan. The Company will also make any needed changes to its existing policy as may be required to comply with regulations.
Compensation Committee Report
We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management, as required by Item 402(b) of Regulation S-K. Based on our review and discussions with management, we have recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2019.25, 2020.
The Chefs’ Warehouse, Inc. Compensation Committee
Mr. Guarino (chairman)
Mr. Cerbone
Mr. Cugine
Mr. Lewis
Ms. Oliver
The foregoing Report of the Compensation Committee shall not be considered soliciting material, nor shall it be deemed “filed” for any purpose, including for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section. The Report of the Compensation Committee shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, regardless of any general incorporation language in such filing.
Summary Compensation Table – Fiscal Years 2017-20192018-2020
The table below summarizes the compensation paid or accrued by us during the fiscal years indicated for our chief executive officer, chief financial officer, and each of our next three highest paid executive officers whose total compensation exceeded $100,000 for fiscal 2019.2020. |
| | | | | | | | | | |
Name and Principal Position | Year | Salary ($) | | Bonus ($) | | Stock Awards(1) ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation(2) ($) | All Other Compensation(3) ($) | Total ($) |
Christopher Pappas | 2019 | 855,383 | | — | | 1,785,047 | — | 413,274 | 144,159 | 3,197,863 |
Chief Executive Officer | 2018 | 849,016 | | — |
| 818,865 | — | 585,478 | 102,837 | 2,356,196 |
| 2017 | 792,000 |
| — | | — | — | 636,000 | 107,875 | 1,535,875 |
John Pappas | 2019 | 470,077 |
| — | | 980,941 | — | 227,115 | 60,258 | 1,738,391 |
Vice Chairman | 2018 | 466,401 | | — |
| 449,981 | — | 321,750 | 58,322 | 1,296,454 |
| 2017 | 395,000 |
| — | | — | — | 316,000 | 39,260 | 750,260 |
James Leddy | 2019 | 391,731 | | — | | 613,134 | — | 141,947 | 5,413 | 1,152,225 |
Chief Financial Officer | 2018 | 397,665 | | — | | 281,255 | — | 197,500 | 5,402 | 881,822 |
| 2017 | 89,451 | | 100 | | 88,109 | — | 45,478 | 686 | 223,824 |
Alexandros Aldous | 2019 | 365,615 | | — | | 572,233 | — | 132,484 | 7,073 | 1,077,405 |
General Counsel | 2018 | 366,663 | | — | | 262,493 | — | 187,688 | 6,872 | 823,716 |
| 2017 | 325,000 | | 20,000 | | 243,759 | — | 215,000 | 5,916 | 809,675 |
Patricia Lecouras | 2019 | 285,180 |
| — | | 446,346 | — | 103,337 | 7,978 | 842,841 |
Chief Human Resources Officer | 2018 | 288,606 | | — | | 204,763 | — | 146,396 | 8,358 | 648,123 |
| 2017 | 262,961 |
| — | | 198,742 | — | 159,000 | 7,618 | 628,321 |
| |
(1) | Reflects the aggregate grant date fair value of our awards to certain of our named executive officers of restricted shares of our common stock and performance-based vesting restricted stock consistent with FASB Accounting Standards Codification Topic 718 “Compensation-Stock Compensation” (“ASC Topic 718”). The grant date fair value for the awards of time-based restricted stock was determined by taking the closing market price of the Company’s common stock on the date of grant (or the last day on which there was a closing market price of our common stock when grants were made on days when there was no trading in our common stock) and multiplying it by the number of shares awarded. The assumptions made, if any, when calculating the amounts in this column are found in Note 10 to the Consolidated Financial Statements of the Company, as filed with the SEC on Form 10-K for 2019. The grant date fair value for awards of performance-based restricted stock reflects payouts at “target” levels of performance. The amounts reported in the Summary Compensation Table for the performance-based vesting restricted stock are the values at the grant date under applicable accounting principles, which take into account the probable outcome of the performance conditions. Consequently, these values differ from the nominal amount of the awards made by the Compensation Committee, which is divided by the Company’s common stock price as determined on the grant date to yield a number of performance-based vesting restricted stock. The values of the Performance Share Units at the 2019 grant date shown in the 2019 Summary Compensation Table, assuming that the highest levels of performance conditions are achieved, are: Mr. C. Pappas, $1,433,811, Mr. J. Pappas, $787,959, Mr. Leddy, $492,478, Mr. Aldous, $461,951, and Ms. Lecouras, $358,525. |
| |
(2) | Amounts reflect those amounts earned by the named executive officer under our performance-based, annual cash incentive compensation program, which for fiscal 2019 was settled in time-vesting restricted stock in 2020. For a description of this program including the stock grant with respect to fiscal 2019, please see the “EXECUTIVE COMPENSATION - Compensation Discussion and Analysis - Components of Named Executive Officer Compensation - Annual Cash Incentive Compensation” above.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | Year | Salary(1) ($) | | Bonus ($) | | Stock Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | All Other Compensation(4) ($) | Total ($) |
Christopher Pappas | 2020 | 941,428 | | — | | 2,319,943 | 463,878 | 79,743 | 3,804,992 |
Chief Executive Officer | 2019 | 855,383 | | — |
| 1,785,047 | 413,274 | 144,159 | 3,197,863 |
| 2018 | 849,016 |
| — | | 818,865 | 585,478 | 102,837 | 2,356,196 |
John Pappas | 2020 | 517,362 |
| — | | 1,274,910 | 254,925 | 40,098 | 2,087,295 |
Vice Chairman | 2019 | 470,077 | | — |
| 980,941 | 227,115 | 60,258 | 1,738,391 |
| 2018 | 466,401 |
| — | | 449,981 | 321,750 | 58,322 | 1,296,454 |
James Leddy | 2020 | 431,136 | | — | | 796,798 | 159,328 | 18,055 | 1,405,317 |
Chief Financial Officer | 2019 | 391,731 | | — | | 613,134 | 141,947 | 5,413 | 1,152,225 |
| 2018 | 397,665 | | — | | 281,255 | 197,500 | 5,402 | 881,822 |
Alexandros Aldous | 2020 | 402,393 | | — | | 743,714 | 148,706 | 10,013 | 1,304,826 |
General Counsel | 2019 | 365,615 | | — | | 572,233 | 132,484 | 7,073 | 1,077,405 |
| 2018 | 366,663 | | — | | 262,493 | 187,688 | 6,872 | 823,716 |
Patricia Lecouras | 2020 | 319,815 |
| — | | 580,112 | 115,991 | 11,497 | 1,027,415 |
Chief Human Resources Officer | 2019 | 285,180 | | — | | 446,346 | 103,337 | 7,978 | 842,841 |
| 2018 | 288,606 |
| — | | 204,763 | 146,396 | 8,358 | 648,123 |
30(1)In fiscal 2020, our named executive officers received time-based restricted stock shares in lieu of 50% of salary for the period following March 22, 2020. The number of time-based restricted stock shares received by our named executive officers includes: Mr. C. Pappas, 98,411, Mr. J. Pappas, 54,082, Mr. Leddy, 45,068, Mr. Aldous, 42,064, and Ms. Lecouras, 32,810.
| |
(3) | The following table breaks out the components of the “All Other Compensation” paid to our named executive officers in fiscal 2019: |
(2)Reflects awards granted in 2020 (a significant portion of which were canceled later in 2020), as well as incremental fair value as determined under accounting rules related to awards granted in 2018, which such awards were already included in the amount shown in this column for 2018. For awards granted in 2020, the aggregate grant date fair value of our awards to our named executive officers of restricted shares of our common stock and performance-based vesting restricted stock were consistent with FASB Accounting Standards Codification Topic 718 “Compensation-Stock Compensation” (“ASC Topic 718”). The grant date fair value for the awards of time-based restricted stock was determined by taking the closing market price of the Company’s common stock on the date of grant (or the last day on which there was a closing market price of our common stock when grants were made on days when there was no trading in our common stock) and multiplying it by the number of shares awarded. The assumptions made, if any, when calculating the amounts in this column are found in Note 11 to the Consolidated Financial Statements of the Company, as filed with the SEC on Form 10-K for 2020. The grant date fair value for awards of performance-based restricted stock reflects payouts at “target” levels of performance. The amounts reported in the Summary Compensation Table for the performance-based vesting restricted stock granted in 2020 are the values at the grant date under applicable accounting principles, which take into account the probable outcome of the performance conditions. Consequently, these values differ from the total amount of the awards made by the Compensation Committee, which is divided by the Company’s common stock price as determined on the grant date to yield a number of performance-based vesting restricted stock. Assuming that the highest levels of performance conditions are achieved, the values of the performance-based restricted stock granted in fiscal 2020 and measured as of the 2020 grant date were: Mr. C. Pappas, $1,577,169, Mr. J. Pappas, $866,745, Mr. Leddy, $541,728, Mr. Aldous, $505,626, and Ms. Lecouras, $394,383. With respect to the 2018 awards, the values reflect incremental fair value due to determining that the performance-based conditions of these restricted stock awards were achieved at 83% of target, which is considered a modification effective as of December 3, 2020. Incremental fair value in the following amounts was recognized as an expense in accordance with ASC Topic 718 and is reflected in the stock awards column for 2020: Mr. C. Pappas, $509,119, Mr. J. Pappas, $279,775, Mr. Leddy, $174,856, Mr. Aldous, $163,187, and Ms. Lecouras, $127,310. In light of the COVID Challenges, the performance-based restricted stock awards granted to our named executive officers on February 25, 2019 |
| | | | | | | | |
Name | Medical, Dental and Vision Insurance Premiums(a) ($) | Life Insurance Premiums(b) ($) | Tax Reimbursement(c) ($) | Short-Term Disability Insurance Premiums(d) ($) | 401(k) Plan Match(e) ($) | Auto(f) ($) | Aircraft(g) ($) | Total ($) |
Christopher Pappas | 12,388 | 367 | 2,021 | 231 | 2,500 | 24,000 | 102,652 | 144,159 |
John Pappas | 12,388 | 367 | 1,317 | 231 | 2,500 | 24,000 | 19,455 | 60,258 |
James Leddy | 3,498 | 367 | 1,317 | 231 | — | — | — | 5,413 |
Alexandros Aldous | 3,699 | 367 | 276 | 231 | 2,500 | — | — | 7,073 |
Patricia Lecouras | 3,038 | 345 | 1,864 | 231 | 2,500 | — | — | 7,978 |
| |
(a) | This amount reflects each named executive officer’s portion of the premiums for such individual and his or her family’s medical, dental and vision insurance that we pay on such individual’s behalf. |
| |
(b) | This amount reflects premiums we pay for each named executive officer’s group term life insurance. |
| |
(c) | This amount reflects reimbursement of taxes incurred by the named executive officer on group term life insurance premium payments reported in column (b). |
| |
(d) | This amount reflects the premiums we pay for each named executive officer’s short-term disability insurance. |
| |
(e) | This amount reflects our matching contribution to each named executive officer’s 401(k) plan. |
| |
(f) | Mr. C. Pappas and Mr. J. Pappas each received a monthly car allowance of $2,000 during fiscal 2019. |
| |
(g) | Per IRS regulations, our chief executive officer and vice chairman recognize imputed income on the personal use of the Company’s aircraft. For SEC disclosure purposes, the cost of personal use of the Company’s aircraft is calculated based on the incremental cost to the Company. To determine the incremental cost, we calculate the variable fuel cost by multiplying flight time by the average hourly fuel cost per flight, plus any direct trip expenses such as aircraft landing and parking fees and crew expenses. Fixed costs that do not change based on usage, such as pilot salaries, aircraft and hangar lease expenses, maintenance costs, in-flight Internet, and aircraft insurance costs, are excluded from this amount. |
and February 25, 2020 were canceled, except with respect to the non-market price based portion of the award granted on February 25, 2019, which was achieved. See “EXECUTIVE COMPENSATION - Compensation Discussion and Analysis – Components of Named Executive Officer Compensation - Long-Term Equity Compensation” for a more detailed description of these awards. The table below (which is not meant to be a replacement of the Summary Compensation Table) reflects what the compensation of the named executive officers in fiscal 2020 would be if the following, which are included in the Summary Compensation Table, were not included as compensation for fiscal 2020: (i) the amounts relating to incremental fair value of the modified awards and (ii) the value of the 2020 performance-based restricted stock awards that were canceled during fiscal 2020:
| | | | | | | | | | | | | | | | | | | | |
Name | Salary ($) | Bonus ($) | Stock Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) |
Christopher Pappas | 941,428 | — | 927,762 | 463,878 | 79,743 | 2,412,811 |
John Pappas | 517,362 | — | 509,850 | 254,925 | 40,098 | 1,322,235 |
James Leddy | 431,136 | — | 318,648 | 159,328 | 18,055 | 927,167 |
Alexandros Aldous | 402,393 | — | 297,429 | 148,706 | 10,013 | 858,541 |
Patricia Lecouras | 319,815 | — | 231,990 | 115,991 | 11,497 | 679,293 |
(3) Amounts reflect those amounts earned by the named executive officer under our performance-based, annual cash incentive compensation program. For a description of this program, please see the “EXECUTIVE COMPENSATION - Compensation Discussion and Analysis - Components of Named Executive Officer Compensation - Annual Cash Incentive Compensation” above.
(4) The following table breaks out the components of the “All Other Compensation” paid to our named executive officers in fiscal 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | Medical, Dental and Vision Insurance Premiums(a) ($) | Life Insurance Premiums(b) ($) | Tax Reimbursement(c) ($) | Short-Term Disability Insurance Premiums(d) ($) | 401(k) Plan Match(e) ($) | Auto(f) ($) | Aircraft(g) ($) | | Total ($) |
Christopher Pappas | 18,528 | 360 | 1,980 | 227 | 2,500 | 24,000 | 32,148 | | 79,743 |
John Pappas | 11,721 | 360 | 1,290 | 227 | 2,500 | 24,000 | — | | 40,098 |
James Leddy | 16,178 | 360 | 1,290 | 227 | — | — | — | | 18,055 |
Alexandros Aldous | 6,626 | 360 | 300 | 227 | 2,500 | — | — | | 10,013 |
Patricia Lecouras | 6,626 | 360 | 1,980 | 227 | 2,304 | — | — | | 11,497 |
(a) This amount reflects each named executive officer’s portion of the premiums for such individual and his or her family’s medical, dental and vision insurance that we pay on such individual’s behalf.
(b) This amount reflects premiums we pay for each named executive officer’s group term life insurance.
(c) This amount reflects reimbursement of taxes incurred by the named executive officer on group term life insurance premium payments reported in column (b).
(d) This amount reflects the premiums we pay for each named executive officer’s short-term disability insurance.
(e) This amount reflects our matching contribution to each named executive officer’s 401(k) plan.
(f) Mr. C. Pappas and Mr. J. Pappas each received a monthly car allowance of $2,000 during fiscal 2020.
(g) Per IRS regulations, our chief executive officer and vice chairman recognize imputed income on the personal use of the Company’s aircraft. For SEC disclosure purposes, the cost of personal use of the Company’s aircraft is calculated based on the incremental cost to the Company. To determine the incremental cost, we calculate the variable fuel cost by multiplying flight time by the average hourly fuel cost per flight, plus any direct trip expenses such as aircraft landing and parking fees and crew expenses. Fixed costs that do not change based on usage, such as pilot salaries, aircraft and hangar lease expenses, maintenance costs, in-flight Internet, and aircraft insurance costs, are excluded from this amount.
Fiscal 20192020 Grants of Plan-Based Awards
We granted cash and equity-based awards to our named executive officers in fiscal 2019.2020. The following table provides information about plan-based awards granted to the named executive officers during fiscal 2019:2020: | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)(2) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)(2) | | Estimated Future Payouts Under Equity Incentive Plan Awards | | All Other Stock Awards | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)(2) | | Estimated Future Payouts Under Equity Incentive Plan Awards | | All Other Stock Awards |
Name | Grant Date | | Threshold | Target ($) | Maximum ($) | | Threshold (#) | Target (#) | Maximum (#) | | Number of Shares of Stock or Units(5) (#) | | Grant Date Fair Value of Equity Awards(6) ($) | Name | Grant Date | | Threshold | Target ($) | Maximum ($) | | Threshold (#) | Target (#) | Maximum (#) | | Number of Shares of Stock or Units (#) | | Grant Date Fair Value of Equity Awards(8) ($) |
Christopher Pappas | | — | 843,415 | 1,686,830 | | | | | Christopher Pappas | | — | 927,757 | 1,855,514 | | | | |
| | | 2/25/2020 | (3) | | 2,460 | 19,680 | 39,359 | | 649,440 |
| | | 2/25/2020 | (4) | | — | 8,434 | | 233,622 |
| 5/17/2019 | (3) | | 2,299 | 18,393 | 36,786 | | 637,501 | | 2/25/2020 | | (5) | 28,114 | | 927,762 |
| 5/17/2019 | (4) | | — | 7,882 | | 236,854 | | 3/18/2020 | | (6) | 98,411 | | 354,281 |
| 5/17/2019 | | 26,275 | | 910,692 | | 12/3/2020 | | (7) | 20,463 | | 509,119 |
| | |
John Pappas | | — | 463,500 | 927,000 | | John Pappas | | — | 509,850 | 1,019,701 | |
| 5/17/2019 | (3) | | 1,263 | 10,107 | 20,214 | | 350,309 | | 2/25/2020 | (3) | | 1,352 | 10,815 | 21,630 | | 356,895 |
| 5/17/2019 | (4) | | — | 4,332 | | 130,177 | | 2/25/2020 | (4) | | — | 4,635 | | 128,390 |
| 5/17/2019 | | 14,439 | | 500,456 | | 2/25/2020 | | (5) | 15,450 | | 509,850 |
| | | 3/18/2020 | | (6) | 54,082 | | 194,695 |
| | | 12/3/2020 | | (7) | 11,245 | | 279,775 |
| James Leddy | | — | 289,688 | 579,376 | | James Leddy | | — | 318,656 | 637,312 | |
| | | 2/25/2020 | (3) | | 845 | 6,759 | 13,519 | | 223,047 |
| | | 2/25/2020 | (4) | | — | 2,897 | | 80,247 |
| 5/17/2019 | (3) | | 790 | 6,318 | 12,636 | | 218,982 | | 2/25/2020 | | (5) | 9,656 | | 318,648 |
| 5/17/2019 | (4) | | — | 2,707 | | 81,345 | | 3/18/2020 | | (6) | 45,068 | | 162,246 |
| 5/17/2019 | | 9,025 | | 312,807 | | 12/3/2020 | | (7) | 7,028 | | 174,856 |
| | |
Alexandros Aldous | | — | 270,375 | 540,750 | | Alexandros Aldous | | — | 297,413 | 594,826 | |
| 5/17/2019 | (3) | | 737 | 5,896 | 11,792 | | 204,355 | | 2/25/2020 | (3) | | 789 | 6,309 | 12,618 | | 208,197 |
| 5/17/2019 | (4) | | — | 2,527 | | 75,936 | | 2/25/2020 | (4) | | — | 2,704 | | 74,901 |
| 5/17/2019 | | 8,423 | | 291,941 | | 2/25/2020 | | (5) | 9,013 | | 297,429 |
| | | 3/18/2020 | | (6) | 42,064 | | 151,430 |
| | | 12/3/2020 | | (7) | 6,559 | | 163,187 |
| Patricia Lecouras | | — | 210,893 | 421,786 | | Patricia Lecouras | | — | 231,982 | 463,964 | |
| 5/17/2019 | (3) | | 575 | 4,599 | 9,198 | | 159,401 | | 2/25/2020 | (3) | | 615 | 4,921 | 9,842 | | 162,393 |
| 5/17/2019 | (4) | | — | 1,971 | | 59,229 | | 2/25/2020 | (4) | | — | 2,109 | | 58,419 |
| 5/17/2019 | | 6,570 | | 227,716 | | 2/25/2020 | | (5) | 7,030 | | 231,990 |
| | | 3/18/2020 | | (6) | 32,810 | | 118,115 |
| | | 12/03/2020 | | (7) | 5,117 | | 127,310 |
|
| |
(1) | Represents the possible performance-based, cash incentive award payments pursuant to our 2019 Plan. For a description of the 2019 Plan and awards made pursuant thereto, see “EXECUTIVE COMPENSATION - Compensation Discussion and Analysis - Components of Named Executive Officer Compensation - Annual Cash Incentive Compensation” beginning on page 23 of this proxy statement, and for a description of the payments actually made pursuant to the 2019 Plan, see “EXECUTIVE COMPENSATION - Summary Compensation Table - Fiscal Years 2017-2019 ” beginning on page 31 of this proxy statement.
|
| |
(2) | There were no threshold payouts under the 2019(1)Represents the possible performance-based, cash incentive award payments pursuant to our 2020 Plan. For a description of the 2020 Plan and awards made pursuant thereto, see “EXECUTIVE COMPENSATION - Compensation Discussion and Analysis - Components of Named Executive Officer Compensation - Annual Cash Incentive Compensation” beginning on page 25 of this proxy statement, and for a description of the payments actually made pursuant to the 2020 Plan, see “EXECUTIVE COMPENSATION - Summary Compensation Table - Fiscal Years 2018-2020 ” beginning on page 33 of this proxy statement. (2)There were no threshold payouts under the 2020 Plan, as the possible performance-based, cash incentive award payments under the 2020 Plan were to be paid on a sliding scale basis from $0 up to a certain percentage of a named executive officer’s fiscal 2020 annual base salary based on our achievement of certain revenue or AEBITDA targets. These sliding scale payments and the related revenue and AEBITDA targets are described more fully under “EXECUTIVE COMPENSATION - Compensation Discussion and Analysis -
Components of Named Executive Officer Compensation - Annual Cash Incentive Compensation” beginning on page 25 of this proxy statement. (3)Although these grants were later canceled, the amounts shown in these rows marked (3) reflect threshold, target and maximum performance for the performance-based restricted share award granted pursuant to the 2019 Equity Incentive Plan. The forfeiture restrictions associated with these restricted stock awards would have immediately lapsed upon the Compensation Committee’s certification of the attainment of the two targets, related to AEBITDA and ROIC, for the performance period beginning at the start of fiscal 2020 and ending at the conclusion of fiscal 2022, provided that the grantee provided continuous service through the applicable vesting date and further provided that the additional conditions and performance criteria related to AEBITDA and ROIC for the performance period ending at the conclusion of fiscal 2022 were met, as set forth in the grantee’s performance-based vesting restricted share award agreement. (4)Although these grants were later canceled, the amounts shown in these rows marked (4) reflect threshold, target and maximum performance for the performance-based, market-based restricted share award granted pursuant to the 2019 Equity Incentive Plan. There were no threshold payouts with respect to the performance-based, market-based restricted share awards, as the possible performance-based, market-based award payments under the 2019 Plan were to be paid on a sliding scale basis from $0 up to a certain percentage of a named executive officer’s fiscal 2019 annual base salary based on our achievement of certain revenue or AEBITDA targets. These sliding scale payments and the related revenue and AEBITDA targets are described more fully under “EXECUTIVE COMPENSATION - Compensation Discussion and Analysis - Components of Named Executive Officer Compensation - Annual Cash Incentive Compensation” beginning on page 23 of this proxy statement. |
| |
(3) | The amounts shown in these rows marked (3) reflect threshold, target and maximum performance for the performance-based restricted share award granted pursuant to the 2019 Equity Incentive Plan. The forfeiture restrictions associated with these restricted stock awards will immediately lapse upon the Compensation Committee’s certification of the attainment of the two targets, related to AEBITDA and ROIC, for the performance period beginning at the start of fiscal 2019 and ending at the conclusion of fiscal 2021, provided that the grantee provides continuous service through the applicable vesting date and further provided that the additional conditions and performance criteria related to AEBITDA and ROIC for the performance period ending at the conclusion of fiscal 2021 are met, as set forth in the grantee’s performance-based vesting restricted share award agreement. |
| |
(4) | The amounts shown in these rows marked (4) reflect threshold, target and maximum performance for the performance-based, market-based restricted share award granted pursuant to the 2019 Equity Incentive Plan. There were no threshold payouts with respect to the performance-based, market-based restricted share awards, as the possible performance-based, market-based award payments under the |
2019 Equity Incentive Plan were to be either achieved or not achieved, with non-achievement resulting in attainment of zero shares under such award vesting and achievement resulting in attainment of all of the shares under such award vesting. The forfeiture restrictions associated with these restricted stock awards will immediately lapse upon the Compensation Committee’s certification that the Company's common stock price was at least $36.92,$37.95, based on an average of 20 consecutive trading days, at any time during the three-year performance period beginning upon the grant date and ending fiscal 20212022 and provided that the grantee provides continuous service through the applicable vesting date.
| |
(5) | The forfeiture restrictions associated with these restricted share awards will lapse in one-third increments on February 25, 2020 through 2022. |
| |
(6) | The aggregate grant date fair value is computed in accordance with ASC Topic 718. For awards that are subject to performance conditions, the amounts included in this column are the full fair value at the grant date based on the probable outcome with respect to the satisfaction of the performance condition consistent with the recognition criteria in FASB ASC Topic 718 (excluding the effect of estimated forfeitures). |
(5)Although these grants were later canceled, the forfeiture restrictions associated with these restricted share awards would have lapsed in one-third increments on February 25, 2021 through 2023. (6)In fiscal 2020, our named executive officers received time-based restricted stock shares in lieu of 50% of salary for the period following March 22, 2020. The forfeiture restrictions associated with these restricted share awards lapsed with respect to the entirety of the grant on March 18, 2021.
(7)Amounts represent the number of shares that vested in 2020 as a result of the modifications of the 2018 performance-based restricted stock awards, as discussed in more detail in footnote 1 to the “Summary Compensation Table - Fiscal Years 2018-2020.”
(8)The aggregate grant date fair value is computed in accordance with ASC Topic 718. For awards that are subject to performance conditions, the amounts included in this column are the full fair value at the grant date based on the probable outcome with respect to the satisfaction of the performance condition consistent with the recognition criteria in FASB ASC Topic 718 (excluding the effect of estimated forfeitures). With respect to the awards shown as granted on December 3, 2020, the amounts reflect the incremental fair value of those awards computed in accordance with ASC Topic 718, as discussed in more detail in footnote 1 to the “Summary Compensation Table - Fiscal Years 2018-2020.”
Outstanding Equity Awards at 20192020 Fiscal Year End
The table below summarizes the amount of unvested time-based vesting and performance-based vesting restricted stock awards granted for each named executive officer as of December 27, 2019.25, 2020. The vesting schedule for each grant can be found in the footnotes to this table, based on the grant date. We have not issued stock options in fiscal 20192020 to any of our named executive officers. For additional information on our equity awards, see “EXECUTIVE COMPENSATION - Compensation Discussion and Analysis - Components of Fiscal 20192020 Compensation for Our Named Executive Officers - Long-Term Equity Compensation” on page 2527 of this proxy statement.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | OPTION AWARDS | | STOCK AWARDS |
Name | | Equity Incentive Plan Award: Number of Securities Underlying Unexercised Options (#) | | | Option Exercise Price ($) | Option Expiration Date | | Number of Shares of Stock That Have Not Vested (#) | | Market Value of Shares of Stock That Have Not Vested(1) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) ($) |
Christopher Pappas | | 95,908 | (2) | | 20.23 | 3/7/2026 | | — | | — | — | | — |
| | | | | | | | 162,275 | (3) | 3,876,750 | — | | — |
| | | | | | | | 17,517 | (4) | 418,481 | 7,882 | (13) | 188,301 |
| | | | | | | | | | | | | |
John Pappas | | — | | | — | | | 89,179 | (5) | 2,130,486 | — | | — |
| | | | | | | | 9,627 | (6) | 229,989 | 4,332 | (13) | 103,491 |
James Leddy | | — | | | — | | | 67,003 | (7) | 1,600,702 | — | | — |
| | | | | | | | 6,767 | (8) | 161,664 | 2,707 | (13) | 64,670 |
| | | | | | | | | | | | | |
Alexandros Aldous | | — | | | — | | | 62,538 | (9) | 1,494,033 | — | | — |
| | | | | | | | 5,616 | (10) | 134,166 | 2,527 | (13) | 60,370 |
| | | | | | | | | | | | | |
Patricia Lecouras | | — | | | — | | | 48,779 | (11) | 1,165,330 | — | | — |
| | | | | | | | 4,381 | (12) | 104,662 | 1,971 | (13) | 47,087 |
|
| | | | | | | | | | | | | |
| OPTION AWARDS | | STOCK AWARDS(1) |
Name | Equity Incentive Plan Award: Number of Securities Underlying Unexercised Options (#) | | Option Exercise Price ($) | Option Expiration Date | | Number of Shares of Stock That Have Not Vested (#) | | Market Value of Shares of Stock That Have Not Vested(2) ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) ($) |
Christopher Pappas | 95,908 | (3) | 20.23 | 3/7/2026 | | — | | — | | — | | — |
| | | | | | 26,275 | (4) | 997,662 | | 26,275 | (10) | 997,662 |
| | | | | | 7,045 | (5) | 267,499 | | 24,654 | (11) | 936,112 |
John Pappas | | | | | | 14,349 | (4) | 544,832 | | 14,439 | (10) | 548,249 |
| | | | | | 3,871 | (6) | 146,982 | | 13,548 | (12) | 514,418 |
James Leddy | — | | — | | | 9,025 | (4) | 342,679 | | 9,025 | (10) | 342,679 |
| | | | | | 4,101 | (7) | 155,715 | | 9,721 | (13) | 369,106 |
Alexandros Aldous | — | | — | | | 8,423 | (4) | 319,821 | | 8,423 | (10) | 319,821 |
| | | | | | 4,887 | (8) | 185,559 | | 19,471 | (14) | 739,314 |
Patricia Lecouras | — | | — | | | 6,570 | (4) | 249,463 | | 6,570 | (10) | 249,463 |
| | | | | | 3,921 | (9) | 148,880 | | 15,597 | (15) | 592,218 |
| |
(1) | This table reflects outstanding awards as of December 27, 2019 and does not include the following time-vesting restricted stock granted with respect to payment of bonuses under the 2019 Plan: 35,750 shares of our common stock for Mr. C. Pappas; 19,647 shares of our common stock for Mr. J. Pappas; 12,279 shares of our common stock for Mr. Leddy; 11,461 shares of our common stock for Mr. Aldous; and 8,939 shares of our common stock for Ms. Lecouras. |
| |
(2) | The value presented in the table is equal to the product of the number of shares that had not vested as of the last trading day of fiscal 2019 (December 27, 2019), which was $37.97. |
| |
(3) | The price-based stock options became exercisable during fiscal 2019 as the Company achieved the $30 stock price hurdle (based on an average of 20 consecutive trading days) and the third anniversary of the grant date had occurred, both requirements to exercise; in addition, the price-based stock options remain subject to the reporting person’s non-qualified stock option agreement. |
| |
(4) | The forfeiture restrictions associated with this time-based restricted stock award granted in fiscal 2019 will lapse in one-third increments as of the first through third anniversary dates of the service-inception date (February 25, 2019). |
| |
(5) | Includes 7,045 shares of time-based vesting restricted stock awarded prior to fiscal 2019 that were unvested at the end of fiscal 2019 consisting of: 3,522 shares which vested on March 5, 2020 and 3,523 shares which will vest on March 5, 2021. |
| |
(6) | Includes 3,871 shares of time-based vesting restricted stock awarded prior to fiscal 2019 that were unvested at the end of fiscal 2019 consisting of: 1,935 shares which vested on March 5, 2020 and 1,936 shares which will vest on March 5, 2021. |
| |
(7) | Includes 4,101 shares of time-based vesting restricted stock awarded prior to fiscal 2019 that were unvested at the end of fiscal 2019 consisting of: 1,210 shares which vested on March 5, 2020; 181 shares which vested on March 6, 2020; 750 shares which will vest on September 11, 2020; 1,210 shares which will vest March 5, 2021; and 750 shares which will vest on September 11, 2020. |
| |
(8) | Includes 4,887 shares of time-based vesting restricted stock awarded prior to fiscal 2019 that were unvested at the end of fiscal 2019 consisting of: 1,129 shares which vested on March 5, 2020; 1,654 shares which vested on March 6, 2020; 974 shares which vested on March 7, 2020; and 1,130 shares which will vest on March 5, 2021. |
| |
(9) | Includes 3,921 shares of time-based vesting restricted stock awarded prior to fiscal 2019 that were unvested at the end of fiscal 2019 consisting of: 881 shares which vested on March 5, 2020; 1,348 shares which vested on March 6, 2020; 811 shares which vested on March 7, 2020; and 881 shares which will vest on March 5, 2021. |
| |
(10) | The unearned performance-based restricted stock awarded in fiscal 2019 will vest, to the extent earned, following the three-year performance period ending in fiscal 2021. |
| |
(11) | Includes 24,654 shares of unearned performance-based restricted stock awarded in fiscal 2018 which will vest, to the extent earned, following the three-year performance period ending in fiscal 2020. |
| |
(12) | Includes 13,548 shares of unearned performance-based restricted stock awarded in fiscal 2018 which will vest, to the extent earned, following the three-year performance period ending in fiscal 2020. |
| |
(13) | Includes (i) 8,468 shares of unearned performance-based restricted stock awarded in fiscal 2018 which will vest, to the extent earned, following the three-year performance period ending in fiscal 2020 and (ii) 1,253 shares of unearned performance-based restricted stock awarded in fiscal 2017 which will vest, to the extent earned, following the three-year performance period ending in fiscal 2019. On February 3, 2020, the Compensation Committee certified achievement of certain of the performance targets with respect to the performance-based restricted stock awarded for the three-year performance period ending in fiscal 2019. |
| |
(14) | Includes (i) 7,903 shares of unearned performance-based restricted stock awarded in fiscal 2018 which will vest, to the extent earned, following the three-year performance period ending in fiscal 2020 and (ii) 11,568 shares of unearned performance-based restricted stock awarded in fiscal 2017 which will vest, to the extent earned, following the three-year performance period ending in fiscal 2019. On February 3, 2020, the Compensation Committee certified achievement of certain of the performance targets with respect to the performance-based restricted stock awarded for the three-year performance period ending in fiscal 2019. |
| |
(15) | Includes (i) 6,165 shares of unearned performance-based restricted stock awarded in fiscal 2018 which will vest, to the extent earned, following the three-year performance period ending in fiscal 2020 and (ii) 9,432 shares of unearned performance-based restricted stock awarded in fiscal 2017 which will vest, to the extent earned, following the three-year performance period ending in fiscal 2019. On February 3, 2020, the Compensation Committee certified achievement of certain of the performance targets with respect to the performance-based restricted stock awarded for the three-year performance period ending in fiscal 2019. |
(1)The value presented in the table is equal to the product of the number of shares that had not vested as of the last trading day of fiscal 2020 (December 25, 2020) and the closing price of our common stock on such date, which was $23.89.
(2)The price-based stock options became exercisable during fiscal 2019 as the Company achieved the $30 stock price hurdle (based on an average of 20 consecutive trading days) and the third anniversary of the grant date had occurred, both requirements to exercise; in addition, the price-based stock options remain subject to the reporting person’s non-qualified stock option agreement.
(3)These 162,275 shares of time-based vesting restricted stock awarded in fiscal 2020 include: (i) 28,114 shares with forfeiture restrictions which will lapse in one-third increments on the first through third anniversary dates of the service-inception date (February 25, 2020); (ii) 98,411 shares with forfeiture restrictions which will lapse on the first anniversary date of the service-inception date (March 18, 2020); and (iii) 35,750 shares with forfeiture restrictions which will lapse in one-half increments on the first and second anniversary dates of the service-inception date (March 25, 2020).
(4)These 17,517 shares of time-based vesting restricted stock awarded prior to fiscal 2020 that were unvested at the end of fiscal 2020 include: 8,758 shares which vested on February 25, 2021 and 8,759 shares which will vest on February 25, 2022.
(5)These 89,179 shares of time-based vesting restricted stock awarded in fiscal 2020 include: (i) 15,450 shares with forfeiture restrictions which will lapse in one-third increments on the first through third anniversary dates of the service-inception date (February 25, 2020); (ii) 54,082 shares with forfeiture restrictions which will lapse on the first anniversary date of the service-inception date (March 18, 2020); and (iii) 19,647 shares with forfeiture restrictions which will lapse in one-half increments on the first and second anniversary dates of the service-inception date (March 25, 2020).
(6)These 9,627 shares of time-based vesting restricted stock awarded prior to fiscal 2020 that were unvested at the end of fiscal 2020 include: 4,812 shares which vested on February 25, 2021 and 4,815 shares which will vest on February 25, 2022.
(7)These 67,003 shares of time-based vesting restricted stock awarded in fiscal 2020 include: (i) 9,656 shares with forfeiture restrictions which will lapse in one-third increments on the first through third anniversary dates of the service-inception date (February 25, 2020); (ii) 45,068 shares with forfeiture restrictions which will lapse on the first anniversary date of the service-inception date (March 18, 2020); and (iii) 12,279 shares with forfeiture restrictions which will lapse in one-half increments on the first and second anniversary dates of the service-inception date (March 25, 2020).
(8)These 6,767 shares of time-based vesting restricted stock awarded prior to fiscal 2020 that were unvested at the end of fiscal 2020 include: 3,008 shares which vested on February 25, 2021; 750 shares which will vest on September 11, 2021; and 3,009 shares which will vest on February 25, 2022.
(9)These 62,538 shares of time-based vesting restricted stock awarded in fiscal 2020 include: (i) 9,013 shares with forfeiture restrictions which will lapse in one-third increments on the first through third anniversary dates of the service-inception date (February 25, 2020); (ii) 42,064 shares with forfeiture restrictions which will lapse on the first anniversary date of the service-inception date (March 18, 2020); and (iii) 11,461 shares with forfeiture restrictions which will lapse in one-half increments on the first and second anniversary dates of the service-inception date (March 25, 2020).
(10)These 5,616 shares of time-based vesting restricted stock awarded prior to fiscal 2020 that were unvested at the end of fiscal 2020 include: 2,807 shares which vested on February, 25, 2021 and 2,809 shares which will vest on February 25, 2022.
(11)These 48,779 shares of time-based vesting restricted stock awarded in fiscal 2020 include: (i) 7,030 shares with forfeiture restrictions which will lapse in one-third increments on the first through third anniversary dates of the service-inception date (February 25, 2020); (ii) 32,810 shares with forfeiture restrictions which will lapse on the first anniversary date of the service-inception date (March 18, 2020); and (iii) 8,939 shares with forfeiture restrictions which will lapse in one-half increments on the first and second anniversary dates of the service-inception date (March 25, 2020).
(12)These 4,381 shares of time-based vesting restricted stock awarded prior to fiscal 2020 that were unvested at the end of fiscal 2020 include: 2,189 shares which vested on February 25, 2021and 2,192 shares which will vest on February 25, 2022.
(13)Consists of earned performance-based restricted stock awarded in fiscal 2019 which will vest following the three-year performance period ending on the last day of fiscal 2021 (December 24, 2021). On December 3, 2020, the Compensation Committee certified the achievement of the performance targets with respect to 30% of the target performance-based restricted stock awarded for the three-year performance period ending on the last day of fiscal 2021, subject to the satisfaction of the applicable service-based conditions until such time.
Fiscal 20192020 Stock Vested Table
The following table sets forth certain information with respect to the number of shares of restricted stock that our named executive officers received upon vesting in fiscal 2019:2020:
| | | | | | | | | | | | | | | | | |
| OPTION AWARDS | | STOCK AWARDS |
Name | Number of shares acquired on exercise (#) | Value realized on exercise ($) | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
Christopher Pappas(1) | — | — | | 36,266 | 969,230 |
John Pappas(2) | — | — | | 19,928 | 532,584 |
James Leddy(3) | — | — | | 14,490 | 391,208 |
Alexandros Aldous(4) | — | — | | 24,433 | 759,097 |
Patricia Lecouras(5) | — | — | | 19,527 | 608,372 |
(1)Of Mr. C. Pappas’ 36,266 shares of restricted stock vested in fiscal 2020: (i) 8,758 shares vested on February 25, 2020, (ii) 3,521 shares vested on March 5, 2020, and (iii) 23,987 shares vested on December 17, 2020. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $33.00 (February 25, 2020), $27.03 (March 5, 2020), and $24.39 (December 17, 2020). In fiscal 2020, Mr. C. Pappas had 21,650 shares and 7,865 shares withheld, at the closing price of our common stock on the relevant grant date of $3.60 (March 18, 2020) and $11.81 (March 25, 2020), respectively, to satisfy taxes payable under Section 83(b) of the Internal Revenue Code in accordance with their elections to be taxed on the value of their restricted stock award grants in fiscal 2020.
(2)Of Mr. J. Pappas’ 19,928 shares of restricted stock vested in fiscal 2020: (i) 4,812 shares vested on February 25, 2020, (ii) 1,935 shares vested on March 5, 2020, and (iii) 13,181 shares vested on December 17, 2020. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $33.00 (February 25, 2020), $27.03 (March 5, 2020), and $24.39 (December 17, 2020). In fiscal 2020, Mr. J. Pappas had 11,898 shares and 4,322 shares withheld, at the closing price of our common stock on the relevant grant date of $3.60 (March 18, 2020) and $11.81 (March 25, 2020), respectively, to satisfy taxes payable under Section 83(b) of the Internal Revenue Code in accordance with their elections to be taxed on the value of their restricted stock award grants in fiscal 2020.
(3)Of Mr. Leddy’s 14,490 shares of restricted stock which vested in fiscal 2020: (i) 1,103 shares vested on February 3, 2020, (ii) 3,008 shares vested on February 25, 2020, (iii) 1,209 shares vested on March 5, 2020, (iv) 181 shares vested on March 6, 2020, (v) 750 shares vested on September 11, 2020, and (vi) 8,239 shares vested on December 17, 2020. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $37.28 (February 3, 2020), $33.00 (February 25, 2020), $27.03 (March 5, 2020), $26.22 (March 6, 2020), $16.60 (September 11, 2020), and $24.39 (December 17, 2020). In fiscal 2020, Mr. Leddy had 9,915 shares and 2,701 shares withheld, at the closing price of our common stock on the relevant grant date of $3.60 (March 18, 2020) and $11.81 (March 25, 2020), respectively, to satisfy taxes payable under Section 83(b) of the Internal Revenue Code in accordance with their elections to be taxed on the value of their restricted stock award grants in fiscal 2020.
(4)Of Mr. Aldous’ 24,433 shares of restricted stock which vested in fiscal 2020: (i) 10,180 shares vested on February 3, 2020, (ii) 2,807 shares vested on February 25, 2020, (iii) 1,128 shares vested on March 5, 2020, (iv) 1,654 shares vested on March 6, 2020, (v) 974 shares vested on March 7, 2020, and (vi) 7,690 shares vested on December 17, 2020. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $37.28 (February 3, 2020), $33.00 (February 25, 2020), $27.03 (March 5, 2020), $26.22 (March 6, 2020 and March 7, 2020), and $24.39 (December 17, 2020). In fiscal 2020, Mr. Aldous had 9,254 shares and 2,521 shares withheld, at the closing price of our common stock on the relevant grant date of $3.60 (March 18, 2020) and $11.81 (March 25, 2020), respectively, to satisfy taxes payable under Section 83(b) of the Internal Revenue Code in accordance with their elections to be taxed on the value of their restricted stock award grants in fiscal 2020.
(5)Of Ms. Lecouras’ 19,527 shares of restricted stock which vested in fiscal 2020: (i) 8,300 shares vested on February 3, 2020, (ii) 2,189 shares vested on February 25, 2020, (iii) 880 shares vested on March 5, 2020, (iv) 1,348 shares vested on March 6, 2020, (v) 811 shares vested on March 7, 2020, and (vi) 5,999 shares vested on December 17, 2020. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $37.28 (February 3, 2020), $33.00 (February 25, 2020), $27.03 (March 5, 2020), $26.22 (March 6, 2020 and March 7, 2020), and $24.39 (December 17, 2020). In fiscal 2020, Ms. Lecouras had 7,218 shares and 1,967 shares withheld, at the closing price of our common stock on the relevant grant date of $3.60 (March 18, 2020) and $11.81 (March 25, 2020), respectively, to satisfy taxes payable under Section 83(b) of the Internal Revenue Code in accordance with their elections to be taxed on the value of their restricted stock award grants in fiscal 2020.
|
| | | | | |
| Option Awards | | STOCK AWARDS |
Name | Number of shares acquired on exercise (#) | Value realized on exercise ($) | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
Christopher Pappas(1) | — | — | | 3,521 | 112,566 |
John Pappas(2) | 44,757 | 733,227 | | 1,935 | 61,862 |
James Leddy(3) | — | — | | 2,137 | 74,559 |
Alexandros Aldous(4) | 8,632 | 93,365 | | 16,225 | 509,044 |
Patricia Lecouras(5) | 7,193 | 101,260 | | 4,234 | 129,843 |
| |
(1) | Mr. C. Pappas' 3,521 shares of restricted stock vested on March 5, 2019 at a closing price of our common stock of $31.97. |
| |
(2) | Mr. J. Pappas exercised options to purchase 44,757 shares of our common stock at an exercise price of $20.30 on October 7, 2019 (the closing price of our common stock on such date was $36.39). Mr. J. Pappas' 1,935 shares of restricted stock vested on March 5, 2019 at a closing price of our common stock of $31.97.
|
| |
(3) | Of Mr. Leddy’s 2,137 shares of restricted stock which vested in fiscal 2019: (i) 1,209 shares vested on March 5, 2019, (ii) 178 shares vested on March 6, 2019 and (iii) 750 shares vested on September 11, 2019. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $31.97 (March 5, 2019), $30.32 (March 6, 2019) and $40.68 (September 11, 2019). |
| |
(4) | Mr. Aldous exercised options to purchase 8,632 shares of our common stock at an exercise price of $20.30 (the closing price of our common stock on such date was $31.35) on March 11, 2019. Of Mr. Aldous’ 16,225 shares of restricted stock which vested in fiscal 2019: (i) 1,128 shares vested on March 5, 2019, (ii) 2,011 shares vested on March 6, 2019, (iii) 1,810 vested on March 7, 2019 and (iv) 11,276 vested on April 6, 2019. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $31.97 (March 5, 2019), $30.32 (March 6, 2019), $30.33 (March 7, 2019) and $31.67 (April 6, 2019). |
| |
(5) | Ms. Lecouras exercised options to purchase 7,193 shares of our common stock at an exercise price of $20.30 (the closing price of our common stock on such date was $34.30) on May 15, 2019. Of Ms. Lecouras’ 4,234 shares of restricted stock which vested in fiscal 2019: (i) 880 shares vested on March 5, 2019, (ii) 1,706 vested on March 6, 2019 and (iii) 1,648 vested on March 7, 2019. The value realized on vesting of those shares is calculated based on the closing price of our common stock on the relevant vesting dates, which was $31.97 (March 5, 2019), $30.32 (March 6, 2019) and $30.33 (March 7, 2019). |
Potential Payments upon Termination or Change in Control
The table below reports the amount of compensation payable to each of our named executive officers in the event of termination of such executive’s employment and in certain situations following a change in control of the Company. The amounts shown in the table below reflect the assumption that the named executive officer’s termination of employment was effective as of December 27, 2019,25, 2020, and that the executive was employed through such date. The columns for amounts due upon a change in control or upon certain terminations following a change in control reflect the assumption that the change in control occurred and, if applicable, the executive experienced a termination of employment as of December 27, 2019.25, 2020. Amounts listed represent the incremental amounts due to the named executive officers beyond what they would have received without, as applicable, a termination of employment or change in control. Thus, amounts earned under the 20192020 Plan, which were earned as of the end of fiscal 2019,2020, are not duplicated in the table. All amounts shown are estimates of the amounts which would be paid out to the executives. The actual amounts to be paid out can only be determined at the time of the relevant triggering event.
For purposes of the table, the value attributed to acceleration of the vesting of restricted stock awards is based on the closing price of our common stock on the last trading day of fiscal 20192020 (December 27, 2019)25, 2020), which was $37.97.$23.89. | | Executive Benefits and Payments Upon Separation | Involuntary Not-For-Cause Termination on 12/27/2019 ($) | | Disability on 12/27/2019 ($) | Death on 12/27/2019 ($) | Change in Control on 12/27/2019(1) ($) | Termination By Executive For Good Reason or By the Company Without Cause At or During the Two-Year Period Following a Change in Control on 12/27/2019(1)(2) ($) | | Executive Benefits and Payments Upon Separation | Involuntary Not-For-Cause Termination on 12/25/2020 ($) | | Disability on 12/25/2020(1) ($) | Death on 12/25/2020(1) ($) | Change in Control on 12/25/2020(1)(2) ($) | Termination By Executive For Good Reason or By the Company Without Cause At or During the Two-Year Period Following a Change in Control on 12/25/2020(1)(2)(3) ($) | |
Christopher Pappas | | | Christopher Pappas | |
Acceleration of Vesting of Restricted Stock | — | | 4,565,855 | 2,931,436 | 4,565,855 | (7) | Acceleration of Vesting of Restricted Stock | — | | 3,949,734 | 4,483,532 | (6) |
Cash Severance Payment | 843,415 | (3) | — | 4,416,119 | | Cash Severance Payment | 1,935,514 | (4) | — | 5,671,542 | |
Total | 843,415 | | 4,565,855 | 2,931,436 | 8,981,974 | | Total | 1,935,514 | | 3,949,734 | 4,483,532 | 10,155,074 | |
John Pappas | | John Pappas | |
Acceleration of Vesting of Restricted Stock | — | | 2,509,172 | 1,610,915 | 2,509,172 | (7) | Acceleration of Vesting of Restricted Stock | — | | 2,170,622 | 2,463,967 | (6) |
Cash Severance Payment | 463,500 | (3) | — | 1,600,522 | | Cash Severance Payment | 832,275 | (5) | — | 2,119,400 | |
Total | 463,500 | | 2,509,172 | 1,610,915 | 4,109,694 | | Total | 832,275 | | 2,170,622 | 2,463,967 | 4,583,367 | |
James Leddy | | James Leddy | |
Acceleration of Vesting of Restricted Stock | — | | 1,663,390 | 1,054,465 | 1,663,390 | (7) | Acceleration of Vesting of Restricted Stock | — | | 1,643,704 | 1,827,036 | (6) |
Cash Severance Payment | 386,250 | (4) | — | 1,051,250 | | Cash Severance Payment | 704,813 | (5) | — | 1,567,062 | |
Total | 386,250 | | 1,663,390 | 1,054,465 | 2,714,640 | | Total | 704,813 | | 1,643,704 | 1,827,036 | 3,394,098 | |
Alexandros Aldous | | Alexandros Aldous | |
Acceleration of Vesting of Restricted Stock | — | | 2,342,141 | 1,378,956 | 2,342,141 | (7) | Acceleration of Vesting of Restricted Stock | — | | 1,517,445 | 1,688,569 | (6) |
Cash Severance Payment | 360,500 | (5) | — | 1,159,460 | | Cash Severance Payment | 662,325 | (5) | — | 1,467,926 | |
Total | 360,500 | | 2,342,141 | 1,378,956 | 3,501,601 | | Total | 662,325 | | 1,517,445 | 1,688,569 | 3,156,495 | |
Patricia Lecouras | | Patricia Lecouras | |
Acceleration of Vesting of Restricted Stock | — | | 1,857,948 | 1,091,144 | 1,857,948 | (7) | Acceleration of Vesting of Restricted Stock | — | | 1,183,606 | 1,317,080 | (6) |
Cash Severance Payment | 281,190 | (6) | — | 903,548 | | Cash Severance Payment | 531,464 | (5) | — | 1,162,582 | |
Total | 281,190 | | 1,857,948 | 1,091,144 | 2,761,496 | | Total | 531,464 | | 1,183,606 | 1,317,080 | 2,479,662 | |
| |
(1) | Amounts in this column assume the individual’s awards of time-based vesting and performance-based vesting restricted shares of our common stock are not assumed in the change in control transaction and therefore vested immediately prior to the change in control transaction. If awards are assumed by the successor entity in the change in control, awards will vest if within one year following the change in control, the executive terminates employment by reason of death, disability, normal or early retirement, for “good reason” by the executive or involuntary termination for any reason other than “cause”. Thus amounts in this column would also apply if the |
(1) The named executive officers executed letters which noted that the performance measure with respect to the share-price portion of the performance-based vesting restricted share award granted in fiscal 2019 to the named executive officers (the “2019 PRSA Award”) shall be deemed achieved at target upon certification by the Compensation Committee and that the share-price portion of the 2019 PRSA Award shall not vest upon such certification but instead shall remain subject to forfeiture and vest at the earlier of (a) at the end of the fiscal 2021 (which shall be the end of the “Vesting Period” under the 2019 PRSA Award), subject to the named executive
officers providing continuous service to the Company until such date or (b) the date the named executive officers have a qualifying termination under Section 3 of the 2019 PRSA Award if before the end of the fiscal 2021.
(2) Amounts in this column assume the individual’s awards of time-based vesting and performance-based vesting restricted shares of our common stock are not assumed in the change in control transaction and therefore vested immediately prior to the change in control transaction. If awards are assumed by the successor entity in the change in control, awards will vest if within one year following the change in control, the executive terminates employment by reason of death, disability, normal or early retirement, for “good reason” by the executive or involuntary termination for any reason other than “cause.” Thus amounts in this column would also apply if the individual’s time-based vesting and performance-based vesting restricted shares are assumed in the change in control transaction and the individual’s employment terminated for any of the foregoing reasons as of December 27, 2019.25, 2020.
| |
(2) | (3) As discussed in “EXECUTIVE COMPENSATION - Compensation Discussion and Analysis - Employment Agreements, Offer Letters and Severance Benefits - Executive Change in Control Plan” the severance benefit due in connection with a resignation by the individual for “good reason” or termination by the Company without “cause” (as such terms are defined in the Executive CIC Plan) during the two-year period following a change in control is a multiple of the individual’s base salary, target annual bonus for the year of termination, a lump sum benefits payment and an outplacement payment. The multiple for Mr. C. Pappas is 3x, and the multiple for the other named executive officers is 2x. In addition, under the Executive CIC Plan, amounts are reduced in the event that the individual would be subject to excise taxes imposed under Section 4999 of the Code or any similar tax imposed by state or local law, but only where the after-tax payments received by the individual would be greater than the after-tax payments without regard to such reduction. The total amounts payable above have been calculated assuming no reduction would apply to avoid excise taxes under Section 4999 or state or local law. (4) Pursuant to our severance agreement with Mr. C. Pappas, if such named executive officer is terminated by us without “cause” (as that term is defined in the severance agreement), he is entitled to receive an amount equal to a multiple of his annual base salary and target annual bonus for the year of termination as well as a lump-sum benefits payment and lump-sum outplacement services payment payable for a period of two (2) years from the date of his termination and on the same terms and with the same frequency as his annual base salary was paid prior to such termination. The multiple for Mr. C. Pappas is 3x. (5) Pursuant to our severance agreements with each of Messrs. J. Pappas, Leddy and Aldous as well as Ms. Lecouras, if such named executive officer is terminated by us without “cause” (as that term is defined in the severance agreement), they are entitled to receive an amount equal to a multiple of their annual base salary and target annual bonus for the year of termination as well as a lump-sum benefits payment and lump-sum outplacement payment payable for a period of eighteen (18) months from the date of their termination and on the same terms and with the same frequency as their annual base salary was paid prior to such termination. The multiple for each of Messrs. J. Pappas, Leddy and Aldous as well as Ms. Lecouras is 2x. (6) Amounts assume the individual’s awards of time-based vesting and performance-based vesting restricted shares of our common stock were assumed in the change in control transaction and were accelerated in connection with the executive’s termination without “cause” or resignation for “good reason” as of December 25, 2020.
EXECUTIVE COMPENSATION - Compensation Discussion and Analysis - Employment Agreements, Offer Letters and Severance Benefits - Executive Change in Control Plan” the severance benefit due in connection with a resignation by the individual for “good reason” or termination by the Company without “cause” (as such terms are defined in the Executive CIC Plan) during the two-year period following a change in control is a multiple of the individual’s base salary, reference bonus (average of the annual bonuses paid to the executive for the two calendar years immediately preceding the change in control unless an executive has not been employed for two calendar years, in which case certain alternative reference bonus calculation methods apply) and a lump sum benefits payment. The multiple for Mr. C. Pappas is 3x, and the multiple for the other named executive officers is 2x. For purposes of the table, annual bonuses paid for fiscal 2017 and 2018 were used to calculate the reference bonus. In addition, under the Executive CIC Plan, amounts are reduced in the event that the individual would be subject to excise taxes imposed under Section 4999 of the Code or any similar tax imposed by state or local law, but only where the after-tax payments received by the individual would be greater than the after-tax payments without regard to such reduction. The total amounts payable above have been calculated assuming no reduction would apply to avoid excise taxes under Section 4999 or state or local law.
|
| |
(3) | Pursuant to our employment agreements with each of Messrs. C. Pappas and J. Pappas, if such named executive officer is terminated by us without “cause” (as that term is defined in his employment agreement), he is entitled to receive an amount equal to his annual base salary, payable for a period of one (1) year from the date of his termination and on the same terms and with the same frequency as his annual base salary was paid prior to such termination. |
| |
(4) | Mr. Leddy is entitled to receive his base salary for twelve months following our termination of his employment without “cause” (as that term is defined in his offer letter). |
| |
(5) | Mr. Aldous is entitled to receive an amount equal to twelve months of his base salary as in effect as of the date of his severance agreement or on the effective date of his termination, whichever is greater, following our termination of his employment without “cause” (as that term is defined in his severance agreement). |
| |
(6) | Ms. Lecouras is entitled to receive her base salary for twelve months following our termination of her employment without “cause” (as that term is defined in her offer letter). |
| |
(7) | Amounts assume the individual’s awards of time-based vesting and performance-based vesting restricted shares of our common stock were assumed in the change in control transaction and were accelerated in connection with the executive’s termination without “cause” or resignation for “good reason” as of December 27, 2019. |
Employment Agreements, Offer Letters and Severance Benefits
The following describes these arrangements as of December 27, 2019. For a description of changes made to the severance benefits of named executive officers in fiscal 2020, please see “Compensation Discussion and Analysis - Certain Changes in 2020 Named Executive Officer Compensation.”25, 2020.
Mr. C. Pappas’ Employment Agreement
We entered into an employment agreement with Mr. C. Pappas on August 2, 2011, immediately prior to the consummation of our IPO. Mr. C. Pappas’ employment agreement has a three-year term and provides for the automatic extension of the term for successive one-year terms unless either party to the agreement elects not to renew the agreement at least 60 days prior to the end of the term. The agreement provides for an annual base salary of $750,000 (which has been subsequently increased), an annual cash bonus opportunity to be determined by the Board (or a committee thereof) and the right to participate in our equity-based incentive plans. Additionally, the agreement provides for four weeks of paid vacation annually, a monthly car allowance of $2,000 and participation in our employee benefit plans and programs for salaried employees to the extent permissible under such plans or programs.
The agreement also provides for severance benefits if Mr. C. Pappas is terminated by us without cause, pursuant to which he would receive the continued payment of base salary for one year from the date of termination and the right to receive any bonus that has been earned but remains unpaid on the date of termination; provided, however, that any severance or benefits payable to Mr. C. Pappas in the event of a change in control of the Company shall be determined in accordance with the Executive CIC Plan. Mr. C. Pappas’ employment agreement also includes a non-competition and non-solicitation provision, pursuant to which Mr. C. Pappas agrees, among other things, that for one year following the termination of his employment with us, he will not (i) compete with us or our subsidiaries; (ii) induce a customer or supplier of ours to cease doing business with us; or (iii) induce an employee of ours to leave our employ. For purposes of Mr. C. Pappas’ employment agreement, “cause” is defined as (i) engaging in willful misconduct that is injurious to the Company or our affiliates or (ii) the embezzlement or misappropriation of our, or our affiliates’, funds or property; however, that no act, or failure to act, is to be considered “willful” unless done, or omitted to be done, not in good faith and without reasonable belief that the action or omission was in the best interest of the Company.
38
Mr. J. Pappas’ Employment Agreement
We entered into an employment agreement with Mr. J. Pappas on January 12, 2012. Mr. J. Pappas’ employment agreement has a three-year term and provides for the automatic extension of the term for successive one-year terms unless either party to the agreement elects not to renew the agreement at least 60 days prior to the end of the term. The agreement provides for an annual base salary of $250,000 (which has been subsequently increased), an annual cash bonus opportunity to be determined by the Board (or a committee thereof) and the right to participate in our equity-based incentive plans. Additionally, the agreement provides for four weeks of paid vacation annually, a monthly car allowance of $2,000 and participation in our employee benefit plans and programs for salaried employees to the extent permissible under such plans or programs.
The agreement also provides for severance benefits if Mr. J. Pappas is terminated by us without cause, pursuant to which he would receive the continued payment of base salary for one year from the date of termination and the right to receive any bonus that has been earned but remains unpaid on the date of termination; provided, however, that any severance or benefits payable to Mr. J. Pappas in the event of a change in control of the Company shall be determined in accordance with the Executive CIC Plan. Mr. J. Pappas’ employment agreement also includes a non-competition and non-solicitation provision identical to the corresponding provision in the employment agreement with Mr. C. Pappas. For purposes of Mr. J. Pappas’ employment agreement, “cause” is defined in the same manner as in the employment agreement with Mr. C. Pappas.
Offer Letters and Other Severance Benefits
James Leddy
In connection with Mr. Leddy becoming Chief Financial Officer and Assistant Corporate Secretary, the Company entered into an offer letter with Mr. Leddy on October 17, 2017, effective as of November 11, 2017, which provides for the following: (i) an annual base salary of $375,000 (which has been subsequently increased), an annual cash bonus opportunity to be determined by the Board (or a committee thereof), and the right to participate in our equity-based incentive plans. Mr. Leddy’s offer letter also provides that he is entitled to receive his base salary for a period of one year (or payment until he finds a position that provides 80% or more of his then current base salary, if shorter), provided that any severance or benefits payable to Mr. Leddy in the event that his employment is terminated by the Company without “cause” (as defined in the Executive CIC Plan) or by Mr. Leddy for “good reason” (as defined in the Executive CIC Plan), within two years following a change in control of the Company, shall be determined in accordance with the Executive CIC Plan.
Alexandros Aldous
The terms of Mr. Aldous’ employment are described in an offer letter dated February 11, 2011, provided to him by the Company. This offer letter has no specific term and provides that Mr. Aldous is an at-will employee. Mr. Aldous’ annual base salary under the offer letter was $155,000 (which has been subsequently increased). Under his offer letter, Mr. Aldous was initially eligible to participate in our annual, performance-based cash incentive program at a target of 25% of his annual base salary. The Compensation Committee subsequently increased his target under the annual, performance-based cash incentive program to 35% of his annual base salary for 2012, increased the target to 50% of his annual base salary starting in 2013, and then further increased the target to 75% of his annual base salary starting in 2016.
In August 2014, Mr. Aldous entered into a severance agreement with the Company whereby Mr. Aldous is entitled to receive an amount equal to twelve months of his base salary as in effect as of the execution date of the severance agreement or on the effective date of his termination, whichever is greater, following the Company’s termination of his employment without “cause” (as defined in the severance agreement), provided that any severance or benefits payable to Mr. Aldous in the event that his employment is terminated by the Company without “cause” (as defined in the Executive CIC Plan) or by Mr. Aldous for “good reason” (as defined in the Executive CIC Plan), within two years following a change in control of the Company, shall be determined in accordance with the Executive CIC Plan.
Patricia Lecouras
The terms of Ms. Lecouras’ employment are described in an offer letter dated January 1, 2007, provided to her by the Company. This offer letter has no specific term and provides that Ms. Lecouras is an at-will employee. Ms. Lecouras’ annual base salary under the offer letter was initially $200,000 (which has been subsequently increased). Ms. Lecouras is eligible to participate in our annual performance-based cash incentive program at a target of 75% of her annual base salary. Ms. Lecouras’ offer letter also provides that she is entitled to receive her base salary for a period of twelve months following
39
her termination by us without “cause” (as defined in the offer letter), provided that any severance or benefits payable to Ms. Lecouras in the event that her employment is terminated by the Company without “cause” (as defined in the Executive CIC Plan) or by Ms. Lecouras for “good reason” (as defined in the Executive CIC Plan), within two years following a change in control of the Company, shall be determined in accordance with the Executive CIC Plan.
Severance Agreements
On March 25, 2020, the Compensation Committee approved certain enhancements to severance arrangements payable to its current named executive officers, absent a change in control, to provide stability and to help retain management. These changes were documented through severance agreements that provide that, during the term of the severance agreement, if the named executive officer is terminated without cause or resigns for good reason not in connection with a change in control of the Company, and subject to an execution of a release of claims, the named executive officer would be entitled to the following:
•A cash amount, to be paid in the form of salary continuation, equal to the named executive officer’s base salary and annual bonus for the year of termination multiplied by an applicable severance multiple (2x for Mr. C. Pappas and 1.5x for other named executive officers);
•A lump-sum cash payment in lieu of benefits continuation;
•A lump-sum cash payment in lieu of reimbursement for outplacement service costs; and
•Any earned but unpaid annual bonus with respect to the year prior to the year of termination.
The severance agreements each have an initial term of two years that automatically renews on an annual basis unless and until terminated by the Board prior to any renewal in accordance with the terms of the severance agreement.
Executive Change in Control Plan
TheOn March 25, 2020, the Compensation Committee approved certain enhancements to the Executive CIC Plan which the Company has an Executive CIC Planin place for certain senior executives of the Company, including the named executive officers. Under the Executive CIC Plan, if during the two years following a “change in control” of the Company (as defined in the Executive CIC Plan), a named executive officer’s employment is terminated by the Company without “cause” (as defined in the Executive CIC Plan), or the named executive officer resigns for “good reason” (as defined in the Executive CIC Plan), then the named executive officer will be entitled to the following:
•A cash amount equal to the named executive officer’s base salary multiplied by an applicable severance multiple (3x for Mr. C. Pappas and 2x for other named executive officers);
•A cash amount equal to the named executive officer’s referencetarget annual bonus (generally, the average of the annual bonuses earned for the two calendar years immediately preceding the change in control)year of termination multiplied by the same severance multiple that applies to base salary;
•If the termination of employment occurs during the calendar year in which the change in control occurs, a pro-rated target annual bonus for the year of termination, and if the termination of employment occurs in a calendar year following the calendar year in which the change in control occurs, a pro-rated annual bonus for the year of termination paid at the same time and in the same form as annual bonuses are paid to active employees generally based on actual performance in respect of the performance year, with all individual performance goals deemed attained at 100%; and
•A lump-sum cash payment in lieu of benefits continuation for the two years commencing on the change in control date.date; and
•A lump-sum cash payment in lieu of reimbursement for outplacement service costs.
If any payments or benefits provided to a named executive officer pursuant to the Executive CIC Plan would trigger the payment of the excise tax imposed by Section 4999 of the Code or any similar tax imposed by state or local law, the named executive officer will receive (i) the full payment or (ii) a payment reduced to the minimum amount necessary to avoid any such excise tax, whichever amount is greater on a post-tax basis. In no event is the Company responsible to gross-upgross-
up or indemnify any named executive officer for excise taxes paid or reductions to payments and benefits received to avoid such excise taxes.
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our chief executive officer. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
| | | | | | | | |
| | |
| | |
• | | For fiscal 2019,2020, the median annual total compensation of all employees of the Company (other than the chief executive officer) was $56,051$44,524 and the annual total compensation of our chief executive officer was $2,784,589.$3,804,992. In each case, compensation was calculated using the methodology for determining the compensation of our named executive officers as reported in the Summary Compensation Table. |
| | |
• | | Based on this information, for fiscal 2019,2020, the ratio of the annual total compensation of our chief executive officer to the median annual total compensation of all employees of the Company was 49.785.5 to 1. |
| | |
How We Calculated the Ratio
•The “median annual total compensation of all employees” is the annual total compensation of a single employee who is at the midpoint of all of the employees of the Company (other than our chief executive officer) ranked in order of compensation amounts. For fiscal 2018,When determining our midpoint, we considered the compensation of 2,2792,102 employees (other than the chief executive officer) who were employed by the Company as of December 28, 2018.25, 2020. Consistent with SEC requirements, we excluded all of our Canadian employee workforce, which was comprised of approximately 5644 employees in Canada, who collectively constituted less than three percent (3%) of our total workforce of approximately 2,3352,146 employees as of December 28, 2018,25, 2020, from consideration in determining the median annual total compensation of all employees. We do not have employees in any countries other than the United States and Canada, and we did not make any adjustments for the cost of living.
•SEC regulations allow employers to identify the midpoint based on a “consistently applied compensation measure” (CACM). ForDue to the termination of the initially identified median employee, we identified a new median employee in fiscal 2018,2020. As a result, for fiscal 2020, we ran a check detail gross pay report as of December 28, 201825, 2020 as our CACM to determine the midpoint of our employee population. We chose this CACM because the data was readily available and, in our judgment, did not include or exclude elements of compensation that would affect our midpoint.
During fiscal 2019,•Although there was no change to our employee population or compensation arrangements that we reasonably believe would significantly affect our pay ratio disclosure from last year. Additionally, there was no change in the circumstances of the employee identified as the median employee in fiscal 2018. There were two acquisitions that, as of January 30,in early 2020, and February 3, 2020,which initially caused a changean increase in our employee population, fordue to the economic impact of COVID-19, the Company reduced its workforce by approximately 28% in fiscal 2020 (an approximately twenty-five percent (25%) increase in the number of our employees) that we anticipate may impact our median employee determination in future years; however, this acquisition did not affect the employee population for fiscal 2019..
•For fiscal 2019,2020, once we identified our new median employee, we then calculated the median employee’s “annual total compensation.” We followed the methodology required under SEC regulations for calculating the total compensation of our named executive officers as reported in the Summary Compensation Table. We did not add the value of employer contributions to broad-based employee benefit plans except to the extent such amounts are included in the Summary Compensation Table for our named executive officers.
Director Compensation
Pursuant to our Corporate Governance Guidelines, the Board is responsible for setting the compensation of its independent directors. For fiscal 2019,2020, the retainer we paid our non-employee directors was $100,000.$130,000. The retainer consists of a mix of cash and equity. The cash portion of the retainer, $30,000, is paid in quarterly installments on the first day of each fiscal quarter. On May 15, 2020, in response to the significant impact on the global economy, and the food service industry in particular, from the effects of the COVID pandemic, the Board unanimously approved waiving the cash retainer component of the Board’s compensation package for purposes of liquidity preservation by the Company until the Board reevaluated such cash retainer compensation. On December 3, 2020, the Board approved the restoration of the $30,000 cash retainer component of the 2020-2021 independent Board member compensation, on a pro-rata basis for the remainder of each Board member’s current term, such restoration effective as of December 26, 2020. The equity portion of the retainer, $70,000$100,000 in time-based vesting restricted stock, will vest at the Annual Meeting. In fiscal 2019,2020, we did not pay directors for attending meetings of the Board or its committees, but we did pay directors for lead directorship and committee membership and chairmanship as well as reimbursed our independent directors for their expenses incurred in attending Board and committee meetings. Our directors receive retainers for their participation as members of committees of the Board equal to $8,000$12,500 for Audit Committee membership, $5,000$10,000 for Compensation Committee membership and $4,000$7,500 for Nominating and Corporate Governance Committee membership. Directors who serve as a chairperson of a committee of the Board receive retainers equal to $15,000$25,000 for the Audit Committee chairpersonship, $10,000$20,000 for the Compensation Committee chairpersonship, and $7,500$15,000 for the Nominating and Corporate Governance Committee chairpersonship. Our Lead Director also receives a retainer equal to $10,000$15,000 for Board lead directorship.
For fiscal 2020, the Compensation Committee, in consultation with FW Cook and management, approved increases in the (i) equity portion of the retainer (increased to $100,000), (ii) retainers for their participation as members of committees of the Board (the Audit Committee retainer for participation increased to $12,500, the Compensation and Human Capital Committee retainer for participation increased to $10,000, and the Nominating and Corporate Governance Committee retainer for participation increased to $7,500), (iii) retainers for chairpersonship of committees of the Board (the Audit Committee retainer for chairpersonship increased to $25,000, the Compensation and Human Capital Committee retainer for chairpersonship increased to $20,000, and the Nominating and Corporate Governance Committee retainer for chairpersonship increased to $15,000) and (iv) retainer for our Lead Director (increased to $15,000) as a result of an increase in the Company’s revenue and market capitalization.
The table below summarizes the compensation paid by us to our directors for fiscal 2019:2020:
| | | | | | | | | | | | | | | |
Name | Fees Earned or Paid in Cash ($) | Stock Awards(3) ($) | | All Other Compensation ($) | Total ($) |
Christopher Pappas(1) | — | — | | — | — |
John Pappas(1) | — | — | | — | — |
Ivy Brown(2) | — | — | | — | — |
Dominick Cerbone | 63,875 | 100,001 | | — | 163,876 |
Joseph Cugine | 47,375 | 100,001 | | — | 147,376 |
Steven F. Goldstone | 14,125 | 100,001 | | — | 114,126 |
Alan Guarino | 40,375 | 100,001 | | — | 140,376 |
Stephen Hanson | 25,500 | 100,001 | | — | 125,501 |
Aylwin Lewis(2) | — | — | | — | — |
Katherine Oliver | 23,325 | 100,001 | | — | 123,326 |
(1) These individuals did not receive any compensation for their service as a director.
(2) These individuals did not receive any compensation in fiscal 2020 as their election as directors was not effective until January 1, 2021.
(3) Each of these restricted stock awards was unvested as of the end of fiscal 2020, and they will each vest at the Annual Meeting. Consistent with ASC Topic 718, the amounts in the table reflect the grant date fair value of our awards to each of our directors, other than Messrs. C. Pappas, J. Pappas and Lewis as well as Ms. Brown, of 7,746 restricted shares of our common stock on May 15, 2020, the date of our 2020 annual meeting of stockholders. The grant date fair value for these awards of restricted stock was determined by taking the closing market price of the Company’s common stock on the date of grant, which was $12.91, and multiplying it by the number of shares awarded.
|
| | | | | |
Name | Fees Earned or Paid in Cash ($) | Stock Awards(2) ($) | | All Other Compensation ($) | Total ($) |
Christopher Pappas(1) | — | — | | — | — |
John Pappas(1) | — | — | | — | — |
Christina Carroll | 16,154 | — | | — | 16,154 |
Dominick Cerbone | 68,000 | 70,013 | | — | 138,013 |
John A. Couri | 17,885 | — | | — | 17,885 |
Joseph Cugine | 51,625 | 70,013 | | — | 121,638 |
Steven Goldstone | 34,000 | 70,013 | | — | 104,013 |
Alan Guarino | 49,000 | 70,013 | | — | 119,013 |
Stephen Hanson | 42,000 | 70,013 | | — | 112,013 |
Katherine Oliver | 39,000 | 70,013 | | — | 109,013 |
David E. Schreibman | 14,809 | — | | — | 14,809 |
| |
(1) | These individuals did not receive any compensation for their service as a director. |
| |
(2) | Each of these restricted stock awards was unvested as of the end of fiscal 2019, and they will each vest at the Annual Meeting. Consistent with ASC Topic 718, the amounts in the table reflect the grant date fair value of our awards to each of our directors, other than Messrs. C. Pappas and J. Pappas, of 2,020 restricted shares of our common stock on May 17, 2019, the date of our 2019 annual meeting of stockholders. The grant date fair value for these awards of restricted stock was determined by taking the closing market price of the Company’s common stock on the date of grant, which was $34.66, and multiplying it by the number of shares awarded. |
Director Stock Ownership Requirement
To further align the interests of the Board with the interests of the Company’s stockholders, the Company believes that its independent directors should be stockholders and have a significant personal financial stake in the Company. Accordingly, each independent director is required to own shares of the Company’s common stock valued at three times the director’s equity component of the then-current annual retainer. Each director has three years from the date of the director’s election to the Board to attain such level of stock ownership. After achieving the minimum level of stock ownership, ownership of the minimum amount must be maintained as long as the director remains on the Board. The Nominating and Corporate Governance Committee in its discretion may extend the period of time for attainment of such ownership levels in appropriate circumstances. Until the stock ownership requirements are met, directors are required to retain the net number of shares of the Company’s common stock received by the directors pursuant to awards granted to the directors or exercised by the directors pursuant to the 2019 Equity Incentive Plan.
PROPOSAL 2—RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is responsible for the appointment, compensation and oversight of the independent registered public accounting firm. The Audit Committee has selected BDO USA, LLP (“BDO”) as our independent registered public accounting firm for fiscal 20202021 and has recommended to the Board that this selection be submitted to our stockholders for ratification at the Annual Meeting. Stockholder ratification of the selection of BDO as our independent registered public accounting firm is not required by law or otherwise. However, the Board, upon the recommendation of the Audit Committee, is submitting the selection of BDO to stockholders for ratification as a matter of good corporate governance. If stockholders do not ratify the selection of BDO, the Audit Committee will reconsider the matter. BDO has served as our independent registered public accounting firm since 2006. The Audit Committee considers the impact of changing auditors when assessing whether to retain the current independent registered public accounting firm.
Representatives of BDO, which served as our independent registered public accounting firm for fiscal 2019,2020, will be present at the Annual Meeting to respond to appropriate questions and to make such statements as they may desire.
The Board unanimously recommends that stockholders vote “FOR” ratification of the selection of BDO as our independent registered public accounting firm for fiscal 2020.2021. Proxies received by the Board will be voted “FOR” ratification of BDO unless a contrary choice is specified in the proxy.
Vote Required
An affirmative vote of a majority of the shares represented at the Annual Meeting in person (including by webcast) or by properly executed proxy and entitled to vote on Proposal 2 is necessary to ratify the appointment of BDO as our independent registered public accounting firm for fiscal 2020.2021. Abstentions will be equivalent to a vote against this proposal. If no voting specification is made on a properly returned or voted proxy card, the proxies will vote FOR Proposal 2.
Fees Paid to BDO USA, LLP
In addition to retaining BDO to audit our financial statements for fiscal 2019,2020, we engaged the firm from time to time during the year to perform other services. The following table sets forth the aggregate fees billed by BDO in connection with services rendered during the last two fiscal years. | |
| | Fiscal 2019 | | Fiscal 2018 | | Fiscal 2020 | | Fiscal 2019 |
Fee Category | | ($) | | ($) | Fee Category | | ($) | | ($) |
Audit Fees | | 1,388,992 |
| | 1,429,921 |
| Audit Fees | | 1,421,980 | | 1,463,992 |
Audit-Related Fees | | — |
| | — |
| Audit-Related Fees | | — | | — |
Tax Fees | | — |
| | — |
| Tax Fees | | — | | — |
All Other Fees | | — |
| | — |
| All Other Fees | | — | | — |
| | 1,388,992 |
| | 1,429,921 |
| | 1,421,980 | | 1,463,992 |
Audit Fees consist of fees billed for professional services rendered in connection with the audit of our annual financial statements, the review of the interim financial statements included in quarterly reports and services that are normally provided by BDO in connection with statutoryregulatory or registration filings and regulatory filings or engagements.secondary offerings. Fees for audit services in fiscal 2019 included fees billed for the audit of our annual financial statements2020 and fees billed for professional services related to BDO’s assessment of internal controls over financial reporting and for professional services related to our public offering of convertible debt, including providing comfort letters and consents. Fees for audit services in fiscal 20182019 included fees billed for the audit of our annual financial statements and fees billed for professional services related to BDO’s assessment of internal controls over financial reporting.
Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees”.Fees.”
Tax Fees consist of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal and state tax compliance, tax audit defense and mergers and acquisitions.
All Other Fees consist of fees for services other than the services reported above.
In fiscal 20192020 and fiscal 2018,2019, no services other than the audit and audit-related services discussed above were provided by BDO.
The Audit Committee has considered whether the provision of the audit-related services described above by BDO is compatible with maintaining auditor independence and determined that BDO’s provision of audit-related services did not compromise its independence as our independent registered public accounting firm.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services
The Audit Committee has adopted a policy requiring pre-approval of all audit and non-audit related services to be provided by the Company’s independent auditor regardless of amount. These services may include audit services, audit-related services, tax services and other related services. BDO and management are required to periodically report to the Audit Committee regarding the extent of services provided by BDO in accordance with this pre-approval and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis. In fiscal 2019,2020, all services provided by BDO were pre-approved by the Audit Committee in accordance with this policy.
Audit Committee Report
The Audit Committee of the Board reports to and acts on behalf of the Board and is responsible for providing independent, objective oversight of the Company’s accounting functions and internal controls and processes for monitoring compliance with laws and regulations. The Audit Committee is composed of “independent directors,” as defined in the NASDAQ Listing Rules, and acts under a written charter in compliance with the Sarbanes-Oxley Act of 2002 and other regulations adopted by the SEC and NASDAQ.
The role of the Audit Committee is to assist the Board in the oversight of:
•Compliance with legal and regulatory requirements;
•Accounting and reporting practices;
•The integrity of the Company’s financial statements;
•The qualifications, independence and performance of BDO, the Company’s independent registered public accounting firm;
•The performance of the Company’s internal audit function; and
•Risk and risk management.
During fiscal 2019,2020, the Audit Committee held eight (8)seven (7) meetings and fulfilled all its responsibilities as set forth in the Audit Committee’s charter, including:
•Reviewing with BDO and the internal auditors the overall scope and plans for the respective audits for the current year;
•Approving all audit engagement fees and terms, as well as permissible non-audit engagements with BDO (please refer to “PROPOSAL 2 - RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - FEES PAID TO BDO USA, LLP” beginning on page 4447 of this proxy statement for a detailed discussion of such fees and related approvals);
•Reviewing the experience and qualifications of the senior members of the BDO audit team;
•Assuring the regular rotation of BDO’s lead audit partner as required by law and considering whether there should be rotation of the independent registered public accounting firm itself;
•Reviewing and discussing with management the Company’s earnings press releases prior to release to the public;
•Meeting with BDO and the Company’s Director of Internal Audit, with and without management present, to discuss the adequacy and effectiveness of the Company’s internal control over financial reporting and the overall quality of the Company’s financial reporting; and
•Meeting independently with each of the Company’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and General Counsel.
With respect to fiscal year 2019,2020, the Audit Committee hereby reports as follows:
•The Audit Committee has reviewed and discussed the audited financial statements with the Company’s management and representatives from its independent registered public accounting firm, BDO.
•The Audit Committee has discussed with its independent registered public accounting firm, BDO, the matters required to be discussed by the statement on Auditing Standards No. 1301, Communications with Audit Committees, adopted by the Public Company Accounting Oversight Board.
•The Audit Committee has received 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 the independent registered public accounting firm’s independence. In addition, the Audit Committee has discussed and considered whether the provision of non-audit services by the Company’s principal auditor, as described above, is compatible with maintaining auditor independence.
•Based on the review and discussion referred to in the immediately preceding first through third paragraphs above, the Audit Committee recommended to the Company’s Board of Directors the inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K for fiscal year 20192020 for filing with the SEC.
The Chefs’ Warehouse, Inc. Audit Committee
Mr. Cerbone (chairman)
Ms. Brown
Mr. Cugine
Mr. Hanson
The foregoing Report of the Audit Committee shall not be considered soliciting material, nor shall it be deemed “filed” for any purpose, including for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section. The Report of the Audit Committee shall not be deemed incorporated by reference into any filing under the Securities Act or under the Exchange Act, regardless of any general incorporation language in such filing.
PROPOSAL 3 — ADVISORY VOTE ON EXECUTIVE COMPENSATION
As described in this proxy statement under the caption “EXECUTIVE COMPENSATION - Compensation Discussion and Analysis,” the Compensation Committee’s goal in setting executive compensation is to attract and retain highly-qualified executives by providing total compensation for each position that our board of directors and chief executive officer believe is competitive within our business sector. We also seek to provide appropriate incentives for our named executive officers to achieve performance metrics related to company-wideCompany-wide performance and the individual’s relevant performance goals. In applying these principles, we seek to integrate compensation with our short-and long-term strategic plans and to align the interests of our named executive officers with the long-term interests of our stockholders.
Stockholders are urged to read the Compensation Discussion and Analysis contained in this proxy statement, which discusses how our compensation policies and procedures implement our compensation objectives and philosophies, as well as the summary compensation table set forth in “EXECUTIVE COMPENSATION - Summary Compensation Table - Fiscal Years 2017-2019”2018-2020” and other related compensation tables and narrative disclosure which describe the compensation of our named executive officers in fiscal 2019.2020.
The Compensation Committee and the Board believe that the policies and procedures articulated in the Compensation Discussion and Analysis are effective in aligning the interests of our executives with those of our stockholders and in incentivizing performance that supports our short-and long-term strategic objectives and that the compensation of our named executive officers in fiscal 20192020 reflects and supports these compensation policies and procedures.
As required by Section 14A of the Exchange Act and as a matter of good corporate governance, stockholders will be asked at the Annual Meeting to approve the following advisory resolution:
RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.
This advisory vote, commonly referred to as a “say-on-pay” advisory vote, is non-binding on the Board. At our 2018 annual meeting of stockholders, a majority of our stockholders voted, on an advisory basis, to hold the “say-on-pay” advisory vote every year, and our Board subsequently determined that the Company will do so until the next required vote on the frequency of such “say-on-pay” advisory votes occurs. We will hold the next frequency of “say-on-pay” advisory vote at our 2024 annual meeting of stockholders. Although non-binding, the Board and the Compensation Committee will review the voting results of the “say-on-pay” advisory vote and take them into consideration when making future decisions regarding our executive compensation programs.
The Board unanimously recommends that stockholders vote “FOR” the advisory vote on executive compensation. Proxies received by the Board will be voted “FOR” the advisory vote on executive compensation unless a contrary choice is specified in the proxy.
Vote Required
An affirmative vote of a majority of the shares represented at the Annual Meeting in person (including by webcast) or by properly executed proxy and entitled to vote on Proposal 3 is necessary for approval. Broker non-votes will have no effect on the outcome of Proposal 3, and abstentions will be equivalent to a vote against this proposal. If no voting specification is made on a properly returned or voted proxy card, the proxies will vote FOR Proposal 3.
OTHER MATTERS
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers and holders of more than 10% of our common stock (“Reporting Persons”) to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities. To the Company’s knowledge, based solely upon a review of Forms 3, 4 and 5 and amendments thereto filed with the SEC and written representations from Reporting Persons, the Company believes that all Reporting Persons filed the required reports on a timely basis, except that Timothy McCauley had one late Form 4 report for a transaction and each of the Company's Section 16 officers had late Form 4 reports related to the reporting of the grant of performance-vesting restricted stock awards in 2019 and 2020 that are subject to a market-based performance condition.basis.
Stockholder Proposals for the 20212022 Annual Meeting of Stockholders
The 20212022 annual meeting of stockholders is expected to be held on May 14, 2021,13, 2022, although this date may change. Eligible stockholders interested in submitting a proposal for inclusion in the proxy materials for the annual meeting of stockholders in 20212022 may do so by following the procedures prescribed in Rule 14a-8 under the Exchange Act. In order to be considered timely for inclusion in the Company’s proxy materials for the 2021 annual meeting of stockholders, stockholder proposals must be received by the Company at 100 East Ridge Road, Ridgefield, Connecticut 06877, addressed to the corporate secretary of the Company, not later than November 27, 2020.29, 2021. Eligible stockholders interested in submitting a matter to be brought before the Company’s 20212022 annual meeting although not included in the Company’s proxy materials may do so by following the procedures prescribed in the Company’s bylaws. In order for the proposal to be considered timely for the Company’s 20212022 annual meeting, such stockholder proposal must be received by the Company at the address stated above not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting of stockholders (i.e., not earlier than January 15, 202114, 2022 and not later than February 14, 2021)13, 2022); provided, however, that if the date of the annual meeting is advanced more than 30 days prior to such anniversary date or delayed more than 60 days after such anniversary date, then to be timely such notice must be so received not later than the tenth (10th) day following the day on which notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was first made, whichever occurs first.
The stockholder’s submission must include certain specified information concerning the proposal and the stockholder, including such stockholder’s ownership of our common stock. As we will not entertain any proposals at an annual meeting that do not meet these requirements, we strongly encourage stockholders to seek advice from legal counsel before submitting a proposal. Submitting a stockholder proposal does not guarantee that we will include it in our proxy statement.
THE BOARD HOPES THAT STOCKHOLDERS WILL ATTEND THE ANNUAL MEETING ON THE INTERNET THROUGH THE VIRTUAL WEB CONFERENCE. REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO VOTE EITHER VIA THE INTERNET, OR BY TELEPHONE, OR BY COMPLETING, SIGNING, DATING AND RETURNING THE ENCLOSED PROXY CARD (IF RECEIVED BY MAIL) AS SOON AS POSSIBLE TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING. STOCKHOLDERS OF RECORD OR BENEFICIAL STOCKHOLDERS NAMED AS PROXIES BY THEIR STOCKHOLDERS OF RECORD WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND CAST THEIR VOTES ELECTRONICALLY OVER THE INTERNET DURING THE MEETING.
|
| | | | | | | |
| | By Order of the Board of Directors, |
| | /s/ Christopher Pappas |
| | Christopher Pappas |
| | Chairman of the Board |
| | |
March 27, 202029, 2021 | | |