UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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o Soliciting Material under §240.14a-12
Franchise Group, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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FRANCHISE GROUP, INC.
1716 Corporate Landing Parkway109 Innovation Court, Suite J
Virginia Beach, Virginia 23454Delaware, Ohio 43015
April 27, 202022, 2022
Dear Fellow Stockholder:
You are cordially invited to attend Franchise Group, Inc.'s 20202022 Annual Meeting of Stockholders, which will be held via live webcast on Wednesday, June 3, 2020,Tuesday, May 17, 2022, at 11:0010:30 a.m., Eastern Time. In lightFor planning purposes and in support of the public health concerns regarding the coronavirus (COVID-19) pandemic and to support the health and well-being of our employees, directors and stockholders, we have made the decision to hold the 2022 Annual Meeting virtually this year. YouWhile you will not be able to attend the 2022 Annual Meeting physically. in person this year, we look forward to a time when we can meet in person again. Details regarding access to the virtual meeting and the business to be conducted are described in thisthe attached Proxy Statement. We have also made available with thisthe accompanying Proxy Statement a copy of our TransitionAnnual Report on Form 10-K/T10-K for the transition periodfiscal year ended December 28, 2019,25, 2021, which includes our 20192021 audited consolidated financial statements and provides information about our business.
The attached Proxy Statement, with the accompanying notice of the meeting, describes the matters expected to be acted upon at the meeting. We urge you to review these materials carefully and to take part in the affairs of our Company by voting on the matters described in the accompanying Proxy Statement. We hope that you will be able to attend the meeting via the webcast. Our directors and management team will be available to answer questions, and you will have an opportunity to vote during the meeting.
The Company’s Board of Directors welcomes and appreciates the interest of all our stockholders in Franchise Group, Inc.’s affairs and encourages those entitled to vote at the Annual Meeting to take the time to do so. We hope you will attend the 2022 Annual Meeting via the webcast, but if you are unable to do so, please vote your shares by either: (1) signing, dating and promptly returning the enclosed proxy card in the accompanying postage-paid envelope, (2) online at www.proxypush.com/frg until 11:59 p.m. (CT)(ET) on June 2, 2020,May 16, 2022, or (3) you may call 1-866-883-3382 via a touch-tone telephone to vote your proxy until 11:59 p.m. (CT)(ET) on June 2, 2020May 16, 2022. We look forward to your attendance at the virtual meeting and the opportunity to review our developments over the past monthsyear and to share with you our plans for the future.
On behalf of the entire Board of Directors, I'd like to thank you for your commitment and support.
| Sincerely, | ||||||||
 | ||||||||
Matthew Avril Chairman of the Board of Directors Franchise Group, Inc. | ||||||||
FRANCHISE GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELDJUNE 3, 2020MAY 17, 2022
TO BE HELD
The Annual Meeting of Stockholders of Franchise Group, Inc. (the "Company") will be held via live webcast on Wednesday, June 3, 2020,Tuesday, May 17, 2022, at 11:0010:30 a.m. Eastern Time (the "2020"2022 Annual Meeting").
The 20202022 Annual Meeting will be held for the following purposes:
1.Election of seven (7) directors to the Board of Directors, each to serve until the 2023 annual meeting and until their successors are elected and qualified;
2.Approval, in an advisory and non-binding vote, of the compensation of the Company’s named executive officers as disclosed in the Proxy Statement;
3.Ratification of the appointment of Deloitte & Touche LLP ("Deloitte") as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2022 ("Fiscal 2022"); and
4.Transaction of any other business that properly comes before the 2022 Annual Meeting and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy Statement accompanying this notice. The Board of Directors has fixed the close of business on April 10, 20201, 2022 as the record date for determining stockholders of the Company entitled to receive notice of and vote at the meeting.2022 Annual Meeting.
Stockholders of record of the Company's common stock, par value $0.01 per share ("Common Stock"), as of the close of business on April 10, 20201, 2022 are entitled to receive notice of, and to vote at, the 20202022 Annual Meeting. Included in these materials are the Proxy Statement and the Company's TransitionAnnual Report on Form 10-K/T10-K (the “2019 Transition“2021 Annual Report”) as described in thisthe Proxy Statement accompanying this notice, which includes the Company's audited consolidated financial statements for the transition periodfiscal year ended December 28, 2019 (the "Transition Period"25, 2021 ("Fiscal 2021"). The notice and proxy card are filed as part of the Proxy Statement. These materials are being sent to stockholders on or about April 27, 202022, 2022 and are also available online at the Company's website at www.franchisegrp.com and at the Securities and Exchange Commission ("SEC") website at www.sec.gov.
| By Order of the Board of Directors, | ||||||||
 | ||||||||
Brian R. Kahn President and Chief Executive Officer Franchise Group, Inc. | ||||||||
April 27, 2020
22, 2022
FRANCHISE GROUP, INC.
2022 ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE 20202022 ANNUAL MEETING AND VOTING
PROXY STATEMENT
This proxy statement ("Proxy Statement") is furnished in connection with the solicitation of proxies by the Board of Directors (the "Board") of Franchise Group, Inc., a Delaware corporation (the "Company"), for the Annual Meeting of Stockholders which will be held via live webcast on June 3, 2020,May 17, 2022, at 11:0010:30 a.m., Eastern Time (the "2020"2022 Annual Meeting"). References to the 20202022 Annual Meeting andin this Proxy Statement includeany adjournment or postponement of the 20202022 Annual Meeting. The proxy materials were first mailed to stockholders on or about April 27, 2020.22, 2022.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on June 3, 2020May 17, 2022
The notice of the 20202022 Annual Meeting, this Proxy Statement and the TransitionCompany's Annual Report on Form 10-K/T10-K for the transition periodfiscal year ended December 28, 201925, 2021 ("2019 Transition2021 Annual Report") are available online at the Company's website at www.franchisegrp.com.
VOTING INSTRUCTIONS AND INFORMATION
Who may vote at the 20202022 Annual Meeting?
Each holder of the 35,148,65940,354,436 shares of the Company's common stock, par value $0.01 per share ("Common StockStock") issued and outstanding at the close of business on April 10, 20201, 2022 ("Record Date") will be entitled to receive a notice of the 20202022 Annual Meeting, and to attend and vote at the 20202022 Annual Meeting. These persons are considered "holders of record," and will be entitled to cast one vote per share owned for each proposal to be considered at the 20202022 Annual Meeting.
What proposals will be voted on at the 20202022 Annual Meeting?
Stockholders will vote on three proposals at the 20202022 Annual Meeting:
1.Election of seven (7) directors to serve on our Board (Proposal 1);
2.Approval, in an advisory and non-binding vote, of the compensation of the Company’s named executive officers as disclosed in the Proxy Statement (Proposal 2);
3.Ratification of the appointment of Deloitte & Touche LLP ("Deloitte") as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2022 ("Fiscal 2022") (Proposal 3); and
4.Transaction of any other business that properly comes before the 2022 Annual Meeting and any adjournment or postponement thereof. |
We are not aware of any matters to be presented at the 20202022 Annual Meeting other than those described in this Proxy Statement. If any matters not described in the Proxy Statement are properly presented at the 20202022 Annual Meeting, the proxies will use their own judgment to determine how to vote your shares. If the 20202022 Annual Meeting is adjourned, the proxies may vote your shares at the adjournment or postponement as well.
How does the Board of Directors recommend that I vote on these proposals?
The Board of Directors recommends that you vote your shares:
1. "FOR" each of the Board's nominees for director (Proposal 1);
2. "FOR" the approval, in an advisory and non-binding vote, of the compensation of the Company’s named executive officers as disclosed in the Proxy Statement (Proposal 2); and
3. "FOR" the ratification of the appointment of Deloitte as our independent registered public accounting firm for Fiscal 2022 (Proposal 3).
Who will bear the cost of this proxy solicitation?
The Company will bear the entire cost of this proxy solicitation, including the preparation, assembly, printing and mailing of this Proxy Statement, the proxy card, 2019 Transition2021 Annual Report, and any additional solicitation materials sent by the Company to stockholders. The Company may reimburse brokerage firms and other persons representing beneficial owners of Common Stock and Preferred Stock for their expenses in forwarding the proxy materials to those beneficial owners. In addition, proxies may be solicited by directors, officers and regular employees of the Company, who will not receive any additional compensation for solicitation, by mail, email, facsimile, telephone or personal contact.
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What is included in the proxy materials?
The proxy materials include:
•This Proxy Statement for the 20202022 Annual Meeting, including a proxy card; and
•Our 2019 Transition2021 Annual Report.
If I am a stockholder of record, how do I vote?
You may vote by the following methods:
•By Mail. To vote by mail, you will need to sign, date and return the accompanying proxy card that was sent to you with the proxy materials.
•By Phone. To vote by phone use a touch-tone telephone and dial 1-866-883-3382. You may only vote your proxy by phone until 11:59 p.m. (CT)(ET) on June 2, 2020.May 16, 2022.
•By Internet. To vote by internet you may visit www.proxypush.com/frg. You may only vote your proxy by Internet until 11:59 p.m. (CT)(ET) on June 2, 2020.May 16, 2022.
How may I attend the 20202022 Annual Meeting?
The 20202022 Annual Meeting will be via live webcast on June 3, 2020May 17, 2022 at 11:0010:30 a.m. EST.ET. To participate in the online meeting:
•As a stockholder, you will then be required to enter your control number” and enternumber which is located in the EQ control number.upper right hand corner of your proxy card.
•After registering, you will receive a confirmation email. Approximately one (1) hour prior to the start of the meeting you will receive an email with a unique link to the virtual meeting.
We recommend accessing the 2022 Annual Meeting webcast using an up-to-date internet browser such as Chrome, Firefox, Safari, or Edge.
If you are a stockholder whose shares are held in "street name" (i.e., in the name of a broker, bank or other similar organization), you must contact the broker, bank or other nominee that holds your shares to request an access code and meeting code and, if you would like to vote during the virtual 2022 Annual Meeting, a legal proxy giving you the right to vote your shares. To access the 2022 Annual Meeting, visit the link provided above, have your access code and meeting code available, and follow the instructions. You may only vote during the 2022 Annual Meeting by emailing a copy of your legal proxy to EQSS-ProxyTabulation@equiniti.com.
How do I vote before the 20202022 Annual Meeting?
You may vote either by mail, phone or you may vote online.
Voting by mail.
To vote on the proposals on the agenda by mail, simply complete the proxy card, sign and date it, and return it in the postage-paid envelope provided. If you are a stockholder whose shares are held in "street name" (i.e., in the name of a broker, bank or other similar organization), you may obtain a proxy, executed in your favor, from the record holder. You may sign the proxy card and return it to the Company or to Equiniti Group plc at the address indicated on the proxy card, or you may direct the record holder of your shares to vote your proxy in the manner you specify. Further, if your shares are held in street name, you must communicate your instructions respecting the voting of your shares to the record holder, or your broker will be prohibited from voting your shares. Voting by mail will not affect your right to vote during the meeting if you decide to attend the 20202022 Annual Meeting.
Voting by phone.
To vote on the proposals on the agenda by phone, please dial 1-866-883-3382 and follow the instructions provided by the operator. Please note that you may only vote your proxy by phone until 11:59 p.m. (CT)(ET) on June 2, 2020.May 16, 2022.
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Voting by internet.
To vote on the proposals on the agenda by internet, please visit www.proxypush.com/frg. Please note that you may only vote your proxy online until 11:59 p.m. (CT)(ET) on June 2, 2020.May 16, 2022.
How do I vote during the 20202022 Annual Meeting?
To vote during the 2022 Annual Meeting you must vote by phone or internet. The meeting website referenced above will direct you to the voting link to vote online or provide instructions on how to vote on the phone. You will need a control number in order to vote during the 2022 Annual Meeting. You may vote during the 2022 Annual Meeting until the operator indicates that voting has been cut off.
What does it mean if I receive more than one set of proxy materials for the 20202022 Annual Meeting?
It means your shares are held in more than one account. You should vote all of your shares, using the separate proxy card provided with each set of proxy materials.
What is householding?
As permitted by the SEC, only one set of the proxy materials is being delivered to stockholders residing at the same address, unless the stockholders have notified the Company of their desire to receive multiple copies of proxy materials. This is known as householding.
The Company will promptly deliver, upon request, a separate copy of the Proxy Statement or the 2019 Transition2021 Annual Report to any stockholder residing at an address to which only one copy was mailed. Requests for additional copies for the current year or future years should be directed to the Company's AssistantDeputy General Counsel in writing at 1716 Corporate Landing Parkway, Virginia Beach, Virginia 23454,109 Innovation Court, Suite J, Delaware, Ohio 43015, Attention: AssistantDeputy General Counsel, or by email at tiffany.mcwaters@libtax.com.tmcwaters@franchisegrp.com.
How may I view the voting results?
The results of voting at the 20202022 Annual Meeting will be filed with the SEC within four business days after the 20202022 Annual Meeting and will be available on the SEC's website (www.sec.gov) or on our website (www.franchisegrp.com). If the final results are not available at that time, we will provide preliminary voting results in a Current Report on Form 8-K and will provide the final voting results in an amendment to the Current Report on Form 8-K as soon as they are available.
How may I revoke my proxy?
You may change or revoke your proxy at any time before it is voted at the 20202022 Annual Meeting. You can send a written notice of revocation of your proxy to the AssistantDeputy General Counsel so that it is received before the taking of the vote at the 20202022 Annual Meeting. In order to revoke your proxy, you must also notify the AssistantDeputy General Counsel of your intent to vote in another acceptable form, e.g., either by mail, by phone or by voting online, and then vote your shares before or during the meeting. If you require assistance in changing or revoking your proxy, please contact the AssistantDeputy General Counsel at 1716 Corporate Landing Parkway, Virginia Beach, Virginia 23454,109 Innovation Court, Suite J, Delaware, Ohio 43015, Attention: AssistantDeputy General Counsel or by email at tiffany.mcwaters@libtax.com.tmcwaters@franchisegrp.com.
What constitutes a quorum?
Holders of a majority of the voting power represented by the issued and outstanding shares of capital stock of the Company entitled to vote who are present in person or represented by proxy, will constitute a quorum at the 20202022 Annual Meeting. A quorum is required to transact business at the 20202022 Annual Meeting. A representative of Equiniti Group plc has been appointed by the Company's Board of Directors to act as the inspector of elections. The inspector of elections will tabulate the votes cast by proxy or in person at the 20202022 Annual Meeting and will determine whether or not a quorum is present. If a quorum is not present, the 20202022 Annual Meeting may be adjourned in order to solicit additional proxies.
How are votes counted?
Each holder of Common Stock will be entitled to one vote for each share of Common Stock held by such stockholder. Except for the election of directors and except as otherwise required by law, the Second Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”) and the Second Amended and Restated Bylaws (the “Bylaws”), the affirmative vote of a majority of the voting power of the shares of capital stock present or represented by proxy at the meeting2022 Annual Meeting and entitled to vote on the subject matter shall be the act of the stockholders. A plurality of the voting power of the shares of capital stock present in person or represented by proxy at the meeting2022 Annual Meeting and entitled to vote with respect to the election of directors shall elect directors.
Election of Directors (Proposal 1)
To be elected as a Director,director, a nominee must receive a plurality of the voting power of the shares of capital stock present in person or represented by proxy and entitled to vote and, therefore, "withhold votes" will not impact the outcome of the elections.
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Advisory and Non-Binding Vote to Approve the Compensation of the Company’s Named Executive Officers (Proposal 2)
Approval, in an advisory and non-binding vote, of the compensation of the Company’s named executive officers requires the affirmative vote of a majority of the voting power of the shares of capital stock present or represented by proxy and entitled to vote at a meeting at which a quorum is present. Under Delaware law, abstentions are counted as shares present and entitled to vote at the meeting. Therefore, abstentions will have the same effect as a vote "against" the approval, in an advisory and non-binding vote, of the compensation of the Company’s named executive officers.
Ratification of Independent Registered Public Accounting Firm (Proposal 3)
Ratification of the appointment of Deloitte & Touche LLP as the Company's independent registered public accounting firm for Fiscal 20202022 requires the affirmative vote of a majority of the voting power of the shares present or represented by proxy and entitled to vote at a meeting at which a quorum is present. Under Delaware law, abstentions are counted as shares present and entitled to vote at the meeting. Therefore, abstentions will have the same effect as a vote "against" the ratification of the Company's independent registered public accounting firm.
Shares represented by proxy will be voted as directed on the proxy form and, if no direction is given, will be voted as follows:
1."FOR" the election of each of the director nominees;
2."FOR" the approval, in an advisory and non-binding vote, of the compensation of the Company’s named executive officers as disclosed in the Proxy Statement;
3."FOR" the ratification of the appointment of Deloitte as the Company's independent registered public accounting firm for Fiscal 2022; and
4.In the best judgment of the persons named in the proxies, with respect to any other matters that may properly come before the 2022 Annual Meeting.
What are broker non-votes, and how are they counted?
Brokers, banks or other similar organizations holding shares in street name for customers who are beneficial owners of such shares are prohibited from voting customers' shares on non-routine matters in the absence of specific instructions from those customers. This is commonly referred to as a "broker non-vote." With respect to the proposals in question, broker non-votes will be counted for quorum purposes but will not be counted as "votes cast" either for or against such proposals.
The election of directors and the advisory approval of the compensation of the Company's named executive officers are considered non-routine matters and, therefore, if you hold your shares through a bank, broker or other similar organization, the organization may not vote your shares on these matters absent specific instructions from you. As such, there may be broker non-votes with respect to these matters. With respect to the proposals in question, broker non-votes will be counted for quorum purposes but will not be counted as "votes cast" either for or against such proposals.Because broker non-votes with respect to these matters will not be counted as "votes cast," if your shares are held in street name, it is critical that you vote or provide specific instructions to your broker, bank or similar organization if you want your vote to count.
If you received more than one proxy card, you may hold shares in more than one account. To ensure that all of your shares are voted, you must vote each proxy card by one of the approved methods: either by signing and return each proxy card by mail, voting each proxy card by phone or voting each proxy card online as described above. You also may attend and vote during the meeting.2022 Annual Meeting.
Is my vote confidential?
Yes, it is our policy that documents identifying your vote are confidential. The vote of any stockholder will not be disclosed to any third party before the final vote count at the 20202022 Annual Meeting except:
•To meet any legal requirements;
•To assert claims for or defend claims against the Company;
•To allow authorized individuals to count and certify the results of the stockholder vote;
•To facilitate a successful proxy solicitation; or
•To respond to stockholders who have written comments on proxy cards.
What is the Company's internet address?
The Company's internet address is www.franchisegrp.com. The Company's filings with the SEC are available free of charge via the "Financial Information" link at this website (click on the "SEC Filings" heading) and may also be found at the SEC's website at www.sec.gov.
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PROPOSAL 1 - ELECTION OF DIRECTORS
BOARD MEMBERSHIP CRITERIA AND PROCESS
In assessing the candidates for recommendation to the Board as director nominees, the Nominating and Corporate Governance Committee of the Board (the "Nominating Committee") considers the appropriate balance of skills, knowledge, diversity of background and experience, and expertise useful and appropriate to the effective oversight of our business. Additionally, the Nominating Committee takes into account the qualifications of the individual candidate as well as the composition of the Board as a whole. The Nominating Committee is committed to advancing diversity and the Company believes that its director nominees further its commitment to enhancing diversity at the Board level. The Board and the Nominating Committee believe that the seven nominated directors encompass a range of talents, skills and expertise sufficient to provide sound and prudent guidance with respect to all of the Company’s operations and interests and the interests of the Company’s stockholders. Additionally, the Board and the Nominating Committee believe that the director nominees reflect the diversity of the Company’s stockholders, employees, franchisees, dealers, customers and the community.
The Nominating Committee’s process for identifying and evaluating candidates to be nominees to the Board is typically initiated by identifying a candidate who meets the criteria for selection as a nominee and has the specific qualities or skills being sought based on input from members of the Board, management and, if the Nominating Committee deems appropriate, a third-party search firm which would help to identify candidates. The Nominating Committee considers candidates who are recommended by directors or stockholders, and who satisfy the qualifications we seek in our directors. A stockholder may recommend a director candidate. Instruction for submitting a director nominee is included under the "Nominating Committee" section below.
Our Certificate of Incorporation and Bylaws provide that except as may be provided in a resolution or resolutions of the Board of Directors providing for any series of preferred stock with respect to any directors elected (or to be elected) by the holders of that series, the total number of directors constituting the entire Board of Directors shall consist of not less than five nor more than fifteen members, with the precise number of directors to be determined from time to time by a vote of the Board of DirectorsBoard.
By resolution of the Board, of Directors, the present size of the Board has been established at seven. The Bylaws include an advance notice procedure for stockholder approvals to be brought before an annual meeting of stockholders, including proposed nominations of persons for election to the Board of Directors.Board. No nominations were received for the 20202022 Annual Meeting, and the seven nominees for the Board of Directors being recommended for election at the 20202022 Annual Meeting are being recommended by the Board, of Directors, acting upon the recommendation of the Board's Nominating Committee. Each of the seven nominees, if elected, will hold office until the next annual meeting of stockholders and until his or her successor is elected and qualified. EachFive of the seven nominees is aare current directordirectors of the Board. The Board has nominated Matthew Avril, Patrick A. Cozza,Cynthia S. Dubin, Lisa M. Fairfax, Thomas Herskovits, Brian R. Kahn, Andrew M. Laurence, Lawrence Miller,Gary S. Rich and G. William Minner, Jr.Nanhi Singh for election as directors of the Company. Each nominee has consented to be named and to serve if elected. If any of the nominees becomes unavailable for election for any reason, the proxies will be voted for any substitute nominees.
DIRECTOR NOMINEES
The following table sets forth information regarding our director nominees and designees, as of the date of this Proxy Statement:
| Name | Age | Position(s) | ||||||||||||
| Matthew Avril | ||||||||||||||
| Director | ||||||||||||||
| Lisa M. Fairfax | 51 | Director | ||||||||||||
| Thomas Herskovits | Director | |||||||||||||
| Brian R. Kahn | ||||||||||||||
| Director | ||||||||||||||
| Director | ||||||||||||||
| Nanhi Singh | 52 | Director | ||||||||||||
The Board believes that diversity and inclusion is critical to the success of the Company. As presently constituted, the Board represents a deliberate mix of members who have a deep understanding of our business as well as members who have different skill sets and points of view. Recently adopted listing requirements of NASDAQ require each listed company to have, or explain why it does not have, two diverse directors on the board, including at least one diverse director who self-identifies as female and at least one diverse director who self-identifies as an underrepresented minority or LGBTQ+. Our current board composition is in compliance with this requirement. The matrix below provides certain highlights of the composition of our Board members based on self-identification. Each of the categories listed in the matrix below has the meaning as it is used in NASDAQ Listing Rule 5605(f).
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| Board Diversity Matrix (As of April 1, 2022) | ||||||||||||||||||||||||||
| Total Number of Directors | 7 | |||||||||||||||||||||||||
| Female | Male | Non-Binary | Did Not Disclose Gender | |||||||||||||||||||||||
| Part I: Gender Identity | ||||||||||||||||||||||||||
| Directors | 3 | 4 | — | — | ||||||||||||||||||||||
| Part II: Demographic Background | ||||||||||||||||||||||||||
| African American or Black | 1 | — | — | — | — | |||||||||||||||||||||
| Alaskan Native or Native American | — | — | — | — | — | |||||||||||||||||||||
| Asian | 1 | — | — | — | — | |||||||||||||||||||||
| Hispanic or Latinx | — | — | — | — | — | |||||||||||||||||||||
| Native Hawaiian or Pacific Islander | — | — | — | — | — | |||||||||||||||||||||
| White | 1 | 4 | — | — | — | |||||||||||||||||||||
| Two or More Races or Ethnicities | — | — | — | — | — | |||||||||||||||||||||
| LGBTQ+ | — | — | — | — | — | — | — | |||||||||||||||||||
| Did Not Disclose Demographic Background | — | — | — | — | — | — | — | |||||||||||||||||||
QUALIFICATIONS AND EXPERIENCE OF DIRECTOR NOMINEES
Matthew Avril. Mr. Avril, age 59,61, has served as a director of the Company since September 2018 and is a self-employed consultant. He was appointed as Chairman of the Board of Directors in March 2020. He is currently a member of the strategic advisory board of Vintage Capital Management, LLC (“Vintage”). SinceFrom January 2018 to June 2020, he has beenserved as a director and Chair of the Board of Directors of Babcock & Wilcox Enterprises, Inc. (“Babcock & Wilcox”), a global leader in energy and environmental technologies and services for the power and industrial markets. From November 2016 to March 2017, he served as Chief Executive Officer of Diamond Resorts International, Inc., a company in the hospitality and vacation ownership industries.company. From July 2014 until June 2016, Mr. Avril was a director of Aaron’s, Inc., a leader in the sales and lease ownership and specialty retailing of residential furniture, consumer electronics, home appliances and accessories. From March 2011 to April 2016, Mr. Avril was a director of API Technologies.Technologies Corporation, a developer of radio frequency and microwave, power and securities applications. From February 2015 to March 2016, he was consultant to and Chief Executive Officer-elect for Vistana Signature Experiences, Inc. (“Vistana”), a vacation ownership business. Previously, he served as President, Hotel Group, for Starwood Hotels & Resorts Worldwide, Inc. (“Starwood”), an international hotel and leisure company with extensive franchise operations, from August 2008 to July 2012. From 2002 to 2008, he served in a number of executive leadership positions with Starwood, and from 1989 to 1998, held various senior leadership positions with Vistana. Mr. Avril’s management background provides substantial additional expertise to the Board. Mr. Avril is a Certified Public Accountant (inactive status). Mr. Avril received a B.S.(Accounting) in Accounting from the University of Miami.
Lisa M. Fairfax. Ms.Fairfax, age 51, is currently a tenured professor at the University of Pennsylvania (Carey) Law School (“Penn”), where she is the Presidential Professor and Co-Director of Penn’s Institute for Law & Economics. From July 2009 to June 2021, Ms. Fairfax was a tenured and chaired professor at the George Washington University Law School ("GW"), where she was the Alexander Hamilton Professor of Business Law, and the Founder and Director of the Company since May 2018GW Corporate Law and is managing partner of Cozza Enterprises, LLC, a firm that provides strategic consultation and executive coaching services, a position he has held since January 2014. Mr. Cozza also servesGovernance Initiative. From September 2015 to August 2019, Ms. Fairfax served as an Executive in Residence and Lecturer, Wealth Management, atappointed member of the Silberman CollegeInvestor Advisory Committee of Business, Fairleigh Dickinson University. Mr. Cozza was formerly Chairman and Chief Executive Officer of HSBC Insurance North America, which operated four insurance companies with operations in the United States, Canada, Mexico, India and the United Kingdom, fromSEC. From January 20062008 to December 2014. Concurrently, Mr. Cozza2011, Ms. Fairfax served as Senior Executive Vice President, Retail Banking and Wealth Management - North America for HSBC from January 2011 to December 2014, and previously served as Group Executive, Taxpayer Financial Services and North America and Mexico Insurance for HSBC from January 2002 to December 2006. HSBC Holdings plc is onea member of the world’s largest banking and financial services organizations. Mr. Cozza was also Chief Executive Officer of Taxpayer Financial Services from 2000 to 2002 and held a variety of senior leadership positions, including Chief Financial Officer, Chief Operating Officer and PresidentNational Adjudicatory Council of the Beneficial Insurance Group subsidiariesFinancial Industry Regulation Authority (“FINRA”). From June 2008 to June 2012, Ms. Fairfax served on FINRA’s NASDAQ Market Regulation Committee. Ms. Fairfax is currently Chair of Beneficial Corporation from 1985 to 1998. Mr. Cozzathe Board of Georgetown Day School, an independent K-12 school in Washington, D.C. Ms. Fairfax serves on the BoardsBoard of DirectorsDirectWomen, a nonprofit focused on increasing public company board diversity, and is a member of DirectWomen’s finance and audit
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committee. Ms. Fairfax is an elected member of the National AssociationAmerican Law Institute (“ALI”), and serves on the Advisory Group for the ALI’s Restatement of the Law, Corporate Directors, where he holdsGovernance. Ms. Fairfax is a member of the designationSEC Historical Society Board of Board Leadership Fellow, Junior AchievementAdvisors. Prior to joining GW, Ms. Fairfax was a tenured professor and Director of New Jerseythe Business Law Program at the University of Maryland School of Law. Before entering academia, Ms. Fairfax practiced corporate and securities law with Ropes & Gray LLP in Boston and the Silberman CollegeDistrict of Business at Fairleigh Dickinson University. Mr. CozzaColumbia. Ms. Fairfax’s financial services, securities, capital markets, regulatory environment, board oversight and duties, board oversight of environmental, social and governance (ESG), and corporate governance background provides substantial management, leadership and strategic business experience andadditional expertise to the Board of Directors. Mr. CozzaBoard. Ms. Fairfax received a B.S.Juris Doctorate from Seton Hall UniversityHarvard Law School with honors and an M.B.A.A.B. from Fairleigh Dickinson University.Harvard College with honors.
Thomas Herskovits. Mr. Herskovits, age 73,75, served as a director of the Company from October 2015 until November 2017 and was reappointed to serve as a director in March 2018. Since 2014, Mr. Herskovits has been managing director of Feldman Advisors, a middle market investment banking firm based in Chicago, and since 1996, he has managed private investments through Herskovits Enterprises. From 2013 through February 2014, he was CEO of WinView, Inc., a privately-held technology company. Hecompany, and served on the Board of Directors of that privately-held company from 2012 to 2015. He previously served as non-operating Chairman of the Board of Directors of Natural Golf Corporation, a golf equipment and instruction company, as President & CEO of Specialty Foods, and as President of Kraft Dairy and Frozen Products. Mr. Herskovits was President of the Breakfast Foods Division of General Foods and spent the first nine years of his career in brand management at The Procter & Gamble Company. Mr. Herskovits’ management, finance and consumer products backgrounds provide substantial additional expertise to the Board. Mr. Herskovits received a B.S. in Architecture and Finance and an M.B.A. in Finance and Marketing from Syracuse University.
Brian R. Kahn. Mr. Kahn, age 46,48, has served as a director of the Company since September 2018 and as the Company's President and Chief Executive Officer since October 2019. Mr. Kahn founded and has served as the investment manager of Vintage and its predecessor, Kahn Capital Management, LLC, since 1998. Vintage is a value-oriented, operations-focused, private and public equity investor specializing in the consumer, aerospace and defense, and manufacturing sectors. Since 2012, Mr. Kahn has served as Chairman of the Board of Directors of Buddy’s Newco LLC, an operator and franchisor of rent-to-own stores under the banners of Buddy’s Home Furnishings, Flexi Compras Corp., and Good-to-Go Wheels and Tires. Since January 2018, Mr. Kahn has been a director of Babcock & Wilcox, a global leader in energy and environmental technologies and services for the power and industrial markets. Previously, Mr. Kahn was the Chairman of the boardBoard of directorsDirectors of API Technologies Corporation, a developer of radio frequency and microwave, power and securities applications,from 2011 until 2016 and White Electronic Designs Corporation from 2009 until 2010. Mr. Kahn has also served as a director of Aaron’s, Inc., a leader in the sales and lease ownership and specialty retailing of residential furniture, consumer electronics, home appliances and accessories from 2014 until 2015, and Integral Systems, Inc., a provider of products, systems and services for satellite command and control, telemetry and digital signal processing, data communications, enterprise network management and communications information assurance, from 2011 to 2012.2012, and Babcock & Wilcox, a global leader in energy and environmental technologies and services for the power and industrial markets, from 2018 to 2020. Mr. Kahn brings to the Board extensive management and consumer finance expertise, as well as public company experience. Mr. Kahn received a B.A. from Harvard University.
The Loewen Group, Inc. (now known asBoard unanimously recommends that you vote "FOR" the Alderwoods Group, Inc.), where he served in various management positions, including Executive Vice President of Operations from January 1997 until June 1998, and President of the Cemetery Division from March of 1995 until December 1996. Prior to joining The Loewen Group, Mr. Miller served as President and Chief Executive Officer of Osiris Holding Corporation, a private consolidator of cemeteries and funeral homes of which Mr. Miller was a one-third owner, from November 1987 until March 1995, when Osiris was sold to The Loewen Group. Mr. Miller served as President and Chief Operating Officer of Morlan International, Inc., one of the first publicly traded cemetery and funeral home consolidators from 1982 until 1987, when Morlan was sold to Service Corporation International. Mr. Miller bringselection to the Board of Directors extensive operating and managerial expertise, excellent leadership skills and significant experience in advancing growth strategies, including acquisitions and strategic alliances. Mr. Miller received a B.B.A and an M.B.A. in Finance from Temple University.
COMMITTEES OF THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Our Board of Directors currently has four standingthree principal committees: the Audit Committee, the Compensation Committee and the Nominating Committee. In Fiscal 2021, the committees of Board also included a standing Risk Committee which was disbanded in August 2021. The duties and responsibilities that were previously delegated to the Risk Committee were assumed by the Audit Committee. The responsibilities of each committee are described below. Members serve on these committees until their resignation or until otherwise determined by our Board of Directors.Board. The chart below reflects the current composition of each of the standing committees.committees and the composition of the disbanded Risk Committee.
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| Name of Director | Audit Committee | Compensation Committee | Nominating Committee | Risk Committee (2) | ||||||||||||||||||||||||
| Matthew Avril | X | X | X | |||||||||||||||||||||||||
| Patrick A. Cozza | X | X(1) | ||||||||||||||||||||||||||
| Cynthia S. Dubin | X(1) | X | X | |||||||||||||||||||||||||
| Lisa M. Fairfax | X(1) | |||||||||||||||||||||||||||
| Thomas Herskovits | X | X(1) | ||||||||||||||||||||||||||
| Brian R. Kahn | ||||||||||||||||||||||||||||
| X | ||||||||||||||||||||||||||||
(1) Chairperson of Committee
(2) Disbanded in August 2021
Audit Committee
Our Audit Committee, which met teneight times during the Transition Period,Fiscal 2021, provides oversight of our accounting and financial reporting process, the audit of our financial statements and our internal control function. Among other matters, the Audit Committee assists the Board of Directors in oversight of the independent auditors' qualifications, independence and performance; is responsible for the engagement, retention and compensation of the independent auditors; reviews the scope of the annual audit; reviews and discusses with management and the independent auditors the results of the annual audit and the review of our quarterly consolidated financial statements, including the disclosures in our annual and quarterly reports filed with the SEC; reviews and oversees risk management related to financial matters; establishes procedures for receiving, retaining and investigating complaints received by us regarding accounting, internal accounting controls or audit matters; approves audit and permissible non-audit services provided by our independent auditor; and reviews and approves related party transactions under Item 404 of Regulation S-K. In addition, our Audit Committee oversees our internal audit function.function, including the effectiveness of the Company's internal controls.
In August 2021, the Audit Committee assumed oversight responsibilities of the Company's enterprise risk management, including but not limited to, operational, legal, regulatory, business, franchise, major project, strategic, data and cyber security, credit, liquidity, derivative, reputation and external risks. As part of its oversight, the Audit Committee reviews the Company's enterprise risk management plans and procedures, reviews and discusses with management major risk exposures and the steps management has taken to monitor and control such exposures, and regularly reports to the Board on Company's enterprise risk management program, including those risks noted previously. The Company's management team holds monthly cyber security reviews and provides an update to the Audit Committee on a quarterly basis. In addition, our Audit Committee monitors the Company’s risk profile, including but not limited to, ongoing and potential exposure to operational, reputational and franchise risks.
All members of our Audit Committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and NASDAQ. Our Board of Directors has determined that Mr. Minner has been designated the Company’seach of Messrs. Avril and Cozza and Ms. Dubin qualify as an audit committee financial expert as defined under the applicable rules of the SEC and NASDAQ. The current members of the Audit Committee are listed above. The members of the Audit Committee during the Transition Period were Messrs. Cozza, Laurence, Miller, Minner and Mr. Bryant Riley who voluntarily stepped down from the Company's Board of Directors on March 31, 2020. All of the current members of our Audit Committee are, and all of the members who served on the Audit Committee during the Transition PeriodFiscal 2021 were, independent as defined under the applicable rules and regulations of the SEC and NASDAQ. The Board has adopted a written Audit Committee Charter, which is available at the Company's website at www.franchisegrp.com or upon written request to the AssistantDeputy General Counsel, Franchise Group, Inc., 1716 Corporate Landing Parkway, Virginia Beach, Virginia 23454.109 Innovation Court, Suite J, Delaware, Ohio 43015.
Compensation Committee
Our Compensation Committee, which met nine times during the Transition Period,Fiscal 2021, adopts and administers the compensation policies, plans and benefit programs for our executive officers and all other members of our executive team. In addition, among other things, our Compensation Committee annually evaluates, in consultation with the Board, of Directors, the performance of our Chief Executive Officer, reviews and approves corporate goals and objectives relevant to compensation of our Chief Executive Officer and other executives, and evaluates the performance of these executives in light of those goals and objectives.objectives and oversees the development of the Company's succession plan. Our Compensation Committee also adopts and administers our equity compensation plans.
The current members of the Compensation Committee are listed above. The members of the Compensation Committee during the Transition Period were Messrs. Avril, Cozza, Minner, and Mr. Kenneth Young, who voluntarily stepped down from the Company’s Board of Directors on March 31, 2020. All of the current members of our Compensation Committee are, and all of the members who served on the Compensation Committee during the Transition PeriodFiscal 2021 were, independent under the applicable rules and regulations of the SEC and NASDAQ, and Section 162(m) of the Internal Revenue Code (the “Code”). The Board has adopted a written Compensation Committee Charter, which is available at the Company's website at www.franchisegrp.com or upon written request to the AssistantDeputy General Counsel, Franchise Group, Inc., 1716 Corporate Landing Parkway, Virginia Beach, Virginia 23454.109 Innovation Court, Suite J, Delaware, Ohio 43015.
Nominating Committee
Our Nominating Committee, which met threeseven times during the Transition Period,Fiscal 2021, is responsible for, among other things, making recommendations regarding the composition of our Board, of Directors, identification, evaluation and nomination of director candidates and the structure and composition of committees of our Board of Directors.Board. The Nominating Committee is also responsible for considering candidates nominated by stockholders for election to the Board, evaluating the proposed candidates and making recommendations regarding the candidates to the Board. The Nominating Committee considers candidates for Board membership recommended by its members and other Board members, as
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well as by management and stockholders. While there are no formal procedures for stockholders to submit director candidate recommendations, the Nominating Committee will consider candidates recommended in writing by stockholders entitled to vote in the election of directors. Such written submissions should include the name, address, and telephone number of the recommended candidate, along with a brief statement of the candidate's qualifications to serve as a director. All such stockholder recommendations should be submitted to the attention of the Company’s AssistantDeputy General Counsel at the Company’s principal office located at Franchise Group, Inc., 1716 Corporate Landing Parkway, Virginia Beach, Virginia 23454109 Innovation Court, Suite J, Delaware, Ohio 43015 and must be received in a reasonable time prior to the next annual election of directors to be considered by the Nominating Committee. Any director candidate recommended by a stockholder will be reviewed and considered by the Nominating Committee in the same manner as all other director candidates based on the qualifications described in this section. In addition, our Nominating Committee approves our Committee charters, oversees compliance with our code of business conduct and ethics, reviews actual and potential conflicts of interest of our directors and officers other than related party transactions reviewed by the Audit Committee and oversees the Board self-evaluation process.
The current members of the Nominating Committee are listed above. The members of the Nominating Committee during the Transition Period were Messrs. Herskovits, Kahn, Miller, and Young. All of the current members of our Nominating Committee are, and all members who served on the Nominating Committee during the Transition PeriodFiscal 2021 were, independent under the rules and regulations of NASDAQ. The Board has adopted a written Nominating Committee Charter, which is available at the Company’s website at www.franchisegrp.com or upon written request to the AssistantDeputy General Counsel, Franchise Group, Inc., 1716 Corporate Landing Parkway, Virginia Beach, Virginia 23454.109 Innovation Court, Suite J, Delaware, Ohio 43015.
Risk Committee
Our Risk Committee, which was disbanded in August 2021, met three times during Fiscal 2021. Previously, the Transition Period, isRisk Committee was responsible for, among other things, risk governance structure, risk management and review of operational risk assessment guidelines and policies. All of the current members of our Risk Committee are independent under the rules and regulations of NASDAQ. In addition, our Risk Committee overseesoversaw the performance of the internal compliance department evaluates and reportsevaluated and reported on the adequacy of our system of internal controls and processes governing all aspects of compliance operations. OurThese duties and responsibilities were transferred to our Audit Committee following the disbandment of our Risk Committee. The directors that served on the Risk Committee during Fiscal 2021 are listed above.
CORPORATE GOVERNANCE PRACTICES
The Company maintains robust governance practices and is also responsible for assistingcommitted to strong corporate governance practices that are designed to maintain high standards of oversight, accountability, integrity and ethics. The Board believes this commitment promotes and benefits the long-term interests of our stockholders. We regularly review and update our corporate governance practices in response to best practices, changes in law, and other corporate developments, as well as the evolving needs of our business. Additionally, the Company documents key components of its corporate governance system, including through its written Code of Conduct, Insider Trading Policy, Company Corporate Governance Guideline, Disclosure Committee Charter, and Board of Directors in its oversightCharter and review of information regarding our risk management approach.Corporate Governance Guidelines.
Code of Conduct
All directors, officers and employees of the Company must adhere to the ethical standards as set forth in the Company's Code of Conduct (the "Code of Conduct"), which was amended in July 2018November 2021 to address policies and procedures including, but not limited to, conflicts of interests and related party transactions. The fundamental principles outlined in the Code of Conduct serve as a guide for matters, including but not limited to, adhering to ethical standards in day to dayday-to-day activities, engaging in fair dealings and best business practices, complying with state, federal and foreign laws, identifying conflicts of interest, ensuring financial integrity and reporting violations of the Code of Conduct. There are many resources in which potential violations of the Code of Conduct may be reported as well as related concerns or to seek guidance on ethical matters through in-person, email and telephone communications. The Company has established aan anonymous Code of Conduct and Compliance Hotline at 800-216-1288844-989-1499 or by email at www.franchisegroup.ethicspoint.com and reports of possible violationviolations can also be made to the Human Resources Officer, the Compliance Department on the Compliance Hotline at 877-472-2110 or by email at www.lighthouse-services.com/libtax.
Officer. The Code of Conduct is available at the Company’s website at www.franchisegrp.com or upon written request directed to the AssistantDeputy General Counsel in writing at 1716 Corporate Landing Parkway, Virginia Beach, Virginia 23454,109 Innovation Court, Suite J, Delaware, Ohio 43015, Attention: AssistantDeputy General Counsel, or by email at tiffany.mcwaters@libtax.com.tmcwaters@franchisegrp.com.
| Name | Fees Earned or Paid in Cash | Stock Awards (1) (2) | Option Awards (3) (4) | All Other Compensation | Total | |||||||||||||||
| Matthew Avril | $ | 38,139 | $ | 21,665 | $ | 43,334 | $ | — | $ | 103,138 | ||||||||||
| Patrick A. Cozza | 72,745 | 21,665 | 43,334 | — | 137,744 | |||||||||||||||
| Thomas Herskovits | 63,899 | 21,665 | 43,334 | — | 128,898 | |||||||||||||||
| Lawrence Miller | 58,139 | 21,665 | 43,334 | — | 123,138 | |||||||||||||||
| G. William Minner, Jr. | 67,188 | 21,665 | 43,334 | — | 132,187 | |||||||||||||||
| Bryant R. Riley (5) | 41,440 | 21,665 | 43,334 | — | 106,439 | |||||||||||||||
| Kenneth M. Young (5) | 37,323 | 21,665 | 43,334 | — | 102,322 | |||||||||||||||
Our Board of Directors has undertaken a review of its composition, the composition of its committees and the independence of each director. Based on the review of each director's background, employment and affiliations, including family relationships, the Board of Directors has determined that, except for Mr. Kahn, and Mr. Laurence, all of our current directors are “independent” under the applicable rules and regulations of the SEC and NASDAQ. In making this determination, our Board of Directors considered the current and prior relationships that each non-employee director has with the Company and all other facts and circumstances our Board of Directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock.
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Risk Oversight and Management
Risk is inherent with every business, and the Company faces a number of risks, including financial, business, operational, cyber security, strategic, legal and compliance and reputational risks. Our Board plays an active role, as a whole and also at the committee level, in overseeing the management of our risks. The Risk Committee was established to have oversight responsibility of the Company’s risk governance structure, risk management and to monitor the Company's operational risks. However, the Board of Directors expects the Company’s management to take primary responsibility for identifying material risks the Company faces and communicating them to the Risk Committee and to the Board, developing and implementing appropriate risk management strategies responsive to those risks with oversight from the Risk Committee, and integrating risk management into the Company's decision-making processes. The Company has designed and implemented an enterprise risk management ("ERM") program to monitor, address and manage risks in our operations and reports those findings to the Board on at least a quarterly basis. Each of Directorsthe committees of our Board also oversees the management of Company risks that fall within the committee’s areas of responsibility. The Audit Committee regularly reviews information regarding the Company’s credit, liquidity, regulatory and operational risksmonitors financial reporting and internal controls, as well as strategiesrisks associated with credit, liquidity and operations. In addition, on at least a quarterly basis, the Audit Committee receives a report from management on the Company's ERM, where among other topics, they discuss strategy and risks facing the Company. The Nominating Committee assists the Board in overseeing risks associated with Board organization, membership, structure and corporate governance. The Compensation Committee assists the Board in reviewing whether any material risks arise from our compensation programs and in overseeing risks associated with succession planning for addressingour executives. The Board also reviews our director and managingofficer insurance annually.
The Company understands the importance of safeguarding our informational technology system, our customers' personal information, our associates' private data, supplier's data and our business records, intellectual property and other sensitive information. Our Board and management team has significant expertise and representation from the technology and cybersecurity fields, including Ms. Singh who is a director nominee and our Vice President of Internal Audit who oversees risk management, governance and internal control processes. Additionally, our designated internal Chief Information Security Officer also currently serves as the Chief Information Security Officer at one of our business segments and provides regular updates to our Audit Committee and periodic updates to our Board regarding the status and effectiveness of our cybersecurity and data privacy program. Our Board appreciates the evolving nature of our businesses and industries and is actively involved with monitoring new threats and risks as they emerge. In particular, our Board is committed to the timely detection, protection against and mitigation efforts of cybersecurity incidents and threats to the Company. Our Audit Committee actively engages in such activities as considering input from the Company's cybersecurity team and others to better understand the threats to the security of our businesses and subsequent impact, as well as evaluating methods for validating the effectiveness of our cybersecurity efforts. In addition to the Company's internal cyber security and data privacy program, policies and procedures, in Fiscal 2021, the Company engaged a third-party security service provider to perform a multi-phased assessment of ransomware and incident readiness. To date, the Company has not experienced a material data or informational security breach.
Environmental, Human Capital, Social and Governance Practices
We believe that only an ethical, financially healthy and transparent company with effective corporate governance can grow, attract the necessary resources and create real long-term benefits for our stockholders, employees, franchisees and other stakeholders. These values extend to our ESG efforts as we consciously strive to make a positive impact on the environment and uphold social responsibility. The stewardship of our ESG practices starts at the top with both our Board and executive management team taking active roles. In February 2022, our Board amended the charter of our Nominating Committee to include oversight of ESG practices and initiatives. Our management team provides reports on these risks. matters to the Nominating Committee on a regular basis. We intend to keep our investors updated on our ESG efforts on our website.
Environmental. Certain of our products and activities are subject to federal, state and local regulatory requirements relating to environmental, waste management and health and safety matters, including measures relating to the release, use, storage, treatment, transportation, discharge, disposal and remediation of contaminants, hazardous substances and waste, as well as practices and procedures applicable to the operation of certain Company facilities. The Company remains committed to operating our businesses in a manner that is socially and environmentally responsible and that protects the health and well-being of our employees, our franchisees and our customers.
Human Capital. The Company embraces diversity and multiculturalism and is reinforcing a culture of inclusion by committing to even greater transparency and comprehensive training to improve diversity, equity and inclusion ("DEI") within the Company and to ensure every employee is treated with dignity and respect. Our ultimate goal is to foster an atmosphere of acceptance, inclusion, trust and of mutual respect for all. To reach that goal, the Company invests in attracting diverse candidates, developing and retaining the best talent and providing opportunities where our employees can develop and grow their careers. Throughout our business segments, we currently have active DEI committees and committees promoting women’s leadership to further enhance our diversity efforts.
The Company is committed to ensuring diversity at all levels, including our senior management. Out of our twelve executive officers and directors, three are women, one is African American and one is Asian. At the close of Fiscal 2021, the Company reported that women represented 36.9% of the executive management team enterprise wide.
Social Responsibility. The Company believes that social responsibility is a critical component to being a good corporate citizen and driving stockholder value by sustaining the equilibrium between the business of the Company and the communities where we work and live. Pursuant to its charter, our Nominating Committee has the responsibility to review and oversee the Company's actions on issues and policies related to corporate social responsibility (such as human rights, health and safety, diversity, equity and inclusion, workplace rights, employee development and training, and public policy advocacy efforts), sustainability and philanthropy, among other matters. The Company supports and encourages our employees to contribute directly to the community with their time and resources. Additionally, our robust Code of Conduct demonstrates our commitment to an ethical workplace, empowering all stakeholders to play an active role in ensuring we conduct business consistent with our values.
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Governance. Our Board is highly involved in every aspect of our Company’s governance and has taken additional action to explicitly delegate roles in key areas to specific committees and management to ensure accountability. Our Board meets the NASDAQ board diversity requirements regarding women and under-represented groups. In addition, our Nominating Committee oversees ESG matters.
Meeting Attendance
During Fiscal 2021, our Board held nine meetings, either in person or by telephone. Each director attended at least 75% of the aggregate of (1) the total number of meetings of the Board suchheld while they were a director, and (2) the total number of meetings held by all committees on which they served during the periods that they served on the committee.
Director Attendance at Annual Meeting of Stockholders
All Board members attended the Company’s Annual Meeting of Stockholders held on May 4, 2021.
Communications with the Board
Stockholders and other interested parties wishing to communicate with the Board, the non-employee directors, or an individual Board member concerning the Company may do so by writing to the Board, to the non-employee directors, or to the particular Board member, and mailing the correspondence to the Deputy General Counsel, Franchise Group, Inc., 109 Innovation Court, Suite J, Delaware, Ohio 43015. Please indicate on the envelope whether the communication is from a stockholder or other interested party. In addition, our Board members have made and may in the future make themselves available for consultation and direct communication with significant stockholders.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 2021, none of the members of the Compensation Committee was an officer or employee of the Company. No executive officer of the Company served on the compensation committee (or other board committee performing equivalent functions) or on the board of directors of any entity having an executive officer who served on the Compensation Committee.
NON-EMPLOYEE DIRECTOR COMPENSATION
The Compensation Committee generally reviews non-employee director compensation every two years. Non-employee director compensation is reviewed and approved by the Board based on the recommendations of the Compensation Committee. The Compensation Committee periodically reviews non-employee director compensation in an effort to determine if the Company pays competitive compensation to attract and retain highly-qualified directors. In Fiscal 2021, non-employee directors received an annual retainer of $87,500 or an equal amount of compensation in the form of restricted stock. In addition, directors who served as the Audit and Compensation Committees, manage risks within their areaChairperson of responsibility. In particular, the Audit Committee, monitors financial, credit and liquidity risk issues, and the Compensation Committee, monitorsNominating Committee and Risk Committee received annual retainers of $20,000, $15,000, $10,000 and $10,000, respectively. Additionally, directors who served on the Audit Committee, Compensation Committee, Nominating Committee and Risk Committee received annual retainers of $10,000, $7,500, $5,000 and $5,000, respectively. Our committee members are also entitled to receive this cash compensation in the form of restricted stock, if they so elect. In Fiscal 2021, we also granted each of our non-employee directors stock-based compensation in the form of restricted stock units (“RSUs”) in an approximate value of $87,500. The Chairman of the Board received an additional RSU retainer equivalent to approximately $100,000.
For Fiscal 2022, non-employee directors will receive an annual retainer of $87,500 or an equal amount of compensation in the form of restricted stock. In addition, those directors who serve as Chairperson of the Audit Committee, Compensation Committee and Nominating Committee will receive annual retainers of $20,000, $15,000 and $10,000, respectively. Additionally, directors who serve on the Audit Committee, Compensation Committee and Nominating Committee received annual retainers of $10,000, $7,500 and $5,000, respectively. Our committee members are also entitled to receive this cash compensation in the form of restricted stock, if they so elect. For Fiscal 2022, we will also grant each of our non-employee directors stock-based compensation in the form of RSUs with an approximate value of $87,500. The Chairman of the Board will receive an additional RSU retainer equivalent to approximately $100,000.
The table below sets forth all compensation paid to our non-employee directors for Fiscal 2021. Information regarding Mr. Kahn and Mr. Laurence's compensation for Fiscal 2021 is included under “Executive Compensation.”
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| Name | Fees Earned or Paid in Cash | Stock Awards (1) (2) | Option Awards (3) (4) | All Other Compensation | Total | |||||||||||||||||||||||||||
| Matthew Avril (5) | $ | 101,902 | $ | 187,496 | $ | — | $ | — | $ | 289,398 | ||||||||||||||||||||||
| Patrick A. Cozza (6) | 107,919 | 87,488 | — | — | 195,407 | |||||||||||||||||||||||||||
| Thomas Herskovits (7) | 92,205 | 87,488 | — | — | 179,693 | |||||||||||||||||||||||||||
| Cynthia S. Dubin (8) | 75,824 | 87,517 | — | — | 163,341 | |||||||||||||||||||||||||||
| Lisa Fairfax (9) | 106 | 150,625 | — | — | 150,731 | |||||||||||||||||||||||||||
| Larry Miller (10) | 19,911 | — | — | — | 19,911 | |||||||||||||||||||||||||||
| Bill Minner (11) | 22,411 | — | — | — | 22,411 | |||||||||||||||||||||||||||
(1)Amounts in this column reflect the grant date fair value of the RSUs granted to each non-employee director under the Company's compensation programs so that those programs do not encourage excessive risk-taking2019 Omnibus Plan, calculated in accordance with FASB Accounting Standards Codification Topic 718 ("ASC Topic 718"), based on the fair market value, as determined by Company employees.
(2)The value reported in the “Stock Awards” column represents RSUs granted to directors which generally vest and become subject to settlement 12 months after the date of grant. Each RSU represents the right to receive upon settlement of one share of the Company’s Common Stock. The aggregate amount of RSUs outstanding as of December 25, 2021 for Mr. Avril was 5,047 (which includes the additional RSU retainer as noted above for his role as Chairman of the Board), Mr. Cozza was 2,355, Mr. Herskovits was 2,355, Ms. Dubin was 2,255, and Ms. Fairfax was 2,255. For each of the seven nominees identified aboveawards, the grant date fair value of these awards is calculated using the closing price of the Company's Common Stock on the date of grant.
(3)Amounts in this column reflect the grant date fair value of the options granted to each director, under the Company's 2019 Omnibus Plan calculated in accordance with ASC Topic 718, based on the fair market value, as "Director Nominees."determined by the Board of the Company's Common Stock on the date of grant.
(4)The aggregate number of option awards outstanding as of December 25, 2021 for each of Messrs. Avril, Cozza, Herskovits was 23,188.
(5)Fees earned for Mr. Avril includes an $87,500 annual board retainer fee, a $10,000 Audit Committee member retainer fee, a $7,500 Compensation Committee member retainer fee, and a $5,000 Nominating Committee member retainer fee.
(6)Fees earned for Mr. Cozza includes an $87,500 annual board retainer fee, a $10,000 Audit Committee member retainer fee, and a $15,000 Compensation Committee chairman retainer fee.
(7)Fees earned for Mr. Herskovits includes an $87,500 annual board retainer fee, and a $5,000 Nominating Committee retainer fee.
(8)Fees earned for Ms. Dubin includes an $87,500 annual board retainer fee, a $20,000 Audit Committee chairman retainer fee, and a $7,500 Compensation Committee member retainer fee.
(9)Fees earned for Ms. Fairfax includes an $87,500 annual board retainer fee and a $10,000 Nominating Committee chairman retainer fee. Ms. Fairfax opted to receive compensation of 1,546 shares in lieu of cash, which is included in the stock awards column. Any excess payment for remainder of shares was paid in cash.
(10)Fees earned for Mr. Miller includes an $87,500 annual board retainer fee and a $7,500 Compensation Committee member retainer fee, pro-rated for the period of time Mr. Miller served on the Board, through May 3, 2021.
(11)Fees earned for Mr. Minner includes an $87,500 annual board retainer fee, a $20,000 Audit Committee chairman retainer fee, and a $7,500 Compensation Committee member retainer fee, pro-rated for the period of time Mr. Minner served on the Board, through May 3, 2021.
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EXECUTIVE OFFICERS
The following table sets forth certain information regarding our current executive officers:
| Name | Age | Position(s) | ||||||||||||
| Brian R. Kahn | President and Chief Executive Officer | |||||||||||||
| Eric F. Seeton | Chief Financial Officer | |||||||||||||
| Andrew M. Laurence | Executive Vice President | |||||||||||||
| Andrew F. Kaminsky | Executive Vice President and Chief Administrative Officer | |||||||||||||
| Kenneth Todd Evans | 58 | Chief Franchising Officer | ||||||||||||
| Lee Wright | 50 | Executive Vice President and Chief Commercial Officer | ||||||||||||
Brian R. Kahn. Mr. Kahn has served as the Company's President and Chief Executive Officer since October 2, 2019. Mr. Kahn currently serves as a director on the Company's Board. Additional information about Mr. Kahn’s business experience is disclosed under the Qualifications and Experience of Director Nominees section in this Proxy Statement.
Eric F. Seeton. Mr. Seeton has served as the Company's Chief Financial Officer since October 28, 2019. From September 2015 until October 2019, Mr. Seeton served as the Senior Vice President and Chief Financial Officer of API Technologies Corporation, a developer of radio frequency and microwave, power and securities applications. Prior to API Technologies Corporation, Mr. Seeton served as the Business Unit Finance Director for the radio frequency and microwave business unit from July 2014 until September 2015 at Analog Devices, Inc. and as the Director of Corporate Finance for Hittite Microwave Corp. from July 2011 until its acquisition by Analog Devices, Inc. in July 2014. Mr. Seeton is a Certified Public Accountant (inactive status) and holds a Bachelor of Science degree in Accounting from Bentley College (now Bentley University) and an M.B.A. from Cornell University.
Andrew M. Laurence. Mr. Laurence has served as the Company's Executive Vice President since October 2, 2019. Mr. Laurence currently serves2019 and previously served as a director on the Company's Board. Additional information aboutBoard from September 2018 until May 2021. Mr. Laurence’s business experienceLaurence is disclosed undera partner of Vintage since January 2010, responsible for all aspects of its transaction sourcing, due diligence and execution. From January 2015 until its sale in October 2021, Mr. Laurence served as a director, member of the Qualificationsaudit committee and Experiencechairman of Director Nominees section in this Proxy Statement.the special committee of the board of IEC Electronics Corp., a provider of electronic manufacturing services to advanced technology companies that produce products for the medical, industrial, aerospace and defense sectors. Mr. Laurence also serves as Manager of East Coast Welding & Fabrication, LLC, a metals fabrication and machining business. Mr. Laurence served as Corporate Secretary of API Technologies from January 2011 until February 2016; he also served as Vice President of Finance and Chief Accounting Officer from January 2011 to June 2011. He is also a director of non-profits Good Sports, Inc. and Beth Israel Deaconess Hospital - Milton. Mr. Laurence received a B.A. from Harvard University.
Andrew F. Kaminsky. Mr. Kaminsky has served as the Company's Executive Vice President and Chief Administrative Officer since October 2, 2019. Prior to joining the Company, Mr. Kaminsky held various executive and operating positions with Viavi Solutions Inc., Cobham plc and Aeroflex Holding Corp. From April 2018 through June 2019, Mr. Kaminsky was an Executive Consultant in Strategic Initiatives to the CEO of Viavi Solutions Inc., focusing on mergers and acquisitions, their subsequent integration and driving operational efficiencies across the company. From September 2014 through April 2018, Mr. Kaminsky held various roles with Cobham plc, most recently as the Senior Vice President of Strategic Initiatives. From March 2010 through its sale to Cobham plc in September 2014, Mr. Kaminsky was a Senior Vice President and Head of Corporate Development, Investor Relations and Human Resources for Aeroflex Holding Corp. Prior to his corporate roles, Mr. Kaminsky spent over 15 years as an investment banker, including as a Managing Director at Oppenheimer & Co. Inc. and CIBC. In 2001, Mr. Kaminsky co-founded and presently serves as the Chairman and Executive Director of the Greg Richards, Larry Polatsch and Scott Weingard Memorial Fund, a 9/11 not-for-profit charity. Mr. Kaminsky holds a Bachelor’s degree from the University of Michigan and aan M.B.A. in Finance and Management from the Stern School of Business at New York University.
Kenneth Todd Evans. Mr. Evans has served as the Company's Chief Franchising Officer since August 1, 2020. Prior to joining Franchise Group, Mr. Evans served as Vice President of Franchising with UBREAKIFIX/Asurion, a franchised consumer electronics repair company, from May 2015 through July 2020. From April 2014 through May 2015, Mr. Evans served as Vice President of Franchising with Rent A Tire. From June 1991 through Mach 2014, Mr. Evans served various executive roles including Vice President of Franchising with Aaron’s, Inc., a franchised consumer durables leasing company. Mr. Evans holds a Bachelor of Science degree in Business Administration from East Carolina University.
Lee Wright. Mr. Wright has served as the Company's Chief Commercial Officer since January 3, 2022. Prior to joining Franchise Group, Mr. Wright served in various executive positions at Conn’s, Inc. ("Conn's") including Chief Operating Officer and Chief Financial Officer. Prior to joining Conn’s, Mr. Wright served as President and then CEO of Professional Directional Enterprises, Inc., an energy services company. Prior to his corporate roles, Mr. Wright held various investment positions for 16 years within several private equity firms, including as a Senior Managing Director at Diamond Castle and as a Director at DLJ Merchant Banking Partners. Prior to his time spent in private equity, Mr. Wright was an analyst in Credit Suisse First Boston’s Investment Banking division. Mr. Wright holds a Bachelor of Science degree, magna cum laude and Phi Beta Kappa, from Washington & Lee University.
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COMPENSATION DISCUSSION AND ANALYSIS
Our compensation discussion and analysis for(“CD&A”) describes the Transition Period (the “CD&A”) discusses the compensation for our “named executive officers” set forth in detail in the Transition Period Summary Compensation Table and the other tables and accompanying footnotes that follow this section. This section explains our executiveCompany's compensation philosophy objectives and design, our compensation-setting process, our executive compensation program components and the decisions made in the Transition Period forpay programs that we provided to our named executive officers.
(“NEOs”) in Fiscal 2021. The below CD&A provides an overview of our business performance for the Transition Period,Fiscal 2021, highlights the key components and structure of our executive compensation program, discusses the principles underlying our compensation policies and procedures and addresses other matters we believe explain and demonstrate our performance-based compensation philosophy. Because it describes our executive compensation program for the Transition Period, in most cases, this CD&A does not address the impact of COVID-19 pandemic on the global economy, our business and financial results or our executive compensation forOur NEOs during Fiscal 2020.2021 are listed below:
| Name | Position(s) | |||||||
| Brian R. Kahn | President and Chief Executive Officer | |||||||
| Eric F. Seeton | Chief Financial Officer | |||||||
| Andrew M. Laurence | Executive Vice President | |||||||
| Andrew F. Kaminsky | Executive Vice President and Chief Administrative Officer | |||||||
| Kenneth Todd Evans | Chief Franchising Officer | |||||||
Executive Summary, Compensation Overview and Objectives
We strive to establish compensation practices that attract, retain and reward our senior management, motivate our executives to achieve our overall business objectives, and strengthen the mutuality of interestsalignment between our senior management and our stockholders. We believe that the most effective executive compensation program is one that is conservative, but competitive, and that aligns the compensation of our senior management with the creation of stockholder value. Under the oversight of the Compensation Committee, we have developed and implemented a pay-for-performance executive compensation program that is conservative, but competitive and rewards senior management for the achievement of certain financial and performance objectives.
Our program consists primarily of three direct compensation elements: (i) salary, (ii) annual incentive compensation, and (iii) long-term equity compensation as detailed in the table below.
| Base Salary | Annual Incentive Compensation | RSUs | Performance Restricted Stock Units (“PRSUs”) | |||||||||||
| Form of Compensation | Cash | Cash | Equity | Equity | ||||||||||
| Performance Timing | Short-Term Emphasis | Short-Term Emphasis | Long-Term Emphasis | Long-Term Emphasis | ||||||||||
| Compensation Period | N/A | Annual Performance | 3 Years | 3 Years | ||||||||||
| Key Performance Measures | N/A | Annual Financial, Operational & Individual Performance | Multi-Year Financial Performance & Stock Price Appreciation | Multi-Year Financial Performance & Stock Price Appreciation | ||||||||||
| Determination of Performance-Based Payouts | N/A | 70% Formulaic/30% Discretion based on Individual Performance | Time Vested | Formulaic | ||||||||||
Our NEOs’ total direct compensation reflects a mix of the above elements. We achieve the philosophiesphilosophy of pay-for-performance and alignment of senior management compensation with stockholder value creation primarily by providing a substantial portion of each executive's total annual compensation through annual performance bonuses and grants of long-term equity compensation. The Compensation Committee also believes that there must be a meaningful link between the compensation paid to our executives and our goal of long-term, sustainable growth for our stockholders. For the Transition Period,Fiscal 2021, the Compensation Committee tied the level of potential bonus payments for each of the named executive officers solelyNEOs as follows: 70% of the potential payout allocated to Company-wide financialthe achievement of pro-forma adjusted EBITDA of the Company, and 30% to the discretion of the Chief Executive Officer based on a review of individual performance, objectives.components of which are discussed further in the "Fiscal 2021 Compensation Components" section in this Proxy Statement. For the Chief Executive Officer, 30% of the potential payment was at the discretion of the Board based on a review of his individual performance, components of which are discussed further in the "Fiscal 2021 Compensation Components" section in this Proxy Statement.
Determination of Compensation
Our Compensation Committee is responsible for determining our compensation and benefit plans generally and has established and reviewed all compensatory plans and arrangements with respect to our named executive officers.NEOs. The Compensation Committee meets not less than four times annually to specifically review and determine adjustments, if any, to all elements of compensation, including base salary, annual bonus compensation and long-term equity awards. The Compensation Committee annually evaluates the achievement of performance goals for the prior fiscal year and sets new performance goals for the current fiscal year. The Compensation Committee also meets additionally as needed
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to discuss compensation-related matters as they arise during the year. The Compensation Committee is also responsible for reviewing and approving total compensation packages for new executive officers, as well as severance paymentspackages for departing executive officers.
In addition, with respect to the compensation of our named executive officers,NEOs, other than our Chief Executive Officer, the Compensation Committee seeks the input and recommendation of our Chief Executive Officer. Our Chief Executive Officer reviews each of the other named executive officer’sNEOs overall performance and contribution to the Company at the end of each fiscal year and makes recommendations regarding their compensation to the Compensation Committee. Our Board Chairman reviews the Chief Executive Officer’s overall performance and contribution to the Company at the end of each fiscal year and his compensation is determined solely by the Compensation Committee. Our Chief Executive Officer, former Chief Executive Officer and former Interim Chief Executive Officer did not participate in any formal discussion with the Compensation Committee regarding his or her compensation.
The Compensation Committee does not generally rely on formulaic guidelines for determining the mix or levels of cash and equity-based compensation, but rather maintains a flexible compensation program that allows it to adapt components and levels of compensation to motivate and reward individual executives within the context of our desire to attain certain strategic and financial goals. Subjective factors considered in compensation determinations include an executive’s skills and capabilities, contributions as a member of the executive management team, contributions to our overall performance and the sufficiency of total compensation potential and structure to ensure the retention of an executive when considering the compensation potential that may be available elsewhere.
Independent Compensation Consultant
In September 2019,2021, the Compensation Committee engaged Pearl Meyer & Partners LLC (“Pearl Meyer”), an independent compensation consultant, to provide a complete market analysis and assessment of the competitiveness of the Company’s executive compensation program. AsDuring 2021, Pearl Meyer advised the Compensation Committee on a variety of subjects, including compensation plan design and trends, pay-for-performance analytics, benchmarking data and related matters. Additionally, as part of its engagement, Pearl Meyer assisted the Compensation Committee in reviewing market data regarding salary, annual cash incentive award targets, and equity-based and other long-term incentive compensation awards to assess the competitiveness of the compensation of our executives. In connection with the analysis of equity-based and other long-term incentive compensation for our executives, Pearl Meyer provided market data for performance-based restricted stock unit plans using financial measures. During 2021, a Pearl Meyer representative attended one Compensation Committee meeting, which included a discussion of the Company's overall compensation plan and a presentation to the Compensation Committee in connection with a supplemental equity award plan relative total shareholder returnto such plan.
Our Compensation Peer Group
The Compensation Committee believes it is important to clearly understand the relevant market for executive talent to inform its decision-making and ensure that our executive compensation program supports our recruitment and retention needs. In designing the 2021 compensation program, the Compensation Committee worked with Pearl Meyer to assess the competitiveness of our executive compensation practices using a peer group of the companies listed below, which we refer to as the performance measure.Peer Group. The peer group selectedCompensation Committee intends to periodically review compensation data for the Peer Group derived from available compensation survey data, including public filings. The Peer Group is used by the Compensation Committee solely for the purpose of benchmarking executive compensation.We do not use the relative financial performance of the Peer Group as a performance metric in consultation withour incentive compensation programs.
| At Home Group Inc. | Chewy, Inc. | Driven Brands Holdings Inc. | Papa John's International, Inc. | Texas Roadhouse, Inc. | ||||||||||
| Big Lots, Inc. | Conn's, Inc. | H&R Block, Inc. (1) | Petco Health and Wellness Company, Inc. | The Aaron's Company, Inc. | ||||||||||
| Brinker International, Inc. | Dine Brands Global, Inc. | Ollie's Bargain Outlet Holdings, Inc. | Rent-A-Center, Inc. | Wingstop Inc. | ||||||||||
(1) Upon Pearl Meyer,Meyer's recommendation, H&R Block, Inc. was removed from the Peer Group after the divestiture of Liberty Tax in July 2021.
The Compensation Committee selected companies for purposes of evaluating a performance-based restricted stock unit plan, consisted of thirty-one publicly-traded companies chosen becauseinclusion in this Peer Group based on the following criteria:
•the similarity of their comparable revenues and/or market capitalization, status and size as franchisors, and/or their participation in our industry or similar industries1.classification to the Company’s classification;
•the business model of the peers compared to the Company;
•general comparability of key size measures, primarily revenue and market capitalization.
The Compensation Committee does not rely solely on data from the Peer Group in establishing the compensation study by Pearl Meyer,for our executive officers. Furthermore, the Compensation Committee approved, anddoes not target a specific competitive position versus the Company entered into employment agreements with Messrs. Kahn, Laurence and Kaminsky. Those agreements, along withmarket in determining the agreements for the other namedcompensation of our executive officers are further describedbecause, in “Individuallight of our diverse mix of businesses, it believes strict benchmarking against a selected group of companies would not provide a meaningful basis for establishing compensation. While the Compensation Arrangements with Named Executive Officers.”Committee considers the data from the Peer Group helpful in assessing our competitive position, it also refers to additional resources, including publicly available compensation data for other potential competitors for executive talent. The Compensation Committee considers Peer Group and competitor pay, alongside our pay for performance and long-term value creation objectives, in determining the compensation for our executive officers that best aligns compensation and stakeholder interests.
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The Compensation Committee values the input of our stockholders regarding the design and effectiveness of our executive compensation program. At the 20192021 annual meeting of stockholders, the Company asked its stockholders to vote to approve, on an advisory basis, the Company’s executive compensation. Although the advisory stockholder vote on executive compensation was non-binding, the Compensation Committee has considered, and will continue to consider, the outcome of this vote each year when making compensation decisions for our Chief Executive Officer and other executive officers. Approximately 99.9%99% of the stockholders who voted on the “say-on-pay” proposal at the 20192021 annual meeting of stockholders approved the compensation of our named executive officers,NEOs, while approximately 0.1%1% voted against the proposal. In light of such strong support,Other than the supplemental equity grant in June 2021, the Compensation Committee determined that no significant additional changes were needed to the executive compensation program for Fiscal 2020.2021. Nonetheless, because market practice and our business needs continue to evolve, the Compensation Committee continually evaluates our compensation program and makes changes when warranted.
We summarize the allocation of responsibilities for executive compensation decisions in the table below:
| Compensation Committee | •Determines our compensation program and policies for our NEOs and approves the compensation levels applicable to our NEOs. | ||||
| Board of Directors and Management | •The Compensation Committee consults the Board of Directors, the Chief Executive Officer and other members of management as the Committee evaluates performance of, and establishes the compensation program and policies for our NEOs. | ||||
| Independent Compensation Consultant | •Provides guidance to the Compensation Committee with respect to our compensation levels and our compensation programs. | ||||
Design Consideration Factors
In designing our Fiscal 2021 executive compensation program, the Compensation Committee considered the factors listed below, with input and guidance from Pearl Meyer and by our overall compensation philosophy. We refer to these factors as the Design Consideration Factors:
| The Competitive Landscape for Executive Talent | The Compensation Committee considered the competitive demand for our executive officers based on their prior experience and success. While the Compensation Committee did not target a specific competitive position versus the market in determining the compensation of our executive officers, how our executive compensation package compares to those of our peer group companies was an important factor in the design of our 2021 compensation program. | ||||
| The Company’s and Individual Executive’s Performance | The Compensation Committee considered the performance of the Company, the executive officers’ respective roles and their contributions to our performance. As such, the program includes “at-risk” elements that appropriately motivate and reward NEOs for our continued high performance and align them with the goal of long-term value creation for our stockholders. | ||||
| An Executive Officer’s Potential to Assume Additional Leadership Responsibility | In designing individual compensation for each NEO, the Compensation Committee considered the historical performance of such executive officer, readiness of such executive officer to assume greater leadership responsibility, and the ability to execute on succession planning. | ||||
The Relative Complexity and Importance of the Executive Officer’s Position within Franchise Group | The Compensation Committee considered the importance of pay equity among the executive officers based on the relative complexity and importance of the position and each executive officer’s historical performance, tenure and leadership potential. | ||||
Based on the Design Consideration Factors noted above, the Compensation Committee established each NEO's total target compensation for Fiscal 2021. After establishing each NEO's total target compensation, the Compensation Committee then allocated the total target compensation amount among each of the elements of compensation described below.
Timeline for Compensation Decisions
The Compensation Committee followed the process shown below in making Fiscal 2021 annual pay decisions for each principal component of compensation included in Fiscal 2021 total direct compensation, which includes the Fiscal 2022 long-term incentive awards. Total direct compensation for each of our NEOs is shown in the “Summary Compensation Table.”
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| March 2021 | June 2021 | August 2021 | December 2021 | February 2022 | ||||||||||
Reviewed final Fiscal 2020 Company, business unit and individual NEO performance. Approved performance factors and individual payout levels for Fiscal 2020 annual incentive awards. Approved and granted Fiscal 2021 LTIP awards reflective of Fiscal 2020 performance. Payout of Fiscal 2020 annual incentive awards. | Reviewed and approved a supplemental equity award subject to (i) the Company's stock achieving total stockholder return of 100% of the grant date price of Company stock ("TSR Hurdle); (ii) achievement of the TSR Hurdle within three years of the grant date; and (iii) continued employment with the Company. Vesting of the supplemental equity award occurs two years after the TSR Hurdle is achieved, provided the employee is employed with the Company at the time of vesting. | Reviewed preliminary Fiscal 2021 Company and business unit performance and status of NEO performance goals. | Reviewed proposed adjustments to the incentive compensation targets based primarily on M&A and refranchising activity. | Reviewed and approved proposed adjustments to incentive compensation targets and the final Fiscal 2021 Company, business unit and individual NEO performance. Approved payout of Fiscal 2021 annual incentive awards. Reviewed Pearl Meyer market data analysis and approved performance goals for Fiscal 2022 bonuses and long-term incentive awards and related performance targets. Approved and granted Fiscal 2022 LTIP awards reflective of Fiscal 2021 performance. | ||||||||||
Summary of Fiscal 2021 Performance
Fiscal 2021 was a strong year for the Transition PeriodCompany. In addition to the financial and operational achievements highlighted below, we also attribute our success to the mutually beneficial relationships with our franchisees and dealers. For our Fiscal 2021, we achieved growth and significantly improved business results that we believe provide valuable context for our stockholders in reviewing our executive compensation disclosures, including:
•Acquisitions: Successfully acquired and integrated Pet Supplies Plus, Sylvan Learning and W.S. Badcock.
•Divestitures and Asset Dispositions: Completed the Transition Period,sale of the W.S Badcock consumer accounts receivable portfolio and divested the Liberty Tax segment.
•Financing: Raised over $1.2 billion in acquisition financing.
•Debt Repayment: Repaid over $400 million of debt.
•Dividend Payout: Returned over $67 million to common stockholders in the form of cash dividends and increased the dividend paid on shares of our Common Stock by 67% at the end of Fiscal 2021 from $1.50 to $2.50 per share.
Fiscal 2021 Compensation Components
Our Compensation Committee closely considered the significant corporate achievements described above and our transformation as a company in making executive compensation decisions. We carefully evaluate our compensation arrangements and develop programs that we feel are the most appropriate to drive results for our Company and our stockholders. During Fiscal 2021, the compensation provided to our named executive officersNEOs consisted of base salary, annual bonus, long-term equity-based compensation and performance-based equity incentives, retirement benefits and other benefits, each of which is described in more detail below. We believe that the mix of cash- and equity-based compensation, as well as the relationship of fixed to performance-based compensation, is properly balanced and provides us with an effective means to attract, motivate and retain our named executive officers,NEOs, as well as reward them for creation of stockholder value.
Base Salary
The base salary payable to each named executive officerNEO is intended to provide a fixed component of compensation reflecting the executive's skill set, experience, role and responsibilities. Base salary amounts are established at the time of each named executive officer'sNEO's initial employment with the Company, but are subject to upward adjustment by the Compensation Committee after its consideration of, among other factors, the scope of the executive's responsibilities, individual performance for the prior year, the mix of fixed compensation to overall compensation and consistency with what
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the Compensation Committee considers to be the market standard for compensation paid to similarly-situated executives at other companies. We did not increase base salaries in Fiscal 2021, with the exception of Mr. Seeton whose salary was increased to align with comparable peer group base salaries. The change in Mr. Seeton's base salary is shown in the "Summary Compensation Table".
Annual Bonuses
The Company has an annual performance bonus plan (a short-term cash incentive bonus plan with annual financial, and in some cases, individual performance goals), through which we provide for cash bonus awardsbonuses to certain of our senior employees, including all of our named executive officers.NEOs. Annual bonuses are intended to compensate executives for achieving annual company-wide financial and operating goals, and, in some instances,as well as individual performance goals.performance. Under our bonus plan, our Compensation Committee establishes a financial target that can be earned at a threshold amount, target amount or maximum payout. The actual percentages applied to each metric are established in each NEOs employment agreement with the Company. In Fiscal 2021, our NEOs could earn up to 70% of their bonus amount (expressed as a percentage of base salary) for each of our executives that would become payable uponbased on the Company’s achievement of our corporatethe financial target of pro-forma adjusted EBITDA of $324.3 million and 30% based on individual performance metrics, subject toincluding improvements within the Compensation Committee discretion. Our Compensation Committee also hadCompany's ESG program. In Fiscal 2021, the discretion to award an additional bonus to the extent that the Company achieved pro-forma adjusted EBITDA of $357.3 million, which exceeded the target amount. Accordingly, the bonus payments earned for Fiscal 2021 were as follows: Mr. Kahn received $1,215,000, Mr. Laurence received $675,000, Mr. Kaminsky received $637,500 and Mr. Seeton received $450,000. Mr. Evans' non-equity incentive plan is a commission on amounts paid to the Company and/or its subsidiaries or affiliates in connection with the sale of any franchise subject to certain conditions which was $592,701 for Fiscal 2021.
In determining bonuses for Fiscal 2021, the Chief Executive Officer and Board evaluated certain achievements including, but not limited to, the following:
•the successful navigation of the COVID-19 pandemic, including the prioritization of the health and welfare of our employees, customers and communities;
•the completion and subsequent integration of our acquisitions of Pet Supplies Plus, Sylvan Learning and W.S. Badcock;
•the divestiture of Liberty Tax;
•the successful completion of two financing transactions for over $1.2 billion;
•the significant improvement in the Company’s balance sheet;
•the success of managerial leadership and contribution to the Company;
•the progress made to the Company's ESG plan; and
•the overall performance metrics.of our business.
Long-term equity compensation
2019 Omnibus Plan
On November 10, 2019, in consideration of the benefits of long-term equity incentive awards and upon the recommendation of our Compensation Committee, our Board of Directors adopted the 2019 Omnibus Incentive Plan (also referred to in this Proxy Statement as the “2019 Omnibus Plan” or the “2019 Plan”). The 2019 Plan, which reserved 5,000,000 shares of Common Stock for issuance, was subsequently approved by our stockholders by written consent on December 4, 2019. Simultaneously with stockholder approval of the 2019 Plan, the Company’s prior equity incentive compensation plan, the JTH Holding, Inc. 2011 Equity and Cash Incentive Plan (the “2011 Plan”), was terminated. No new awards will be granted under the 2011 Plan, although awards previously granted under the 2011 Plan and still outstanding will continue to be subject to all terms and conditions of the 2011 Plan.
We consider the 2019 Plan to be an important element of our compensation programs with two complementary goals of (1)(i) attracting and retaining outstanding individuals to serve as officers, directors, employees and consultants to our Company and (2)(ii) to increasing stockholder value by providing a direct link between stockholder value and executive compensation by offering the opportunity to acquire shares of Common Stock, receive monetary payments based on the values of such Common Stock or receive other incentive compensation.
Key features of the 2019 Plan include:
•All stock options, stock appreciation rights and other purchase rights must have an exercise price that is not less than the fair market value of the underlying stock on the grant date.
•The maximum number of shares of our Common Stock remaining available for future issuance under the 2019 Plan is 4,398,3343,004,259 (as of December 28, 2019)25, 2021). The maximum number of shares of our Common Stock that may be issued under the 2019 Plan may be issued under any type of award, including incentive stock options.
•The 2019 Plan does not include any reload or “evergreen” share replenishment features.
•Without stockholder approval, we may not reprice awards or repurchase awards that are subject to forfeiture or have not yet vested.
•Any material amendments to the 2019 Plan require stockholder approval.
•The 2019 Plan is administered by our Compensation Committee.
In determining the actual numberFiscal 2021 target dollars values for the NEOs' equity awards, the Compensation Committee considered the completed acquisition transactions that will result in incremental complexity of restricted stock units and performance-based restricted stock units ("PRSUs") awarded tothe business operations, assumption of additional responsibilities of our named executive officers, the Board of Directors considered our past grant practicesNEOs and the market analysis provided by Pearl Meyer. Throughout 2020 and into early 2021, the Compensation Committee worked with Pearl Meyer and determined awards that were consistent with our overall compensation objectives. Those objectives include providing a substantial portion of named executive officer compensation into revise the form of long-term equity-based compensation and aligning our named executive officers' interests with those of our stockholders. Each PRSU granted represented a contingent right to receive one sharedesign of the Company's Common Stock.annual RSU awards. In determining the new RSU design, the Compensation Committee sought to maintain strong alignment with the go-forward business strategy and drive retention of employees over a full three-year
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period (versus a one- year period). To that end, the Fiscal 2021 RSU awards will become fully vested in March 2024 and represent 50% of an NEO's total award. The resulting numberFiscal 2021 PRSU awards will vest based on the achievement of shares acquired upon vestingtwo independent performance goals: (i) 50% of the PRSU will be measured as the absolute total share return of the price of Common Stock overperformance goal is based on a three-year performance period commencing on September 30, 2019cumulative proforma adjusted EBITDA target for fiscal years 2021, 2022 and ending on September 30, 20222023 (the "Performance Period"). The Company's total share return over the Performance Period will be measured against the peer group selected by the Compensation Committee. Vesting and (ii) 50% of the target level PRSUs will accelerate upon death or disability in an amount equal to the proportion of days in the Performance Period worked. Vesting of the target PRSUs may also accelerate in certain circumstances if thereperformance goal is based on a change in control of the Companycumulative free cash flow target during the Performance Period.
In June of 2021, the Compensation Committee granted a one-time special market-based restricted stock units ("MPRSUs") award to our NEOs and certain other employees that will vest two years after the Company’s Common Stock achieves a total stockholder return of 100% of the grant date closing price of Company’s Common Stock (or $71.96, before giving effect to cash dividends paid during this period) for 10 consecutive trading days, provided the hurdle is achieved within three years of the grant date and the employee remains employed with the Company at the time of vesting. We granted this one-time special award in recognition of the Company's efforts and contributions to drive long term success, to recognize the alignment between employees and stockholders and to retain and motivate our employees during a critical time.
The Company has entered into compensation arrangements with the named executive officers,each NEO, which are described in more detail below under the heading “Individual Compensation Arrangements with Named Executive Officers.”
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth information about our outstanding stock grants and remaining shares available as of December 28, 201925, 2021 under the 2019 Omnibus Plan and 2011 Equity and Cash Incentive Plan:
| Plan Category | Number of Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) | |||||||||||||||||
| (a) | (b) | (c) | ||||||||||||||||||
| Equity compensation plans approved by security holders | 332,033 | $ | 10.02 | 3,004,259 | ||||||||||||||||
| Equity compensation plans not approved by security holders | — | — | — | |||||||||||||||||
| Total | 332,033 | $ | 10.02 | 3,004,259 | ||||||||||||||||
| Plan Category | Number of Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) | |||||||
| (a) | (b) | (c) | ||||||||
| Equity compensation plans approved by security holders | 665,491 | $ | 11.15 | 4,398,334 | ||||||
| Equity compensation plans not approved by security holders | — | — | — | |||||||
| Total | 665,491 | $ | 11.15 | 4,398,334 | ||||||
Retirement Benefits, Perquisites and Other Benefits
Fiscal 2022 Executive Compensation Design
As a general principle, the Company seeks to make pre-tax savings deferralstie executive compensation closely with the Company’s performance. For Fiscal 2022 and consistent with recent years, we granted our NEOs a combination of up to 86% of their compensation each calendar year, subject to annual limits on such deferrals (e.g., $18,500time-based and $19,000 in the 2018performance-based restricted stock units, or RSUs and 2019 calendar years) imposed by the Code. Participants who attain age 50 also may elect to make certain catch-up contributions, subject to a separate annual limit on such contributions ($6,000 in both the 2018 and 2019 calendar years) imposed by the Code.
PRSUs. The Compensation Committee believes this combination provides a balance between awards that provide high incentive value (in the form of PRSUs, which will only vest if we meet performance criteria) and awards that provide high retention value (in the form of time-based RSUs, which will have at least some value. With respect to base salary, we did not make changes to the base salaries of our NEOs.
The Company continues to work to shape our practices related to ESG matters. In 2021 we engaged a third-party consultant to assist the Company in enhancing and improving our ESG initiatives. Our Board and management strongly believe in the value of developing goals and metrics into our business strategies to mitigate ESG risks. To that end, the Company has consideredtied certain executive annual bonus performance targets in Fiscal 2022 to progress surrounding ESG initiatives, including the expectation of publishing a Company ESG Annual Report.
Compensation Governance Practices and Policies
Management Succession Planning
Our Board believes that effective succession planning and talent management and development play a critical role in safeguarding business capabilities, developing strong leadership quality and executive bench strength, and optimizing overall business development, operating performance, profitability and stockholder value. In order to ensure that qualified candidates are available for the position of Chief Executive Officer and also for each senior management positions, the Compensation Committee is charged with reviewing the development of internal candidates and corporate succession plans and making recommendations to the Board. The Board views succession planning as a continual process and intends to continue to engage in management succession planning.
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Regulatory Considerations under Section 162(m)
As a general matter, the Compensation Committee considers tax deductibility pursuant to Section 162(m) of the Code when setting performance goals for our named executive officers.NEOs. Section 162(m) of the Code generally set a limit of $1 million on the amount of compensation that we could deduct for federal income tax purposes in any given year with respect to the compensation of each of our named executive officers.NEOs. The Compensation Committee has considered Section 162(m)’s conditions for deductibility, as one of several relevant factors, when structuring compensation arrangements for our executive officers, including our named executive officers.NEOs. However, we believe that the Compensation Committee needs flexibility to pursue its incentive and retention objectives, even if this means that we would not be able to deduct a portion of executive compensation.
Compensation Risk Assessment
As part of its oversight of our executive compensation program, the Compensation Committee considers the impact of our executive compensation program, and the incentives created by the compensation awards that it administers, on our risk profile. In addition, the Compensation Committee reviews all of our compensation policies and procedures, including the incentives that they create and factors that may increase the likelihood of excessive risk taking, to determine whether they present a material risk to us. The Compensation Committee believes that our compensation programs are designed with the appropriate balance of risk and reward in relation to our overall
business strategy and that the various components of our overall compensation program, taken as a whole, do not encourage undesired or unintentional risk taking of a material nature. This conclusion is based on, among other factors, the level of base salaries paid by us, the balance of short-term and long-term incentive compensation, and the establishment of goals and thresholds in compensation plans and awards that are believed to be aggressive, but achievable. The Compensation Committee believes that the risks arising from our employee compensation policies and practices are not reasonably likely to have a material adverse effect on us.
Executive Compensation Practices
The Company is committed to responsible executive compensation and governance practices that support our business while also aligning with prevailing governance practices. The following list contains items that we believe are in stockholders' best interests and practices that we avoid due to the potential for a misalignment between pay and performance:
What we do What we don't do
Establish core executive compensation principles designed No excise tax gross-ups
to promote alignment with the interest of stockholders
No "single trigger" change-of-control
Utilize performance measures that align with business objectives severance benefits or change-of-control
equity vesting
Pay for performance (based on financial objectives and individual performance)
No pledging of our Common Stock by
Maintain stock ownership requirements (including multiple executive officers
of five times base salary of Chief Executive Officer)
No hedging transactions by executive
Maintain compensation recoupment policy officers
Maintain long vesting for equity awards No evergreen provision in stock incentive
plan
Require minimum vesting schedule under our equity policy
No repricing of stock options
Monitor for risk-taking incentives
Engage independent compensation consultant No liberal share recycling under stock
incentive plan
Limit perquisites
No liberal definition of change-of-control
No defined benefit plans for executive
officers
Stock Ownership Guidelines
In April 2020, the Board approved stock ownership guidelines that apply to all of our directors and executive officers. We believe our guidelines further align management’s and stockholders’ interests and we based the guidelines on practices at comparable companies.
Stock ownership guidelines for the Company’s executive officers are determined as a multiple of thetheir annual cash retainer for non-employee directorssalary in effect at the end of the Company’s most recent fiscal year, calculated using the closing price of the Company’s common stockCommon Stock on the last business day of the Company’s most recent fiscal year as follows:
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