UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[x]
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Preliminary Proxy Statement
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Confidential, for use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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SunOpta Inc.
(Name of
Registrant as Specified In Its Charter)
_________________________________________________________
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x]
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No fee required
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11
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Title of each class of securities to which transaction
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Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of
transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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SUNOPTA INC.
2233 Argentia Road
Suite 401, West
Tower
Mississauga, ON L5N 2X7
905-821-9669
Dear Fellow Shareholder:
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April 3, 2017
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It is our pleasure to cordially invite you to attend in
person, via the Internet or by telephone the Annual and Special Meeting of
the Shareholders of SunOpta Inc., which will be held on Wednesday, May 24,
2017 at our corporate offices located at 2233 Argentia Road, Suite 401,
West Tower, Mississauga, Ontario, Canada at 4:00 P.M. Eastern Daylight
Time.
At our Annual and Special Meeting, shareholders will vote
on: the election of our directors; the appointment of our independent
public registered accounting firm and auditor and authorization to fix
their remuneration; the compensation of our named executive officers; a
resolution to approve the Companys Amended 2013 Stock Incentive Plan; and
a resolution to remove the beneficial ownership exchange cap and voting
cap and to waive the application of the shareholder rights plan, all as
described in more detail in the accompanying proxy statement. In addition
to these formal items of business, we will review the major developments
of the past year and share with you some of our plans for the future.
You will have the opportunity to ask questions and
express your views to the senior management of SunOpta Inc. and certain
members of the Board of Directors who will be in attendance.
Your vote is important to us. Whether or not you intend
to attend the meeting, please read the enclosed proxy statement and submit
your vote by completing and returning the enclosed proxy card, or if you
are a beneficial owner of shares held in street name, you may vote by
telephone or via the Internet.
Sincerely,
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Dean Hollis
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David Colo
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Chair
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Chief Executive Officer
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2233 Argentia Road
Suite 401, West Tower
Mississauga, ON
L5N 2X7
T:(905) 821-9669 F:(905) 819-7971
NOTICE OF ANNUAL AND SPECIAL MEETING OF
SHAREHOLDERS
TO BE HELD MAY 24, 2017
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To the holders of the common shares (
Common Shares
)
and special shares, series 1 (
Special Voting Shares
) of SunOpta Inc.
(the
Company
):
Notice is hereby given that an Annual and Special Meeting of
Shareholders of SunOpta Inc. (the
Meeting
) will be held on Wednesday,
May 24, 2017 at 4:00 P.M. Eastern Daylight Time, at the Companys corporate
offices located at 2233 Argentia Road, Suite 401, West Tower, Mississauga, ON,
Canada L5N 2X7 for the following purposes, all as described in more detail in
the accompanying proxy statement:
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1.
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to elect the directors of the Company;
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2.
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to appoint the Companys independent registered public
accounting firm and auditor and to authorize the Audit Committee to fix
their remuneration;
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3.
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to consider and, if deemed advisable, approve a
non-binding, advisory resolution to approve the compensation of the
Companys named executive officers;
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4.
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to consider and, if deemed advisable, to pass an ordinary
resolution approving the Companys Amended 2013 Stock Incentive Plan, a
copy of which is attached as Exhibit A;
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5.
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to consider and, if deemed advisable, to pass an ordinary
resolution to approve (i) the removal of the Beneficial Ownership Exchange
Cap (as defined hereafter) under the terms of the Series A Preferred Stock
(
Preferred Stock
) of our subsidiary, SunOpta Foods Inc., in
compliance with NASDAQ Listing Rule 5635(b), (ii) the removal of the
Voting Cap in accordance with the terms of the Voting Trust Agreement (as
defined hereafter) and (iii) the waiver of the application of the
Companys Shareholder Rights Plan to the acquisition of the Special Voting
Shares and Common Shares issuable to holders of Preferred Stock in
accordance with the terms of the Preferred Stock financing completed in
October 2016 (collectively, the
Preferred Stock Resolution
);
and
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6.
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to consider and take action upon such other matters as
may properly come before the Meeting or any adjournment or adjournments
thereof.
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You may also access the Meeting live by teleconference or over
the Internet, by following the instructions provided in the accompanying Proxy
Statement in the section Questions and Answers About the Meeting and Voting -
How can I vote?
This Notice is accompanied by a Proxy Statement, a proxy card,
the Annual Report of the Company on Form 10-K which includes the Audited
Consolidated Financial Statements for the year ended December 31, 2016 and
related Managements Discussion and Analysis, and an envelope to return the
proxy card.
The Board of Directors has fixed the close of business on March
27, 2017 as the record date for the determination of the shareholders of the
Company entitled to receive notice of and to vote at the Meeting. All such
shareholders are cordially invited to attend the Meeting.
Your vote is important. Whether or not you intend to attend
the Meeting, please read the enclosed Proxy Statement and submit your vote by
completing and returning the enclosed proxy card or if you are a beneficial
owner of shares held in street name, you may vote by telephone or via the
Internet.
If you have any questions or need assistance to vote, please
contact our strategic shareholder advisor and proxy solicitation agent,
Kingsdale Advisors by toll-free telephone in North America at 1-877-659-1822 or
collect call at 1-416-867-2272 outside North America, or by email at
contactus@kingsdaleadvisors.com.
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 24, 2017.
This Proxy Statement, the accompanying proxy card and our
Annual Report to Shareholders for the fiscal year ended December 31, 2016 are
first being made available on or about April 3, 2017 to shareholders of the
Company entitled to receive notice of and vote at the Meeting as of the record
date, and such materials are also available on our website at www.sunopta.com,
under the Investor Relations link.
In order to be represented by proxy at the Meeting, you must
complete and submit the enclosed Form of Proxy or another appropriate form of
proxy.
SUNOPTA INC.
PROXY STATEMENT
TABLE OF
CONTENTS
BASIS OF PRESENTATION
In this document, all currency amounts are expressed in United
States (U.S.) dollars ($) unless otherwise stated. Amounts expressed in
Canadian dollars are preceded by the symbol Cdn $. Amounts expressed in euros
are preceded by the symbol €.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
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QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
What is the Notice of Internet Availability of Proxy
Materials that I received instead of complete proxy materials?
The Securities and Exchange Commission (the
SEC
) rules
allow companies to furnish proxy materials, including this proxy statement and
our Annual Report to Shareholders, by providing access to these documents on the
Internet instead of mailing printed copies of our proxy materials to
shareholders. Most shareholders who reside in the United States have received a
Notice of Internet Availability of Proxy Materials (the
Notice
), which
provides instructions for accessing proxy materials on a website or for
requesting electronic or printed copies of the proxy materials.
If you would like to receive a paper copy of the proxy
materials for the Annual and Special Meeting of Shareholders (the
Meeting
) of SunOpta Inc. (sometimes referred to as
we
,
us
,
our
,
the Company
or
SunOpta
) and for all
future meetings, please follow the Notice instructions for requesting such
materials. The chosen electronic delivery option lowers costs and reduces
environmental impacts of printing and distributing the materials.
What is the date, time and place of the Meeting?
The Meeting will be held on Wednesday, May 24, 2017 at 4:00
P.M. Eastern Daylight Time at our corporate offices located at 2233 Argentia
Road, Suite 401, West Tower, Mississauga, ON L5N 2X7.
You may also access the Meeting live by teleconference or over
the Internet. To access the Meeting by teleconference, dial toll free at
1-877-312-9198 or international at 1-631-291-4622. To access the Meeting over
the Internet, go to the Companys website at www.sunopta.com. You should plan to
access the Companys website at least 15 minutes prior to the Meeting time in
order to register, download and install any necessary audio software.
Why am I receiving proxy materials?
We sent you the Notice or this proxy statement relating to the
Meeting (this
Proxy Statement
) and the accompanying proxy card because
our Board of Directors (sometimes referred to as the
Board
) is
soliciting your proxy to vote at the Meeting and at any adjournment or
postponement thereof. You are invited to attend the Meeting and we request that
you vote on the proposals described in this Proxy Statement. However, you do not
need to attend the Meeting to vote your shares. Instead, you may simply
complete, sign and return the enclosed proxy card, or vote by telephone or
Internet as described below under How can I vote?
What are the items of business scheduled for the Meeting?
There are five matters scheduled for a vote:
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the election of the director nominees specified in this
Proxy Statement;
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the appointment of Deloitte LLP as the Companys
independent registered public accounting firm and auditor and
authorization for the Audit Committee to fix their remuneration;
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a non-binding, advisory resolution to approve the
compensation of the Companys named executive officers (
NEOs
);
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a proposal to approve the Companys Amended 2013 Stock
Incentive Plan, a copy of which is attached as Exhibit A; and
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a proposal to approve the Preferred Stock Resolution.
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Shareholders will also consider and take action upon such other
matters as may properly come before the Meeting or any adjournment thereof. The
Board is not currently aware of any other matters to be presented at the
Meeting.
What is included in the proxy materials?
The proxy materials include:
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
5
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this Proxy Statement for the Meeting;
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the accompanying proxy card; and
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our Annual Report to Shareholders on Form 10-K for the
year ended December 31, 2016, which includes the Audited Consolidated
Financial Statements for the year ended December 31, 2016 and the related
Managements Discussion and Analysis of Financial Condition and Results of
Operations. The Annual Report is not incorporated by reference into this
Proxy Statement and is not deemed to be a part hereof.
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What is a proxy?
It is your legal designation of another person to vote the
shares you own. The other person is called a proxy. If you designate someone as
your proxy in a written document, that document is also called a proxy or a
proxy card.
The enclosed proxy card contemplates that Robert McKeracher,
Vice President and Chief Financial Officer, and Jill Barnett, General Counsel
and Secretary, each be appointed to act as your proxy. However, you may choose
another person to act as your proxy. If you wish to appoint as your proxy a
person other than the individuals named on the proxy card to attend the Meeting
and vote for you, you may do so by striking out the names on the proxy card and
inserting the name of your proxy in the blank space provided in the proxy card,
or you may complete another proper proxy card. Your appointed proxy need not be
a shareholder of the Company. If you appoint a non-management proxyholder,
please make them aware and ensure they will attend the meeting for the vote to
count.
Who is soliciting my proxy?
The proxy accompanying this Proxy Statement is solicited by
management and the Board of Directors of the Company. Proxies may be solicited
by officers, directors and regular employees of the Company. None of the
officers, directors or employees will be directly compensated for such services.
In addition, Kingsdale Advisors has been retained by the Company as our
strategic shareholder advisor and proxy solicitation agent in connection with
the solicitation of proxies for the Meeting. The contact information for
Kingsdale Advisors is set out on the last page of this Proxy Statement. The
Company will pay Kingsdale Advisors a fee of approximately $27,500, plus
reasonable out-of-pocket expenses, for these services. Solicitations of proxies
may be made personally or by mail, facsimile, telephone, messenger, or e-mail.
The Company will bear all proxy solicitation costs.
How many classes of shares are outstanding?
The Company currently has two classes of shares issued and
outstanding. The Common Shares are quoted for trading on NASDAQ (STKL) and are
listed for trading on the Toronto Stock Exchange (SOY). The Company also created
and issued Special Voting Shares in connection with the Preferred Stock
financing completed by our subsidiary, SunOpta Foods Inc., in October 2016 as
more fully described below under Proposal Five The Preferred Stock
Resolution.
Unless the context otherwise requires, any reference in this
Proxy Statement to shares of the Company refers to both the Common Shares and
Special Voting Shares, and any reference to shareholders of the Company is
intended to refer to holders of either Common Shares or Special Voting
Shares.
Who can vote at the Meeting?
Subject to the restriction noted below under How many votes
are needed to approve each proposal, each holder of Common Shares and each
holder of Special Voting Shares is entitled to one vote for every share owned.
The holders of Common Shares and Special Voting Shares vote together as a single
class.
Only shareholders of record at the close of business on March
27, 2017, or the record date, will be entitled to vote at the Meeting. On the
record date, there were 86,007,186 Common Shares and 11,333,333 Special Voting
Shares issued and outstanding (97,340,519 shares in aggregate), representing
88.4% and 11.6%, respectively, of the aggregate voting rights attaching to all
of the Companys outstanding shares. Except as otherwise stated, all information relating to the number of outstanding shares or
other securities of the Company in this Proxy Statement is as of March 27, 2017.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
6
In the event a shareholder of record transfers his, her or its
Common Shares after the close of business on the record date, the transferee of
those shares will be entitled to vote the transferred shares at the Meeting
provided that he, she or it produces properly endorsed share certificates
representing the transferred shares to the Companys Secretary or transfer agent
or otherwise establishes ownership of the transferred shares at least 10 days
prior to the Meeting.
What is the difference between a shareholder of record and a
shareholder who holds shares in street name?
Most shareholders hold their shares through a broker, bank or
other nominee rather than directly in their own name. As summarized below, there
are important distinctions between shares held of record and those owned in
street name.
Shareholder of Record Shares Registered in Your Name
If on March 27, 2017 your shares were registered directly in
your name with our transfer agent, you are considered, with respect to those
shares, the shareholder of record. As the shareholder of record, you have the
right to grant your voting proxy directly to the individuals named on the proxy
card, or to vote in person at the Meeting. Whether or not you plan to attend the
Meeting, we urge you to fill out and return the enclosed proxy card to ensure
your vote is counted.
Beneficial Owner Shares Registered in the Name of Broker,
Bank or Nominee
If your shares are held in a stock brokerage account or by a
bank or other nominee, you are considered the beneficial owner of shares held in
street name, and the proxy materials are being forwarded to you by your broker
or nominee, which is considered, with respect to those shares, the shareholder
of record. As the beneficial owner, you have the right to direct your broker how
to vote and are also invited to attend the Meeting. However, since you are not
the shareholder of record, you may not vote these shares in person at the
Meeting unless you obtain a signed proxy from the shareholder of record giving
you the right to vote the shares. Your broker or nominee has provided voting
instructions for you to use in directing the broker or nominee how to vote your
shares. If you fail to provide sufficient instructions to your broker or
nominee, that shareholder of record may be prohibited from voting your shares.
See What if I do not specify how my shares are to be voted? and What are
broker non-votes? below.
How can I vote?
You may vote your shares by one of the following methods:
Vote in Person.
If you are the
shareholder of record with respect to your shares, you may vote the shares in
person at the Meeting. If you choose to vote in person at the Meeting, please
bring your proxy card or personal identification.
Shares held in street
name may be voted in person by you only if you obtain a legal proxy from the
shareholder of record giving you the right to vote your beneficially owned
shares.
Vote by Telephone.
To vote by
telephone, call toll free 1-800-690-6903. You will be prompted to provide your
16 digit control located on the Notice or your proxy card.
Please note that
telephone voting should not be used if you plan to attend the Meeting and vote
in person or designate a proxy to vote on your behalf at the Meeting.
Vote by Facsimile (Canadian
shareholders only).
You may also submit your proxy card via facsimile by
sending it to 1-866-623-5305.
Vote by Internet.
To vote via
the Internet, go to www.proxyvote.com and follow the simple instructions. You
will be required to provide your 16 digit control number located on the Notice
or your form of proxy.
Vote by Mail.
If you received a
printed set of proxy materials, you may complete, sign, date and mail the
separate proxy card or other proper form of proxy in the envelope provided with
this Proxy Statement.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
7
If you vote by telephone, Internet or facsimile, please do
not mail your proxy card.
If you vote by telephone, facsimile or Internet, your vote must
be cast no later than the proxy cut-off of
4:00 P.M. Eastern Daylight Time on
Monday, May 22, 2017
(or 4:00 P.M. on the day before, excluding Saturdays,
Sundays and holidays, any adjournment or postponement of the Meeting). If you
vote by proxy, your completed proxy card must be received by Broadridge at 51
Mercedes Way, Edgewood, New York USA 11717,
prior to 4:00 P.M. Eastern
Daylight Time on Monday, May 22, 2017
(or 4:00 P.M. on the day
before, excluding Saturdays, Sundays and holidays, any adjournment or
postponement of the Meeting at which the proxy is to be used). The Chair of the
Meeting may waive or extend the proxy cut-off without notice at his own
discretion.
If your shares are held in street name by a broker, bank or
other nominee, please refer to the instructions provided by that broker, bank or
nominee regarding how to vote or how to revoke your voting instructions.
If you return a signed proxy card or use the telephone or
Internet to vote before the Meeting, the person named as proxies in the proxy
card will vote your Common Shares as you direct.
Even if you currently plan to attend the Meeting, we
recommend that you also submit your proxy as described above so that your vote
will be counted if you later decide not to attend the Meeting. Submitting your
proxy via Internet, telephone or mail does not affect your right to vote in
person at the Meeting
.
How many votes are needed to approve each proposal?
The number of votes required to approve each of the proposals
scheduled to be presented at the Meeting is as follows:
Proposal One: Election of Directors
. Directors are
elected by a plurality of the votes cast, meaning the nominees who receive the
largest number of votes will be elected as directors, up to the maximum number
of directors to be elected. However, in accordance with our Majority Voting
Policy, any director who receives more withhold than for votes will be
required to immediately submit his or her resignation as a director. See
Proposal One Election of Directors Majority Voting Policy below.
Proposal Two: Appointment of Deloitte LLP as the Companys
independent registered public accounting firm and auditors and authorization of
the Audit Committee to fix their remuneration
. This proposal will be
approved if the votes cast in favor of the proposal constitute a majority of the
total votes cast on the proposal.
Proposal Three: Advisory vote regarding the compensation of
the Companys NEOs
. This proposal will be approved if the votes cast in
favor of the proposal constitute a majority of the total votes cast on the
proposal. Although the outcome of this vote is not binding on us, we will
consider the outcome of this vote when developing our compensation policies and
practices, and when making compensation decisions in the future.
Proposal Four:
Approval of the Companys Amended 2013
Stock Incentive Plan.
This proposal will be approved if the votes cast in
favor of the proposal constitute a majority of the total votes cast on the
proposal.
Proposal Five: Approval of the Preferred Stock
Resolution
. This proposal will be approved if the votes cast in favor of the
proposal constitute a majority of the total votes cast on the proposal. Holders
of Special Voting Shares or Common Shares beneficially owned by the Investors
(as such term is defined below in Proposal Five Approval of the Preferred
Stock Resolution) or their affiliates are not entitled to vote on this
proposal.
What if I do not specify how my shares are to be voted?
Shareholders of Record
. If you are a shareholder of
record and you submit a proxy card, but you do not provide voting instructions,
your shares will be voted as follows:
FOR
each of the eight nominees
named in this Proxy Statement for election to the Companys Board of
Directors;
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
8
FOR
the appointment of Deloitte
LLP as the Companys independent registered public accounting firm and auditor
and authorization of the Audit Committee to fix their remuneration;
FOR
the approval of the
non-binding advisory resolution regarding the compensation of the Companys
NEOs;
FOR
the proposal to approve the
Companys Amended 2013 Stock Incentive Plan; and
FOR
the proposal to approve the
Preferred Stock Resolution.
The Board does not expect that any additional matters will be
brought before the Meeting. The persons appointed as proxies will vote in their
discretion on any other matters that may properly come before the Meeting or any
postponement or adjournment thereof, including any vote to postpone or adjourn
the Meeting. Moreover, if for any reason any of our nominees are not available
as a candidate for director, the persons named as proxies will vote for such
other candidate or candidates as may be nominated by the Board.
Beneficial Owners
. If you are a beneficial owner and you
do not provide the broker, bank or other nominee that holds your shares with
voting instructions, the broker or other nominee will determine if it has the
discretionary authority to vote on the particular matter. Therefore, if you do
not provide voting instructions to your broker, your broker may only vote your
shares on Proposal Two. See What are broker non-votes? below.
What are broker non-votes?
A broker non-vote occurs when a broker, bank or other nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have authority to vote on that particular proposal
without receiving voting instructions from the beneficial owner.
Under NASDAQ
rules, brokers that do not receive voting instructions from the beneficial owner
have the discretion to vote on certain routine matters, but do not have the
discretion to vote on the election of directors to the Board, executive
compensation matters or any other significant matter as determined by the SEC.
We believe that Proposal Two relating to the appointment of Deloitte LLP as
our independent registered public accounting firm is considered a matter on
which brokers may vote in their discretion on behalf of clients who have not
furnished voting instructions. However, under current NASDAQ rules, we believe
that brokers who have not received voting instructions from their clients will
not be authorized to vote in their discretion on Proposals One, Three, Four or
Five. Accordingly, for beneficial owners of shares, if you do not give your
broker specific instructions, your shares may not be voted on such proposals.
How are abstentions and broker non-votes counted?
Abstentions and broker non-votes are counted for purposes of
determining whether a quorum exists at the Meeting. The shares represented by
proxies marked abstain will not be treated as affirmative or opposing votes.
Broker non-votes will not affect the outcome of the vote on any of the proposals
to be voted upon at the Meeting because the outcome of each vote depends on the
number of
votes cast
rather than the number of shares
entitled to
vote
.
How many votes do I have?
On each matter to be voted upon, you have one vote for each
common share you owned as of March 27, 2017.
Who counts the votes?
The Company has nominated Broadridge Financial Solutions, Inc.
to count and tabulate the votes. This is done independently of the Company to
preserve the confidentiality of individual shareholder votes. Proxies are
referred to the Company only in cases where a shareholder clearly intends to
communicate with management, the validity of the proxy is in question or where
it is necessary to do so to meet the requirements of applicable law.
Is my vote confidential?
The Companys transfer agents (identified below) preserves the
confidentiality of individual shareholder votes, except where a shareholder clearly intends to communicate his
or her individual position to the management of the Company or as necessary in
order to comply with legal requirements.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
9
If I need to contact the Companys transfer agents, how do I
reach them?
You can contact the transfer agent in Canada by mail at: TSX
Trust Company, 200 University Avenue, Suite 300, Toronto, Ontario, Canada M5H
4H1, or via telephone at (416) 361-0930. You can contact the transfer agent in
the USA by mail at: American Stock Transfer & Trust Company, LLC, 6201
15
th
Avenue, Brooklyn, NY USA 11219, or via telephone at (718)
921-8293.
What does it mean if I receive more than one copy of the
Notice or proxy card?
If you receive more than one copy of the Notice or more than
one proxy card, your shares are registered in more than one name or are
registered in different accounts. Please complete, sign and return each proxy
card or follow the instructions on each copy of the Notice to ensure that all of
your shares are voted.
How do I revoke or change my vote?
If you are a shareholder of record, you may revoke your proxy
at any time before it is voted by one of the following methods:
Voting again by telephone or by
Internet prior to
4:00 P.M. Eastern Daylight Time on May 22, 2017
, as set
forth above under How can I vote?;
Requesting, completing and mailing or
delivering by facsimile a proper proxy card, as set forth above under How can I
vote?;
Sending written notice of revocation,
signed by you (or your duly authorized attorney), to the Company at its
corporate offices at 2233 Argentia Road, Suite 401, West Tower, Mississauga, ON
L5N 2X7, at any time prior to the last business day preceding the date of the
Meeting; or
Attending the Meeting (or any
adjournment thereof) and delivering written notice of revocation prior to any
vote to the Chair of the Meeting.
If you hold your shares in street name, you may revoke your
proxy by following the instructions provided by your broker, bank or other
nominee.
What is the quorum requirement?
Under NASDAQ listing rules and the Companys by-laws, the
presence at the Meeting, in person or represented by proxy, of at least two
shareholders holding not less than one-third (33 1/3%) of all the Companys
outstanding shares shall constitute a quorum for the purpose of transacting
business at the Meeting. As of the record date, there were 86,007,186 Common
Shares and 11,333,333 Special Voting Shares outstanding (97,340,519 shares in
the aggregate). Therefore, holders of at least 32,446,840 of the Companys
outstanding shares must be present, in person or represented by proxy, at the
Meeting in order to establish a quorum. The Company encourages all of its
shareholders to participate in the Meeting.
How can I find out the results of the voting at the Meeting?
Preliminary voting results will be announced at the Meeting. We
will publish final results in a Current Report on Form 8-K that we expect to
file with the SEC and with applicable Canadian securities regulatory authorities
within four business days of the Meeting. After the Form 8-K is filed, you may
obtain a copy by visiting our website, by viewing our public filings in the U.S.
at
www.sec.gov
or in Canada at
www.sedar.com
, by calling (905)
821-9669, by writing to Investor Relations, SunOpta Inc., 2233 Argentia Road,
Suite 401, West Tower, Mississauga, ON L5N 2X7 or by sending an email to
beth.mcgillivary@sunopta.com.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following presents information regarding beneficial
ownership of our shares as of March 27, 2017 by:
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each person who we know owns beneficially more than 5% of
each class of our shares;
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each of our directors and nominees;
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each of our NEOs; and
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all of our directors and executive officers as a group.
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Under the regulations of the SEC, shares are generally deemed
to be beneficially owned by a person if the person directly or indirectly has
or shares voting power or investment power (including the power to dispose) over
the shares, whether or not the person has any pecuniary interest in the shares,
or if the person has the right to acquire voting power or investment power of
the shares within 60 days, including through the exercise of any option, warrant
or right. In accordance with the regulations of the SEC, in computing the number
of Common Shares beneficially owned by a person and the percentage ownership of
such person, we deemed to be outstanding all Common Shares subject to options or
other rights held by the person that are currently exercisable or exercisable
within 60 days of March 27, 2017. We did not deem such shares outstanding,
however, for the purpose of computing the percentage ownership of any other
person.
Based solely on our review of statements filed with the SEC
pursuant to Section 13(d) and 13(g) under the Securities Exchange Act of 1934,
as amended (the
Exchange Act)
the Company is not aware of any other
person or group that beneficially owns more than 5% of any class of voting
shares of the Company, except as noted below.
Name and Address of Beneficial
Owner
|
Title of Class
|
Amount and
Nature of
Beneficial
Ownership
|
Percentage
of Class
(1)
|
Percentage
of all
Shares
(1)
|
Oaktree Capital Management,
L.P.
333 South Grand Avenue, 28
th
Floor,
Los Angeles, CA 90071
|
Common
Special Voting
|
3,000,000
(2)
11,333,333
(2)
|
3.49%
100%
|
3.08%
11.64%
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Tourbillon Capital Partners,
L.P.
888 Seventh Avenue, 32
nd
Floor,
New York, NY 10019
|
Common
|
8,450,000
(3)
|
9.82%
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8.68%
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Morgan Stanley
1585
Broadway,
New York, NY 10036
|
Common
|
8,110,287
(4)
|
9.43%
|
8.33%
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Engaged Capital, LLC
610 Newport
Center Drive, Suite 250,
Newport Beach, CA
92660
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Common
|
6,426,435
(5)
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7.47%
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6.60%
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UBS Group AG
Bahnhofstrasse 45,
PO Box CH-8021,
Zurich, Switzerland
|
Common
|
5,708,968
(6)
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6.64%
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5.86%
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(1)
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Percentage of Class and Percentage of all Shares is
calculated based on a total of 86,007,186 Common Shares and 11,333,333
Special Voting Shares outstanding, in each case as at March 27, 2017.
These totals do not include Common Shares that are issuable on the
exercise of outstanding options or upon exchange of the Preferred Stock.
However, to the extent Preferred Stock is exchanged for Common Shares, a
corresponding number of Special Voting Shares will be redeemed by the
Company. See Proposal Five The Preferred Stock Resolution Preferred
Stock Financing.
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(2)
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On October 7, 2016, Oaktree Organics, L.P.
(
Organics
) and Oaktree Huntington Investment Fund II, L.P.
(
OHIF II LP
and together with Organics, the
Oaktree
Funds
) subscribed for 85,000 shares of Preferred Stock of SunOpta Foods Inc. for total consideration
of $85,000,000. Concurrently, the Company issued an aggregate of 11,333,333
Special Voting Shares to the Oaktree Funds. See Proposal Five The Preferred
Stock Resolution Preferred Stock Financing. According to a Schedule 13D filed
on March 8, 2017 by Oaktree Capital Management, L.P. (
Oaktree
),
Organics owned directly 2,509,921 Common Shares and 71,196 shares of Preferred
Stock exchangeable into 9,492,800 Common Shares at an exercise price of $7.50
per share, and has the sole power to vote and dispose of those shares, and OHIF
II LP owned directly 490,079 Common Shares and 13,804 shares of Preferred Stock
exchangeable into 1,840,533 Common Shares at an exercise price of $7.50 per
share, and has the sole power to vote and dispose of those shares. Also
according to the Schedule 13D, Oaktree Huntington Investment Fund II GP, L.P.
(
OHIF II GP
), the general partner of OHIF II LP; Oaktree, the
investment manager of OHIF II GP; and Oaktree Holdings, Inc. (
Holdings,
Inc.
), the general partner of Oaktree, may be deemed to have indirect
beneficial ownership of the 2,330,612 Common Shares owned directly by OHIF II
LP. Additionally, Oaktree Fund GP, LLC (
GP LLC
), the general partner of
OHIF II GP; Oaktree Fund GP I, L.P. (
GP I
), the managing member of GP
LLC; Oaktree Capital I, L.P. (
Capital I
), the general partner of GP I;
OCM Holdings I, LLC (
Holdings I
), the general partner of Capital I;
Oaktree Holdings, LLC (
Holdings
), the managing member of Holdings I;
Oaktree Capital Group, LLC (
OCG
), the sole shareholder of Holdings,
Inc. and management member of Holdings; and Oaktree Capital Group Holdings GP,
LLC, the manager of OCG, may be deemed to have indirect beneficial ownership of
the 14,333,333 shares owned directly in the aggregate by the Oaktree Funds.
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If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
11
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(3)
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According to a Schedule 13D filed jointly on May 27, 2016
by Tourbillon Capital Partners, L.P. (
Tourbillon
), Tourbillon
Global Long Alpha Fund, LLC (
Long Alpha Fund LLC
), Tourbillon
Global Long Alpha Fund, Ltd (
Long Alpha Fund Ltd
), Tourbillon
Global Master Fund, Ltd (
Global Master Fund
and collectively with
Long Alpha Fund LLC and Long Alpha Fund Ltd, the
Funds
) and Jason
H. Karp (
Karp
), Long Alpha Fund LLC owned directly 160,795 Common
Shares, Long Alpha Fund Ltd owned directly 587,779 Common Shares, and
Global Master Fund owned directly 7,701,426 Common Shares. Collectively
the Funds had shared voting and shared dispositive power over 8,450,000
Common Shares. In addition, collectively the Funds have an interest in an
additional 12,660,515 Common Shares under cash-settled swaps and Global
Master Fund has an interest in an additional 1,608,300 Common Shares under
cash-settled call options. Collectively, the cash-settled swaps and call
options represent economic exposure comparable to an interest in an
additional 16.60% of the outstanding Common Shares. Tourbillon is the
Investment Manager of each of the Funds and Karp is the Chief Executive
Officer of Tourbillon. By virtue of these relationships, each of
Tourbillon and Karp may be deemed to beneficially own the Common Shares
owned by the Funds.
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(4)
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According to a Schedule 13G filed jointly by Morgan
Stanley (
Morgan Stanley
) and Morgan Stanley Capital Services LLC
(
MSCS
) on February 13, 2017, Morgan Stanley had sole voting power
over 7,986,955 Common Shares, and shared voting and shared dispositive
power over 113,832 and 8,110,287 Common Shares, respectively. MSCS had
sole voting and shared dispositive power over 7,869,835 Common Shares. The
Common Shares reported by Morgan Stanley as a parent holding company are
owned, or may be deemed to be beneficially owned, by MSCS, a wholly-owned
subsidiary of Morgan Stanley.
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(5)
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According to a Schedule 13D filed on October 12, 2016 by
Engaged Capital, LLC (
Engaged Capital
), Engaged Capital Flagship
Master Fund, LP (
Engaged Capital Flagship Master
) owned directly
2,896,833 Common Shares, and has the sole power to vote and dispose of
those shares and Engaged Capital Co-Invest IV, LP (
Engaged Capital
Co-Invest IV
) owned directly 3,191,639 Common Shares, and has the
sole power to vote and dispose of those shares. In addition, a certain
managed account of Engaged Capital (the
Engaged Capital Account
)
held 337,963 Common Shares. Also according to the Schedule 13D, each of
Engaged Capital Flagship Fund, LP and Engaged Capital Flagship Fund, Ltd.,
as feeder funds of Engaged Capital Flagship Master, may be deemed to have
indirect beneficial ownership of the 2,896,833 Common Shares owned
directly by Engaged Capital Flagship Master. Additionally, Engaged
Capital, as the general partner and investment advisor of Engaged Capital
Flagship Master and Engaged Capital Co-Invest IV and the investment
adviser of the Engaged Capital Account, may be deemed to have indirect
beneficial ownership of the 6,426,435 Common Shares owned directly in the
aggregate by Engaged Capital Flagship Master and Engaged Capital Co-Invest
IV and held in the Engaged Capital Account. Engaged Capital Holdings, LLC
(
Engaged Holdings
), as the managing member of Engaged Capital, may be
deemed to have indirect beneficial ownership of the 6,426,435 Common Shares
owned directly in the aggregate by Engaged Capital Flagship Master and Engaged
Capital Co-Invest IV and held in the Engaged Capital Account. Glenn W. Welling,
as the Founder and Chief Investment Officer of Engaged Capital and sole member
of Engaged Holdings, may be deemed to have indirect beneficial ownership of the
6,426,435 Common Shares owned directly in the aggregate by Engaged Capital
Flagship Master and Engaged Capital Co-Invest IV and held in the Engaged Capital
Account.
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If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
12
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(6)
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According to a Schedule 13G filed jointly by UBS Group AG
on behalf of itself and its wholly-owned subsidiaries UBS AG London
Branch, UBS Financial Services Inc. and UBS Securities LLC (collectively,
the
UBS Group
) on February 7, 2017, the UBS Group has shared
power to vote and dispose 5,708,968 Common Shares.
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[Remainder of page left intentionally blank]
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
13
Name and Address of
Beneficial Owner(1)
|
Amount and
Nature of Beneficial Ownership(2)
|
Total
Number of
Common
Shares,
Vested
Options
and Vested
RSUs
|
Percentage
of Class(5)
|
Percentage
of all
Shares(5)
|
Common
Shares
|
Vested
Options(3)
|
Vested
RSUs(4)
|
Margaret Shân Atkins
Director
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13,381
|
-
|
14,343
(6)
|
27,724
|
*
|
*
|
Dr. Albert Bolles
Director
|
40,000
|
-
|
-
|
40,000
|
*
|
*
|
David Colo
President, Chief Executive
Officer and
Director
|
145,000
|
-
|
-
|
145,000
|
*
|
*
|
Michael Detlefsen
Director
|
59,915
(7)
|
9,000
|
17,170
(8)
|
86,085
|
*
|
*
|
Ed Haft
Senior Vice President, Healthy Fruit
|
-
|
39,049
|
-
|
39,049
|
*
|
*
|
Dean Hollis(9)
Chair of the Board
|
50,000
|
-
|
-
|
50,000
|
*
|
*
|
Katrina Houde
Director, Former Interim Chief
Executive Officer
|
74,311
|
51,000
|
11,586
|
136,897
|
*
|
*
|
Hendrik Jacobs(10)
Former President, Chief
Executive Officer and Director
|
41,638
|
335,067
|
-
|
376,705
|
*
|
*
|
Robert McKeracher
Vice President and Chief
Financial Officer
|
49,475
|
213,384
|
-
|
262,859
|
*
|
*
|
John Ruelle
Chief Administrative Officer
and Senior
Vice President
|
23,759
|
181,615
|
-
|
205,374
|
*
|
*
|
Brendan Springstubb
Director
|
-
|
-
|
-
|
-
|
*
|
*
|
Gregg Tanner
Director
|
-
|
-
|
-
|
-
|
*
|
*
|
Gerard Versteegh
Senior Vice President, Global
Ingredients
|
103,078
|
142,122
|
-
|
245,200
|
*
|
*
|
All directors and executive
officers as a
group(17)
|
600,557
|
971,237
|
43,099
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1,614,893
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1.88%
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1.66%
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(1)
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The address of each director and executive officer is
2233 Argentia Road, Suite 401, West Tower, Mississauga, ON L5N
2X7.
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(2)
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Unless otherwise indicated, the persons in this table
have sole voting and dispositive power with respect to the Common Shares
shown as beneficially owned by them. The information as to shares
beneficially owned or over which control or direction is exercised,
directly or indirectly, not being within the knowledge of the Company, has
been furnished by the respective directors and executive officers
individually.
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If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
14
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(3)
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The number of vested options includes options that will
become exercisable within 60 days of March 27, 2017. The exercise price of
vested options range from $3.27 to $11.30 per share.
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(4)
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The number of vested Restricted Stock Units (RSUs)
includes RSUs that will vest within 60 days of March 27, 2017 as well as
any deferred RSUs that a director has deferred until his or her departure
from the Board, which are specifically noted within the individual
biography section.
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(5)
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Percentage of Class and Percentage of all Shares is
calculated based on a total of 86,007,186 Common Shares and 11,333,333
Special Voting Shares outstanding, in each case as at March 27, 2017
(*indicates less than 1% of the outstanding Common Shares).
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(6)
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The number includes 5,366 deferred RSUs that Ms. Atkins
has deferred until her departure from the Board.
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(7)
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Includes 2,000 Common Shares beneficially owned by Mr.
Detlefsens spouse, in respect of which Mr. Detlefsen has no voting or
dispositive power or authority.
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(8)
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The number includes 5,584 of the total RSUs are deferred
RSUs that Mr. Detlefsen has deferred until his departure from the Board.
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(9)
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Mr. Hollis also owns 500 limited partnership units of
Organics, which owns 2,509,921 Common Shares, 9,492,800 Special Voting
Shares and Preferred Stock which is exchangeable for 9,492,800 Common
Shares. See Note (2) under Security Ownership of Certain Beneficial
Owners and Management. However, Mr. Hollis does not directly or
indirectly exercise control or direction over the securities of the
Company held by Organics.
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(10)
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Mr. Jacobs resigned from his position of President and
Chief Executive Officer and as a director of the Company effective
November 11, 2016. These numbers reflect the information as of his last
day of employment.
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The Company does not currently have a formal policy to prohibit
officers and directors from hedging against declines in the market value of
their equity based compensation or equity securities through the use of
financial instruments. However, this practice is discouraged and the Company is
not aware of any NEOs or directors engaging in any hedging transactions.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and
executive officers, among others, to file with the SEC an initial report of
ownership of our Common Shares on Form 3 and reports of changes in ownership on
Form 4 or Form 5. Persons subject to Section 16 are required by SEC regulations
to furnish us with copies of all Section 16 forms that they file related to
SunOpta stock transactions. Under SEC rules, certain forms of indirect ownership
and ownership of our Common Shares by certain family members are covered by
these reporting requirements. As a matter of practice, our administrative staff
assists our directors and executive officers in preparing initial ownership
reports and reporting ownership changes and typically files these reports on
their behalf.
Based solely on a review of the copies of Forms 4 and 5
furnished to us, or written representations from reporting persons that all
reportable transactions were reported, we believe that during the fiscal year
ended December 31, 2016 all of our executive officers, directors and greater
than 10% holders, if any, filed the reports required to be filed under Section
16(a) on a timely basis, except that the Form 4 filings made on May 18, 2016 for
Jay Amato, Katrina Houde and Alan Murray were late and the Form 4 filing made on
July 5, 2016 for James Gratzek was late. The seven late Form 4 filings reported
a total of thirteen transactions.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
15
PROPOSAL ONE - ELECTION OF DIRECTORS
Nominees
The term of office of each director expires at the close of the
next Annual Meeting of Shareholders unless he or she resigns or his or her
office becomes vacant as a result of death, removal or other cause.
It is proposed that the following eight individuals be elected
as directors of the Company at the Meeting. Each of the nominees named below has
consented to be named herein and to serve as a director if elected. Management
has no reason to believe that any of the nominees will not be a candidate or, if
elected, will be unable to serve as a director. There are no family
relationships among the Companys directors, executive officers or persons
nominated or chosen to become directors.
Board of Director Nominees in Alphabetical Order:
Margaret Shân Atkins
Dr. Albert
Bolles
David Colo
Michael Detlefsen
Dean Hollis
Katrina Houde
Brendan Springstubb
Gregg Tanner
Recommendation of the Board of Directors; Vote
Required
The Board of Directors recommends that shareholders vote FOR
the election of each of the eight director nominees named above.
The eight
nominees who receive the greatest number of votes cast at the Meeting will be
elected as directors. In accordance with our by-laws, any director who receives
more withhold than for votes will be deemed to have tendered his or her
resignation as a director. See Majority Voting Policy below. Abstentions and
broker non-votes are counted only for purposes of determining whether a quorum
exists at the Meeting, but will have no effect on the results of the vote.
Brokers and other nominees will not have discretionary authority to vote your
shares if you hold your shares in street name and do not provide instructions as
to how your shares should be voted on this proposal. If any of the nominees for
director at the Meeting becomes unavailable for election for any reason, the
proxies on this proposal will have discretionary authority to vote pursuant to
the proxy for a substitute or substitutes.
Information about the Board Nominees
The biographies that follow provide certain information as of
March 27, 2017 with respect to each director nominee. The information presented
below for each director includes the specific experience, qualifications,
attributes and skills that led us to the conclusion that such director should be
nominated to serve on the Board in light of our business.
In addition to the factual information provided for each of the
nominees, the Board and the Corporate Governance Committee (as Nominating
Committee) also believe that each of the nominees has attributes that are
important to an effective board, including: sound judgment and analytical
skills; integrity and demonstrated high ethical standards; the ability to engage
management and one another in a constructive and collaborative manner; diversity
of background and experience; and the continued commitment to devote his or her
time, energy and skills to ensure the growth and prosperity of the Company.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
16
Majority Voting Policy
The Board has adopted a policy providing that, in an
uncontested election of directors,shareholders will be able to vote in favor of,
or to withhold from voting, separately for each director nominee. If any nominee
receives a greater number of votes withheld than votes for, then that
nominee is required to tender his or her resignation to the Board immediately
following the relevant shareholder meeting. At the option of the nominee, his or
her resignation may be unconditional and effective immediately or may be subject
to or conditional upon acceptance by the Board and only effective upon
acceptance by the Board. If the resignation is conditional upon acceptance by
the Board, the Board will then refer the resignation for consideration by the
Corporate Governance Committee which, among other matters, is responsible for
selecting or recommending director nominees, and the Corporate Governance
Committee will provide a recommendation as to whether the resignation should be
accepted. Any director who tenders his or her resignation shall not participate
in any meeting of the Board or of the Corporate Governance Committee, if he or
she is a member of the Corporate Governance Committee, at which his or her
resignation is considered. The Board shall accept the resignation absent
exceptional circumstances. The Board will make its decision as to whether or not
to accept the resignation within ninety (90) days after the date the resignation
is tendered. The Board will promptly issue a news release with the Boards
decision and, if the decision is not to accept the resignation, shall include in
the news release the reasons for its decision. A copy of the news release will
be filed with the Toronto Stock Exchange and any other applicable regulatory
authority.
Advance Notice By-Law
Effective November 10, 2015, the Board approved and adopted
by-law number 15 (the
Advance Notice By-Law
) providing for advance
notice requirements for the nomination of directors. The Companys shareholders
subsequently approved the Advance Notice By-law at the annual and special
meeting of shareholders held on May 10, 2016. A copy of the Advance Notice
By-law can be found under the Company's profile on the SEDAR website at
www.sedar.com
.
The Advance Notice By-Law establishes the conditions and
framework under which holders of record of Common Shares may exercise their
right to submit director nominations and is designed to ensure that shareholders
receive adequate notice of all director nominations to be considered at a
shareholders' meeting and sufficient information so that shareholders can cast
an informed vote.
The Advance Notice By-Law provides that for an annual meeting
of shareholders (including an annual and special meeting), advance notice of
director nominations to the Company must be given not less than thirty (30) days
prior to the date of the annual meeting. If the annual meeting is to be held on
a date that is less than fifty (50) days following the date of public
announcement of date of the annual meeting, notice must be given by the
nominating shareholder not later than the close of business on the tenth (10th)
day following the notice date. In the case of a special meeting of shareholders
(which is not also an annual meeting), called for the purpose of electing
directors (whether or not called for other purposes as well), notice to the
Company must be given not later than the close of business on the fifteenth
(15th) day following the day on which the first public announcement of the date
of the special meeting was made. The Advance Notice By-Law requires the
nominating shareholder to include in its notice to the Company certain
information regarding the nominating shareholder and the director nominees.
[Remainder of page left intentionally blank]
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
17
Margaret
Shân Atkins
Age: 60
Location: Illinois, USA
Director Since: Oct 2014
Independent Director
|
Margaret Shân Atkins was appointed to the Board of
Directors in October 2014. Ms. Atkins served as Chair of the Audit
Committee from January 2015 through November 2016 and was appointed Chair
of the Compensation Committee in November 2016. Ms. Atkins was appointed
to the Corporate Governance Committee on February 27, 2017. She is also a
member of the Operations Transformation Committee.
|
|
Ms. Atkins has been an independent corporate director for
more than a decade, serving on a number of public and private company
boards in the United States and Canada. She spent most of her executive
career in the retail/consumer sector, including various positions with
Sears Roebuck & Co., a major North American retailer, from 1996 to
2001 where she was promoted to Executive Vice President in 1999. Prior to
joining Sears, Ms. Atkins spent 14 years at Bain & Company, Inc., the
international management consultancy, as a leader in Bain's consumer and
retail practice. Ms. Atkins began her career as a public accountant at
what is now PricewaterhouseCoopers LLP, a major accounting firm, and has
designations as a Chartered Professional Accountant, Chartered Accountant
(Ontario) and Certified Public Accountant (Illinois). Ms. Atkins holds an
Honours Bachelor of Commerce degree from Queens University in Kingston,
Ontario, as well as a Masters of Business Administration from Harvard
University. She is recognized as a Board Governance Fellow by the (U.S.)
National Association of Corporate Directors, and is also a member of the
Canadian Institute of Corporate Directors.
|
Director Qualifications
: Ms. Atkins currently
serves on the boards of Spartan Nash Company, a national grocery
wholesaler and retailer in the US; Darden Restaurants, Inc., an owner and
operator of more than 1,500 restaurants in North America including Olive
Garden, Longhorn Steakhouse and The Capital Grille; and LSC
Communications, a leading printer of books, catalogs, magazines and a
manufacturer of office supplies.
|
Other Public Company Directorships in the Past Five
Years
|
SEC Reporting Companies
|
Canadian Listed Reporting Companies
|
LSC Communications (NYSE: LKSD) 10/16-Present
|
Tim
Hortons (TSX: THI) 5/07-12/14
|
Darden Restaurants, Inc. (NYSE: DRI) 10/14-Present
|
Shoppers Drug Mart (TSX: SC) 5/05-5/12
|
SpartanNash Company (NASD: SPTN) 12/13-Present
|
|
Spartan Stores (NASD: SPTN) 8/03-12/13
|
|
The Pep Boys Manny, Moe & Jack (NYSE: PBY) 6/04-7/15
|
|
Tim Hortons (NYSE: THI) 5/07-12/14
|
|
2016 Board / Committee Membership
|
2016 Meeting Attendance
|
Percentage
|
Member of Board
|
14 of 15
|
93%
|
Chair of Audit Committee(1)
|
5 of 5
|
100%
|
Member/Chair of Compensation Committee (1)
|
7 of 7
|
100%
|
Member Operations Transformation Committee
|
8 of 8
|
100%
|
Combined Total
|
34 of 35
|
97%
|
Equity Ownership
|
|
|
|
Total Common
|
Total Market Value of
|
|
|
|
Shares, Options and
|
Common Shares,
|
Common Shares
|
Options(2)
|
RSUs(2)
|
RSUs
|
Options and RSUs(3)
|
13,381
|
-
|
14,343
|
27,724
|
$185,751
|
|
(1)
|
Ms. Atkins was Chair of the Audit Committee until
November 8, 2016. Ms. Atkins was appointed Chair of the Compensation
Committee on November 8, 2016.
|
|
(2)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of March 27, 2017. 5,366 of the total
RSUs are deferred RSUs that Ms. Atkins has deferred until her departure
from the Board.
|
|
(3)
|
The market value has been determined based on $6.70 being
the closing price of the Common Shares as at March 27,
2017.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
18
Dr. Albert Bolles
Age: 59
Location: Illinois, USA
Director Since: Oct 2016
Independent Director
|
Dr. Albert Bolles was appointed to the Board on October
7, 2016 and currently serves as a member of the Audit Committee, Corporate
Governance Committee and Operations Transformation Committee.
|
|
Dr. Bolles most recently served as Executive Vice
President, Chief Technology & Operations Officer of ConAgra Foods, a
leading consumer products food company with net sales exceeding $16
billion. Prior to this role, Dr. Bolles was Executive Vice President,
Research, Quality and Innovation for ConAgra, championing the development
and execution of multiple new and improved products, realizing incremental
growth for ConAgra Foods and a multi-year pipeline to sustain and advance
growth further. Prior to joining ConAgra in 2006, Dr. Bolles served as
Vice President, Worldwide Research & Development (R&D) for PepsiCo
Beverages and Foods, responsible for global R&D leadership for
beverages (Pepsi, Gatorade, and Tropicana) and Quaker Foods including
product, process, package and sensory R&D, Nutrition, Quality, and
Scientific & Regulatory Affairs. His prior appointment was with Gerber
Foods for over eight years up to R&D Director, overseeing infant and
toddler global research and development. Dr. Bolles holds six patents and
has won numerous awards for his contribution to the world of food science.
|
Director Qualifications:
Dr. Bolles currently
serves as a director of Landec Corporation, where he is a member of the
Compensation Committee, the Food Innovation Committee and the Nominating
and Corporate Governance Committee. He is a graduate of Michigan State
University with a B.S. in Microbiology and an M.S. and Ph.D. in Food
Science. His experience in the areas of research and development,
innovation and quality along with breadth of knowledge in the food
industry is a great addition to the Board of Directors. Dr. Bolles also
has experience partnering with the FDA and USDA on influencing and
crafting public policy that benefits consumers and the passage of the Food
Safety Modernization Act in 2010.
|
Other Public Company Directorships in the Past
Five Years
|
SEC Reporting Companies
|
Canadian Listed Reporting Companies
|
Landec Corporation (NASD: LNDC) 5/14-Present
|
None
|
2016 Board / Committee Membership
|
2016 Meeting Attendance
|
Percentage
|
Member of Board(1)
|
3 of 4
|
75%
|
Member of Audit Committee(1)
|
6 of 6
|
100%
|
Member of Corporate Governance Committee(1)
|
1 of 1
|
100%
|
Member of Operations Transformation Committee
|
7 of 8
|
88%
|
Combined Total
|
17 of 19
|
89%
|
Equity Ownership
|
|
|
|
Total Common
|
Total Market Value of
|
|
|
|
Shares, Options and
|
Common Shares,
|
Common Shares
|
Options(2)
|
RSUs(2)
|
RSUs
|
Options and RSUs(3)
|
40,000
|
-
|
-
|
40,000
|
$268,000
|
|
(1)
|
Dr. Bolles was appointed to the Board on October 7, 2016.
Dr. Bolles was appointed to the Audit Committee and Corporate Governance
Committee on November 8, 2016. His attendance reflects the number of
meetings following his appointment date.
|
|
(2)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of March 27, 2017.
|
|
(3)
|
The market value has been determined based on $6.70 being
the closing price of the Common Shares as at March 27,
2017.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
19
David Colo
Age: 54
Location: Nebraska, USA
Director Since: Feb 2017
Non-Independent
|
David J. Colo was appointed as the Companys President
and Chief Executive Officer and as a director of the Company on February
6, 2017. Mr. Colo joined the Company from Diamond Foods, Inc. where he
served as Executive Vice-President, Chief Operating Officer. Mr. Colo has
30 years of leadership experience in general management, operations and
supply chain management. As Executive Vice-President and Chief Operating
Officer for Diamond Foods, Mr. Colo had direct responsibility for
marketing, innovation, R&D, operations, supply chain, procurement,
quality, food safety, grower services and contract manufacturing. Together
with the Diamond Foods executive team, he was responsible for leading the
turnaround of the highly distressed company and its successful sale for
approximately $1.9 billion to Snyder's-Lance in March 2016.
|
|
Before joining Diamond Foods, Mr. Colo spent
approximately three years as an independent industry consultant, focusing
on organizational optimization and planning. From 2005 to 2009, he held
leadership positions in the consumer products division of ConAgra Foods,
including roles as Senior Vice President of Sales and Operations Planning,
Senior Vice President of Enterprise Manufacturing and Senior Vice
President of Operations. From 2003 to 2005, he served as President of
ConAgra Food Ingredients.
|
|
Mr. Colo is a member of the board of MGP Ingredients,
Inc., a leading U.S. supplier of premium bourbons, whiskeys, distilled
gins and vodkas, where he serves as Chair of the HR and Compensation
Committee and is a member of the Audit Committee and Governance Committee.
Mr. Colo holds a Bachelor of Science, Agribusiness Economics, from
Southern Illinois University.
|
|
Director Qualifications:
Mr. Colo brings to the
SunOpta Board of Directors leadership, business intensity and operational
skills along with a proven track record in the food industry. His
significant experience in and understanding of general management,
operations, supply chain management and company turnarounds provides the
Board with valuable perspective.
|
Other Public Company Directorships in the Past Five
Years
|
SEC Reporting Companies
|
Canadian Listed Reporting Companies
|
MGP Ingredients, Inc. (NASD: MGPI) 8/15-Present
|
None
|
2016 Board / Committee Membership
|
2016 Meeting Attendance
|
Percentage
|
Not applicable
|
Not applicable
|
Not applicable
|
Equity Ownership
|
|
|
|
Total Common
|
Total Market Value of
|
|
|
|
Shares, Options and
|
Common Shares,
|
Common Shares
|
Options(1)
|
RSUs(1)
|
RSUs
|
Options and RSUs(2)
|
145,000
|
-
|
-
|
145,000
|
$971,500
|
|
(1)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of March 27, 2017.
|
|
(2)
|
The market value has been determined based on $6.70 being
the closing price of the Common Shares as at March 27,
2017.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
20
Michael Detlefsen
Age: 53
Location: Ontario, Canada
Director Since: May 2013
Independent Director
|
Michael Detlefsen was appointed as a director of
the Company in May 2013 and since that time has also served as a member of
the Audit Committee. On November 8, 2016, Mr. Detlefsen was appointed
Chair of the Audit Committee and a member of the Compensation Committee.
Mr. Detlefsen is also a member of the Operations Transformation Committee.
|
|
Mr.
Detlefsen is currently Managing Director of Pomegranate Capital Advisors
Inc. and President and CEO of Tangerine Holdings Inc. He is also Executive
Chairman of Elevation Brands, LLC, a gluten free food processor. From
2011-2016, Mr. Detlefsen was Co- Managing Director of Muir Detlefsen &
Associates Limited. He was Chief Restructuring Officer of Organic Meadow
Inc. from 2014 to 2015. From 2013 to 2014 he was Interim CEO of Ceres
Global Ag Corp. and from 2008 to 2013, he was President of Ceres. Mr.
Detlefsen was also previously with Maple Leaf Foods Inc. where he held the
position of Vice President, Corporate Development from 1999 to 2000,
Executive Vice President Vertical Coordination from 2000 to 2004 and
President of Maple Leaf Global Foods, the global sales, marketing and
trading subsidiary of Maple Leaf Foods Inc. from 2005 to 2007. Prior to
joining Maple Leaf Foods, Mr. Detlefsen was with BCE Inc. in Montreal
where he was Vice President, Corporate Development at Bell Canada
International, from 1997 to 1999, responsible for telecom investments in
Korea, Brazil, Mexico and the United Kingdom.
|
|
Mr. Detlefsen is currently a director of Phoenix Canada Oil Company
Limited, a director of the State Street Bank and Trust (Canada), a
Governor of the Royal Ontario Museum, a member of Harvard
Universitys Private and Public, Scientific, Academic and Consumer Food
Policy Committee and a member of the Finance Committee and 150th
Anniversary Campaign Cabinet of Trinity College
School.
|
|
Director Qualifications:
Mr. Detlefsen brings extensive
strategy, operating, transactional and governance experience in the food
and other industries to the SunOpta Board of Directors. Mr. Detlefsen has
a unique combination of domestic and international expertise and a deep
understanding of global supply chain risks and opportunities.
|
Other Public Company Directorships in the
Past Five Years
|
SEC Reporting Companies
|
Canadian Listed Reporting Companies
|
None
|
Phoenix Canada Oil Co. Ltd. (TSX: PCO)
12/15-Present
|
2016 Board / Committee Membership
|
2016 Meeting Attendance
|
Percentage
|
Member of Board
|
15 of 15
|
100%
|
Member/Chair of Audit Committee(1)
|
10 of 10
|
100%
|
Member Compensation Committee(1)
|
4 of 4
|
100%
|
Member Operations Transformation Committee
|
8 of 8
|
100%
|
Combined Total
|
37 of 37
|
100%
|
Equity Ownership
|
|
|
|
Total Common
|
Total Market Value of
|
|
|
|
Shares, Options and
|
Common Shares,
|
Common Shares(2)
|
Options (3)
|
RSUs(3)
|
RSUs
|
Options and RSUs(4)
|
59,915
|
9,000
|
17,170
|
86,085
|
$576,770
|
|
(1)
|
Mr. Detlefsen was appointed Chair of the Audit Committee
on November 8, 2016. Mr. Detlefsen was appointed to the Compensation
Committee on November 8, 2016.
|
|
(2)
|
Includes 2,000 Common Shares beneficially owned by Mr.
Detlefsens spouse, in respect of which Mr. Detlefsen has no voting or
dispositive power or authority.
|
|
(3)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of March 27, 2017. 5,584 of the total
RSUs are deferred RSUs that Mr. Detlefsen has deferred until his departure
from the Board.
|
|
(4)
|
The market value has been determined based on $6.70 being
the closing price of the Common Shares as at March 27,
2017.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
21
Dean Hollis
Age: 56
Location: Nebraska, USA
Director Since: Nov 2017
Independent Director
|
Dean Hollis was appointed to the Board on October 7, 2016
and as Board Chair effective November 9, 2016. Mr. Hollis is currently a
member of the Corporate Governance Committee, Compensation Committee and
Operations Transformation Committee.
|
|
Mr. Hollis presently serves as a senior advisor for
Oaktree Capital and Chairman of the Board at AdvancePierre Foods Holdings,
Inc., a national producer and distributor of hand held convenience items
and value added protein products. Prior to retiring in 2008, Mr. Hollis
served as the President and Chief Operating Officer of the Consumer Foods
Division of ConAgra Foods from December 2004 to July 2008. In that role,
Mr. Hollis developed and executed a worldwide business transformation
strategy, while overseeing the largest part of the ConAgra Foods
portfolio. During Mr. Hollis' 21 years with ConAgra Foods, he held many
executive level positions, including Executive Vice President, Retail
Products; President, Grocery Foods; President, Frozen Foods; President,
Specialty Foods; and President, Gilardi Foods.
|
|
Mr. Hollis holds a Bachelors degree in Psychology from
Stetson University, and serves on its board of directors.
|
Director Qualifications:
Mr. Hollis is currently
Chairman of the Board of AdvancePierre Foods, Inc. He is also a member of
its Compensation Committee. From 2009 to October 2015, Mr. Hollis served
as a director of Landec Corporation, a developer and marketer of patented
polymer products for food, agriculture and licensed partner applications,
where he also served as Chairman of the Compensation Committee. From July
2011 until the completion of its sale in January 2016, Mr. Hollis served
as a director of Boulder Brands, Inc., a leader and innovator in health
and wellness foods, where he also served as Chairman of the Board and a
member of the Audit Committee. From May 2012 until the completion of its
sale in February 2016, Mr. Hollis served as a director of Diamond Foods,
Inc., a leading branded snacks supplier, where he also served on the Audit
Committee and Nominating and Governance Committee.
|
Other Public Company Directorships in the
Past Five Years
|
SEC Reporting Companies
|
Canadian Listed Reporting Companies
|
AdvancePierre Foods, Inc. (NYSE:APFH) 12/08-Present
|
None
|
Landec Corporation (NASDAQ:LNDC) 8/09-10/15
|
|
Boulder Brands, Inc. (formerly NASDAQ:BDBD) 7/11-1/16
|
|
Diamond Foods, Inc. (formerly NASDAQ:DMND) 5/12-2/16
|
|
2016 Board / Committee Membership
|
2016 Meeting Attendance
|
Percentage
|
Chair of Board(1)
|
4 of 4
|
100%
|
Chair of Corporate Governance Committee(1)
|
1 of 1
|
100%
|
Member of Operations Transformation Committee
Combined Total
|
8 of 8
13 of 13
|
100%
100%
|
Equity Ownership
|
|
|
|
Total Common
|
Total Market Value of
|
|
|
|
Shares, Options and
|
Common Shares,
|
Common Shares(2)
|
Options (3)
|
RSUs(3)
|
RSUs
|
Options and RSUs(4)
|
50,000
|
-
|
-
|
50,000
|
$335,000
|
|
(1)
|
Mr. Hollis was appointed to the Board on October 7, 2016
and Chair of the Board effective November 9, 2016. He was appointed Chair
of the Corporate Governance Committee from November 8, 2016 through
February 27, 2017. His attendance reflects the number of meetings
following his appointment dates.
|
|
(2)
|
Mr. Hollis also owns 500 limited partnership units of
Organics, which owns 2,509,921 Common Shares, 9,492,800 Special
Voting Shares and Preferred Stock of SunOpta Foods Inc. which is
exchangeable for 9,492,800 Common Shares. See Note (2) under Security
Ownership of Certain Beneficial Owners and Management. However, Mr.
Hollis does not directly or indirectly exercise control or direction over
the securities of the Company held by Organics.
|
|
(3)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of March 27, 2017.
|
|
(4)
|
The market value has been determined based on $6.70 being
the closing price of the Common Shares as at March 27,
2017.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
22
Katrina Houde
Age: 58
Location: Ontario, Canada
Director Since: Dec 2000
Independent Director
|
Katrina Houde was appointed to the Board of Directors in
December 2000 and served as Chair of the Compensation Committee from
August 2014 to November 2016 and as a member of the Audit Committee until
November 8, 2016. Ms. Houde was appointed Interim Chief Executive Officer
for the Company effective November 11, 2016 and served in that capacity
through February 6, 2017 until the appointment of Mr. Colo as Chief
Executive Officer. In February 2017, Ms. Houde was appointed Chair of the
Corporate Governance Committee and a member of the Audit Committee. Ms.
Houde is also a member of the Operations Transformation Committee.
|
|
Ms. Houde has been an independent consultant since March
2000. From January 1999 to March 2000, Ms. Houde was President of Cuddy
Food Products, a division of Cuddy International Corp. and was Chief
Operating Officer of Cuddy International Corp. from January 1996 to
January 1999. She is a Director of a number of private and charitable
organizations.
|
|
Director Qualifications
. Ms. Houde has held a
variety of senior level positions in the food industry. When combined with
her extensive knowledge of the Companys history, strategies and
governance practices, she brings valuable insight, leadership and
experience to the Board of Directors. Additionally, Ms. Houdes
significant understanding of the Companys business and operations
acquired through her service as the Interim Chief Executive Officer
provides the Board with a valuable perspective.
|
Other Public Company Directorships in the
Past Five Years
|
SEC Reporting Companies
|
Canadian Listed Reporting Companies
|
None
|
None
|
2016 Board / Committee
Membership
|
2016 Meeting Attendance
|
Percentage
|
Member of Board
|
15 of 15
|
100%
|
Chair of Compensation Committee(1)
|
4 of 4
|
100%
|
Member of Audit Committee(1)
|
5 of 5
|
100%
|
Member of Operations Transformation Committee
|
8 of 8
|
100%
|
Combined Total
|
32 of 32
|
100%
|
Equity Ownership
|
|
|
|
Total Common
|
Total Market Value of
|
|
|
|
Shares, Options and
|
Common Shares,
|
Common Shares
|
Options (2)
|
RSUs(2)
|
RSUs
|
Options and RSUs(3)
|
74,311
|
51,000
|
11,586
|
136,897
|
$917,210
|
|
(1)
|
Ms. Houde served as Chair of the Compensation Committee
and a member of the Audit Committee until November 8, 2016.
|
|
(2)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of March 27, 2017.
|
|
(3)
|
The market value has been determined based on $6.70 being
the closing price of the Common Shares as at March 27,
2017.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
23
Brendan Springstubb
Age: 33
Location: California, USA
Director Since: Oct 2016
Independent Director
|
Brendan B. Springstubb was appointed to the Board on
October 7, 2016 and is currently a member of the Audit Committee,
Compensation Committee and the Operations Transformation Committee.
|
|
Mr. Springstubb is a Principal at Engaged Capital, a
California-based investment firm and registered advisor with the SEC
focused on investing in small and mid-cap North American equities, which
he joined in June 2013. In this role, Mr. Springstubb has been responsible
for sourcing and managing a variety of Engaged Capitals investments in
the consumer, healthcare and technology sectors. Prior to joining Engaged
Capital, Mr. Springstubb held multiple roles with Relational Investors,
LLC (Relational) a $6 billion activist equity fund, from June 2005 to
April 2013. At Relational, Mr. Springstubb was most recently the senior
analyst covering the healthcare sector where he was responsible for
identifying and overseeing activist investment opportunities and
communicating with portfolio company management teams. Prior to leading
the healthcare group, Mr. Springstubb was a generalist covering
investments in the telecom, financial and technology sectors. Mr.
Springstubb earned a Masters degree in Biotechnology with a dual
concentration in Biotechnology Enterprise and Regulatory Affairs from
Johns Hopkins University and a Bachelors degree in Economics and
Molecular Biology from Pomona College. Mr. Springstubb is also a CFA
Charter holder and a Certified Financial Risk Manager.
|
|
Director Qualifications:
Mr. Springstubbs
experience working at an investment firm and activist equity fund provides
the Board with a unique perspective. Additionally, Mr. Springstubbs
financial acumen and experience enables him to analyze and review
financial statements in order to oversee financial reporting, understand
capital structure and provide insight on Company strategy and operations.
|
Other Public Company Directorships in the
Past Five Years
|
SEC Reporting Companies
|
Canadian Listed Reporting Companies
|
None
|
None
|
2016 Board / Committee Membership
|
2016 Meeting Attendance
|
Percentage
|
Member of Board(1)
|
4 of 4
|
100%
|
Member of Audit Committee(1)
|
6 of 6
|
100%
|
Member of Compensation Committee(1)
|
4 of 4
|
100%
|
Member of Operations Transformation Committee
|
8 of 8
|
100%
|
Combined Total
|
22 of 22
|
100%
|
Equity Ownership
|
|
|
|
Total Common
|
Total Market Value of
|
|
|
|
Shares, Options and
|
Common Shares,
|
Common Shares
|
Options (2)
|
RSUs(2)
|
RSUs
|
Options and RSUs(3)
|
-
|
-
|
-
|
-
|
-
|
|
(1)
|
Mr. Springstubb was appointed to the Board on October 7,
2016. Mr. Springstubb was appointed to the Audit Committee and
Compensation Committee on November 8, 2016. His attendance reflects the
number of meetings following his appointment date.
|
|
(2)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of March 27, 2017. Consistent with the
Companys compensation guidelines for non-employee directors, Mr.
Springstubb has been awarded 5,322 options and 7,995 RSUs. See
Compensation of Directors below. Pursuant to the terms of his employment
arrangements with Engaged Capital, all such options and RSUs were issued
to Engaged Capital.
|
|
(3)
|
The market value has been determined based on $6.70 being
the closing price of the Common Shares as at March 27,
2017.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
24
Age: 60
Location: Texas, USA
Director Since: Jan 2017
Independent Director
|
Gregg Tanner was appointed to the Board and as a member
of the Operations Transformation Committee on January 19, 2017. On
February 27, 2017, Mr. Tanner was appointed Chair of the Operations
Transformation Committee and a member of the Audit Committee and Corporate
Governance Committee.
|
|
Mr. Tanner served as Chief Executive Officer and Director
for Dean Foods Company from October 2012 to December 2016. As the Dean
Foods Chief Executive Officer, and with his experience in supply chain
management, Mr. Tanner provided the board of Dean Foods with invaluable
insight regarding its operations and businesses.
|
|
Prior to serving as CEO, Mr. Tanner served as Dean Foods
Chief Supply Chain Officer and President of its Fresh Dairy Direct
division, where he was responsible for all sales, marketing, manufacturing
and distribution functions for Dean Foods' largest business unit and for
supply chain operations for Dean Foods as a whole. Mr. Tanner joined Dean
Foods in 2007.
|
|
Prior to joining Dean Foods, Mr. Tanner was Senior Vice
President, Global Operations with The Hershey Company. Before joining
Hershey, Mr. Tanner was Senior Vice President, Retail Supply Chain at
ConAgra Foods, Inc. where he directed the entire supply chain for retail
products. Earlier in his career, Mr. Tanner held positions at Quaker Oats
Company and Ralston Purina Company. He is a graduate of Kansas State
University.
|
Director Qualifications
. Since 2007, Mr. Tanner
has served on the Board of Directors of The Boston Beer Company, Inc.,
where he is the Chair of the Audit Committee. He serves as Chair of the
Milk Industry Foundation, as Vice Chair of the Board of Directors of the
International Dairy Foods Association and as a member of the Board of
Directors of the Grocery Manufacturers Association. His knowledge and
experience in the food industry, leadership and management of various
business operations throughout his career and corporate governance and
public company board experience make him highly qualified for service on
the Board.
|
Other Public Company Directorships in the
Past Five Years
|
SEC Reporting Companies
|
Canadian Listed Reporting Companies
|
Dean Foods Company (NYSE: DF) 10/12-12/16
|
None
|
Boston Beer Company, Inc. (NYSE: SAM) 10/07-Present
|
|
2016 Board / Committee Membership
|
2016 Meeting Attendance
|
Percentage
|
Not applicable
|
Not applicable
|
Not applicable
|
Equity Ownership
|
|
|
|
Total Common
|
Total Market Value of
|
|
|
|
Shares, Options and
|
Common Shares,
|
Common Shares
|
Options (1)
|
RSUs(1)
|
RSUs
|
Options and RSUs(2)
|
-
|
-
|
-
|
-
|
-
|
|
(1)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of March 27, 2017.
|
|
(2)
|
The market value has been determined based on $6.70 being
the closing price of the Common Shares as at March 27,
2017.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
25
CORPORATE GOVERNANCE
Introduction
The Board of Directors believes that effective corporate
governance contributes to improved corporate performance and enhanced
shareholder value. Consequently, the Board of Directors is committed to ensuring
that the Company follows best practices and continually seeks to enhance and
improve its corporate governance practices.
Board Mandate
The Board is responsible for the stewardship of the Company and
to supervise the management of the business and affairs of the Company in
accordance with the best interests of the Company and its shareholders. The
Board establishes overall policies and standards for the Company. Where
appropriate, the directors rely upon management and the advice of the Companys
outside advisors and auditors. The Board also delegates certain responsibilities
to its standing committees, based upon the approved charters of each such
committee.
In accordance with its mandate, the Board oversees and reviews
the development and implementation of the following significant corporate plans
and initiatives, among others:
|
|
the Companys strategic planning process;
|
|
|
the identification of the principal risks to the
Companys business and the implementation of systems to manage these
risks, whether financial, operational, environmental, safety-related or
otherwise;
|
|
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succession planning and evaluation of relative strengths
of existing management including the needs to ensure sufficient depth of
management;
|
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oversight of communications and public disclosure
including the Companys disclosure policy and receiving feedback from
stakeholders;
|
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|
analysis and approval of significant transactions
including material acquisitions and dispositions of businesses or other
Company assets; and
|
|
|
the Companys internal controls and management
information systems.
|
Board Composition, Size and Leadership
The articles of the Company provide that its Board of Directors
shall consist of a minimum of five and a maximum of fifteen directors.
Presently, the Board of Directors consists of eight directors. These eight
directors are being nominated for re-election at the Meeting. If suitable
candidates are identified prior to the next annual meeting of shareholders, the
Board may add one or two additional directors following the Meeting as part of
its succession planning activities.
In accordance with its mandate, the Corporate Governance
Committee regularly considers the appropriate skills and characteristics
required of Board members, taking into consideration the Board's short-term
needs and long-term succession plans. The Corporate Governance Committee
believes that the Board should be comprised of directors with a broad range of
experience and expertise. Additionally, the committee develops and periodically
updates a long-term plan for the Board's composition taking into consideration
the independence, age, skills, experience and availability of service to the
Company of its members, as well as the opportunities, risks, and strategic
direction of the Company. Having regard for the results of the foregoing, the
Corporate Governance Committees makes recommendations to the full Board
regarding the size and composition of the Board and seeks to identify qualified
individuals to become Board members as deemed appropriate.
Each of the directors and executive officers of the Company is
required to certify on an annual basis that he or she has reviewed and is
knowledgeable as to the contents of the Companys Business Ethics and Code of
Conduct (the
Code
) and is not aware of any violations of the Code. All
new employees of the Company are required to certify at the time of hiring that
they have reviewed and are knowledgeable as to the contents of the Code. The
Company monitors compliance with the Code through management oversight and
regular communications with employees. In addition the Company has established and maintains, through an
independent third party service provider, a confidential toll-free ethics
reporting hotline which all directors, officers and employees are advised of and
encouraged to use to report matters which may constitute violations of the
Code.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
26
The Board, each committee and each of the individual directors
are typically assessed annually at the end of the year as part of the Companys
evaluation process. During this annual assessment process, each director is
required to complete an individual assessment, which is prepared and reviewed by
someone other than the directors. The results of this review are reported to,
and discussed in detail at, a meeting of the full Board of Directors. Due to the
significant change in directors and the composition of the committees over the
past six months, the Board discussed the annual evaluation process for 2016 and
determined that it would not be appropriate to conduct an annual evaluation at
the end of 2016 as normally done. However, the Board discussed the importance of
an annual evaluation of the Board, each committee and each director,
individually, and agreed that the annual evaluation would be performed in
2017.
On October 7, 2016, we increased the size of the Board to nine
directors and appointed two independent directors, Dean Hollis and Dr. Albert
Bolles, to the Board who were designated by Oaktree in accordance with the terms
of the Investor Rights Agreement entered into in connection with the Preferred
Stock financing. See Proposal Five The Preferred Stock Resolution. Also on
October 7, 2016, Brendan Springstubb was appointed to the Board to replace
Douglas Greene who resigned as a director. Mr. Springstubb is a Principal at
Engaged Capital LLC, one of our largest shareholders. On November 9, 2016, Alan
Murray stepped down from the Board and was replaced as Chair of the Board by Mr.
Hollis. On January 19, 2017, Gregg Tanner was appointed to the Board to fill the
vacancy created by the resignation of director Jay Amato and the number of
directors was set at eight.
On November 11, 2016, Hendrik Jacobs resigned from his
positions as President, Chief Executive Officer and director of the Company.
Director Katrina Houde served as Interim CEO while the Board conducted a search
to identify a successor to Mr. Jacobs. Effective February 6, 2017, David Colo
was appointed President and Chief Executive Officer (
CEO
) of the
Company. In conjunction with this appointment, Mr. Colo also became a member of
the Board and Ms. Houde continued her position on the Board.
David Colo, our President and CEO, currently serves on the
Board of Directors and Dean Hollis is the Chair of the Board. The Board does not
have a formal policy concerning the separation of the roles of CEO and Chair, as
the Board believes that it is in the best interests of the Company to make that
determination based on the position and direction of the Company and the
membership of the Board. As indicated above, these roles are currently
separate.
The Chair of the Board sets the agenda for meetings of the
Board with input and feedback from the directors. All committees of the Board
are chaired by independent directors. The Board and the Corporate Governance
Committee believe that the current Board leadership structure is an appropriate
structure for the Company and will continue to periodically evaluate whether the
structure is in the best interests of the Company and its shareholders.
Director Independence
Under NASDAQ listing rules, a majority of the members of the
Board must be independent directors. An independent director under NASDAQ
listing rules is a person other than an executive officer or employee or any
other individual having a relationship which, in the opinion of the Board, would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a director.
National Policy 58-201
Corporate Governance Guidelines
of the Canadian Securities Administrators (the
CSA
) recommends that
boards of directors of reporting issuers be composed of a majority of
independent directors. A director is considered independent only where the board
determines that the director has no material relationship with the Company.
Director independence of each of the current directors is determined by the
Board of Directors with reference to the requirements as set forth by the CSA in
National Instrument 52-110 -
Audit Committees
, as well as the rules and
regulations of the Toronto Stock Exchange (the
TSX
), NASDAQ and SEC.
The Board has determined that each of the following seven
directors nominated for election are independent: Margaret Shân Atkins, Dr.
Albert Bolles, Michael Detlefsen, Dean Hollis, Katrina Houde, Brendan
Springstubb and Gregg Tanner. David Colo, President and CEO, is currently an
officer of the Company, and is therefore not considered independent.
Notwithstanding that Ms. Houde served as Interim CEO for approximately three
months prior to the appointment of Mr. Colo as CEO and was paid a salary for
serving in that capacity, the Board has confirmed that Mr. Houde has no direct
or indirect material relationship with the Company which could reasonably be
expected to interfere with the exercise of her independent judgment and
therefore concluded that she is independent in accordance with the applicable
rules, policies and instruments discussed above. As a result, if all of the
director nominees are elected at the Meeting, seven of the eight directors will
be independent. These independent directors currently comprise in full the
membership of each standing Board committee described in this Proxy
Statement.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
27
Executive Sessions
The independent directors meet without management and
non-independent directors at regularly scheduled in-person Board meetings,
generally following meetings of the full Board. The Chair of the Board presides
over these meetings.
Meeting Attendance
The Board held 15 duly called meetings during fiscal year 2016
and the committees held a total number of 29 meetings. Each incumbent board
member attended all of the meetings of the Board and all committees on which he
or she served, except one director missed one Board meeting and another director
missed one Board meeting and one committee meeting. All directors were in
attendance at the 2016 Annual and Special Meeting of the Shareholders on May 10,
2016.
Term and Age Limits
A directors term of office is from the date on which he or she
is elected or appointed until the close of the next annual meeting. The Board
believes that individual directors should be rigorously evaluated on the basis
of their skills, knowledge, experience, character, attendance and contributions
to the business of the Board and Company and the specific needs and requirements
of the Board without regard to their term of service or age. At this time, the
Board has, therefore, not adopted term or age limits for directors as it
believes it is important to find a balance between ensuring a mechanism for
fresh ideas and viewpoints while not losing the insight, experience and other
benefits of continuity contributed by longer serving directors. However, as the
Board recognizes that diversity of views from longer-term and newly-appointed
directors can contribute to effective decision making, the Board considers the
term of service of individual directors, the average term of the Board as a
whole and turnover of directors in recent years when proposing a slate of
nominees.
Diversity
The Board believes that directors with diverse backgrounds and
experiences benefit the Company by enabling the Board to consider issues from a
variety of perspectives. In 2015, the Board approved a separate written
diversity policy, which is posted at
http://investor.sunopta.com/governance.cfm.
In support
of the Companys commitment to diversity, when selecting qualified candidates to
serve on the Board, SunOpta will consider a wide range of diversity criteria
including gender, ethnicity, personal abilities, geographic location and other
factors. The Board seeks to include members not only with diverse backgrounds,
but also with skills and experience, including appropriate financial and other
expertise relevant to the business of the Company, in order to find the best
qualified candidates given the needs and circumstances of the Board. For these
reasons, the Board has not established specific targets relating to the
identification, nomination or representation on either the Board or among
executive officers based on gender or any other specific criteria.
Currently, the Board is comprised of two female directors (25%)
and six male directors (75%). Assuming all of the Companys nominees are
elected, the Board will continue to be comprised of two female directors (25%)
and six male directors (75%) following the meeting. The Board hopes to increase
the representation of women on the Board as turnover occurs, taking into account
the skills, experience and knowledge desired at that particular time by the
Board.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
28
With respect to executive officer positions, currently there
are two females (20%) and eight males (80%) at this level within the Company.
While there are currently no specific goals or plans with respect to women in
named executive officer positions, the Company hopes to increase the
representation of women at the executive officer level as positions are
available, taking into account the skills, experience and knowledge desired at
that particular time by the Company.
Director Orientation and Continuing Education
The Company has a formal director orientation policy to ensure
that all new directors receive proper orientation to facilitate the level of
familiarity with the Companys practices, policies and operations required to
meet Board responsibilities.
The current process to orient new directors is as follows:
|
1)
|
The new director meets with the Chair of the Board and
the Companys CEO to discuss various information about the Company,
including history, vision, mission and values, organization structure,
shareholdings, strategic plan, fiscal business plan and budget, historical
and current year to date fiscal results.
|
|
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2)
|
The new director meets with the Chair to discuss the
aspects of the Board such as organizational documents and Board and
committee minutes for the past year, Board administration matters, expense
reimbursement practices, and Company policies.
|
|
|
|
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3)
|
The new director meets with other directors of the
Company and certain members of management which allows new directors an
opportunity to ask questions about the role of the Board, its committees
and directors and the nature and operation of the Company. Following
nomination, new directors are encouraged to meet other members of
management and to visit the Companys premises and view its
operations.
|
|
|
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4)
|
New directors are provided access to the Companys
continuous disclosure documents as filed with the SEC and on SEDAR,
investor presentation material, director mandate and the Companys
Business Ethics and Code of Conduct policies. New directors are required
to affirm that they have read and understand the Companys Business Ethics
and Code of Conduct.
|
The Company also encourages directors to attend other
appropriate continuing education programs. Furthermore, the Board and its
committees received a number of presentations in 2016 to expand the Boards
knowledge of the Companys business, industry and principal risks and
opportunities. Presentation topics included maximizing shareholder value,
capital expenditures, cost of operational non-performance, internal controls,
assessment of inventory and reserves, commodity risks, regulatory updates and
product development and innovation. As well, written materials likely to be of
interest to directors that have been published in periodicals, newspapers or by
legal or accounting firms are routinely forwarded to directors or included with
Board and committee meeting materials.
Board Role in Risk Oversight
The Board has risk oversight responsibility and sets the tone
for risk tolerance within the Company. The Board strives to effectively oversee
the Companys enterprise-wide risk management in a way that balances managing
risks while enhancing the long-term value of the Company for the benefit of the
shareholders. The Board understands that its focus on effective risk oversight
is critical to setting the Companys culture towards effective risk management.
To administer its oversight function, the Board seeks to understand the
Companys risk philosophy by having discussions with management to establish a
mutual understanding of the Companys overall appetite for risk. The Board
maintains an active dialogue with management about existing risk management
processes and how management identifies, assesses and manages the Companys most
significant risk exposures. The Board receives regular updates from management
about the Companys most significant risks to enable it to evaluate whether
management is responding appropriately. During each regularly scheduled Board
meeting, the Board also reviews components of the Companys long-term strategic plans and the
principal issues, including foreseeable risks that the Company expects to face
in the future.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
29
The Board oversees risk management directly, as well as through
its committees. For example, the Audit Committee reviews the Companys policies
and practices with respect to risk assessment and risk management, including
discussing with senior management major financial risks and the steps taken to
monitor and control exposure to such risk. The Corporate Governance Committee
considers risks related to succession planning and internal trading governance
and the Compensation Committee considers risks related to the attraction and
retention of talent and risks relating to the design of executive compensation
programs and arrangements. See below for additional information about the
Boards committees. Each of these committees is required to make regular reports
of its actions and any recommendations to the Board, including recommendations
to assist the Board with its overall risk oversight function.
Board Committees
The Board of Directors presently has four committees, with the
principal functions and membership described below. Each committee has a
charter, which is available at our website at www.sunopta.com, under the
Investors link. The following table summarizes the current membership of each
of our four Board committees. Each of the four committees is composed entirely
of independent directors.
Director
|
Audit
Committee
|
Corporate
Governance
Committee
|
Compensation
Committee
|
Operations
Transformation
Committee
|
Margaret Shân Atkins
|
|
✓
|
Chair
|
✓
|
Dr. Albert Bolles
|
✓
|
✓
|
|
✓
|
Michael Detlefsen
|
Chair
|
|
✓
|
✓
|
Dean Hollis
|
|
✓
|
✓
|
✓
|
Katrina Houde
|
✓
|
Chair
|
|
✓
|
Brendan Springstubb
|
✓
|
|
✓
|
✓
|
Gregg Tanner
|
✓
|
✓
|
|
Chair
|
Audit Committee
The Audit Committees duties and responsibilities are
documented in a formal Audit Committee Charter, which is regularly updated.
These duties and responsibilities include (a) providing oversight of the
financial reporting process and managements responsibility for the integrity,
accuracy and objectivity of financial reports and related financial reporting
practices; (b) recommending to the Board the appointment and authorizing
remuneration of the Companys auditors; (c) providing oversight of the adequacy
of the Companys system of internal and related disclosure controls; and (d)
providing oversight of management practices relating to ethical considerations
and business conduct, including compliance with laws and regulations. The Audit
Committee meets a minimum of four times a year, once to review the Annual Report
on Form 10-K and annual Audited Consolidated Financial Statements, and once
before each quarters earnings are filed to review interim financial statements
and the Quarterly Report on Form 10-Q which is filed with the SEC in the U.S.
and with applicable securities regulators in Canada. Other meetings may be held
at the discretion of the Chair of the Audit Committee. The Audit Committee has
free and unfettered access to Deloitte LLP, the Companys independent registered
accounting firm and auditors, the Companys risk management and internal audit
team and the Companys internal and external legal advisors.
The Audit Committee maintains a company-wide whistle-blower
policy related to the reporting of concerns in accounting or internal controls.
This policy gives all employees of the Company the option of using a hot line
administered by a third party for communication of concerns dealing with a wide
range of matters including accounting practices, internal controls or other
matters affecting the Companys or the employees well-being.
Our Audit Committee is currently comprised of Michael Detlefsen
(Chair), Dr. Albert Bolles, Katrina Houde, Brendan Springstubb and Gregg Tanner.
The Board has determined that each member of the Audit Committee (1) is independent as defined by applicable SEC and CSA rules and
NASDAQ and TSX listing rules; (2) has not participated in the preparation of the
financial statements of the Company or any current subsidiary of the Company at
any time during the past three years; and (3) is able to read and understand
fundamental financial statements, including a companys balance sheet, income
statement, and cash flow statement. In addition, the Board has determined that
Michael Detlefsen and Gregg Tanner each meet the definition of audit committee
financial expert, as defined in SEC and CSA rules, and has appointed Mr.
Detlefsen as Chair of the Audit Committee.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email at contactus@kingsdalesadvisors.com.
30
The report of the Audit Committee appears under the heading
Report of the Audit Committee below.
The Audit Committee met formally ten times during fiscal
2016.
Corporate Governance Committee (Nominating Committee)
The Corporate Governance Committees duties and
responsibilities are documented in a formal Corporate Governance Committee
Charter, which is updated regularly. These duties and responsibilities include:
(a) identifying individuals qualified to become members of the Board of
Directors, and selecting or recommending director nominees; (b) developing and
recommending to the Board of Directors corporate governance principles
applicable to the Company; (c) leading the Board of Directors in its annual
review of the performance of the Board of Directors; (d) recommending to the
Board of Directors director nominees for each committee; (e) discharging the
responsibilities of the Board of Directors relating to compensation of the
Companys directors; (f) leading the Board of Directors in its annual review of
the performance of the CEO; and (g) regularly assessing the effectiveness of the
Companys governance policies and practices.
The Corporate Governance Committee, in its capacity as the
Nominating Committee, concerns itself with the composition of the Board with
respect to depth of experience, balance of professional interests, required
expertise and other factors. The Nominating Committee evaluates prospective
nominees identified on its own initiative or referred to it by other Board
members, management, shareholders or external sources and all self-nominated
candidates. The Nominating Committee uses the same criteria for evaluating
candidates nominated by shareholders and self-nominated candidates as it does
for those proposed by other Board members, management and search companies. To
be considered for membership on the Board, the Nominating Committee will
consider certain necessary criteria that a candidate should meet, which would
include the following: (a) be of proven integrity with a record of substantial
achievement; (b) have demonstrated ability and sound judgment that usually will
be based on broad experience but, particularly, industry experience; (c) be able
and willing to devote the required amount of time to the Companys affairs,
including attendance at Board and committee meetings; (d) possess a judicious
and critical temperament that will enable objective appraisal of managements
plans and programs; and (e) be committed to building sound, long-term Company
growth. The committee also takes into consideration the range of skills and
expertise that should be represented on the Board, geographic experience with
businesses and organizations, and potential conflicts of interest that could
arise with director candidates. Evaluation of candidates occurs on the basis of
materials submitted by or on behalf of the candidate. If a candidate continues
to be of interest, additional information about her/him is obtained through
inquiries to various sources and, if warranted, interviews. The Company adheres
to its diversity policy and seeks to include members with diverse backgrounds,
skills and experience, including appropriate financial and other expertise
relevant to the business of the Company.
A shareholder may recommend a person as a nominee for election
as a director at the Companys next annual meeting of shareholders by writing to
the Secretary of the Company. In order for a shareholder to formally nominate a
person for election as a director, including by submitting a shareholder
proposal in accordance with the Canada Business Corporations Act, the
shareholder must comply with the Companys Advance Notice By-Law. See Proposal
One Election of Directors Advance Notice By-Law and Shareholder Proposals
for 2018 Annual and Special Meeting of Shareholders; Shareholder
Communications.
Our Corporate Governance Committee is currently comprised of
Katrina Houde (Chair), Margaret Shân Atkins, Dr. Albert Bolles, Dean Hollis and
Gregg Tanner, each of whom has been determined by the Board to be
independent.
The Corporate Governance Committee met formally four times
during fiscal 2016.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
31
Compensation Committee
The Compensation Committees duties and responsibilities are
documented in a formal Compensation Committee Charter, which is updated
regularly. These duties and responsibilities include to (a) reward executives
for long-term strategic management and enhancement of shareholder value; (b)
support a performance-oriented environment that rewards achievement of internal
Company goals and recognizes the Companys performance compared to the
performance of similarly situated companies; (c) attract and retain executives
whose abilities are considered essential to the long-term success and
competitiveness of the Company through the Companys salary administration
program; (d) align the financial interests of the Companys executives with
those of the shareholders; and (e) ensure fair and equitable treatment for all
employees.
The function of the Compensation Committee is to determine the
compensation of the CEO as well as to review and approve the compensation
recommended by the CEO for certain officers of the Company and to review overall
general compensation policies and practices for all employees of the Company. In
addition, this committee oversees the administration of the Companys 2013 Stock
Incentive Plan and the Companys Amended and Restated 2002 Stock Option Plan
(collectively, the Stock Incentive Plans), Employee Stock Purchase Plan and
any other incentive plans that may be established for the benefit of employees
of the Company.
Our Compensation Committee is currently comprised of Margaret
Shân Atkins (Chair), Michael Detlefsen, Dean Hollis and Brendan Springstubb. The
Board has determined that the committee consists entirely of non-employee
directors, within the meaning of Rule 16b-3 under the Exchange Act, outside
directors within the meaning of Section 162(m) of the Internal Revenue Code and
independent directors within the meaning of NASDAQ listing rules and National
Policy 58-201 Corporate Governance Guidelines of the CSA.
Our Compensation Committee has deep experience with
compensation matters. Specifically:
|
|
Ms. Atkins, the Chair of the Compensation Committee, has
extensive compensation related experience from both a senior operating and
board governance perspective having served as a senior operational
executive and as a Chair and member of compensation committees of other publicly
traded and private organizations.
|
|
|
|
|
|
Mr. Hollis, as the former President and Chief Operating
Officer of the Consumer Foods Division of ConAgra Foods, was responsible
for employee annual performance and salary reviews and has extensive
compensation related experience as a Chair and member of compensation
committees of other publicly traded organizations.
|
The report of the Compensation Committee appears under the
heading Executive CompensationCompensation Committee Report below.
The Compensation Committee met formally seven times during
fiscal 2016.
Compensation Committee Interlocks and Insider
Participation
No member of our current Compensation Committee has served as
one of our officers or employees at any time over the past year. None of our
executive officers serves as a member of the compensation committee of any other
entity that has an executive officer serving as a member of our Board or
Compensation Committee. None of our executive officers serve as a member of the
board of directors of any other company that has an executive officer serving as
a member of our Compensation Committee.
Furthermore, other than with respect to the Companys Board of
Directors, none of the Companys directors currently sits on the same public
company board as any other director.
Operations Transformation Committee
The Operations Transformation Committee was established in
October 2016 and its duties and responsibilities are documented in a formal Operations Transformation Committee
Charter. These duties and responsibilities include to: (a) oversee development
of, and recommend to the Board for approval, the Companys annual and
longer-term value creation plans; (b) review individual operating unit plans for
alignment with the strategic objectives set by the Board and the Companys
operating plan; (c) review and provide feedback to the Board and management on
the Companys capital allocation strategy; including, but not limited to,
capital expenditures, capital structure, acquisitions and/or divestitures; (d)
conduct reviews with management of performance against the Companys business
plan and provide feedback and guidance to management and the Board on plan
execution; (e) provide input to management and the Audit Committee on the
financial and/or operational information that will be presented to external
parties; (f) within current corporate spending approval limits, review and
approve the engagement and compensation of third party advisors in connection
with achieving plan objectives; and (g) provide input to the Compensation
Committee and the Corporate Governance Committee on critical executive hiring,
retention, motivation, and compensation decisions aimed at reinforcing
achievement of plan goals.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
32
Our Operations Transformation Committee is currently comprised
of Gregg Tanner (Chair), Margaret Shân Atkins, Dr. Albert Bolles, Michael
Detlefsen, Dean Hollis, Katrina Houde and Brendan Springstubb, each of whom has
been determined by the Board to be independent.
The Operations Transformation Committee met formally eight
times during fiscal 2016.
Code of Ethics
The Company has a Code of Ethics policy titled Business Ethics
and Code of Conduct. The policy is applicable to all employees, including the
Companys executive officers and employees performing similar functions, as well
as all persons serving as directors and consultants to the Company. A copy of
the Business Ethics and Code of Conduct is available, without charge, at
www.sunopta.com
or upon written request to the Company at SunOpta Inc.,
2233 Argentia Road, Suite 401, West Tower, Mississauga, ON L5N 2X7. Any
amendments to, or waivers of, the Business Ethics and Code of Conduct which
specifically relate to any financial professional will be disclosed promptly
following the date of such amendment or waiver at
www.sunopta.com
.
Insider Ownership Guidelines for Directors, Officers and
Executives
The Board approved insider ownership guidelines for all
non-employee directors and members of the senior management in May 2012 and in
August 2015 approved an amendment to the insider ownership guidelines for all
non-employee directors. These guidelines are reviewed on an annual basis and are
intended to align the interests of directors and management with those of our
shareholders.
The insider ownership guidelines encompass the following
parameters:
|
1.
|
Insider ownership guidelines are mandatory for all
non-employee members of the Board and members of the Senior Leadership
Team. All persons covered by these guidelines will have the option to
request an exemption from these requirements based on consideration of
their personal circumstances by the Compensation Committee.
|
|
|
|
|
2.
|
Stock ownership targets established as
follows:
|
|
a.
|
Chief Executive Officer five times base
salary
|
|
|
|
|
b.
|
Directors five times annual cash retainers
|
|
|
|
|
c.
|
Other NEOs (includes Chief Financial Officer and three
most highly compensated officers) two times base salary
|
|
|
|
|
d.
|
All other Senior Leadership Team members one times base
salary
|
|
3.
|
Targets are based on direct shareholdings only and do not
account for the value of in-the-money options.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
33
|
4.
|
In determining whether the required investment levels
have been met, holdings are valued using the higher of the cost basis of
the stock when acquired, or the market closing price on the last trading
day of each fiscal quarter.
|
|
|
|
|
5.
|
All participants are provided a five-year transition
period to be in compliance with the ownership target. At the end of that
period, the CEO, other NEOs and the Senior Leadership Team not in
compliance will receive 50% of all subsequent short-term incentive
payments in the form of equity until such time as the minimum holding is
established.
|
As of December 31, 2016, four of the seven directors were in
compliance with the mandatory guidelines. As of March 27, 2017, five of the
eight director nominees were in compliance. The director nominees that currently
do not meet the insider ownership guidelines are still within their transition
period.
Compensation of Directors
Annual compensation for non-employee directors is comprised of
cash and equity-based compensation. Cash compensation consists of an annual
retainer and supplemental retainers for the chairs and members of Board
committees. Equity compensation is comprised of an annual grant of RSUs and, for
2016, a one-time stock option grant for service on the Operations Transformation
Committee. Katrina Houde served as a non-employee director of the Company until
November 11, 2016, when she was appointed Interim CEO and became an employee of
the Company. Her compensation as a non-employee director of the Company is shown
in the Non-Employee Director Compensation Table below, and her compensation as
an employee of the Company is shown in the Summary Compensation Table.
Non-employee directors may elect to receive stock in lieu of
cash compensation, including from 50% to 100% of the cash amount. Also,
non-employee directors have the option to defer receipt of annual equity
compensation that would otherwise be payable to them, subject to compliance with
the Companys Non-Employee Director Stock Deferral Plan and Section 409A of the
Internal Revenue Code.
In August 2016, the Board reviewed non-employee director
compensation and approved the following schedule effective October 1, 2016:
|
i.
|
Annual cash retainer of:
|
|
|
$50,000 for serving as a director;
|
|
|
$50,000 for serving as the Chair of the Board;
|
|
|
$17,000 for serving as the Chair of the Audit
Committee;
|
|
|
$12,500 for serving as the Chair of the
Compensation Committee;
|
|
|
$8,500 for serving as the Chair of the
Corporate Governance Committee;
|
|
|
$6,000 for serving on the Audit Committee; and
|
|
|
$3,000 for serving on other committees.
|
|
|
$1,250 for travel in excess of four hours
|
|
iii.
|
Annual equity compensation:
|
During 2016, the Board also approved the following one-time
cash retainers and equity awards noted below:
|
|
$15,000 for serving as the Chair of the Special
Committee (which was created for the strategic review);
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
34
|
|
$10,000 for serving on as a member of the Special Committee
(which was created for the strategic review);
|
|
|
Stock options valued at $30,000 for serving as
the Chair of the Board; and
|
|
|
Stock options valued at $15,000 for serving on
the Operations Transformation Committee.
|
Effective October 6, 2016, the Board approved the vesting of
all unvested RSUs upon the departure of a director from the Board and any new
RSU grants going forward to have a 12-month vesting period.
The following table summarizes total compensation paid to our
non-employee directors for fiscal year 2016.
Non-Employee Director Compensation Table
Name
|
Fees
Earned
or Paid in
Cash
($)(1)
|
Stock
Awards
($)(2)
|
Option
Awards
($)(3)
|
Other
Compensation
($)(4)
|
Total
($)
|
Jay Amato
|
56,512
|
58,860
|
-
|
7,500
|
122,872
|
Margaret Shân Atkins
|
85,721
|
58,860
|
15,114
|
7,500
|
167,195
|
Dr. Albert Bolles(5)
|
12,986
|
53,167
|
15,114
|
2,500
|
83,767
|
Michael Detlefsen
|
67,725
|
58,860
|
15,114
|
3,750
|
145,449
|
Doug Greene(5)
|
36,874
|
58,860
|
-
|
5,000
|
100,734
|
Dean Hollis(5)(6)
|
20,630
|
53,167
|
45,346
|
2,500
|
121,643
|
Katrina Houde(7)
|
67,751
|
58,860
|
15,114
|
2,500
|
144,225
|
Jeremy Kendall(8)
|
19,500
|
-
|
-
|
50,949
|
70,449
|
Alan Murray(6)
|
94,253
|
71,940
|
-
|
6,250
|
172,443
|
Brendan Springstubb(5)(9)
|
12,986
|
53,167
|
15,114
|
2,500
|
83,767
|
|
(1)
|
Includes the fair market value of Common Shares issued in
lieu of cash retainers, including elections of $33,373 for Mr. Detlefsen
and $31,914 for Mr. Murray.
|
|
|
|
|
(2)
|
The fair value, as shown in this table, is determined in
accordance with FASB ASC Topic 718 based on the number of RSUs granted and
SunOptas closing stock price on the date of grant. The number of RSUs
granted is determined by dividing the scheduled Annual Equity Compensation
by the average of SunOptas closing stock prices during the 90 calendar
days ending on the grant date. RSUs granted in May 2016 vest one-third per
year over 3 years, and RSUs granted to Dr. Bolles, Mr. Hollis and Mr.
Springstubb following their appointments to the Board in October 2016 vest
on the first anniversary of the grant date.
|
|
|
|
|
(3)
|
Consists of the aggregate grant-date fair value of stock
options granted to directors under the Companys 2013 Stock Incentive Plan
(as amended in May 2013, the
Existing 2013 Plan
), calculated in
accordance with FASB ASC Topic 718. The number of stock options granted is
determined by dividing the scheduled Annual Equity Compensation by the
Black-Scholes value based on the average of SunOptas closing stock prices
during the 90 calendar days ending on the grant date. The stock options
vest on the first anniversary of the grant date. At the end of fiscal
2016, non-employee directors held total RSUs and stock options as
follows:
|
Name
|
RSUs
|
Options
|
Total
|
Jay Amato
|
26,562
|
55,000
|
81,562
|
Margaret Shân Atkins
|
30,514
|
5,322
|
35,836
|
Dr. Albert Bolles
|
7,995
|
5,322
|
13,317
|
Michael Detlefsen
|
32,146
|
20,322
|
52,468
|
Doug Greene
|
32,146
|
-
|
32,146
|
Dean Hollis
|
7,995
|
15,967
|
23,962
|
Katrina Houde
|
26,562
|
60,322
|
86,884
|
Jeremy Kendall
|
-
|
52,000
|
52,000
|
Alan Murray
|
-
|
-
|
-
|
Brendan Springstubb
|
7,995
|
5,322
|
13,317
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
35
|
(4)
|
Other compensation includes travel fees for all directors
except Mr. Kendall. For Mr. Kendall, other compensation reflects a
retiring allowance in the amount of $18,870 (Cdn $25,000) paid under a
contract with the Company and director fees of $32,079 (Cdn $42,500) for
service on the Board of Directors of Opta Minerals Inc. (
Opta
Minerals
), a subsidiary of SunOpta through April 6, 2016.
|
|
|
|
|
(5)
|
On October 7, 2016, Mr. Greene stepped down from the
Board, and Dr. Bolles, Mr. Hollis, and Mr. Springstubb were appointed to
the Board.
|
|
|
|
|
(6)
|
On November 9, 2016, Mr. Murray stepped down from the
Board, and Mr. Hollis was appointed Chair of the Board.
|
|
|
|
|
(7)
|
On November 11, 2016, Katrina Houde was appointed Interim
CEO of the Company and ceased being paid as a non-employee
director.
|
|
|
|
|
(8)
|
Mr. Kendall did not stand for re-election at the Annual
and Special Meeting on May 10, 2016.
|
|
|
|
|
(9)
|
Pursuant to the terms of his employment arrangements with
Engaged Capital, all cash compensation and equity awards payable to Mr.
Springstubb are paid or issued to Engaged Capital.
|
The Board believes that compensation for non-employee directors
should be competitive and should fairly compensate directors for the time and
skills devoted to serving our Company but, for independent directors, should not
be so significant as to compromise independence.
All our directors are reimbursed for reasonable out-of-pocket
expenses incurred for attending meetings of our Board or its committees and for
other reasonable expenses related to the performance of their duties as
directors. The Board believes that our non-employee director compensation
package is competitive with the compensation offered by other companies and is
fair and appropriate considering the responsibilities and obligations of our
directors.
Penalties and Sanctions and Personal Bankruptcies
The information related to cease trade orders and bankruptcies,
not being within the knowledge of the Company, has been furnished by the
directors. Except as disclosed below, none of the proposed nominees for election
to the Board of Directors:
|
1)
|
is, as at the date of this Proxy Statement, or was within
10 years before the date of the Proxy Statement, a director or chief
executive officer or chief financial officer of any company (including the
Company) that:
|
|
(i)
|
was the subject of an order (as defined in Form 51-102F5
made under National Instrument 51-102 of the CSA) that was issued while
the director or executive officer was acting in the capacity as director,
chief executive officer or chief financial officer; or
|
|
|
|
|
(ii)
|
was subject to an order that was issued after the
director or executive officer ceased to be a director, chief executive
officer, or chief financial officer, and which resulted from an event that
occurred while that person was acting in the capacity as a director, chief
executive officer, or chief financial officer;
or
|
|
2)
|
is at the date hereof, or has been within 10 years before
the date of this Proxy Statement, a director or executive officer of any
company (including the Company) that while that person was acting in
that capacity, or within a year of that person ceasing to act in
that capacity, became bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency or was subject to or instituted any proceedings,
arrangement or compromise with creditors or had a receiver, receiver manager or
trustee appointed to hold its assets; or
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
36
|
3)
|
has, within the 10 years before the date of this Proxy
Statement, become bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency, or become subject to or instituted any
proceedings, arrangement or compromise with creditors, or had a receiver,
receiver manager or trustee appointed to hold the assets of the director,
executive officer or shareholder.
|
In December 2014, Michael Detlefsen was appointed as Chief
Restructuring Officer of Organic Meadow Inc. and its subsidiary, Organic Meadow
Ltd. (collectively, Organic Meadow) to guide Organic Meadow through a proposed
restructuring process when it was experiencing significant operational and
financial difficulties. As part of the restructuring process, Organic Meadow
filed a proposal for creditor protection pursuant to the Bankruptcy and
Insolvency Act (Canada) on April 1, 2015. Organic Meadow emerged from bankruptcy
protection on September 9, 2015 and was later sold in November 2015, following
which Mr. Detlefsen resigned as Chief Restructuring Officer.
[Remainder of page left intentionally blank]
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proxy or voting instruction form, please call
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37
PROPOSAL TWO APPOINTMENT AND REMUNERATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM AND AUDITOR
Appointment of Independent Registered Public Accounting Firm
and Auditor
The Audit Committee of the Board has recommended that Deloitte
LLP (
Deloitte
) be reappointed as the Companys independent registered
public accounting firm and auditor until the close of the next annual meeting of
shareholders. Shareholders will be asked to vote at the Meeting to appoint
Deloitte as the Companys independent registered public accounting firm and
auditor until the close of the next annual meeting of shareholders and to
authorize the Audit Committee to fix their remuneration. Deloitte has served as
our auditors since 2008. One or more representatives of Deloitte will attend the
Meeting and will have the opportunity to make a statement if he or she desires
to do so and will be available to respond to appropriate questions from
shareholders in attendance.
Recommendation of the Board of Directors; Vote
Required
The Board of Directors recommends that the shareholders vote
FOR the appointment of Deloitte as the Companys independent registered public
accounting firm and auditor until the close of the next annual meeting of
shareholders and FOR authorizing the Audit Committee to fix their
remuneration
. In the event that shareholders do not appoint Deloitte as the
Companys auditors at the Meeting and another accounting firm is not appointed,
the Audit Committee will reconsider its recommendation and the Board will select
another accounting firm to serve as the Companys independent registered public
accounting firm and auditor.
This proposal will be approved if a quorum is present at the
Meeting and the votes cast in favor of the proposal constitute a majority of the
total votes cast on the proposal. Abstentions and broker non-votes are counted
for purposes of determining whether a quorum exists at the Meeting, but will
have no effect on the results of the vote. Brokers and other nominees will have
discretionary authority to vote your shares if you hold your shares in street
name and do not provide instructions as to how your shares should be voted on
this proposal.
Auditor Fees
The following table sets forth the aggregate fees billed by
Deloitte for each of the last two fiscal years (including out-of-pocket
expenses):
Fee Category
|
Fiscal 2016
($)
|
Fiscal 2015
($)
|
Audit Fees(1)
|
2,182,954
|
1,946,238
|
Audit-Related Fees(2)
|
125,455
|
486,383
|
Tax Fees(3)
|
73,856
|
120,000
|
All Other Fees(4)
|
-
|
-
|
Total
|
2,382,265
|
2,552,621
|
Following is a description of the nature of services comprising
the fees disclosed under each category:
|
(1)
|
Audit fees relate to the annual audit of the Companys
consolidated financial statements included in the Companys Annual Reports
on Form 10-K, annual audits of the effectiveness of the Companys internal
control over financial reporting, reviews of interim financial statements
included in the Companys Quarterly Reports on Form 10-Q, and services
provided in connection with statutory audits or regulatory filings.
|
|
|
|
|
(2)
|
Audit-related fees relate to due diligence procedures and
accounting consultations in connection with acquisitions or divestitures,
and other audit-related projects.
|
|
|
|
|
(3)
|
Tax Fees relate to tax compliance, tax advice and tax
planning.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
38
|
(4)
|
Other Fees relate to miscellaneous matters other than
reported above.
|
Pre-Approval of Audit and Non-Audit Services
The Audit Committee has a policy for the pre-approval of audit
and non-audit services that may be provided by the Companys independent
registered public accounting firm. The committees policy is to require
pre-approval for all audit and permissible non-audit services provided by
Deloitte prior to the engagement with the exception that management is
authorized to engage Deloitte in respect of services to the extent that (a) each
individual engagement is not more than $50,000, and (b) the aggregate for all
engagements does not exceed $100,000. These services are subsequently approved
at the next scheduled Audit Committee meeting. Any pre-approval is detailed as
to the particular service or category of services and is generally subject to a
specific budget. The Audit Committee has delegated to its Chair authority to
pre-approve proposed audit and non-audit services that arise between Audit
Committee meetings, provided that the decision to approve the service is
presented at the next scheduled Audit Committee meeting. All audit and non-audit
services performed by Deloitte during the fiscal year ended December 31, 2016
were approved in accordance with this policy.
Financial Information Systems Design and Implementation Fees
No fees were billed by Deloitte to the Company during any of
the last two fiscal years for professional services described in Paragraph
(c)(4)(ii) of Rule 2-01 of Regulation S-X (financial information systems design
and implementation services).
[Remainder of page left intentionally blank]
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proxy or voting instruction form, please call
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39
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of the Company assists the
Board in fulfilling its oversight responsibilities with respect to the external
reporting process and the adequacy of the Companys internal controls. Specific
responsibilities of the Audit Committee are set forth in the Audit Committee
Charter, a copy of which can be found on SunOptas website at
www.sunopta.com
. The members of the Audit Committee are Michael Detlefsen
(Chair), Dr. Albert Bolles, Katrina Houde, Brendan Springstubb and Gregg Tanner,
each of whom meets the independence requirements of Rule 10A-3 of the Securities
Exchange Act of 1934, as amended, and applicable independence requirements of
the NASDAQ listing rules and National Instrument 52-110
Audit
Committees
of the CSA.
The Audit Committee has reviewed and discussed the Companys
audited financial statements for the year ended December 31, 2016 with the
Companys management. The Audit Committee has discussed with Deloitte, the
Company's independent registered public accounting firm and auditor, the matters
required to be discussed by the statement on Auditing Standards No. 61, as
amended, as adopted by the Public Company Accounting Oversight Board in Rule
3200T. The Audit Committee has received the written disclosures and the letter
from Deloitte required by applicable requirements of the Public Company
Accounting Oversight Board regarding Deloitte communications with the Audit
Committee concerning independence, and has discussed with Deloitte its
independence.
In reliance on the review and the discussions referred to
above, the Audit Committee recommended to the Board that the audited financial
statements be included in the Annual Report on Form 10-K for the fiscal year
ended December 31, 2016, for filing with the SEC and applicable Canadian
securities regulators.
This report has been submitted by Michael Detlefsen (Chair),
Dr. Albert Bolles, Katrina Houde, Brendan Springstubb and Gregg Tanner, all
members of the Audit Committee.
The information contained in this report shall not be deemed
to be soliciting material or to be filed with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates it by reference in such filing.
[Remainder of page left intentionally blank]
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proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email at contactus@kingsdalesadvisors.com.
40
PROPOSAL THREE ADVISORY VOTE REGARDING THE COMPENSATION OF
NAMED EXECUTIVE OFFICERS
Background
In order to ensure an appropriate level of director
accountability to the Companys shareholders and to ensure that shareholders
have an opportunity to engage with the Board of Directors about executive
compensation matters, the Company has had a policy since 2010 to seek an
advisory vote on an annual basis from shareholders on the Companys executive
compensation practices. Shareholders have previously voted on an advisory basis
for the Company to hold an advisory vote regarding the compensation of NEOs on
an annual basis. The Board understands that our shareholders have a meaningful
interest in our executive compensation policies, and believes that shareholders
should have the opportunity to fully understand the objectives, philosophy and
principles the Board has used to make executive compensation decisions. The
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the
Dodd-Frank Act, now mandates that the Company enable shareholders to vote to
approve, on an advisory, non-binding basis, the compensation of the NEOs named
in the Summary Compensation Table set forth in this Proxy Statement.
Resolution
In accordance with Company policy and Section 14A of the
Exchange Act, we are asking shareholders to indicate their support for the
compensation of the NEOs. This proposal, commonly known as a say-on-pay
proposal, gives shareholders the opportunity to express their views on the NEOs
compensation. Accordingly, we will ask shareholders to vote FOR the following
resolution at the Meeting.
RESOLVED, that the Companys shareholders approve, on an
advisory basis, the compensation of the NEOs, as disclosed in the Companys
Proxy Statement for the 2017 Annual and Special Meeting of Shareholders pursuant
to the compensation disclosure rules of the SEC, including the Compensation
Discussion and Analysis, the Summary Compensation Table and other related tables
and narrative discussion under the Executive Compensation caption.
The say-on-pay vote is advisory, and therefore not binding on
the Company, the Compensation Committee or our Board of Directors. The Board of
Directors and the Compensation Committee value the opinions of our shareholders
and to the extent there is any significant vote against the NEO compensation as
disclosed in this Proxy Statement, we will consider our shareholders concerns
and the Compensation Committee will evaluate whether any actions are necessary
to address those concerns.
Recommendation of the Board of Directors; Vote
Required
The Board of Directors recommends that the shareholders vote
FOR the advisory resolution regarding the compensation of the Companys
NEOs
.
This proposal will be approved if a quorum is present at the
Meeting and the votes cast in favor of this proposal constitute a majority of
the total votes cast on this proposal. While this vote is required by law, it
will neither be binding on the Company or the Board of Directors, nor will it
create or imply any change in the fiduciary duties of, or impose any additional
fiduciary duty on, the Company or the Board of Directors. Abstentions and broker
non-votes are counted for purposes of determining whether a quorum exists at the
Meeting, but will have no effect on the results of the vote. Brokers and other
nominees will not have discretionary authority to vote your shares if you hold
your shares in street name and do not provide instructions as to how your shares
should be voted on this proposal.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
41
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Dear Fellow Shareholder,
We are pleased to provide
you with SunOptas Compensation and Discussion and Analysis (
CD&A
)
which is designed to help you understand SunOptas approach to executive
compensation.
2016 Say on Pay and Shareholder Engagement
The Board
and Compensation Committee are committed to the concept of pay-for-performance.
Consequently, our executive compensation programs are designed to reward
achievement and over-achievement of goals, and to penalize performance
shortfalls. At the 2016 Annual and Special Meeting of the Shareholders,
approximately 81.1% of the shares voted were in favor of the advisory resolution
to support executive compensation, a decline from the 96.5% of shares that voted
in favor of this resolution at the 2015 Annual Meeting. In response to this
decline in support, members of the Board, including members of the Compensation
Committee, increased outreach to shareholders to better understand shareholders
views regarding executive compensation. Since the last Annual and Special
Meeting, SunOpta Board members met with shareholders representing approximately
54% of the shares outstanding. Generally, these conversations revealed a desire
amongst the Companys shareholders to see a further increase in the alignment
between shareholder returns and management compensation.
Fiscal 2016 Performance and Compensation Decision Highlights
SunOpta experienced significant challenges in 2016 for the
following reasons:
|
|
Operational issues at a number of our facilities
compromised efficiency and led to added cost;
|
|
|
A recall in our sunflower business caused considerable
disruption and expense; and
|
|
|
A slowdown in consumer demand for frozen fruit impacted
volumes in our individually quick frozen fruit business.
|
Based on the Compensation Committees philosophy of
pay-for-performance:
|
|
The Committee determined that no payout would be made on
either the fiscal year 2016 short-term incentive plan, or on the long-term
(3-year) incentive plan cycle ending in December 2016 as a result of the
Companys failure to meet threshold levels of performance in 2016; and
|
|
|
We also established an appropriate proportion of
pay-at-risk for key executives, with consequences for over and
under-performance against objectives.
|
Steps to Simplify and Strengthen SunOptas Business
Amid these challenges,
the Company took a number of
steps to simplify and strengthen our business. These actions included, but were
not limited to: divesting Opta Minerals, forming a strategic partnership with
Oaktree, and entering into a new long-term financing arrangement to fund
SunOptas growth.
[Remainder of page left intentionally blank]
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42
The following timeline illustrates some of the major events of
2016 and the actions taken by management and by the Board of Directors:
Fiscal Year 2016 also marked significant change in our
management team. Our CEO, Hendrik Jacobs, left SunOpta in November 2016. The
Board appointed Katrina (Kathy) Houde, a director of the Company since 2000, to
serve as Interim CEO. Upon becoming Interim CEO, Ms. Houde led the initial
stages of SunOptas Value Creation Plan (the
Plan
) to accelerate the
growth and profitability of the business, assisted by our partner and
shareholder Oaktree. Ms. Houdes service as Interim CEO ended on February 6,
2017, with the appointment of David J. Colo as SunOptas new CEO. Ms. Houde
continues to serve on the Board of Directors.
Going Forward: Compensation Changes for 2017 (and Beyond)
As a result, and in conjunction with the roll out of the Value
Creation Plan, we have undertaken a redesign of our incentive compensation
programs for 2017, to even more closely align executives goals to the critical
objectives of the Value Creation Plan. The main highlights include: (i)
revisions to SunOptas compensation peer group, (ii) a short-term incentive plan
redesign, and (iii) a new approach to long-term incentive compensation. These
changes are further discussed below, in the section of this CD&A entitled
Decisions for 2017.
Conclusion
We take the preferences and perspectives of our shareholders
seriously. We welcome constructive dialogue regarding the opportunities
available to SunOpta and the executive compensation arrangements we institute to
align with these opportunities. Please contact Jill Barnett, General Counsel of
the Company, should you wish to offer any comment about our compensation
programs.
The Compensation Committee has reviewed and discussed this
CD&A with management and with the Board of Directors.
More complete details of our compensation program and actions
are provided in the remainder of this CD&A, specifically:
|
■
|
Compensation Philosophy
|
|
■
|
CEO Transition
|
|
■
|
Elements of Compensation
|
|
■
|
Other Aspects of the Compensation Program
|
|
■
|
Decisions for 2017
|
|
■
|
Compensation Tables
|
|
■
|
Potential Payments on Termination or Change of
Control and Tables
|
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43
Based on that review and discussion, the Committee has
recommended to the Board of Directors that the CD&A be included in this
Proxy Statement.
The Compensation Committee of SunOpta, Inc.:
Margaret Shân Atkins - Chair
Michael Detlefsen
Dean Hollis
Brendan Springstubb
Say on Pay Vote Recommendation
|
|
We believe that shareholder support for our compensation programs is warranted, for all the reasons
described above, and we ask for your vote in support.
|
Compensation Practices
The Compensation Committee utilizes best practices in governing
our executive compensation programs. Therefore, there are certain things that we
do and do not do, as a matter of practice
:
What we DO
|
What we DO NOT do
|
■
|
Tie executives pay to results achieved by
weighting variable pay heavily in our pay mix
|
■
|
Provide change-in-control severance payments
exceeding market norms
|
■
|
Use equity to drive a long-term perspective
aligned with shareholders
|
■
|
Allow stock option repricing or discounted
stock option granting
|
■
|
Promote stock ownership with competitive stock
ownership guidelines
|
■
|
Offer change-in-control tax gross-ups under any
circumstances
|
■
|
Consider shareholder perspectives in our
program designs
|
■
|
Pay dividends or dividend equivalents on
unearned or unvested performance shares
|
■
|
Maintain a clawback policy which meets or
exceeds regulatory requirements
|
■
|
Allow our executives or directors to hedge or
pledge company stock
|
■
|
Use double-trigger change in control provisions
for all non pro rata payouts under cash and equity incentive plans*
|
|
|
■
|
Maintain a cap on our short-term incentive
payout
|
|
|
■
|
Assess our pay-for-performance relationship and
conduct a compensation risk assessment annually
|
|
|
*Note: Some employment agreements entered into prior contain
single-trigger change-in-control provisions.
[Remainder of page left intentionally blank]
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44
Compensation Philosophy
Our executive compensation philosophy and the policies that
support it are intended to reward our executives for the achievement of
long-term strategic goals and their efforts to enhance shareholder value. The
philosophy fosters a performance-oriented environment that rewards achievement
of internal Company goals and shareholder value creation. Our
pay-for-performance philosophy is based on these objectives:
Compensation opportunities provided to executives
are intended to approximate market median pay levels, assuming the
targeted level of performance is delivered.
Performance targets
are generally set in relation to the Companys internal budget goals.
Then, using the target as the starting point, upside and downside payout
ranges around the target are developed. These ranges provide additional
compensation opportunity to executives if results exceed targets, while
penalizing under-performance. Through this design, our executive
compensation program motivates our team, while delivering true
pay-for-performance from a shareholder perspective.
|
|
Peer Group
In order to help ensure the competitiveness of our executive
compensation, the Compensation Committee considers competitive compensation
practices from relevant sources. To do this we review general market survey data
as well as comparisons from our executive compensation peer group.
For 2016, this peer group consisted of 19 companies in the food
and beverage industry with similar businesses and revenue to that of SunOpta:
B&G Foods, Inc.
|
Cott Corporation
|
John B. Sanfilippo & Son, Inc.
|
Seneca Foods Corporation
|
The Boston Beer Company, Inc.
|
Darling Ingredients Inc.
|
Lancaster Colony Corporation
|
Snyder's-Lance, Inc.
|
Calavo Growers, Inc.
|
Farmer Bros. Co.
|
Monster Beverage Corporation
|
Tootsie Roll Industries, Inc.
|
Cal-Maine Foods, Inc.
|
The Hain Celestial Group, Inc.
|
Post Holdings, Inc.
|
Treehouse Foods, Inc.
|
Coca-Cola Bottling Co. Consolidated
|
J&J Snack Foods Corp.
|
Sanderson Farms, Inc.
|
N=19
|
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45
Relative to the group from 2015, three companies (Boulder
Brands, Diamond Foods and WhiteWave) were removed due to completed or pending
acquisitions. SunOptas 2016 revenue of $1.35 billion fell between the
25
th
and 50
th
percentiles of this peer group.
For 2017, the Compensation Committee refined this peer group to
further increase the similarities to SunOpta (generally narrowing the size range
and the total number of companies included). The adjustments resulting from that
review are summarized in the Decisions for 2017 section below.
In addition to market comparisons, compensation decisions are
informed by other external and internal factors:
To support the Compensation Committee in making its
determinations, the Committee has retained the services of Willis Towers Watson
(
WTW
) as its independent executive compensation consultant. The
Committee has reviewed and confirmed the independence of WTW. WTW provides
services at the direction of the Committee, and the Committee has specific
authority in managing all work by WTW.
CEO Transition
Our CEO, Hendrik Jacobs, left SunOpta in November 2016. The
Board appointed Katrina (Kathy) Houde, a director of the Company since 2000 and
a retired food industry CEO, to serve as Interim CEO until a permanent successor
was identified. Ms. Houdes deep contacts within the SunOpta management team,
coupled with her significant operating experience in the food industry, made her
an excellent choice to step in as Interim CEO. She was tasked by the Board of
Directors to lead the initial stages of the Value Creation Plan to accelerate
the growth and profitability of the business, assisted by our partner and
shareholder Oaktree. Ms. Houdes monthly salary was set at the same level as Mr.
Jacobs salary; however, she did not participate in any management incentive nor
company benefit programs.
At the time of her appointment as Interim CEO, Ms. Houde was
the Chair of the Compensation Committee, a position she resigned upon her
interim appointment to the management team. Ms. Houdes service as Interim CEO
ended on February 6, 2017, with the conclusion of our external search and the
appointment of David J. Colo as SunOptas new Chief Executive Officer. Ms. Houde
continues to serve on the Board of Directors.
[Remainder of page left intentionally blank]
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46
Elements of SunOptas Compensation Program
To meet our compensation philosophy, we provide the following
compensation components:
Type of
|
|
|
|
|
|
Compensation
|
Element
|
Purpose
|
|
Key Features
|
|
FIXED
|
Base
Salary
|
■
|
Fixed pay
|
■
|
Amounts
reflect individual responsibility, performance, experience, and other
internal and external factors
|
|
|
|
■
|
Reviewed annually by the Compensation Committee
|
VARIABLE
|
Short-Term
Incentive Plan
(STIP)
|
■
|
Cash incentive to reach or surpass
annual goals
|
■
|
Specific metrics are determined annually by the Compensation
Committee
|
|
|
■
|
Ties pay to performance
|
Long-Term
Incentives
(LTI) (Stock
Options and
Performance
Share Units)
|
■
|
Multi-year incentives to reach or
surpass longer-term goals
|
■
|
Stock options only provide value on the stock price growth over
the options term (generally 10 years) and vest over 3 years
|
|
■
|
Aligns with shareholder interests
|
|
■
|
Performance share units (PSUs) only vest if 3-year performance
criteria are met
|
■
|
Promotes ownership mentality
|
|
|
■
|
Equity vehicles and PSU metrics are reviewed
annually by the Compensation Committee
|
OTHER
|
Benefits and
|
■
|
Elements and levels necessary to be
competitive
|
■
|
Generally part of a broad-based set of employee benefit plans
|
Perquisites
|
|
|
|
|
|
■
|
Very limited use of additional perquisites
|
Post-
|
■
|
Continuity of leadership, bridge for
individual in the event of involuntary termination
|
■
|
Double-trigger provisions for cash change- in-control (CIC)
severance in all new agreements
|
Employment
|
|
|
Compensation
|
|
|
(Severance and
|
■
|
Encourages assessment of potential transactions with focus on
shareholder interests
|
■
|
Double-trigger equity vesting in all new agreements
|
Change-in-
|
|
|
Control)
|
|
■
|
Non-compete and non-solicitation
restrictions required in new agreements
|
In 2016, target compensation was delivered primarily through
variable pay (STIP and LTI), as shown here:
*Reflects the target annual compensation program for the former CEO, Hendrik Jacobs.
**Reflects the average
target annual compensation program of the other NEOs, excluding Katrina Houde.
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As these charts illustrate, our compensation design is intended
to deliver the majority of our senior executives total target compensation in
the form of pay-at-risk.
For 2016, the following individuals were SunOptas Named
Executive Officers (
NEOs
):
Executive
|
Role
|
Katrina Houde
|
Interim CEO
|
Edward Haft
|
Senior Vice President, Healthy Fruit
|
Robert McKeracher
|
Vice President & Chief
Financial Officer
|
John Ruelle
|
Chief Administrative Officer & Senior Vice
President
|
Gerard Versteegh
|
Senior Vice President, Global
Ingredients
|
Hendrik Jacobs
|
Former President and CEO
|
As noted above, Mr. Jacobs last day as CEO was November 11,
2016, at which point Ms. Houde assumed the Interim CEO role; she served in that
capacity through February 6, 2017.
Base Salary
For fiscal year 2016, consistent with the compensation
philosophy noted above, base salary levels for executive officers were set based
on assessments of the Companys performance, each individuals performance,
external market comparisons and other external and internal factors.
The following annualized salary rates were effective for our
NEOs during 2016. In certain cases, the Compensation Committee approved base
salary adjustments during the fiscal year, as shown below, to recognize
individual performance and address competitive alignment considerations.
Executive
|
Beginning Base
Salary
|
Ending Base
Salary
|
Percent
Change
|
Katrina Houde
|
NA
|
$650,000
|
NA
|
Edward Haft
|
$412,000
|
$420,240
|
2.0%
|
Robert McKeracher*
|
$298,146
|
$298,146
|
0%
|
John Ruelle
|
$371,565
|
$397,946
|
7.1%
|
Gerard Versteegh*
|
$305,335
|
$336,632
|
10.3%
|
Hendrik Jacobs
|
$650,000
|
$650,000
|
0%
|
*Robert McKeracher's pay is converted from CAD to USD using
the one-year average exchange rate ending 12/31/2016 of 1.325 CAD to 1 USD.
Gerard Versteegh's salary is converted from EUR to USD using the one-year
average exchange rate ending 12/31/2016 of 0.904 EUR to 1 USD.
Short-Term Incentive Plan
The purpose of the Short-Term Incentive Plan (
STIP
) is
to establish goal alignment across the organization and recognize individuals
impact on organizational performance, focusing employees on desired behaviors
which link to demonstrated results.
For 2016, the corporate targets we established for the annual
incentive plan were:
Measure
|
Weight
|
Threshold
|
Target
|
Maximum
|
SunOpta EBITDA
1
|
60%
|
$99.0m
|
$110.0m
|
$132.0m
|
CPG Margin $
2
|
20%
|
$99.5m
|
$110.6m
|
$132.7m
|
Leverage
3
|
20%
|
4.6x
|
4.2x
|
3.4x
|
1) EBITDA is defined as operating income plus depreciation
and amortization and stock based compensation. Target represents the approved
2016 budget. For measurement purposes, costs related to one-time integration
activities of 2015 acquisitions and costs associated with litigation were
excluded from the budget and hence are not intended to be captured in measuring
performance against this target.
2) Budgeted gross margin in the Consumer Products segment
included Sunrise Growers, planned synergies, and the legacy CPG business (which
includes Citrusource and Niagara Natural), for a total of $110.6 million. For
purposes of measuring
performance against this target, synergies captured inside
SG&A will be considered. For measurement purposes, costs related to one-time
integration activities of 2015 acquisitions and costs associated with litigation
were excluded from the budget and hence are not intended to be captured in
measuring performance against this target.
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3) Based on budgeted EBITDA of $110 million, and budgeted
ending Total Debt balance of $464 million. Total Debt is defined as the sum of
bank indebtedness, current portion of long-term debt, and long-term debt.
Performance Payout Qualifier
|
|
While these performance measures are assessed independently, SunOpta EBITDA must meet or
exceed 85% of the target performance level in order for
any payout
under the
Short-Term
Incentive Plan metric to be earned and paid.
|
Each NEO had the following range of short-term incentive
opportunity in 2016, depending on the corporate result achieved:
Executive
|
Threshold
Payout
(% of Base Salary)
|
Target
Payout
(% of Base Salary)
|
Maximum
Payout
(% of Base Salary)
|
Katrina Houde*
|
NA
|
NA
|
NA
|
Edward Haft
|
6%
|
60%
|
120%
|
Robert McKeracher
|
5%
|
50%
|
100%
|
John Ruelle
|
5%
|
50%
|
100%
|
Gerard Versteegh
|
4%
|
40%
|
80%
|
Hendrik Jacobs
|
10%
|
100%
|
200%
|
*As Interim CEO, Ms. Houde was not eligible for
participation in the STIP.
In the event that performance is below threshold for any
metric, there is no payout for that metric. If performance is above maximum in
all categories, the payout is capped at the levels noted above. All payments are
subject to the EBITDA performance qualifier being met. We consider this to be
sound governance which mitigates excessive risk-taking.
In 2016, EBITDA performance was below 85% of target (the
performance payout qualifier); therefore, there were no payouts under the STIP.
Long-Term Incentives
In fiscal year 2016, we provided long-term incentives in the
form of grants of stock options and performance stock units (
PSUs
). The
targeted value for each executive was split evenly between stock options and
PSUs, based on the 90-day average stock price as of May 17, 2016, as follows:
Executive
|
Target Total LTI
(% of Salary)
|
2016 Stock Options
# of Options
|
2016-2018 PSUs
Target # of Units
|
Katrina Houde
1
|
--
|
--
|
--
|
Edward Haft
|
60%
|
57,148
|
24,720
|
Robert McKeracher
|
50%
|
45,658
|
19,750
|
John Ruelle
|
50%
|
43,808
|
18,950
|
Gerard Versteegh
|
40%
|
26,791
|
11,589
|
Hendrik Jacobs
2
|
150%
|
225,400
|
97,500
|
1)
|
As Interim CEO, Ms. Houde was not eligible for the
2016 LTI grants.
|
2)
|
Upon leaving SunOpta, Mr. Jacobs forfeited all PSUs.
The stock options continue vesting through November 11, 2018, and are
exercisable through May 11, 2019.
|
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Specific details and design attributes are summarized
below:
The Compensation Committee selected these two vehicles because
we believe that stock options create shareholder alignment, providing value only
in the event of stock price increases, whereas PSUs are tied to achievement of
capital productivity over a 3-year period (as measured by RONA). Further, RONA
provides balance to the income statement measures (EBITDA and CPG Margin)
utilized in the STIP. RONA is calculated by taking the sum of operating income
plus items of other income and expense incurred in the normal course of
business, and dividing it by the average net assets. Average Net Assets is
defined as total assets, excluding cash and intercompany receivables, less total
liabilities, excluding intercompany and external debt, calculated as an average
of monthly closing balances.
There were grants of PSUs made in 2014 with a 3-year
performance period that ended on December 31, 2016. Vesting of the 2014 PSUs was
based on the Companys 2016 RONA performance against the goal levels shown in
the table below. As noted earlier, the financial performance conditions were not
met; therefore, the 2014 PSUs did not vest.
Measure
|
Threshold
|
Target
|
Maximum
|
2016 RONA
|
13%
|
15%
|
17%
|
Special Retention Incentives Granted in Fiscal Year 2016
With the departure of our CEO in November 2016, the
Compensation Committee desired to retain key leadership in place to drive
performance improvements. Recognizing the uncertainty associated with the search
for a new CEO, as well as the launch by Ms. Houde of an aggressive
cost-reduction and revenue enhancement plan (the Value Creation Plan), the
Compensation Committee and the Board considered the potential risk to the
business which would be created by the possible departure of certain key
executives during this period of transition. In November 2016, the Compensation
Committee recommended, and the Board agreed to put in place, certain retention
awards for selected individuals whose continued service throughout the
transition period was thought to be essential. These awards are only payable to
the recipients if they remain employed by the Company through the entire
agreed-upon period (varies by individual, but in no case less than 13 months).
The two NEOs eligible to receive cash retention payments are:
Executive
|
Retention
Payment
|
Approximate % of
Base Salary
|
Robert McKeracher
|
$210,000
|
60%
|
John Ruelle
|
$199,000
|
50%
|
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Two other NEOs were granted stock options in lieu of cash
retention incentives. These options vest in-full on the third anniversary of the
grant date only if the executive remains employed by the Company through that
date:
Executive
|
Grant Date
|
# of Stock
Options
|
Edward Haft
|
11/8/2016
|
200,000
|
Gerard Versteegh
|
11/8/2016
|
200,000
|
Other Compensation
Our executive officers are eligible to receive the same types
of benefits that we make available to other employees, including:
|
|
Group health benefits, which includes medical,
dental, vision and prescription drug coverage, group life insurance and
short-term and long-term disability plans; and
|
|
|
Retirement benefits in the form of a 401(k)
plan for U.S. employees, a Registered Retirement Savings Plan match for
Canadian employees and a defined benefit pension plan for certain European
employees.
|
In addition, from time to time executive officers receive
modest additional perquisites that are not generally available to other
employees, most commonly automobile benefits. In recent years, we have
substantially reduced the scope of these perquisites. For additional information
regarding other compensation during 2016, see the All Other Compensation
column in the Summary Compensation Table which follows.
We have entered into employment or other agreements with our
NEOs, other than Katrina Houde, most of which provide for certain benefits upon
a change of control of the Company or upon a termination of employment by the
Company without cause. These arrangements are intended to meet both business and
human resources needs, encouraging the executives to weigh potential transitions
based on shareholder interests, rather than personal ones, and to provide a
measure of security to executives in the event of an actual or potential change
in corporate ownership/control. The potential benefits received by the NEOs in
connection with a change-in-control or termination of employment under certain
circumstances below under Payments on Termination or Change of Control.
Other Aspects of the Compensation Program
Stock Ownership Guidelines
We expect our senior executives to maintain substantial
ownership of SunOpta stock:
Category
|
Ownership
Guideline
|
CEO
|
5x base salary
(effective
February 2017)
|
Other NEOs
|
2x base salary
|
Other Senior Leadership Team Members
|
1x base salary
|
Independent Directors
|
5x annual cash retainer
|
We believe this creates important alignment with shareholders.
Executive participants have five years to be in accordance with these
guidelines. If, at the end of five years, the CEO or other NEOs and members of
the Senior Leadership Team are not in compliance, 50% of all short-term
incentive payouts are provided in equity rather than cash until the guideline is
met.
Assessment of Risk
The Compensation Committee conducts an annual review of risk
associated with the compensation programs. The 2016 review found the programs to
be within acceptable parameters.
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Clawback Policy
If material non-compliance with any financial reporting
requirement leads to an accounting restatement, the Company has authority, as
part of the STIP, to recover from current and former executives any
incentive-based pay which would not have been awarded based on the restated
financials. This authority extends to the three years preceding the restatement.
Limitations on Deductions
Section 162(m) of the Internal Revenue Code limits the
deductibility of executive compensation paid to our CEO and the three other most
highly compensated executive officers (other than the Chief Financial Officer)
to $1,000,000 per year, but contains an exception for certain performance-based
compensation. For the fiscal year ended December 31, 2016, grants of stock
options (but not PSUs) under our 2013 Stock Incentive Plans were intended to
satisfy the requirements for deductible compensation for employees residing in
the United States. While our general policy is to preserve the deductibility of
most compensation paid to executive officers, we may approve compensation that
may not be deductible if we believe it is in the best interests of the Company
and its shareholders. For 2016, we believe all compensation paid to our NEOs was
deductible.
Decisions for 2017
In conjunction with the roll out of the Value Creation Plan,
and taking into account the feedback received from shareholders during 2016, the
Compensation Committee and management undertook a redesign of our incentive
compensation programs for fiscal year 2017. This work had three main components:
|
1.
|
Revisions to SunOptas compensation peer group;
|
|
2.
|
Short-term incentive plan redesign; and
|
|
3.
|
New approach to long-term incentive
compensation.
|
To ensure that the Committee is referencing comparator
organizations that align with SunOptas business situation and scale, the
Committee made the following changes for 2017, with assistance from WTW. Each of
the added peer companies is more closely aligned with SunOptas revenue to
market capitalization profile, and have comparable operational models with
manufacturing, marketing and distribution aspects in related industries.
2017 Peer
Group 15 Companies
(Green text indicates new peer)*
|
■
AdvancePierre Foods
■
Calavo
■
Cal-Maine
■
Cott Corporation
■
Darling Ingredients
|
■
Farmer
Bros
■
Flowers Foods
■
Inventure Foods
■
J&J
Snack Foods
■
Lancaster Colony
|
■
Landec Corporation
■
John B.
Sanfilippo & Son
■
Sanderson Farms
■
Seneca Foods
■
Synders-Lance
|
*Note that 8 companies were removed from the peer group for 2017: B&G Foods, Boston Beer, Coca Cola Bottling, Hain
Celestial, Monster, Post, Tootsie Roll and Treehouse Foods.
The Committee believes that the resulting group aligns more
closely with SunOptas business and is more reflective of the Companys
financial scale, in that SunOptas total revenue of $1.37 billion approximates the
$1.35 billion median revenue
of this new peer group.
The Value Creation Plan was instituted to accelerate
significant improvement in EBITDA, while maintaining the most rigorous
expectations for quality and safety. The Board and management are committed to
achieving these improvements, and have redesigned the 2017 STIP accordingly.
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52
For the executive team, the STIP will be based on consolidated
EBITDA. The Committee believes that the use of EBITDA as the sole performance
metric in the STIP will heighten managements focus on implementing and
delivering the operational improvements contemplated in the Value Creation
Plan.
Additionally, the Committee recommended changes to the payout
structure associated with the shortterm incentive plan in order to (1) stress
the importance of executing upon the Value Creation Plan, and (2) effectively
motivate the executive team to exceed the goals and milestones of the Plan. For
this reason, in 2017, achievement of the budget will pay less than 100% of the
target incentive. Executives will be eligible for a 50% payout of the annual
incentive award if 97% of the budget EBITDA is achieved, and a 75% payout for
full achievement of the budget EBITDA. A payout of 100% of the target annual
incentive will require attainment of 103% of the budget EBITDA target. This
structure aligns with the desire to maintain pay and performance alignment,
while providing incentives for EBITDA stabilization as the Value Creation Plan
gains traction.
Short-term incentive compensation outcomes under the EBITDA
performance scale are also subject to an individual performance multiplier
between 0% and 120%.
3.
|
Long-Term Incentive
Approach
|
For 2017, the Compensation Committee and management are
developing a new design for the long-term incentive plan. In part, the changes
to this plan will place greater emphasis on improving stock price, as well as
strengthening the long-term financial performance of the Company.
On February 6, 2017, the Company announced the hiring of David
J. Colo as CEO. In connection with Mr. Colos hiring, the Board of Directors
approved an inducement equity award to Mr. Colo, which included 50,000
restricted stock units (
Special RSUs
), 473,940 performance-based stock
options (
Special Stock Options
) and 277,780 performance stock units
(
Special PSUs
). The Special RSUs will vest in three equal annual
installments beginning February 6, 2018. The vesting of the Special Stock
Options and the Special PSUs will be subject to the satisfaction of stock price
performance conditions during the three-year period ending February 6, 2020.
One-third of the Special Stock Options and the Special PSUs will vest upon
achieving a stock price of $11.00, one-third will vest upon achieving a stock
price of $14.00, and one-third will vest upon achieving a stock price of $18.00,
in each case for 20 consecutive trading days, subject to Mr. Colo's continued
employment during the three-year performance period. On March 9, 2017, the
Company granted Mr. Colo 50,000 restricted stock units that will vest in three
equal annual installments beginning February 6, 2018. Under the terms of Mr.
Colos employment agreement, the Company agreed to issue an additional 50,000
restricted stock units to Mr. Colo if he purchased an aggregate value of
$1,000,000 of the Common Shares in the open market by the later of (i) March 17,
2017 or (ii) the date that is the 10th stock trading date after February 6, 2017
that Mr. Colo was eligible to purchase Common Shares under the Companys insider
trading policy. Mr. Colo satisfied this condition on March 8, 2017.
The Committee believes the performance-based awards described
above provide significant alignment between the interests of the Companys
shareholders and Mr. Colo, as none of the awards will vest without significant
stock price appreciation. Additionally, the Committee intends for these awards
to represent a front-loading of long-term incentive compensation; i.e., the
Committee does not expect to grant regular long-term incentive awards to Mr.
Colo prior to the completion of the three-year performance period.
For other participants in the long term incentive plan, the
Committee intends to grant a combination of PSUs, restricted stock, and stock
options. The PSUs will be identical to those granted to Mr. Colo, i.e., they
will carry the same vesting conditions based on stock price achievement, and
require continuous employment of the recipient through the entire three-year
performance period. The specific weight of each component will vary based on the
level of the recipient. For senior officers, a greater proportion of long term
incentive value will be delivered in the form of the stock-price-conditioned
PSUs than will be the case for lower-level participants. As with Mr. Colos
awards, the Committee intends for these awards to represent a front-loading of
long-term incentive compensation for the ensuing three years, and does not
expect to grant additional long-term incentive awards to these recipients until
the completion of the three-year performance period.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
53
Compensation of Named Executive Officers
Summary Compensation Table
Name and Principal
Position
|
Year
|
Salary
($)
|
Stock
Awards
($)(1)
|
Option
Awards
($)(2)
|
Non-Equity
Incentive
Plan
Compen-
sation
($)(3)
|
All
Other
Compen-
sation
($)(4)
|
Total
($)
|
Katrina Houde(5)(6)
Interim Chief Executive
Officer
|
2016
|
89,041
|
58,860
|
15,114
|
-
|
70,251
|
233,266
|
Robert McKeracher(6)
Vice President and
Chief
Financial Officer
|
2016
2015
2014
|
298,146
296,588
323,890
|
64,583
120,971
127,882
|
62,021
121,094
127,123
|
-
-
121,511
|
24,999
26,635
31,061
|
449,749
565,288
731,467
|
Edward Haft
Senior Vice President,
Healthy Fruit
|
2016
|
416,244
|
80,834
|
645,629
|
-
|
54,005
|
1,196,712
|
John Ruelle
Chief Administrative
Officer
and Senior Vice
President
|
2016
2015
2014
|
384,756
368,221
355,360
|
61,967
133,629
126,989
|
59,508
133,767
126,240
|
-
-
133,279
|
13,538
15,186
16,380
|
519,769
650,803
758,248
|
Gerard Versteegh(7)
Senior Vice President,
Global Ingredients
|
2016
2015
2014
|
314,304
306,025
351,984
|
37,896
86,129
72,230
|
604,393
86,222
71,801
|
-
-
144,488
|
-
-
-
|
956,593
478,376
640,503
|
Hendrik Jacobs(6)(8)
Former President and
Chief
Executive Officer
|
2016
2015
2014
|
560,959
492,914
487,784
|
318,825
438,793
209,807
|
306,181
321,869
208,576
|
-
-
184,030
|
1,552,330
137,221
47,817
|
2,738,295
1,390,797
1,138,014
|
|
(1)
|
Consists of the grant-date fair value of RSUs granted to
Ms. Houde for her service as a non-employee director and PSUs granted to
our other NEOs under the Existing 2013 Plan, calculated in accordance with
FASB ASC Topic 718. Please see Note 14, Stock-Based Compensation, to the
Companys consolidated financial statements included in our Annual Report
on Form 10-K for a detailed description of the assumptions used to
calculate the fair value of PSUs. The amounts reflect the value of the
PSUs at the probable outcome of Company performance at the grant date,
which was the target level. The grant-date fair values of 2016 PSU awards
at the maximum level of payout are as follow: Mr. McKeracher - $129,165;
Mr. Haft - $161,669; Mr. Ruelle - $123,933; Mr. Versteegh - $75,792; and
Mr. Jacobs - $637,650. For additional information on our long-term equity
incentive awards, see Compensation Discussion and AnalysisLong Term
Incentives.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
54
|
(2)
|
Consists of the aggregate grant-date fair value of stock
options granted to Ms. Houde for her service as a non-employee director
and to our other NEOs under the Existing 2013 Plan, calculated in
accordance with FASB ASC Topic 718. For Mr. Haft and Mr. Versteegh, these
amounts include special retention awards granted in November 2016. Please
see Note 14, Stock-Based Compensation, to the Companys consolidated
financial statements included in our Annual Report on Form 10-K for a
detailed description of the assumptions used to calculate the fair value
of options. For additional information on our long-term equity incentive
awards, see Compensation Discussion and AnalysisLong Term
Incentives.
|
|
|
|
|
(3)
|
Consists of payments awarded to our NEOs under our STIP.
These amounts were earned in the years indicated and paid in the following
April. For additional information on our STIP, see Compensation
Discussion and AnalysisShort Term Incentive Plan.
|
|
|
|
|
(4)
|
For Ms. Houde, represents non-employee director and
travel fees received through November 11, 2016 when appointed Interim CEO.
For other NEOs, represents retirement savings contributions, automobile
benefits, life and long-term disability insurance and club memberships.
The amount for Mr. Jacobs includes $1,519,442 in severance payments and,
$10,000 in vacation payout. See All Other Compensation table
below.
|
|
|
|
|
(5)
|
Ms. Houde was appointed Interim CEO on November 11,
2016.
|
|
|
|
|
(6)
|
Mr. McKeracher and Mr. Jacobs are paid in Canadian
dollars. Their compensation has been converted to U.S. dollars using the
average annual exchange rate applicable for each year. For 2016, 2015 and
2014, these rates were 0.7548, 0.7820 and 0.9054 Canadian dollars for each
U.S. dollar, respectively. Likewise, Ms. Houdes compensation after her
appointment to Interim CEO has been converted to U.S. dollars. See
Non-Employee Director Compensation Table for details of her compensation
prior to her appointment as Interim CEO.
|
|
|
|
|
(7)
|
Mr. Versteegh is paid in euros. His compensation has been
converted to U.S. dollars using the average annual exchange rate
applicable for each year. For 2016, 2015 and 2014, these rates were
1.1066, 1.1091 and 1.3283 euros for each U.S. dollar,
respectively.
|
|
|
|
|
(8)
|
Mr. Jacobs served as President and CEO until November 11,
2016. Under the terms of his Separation Agreement, the Company will pay
Mr. Jacobs a monthly amount of $42,207, less applicable withholding, for a
period of thirty-six months. The payments reflect the equivalent of
twenty-four months of Mr. Jacobs salary, bonus and certain benefits paid
out over a thirty-six month period.
|
[Remainder of page left intentionally blank]
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Kingsdale Advisors at
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55
The following table details the various components included in
the All Other Compensation column for 2016.
All Other Compensation
Name
|
Retirement
Plan/401(k)
Contribu-
tions
($)
|
Auto
($)
|
Life
and
Long-Term
Disability
Insurance
($)
|
Member-
ships
($)
|
Other
($)(1)
|
Total
($)
|
Katrina Houde
|
-
|
-
|
-
|
-
|
70,251
|
70,251
|
Robert McKeracher
|
9,575
|
13,374
|
2,050
|
-
|
-
|
24,999
|
Edward Haft
|
10,600
|
37,197
|
516
|
-
|
5,692
|
54,005
|
John Ruelle
|
11,326
|
461
|
1,003
|
-
|
748
|
13,538
|
Gerard Versteegh
|
-
|
-
|
-
|
-
|
-
|
-
|
Hendrik Jacobs
|
9,024
|
10,145
|
2,050
|
1,669
|
1,529,442
|
1,552,330
|
|
(1)
|
For Ms. Houde, represents fees for service as a
non-employee director until appointed Interim CEO on November 11, 2016.
For Mr. Haft, represents a one-time dependent care withholding correction.
For Mr. Ruelle, represents wellness rewards. For Mr. Jacobs, represents
severance payments of $1,519,442 and a vacation payout of
$10,000.
|
[Remainder of page left intentionally blank]
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proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
56
The following table summarizes grants of long-term equity
incentive awards to our NEOs in fiscal 2016, and the estimated possible payouts
under our short-term incentive plan for fiscal 2016.
Grants of Plan-Based Awards
Name
|
Grant
Date
|
Estimated
Possible Payouts Under
Non-Equity Incentive Plan Awards(1)
|
Estimated
Possible Payouts Under
Equity Incentive Plan Awards(2)
|
All Other
Stock
Awards:
Number of
Shares
of
Stock or
Units
(#)(3)
|
All Other
Option
Awards:
Number of
Securities
Under-
lying
Options
(#)(4)
|
Exercise
or Base
Price of
Option
Awards
($/Share)
|
Grant Date
Fair Value
of Stock
and Option
Awards
($)(5)
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
Katrina
Houde(6)
|
05/24/2016
11/08/2016
|
-
-
|
-
-
|
-
-
|
-
-
|
-
-
|
-
-
|
18,000
-
|
-
5,322
|
-
6.65
|
58,860
15,114
|
Robert
McKeracher
|
N/A
05/24/2016
05/24/2016
|
14,907
-
-
|
149,073
-
-
|
298,146
-
-
|
-
9,875
-
|
-
19,750
-
|
-
39,500
-
|
-
-
-
|
-
-
45,658
|
-
-
3.27
|
-
64,583
62,021
|
Edward Haft
|
N/A
05/24/2016
05/24/2016
11/08/2016
|
25,214
-
-
-
|
252,144
-
-
-
|
504,288
-
-
-
|
-
12,360
-
-
|
-
24,720
-
-
|
-
49,440
-
-
|
-
-
-
-
|
-
-
57,148
200,000
|
-
-
3.27
6.65
|
-
80,834
77,629
568,000
|
John Ruelle
|
N/A
05/24/2016
05/24/2016
|
19,424
-
-
|
194,236
-
-
|
388,471
-
-
|
-
9,475
-
|
-
18,950
-
|
-
37,900
-
|
-
-
-
|
-
-
43,808
|
-
-
3.27
|
-
61,967
59,508
|
Gerard
Versteegh
|
N/A
05/24/2016
05/24/2016
11/08/2016
|
12,572
-
-
-
|
125,722
-
-
-
|
251,443
-
-
-
|
-
5,794
-
-
|
-
11,589
-
-
|
-
23,178
-
-
|
-
-
-
-
|
-
-
26,791
200,000
|
-
-
3.27
6.65
|
-
37,896
36,393
568,000
|
Hendrik
Jacobs
|
N/A
05/24/2016
05/24/2016
|
65,000
-
-
|
650,000
-
-
|
1,300,000
-
-
|
-
48,750
-
|
-
97,500
-
|
-
195,000
-
|
-
-
-
|
-
-
225,400
|
-
-
3.27
|
-
318,825
306,181
|
|
(1)
|
Reflects each NEOs possible payouts under our STIP for
fiscal 2016. Amounts shown indicate each NEOs potential bonus assuming
successful completion of the NEOs performance objectives. For additional
information on our short-term incentive plan, see Compensation
Discussion and AnalysisShort Term Incentive Plan. No amounts were paid
for 2016 because the performance criteria were not satisfied.
|
|
|
|
|
(2)
|
Reflects the potential number of PSU awards that may vest
and convert into Common Shares if the predetermined performance measure
meets or exceeds established thresholds for the year ending December 29,
2018. If the predetermined performance measure is below the established
minimum threshold, no PSUs will vest. Mr. Jacobs PSUs were forfeited upon
his termination of employment. For additional information on our long-term
equity incentive awards, see Compensation Discussion and AnalysisLong
Term Incentives.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
57
|
(3)
|
Ms. Houde was granted RSUs for her service as a
non-employee director prior to being appointed Interim CEO. RSUs vest as
to one-third annually beginning on the first anniversary of the grant
date.
|
|
|
|
|
(4)
|
Represents grants of stock options to purchase Common
Shares. For Ms. Houde, stock options were granted for her service as a
non-employee director prior to being appointed Interim CEO and vest in
full on the first anniversary of the grant date. For Messrs. Haft and
Versteegh, stock options granted on November 8, 2016 cliff vest on the
third anniversary of the grant date. Stock options granted to NEOs on May
24, 2016 vest one-third annually beginning on the first anniversary of the
grant date. All stock options expire on the tenth anniversary of the grant
date.
|
|
|
|
|
(5)
|
Consists of the aggregate grant-date fair value of equity
incentive awards granted to our NEOs under the Existing 2013 Plan,
calculated in accordance with FASB ASC Topic 718. Please see Note 14,
Stock- Based Compensation, to SunOpta Inc.s consolidated financial
statements included in our Annual Report on Form 10-K for a detailed
description of the assumptions used to calculate the fair value of
stock-based awards. The amounts reflect the value of the PSUs at the
probable outcome of Company performance as of the grant date.
|
|
|
|
|
(6)
|
Ms. Houde did not participate in the executive incentive
plans during her tenure as Interim CEO.
|
[Remainder of page left intentionally blank]
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proxy or voting instruction form, please call
Kingsdale Advisors at
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58
The following table summarizes the outstanding equity award
holdings of our NEOs as of December 31, 2016. This table incudes unexercised and
unvested option awards and unvested PSUs and RSUs.
Outstanding Equity Awards at Fiscal Year End
Name
|
Option
Awards
|
Stock
Awards
|
Date
of
Grant
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)(2)
|
Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)(2)
|
Katrina Houde
|
05/11/2011
05/08/2012
05/07/2013
05/13/2014
05/12/2015
05/24/2016
11/08/2016
|
15,000
16,000
12,000
-
-
-
-
|
-
4,000
8,000
-
-
-
5,322
|
7.35
5.73
7.36
-
-
-
6.65
|
05/11/2017
05/08/2022
05/07/2023
-
-
-
11/08/2026
|
-
-
-
2,609
5,953
18,000
-
|
-
-
-
18,393
41,969
126,900
-
|
Robert McKeracher
|
05/11/2011
11/08/2011
05/08/2012
05/07/2013
05/13/2014
05/12/2015
05/12/2015
05/24/2016
05/24/2016
|
10,000
50,000
56,000
36,000
7,544
4,424
-
-
-
|
-
-
14,000
24,000
11,317
17,696
-
45,658
-
|
7.35
5.05
5.73
7.36
11.30
10.08
-
3.27
-
|
05/11/2017
11/08/2017
05/08/2022
05/07/2023
05/13/2024
05/12/2025
-
05/24/2026
-
|
-
-
-
-
-
-
12,013
-
19,750
|
-
-
-
-
-
-
84,692
-
139,238
|
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59
Name
|
Option
Awards
|
Stock
Awards
|
Date of
Grant
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)(2)
|
Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)(2)
|
Edward Haft
|
10/09/2015
05/24/2016
05/24/2016
11/08/2016
|
20,000
-
-
-
|
80,000
57,148
-
200,000
|
5.26
3.27
-
6.65
|
10/09/2025
05/24/2026
-
11/08/2026
|
-
-
24,720
-
|
-
-
174,276
-
|
John Ruelle
|
05/11/2011
11/08/2011
05/08/2012
05/07/2013
05/13/2014
05/12/2015
05/12/2015
05/24/2016
05/24/2016
|
2,000
50,000
56,000
12,000
7,492
4,887
-
-
-
|
-
-
14,000
24,000
11,238
19,548
-
43,808
-
|
7.35
5.05
5.73
7.36
11.30
10.08
-
3.27
-
|
05/11/2017
11/08/2017
05/08/2022
05/07/2023
05/13/2024
05/12/2025
-
05/24/2026
-
|
-
-
-
-
-
-
13,270
-
18,950
|
-
-
-
-
-
-
93,554
-
133,598
|
Gerard Versteegh
|
05/11/2011
03/05/2012
05/08/2012
05/07/2013
05/13/2014
05/12/2015
05/12/2015
05/24/2016
05/24/2016
11/08/2016
|
22,500
28,000
28,000
21,000
4,261
3,150
-
-
-
-
|
-
7,000
7,000
14,000
6,392
12,600
-
26,791
-
200,000
|
7.35
5.15
5.73
7.36
11.30
10.08
-
3.27
-
6.65
|
05/11/2017
03/05/2018
05/08/2022
05/07/2023
05/13/2024
05/12/2025
-
05/24/2026
-
11/08/2026
|
-
-
-
-
-
-
8,553
-
11,589
-
|
-
-
-
-
-
-
60,299
-
81,702
-
|
Hendrik Jacobs(3)
|
08/09/2012
05/07/2013
05/13/2014
05/12/2015
07/06/2015
05/24/2016
|
150,000
54,000
12,378
7,383
4,600
-
|
50,000
36,000
18,568
29,533
18,400
225,400
|
5.14
7.36
11.30
10.08
10.52
3.27
|
5/11/2019
5/11/2019
5/11/2019
5/11/2019
5/11/2019
5/11/2019
|
-
-
-
-
-
-
|
-
-
-
-
-
-
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
60
|
(1)
|
Option awards granted before 2016 vest at a rate of 20%
per year over five years. Option awards granted in 2016 vest as to
one-third per year over three years.
|
|
|
|
|
(2)
|
For Ms. Houde, represents RSUs granted in 2014, 2015, and
2016 for her service as a non-employee director of the Company. These RSUs
vest as to one-third per year over three years. For other NEOs, represents
PSUs granted in 2015 and 2016. The number of PSUs shown is based on the
number of shares that would be issued at the end of the performance period
at the target level of performance subject to continued employment. The
2015 and 2016 PSUs vest at the end of a three-year performance period
ending on December 30, 2017 and December 29, 2018, respectively, based on
the Companys performance against the performance goal. For the 2016 PSUs,
see prior table for the maximum number of shares that could become vested.
The market value of the RSUs and PSUs is based on the closing market price
of the Common Shares on the last trading day of fiscal 2016 of
$7.05.
|
|
|
|
|
(3)
|
As of his employment separation date, Mr. Jacobs held
228,361 vested stock options and 377,901 unvested stock options that will
continue to vest for a period of 24 months ending on November 11, 2018. On
November 11, 2018, all unvested stock options will be cancelled, and all
vested stock options can be exercised by Mr. Jacobs until the earlier of
(i) the expiry date of the option and (ii) May 11, 2019 (the last day of
the six-month period commencing from November 11, 2018). In addition, as
of the separation date, PSUs granted to Mr. Jacobs in 2014, 2015, and 2016
were immediately forfeited and cancelled. In the event of a change in
control on or prior to November 11, 2018, all of Mr. Jacobs unvested
stock options will immediately vest. No stock options or PSUs were granted
to Mr. Jacobs after the separation date.
|
Option Exercises and Stock Vested During Fiscal 2016
The following table details certain information concerning
stock options exercised by the NEOs and stock awards that vested during the
fiscal year ended December 31, 2016.
Option Exercises and Stock Vested
Name
|
Option Awards
|
Stock
Awards
|
Number of
Shares Acquired
on Exercise
(#)
|
Value Realized
on Exercise
($)(1)
|
Number of
Shares Acquired
on Vesting
(#)(2)
|
Value Realized
on Vesting
($)(3)
|
Katrina Houde
|
15,000
|
13,950
|
5,584
|
24,879
|
Robert McKeracher
|
8,000
|
6,800
|
-
|
-
|
Gerard Versteegh
|
23,500
|
21,620
|
-
|
-
|
|
(1)
|
Value realized is calculated as the difference between
the total fair market value of the shares on the date of exercise, less
the total exercise price paid for the shares.
|
|
|
|
|
(2)
|
Reflects 2,608 RSUs from the May 13, 2014 grant and 2,976
RSUs from the May 12, 2015 grant that vested and were converted into
shares on May 13, 2016 and May 12, 2016, respectively. These grants were
related to Ms. Houdes service as a non-employee director of the
Company.
|
|
|
|
|
(3)
|
Value realized is based on the market value of the
underlying shares on the vesting date.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
61
Potential Payments on Termination or Change of
Control
The Companys Existing 2013 Plan and Amended 2013 Plan provide
that, in the event of a merger, consolidation or plan of exchange involving the
Company pursuant to which outstanding shares are converted into cash or other
stock, securities or property, or a sale, lease or exchange or other transfer of
all or substantially all of the assets of the Company, the Companys Board of
Directors may, in its sole discretion, provide that outstanding awards under the
plan shall be treated in accordance with any of the following alternatives: (i)
the outstanding award may be converted into a similar award based on the stock
of the surviving or acquiring company, taking into account the relative values
of the companies involved in the transaction; (ii) the outstanding award may be
cancelled by the Company and the holder would receive cash in an amount equal to
the value of the award, as determined by the Companys Board of Directors; or
(iii) the outstanding award may become fully exercisable and the Companys Board
of Directors would provide an arrangement pursuant to which the holder would
have a reasonable opportunity to exercise any award or otherwise realize the
value of the award. In the absence of express provisions in an NEOs employment
or other agreement the vesting of options granted on or after May 28, 2013 does
not automatically accelerate upon a change of control or a subsequent
termination of employment.
The Companys 2002 Stock Option Plan, as amended and restated
in May 2011, provides for immediate vesting of all unvested stock options in the
event of a change of control. A change of control is defined as: (i) the
acquisition by a person or group of beneficial ownership of 50% or more of the
outstanding voting securities of the Company; (ii) a merger or similar
transaction between the Company and another entity whereby voting security
holders of the Company immediately prior to such event receive less than 50% of
the outstanding voting securities of the entity surviving the event; (iii) the
liquidation, dissolution or winding up of the Company; or (iv) the sale or other
disposition of all or substantially all of the Companys assets. Outstanding
options held by the NEOs that were granted prior to May 28, 2013 are governed by
the 2002 Stock Option Plan, and the vesting of these options would accelerate
upon a change of control.
Under the PSUs, in the event of the sale of all or
substantially all of the assets of the Company or certain mergers involving the
Company before the vesting date of the PSUs, an NEO would be entitled to receive
a payout of shares no later than 30 days following the transaction. The number
of shares issued in such event would be the amount determined by the payout
factor calculated as if the performance period ended on the last day of the
Companys most recently completed fiscal quarter prior to the date of the
transaction (with the performance measures adjusted for the shorter performance
period).
With the exception of Ms. Houde, former Interim CEO, we have
entered into employment or other agreements with our NEOs, which provide for
certain benefits upon a change of control of the Company or upon a termination
of employment by the Company without cause. Although some agreements with NEOs
entered into prior to August 2016 provide for accelerated vesting of equity
awards upon a change of control (so-called single-trigger provisions),
employment agreements entered into with NEOs and other executive officers of the
Company after August 2016 generally provide for accelerated vesting of awards
only if the executives employment is terminated within a specified period
before or following a change of control (so-called double-trigger provisions).
The definition of change of control varies among the agreements and generally
includes (i) the acquisition of stock representing a majority of the voting
power of the Companys stock; (ii) at any time during a period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Company (
Incumbent Directors
) shall cease
for any reason to constitute at least a majority thereof; provided, however,
that the term Incumbent Director shall also include each new director elected
during such two-year period whose nomination or election was approved by
two-thirds of the Incumbent Directors then in office; (iii) any consolidation,
merger or plan of exchange involving the Company as a result of which the
holders of outstanding stock of the Company immediately prior to the transaction
do not continue to hold at least 50% of the combined voting power of the
outstanding voting securities of the surviving corporation or a parent
corporation of the surviving corporation immediately after the transaction; and
(iv) the sale of all or substantially all of the assets of the Company. The
definition of cause varies among the agreements.
The benefits to be received by the NEOs under the terms of
their applicable employment or other agreements in connection with a change of
control or upon termination of employment under certain circumstances are
summarized as follows:
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
62
Robert McKeracher
Change of Control:
Upon a change of
control, all of Mr. McKerachers unvested options will immediately vest. If
material changes are proposed to Mr. McKerachers position, he will have the
option of terminating his employment and receiving a lump sum severance payment
equal to 12 months (plus an additional one month per year of service from
October 2011 up to a maximum of 18 months) of his base salary and a bonus
payment as described below and continuation of his auto allowance and certain
medical, dental and insurance benefits for between 12 and 18 months, depending
on his length of service. For purposes of calculating the lump sum severance
payment, the bonus payment will be based on the higher of (i) the average of his
bonus for the year in which termination occurs, on a prorated basis based on
year to date results (assuming a minimum of six months have elapsed during the
year in which employment termination occurs) and his bonus for the preceding
year; or (ii) the average of his bonus payouts for the previous two years of
employment.
Termination by the Company without Cause:
Upon a termination of Mr. McKerachers employment without cause, he would
receive similar benefits as described above relating to a change of control,
except that the vesting of unvested options would not be accelerated. Under a
retention agreement, if Mr. McKeracher is terminated without cause prior to the
earlier of (i) completion of the Companys financial statements for the 2017
fiscal year and (ii) March 28, 2018, he would receive a prorated portion of 60%
of his base salary at that time, with the amount based on the portion of the
period from November 8, 2016 to December 31, 2017 that he was employed.
John Ruelle
Change of Control
: Upon a change of control, all
of Mr. Ruelles unvested options will immediately vest. In addition, if material
changes are proposed to Mr. Ruelles position, he will have the option of
terminating his employment and receiving a lump sum severance payment equal to
12 months (plus an additional one month per year of service from October 2011 up
to a maximum of 18 months) of his base salary and a bonus payment as described
below and continuation of his auto allowance and certain medical, dental and
insurance benefits for between 12 and 18 months, depending on his length of
service. For purposes of calculating the lump sum severance payment, the bonus
payment will be based on the higher of (i) the average of his bonus for the year
in which termination occurs, on a prorated basis based on year to date results
(assuming a minimum of six months have elapsed during the year in which
employment termination occurs) and his bonus for the preceding year or (ii) the
average of his bonus payouts for the previous two years of employment.
Termination by the Company without Cause
: Upon a
termination of Mr. Ruelles employment without cause, he would receive similar
severance benefits as described above under a change of control, except that the
vesting of unvested options would not be accelerated. Under a retention bonus
agreement, if Mr. Ruelle is terminated without cause prior to December 31, 2017
he would receive a prorated portion of 50% of his base salary at that time, with
the amount based on the portion of the period from November 10, 2016 to December
31, 2017 that he was employed.
Gerard Versteegh
Termination without Cause
: Upon a termination of
Mr. Versteeghs employment without cause, he will receive the higher of
severance benefits equivalent to 12 months base salary, including holiday
allowance and bonus (based on the average amount of the previous two years), or
severance benefits calculated as per the formula provided by the Dutch Cantonal
Court formula. The Dutch Cantonal Court formula fixes the redundancy payment for
severance at a number of months salary. Years of service, age, base salary, and
reasonable compensation for the termination circumstance.
Termination of employment following a Change in
Control
: If, at any time during a period of 12 months following a change
of control, the Company terminates Mr. Versteeghs employment without cause, or
the Company causes good reason (as defined in the agreement) Versteegh shall be
entitled to the same benefits as in the event of termination without cause and
all unvested stock options held at that time shall immediately become vested in
full.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
63
Ed Haft
Termination of employment following a Change in
Control
: If a change of control occurs and within the 12 months
following the change of control the Company terminates Mr. Haft without cause,
or Mr. Haft terminates his employment by the Company for good reason (as defined
in the agreement), all unvested stock options shall immediately vest and Mr.
Haft would be entitled to (i) an amount equal to his annual base salary, payable
in substantially equal installments on Companys regular payroll schedule over a
12-month period following the termination date; (ii) an amount equal to the
annual bonus for the fiscal year prior to the year in which the termination date
occurs, which would have been payable had he remained employed by Company
through the annual bonus payment date for such prior fiscal year, if such amount
has not yet been paid; and (iii) an amount equal to a pro-rata portion of the
annual bonus for the fiscal year in which the termination date occurs, which
would have been payable had he remained employed by Company through the annual
bonus payment date. The pro-rata amount would be calculated based on Companys
actual performance during the applicable fiscal year, multiplied by a fraction,
the numerator of which is the number of days during the fiscal year he was
employed and the denominator of which is 365.
Termination Without Cause or Resignation With Good
Reason:
Upon termination of employment by Company without cause (and not
due to death or disability), or upon resignation for good reason, Mr. Haft shall
be entitled to receive similar severance benefits as described above for
termination following a change of control, except that the vesting of unvested
options would not be accelerated.
Hendrik Jacobs
Mr. Jacobs served as President and CEO until November 11, 2016.
Under the terms of his Separation Agreement, the Company will pay Mr. Jacobs a
monthly amount of $42,206.72, less applicable withholding, for a period of
thirty-six months. The payments reflect the equivalent of twenty-four months of
Mr. Jacobs salary, bonus and certain benefits paid out over a thirty-six month
period. Mr. Jacobs is entitled to a continuation of medical, prescription and
dental care benefits for a 24-month period commencing from the date of
termination and ending on November 11, 2018. Stock options for 272,613 shares
will continue to vest for a period of 24 months ending on November 11, 2018. In
the event of a change in control on or prior to November 11, 2018, options for
these shares, plus options for an additional 105,288 shares would immediately
vest.
[Remainder of page left intentionally blank]
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
64
Estimated Potential Payments upon Termination of Employment
The following table sets forth the estimated benefits that
would have been payable to the NEOs if a change in control had occurred and each
NEOs employment was terminated on December 31, 2016 under circumstances
specified in the applicable agreements:
Potential Payments Upon
Termination - Change In Control
|
Name
|
Annual Amount for
Severance Calculation
|
|
Total
Base
Salary
($)
|
Bonus
($)(1)
|
Contin-
uation
of
Benefits
($)(2)
|
Sub
Total
($)
|
Term of
Lump
Sum
Payment
(Years)
|
Lump Sum
Severance
Payment
($)
|
Pro-rata
Vesting of
Cash
Retention
($)(3)
|
Accelerated
Vesting of
RSUs
($)(4)
|
Accelerated
Vesting of
Stock
Options
($)(5)
|
Accelerated
Vesting of
PSUs
($)(6)
|
Total
($)
|
Robert McKeracher(7)
|
$298,146
|
$0
|
$18,189
|
$316,335
|
1.42
|
$448,141
|
$22,127
|
|
$191,067
|
$223,929
|
$885,264
|
Edward Haft
|
$420,240
|
$0
|
$0
|
$420,240
|
1.00
|
$420,240
|
$0
|
|
$439,219
|
$174,276
|
$1,033,735
|
John Ruelle
|
$397,946
|
$0
|
$14,084
|
$412,030
|
1.42
|
$583,709
|
$19,755
|
|
$184,074
|
$227,151
|
$1,014,689
|
Gerard Versteegh(8)
|
$336,632
|
$0
|
$0
|
$336,632
|
1.00
|
$336,632
|
$0
|
|
$203,810
|
$142,001
|
$682,443
|
Katrina Houde
|
|
|
|
|
|
|
|
$187,262
|
$5,280
|
$0
|
$192,542
|
Hendrik Jacobs(9)
|
$650,000
|
$92,015
|
$17,706
|
$759,721
|
2.00
|
$1,519,442
|
$0
|
|
$947,512
|
$0
|
$2,466,954
|
|
(1)
|
Represents bonus payments as calculated pursuant to the
applicable agreements.
|
|
|
|
|
(2)
|
Represents auto allowance, medical, dental, accidental
death, disability and life insurance benefits and other benefits through
the severance period, all to the extent provided in the applicable
agreements.
|
|
|
|
|
(3)
|
Represents the pro-rata portion of the cash retention
awards that would have accelerated as of December 31, 2016.
|
|
|
|
|
(4)
|
For Ms. Houde, this amount represents the value of
unvested restricted stock units as part of her director compensation and
is based on the closing price of the Common Shares on December 30, 2016,
the last trading day of the fiscal year, of $7.05. The vesting of the
awards would accelerate upon a change of control even if no termination of
employment occurred.
|
|
|
|
|
(5)
|
These amounts are with respect to all unvested stock
options for Messrs. McKeracher, Haft, Ruelle, and Versteegh, and Ms.
Houdes options granted before 2016, and represent the difference between
the exercise price of the stock options and the closing price of the
Common Shares on December 30, 2016, the last trading day of the fiscal
year, of $7.05. The vesting of these stock options would accelerate upon a
change of control even if no termination of employment occurred, for Mr.
Ruelle and Mr. McKeracher with respect to all of their options, and for
Mr. Haft, Ms. Houde and Mr. Versteegh with respect to their options
granted before 2014. This footnote does not apply to Mr. Jacobs, as a
description of his stock option payments is provided in footnote 9.
|
|
|
|
|
(6)
|
Under the PSUs, in the event of the sale of all or
substantially all of the assets of the Company or certain mergers
involving the Company before the vesting date of the PSUs, an NEO would be
entitled to receive a payout of shares. The number of shares issued in
such event would be the amount determined by the payout factor calculated
as if the performance period ended on the last day of the Companys most
recently completed fiscal quarter prior to the date of the transaction
(with the performance measures adjusted by the Board for the shorter
performance period). For the purposes of this table, these amounts are
estimated based on the target number of granted, multiplied by the closing
price of the Common Shares on December 30, 2016 of $7.05.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
65
|
(7)
|
Calculated based on the average annual exchange rate for
the year of Cdn $1.00 = $0.7548.
|
|
|
|
|
(8)
|
Calculated based on the average annual exchange rate for
the year of €1.00 = $1.1066.
|
|
|
|
|
(9)
|
Represents amounts paid or to be paid to Mr. Jacobs in
connection with his termination of employment, which occurred on November
11, 2016. Pursuant to the terms of his severance agreement, options for
272,613 shares will continue to vest over a period of 24 months ending on
November 11, 2018. In the event of a change of control prior to November
11, 2018, all of these options will vest, including an additional 105,288
shares. Based on a change of control on December 31, 2016, the amounts in
the table for stock options represents the difference between the exercise
price of the total amount of stock options and the closing price on that
date, of $7.05.
|
The following table sets forth the estimated benefits that
would have been payable to the NEOs if each officers employment was terminated
by the Company without cause on December 31, 2016 in the absence of a change in
control:
Potential Payments Upon Termination
Termination Without Cause
|
Name
|
Annual
Amount for Severance Calculation
|
Term of
Lump
Sum
Payment
(Years)
|
Lump
Sum
Severance
Payment
($)
|
Pro-rata
Vesting of
Cash
Retention
($)(3)
|
Accelerated
Vesting of
RSUs
($)(4)
|
Accelerated
Vesting of Accelerated
Stock
Options
($)
|
Vesting
of
PSUs
($)
|
Total
($)
|
Total
Base
Salary
($)
|
Bonus
($)(1)
|
Contin-
uation
of
Benefits
($)(2)
|
Sub
Total
($)
|
Robert McKeracher(5)
|
$298,146
|
$0
|
$18,189
|
$316,335
|
1.42
|
$448,141
|
$22,127
|
$0
|
$0
|
$0
|
$470,268
|
Edward Haft
|
$420,240
|
$0
|
$0
|
$420,240
|
1.00
|
$420,240
|
$0
|
$0
|
$0
|
$0
|
$420,240
|
John Ruelle
|
$397,946
|
$0
|
$14,084
|
$412,030
|
1.42
|
$583,709
|
$19,755
|
$0
|
$0
|
$0
|
$603,464
|
Gerard Versteegh(6)
|
$336,632
|
$0
|
$0
|
$336,632
|
1.00
|
$336,632
|
$0
|
$0
|
$0
|
$0
|
$336,632
|
Katrina Houde
|
|
|
|
|
|
|
|
$187,262
|
$0
|
$0
|
$187,262
|
Hendrik Jacobs(7)
|
$650,000
|
$92,015
|
$17,706
|
$759,721
|
2.00
|
$1,519,442
|
$0
|
$0
|
$593,416
|
$0
|
$2,112,858
|
|
(1)
|
Represents bonus payments as calculated pursuant to the
applicable agreements.
|
|
|
|
|
(2)
|
Represents auto allowance, medical, dental, accidental
death, disability and life insurance benefits and other benefits through
the severance period, all to the extent provided in the applicable
agreements.
|
|
|
|
|
(3)
|
Represents the pro-rata portion of the cash retention
awards that would have accelerated as of December 31, 2016.
|
|
|
|
|
(4)
|
For Ms. Houde, this amount represents the value of
unvested restricted stock units as part of her director compensation and
is based on the closing price of the Common Shares on December 30, 2016,
the last trading day of the fiscal year, of $7.05.
|
|
|
|
|
(5)
|
Calculated based on the average annual exchange rate for
the year of Cdn $1.00 = $0.7548.
|
|
|
|
|
(6)
|
Calculated based on the average annual exchange rate for
the year of €1.00 = $1.1066.
|
|
|
|
|
(7)
|
Represents amounts paid or to be paid to Mr. Jacobs in
connection with his termination of employment, which occurred on November
11, 2016. Pursuant to the terms of his severance agreement, options for
272,613 shares will continue to vest over a period of 24 months ending on
November 11, 2018. The amount in the table for stock options represents
the difference between the exercise price of the stock options and the
closing price of the Common Shares on November 11, 2016, of
$6.70.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
66
PROPOSAL FOUR APPROVAL OF AMENDED 2013 STOCK INCENTIVE
PLAN
Overview
The Companys 2013 Stock Incentive Plan was originally approved
by shareholders in May 2013, and an amended plan increasing the number of Common
Shares reserved for issuance pursuant to the plan from 1,750,000 to 3,000,000
was approved by shareholders in May 2016 (the
Existing 2013 Plan
). As
of March 27, 2017 there were 3,982,652 shares subject to outstanding awards
under the Existing 2013 Plan and only 2,201,926 shares available for future
grants. The Board of Directors reviewed the Existing 2013 Plan and determined
that the current number of available Common Shares under the Existing 2013 Plan
is insufficient to meet the Companys objectives with respect to its ability to
attract and retain talented individuals on a going-forward basis. The Board of
Directors also determined to make other changes to the Existing 2013 Plan to,
among other things, better align management and employee incentives with the
interests of the Company. As a result, on March 31, 2017 the Board of Directors
adopted, subject to shareholder and Toronto Stock Exchange approvals, the
Amended 2013 Stock Incentive Plan in the form attached as set forth in Exhibit A
(the
Amended 2013 Plan)
to increase the maximum number of Common Shares
that can be issued under the Amended 2013 Plan by 3,800,000 Common Shares so
that the total number of Common Shares reserved for purposes of the Amended 2013
Plan is 6,800,000 and to make other changes to the Existing 2013 Plan as
described below. The Board of Directors believes that increasing the number of
Common Shares available for equity incentives is necessary to allow the Company
to continue to utilize equity-based compensation awards to retain and attract
the services of key individuals essential to the Companys growth and success.
The Board of Directors also believes equity incentives enable participants to
share in the Companys future success.
We are asking our shareholders to approve the Amended 2013 Plan
which would result in the following principal changes to the Existing 2013 Plan,
all as set forth in the Amended 2013 Plan and described in more detail below:
|
|
The number of Common Shares reserved for purposes of the
2013 Amended Plan is increased by 3,800,000 shares, for a total number of
Common Shares reserved for the Amended 2013 Plan of 6,800,000 Common
Shares plus any shares available for grant under the Companys 2002 Stock
Option Plan (the
Prior Plan
);
|
|
|
The maximum number of Full Value Awards (as defined
below) is increased from 750,000 Common Shares to 4,550,000 Common Shares;
|
|
|
The Amended 2013 Plan prohibits the payment of dividends
on shares subject to awards before the shares have vested;
|
|
|
For awards granted under the Amended 2013 Plan after
March 1, 2017, the Amended 2013 Plan requires a minimum service period of
one year from the grant date, subject to limited exceptions, including
that this prohibition does not apply to 5% of the sum of the number of
shares available under the Amended 2013 Plan following the Meeting plus
the number of additional shares that thereafter become available;
|
|
|
For awards granted under the Amended 2013 Plan after
March 1, 2017, the Amended 2013 Plan restricts the granting of awards with
single-trigger vesting of awards in connection with a change in control
of the Company;
|
|
|
Upon the issuance of shares under a stock award or a
performance-based award after March 1, 2017, the number of shares reserved
for issuance under the Amended 2013 Plan shall be reduced by the number of
shares issued plus any shares withheld to satisfy tax withholding
obligations;
|
|
|
The maximum number of shares that can be subject to
options or stock appreciation rights granted under the Amended 2013 Plan
to any employee in any fiscal year is increased from 750,000 Common Shares
to 1,500,000 Common Shares;
|
|
|
The maximum number of shares that can be issued under any
performance-based awards granted under the 2013 Amended Plan to any
recipient in any fiscal year is increased from 275,000 Common Shares to
500,000 Common Shares, and the maximum dollar amount that can be paid
under any performance-based awards granted under the Amended 2013 Plan to
any recipient in any fiscal year is increased from $3,000,000 to
$5,000,000; and
|
|
|
The Amended 2013 Plan provides that the total
compensation paid or granted by the Company in any form (including cash
and awards under the Amended 2013 Plan) to any non-employee director for
service as a director for any fiscal year shall not exceed $500,000,
with awards under the Amended 2013 Plan valued at the time of grant based on the
grant date fair value as determined by the Company for financial reporting
purposes.
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
67
Shareholder approval of this proposal will also constitute
approval of the per-employee limits on grants of options, stock appreciation
rights and performance-based awards set forth in the Amended 2013 Plan and
re-approval of the list of objective business measures set forth in the Amended
2013 Plan upon which performance-based awards may be based. This re-approval is
required every five years for continued compliance with regulations under
Section 162(m) of the Internal Revenue Code. See U.S. Tax Consequences.
The complete text of the Amended 2013 Plan is attached to this
Proxy Statement as Exhibit A, marked to show changes from the Existing 2013
Plan. The descriptions of the Amended 2013 Plan and the amendments are qualified
in their entirety by reference to the full text of the Amended 2013 Plan.
Description of the Amended 2013 Plan
Eligibility
.
All employees, officers and
directors of the Company and its subsidiaries are eligible for selection for
participation in the Amended 2013 Plan.
Administration
.
The Amended 2013 Plan is
administered by the Compensation Committee of the Board of Directors (the
Committee
). The Committee may promulgate rules and regulations for the
operation of the Amended 2013 Plan and related agreements and generally
supervises the administration of the Amended 2013 Plan. The Committee determines
the individuals to whom awards are made under the Amended 2013 Plan, the type of
awards, the amount of the awards and the other terms and conditions of the
awards. The Committee may also accelerate any exercise date, waive or modify any
restriction with respect to an award or extend any exercise period, subject to
the terms of the Amended 2013 Plan.
Types of Awards
.
The Amended 2013 Plan
permits the Committee to grant a variety of awards, including stock options,
stock appreciation rights, restricted stock, restricted stock units and
performance-based awards.
Shares Reserved for the Amended 2013 Plan
.
A total of 6,800,000 Common Shares, plus any Common Shares available for
grant under the Prior Plan and any additional Common Shares that become
available for re-grant under the Prior Plan due to the cancelation or expiration
of stock options, are reserved for issuance under the Amended 2013 Plan. Only
4,550,000 Common Shares may be awarded as Full Value Awards.
Full Value
Awards
are stock awards for which the recipient pays no cash consideration
or cash consideration of less than the fair market value of the underlying
shares as of the grant date (as determined in accordance with the Amended 2013
Plan), except that shares issued in lieu of cash compensation otherwise payable
to a participant are not Full Value Awards.
Duration of the Amended 2013 Plan; Amendments
.
The Amended 2013 Plan will continue until all Common Shares available for
issuance under the Amended 2013 Plan have been issued and all restrictions on
such shares have lapsed. The Board of Directors has the power to suspend,
terminate, modify or amend the Amended 2013 Plan at any time, except that
shareholder approval is required to add additional shares to the Amended 2013
Plan, increase the number of shares that can be issued as Full Value Awards or
amend the provision prohibiting option re-pricing. Except in connection with a
change in capital structure or certain transactions, however, no change in an
award already granted shall be made without the written consent of the award
holder if the change would adversely affect the holder.
No Dividends on Unvested Awards.
No award granted
under the Amended 2013 Plan shall provide for the payment of dividends on shares
subject to the award before the shares have Vested. However, dividends
accumulated between the grant date of an award and the Vesting date on shares
that become Vested under the award may be paid to the recipient at or after the
time the shares become Vested.
Vested
means that shares have been
delivered to the recipient and are no longer subject to a substantial risk of
forfeiture (as defined in regulations under Section 83 of the U.S. Internal
Revenue Code of 1986, as amended (the
U.S. Code
)).
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
68
Minimum Service Period.
No award granted under
the Amended 2013 Plan after March 1, 2017 shall become Vested if the recipient
does not remain in the service of the Company until the first anniversary of the
date of grant, unless the recipients service is terminated as a result of the
recipients death or physical disability (as defined in the applicable award
agreement), or such earlier Vesting occurs in connection with a Change in
Control of the Company, as defined in and to the extent permitted by the Amended
2013 Plan. However, the foregoing prohibition shall not apply to 5% of the sum
of the number of shares available for awards under the Amended 2013 Plan
immediately following the 2017 annual meeting of shareholders plus the number of
additional shares that thereafter become available.
Restrictions on Change in Control Vesting.
No
award granted under the Amended 2013 Plan after March 1, 2017 shall provide for
any excuse from satisfaction of the continued service conditions of the award as
a result of a Change in Control of the Company, except that an award agreement
may excuse the recipient from the continued service obligation if:
i. the recipients employment or
service relationship is terminated by the employer or the Company without cause
or by the recipient for good reason in connection with the Change in Control
under terms specified in the award agreement; or
ii. the award is not converted
into an award for stock of the surviving or acquiring corporation in the Change
in Control transaction under terms specified in the award agreement or pursuant
to the Amended 2013 Plan; provided that any performance-based awards and other
awards with performance-based vesting provisions that are settled or for which
vesting is accelerated in connection with a Change in Control are settled or
accelerated either on a pro-rata basis based on time elapsed during the
performance period from the grant date or with performance measured for a
performance period ending prior to the Change in Control under terms specified
in the award agreement.
A Change in Control is generally defined in the Amended 2013
Plan to include (i) any merger in which the holders of Common Shares immediately
prior to the merger do not continue to hold at least 50% of the voting power of
outstanding securities of the surviving corporation or its parent corporation
immediately after the merger, (ii) any sale of all or substantially all of the
assets of the Company, (iii) at any time during a period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors (
Incumbent Directors
) cease for any reason to constitute at
least a majority thereof; provided, however, that the term Incumbent Director
shall also include each new director elected during such two-year period whose
nomination or election was approved by two-thirds of the Incumbent Directors
then in office; or (iv) any person (other than the Company or any employee
benefit plan sponsored by the Company), as a result of a tender or exchange
offer, open market purchases or privately negotiated purchases from anyone other
than the Company, has become the beneficial owner of 50% or more of the
outstanding Common Shares.
Stock Options
.
The Committee may grant
stock options to eligible individuals under the Amended 2013 Plan. No employee
may be granted options or stock appreciation rights for more than an aggregate
of 1,500,000 Common Shares in any fiscal year. The Committee determines the
individuals to whom options are granted, the exercise price of each option, the
number of shares to be covered by each option, the period of each option, the
times at which each option may be exercised, and whether each option is an
Incentive Stock Option (intended to meet all of the requirements of an Incentive
Stock Option as defined in Section 422 of the U.S. Code) or a non-statutory
stock option. The exercise price of each option may not be less than 100% of the
fair market value of the underlying shares on the date of grant, except that if
a grantee of an Incentive Stock Option at the time of grant owns stock
possessing more than 10% of the combined voting power of all classes of stock of
the Company, the exercise price may not be less than 110% of the fair market
value of the underlying shares on the date of grant. For purposes of determining
the exercise price of options granted under the Amended 2013 Plan, the fair
market value of the Common Shares will be deemed to be the closing price of the
Common Shares as reported by NASDAQ, or such other reported value of the Common
Shares as shall be specified by the Committee, on the date of grant. No monetary
consideration will be paid to the Company upon the granting of options.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
69
Options may be granted for varying periods established at the
time of grant. Incentive Stock Options are nontransferable except in the event
of the death of the holder. The Committee has discretion to allow non-statutory
stock options to be transferred to immediate family members of the optionee,
subject to certain limitations. Options will be exercisable in accordance with
the terms of an option agreement entered into at the time of the grant. In the
event of the death or other termination of an optionees employment with the
Company, the Amended 2013 Plan provides that, unless otherwise determined by the
Committee, the optionees options may be exercised for specified periods
thereafter (12 months in the case of termination by reason of death or
disability and 30 days in the case of termination for any other reason). The
Amended 2013 Plan also provides that upon any termination of employment, the
Committee may extend the exercise period for any period up to the expiration
date of the option and may increase the portion of the option that is
exercisable.
The purchase price for shares purchased pursuant to the
exercise of options must be paid in cash or, with the consent of the Committee,
in whole or in part in Common Shares. With the consent of the Committee, an
optionee may request the Company to withhold shares from the exercise to cover
required tax withholding or to satisfy the exercise price. Upon the exercise of
an option, the number of shares subject to the option and the number of shares
available for issuance under the Amended 2013 Plan will be reduced by the number
of shares issued upon exercise of the option plus the number of shares, if any,
withheld upon exercise to satisfy the exercise price or required tax
withholding. Option shares that are not purchased prior to the expiration,
termination or cancellation of the related option will become available for
future awards under the Amended 2013 Plan.
Re-pricing Prohibition
.
The Amended 2013
Plan provides that, unless shareholder approval is obtained, no stock option may
be (i) amended to reduce the exercise price, or (ii) canceled in exchange for
cash, another award or any other consideration at a time when the exercise price
of the option exceeds the fair market value of the Common Shares.
Stock Appreciation Rights
.
The Committee
may grant stock appreciation rights (
SARs
) to eligible individuals
under the Amended 2013 Plan. SARs may, but need not, be granted in connection
with an option. A SAR gives the holder the right to payment from the Company of
an amount equal in value to the excess of the fair market value on the date of
exercise of one common share over its fair market value on the date of grant
(or, if granted in connection with an option, the exercise price per share under
the option to which the SAR relates), multiplied by the number of shares covered
by the portion of the SAR or option that is surrendered. The fair market value
of the Common Shares on the date of exercise will be deemed to be the closing
price of the Common Shares as reported by NASDAQ, or such other reported value
of the Common Shares as shall be specified by the Committee, on the date of
exercise, or if such date is not a trading day, then on the immediately
preceding trading day. A SAR holder will not pay the Company any cash
consideration upon either the grant or exercise of a SAR, except for tax
withholding amounts upon exercise.
A SAR is exercisable only at the time or times established by
the Committee. If a SAR is granted in connection with an option, it is
exercisable only to the extent and on the same conditions that the related
option is exercisable. Payment by the Company upon exercise of a SAR may be made
in Common Shares valued at fair market value, or in cash, or partly in stock and
partly in cash, as determined by the Committee. If a SAR is not exercised prior
to the expiration, termination or cancellation of the SAR, the unissued shares
subject to the SAR will become available for future awards under the Amended
2013 Plan. Upon the exercise of a SAR for shares, the number of shares reserved
for issuance under the Plan shall be reduced by the number of shares covered by
the SAR. Cash payments for SARs will not reduce the number of shares available
for awards under the Amended 2013 Plan.
Stock Awards, including Restricted Stock and Restricted
Stock Units
.
The Committee may grant Common Shares to eligible
individuals as stock awards (including restricted stock and restricted stock
units) under the Amended 2013 Plan. The Committee will determine the individuals
to receive stock awards, the number of shares to be awarded, the time of the
award and any consideration to be paid by the participant. Generally, no cash
consideration (other than required tax withholding) will be paid by award
recipients to the Company in connection with stock awards. Stock awards shall be
subject to the terms, conditions and restrictions determined by the Committee.
Restrictions may include restrictions concerning transferability, forfeiture of
the shares issued, or such other restrictions as the Committee may determine.
Stock awards subject to restrictions may be either restricted stock awards under
which shares are issued immediately upon grant subject to forfeiture if vesting
conditions are not satisfied, or restricted stock unit awards under which shares are not issued until after
vesting conditions are satisfied. Upon the issuance of shares under a stock
award after March 1, 2017, the number of shares reserved for issuance under the
Plan shall be reduced by the number of shares issued plus any shares withheld to
satisfy tax withholding obligations.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
70
Performance-Based Awards
. The Committee may grant
performance-based awards, payable in stock or cash as determined by the
Committee. All or part of the Common Shares subject to the awards will be earned
(or cash will be paid) if performance targets established by the Committee for
the period covered by the award are met and the recipient satisfies any other
requirements established by the Committee. The performance targets may be
expressed as one or more targeted levels of performance with respect to one or
more of the following objective measures with respect to the Company or any
subsidiary, division or other unit of the Company: earnings, earnings per share,
stock price increase, total shareholder return (stock price increase plus
dividends), return on equity, return on assets, return on capital, economic
value added, revenues, operating income, inventories, inventory turns, cash
flows, earnings before interest and taxes (EBIT), earnings before interest,
taxes, depreciation and amortization (EBITDA) or any of the foregoing before the
effect of acquisitions, divestitures, accounting changes, restructuring or other
special charges. Performance-based awards may be made as awards of restricted
shares subject to forfeiture if performance goals are not satisfied, awards
under which shares are not issued until the performance conditions are satisfied
or as cash-based awards. No recipient may be granted in any fiscal year
performance-based awards under which the maximum number of shares that may be
issued exceeds 500,000 shares or the maximum dollar amount that may be paid
exceeds $5,000,000. The payment of a performance-based award in cash shall not
reduce the number of Common Shares reserved for issuance under the Amended 2013
Plan. Upon the issuance of shares under a performance-based award after March 1,
2017, the number of Common Shares reserved for issuance under the Amended 2013
Plan will be reduced by the number of shares issued plus any shares withheld to
satisfy tax withholding obligations. The number of shares issued pursuant to
stock awards and performance-based awards that are forfeited to the Company will
become available for future grants under the Amended 2013 Plan.
Corporate Mergers
.
The Committee may make
awards under the Amended 2013 Plan that have terms and conditions that vary from
those specified in the Amended 2013 Plan when such awards are granted in
substitution for, or in connection with the assumption of, existing awards made
by another corporation and assumed or otherwise agreed to be provided for by the
Company in connection with a corporate merger or other similar transaction to
which the Company or an affiliated Company is a party.
Changes in Capital Structure
.
The Amended
2013 Plan provides that if the outstanding Common Shares are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of any stock split or certain other
events, appropriate adjustment will be made by the Board of Directors in the
number and kind of shares available for grants under the Amended 2013 Plan and
in all other share amounts set forth in the Amended 2013 Plan and in Stock
Awards. In the event of a merger, consolidation or plan of exchange involving
the Company pursuant to which outstanding shares are converted into cash or
other stock, securities or property, or a sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, the assets of the Company, the Board of Directors, may, in
its sole discretion, provide that outstanding awards under the Plan shall be
treated in accordance with any of the alternatives set forth in the Amended 2013
Plan.
Limits on Non-Employee Director Compensation.
The
total compensation paid or granted by the Company in any form (including cash
and awards under the Amended 2013 Plan) to any non-employee director for service
as a director for any fiscal year shall not exceed $500,000. For this purpose,
awards under the Plan shall be valued at the time of grant based on the grant
date fair value as determined by the Company for financial accounting purposes.
U.S. Tax Consequences
Certain options authorized to be granted under the Amended 2013
Plan are intended to qualify as Incentive Stock Options for U.S. federal
income tax purposes. Under U.S. federal income tax law in effect as of the date
of this Proxy Statement, an optionee will recognize no regular income upon grant
or exercise of an Incentive Stock Option. The amount by which the market value
of shares issued upon exercise of an Incentive Stock Option exceeds the exercise
price, however, is included in the optionees alternative minimum taxable income
and may, under certain conditions, be taxed under the alternative minimum tax.
If an optionee exercises an Incentive Stock Option and does not dispose of any of the shares thereby acquired within two
years following the date of grant and within one year following the date of
exercise, then any gain realized upon subsequent disposition of the shares will
be treated as income from the sale or exchange of a capital asset. If an
optionee disposes of shares acquired upon exercise of an Incentive Stock Option
before the expiration of either the one-year holding period or the two-year
holding period specified in the foregoing sentence (a disqualifying
disposition), the optionee will realize ordinary income in an amount equal to
the lesser of (i) the excess of the fair market value of the shares on the date
of exercise over the option price or (ii) the excess of the fair market value of
the shares on the date of disposition over the option price. Any additional gain
realized upon the disqualifying disposition will constitute capital gain. The
Company will not be allowed any deduction for federal income tax purposes at
either the time of grant or the time of exercise of an Incentive Stock Option.
Upon any disqualifying disposition by an optionee, the Company will generally be
entitled to a deduction to the extent the optionee realizes ordinary income.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
71
Certain options authorized to be granted under the Amended 2013
Plan will be treated as non-statutory stock options for U.S. federal income tax
purposes. Under U.S. federal income tax law in effect as of the date of this
Proxy Statement, no income is generally realized by the grantee of a
non-statutory stock option until the option is exercised. At the time of
exercise of a non-statutory stock option, the optionee will realize ordinary
income, and the Company will generally be entitled to a deduction, in the amount
by which the fair market value of the shares subject to the option at the time
of exercise exceeds the exercise price. The Company is required to withhold
income taxes on such income if the optionee is an employee. Upon the sale of
shares acquired upon exercise of a non-statutory stock option and held for the
applicable capital gains holding period, the optionee will realize capital gain
or loss equal to the difference between the amount realized from the sale and
the fair market value of the shares on the date of exercise.
An individual who receives stock under the Amended 2013 Plan
will generally realize ordinary income under U.S. federal tax law at the time of
receipt unless the shares are not substantially vested for purposes of Section
83 of the U.S. Code. Absent an election under Section 83(b), an individual who
receives shares that are not substantially vested will realize ordinary income
in each year in which a portion of the shares substantially vests. The amount of
ordinary income recognized in any such year will be the fair market value of the
shares that substantially vest in that year less any consideration paid for the
shares. The Company will generally be entitled to a deduction in the amount
includable as ordinary income by the recipient at the same time or times as the
recipient recognizes ordinary income with respect to the shares. The Company is
required to withhold income taxes on such income if the recipient is an
employee.
Section 162(m) of the U.S. Code limits to $1,000,000 per person
the amount that the Company may deduct for compensation paid to certain of its
most highly compensated executive officers in any year. Under IRS regulations,
compensation received through the exercise of an option or stock appreciation
right will not be subject to the $1,000,000 limit if the option or stock
appreciation right and the plan pursuant to which it is granted meet certain
requirements. One requirement is shareholder approval at least once every five
years of a per-employee limit on the number of shares as to which options and
stock appreciation rights may be granted. Approval of this Proposal Four will
constitute approval of the per employee limit under the Amended 2013 Plan. Other
requirements are that the option or stock appreciation right be granted by a
committee of at least two outside directors and that the exercise price of the
option or stock appreciation right be not less than fair market value of the
Common Shares on the date of grant. The Company believes that the Amended 2013
Plan is in compliance with all of the above requirements and, subject to
approval of this proposal, any compensation received on exercise of options and
stock appreciation rights granted under the Amended 2013 Plan will continue to
be exempt from the $1,000,000 deduction limit.
Under IRS regulations, compensation received through a
performance-based award will not be subject to the $1,000,000 limit under
Section 162(m) of the U.S. Code if the performance-based award and the plan meet
certain requirements. One of these requirements is shareholder approval of the
performance criteria upon which award payouts may be based and the maximum
amount payable under awards, both of which are set forth in Section 9 of the
Amended 2013 Plan. Other requirements are that objective performance goals and
the amounts payable upon achievement of the goals be established by a committee
of at least two outside directors and that no discretion be retained to increase
the amount payable under the awards. The Company believes that the Amended 2013
Plan is in compliance with all of the above requirements and, subject to
approval of this proposal, any compensation received on vesting of
performance-based awards granted under the Amended 2013 Plan and otherwise in
compliance with all applicable requirements of 162(m), will be exempt from the
$1,000,000 deduction limit. While our general policy is to preserve the
deductibility of most compensation paid to executive officers, we may approve
compensation that may not be deductible if we believe it is in the best
interests of the Company and its shareholders.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
72
Amended 2013 Plan Benefits
Information regarding stock options and PSUs granted in fiscal
2016 to NEOs under the Existing 2013 Plan is set forth in Grants of Plan-Based
Awards during 2016 above. Information regarding RSUs granted in fiscal 2016 to
non-employee directors under the 2013 Plan is set forth in 2016 Director
Compensation above. Stock options for a total of 978,746 Common Shares and PSUs
for a total of 250,345 Common Shares (at target level) were granted under the
Existing 2013 Plan in fiscal 2016 to all executive officers as a group. Stock
options for a total of 514,118 Common Shares, and PSUs for a total of zero
Common Shares (at target level), were granted under the Existing 2013 Plan in
fiscal 2016 to employees who are not executive officers. Stock options for a
total of 42,577 Common Shares, RSUs for a total of 135,985 Common Shares and
12,600 Common Shares (in lieu of cash) were granted in fiscal 2016 to all
non-employee directors as a group.
Equity Compensation Plan Information
The following table provides information as of December 31,
2016 with respect to our Common Shares that may be issued under equity
compensation plans in effect as of that date.
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
|
|
Number of
|
|
|
|
|
|
Available for
|
|
|
|
|
Securities to be
|
|
|
Weighted-
|
|
|
Future Issuance
|
|
|
|
|
Issued Upon
|
|
|
Average Exercise
|
|
|
Under Equity
|
|
|
|
|
Exercise of
|
|
|
Price of
|
|
|
Compensation
|
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
Plans (Excluding
|
|
|
|
|
Options,
|
|
|
Options,
|
|
|
Securities
|
|
|
|
|
Warrants, and
|
|
|
Warrants and
|
|
|
Reflected in
|
|
|
|
|
Rights
|
|
|
Rights
|
|
|
Column (a))
|
|
Plan Category
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity compensation plans approved by
security holders:
|
|
|
|
|
|
|
|
|
|
|
Stock incentive plans
|
|
|
4,579,850
|
|
$
|
7.12
|
|
|
1,554,218
|
|
Employee share purchase plan
|
|
|
N/A
|
|
|
N/A
|
|
|
1,173,960
|
|
Total
|
|
|
4,579,850
|
|
$
|
7.12
|
|
|
2,728,178
|
|
Shareholder Approval
At the Meeting, shareholders will be asked to consider and, if
deemed advisable, approve the following resolution to approve the Amended 2013
Plan:
BE IT RESOLVED AS AN ORDINARY
RESOLUTION OF THE SHAREHOLDERS OF SUNOPTA INC. THAT:
|
1.
|
The Amended 2013 Plan in the form of Exhibit A is hereby
approved, ratified and confirmed in all respects;
|
|
|
|
|
2.
|
The Company is hereby authorized to file the Amended 2013
Plan with the Toronto Stock Exchange and make any revisions to the text of
the 2013 Amended Plan if and as required by the Toronto Stock Exchange;
and
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
73
|
3.
|
Any director or officer of the Company is hereby
authorized to take all such steps, actions and proceedings and to sign,
execute and deliver all such documents that such director or officer may,
in his or her discretion, determine to be necessary or desirable in order
to give full force and effect to the intent and purpose of this
resolution.
|
Recommendation of the Board of Directors; Vote Required
The Board of Directors recommends that the shareholders vote
FOR approval of the Amended 2013 Plan.
This proposal will be approved if a quorum is present at the
Meeting and the votes cast in favor of this resolution constitute a majority of
the total votes cast on this resolution. Brokers and other nominees will not
have discretionary authority to vote your shares if you hold your shares in
street name and do not provide instructions as to how your shares should be
voted on this proposal. Abstentions and broker non-votes are counted for
purposes of determining whether a quorum exists at the Meeting, but will have no
effect on the results of the vote.
[Remainder of page left intentionally blank]
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
74
PROPOSAL FIVE THE PREFERRED STOCK RESOLUTION
Overview
On October 7, 2016 following a review of strategic alternatives
by the Company, we announced that we had entered into an agreement with funds
managed by Oaktree, a global alternative investment management firm with
experience in the consumer and retail industry. Shortly after entering into the
agreement, we commenced, with the assistance of Oaktree, a thorough review of
our operations, management and governance, with the objective of maximizing our
ability to deliver long-term value to our shareholders. Through this review,
management and the Board have developed a value creation plan built on four
pillars: portfolio optimization, operational excellence, go-to-market
effectiveness and process sustainability (the
Value Creation Plan
).
Recent progress on each of the four pillars of the Value Creation Plan is
highlighted in our Annual Report to Shareholders on Form 10-K for the year ended
December 31, 2016. We believe that with Oaktrees industry knowledge and
operational expertise, we have a valuable partner as we seek to strengthen the
Companys operations in a way that can reduce operational volatility and realize
sustainable growth and value creation.
We are asking our shareholders to approve the Preferred Stock
Resolution to remove the Beneficial Ownership Exchange Cap and the Voting Cap
and to waive the Shareholder Rights Plan Trigger (each as defined below). These
restrictions were imposed in order to ensure that the Companys Preferred Stock
Financing (as defined below) complied with certain regulatory and negotiated
requirements and the terms of the Companys shareholder rights plan. In
connection with the Companys Preferred Stock Financing, the Company agreed to
seek, upon request of the Investors (as defined below), approval of the
Preferred Stock Resolution to remove such restrictions and to recommend that our
shareholders vote in favor of a resolution to do so. The Investors have
requested we do so.
Preferred Stock Financing
On October 7, 2016 (the
Issue Date
), SunOpta Foods
Inc. (the
Subsidiary
), a wholly owned Delaware subsidiary of the
Company, issued an aggregate of 85,000 shares of Preferred Stock to Organics and
OHIF II LP (collectively, the
Investors
) for consideration in the
amount of $85,000,000 (the
Preferred Stock Financing
). The initial
liquidation preference of the Preferred Stock is $1,000 per share (the
Liquidation Preference
), subject to certain adjustments. At any time,
the holders of the Preferred Stock (
Holders
) may exchange each share of
Preferred Stock for a number of Common Shares equal to the quotient of the
Liquidation Preference (as defined below) divided by $7.50 (such quotient, the
Exchange Rate
), subject to adjustments such as anti-dilution
adjustments. On the Issue Date, the Exchange Rate represented an 80.3% premium
to the closing price of $4.16 per Common Share on June 24, 2016, the day before
the strategic review was announced, and a 12.1% premium to the average closing
price for the 60-day period before the Issue Date of $6.69 per Common Share.
As of the date of this proxy circular, the Preferred Stock is
exchangeable into 11,333,333 Common Shares in the aggregate, representing
approximately 11.6% of the outstanding Common Shares on a partially diluted
basis.
The terms of the Preferred Stock provide for quarterly
distributions (
Dividends
) to the Holders. Prior to October 5, 2025, the
Dividend rate is 8.0% per annum of the Liquidation Preference, subject to
non-compliance penalties. If Dividends are not paid in cash, the amount that
would have otherwise been paid will be added to the Liquidation Preference (each
such addition, an
In-Kind Dividend
). As the Liquidation Preference
increases, the number of Common Shares into which the Preferred Stock are
exchangeable will increase. On or after October 5, 2025, the Dividend rate is
12.5% per annum of the Liquidation Preference and the Subsidiary must pay
Dividends in cash. The Dividend rate may also increase in certain events,
including if we or our Subsidiary fail to comply with certain obligations under
agreements entered into in connection with the Preferred Stock Financing.
In connection with the Preferred Stock Financing, in order to
allow the Investors to vote the Preferred Stock as if it had been exchanged into
Common Shares, the Company issued to a trustee for the benefit of the Investors
11,333,333 Special Voting Shares. The Special Voting Shares entitle the holder
thereof to one vote per Special Voting Share on all matters submitted to a vote
of the holders of Common Shares, together as a single class, except for
Excluded Matters as defined in the Voting Trust Agreement (as defined below),
such as the Preferred Stock Resolution. Additional Special Voting Shares will be issued, or
outstanding Special Voting Shares will be redeemed, as necessary to ensure that
the aggregate number of Special Voting Shares outstanding is equal to the number
of shares of Preferred Stock outstanding from time to time multiplied by the
Exchange Rate in effect at such time, subject to certain adjustments and
restrictions.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
75
NASDAQ Listing Rules
Because our Common Shares are listed on the NASDAQ Global
Select Market, we are subject to the NASDAQ Listing Rules. NASDAQ Listing Rule
5635(b) requires shareholder approval prior to any issuance or potential
issuance of securities that will result in a change of control. Generally,
NASDAQ interpretations provide that a change of control would occur if, after a
transaction, a person or an acquiring entity holds 20% or more of the
outstanding shares of common stock or of the voting power of the outstanding
capital stock of a company and such ownership or voting power would be the
largest position.
Removal of the Beneficial Ownership Exchange
Cap
To comply with the NASDAQ Listing Rules the terms of the
Preferred Stock provide that if at any time a Holder elects to exchange, or the
Subsidiary causes an exchange of, Preferred Stock, the number of Common Shares
delivered to each applicable Holder may not cause such Holders beneficial
ownership (as defined in Section 13(d) of the Securities Exchange Act of 1934,
but excluding any Common Shares for which any remaining, unexchanged Preferred
Stock held by such Holder is exchangeable) to exceed 19.99% of the Common Shares
that would be outstanding immediately following such exchange (the
Beneficial Ownership Exchange Cap
), unless the Preferred Stock
Resolution has been approved.
If our shareholders do not approve the Preferred Stock
Resolution, then the Holders will not be able to exchange their Preferred Stock
for Common Shares in excess of the Beneficial Ownership Exchange Cap. Any Holder
whose beneficial ownership meets or exceeds the Beneficial Ownership Exchange
Cap would have to reduce its beneficial ownership before exchanging Preferred
Stock, for example by selling Common Shares or transferring the Preferred Stock
to a new Holder.
As of the date hereof, after giving effect to the completed
open market purchase by the Investors of 3,000,000 Common Shares as contemplated
by the Investor Rights Agreement, the number of Common Shares deliverable on
exchange of all the shares of Preferred Stock is less than the Beneficial
Ownership Exchange Cap. However, the number of Common Shares for which the
Preferred Stock may be exchanged will increase as the Liquidation Preference
increases as a result of In-Kind Dividends and could increase as a result of
other adjustments such as anti-dilution adjustments
.
Assuming that all
Dividends for the quarterly periods after January 1, 2017 and prior to October
5, 2025 are In-Kind Dividends, and assuming no anti-dilution or other
adjustments, the number of Common Shares deliverable on exchange of all the
shares of Preferred Stock would be 22,665,414, which together with the 3,000,000
Common Shares purchased in the open market by the Investors, would represent
approximately 23.6% of the outstanding Common Shares as of the date of this
proxy circular on a partially diluted basis. The Board may declare Dividends to
be paid in cash or as In-Kind Dividends during such periods in its sole
election, therefore the number of Common Shares deliverable in exchange of all
the shares of Preferred Stock may be less than 22,665,414 as a result of In-Kind
Dividends.
Removal of the Voting Cap
The Special Voting Shares were issued to a trustee who holds
the Special Voting Shares on behalf of the Investors and is required to vote the
Special Voting Shares in accordance with the instructions of the Investors.
Under the terms of the Voting Trust Agreement dated the Issue Date between the
Company, the Subsidiary, the Investors and others (the
Voting Trust
Agreement
), until the Preferred Stock Resolution is approved, the aggregate
number of votes exercised by the trustee on behalf of the Investors in respect
of the Special Voting Shares may not exceed 17,130,757, being 19.99% of the
outstanding Common Shares on the Issue Date (the
Voting Cap
), subject
to adjustments such as anti-dilution adjustments.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
76
If our shareholders do not approve the Preferred Stock
Resolution, then the trustee on behalf of the Investors will not be able to vote
the Special Voting Shares in excess of the Voting Cap.
As of the date hereof, the number of Special Voting Shares does
not exceed the Voting Cap. Currently, 11,333,333 Special Voting Shares are
outstanding, representing 66.2% of the Voting Cap. However, the number of
Special Voting Shares will increase as the Liquidation Preference increases as a
result of In-Kind Dividends and could increase as a result of other adjustments
such as anti-dilution adjustments
.
Assuming that all Dividends for the
quarterly periods after January 1, 2017 and prior to October 5, 2025 are In-Kind
Dividends, and assuming no anti-dilution or other adjustments, the number of
Special Voting Shares would be 22,665,414, which would represent approximately
132.3% of the Voting Cap. The Board may declare Dividends to be paid in cash or
as In-Kind Dividends during such periods in its sole election, therefore the
number of Special Voting Shares may be less than 22,665,414 as a result of
In-Kind Dividends.
Waiver of the Shareholder Rights Plan Trigger
The Company has in place a shareholder rights plan pursuant to
the Amended and Restated Shareholder Rights Plan Agreement, dated November 10,
2015, amended and restated as of April 18, 2016, between the Company and
American Stock Transfer & Trust Company, LLC (the
SRP
). Under the
SRP, holders of rights (other than the triggering holder) issued under the SRP
would be entitled to, in effect, purchase Common Shares at a significant
discount to the then-current market price, upon the occurrence of a Flip-in
Event (as defined in the SRP). A Flip-in Event occurs if a Holder beneficially
owns more than 20% of the outstanding Voting Shares (as defined in the SRP).
Voting Shares includes both the Common Shares and the Special Voting Shares.
Under the SRP, beneficial ownership of Voting Shares includes shares issuable or
deliverable to a Holder on the exchange of Preferred Stock. Because the number
of Common Shares issuable or deliverable on the exchange of the Preferred Stock
increases as the Liquidation Preference increases, a Holders beneficial
ownership of Voting Shares will increase as the Liquidation Preference increases
and could result in the occurrence of a Flip-in Event. As discussed above, the
Liquidation Preference increases if Dividends are not paid in cash and in
certain other events.
Under the SRP, the Company may, with prior consent of the
shareholders in accordance with the terms of the SRP, waive the application of
the SRP prior to the occurrence of a Flip-in Event. The Company has consummated
the Preferred Stock Financing and the directors believe it is in the best
interests of the Company to waive the application of the SRP to any Flip-in
Event caused by the acquisition (or deemed acquisition) by a Holder of
beneficial ownership of Special Voting Shares or Common Shares which are
issuable or deliverable to the Holder upon exchange of the Preferred Stock,
including an increase in beneficial ownership by way of an increase in the
Liquidation Preference (
Shareholder Rights Plan Trigger
). For clarity,
such waiver, if approved, would pertain only to the acquisition of Common Shares
issuable or deliverable to the Holder upon exchange of the Preferred Stock and
the issuance of Special Voting Shares to the trustee for the benefit of the
Investors. The SRP would continue to apply in accordance with its terms to other
acquisitions of Common Shares that would otherwise trigger a Flip-in Event. For
further clarity, such waiver, if approved, would pertain only to the application
of a Flip-in Event, and not the terms of the SRP for other purposes, such as
deemed beneficial ownership.
A copy of the SRP is available on SEDAR at
www.sedar.com
.
Shareholder Approval
At the Meeting, shareholders will be asked to consider and, if
deemed advisable, approve the following resolution, being the Preferred Stock
Resolution:
BE IT RESOLVED AS AN ORDINARY
RESOLUTION OF THE SHAREHOLDERS OF SUNOPTA INC. THAT:
|
1.
|
Removal of the Beneficial Ownership Exchange Cap is
hereby consented to, authorized and approved;
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
77
|
2.
|
Removal of the Voting Cap is hereby consented to,
authorized and approved;
|
|
|
|
|
3.
|
Waiver of the application of the SRP to any Flip-in Event
caused by the acquisition (or deemed acquisition) by a holder of Preferred
Stock of beneficial ownership of Special Voting Shares or Common Shares
which are issuable or deliverable to the Holder upon exchange of the
Preferred Stock, including an increase in beneficial ownership by way of
an increase in the Liquidation Preference is hereby consented to,
authorized and approved; and
|
|
|
|
|
4.
|
Any one director or officer of the Company is hereby
authorized, for and on behalf of the Company, to execute and deliver all
such further agreements, documents and instruments and to do all such
other acts and things as such director or officer may determine to be
necessary or advisable for the purpose of giving full force and effect to
the provisions of this resolution, the execution and delivery by such
trustee, director or officer of any such agreement, document or instrument
or the doing of any such act or thing being conclusive evidence of such
determination.
|
Recommendation of the Board of Directors; Vote
Required
In connection with the Preferred Stock Financing, a transaction
which the Board determined was in the best interests of the Company, the Company
agreed that the Investors would have a right to request that the Company seek,
and that the Board recommend, approval by the shareholders of the Preferred
Stock Resolution. The Investors have exercised that right. The Company is
proposing, and the Board is recommending, the Preferred Stock Resolution. The
Board believes that the Companys partnership with Oaktree is in the best
interests of the Company, which has been demonstrated, in part, by Oaktrees
contribution to the development of the Value Creation Plan. The Investors have
the right to require the Company to seek approval of the Preferred Stock
Resolution at each regularly scheduled annual general meeting of shareholders
until the resolution is approved. In the event the Company fails to make
commercially reasonable efforts to obtain such approval, following a 30-day cure
period, the rate of Dividends payable will increase by 1.0% quarterly, subject
to a maximum increase of 5.0% .
The Board of Directors recommends that the shareholders vote
in favor of the resolution set out above. In the absence of contrary
instructions, the persons named in the accompanying form of proxy intend to vote
any Common Shares and Special Voting Shares represented by proxies held by them
FOR the resolution above.
In order for shareholder approval to be obtained, the Preferred
Stock Resolution must be approved by a majority of the votes cast by
shareholders present in person or represented by proxy at the Meeting, other
than the votes attached to any Special Voting Shares, or Common Shares
beneficially owned by the Investors or their affiliates.
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If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
78
CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH INSIDERS AND
RELATED PERSONS
The Audit Committee reviews any material transactions in which
we are or will be a participant and in which any of our 5% shareholders,
directors or executive officers, or any of their immediate family members, has a
direct or an indirect material interest. After its review the Audit Committee
will only approve or ratify those transactions that the Audit Committee
determines are in, or are not inconsistent with, our best interests and the
Audit Committee, in its sole discretion, may impose such conditions as it deems
appropriate on us or the related person in connection with approval of the
transaction.
No informed person (as such term is defined in National
Instrument 51-102 of the CSA), any proposed director of the Company or any
associate or affiliate of the foregoing or any related person (as such term is
defined in Item 404(a) of Regulation S-K) has or will have any material
interest, direct or indirect, in any transaction since the commencement of the
Companys most recently completed fiscal year or in any currently proposed
transaction in which the Company was or is to be a participant and the amount
involved exceeds $120,000 or which otherwise has materially affected or would
materially affect the Company or any of its subsidiaries.
[Remainder of page left intentionally blank]
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
79
EXECUTIVE OFFICERS
David Colo
(Age 54) serves as President and Chief
Executive Officer and as a director. He was appointed to these positions in
February 2017. Prior to joining SunOpta, Mr. Colo served as Executive Vice
President, Chief Operating Officer of Diamond Foods, Inc. from June 2013 until
March 2016 and as Executive Vice President of Global Operations and Supply Chain
from December 2012 until June 2013. Since 2016, Mr. Colo has served as an
independent industry consultant. Before joining Diamond Foods, Mr. Colo spent
approximately three years as an independent industry consultant, focusing on
organizational optimization and planning. From 2005 to 2009, he held leadership
positions in the consumer products division of ConAgra Foods, Inc., including
roles as Senior Vice President of Sales and Operations Planning, Senior Vice
President of Enterprise Manufacturing and Senior Vice President of Operations.
From 2003 to 2005, he served as President of ConAgra Food Ingredients. Mr. Colo
is a member of the Board of Directors of MGP Ingredients, Inc.
Robert McKeracher
(Age 40) serves as Vice
President and Chief Financial Officer of the Company overseeing all financial
reporting, compliance and corporate treasury activities. He previously served as
Vice President of Financial Reporting for SunOpta from June 2008 until October
2011, and as Director of Financial Reporting from August 2007 to June 2008.
Prior to joining the Company, Mr. McKeracher was the Manager of Business
Planning and Treasury at Magna Entertainment Corp. from May 2003 to August 2007,
after spending four years in public accounting in the assurance and business
advisory practice at PricewaterhouseCoopers LLP. Mr. McKeracher is a Chartered
Professional Accountant, Chartered Accountant, and holds a Bachelor of Commerce
degree from the University of Toronto. In the past five years, Mr. McKeracher
has not served on any reporting issuers Board of Directors.
John Ruelle
(Age 47) was appointed to the
position of Senior Vice President of Corporate Development in February 2017 and
continues to serve as Chief Administrative Officer and Senior Vice President of
Raw Material Sourcing and Supply, a position he was appointed to in December
2015, after serving as Chief Administrative Officer and Senior Vice President of
Corporate Development and Secretary since December 2013. Mr. Ruelle also was
responsible for leading the Healthy Snacks platform business within the CPG
Segment from October 2015 through February 2017. From October 2011 to December
2013, Mr. Ruelle served as Vice President and Chief Administrative Officer. Mr.
Ruelle joined the Company in November 2007 as Vice President of Finance and
Administration and Chief Financial Officer of the SunOpta Grains and Foods
Group, the largest operating division of the Company at the time. Mr. Ruelle
brought over 15 years of progressive food industry senior leadership experience
to the Company with a focus on building foundational structures to achieve
aggressive revenue and profitably growth through driving talent management,
business processes and strategy linkage. Prior to joining the Company, Mr.
Ruelle was Vice President of Finance and Administration, Chief Financial
Officer, Treasurer and Corporate Secretary for Restaurant Technologies, Inc.
where he was co-founder and managed over 30 Greenfield start-ups. Earlier in his
career he held various financial and operational roles with LaserMaster
Technologies and was a Certified Public Accountant with Larson Allen, LLP. Mr.
Ruelle has a Bachelor of Science degree from St. Johns University. In the past
five years, Mr. Ruelle has not served on any reporting issuers Board of
Directors.
Gerard Versteegh
(Age 55) serves as Senior Vice
President of Global Ingredients. Mr. Versteegh joined The Company in April 2008
as President and co-founder of Tradin Organic Agriculture. Mr. Versteegh has
over 30 years of expertise in the global sourcing, processing and distribution
of organic raw materials in a broad range of categories. In the past five years,
Mr. Versteegh has not served on any reporting issuers Board of Directors.
Ed Haft
(Age 56) serves as Senior Vice President
of Healthy Fruit platform of the Company. Starting at the Company in October
2015 upon the acquisition of Sunrise Growers, Mr. Haft brings more than 30 years
of experience in consumer packaged goods and food manufacturing. Mr. Haft
previously served as President and CEO of Sunrise Growers, holding the
leadership position in the U.S. retail and food service frozen fruit category.
Prior to assuming his role with Sunrise Growers in 2004, Mr. Haft spent 18 years
with the Sara Lee Corporation, the last six of which as President of their
frozen bakery division. In the past five years, Mr. Haft has not served on any
reporting issuers Board of Directors.
Lillian Barlett
(Age 54) serves as Vice President
of Risk Management and Internal Audit. Ms. Barlett joined the Company in July
2009 as Director of Risk Management and Internal Audit and was promoted to
Senior Director of Risk Management and Internal Audit in late-2011. In April 2013,
Mrs. Barlett was appointed Vice President of Risk Management and Internal Audit.
In the past five years, Ms. Barlett has not served on any reporting issuers
Board of Directors.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
80
Jill Barnett
(Age 43) serves as Vice President,
General Counsel and Corporate Secretary and is responsible for the legal affairs
of the Company. Prior to joining the Company in July 2014, Ms. Barnett spent
twelve years as in-house counsel for Best Buy Co., Inc. holding various
positions and providing legal support to numerous areas of the business,
including Best Buys global sourcing and exclusive brands business. In the past
five years, Ms. Barnett has not served on any reporting issuers Board of
Directors.
James Gratzek
(Age 52) serves as Senior Vice
President of Research and Development and Quality. Mr. Gratzek started with the
Company in June 2014 as Senior Vice President of Research and Development and
was appointed Senior Vice President of Quality in June 2016. Mr. Gratzek brings
more than 20 years of food product and process innovation leadership to the
Company team. He spent more than 10 years at General Mills, where he focused on
new product development, cost and process improvement, and technology
development, completing his tenure as a Director of R&D. Prior to General
Mills, he worked at Tetra Pak as Aseptic Technology Director and various program
leadership roles at Campbells. In the past five years, Mr. Gratzek has not
served on any reporting issuers Board of Directors.
Rob Duchscher
(Age 56) serves as Chief
Information Officer. Starting with the Company in March 2017, Mr. Duchscher
brings over 30 years of experience in the areas of software engineering and
information technology. Of those 30 years, 17 years were spent in industrial
process control and transportation logistics. Mr. Duchscher served as Chief
Information Officer at Starkey Hearing Technologies from January 2010 through
February 2017, where he led the transformation of both the information
technology and software engineering departments. Mr. Duchscher initially started
at Starkey Hearing Technologies in April 2002 as Vice-President of Software
Engineering and R&D PMO. In the past five years, Mr. Duchscher has not
served on any reporting issuers Board of Directors.
Colin Smith
(Age 36) serves as the Chief
Operating Officer of the Companys Consumer Products segment, a role he was
appointed to in February 2017. Mr. Smith is a Managing Director and member of
the Portfolio Transformation Team with Oaktree, who entered into a strategic
partnership with SunOpta in October 2016. Mr. Smith joined Oaktree from
AlixPartners in 2014, where he served as a director leading value creation
projects across a variety of industries for its global clients. Prior to his
eight years at AlixPartners, Mr. Smith worked as a consultant for Deloitte in
their Strategy and Operations practice, and for A.T. Kearney Ltd. as a senior
business analyst. In the past five years, Mr. Smith has not served on any
reporting issuers Board of Directors.
[Remainder of page left intentionally blank]
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
81
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Except insofar as they may be shareholders of the Company or as
otherwise disclosed in this Proxy Statement, no person who has been a director
or executive officer of the Company at any time since the beginning of its last
completed fiscal year, any proposed nominee for election as a director of the
Company or any associate or affiliate of such persons has any substantial
interest, direct or indirect, by way of beneficial ownership of securities or
otherwise, in any matter to be acted upon at the Meeting.
SHAREHOLDER PROPOSALS FOR 2018 ANNUAL MEETING OF
SHAREHOLDERS; SHAREHOLDER COMMUNICATIONS
The Companys shareholders may submit proposals on matters
appropriate for shareholder action at meetings of shareholders in accordance
with Rule 14a-8 promulgated under the Securities Exchange Act of 1934 and
Section 137 of the CBCA. For such proposals to be included in the Companys
proxy materials relating to its 2018 Annual Meeting of Shareholders, all
applicable requirements of Rule 14a-8 and the CBCA must be satisfied and, under
the CBCA, such proposals must be received by the Company no later than January
4, 2018. Such proposals should be delivered to SunOpta Inc., Attn: Corporate
Secretary, 2233 Argentia Road, Suite 401, West Tower, Mississauga, ON L5N 2X7.
Shareholders may recommend a person as a nominee for director
by writing to the Secretary of the Company and providing the information
required pursuant to the Advance Notice By-Law. Under SEC rules, notice of a
nomination for the 2018 Annual Meeting of Shareholders submitted outside the
processes of Rule 14a-8 and Section 137 of the CBCA must be received by the
Corporate Secretary of the Company at our principal executive offices at least
30 days prior to the date fixed by the Company for its next annual meeting of
shareholders as required by the Advance Notice By-Law (unless such meeting is
convened on less than 50 days' notice, in which case notice of any such
nomination must be provided not later than the tenth (10th) day following public
notice of the meeting date). The proxy solicited by the Board for the 2018
Annual Meeting of Shareholders will confer discretionary authority to vote on
any proposal or nomination submitted by a shareholder at that meeting with
respect to which the Company has received notice after such date.
Shareholders may communicate with the Board. Communications
should be in writing and marked to the attention of the Board of Directors or
any of its individual committees, or the Chair of the Board. Any such
communications should be delivered to the Company at is principal executive
offices located at 2233 Argentia Road, Suite 401, West Tower, Mississauga, ON
L5N 2X7.
SOLICITATION OF PROXIES
Proxies solicited in connection with this proxy statement are
being solicited by the Board of Directors of the Company. Proxies may be
solicited by officers, directors and regular employees of the Company. None of
the officers, directors or employees will be directly compensated for such
services. In addition, Kingsdale Advisors has been retained by the Company as
our strategic shareholder advisor and proxy solicitation agent in connection
with the solicitation of proxies for the Meeting. The contact information for
Kingsdale Advisors is set out on the last page of this Proxy Statement. The
Company will pay Kingsdale Advisors a fee of approximately $27,500, plus
reasonable out-of-pocket expenses, for these services. Solicitations of proxies
may be made personally or by mail, facsimile, telephone, messenger, or e-mail.
The Company will bear all proxy solicitation costs, including the costs of
preparing, assembling, printing and mailing this Proxy Statement, the
accompanying proxy card, the Notice and any additional solicitation material
that the Company may provide to shareholders, as well as the fees of Kingsdale
Advisors.
We will request fiduciaries, custodians, brokerage houses and
similar parties to forward copies of proxy materials to beneficial owners of the
Common Shares, and we will reimburse these parties for their reasonable and
customary charges for expenses of distribution.
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
82
FORM 10-K AND OTHER INFORMATION
The Company will mail without charge, upon written request,
a copy of its Annual Report on Form 10-K for the fiscal year ended December 31,
2016, including the consolidated financial statements, Managements Discussion
and Analysis of Financial Condition and Results of Operations
(
MD&A
), schedules and list of exhibits, and any
particular exhibit specifically requested. Requests should be sent to: SunOpta
Inc., Attn: Beth McGillivary,
2233 Argentia Road, Suite 401, West Tower,
Mississauga, ON L5N 2X7
.
The Annual Report on Form 10-K and additional
information relating to the Company is also available at
www.sunopta.com
, on EDGAR at
www.sec.gov
and on SEDAR at
www.sedar.com
. Financial information is provided in the
Companys comparative financial statements and MD&A for the fiscal year
ended December 31, 2016.
OTHER MATTERS
The Board knows of no other matters to be presented for
shareholder action at the Meeting. However, if other matters do properly come
before the Meeting or any adjournments or postponements thereof, the Board
intends that the persons named in the proxies will vote upon such matters in
accordance with their best judgment.
This proxy statement may include forward-looking statements
(as defined in the Private Securities Litigation Reform Act of 1995). These
statements are based on our current expectations and involve risks and
uncertainties, which may cause results to differ materially from those set forth
in the statements. The forward-looking statements may include statements
regarding actions to be taken by us. We do not undertake any obligation to
update our forward-looking statements after the date of this report for any
reason, even if new information becomes available or other events occur in the
future, except as may be required under applicable securities laws.
Forward-looking statements should be evaluated together with the many
uncertainties that affect our business, particularly those mentioned in the risk
factors in our Annual Report on Form 10-K for the year ended December 31, 2016
and in our periodic reports on Form 10-Q and Form 8-K.
Dated this 3rd day of April,
2017.
|
|
|
By Order of the Board of Directors
|
|
|
|
/s/
David Colo
|
|
David Colo
|
|
President and Chief Executive Officer
|
|
|
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
83
Any questions and requests for assistance may be directed to
the
Strategic Shareholder Advisor and Proxy Solicitation Agent:
The Exchange Tower
130 King Street West, Suite 2950, P.O.
Box 361
Toronto, Ontario
M5X 1E2
www.kingsdaleadvisors.com
North American Toll Free Phone:
1-877-659-1822
Email:
contactus@kingsdaleadvisors.com
Facsimile: 416-867-2271
Toll Free Facsimile: 1-866-545-5580
Outside North America, Banks and Brokers Call Collect:
416-867-2272
If you have any questions or need assistance completing your
proxy or voting instruction form, please call
Kingsdale Advisors at
1-877-659-1822 or email contactus@kingsdalesadvisors.com.
84
EXHIBIT A
SUNOPTA INC.
AMENDED 2013 STOCK INCENTIVE PLAN
(as amended March 31,
2017,
subject to shareholder
approval at the 2017 Annual Meeting)
1.
Purpose
.
The purpose of this 2013 Stock Incentive Plan (the Plan) is to enable SunOpta
Inc. (the Company) to attract and retain the services of selected employees,
officers and directors of the Company. For purposes of this Plan, a person is
considered to be employed by or in the service of the Company if the person is
employed by or in the service of any entity (the Employer) that is the
Company, a parent or subsidiary of the Company or a corporation, limited
liability company, partnership, joint venture or other entity in which the
Company has an interest.
2.
Shares
Subject to the Plan
. Subject to adjustment as provided below and in Section
10, the shares to be offered under the Plan shall consist of Common Stock of the
Company, and the total number of shares of Common Stock that may be issued under
the Plan shall be
3,000
6,800
,
000 shares plus
(i) shares that are available under the Companys 2002 Stock Option Plan (the
Prior Plan) as of the Effective Date of the Plan (as defined in Section 3.1)
and (ii) shares subject to outstanding options under the Prior Plan as of the
Effective Date of the Plan if the options are cancelled or terminated or expire
after the Effective Date of the Plan without the issuance of the shares subject
to the options. If an option, stock appreciation right, Stock Award (as defined
in Section 7) or Performance-Based Award (as defined in Section 9) granted under
the Plan expires, terminates or is cancelled, the unissued shares thereto shall
again be available under the Plan. If shares subject to a Stock Award or
Performance-Based Award are forfeited to or repurchased by the Company, the
number of shares forfeited or repurchased shall again be available under the
Plan. Notwithstanding any provision in the Plan, the maximum number of shares
that can be issued under the Plan as
Stock
Awards or Performance Based Awards
(collectively,
Full Value
Awards) shall be 750,000 shares
Full Value Awards shall be
4,550,000 shares. For purposes of the Plan, Full Value Award
means a Stock Award (as defined in Section 7) for which the recipient
pays no cash consideration or cash consideration of less than the fair
market value of the underlying shares as of the grant date (as determined
in accordance with Section 6.2-4), except that shares issued to a participant
in lieu of cash compensation to which the participant is otherwise
entitled are not Full Value Awards
.
3.
Effective
Date and Duration of Plan
.
3.1
Effective
Date
. The Plan shall become effective as of
the date it is
approved by shareholders of the Company (the Effective Date of the Plan).
3.2
Duration
.
The Plan shall continue in effect until all shares available for issuance under
the Plan have been issued and all restrictions on the shares have lapsed. The
Board of Directors of the Company (Board of Directors) may suspend or
terminate the Plan at any time except with respect to awards then outstanding or
subject to restrictions under the Plan. Termination shall not affect any
outstanding awards or any right of the Company to repurchase shares or the
forfeitability of shares issued under the Plan.
4.
Administration
.
4.1
Board
of Directors
. The Plan shall be administered by the Board of Directors,
which shall determine and designate the individuals to whom awards shall be
made, the amount of the awards and the other terms and conditions of the awards.
Subject to the provisions of the Plan, the Board of Directors may adopt and
amend rules and regulations relating to administration of the Plan, advance the
termination of any waiting period, accelerate any exercise or vesting date,
waive or modify any restriction applicable to shares (except those restrictions
imposed by law) and make all other determinations in the judgment of the Board
of Directors necessary or desirable for the administration of the Plan. The
interpretation and construction of the provisions of the Plan and related
agreements by the Board of Directors shall be final and conclusive. The Board of
Directors may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any related agreement in the manner and to the
extent it deems expedient to carry the Plan into effect, and the Board of
Directors shall be the sole and final judge of such expediency.
4.2
Committee
.
The Board of Directors may delegate to any committee of the Board of Directors
(the Committee) any or all authority for administration of the Plan. If authority is delegated to the Committee, all
references to the Board of Directors in the Plan shall mean and relate to the
Committee, except (i) as otherwise provided by the Board of Directors and (ii)
that only the Board of Directors may amend or terminate the Plan as provided in
Sections 3 and 11.
4.3
No Dividends on
Unvested Awards.
No award granted under the Plan shall provide for
the payment of dividends on shares subject to the award before the
shares
have Vested; provided, however, that dividends accumulated between the grant
date
of an award and the Vesting date on shares that become Vested under the
award may be
paid to the recipient at or after the time the shares become
Vested. Vested means that
shares have been delivered to the recipient and
are no longer subject to a substantial risk of
forfeiture (as defined in
regulations under Section 83 of the Internal Revenue Code of
1986, as
amended (the Code).
2
4.4
Minimum
Service Period.
No award granted under the Plan after
March
1, 2017 shall become Vested if the recipient does not remain in the service of
the
Company until the first anniversary of th
e date of grant,
unless the recipients service is terminated as a result of the recipients
death or physical disability (as defined in the
applicable award
agreement), or such earlier Vesting occurs in connection with a Change
in
Control of the Company to the extent permitted by Section 4.5; provided,
however, that
the foregoing prohibition shall not apply to five percent
of the sum of the number of shares
available for awards under the Plan
immediately following the 2017 annual meeting of
shareholders plus the
number of additional shares that thereafter become available.
4.5
Restrictions
on Change in Control Vesting.
No award granted
under the Plan
after March 1, 2017 shall provide for any excuse from satisfaction of the
continued service conditions of the award as a result of a Change in
Control of the
Company, except that an award agreement may excuse the
recipient from the continued
service obligation if:
i.
the recipients employment or service relationship is terminated
by the
employer or the Company without cause or by the recipient for good reason in
connection with the Change in Control under terms specified in the award
agreement; or
ii.
the award is not converted into an award for stock of the
surviving or
acquiring corporation in the Change in Control transaction under terms
specified in the award agreement or pursuant to Section 10.2 of the Plan;
provided that any
Performance-Based Awards and other awards with
performance-based vesting provisions
that are settled or for which
vesting is accelerated in connection with a Change in Control
are settled
or accelerated either on a pro-rata basis based on time elapsed during the
performance period from the grant date or with performance measured for a
performance
period ending prior to the Change in Control under terms
specified in the award agreement.
4.6
Change
in Control Definition.
For purposes of the Plan, a Change
in
Control of the Company shall mean the occurrence of any of the following
events:
i. The
consummation of:
(1) any
consolidation, merger or plan of share exchange
involving the Company (a
Merger) as a result of which the holders of outstanding
securities of
the Company ordinarily having the right to vote for the election of
directors
(Voting Securities) immediately prior to the Merger do
not continue t
o hold at least 50%
of the combined voting power of
the outstanding Voting Securities of the surviving
corporation or a
parent corporation of the surviving corporation immediately after the
Merger, disregarding any Voting Securities issued to or retained by such
holders in respect
of securities of any other party to the Merger;
or
(2) any
sale, lease, exchange or other transfer (in one
transaction or a series
of related transactions) of all, or substantially all, the assets of
the
Company;
3
ii. At any time
during a period of two consecutive years, individuals who at the beginning of
such period constituted the Board (Incumbent Directors) shall cease for any
reason to constitute at least a majority thereof; provided, however, that the
term Incumbent Director shall also include each new director elected during
such two-year period whose nomination or election was approved by two-thirds of
the Incumbent Directors then in office; or
iii.
Any person (as such term is used in Section 14(d) of the Securities Exchange Act
of 1934, other than the Company or any employee benefit plan sponsored by the
Company) shall, as a result of a tender or exchange offer, open market purchases
or privately negotiated purchases from anyone other than the Company, have
become the beneficial owner (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of Voting Securities
representing fifty percent (50%) or more of the combined voting power of the
then outstanding Voting Securities.
5.
Types of Awards, Eligibility, Limitations
. The Board of Directors may,
from time to time, take the following actions, separately or in combination,
under the Plan: (i) grant Incentive Stock Options, as defined in Section 422 of
the
Internal Revenue Code
of 1986, as amended (the
Code),
Code,
as provided in Sections 6.1
and 6.2; (ii) grant options other than Incentive Stock Options (Non-Statutory
Stock Options) as provided in Sections 6.1 and 6.3; (iii) grant Stock Awards as
provided in Section 7; (iv) grant stock appreciation rights as provided in
Section 8; and (v) grant Performance-Based Awards as provided in Section 9.
Awards may be made to employees, including employees who are officers or
directors, officers and directors selected by the Board of Directors; provided,
however, that only employees of the Company or any parent or subsidiary of the
Company (as defined in subsections 424(e) and 424(f) of the Code) are eligible
to receive Incentive Stock Options under the Plan. The maximum number of shares
that can be issued under the Plan as Incentive Stock Options is
3,000
6,800,
000 shares. No
employee may be granted options or stock appreciation rights for more than an
aggregate of
750,000 shares
of Common Stock in any fiscal
year
1,500,000
shares of Common Stock in any fiscal year.
The total compensation paid or
granted by the Company in any form (including cash and
awards under the
Plan) to any non-employee director for service as a director for any fiscal
year shall not exceed $500,000. For this purpose, awards under the Plan shall
be valued at
the time of grant based on the grant date fair value as
determined by the Company for
financial accounting purposes
.
6.
Option
Grants
.
6.1
General
Rules Relating to Options
.
6.1
-1
Terms of
Grant
. The Board of Directors may grant options under the Plan. With
respect to each option grant, the Board of Directors shall determine the number of shares subject to the option, the exercise price, the
period of the option, the time or times at which the option may be exercised and
whether the option is an Incentive Stock Option or a Non-Statutory Stock
Option.
4
6.1 -2
Exercise
of Options
. Except as provided in Section 6.1 -4 or as determined by the
Board of Directors, no option granted under the Plan may be exercised unless at
the time of exercise the optionee is employed by or in the service of the
Company and shall have been so employed or provided such service continuously
since the date the option was granted. Except as provided in Sections 6.1 -4 and
10, options granted under the Plan may be exercised from time to time over the
period stated in each option in amounts and at times prescribed by the Board of
Directors, provided that options may not be exercised for fractional shares.
Unless otherwise determined by the Board of Directors, if an optionee does not
exercise an option in any one year for the full number of shares to which the
optionee is entitled in that year, the optionees rights shall be cumulative and
the optionee may purchase those shares in any subsequent year during the term of
the option.
6.1 -3
Nontransferability
. Except as provided below, each Incentive
Stock Option granted under the Plan by its terms shall be nonassignable and
nontransferable by the optionee, either voluntarily or by operation of law, and
during the optionees lifetime, shall be exercisable only by the optionee. A
stock option may be transferred by will or by the laws of descent and
distribution of the state or country of the optionees domicile at the time of
death. A Non-Statutory Stock Option shall also be transferable pursuant to a
qualified domestic relations order as defined under the Code or Title I of the
Employee Retirement Income Security Act. The Committee may, in its discretion,
authorize all or a portion of a Non-Statutory Stock Option granted to an
optionee to be on terms which permit transfer by the optionee to (i) the spouse,
children or grandchildren of the optionee (Immediate Family Members), (ii) a
trust or trusts for the exclusive benefit of Immediate Family Members, or (iii)
a partnership in which Immediate Family Members are the only partners, provided
that (x) there may be no consideration for any transfer, (y) the stock option
agreement pursuant to which the options are granted must expressly provide for
transferability in a manner consistent with this paragraph, and (z) subsequent
transfers of transferred options shall be prohibited except by will or by the
laws of descent and distribution. Following any transfer, options shall continue
to be subject to the same terms and conditions as were applicable immediately
prior to transfer, provided that for purposes of Section 6.1 -5 the term
optionee shall be deemed to refer to the transferee. The events of termination
of employment of Section 6.1 -4, shall continue to be applied with respect to
the original optionee, following which the options shall be exercisable by the
transferee only to the extent, and for the periods specified, and all other
references to employment, termination of employment, life or death of the
optionee, shall continue to be applied with respect to the original optionee.
6.1 -4
Termination of Employment or Service
.
6.1-4(a)
General Rule
. Unless otherwise determined by the Board of Directors, if an optionees employment or service
with the Company terminates for any reason other than because of total
disability or death as provided in Sections 6.1 -4(b) and (c), his or her option
may be exercised at any time before the expiration date of the option or the
expiration of 30 days after the date of termination, whichever is the shorter
period, but only if and to the extent the optionee was entitled to exercise the
option at the date of termination.
5
6.1-4(b)
Termination Because of Total Disability
. Unless otherwise determined by
the Board of Directors, in the event of the termination of employment or service
because of total disability, the option may be exercised at any time prior to
the expiration date of the option or the expiration of 12 months after the date
of termination, whichever is the shorter period, but only if and to the extent
the optionee was entitled to exercise the option at the date of termination. The
term total disability means a mental or physical impairment which is expected
to result in death or which has lasted or is expected to last for a continuous
period of 12 months or more and which causes the optionee to be unable, in the
opinion of the Company, to perform his or her duties as an employee, director or
officer of the Company. Total disability shall be deemed to have occurred on the
first day after the Company has made a determination of total disability.
6.1 -4(c)
Termination Because of Death
. Unless otherwise determined by
the Board of Directors, in the event of the death of an optionee while employed
by or providing service to the Company or a subsidiary, the option may be
exercised at any time prior to the expiration date of the option or the
expiration of 12 months after the date of death, whichever is the shorter
period, but only if and to the extent the optionee was entitled to exercise the
option at the date of death and only by the person or persons to whom such
optionees rights under the option shall pass by the optionees will or by the
laws of descent and distribution of the state or country of domicile at the time
of death.
6.1 -4(d)
Amendment of Exercise Period
Applicable to Termination
. The Board of Directors may at any time extend the
30-day and 12-month exercise periods any length of time not longer than the
original expiration date of the option. The Board of Directors may at any time
increase the portion of an option that is exercisable, subject to terms and
conditions determined by the Board of Directors.
6.1 -4(e)
Failure to Exercise Option
. To the extent that the option of
any deceased optionee or any optionee whose employment or service terminates is
not exercised within the applicable period, all further rights to purchase
shares pursuant to the option shall terminate.
6.1 -4(f)
Leave of Absence
. Absence
on leave approved by the Employer or on account of illness or disability shall
not be deemed a termination or interruption of employment or service. Unless
otherwise determined by the Board of Directors, vesting of options shall
continue during a medical, family or military leave of absence, whether paid or unpaid, and vesting of options shall
be suspended during any other unpaid leave of absence.
6
6.1
-5
Purchase of Shares
.
6.1
-5(a)
Notice of Exercise
. Unless the Board of Directors determines otherwise,
shares may be acquired pursuant to an option granted under the Plan only upon
the Companys receipt of written notice from the optionee of the optionees
binding commitment to purchase shares, specifying the number of shares the
optionee desires to purchase under the option and the date on which the optionee
agrees to complete the transaction, and, if required to comply with the
Securities Act of 1933, containing a representation that it is the optionees
intention to acquire the shares for investment and not with a view to
distribution.
6.1
-5(b)
Payment
. Unless the Board of Directors determines otherwise, on or before
the date specified for completion of the purchase of shares pursuant to an
option exercise, the optionee must pay the Company the full purchase price of
those shares in cash or by check or, with the consent of the Board of Directors,
in whole or in part, in Common Stock of the Company valued at fair market value
and other forms of consideration. With the consent of the Board of Directors, an
optionee may pay the exercise price, in whole or in part, by instructing the
Company to withhold from the shares to be issued upon exercise shares of Common
Stock valued at fair market value. The fair market value of Common Stock of the
Company provided or withheld in payment of the purchase price shall be the
closing price of the Common Stock of the Company as reported on Nasdaq or such
other reported value of the Common Stock of the Company as shall be specified by
the Board of Directors, on the date the option is exercised, or if such date is
not a trading day, then on the immediately preceding trading day.
6.1
-5(c)
Tax Withholding
. Each optionee who has exercised an option
shall, immediately upon notification of the amount due, if any, pay to the
Company in cash or by check amounts necessary to satisfy any federal, state and
local tax withholding requirements. If additional withholding is or becomes
required (as a result of exercise of an option or as a result of disposition of
shares acquired pursuant to exercise of an option) beyond any amount deposited
before delivery of the certificates, the optionee shall pay the additional
withholding amount, in cash or by check, to the Company on demand. If the
optionee fails to pay the amount demanded, the Company or the Employer may
withhold that amount from other amounts payable to the optionee, including
salary, subject to applicable law. With the consent of the Board of Directors,
an optionee may satisfy this obligation, in whole or in part, by instructing the
Company to withhold some of the shares to be issued upon exercise or by
delivering to the Company other shares of Common Stock
;
provided, however, that the number of shares so withheld
or delivered
shall not exceed the minimum amount necessary to
satisfy the required withholding
obligations
.
The fair market value of Common Stock of the Company withheld or
delivered to satisfy withholding obligation shall be the closing price of the
Common Stock of the Company as reported on Nasdaq or such other reported
value of the Common Stock of the Company as shall be specified by the Board of
Directors, on the date the option is exercised, or if such date is not a trading
day, then on the immediately preceding trading day.
7
6.1
-5(d)
Reduction of Reserved Shares.
Upon the exercise of an option,
the number of shares reserved for issuance under the Plan shall be reduced by
the number of shares issued upon exercise of the option plus any shares withheld
in payment of the exercise price or to satisfy withholding requirements.
6.1 -6
No Repricing
. Except for actions approved by the shareholders of the
Company or adjustments made pursuant to Section 10, the option price for an
outstanding option granted under the Plan may not be decreased after the date of
grant nor may the Company grant a new option or pay any cash or other
consideration (including another award under the Plan) in exchange for any
outstanding option granted under the Plan at a time when the option price of the
outstanding option exceeds the fair market value of the Shares covered by the
option.
6.2
Incentive Stock Options
. Incentive Stock Options shall be subject
to the following additional terms and conditions:
6.2
-1
Limitation on Amount of Grants
. If the aggregate fair market value of
stock, determined as of the date the option is granted, for which Incentive
Stock Options granted under this Plan (and any other stock incentive plan of the
Company or its parent or subsidiary corporations, as defined in subsections
424(e) and 424(f) of the Code) are exercisable for the first time by an employee
during any calendar year exceeds $100,000, the portion of the option or options
not exceeding $100,000, to the extent of whole shares, will be treated as an
Incentive Stock Option and the remaining portion of the option or options will
be treated as a Non-Statutory Stock Option. The preceding sentence will be
applied by taking options into account in the order in which they were granted.
If, under the $100,000 limitation, a portion of an option is treated as an
Incentive Stock Option and the remaining portion of the option is treated as a
Non-Statutory Stock Option, unless the optionee designates otherwise at the time
of exercise, the optionees exercise of all or a portion of the option will be
treated as the exercise of the Incentive Stock Option portion of the option to
the full extent permitted under the $100,000 limitation. If an optionee
exercises an option that is treated as in part an Incentive Stock Option and in
part a Non-Statutory Stock Option, the Company will designate the portion of the
stock acquired pursuant to the exercise of the Incentive Stock Option portion as
Incentive Stock Option stock by issuing a separate certificate for that portion
of the stock and identifying the certificate as Incentive Stock Option stock in
its stock records.
6.2 -2
Limitations on Grants to 10 percent Shareholders
. An Incentive
Stock Option may be granted under the Plan to an employee possessing more than
10 percent of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary (as defined in subsections 424(e) and 424(f)
of the Code) only if the option price is at least 110 percent of the fair market value,
as described in Section 6.2 -4, of the Common Stock subject to the option on the
date it is granted and the option by its terms is not exercisable after the
expiration of five years from the date it is granted.
8
6.2 -3
Duration of Options
. Subject to Sections 6.1 -2, 6.1 -4 and 6.2 -2,
Incentive Stock Options granted under the Plan shall continue in effect for the
period fixed by the Board of Directors, except that by its terms no Incentive
Stock Option shall be exercisable after the expiration of 10 years from the date
it is granted.
6.2
-4
Option Price
. The option price per share shall be determined by
the Board of Directors at the time of grant. Except as provided in Section 6.2
-2, the option price shall not be less than 100 percent of the fair market value
of the Common Stock covered by the Incentive Stock Option at the date the option
is granted. The fair market value shall be deemed to be the closing price of the
Common Stock of the Company as reported on Nasdaq on the date the option is
granted, or if there has been no sale on that date, on the last preceding date
on which a sale occurred, or such other reported value of the Common Stock of
the Company as shall be specified by the Board of Directors.
6.2
-5
Limitation on Time of Grant
. No Incentive Stock Option shall be granted
on or after the tenth anniversary of the last action by the Board of Directors
adopting the Plan or approving an increase in the number of shares available for
issuance under the Plan, which action was subsequently approved within 12 months
by the shareholders.
6.2
-6
Early Dispositions
. If, within two years after an Incentive Stock Option
is granted or within 12 months after an Incentive Stock Option is exercised, the
optionee sells or otherwise disposes of Common Stock acquired on exercise of the
Option, the optionee shall within 30 days of the sale or disposition notify the
Company in writing of (i) the date of the sale or disposition, (ii) the amount
realized on the sale or disposition and (iii) the nature of the disposition
(e.g., sale, gift, etc.).
6.3
Non-Statutory Stock Options
. Non-Statutory Stock Options shall be
subject to the following terms and conditions, in addition to those set forth in
Section 6.1 above:
6.3
-1
Option Price
. The option price for Non-Statutory Stock Options shall be
determined by the Board of Directors at the time of grant. The option price
shall not be less than 100 percent of the fair market value of the Common Stock
covered by the Non-Statutory Stock Options at the date the option is granted.
The fair market value shall be deemed to be the closing price of the Common
Stock of the Company as reported on Nasdaq on the date the option is granted, or
if there has been no sale on that date, on the last preceding date on which a
sale occurred, or such other reported value of the Common Stock of the Company
as shall be specified by the Board of Directors.
9
6.3 -2
Duration of Options
. Non-Statutory Stock Options granted under
the Plan shall continue in effect for the period fixed by the Board of
Directors.
7.
Stock Awards
. The Board of Directors may issue shares, including
restricted stock, or rights to receive shares, including restricted stock units,
under the Plan (Stock Awards) for any consideration, including services,
determined by the Board of Directors. A restricted stock unit represents the
right to receive one share of Common Stock subject to satisfaction of the
conditions set forth in the applicable award agreement. Stock Awards shall be
subject to the terms, conditions and restrictions determined by the Board of
Directors and set forth in an award agreement. The terms may include
restrictions concerning transferability, repurchase by the Company and
forfeiture of the shares issued or awarded, deferral of the date for receipt of
any shares and any other terms determined by the Board of Directors. The Company
may require any recipient of a Stock Award to pay to the Company in cash or by
check upon demand amounts necessary to satisfy any federal, state or local tax
withholding requirements. If the recipient fails to pay the amount demanded, the
Company or the Employer may withhold that amount from other amounts payable to
the purchaser, including salary, subject to applicable law. With the consent of
the Board of Directors, a participant may satisfy this obligation, in whole or
in part, by instructing the Company to withhold some of the shares to be issued
or by delivering to the Company shares of Common Stock
;
provided, however, that the number of shares
withheld or delivered shall not exceed the minimum amount
necessary to satisfy the
required withholding obligation
.
The fair market value of Common Stock of
the Company withheld to satisfy withholding obligations shall be the closing
price of the Common Stock of the Company as reported on Nasdaq or such other
reported value of the Common Stock of the Company as shall be specified by the
Board of Directors, on the date the shares are withheld, or if such date is not
a trading day, then on the immediately preceding trading day. Upon the issuance
of shares under a Stock Award
after March 1, 2017,
the number of shares reserved for issuance under the Plan shall be
reduced by the number of shares issued
,
net
of
plus
any shares withheld to
satisfy tax withholding obligations.
8.
Stock Appreciation Rights
.
8.1
Grant
. Stock appreciation rights may be granted under
the Plan by the Board of Directors, subject to such rules, terms, and conditions
as the Board of Directors prescribes.
8.2
Exercise
.
8.2 -1
General
. Each stock appreciation right shall entitle the holder, upon
exercise, to receive from the Company in exchange therefor an amount equal in
value to the excess of the fair market value on the date of exercise of one
share of Common Stock of the Company over its fair market value on the date of
grant or such higher amount as the Board of Directors shall determine (or, in
the case of a stock appreciation right granted in connection with an option, the
excess of the fair market value of one share of Common Stock of the Company over
the exercise price per share under the option to which the stock appreciation right relates), multiplied by the number of shares
covered by the stock appreciation right or the option, or portion thereof, that
is surrendered. No stock appreciation right shall be exercisable at a time that
the amount determined under this subsection is negative. Payment by the Company
upon exercise of a stock appreciation right may be made in Common Stock valued
at fair market value, in cash, or partly in Common Stock and partly in cash, all
as determined by the Board of Directors.
10
8.2
-2
Time of Exercise
. A stock appreciation right shall be exercisable only at
the time or times established by the Board of Directors. If a stock appreciation
right is granted in connection with an option, the following rules shall apply:
(i) the stock appreciation right shall be exercisable only to the extent and on
the same conditions that the related option could be exercised; (ii) upon
exercise of the stock appreciation right, the option or portion thereof to which
the stock appreciation right relates terminates; and (iii) upon exercise of the
option, the related stock appreciation right or portion thereof terminates.
8.2
-3
Conditions
. The Board of Directors may impose any conditions
upon the exercise of a stock appreciation right or from time to time adopt rules
affecting the rights of holders of stock appreciation rights. These rules may
govern the right to exercise stock appreciation rights granted prior to adoption
or amendment of the rules as well as stock appreciation rights granted
thereafter.
8.2
-4
Fair Market Value
. For purposes of this Section 8, the fair market value
of the Common Stock shall be determined using the methods set forth in Section
6.1 -5(b).
8.2
-5
Fractional Shares
. No fractional shares shall be issued upon exercise of
a stock appreciation right. In lieu thereof, cash may be paid in an amount equal
to the value of the fraction or, if the Board of Directors determines, the
number of shares may be rounded downward to the next whole share.
8.2
-6
Nontransferability
. Each stock appreciation right granted in
connection with an Incentive Stock Option and, unless otherwise determined by
the Board of Directors, each other stock appreciation right granted by its terms
shall be nonassignable and nontransferable by the holder, either voluntarily or
by operation of law, except by will or by the laws of descent and distribution
of the state or country of the holders domicile at the time of death, and each
stock appreciation right by its terms shall be exercisable during the holders
lifetime only by the holder; provided, however, that a stock appreciation right
not granted in connection with an Incentive Stock Option shall also be
transferable pursuant to a qualified domestic relations order as defined under
the Code or Title I of the Employee Retirement Income Security Act.
8.2
-7
Taxes
. Each participant who has exercised a stock appreciation right
shall, upon notification of the amount due, pay to the Company in cash amounts
necessary to satisfy any federal, state and local tax withholding requirements.
If the participant fails to pay the amount demanded, the Company may
withhold that amount from other amounts payable by the Company to the
participant including salary, subject to applicable law. With the consent of the
Board of Directors a participant may satisfy this obligation, in whole or in
part, by having the Company withhold from shares to be issued upon the exercise
that number of shares that would satisfy the withholding amount due or by
delivering Common Stock to the Company to satisfy the withholding amount. The
fair market value of Common Stock of the Company withheld or delivered to
satisfy withholding requirements shall be the closing price of the Common Stock
of the Company as reported on Nasdaq or such other reported value of the Common
Stock of the Company as shall be specified by the Board of Directors, on the
date the stock appreciation right is exercised, or if such date is not a trading
day, then on the immediately preceding trading day. Upon the exercise of a stock
appreciation right for shares, the number of shares reserved for issuance under
the Plan shall be reduced by the number of shares covered by the stock
appreciation right. Cash payments of stock appreciation rights shall not reduce
the number of Shares reserved for issuance under the Plan.
11
9.
Performance-Based Awards
. The Board of Directors may grant awards
intended to qualify as qualified performance-based compensation under Section
162(m) of the Code and the regulations thereunder (Performance-Based
Awards). Performance-Based Awards shall be denominated at the time of
grant either in Common Stock (Stock Performance Awards) or in dollar amounts
(Dollar Performance Awards). Payment under a Stock Performance Award or a
Dollar Performance Award shall be made, at the discretion of the Board of
Directors, in Common Stock (Performance Shares), or in cash or in any
combination thereof. Performance-Based Awards shall be subject to the following
terms and conditions:
9.1
Award Period
. The Board of Directors shall determine the period of
time for which a Performance-Based Award is made (the Award Period).
9.2
Performance Goals and Payment
. The Board of Directors
shall establish in writing objectives (Performance Goals) that must be met by
the Company or any subsidiary, division or other unit of the Company (Business
Unit) during the Award Period as a condition to payment being made under the
Performance-Based Award. The Performance Goals for each award shall be one or
more targeted levels of performance with respect to one or more of the following
objective measures with respect to the Company or any Business Unit: earnings,
earnings per share, stock price increase, total shareholder return (stock price
increase plus dividends), return on equity, return on assets, return on capital,
economic value added, revenues, operating income, inventories, inventory turns,
cash flows, earnings before interest and taxes (EBIT), earnings before interest,
taxes, depreciation and amortization (EBITDA) or any of the foregoing before the
effect of acquisitions, divestitures, accounting changes, and restructuring and
special charges (determined according to criteria established by the Board of
Directors). The Board of Directors shall also establish the number of
Performance Shares or the amount of cash payment to be made under a
Performance-Based Award if the Performance Goals are met or exceeded, including the fixing of a maximum payment
(subject to Section 9.4) . The Board of Directors may establish other
restrictions to payment under a Performance-Based Award, such as a continued
employment requirement, in addition to satisfaction of the Performance Goals.
Some or all of the Performance Shares may be issued at the time of the award as
restricted shares subject to forfeiture in whole or in part if Performance Goals
or, if applicable, other restrictions are not satisfied.
12
9.3
Computation of Payment
.
During or after an Award Period,
the performance of the Company or Business Unit, as applicable, during the
period shall be measured against the Performance Goals. If the Performance Goals
are not met, no payment shall be made under a Performance-Based Award. If the
Performance Goals are met or exceeded, the Board of Directors shall certify that
fact in writing and certify the number of Performance Shares earned or the
amount of cash payment to be made under the terms of the Performance-Based
Award.
9.4
Maximum Awards
. No participant may receive in any fiscal year
Stock Performance Awards under which the aggregate amount payable under the
Awards exceeds the equivalent of
275
500,
000 shares of
Common Stock or Dollar Performance Awards
under which the
aggregate amount payable under the Awards exceeds $
3
5,
000,000.
9.5
Tax Withholding
. Each participant who has received
Performance Shares shall, upon notification of the amount due, pay to the
Company in cash or by check amounts necessary to satisfy any applicable federal,
state and local tax withholding requirements. If the participant fails to pay
the amount demanded, the Company or the Employer may withhold that amount from
other amounts payable to the participant, including salary, subject to
applicable law. With the consent of the Board of Directors, a participant may
satisfy this obligation, in whole or in part, by instructing the Company to
withhold from any shares to be issued or by delivering to the Company other
shares of Common Stock
;
provided, however,
that the number of shares so delivered or withheld
shall not
exceed the minimum amount necessary to satisfy the required withholding
obligation
.
9.6
Reduction of Reserved Shares
. The payment of a Performance-Based
Award in cash shall not reduce the number of shares of Common Stock reserved for
issuance under the Plan.
The
Upon
the issuance of shares under a Performance-Based Award after March 1, 2017,
the
number of shares of Common Stock reserved for issuance
under the Plan shall be reduced by the number of shares issued
upon
payment of an award, net
of
plus
any shares withheld to satisfy withholding obligations.
10.
Changes in Capital Structure
.
10.1
Stock Splits, Stock Dividends
. If the outstanding Common Stock of
the Company is hereafter increased or decreased or changed into or exchanged for
a different number or kind of shares or other securities of the Company by
reason of any stock split, combination of shares, dividend payable in shares,
recapitalization or reclassification, appropriate adjustment shall be made in
the number and kind of shares available for grants under the Plan and in all
other share amounts set forth in the Plan. In addition, appropriate adjustment
shall be made in the number and kind of shares subject to Stock Awards as to
which shares have not been issued and as to which outstanding options and stock
appreciation rights, or portions thereof then unexercised, shall be exercisable,
so that the holders proportionate interest before and after the occurrence of
the event is maintained. Notwithstanding the foregoing, the Board of Directors
shall have no obligation to effect any adjustment that would or might result in
the issuance of fractional shares, and any fractional shares resulting from any
adjustment may be disregarded or provided for in any manner determined by the
Board of Directors. Any adjustments made by the Board of Directors pursuant to
this Section 10.1 shall be conclusive.
13
10.2
Corporate
Transactions.
Unless otherwise provided at the time of grant, if during
the term of an option, stock appreciation right or restricted stock unit award,
there shall occur a merger, consolidation or plan of exchange involving the
Company pursuant to which outstanding shares are converted into cash or other
stock, securities or property, or a sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all, or substantially
all, the assets of the Company, then the Board of Directors, may, in its sole
discretion, provide that outstanding awards under the Plan shall be treated in
accordance with any of the following alternatives:
10.2
-1 The option, stock appreciation right,
restricted stock unit award shall be converted into an option, stock
appreciation right or restricted stock unit award to acquire stock of the
surviving or acquiring corporation in the applicable transaction for a total
purchase price equal to the total price applicable to the unexercised portion of
the option, stock appreciation right or restricted stock unit award, and with
the amount and type of shares subject thereto and exercise price per share
thereof to be conclusively determined by the Board of Directors, taking into
account the relative values of the companies involved in the applicable
transaction and the exchange rate, if any, used in determining shares of the
surviving corporation to be held by holders of Shares following the applicable
transaction, and disregarding fractional shares;
10.2
-2 The option, stock appreciate right or
restricted stock unit shall be cancelled effective immediately prior to the
consummation of the transaction, and, in full consideration of the cancellation,
pay at such time or at other times as determined by the Board of Directors to
the holder thereof an amount in cash, for each share subject to the award, equal
to the value, as determined by the Board of Directors, of the award, provided
that with respect to any outstanding option such value shall be equal to the
excess of (A) the value, as determined by the Board of Directors, of the
property (including cash) received by the holder of a share of stock as a result
of the transaction over (B) the exercise price of such option; or
14
10.2
-3 All unissued shares subject to restricted stock unit awards shall be issued
immediately prior to the consummation of such transaction, all options and stock
appreciation rights will become exercisable for 100 percent of the shares
subject to the option or stock appreciation right effective as of the
consummation of such transaction, and the Board of Directors shall approve some
arrangement by which holders of options and stock appreciation rights shall have
a reasonable opportunity to exercise all such options and stock appreciation
rights effective as of the consummation of such transaction or otherwise realize
the value of these awards, as determined by the Board of Directors. Any option
or stock appreciation right that is not exercised in accordance with procedures
approved by the Board of Directors shall terminate.
10.3
Rights
Issued by Another Corporation
. The Board of Directors may also grant
options, stock appreciation rights, Stock Awards and Performance-Based Awards
under the Plan with terms, conditions and provisions that vary from those
specified in the Plan, provided that any such awards are granted in substitution
for, or in connection with the assumption of, existing options, stock
appreciation rights, Stock Awards and Performance-Based Awards or other awards
granted, awarded or issued by another corporation and assumed or otherwise
agreed to be provided for by the Company pursuant to or by reason of a merger,
combination consolidation, acquisition or similar corporate transaction. In the
case of any award under this Section 10.3, shares issued or issuable in
connection with the substitute award shall not be counted against the number of
shares reserved under the Plan, but shall be governed by the Plan by virtue of
the Companys assumption of the plan or arrangement of the acquired company or
business.
11.
Amendment
of the Plan
. The Board of Directors may at any time modify or amend the Plan
in any respect, except that shareholder approval shall be required to (i)
increase the number of shares reserved for the Plan, (ii) increase the maximum
number of shares that can be issued as Full Value Awards and (iii) amend Section
6.1 -6 of the Plan. Except as provided in Section 10, no change in an award
already granted shall be made without the written consent of the holder of the
award if the change would adversely affect the holder.
12.
Approvals
.
The Companys obligations under the Plan are subject to the approval of state
and federal authorities or agencies with jurisdiction in the matter. The Company
will use its best efforts to take steps required by state or federal law or
applicable regulations, including rules and regulations of the Securities and
Exchange Commission and any stock exchange on which the Companys shares may be
listed, in connection with the grants under the Plan. The foregoing
notwithstanding, the Company shall not be obligated to issue or deliver Common
Stock under the Plan if issuance or delivery would violate state or federal
securities laws.
13.
Employment
and Service Rights
. Nothing in the Plan or any award pursuant to the Plan
shall (i) confer upon any employee any right to be continued in the employment
of an Employer or interfere in any way with the Employers right to terminate
the employees employment at will at any time, for any reason,
with or without cause, or to decrease the employees compensation or benefits,
or (ii) confer upon any person engaged by an Employer or the Company any right
to be retained or employed by the Employer or the Company or to the
continuation, extension, renewal or modification of any compensation, contract
or arrangement with or by the Employer or the Company.
15
14.
Rights
as a Shareholder
. The recipient of any award under the Plan shall have no
rights as a shareholder with respect to any shares of Common Stock until the
recipient becomes the holder of record of those shares. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date occurs before the date the recipient
becomes the holder of record.
16
Important Notice Regarding the Availability of Proxy
Materials for the Annual and Special Meeting:
The Notice and Proxy Statement and Annual Report are available
at www.proxyvote.com.
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