Exhibit 97.1
Sprouts farmers market, inc.
COMPENSATION RECOUPMENT POLICY
The Board of Directors (the “Board”) of Sprouts Farmers Market, Inc. (the “Company”) has adopted this Compensation Recoupment Policy (this “Policy”) in order to implement a mandatory clawback policy in the event of a Restatement in compliance with the Applicable Rules (each, as defined below).
This Policy shall be administered by the Committee, which shall make all determinations with respect to this Policy, provided that this Policy shall be interpreted in a manner consistent with the requirements of the Applicable Rules.
In the event that the Company is required to prepare a Restatement, the Company shall reasonably promptly recover from a Covered Officer the amount of any erroneously awarded Incentive-Based Compensation that is Received by such Covered Officer during the Recovery Period. The amount of erroneously Received Incentive-Based Compensation will be the excess of the Incentive-Based Compensation Received by the Covered Officer (whether in cash or shares) based on the erroneous data in the original financial statements over the Incentive-Based Compensation (whether in cash or in shares) that would have been Received by the Covered Officer had such Incentive-Based Compensation been based on the restated results, without adjustment for any tax liabilities incurred or paid by the Covered Officer. Recovery of any erroneously awarded compensation under this Policy is not dependent on fraud or misconduct by any Covered Officer in connection with a Restatement.
Without limiting the foregoing, for Incentive-Based Compensation based on the Company’s stock price or total shareholder return, where the amount of erroneously awarded compensation is not subject to mathematical recalculation directly from the information in the Restatement, (a) the amount shall be based on the Company’s reasonable estimate of the effect of the Restatement on the stock price or total shareholder return upon which the Incentive-Based Compensation was Received and (b) the Company shall maintain documentation of the determination of that reasonable estimate and provide such estimate to Nasdaq.
In addition, in the event that a Covered Officer fails to repay or reimburse erroneously awarded compensation that is subject to recovery, the Committee may require a Covered Officer
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to reimburse the Company for any and all expenses reasonably incurred (including legal fees) by the Company in recovering erroneously awarded compensation under this Policy.
This Policy covers all persons who are Covered Officers at any time during the Recovery Period for which Incentive-Based Compensation is Received. Incentive-Based Compensation shall not be recovered under this Policy to the extent Received by any person before the date the person served as a Covered Officer. Subsequent changes in a Covered Officer’s employment status, including retirement or termination of employment, do not affect the Company’s right to recover compensation pursuant to this Policy.
No recovery of Incentive-Based Compensation shall be required if any of the following conditions are met and the Committee determines that, on such basis, recovery would be impracticable:
The Company shall make all required disclosures and filings with the Regulators with respect to this Policy in accordance with the requirements of the Applicable Rules and any other requirements applicable to the Company, including any disclosures required in connection with SEC filings.
In the event of a Restatement, subject to applicable law, the Committee may take any such actions as it deems necessary or appropriate to recover Incentive-Based Compensation. These actions may include, without limitation:
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In addition, the Committee may authorize legal action for breach of fiduciary duty or other violation of law and take such other actions to enforce the Covered Officer’s obligations to the Company as the Committee deems appropriate.
The Company shall not indemnify any current or former Covered Officer against the loss of erroneously awarded compensation, and shall not pay or reimburse any Covered Officer for premiums incurred or paid for any insurance policy to fund such Covered Officer’s potential recovery obligations.
Any right of recoupment under this Policy is in addition to, and not in lieu of, (a) any other remedies or rights of recoupment that may be available to the Company pursuant to the Company’s 2022 Omnibus Incentive Compensation Plan and any award agreements thereunder, the Company’s Annual Bonus Plan, any amendments or successor plans to the foregoing, any other incentive plan of the Company or any of its subsidiaries or affiliates, or the terms of any similar policy or provision in any employment agreement, compensation agreement or arrangement, or similar agreement, or (b) any other legal remedies available to the Company.
In addition to recovery of compensation as provided for in this Policy, the Company may take any and all other actions as it deems necessary, appropriate, and in the Company’s best interest, including termination of a Covered Officer’s employment and initiation of legal action against a Covered Officer, and nothing in this Policy limits the Company’s rights to take any appropriate actions.
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The Board may amend this Policy at any time for any reason, subject to any limitations under the Applicable Rules.
To the extent that United States federal laws do not otherwise control, the validity, construction, enforcement, interpretation and effect of this Policy shall be governed and construed by and determined in accordance with the laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof. Any action arising out of, or relating to, the Policy shall be brought only in federal or state courts in the state of Delaware, and the jurisdiction of such court in any such proceeding shall be exclusive.
This Policy is hereby adopted as of November 15, 2023. The terms of this Policy shall apply to any Incentive-Based Compensation that is Received by any Covered Officer on or after October 2, 2023 (the “Effective Date”) that results from attainment of a Financial Reporting Measure based on or derived from financial information for any fiscal period ending on or after the Effective Date, even if such Incentive-Based Compensation was approved, awarded, granted, or paid to such Covered Officer prior to the Effective Date. This Policy supersedes the Clawback of Certain Compensation Following Restatement of Financial Statements Policy set forth in the Company’s Corporate Governance Guidelines (the “Prior Policy”).
Subject to applicable law, the Committee may effect recovery under this Policy from any amount of compensation approved, awarded, granted, payable, or paid to any Covered Officer prior to, on, or after the Effective Date.
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Compensation Recoupment Policy Acknowledgement
I, the undersigned, acknowledge and agree that I have read and am fully bound by, and subject to, all of the terms and conditions of the Compensation Recoupment Policy (as it may be amended, restated, supplemented, or otherwise modified from time to time, the “Policy”) of Sprouts Farmers Market, Inc. (the “Company”). I hereby agree to abide by all of the terms of the Policy both during and after my employment with the Company.
I further acknowledge and agree that any right of recoupment under the Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company pursuant to the terms of any employment agreement, equity award agreement, equity incentive plan, cash incentive plan or similar agreement, plan, or policy and any other legal remedies available to the Company. In the event it is determined by the Company’s Board of Directors (the “Board”), the Compensation Committee of the Board (the “Committee”) or their designee that any amounts granted, awarded, earned, or paid to me must be forfeited or reimbursed to the Company, I will promptly take any action necessary to effectuate such forfeiture and/or reimbursement.
I further acknowledge and agree that the Committee and the Board have the authority to administer and amend the Policy, and I hereby agree to accept as binding, conclusive, and final all decisions or interpretations of the Committee and/or the Board regarding any questions or determinations that arise under the Policy.
By:
[Name]
[Title]
Date: