UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
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Filed by the Registrant
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Filed by a Party other
than the Registrant ☐
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Check
the appropriate box:
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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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GNC
HOLDINGS, INC.
(Name
of Registrant as Specified In Its Charter)
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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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(1)
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Title of
each class of securities to which transaction applies
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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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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(4)
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Proposed
maximum aggregate value of transaction:
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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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(1)
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Amount Previously
Paid:
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(2)
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Form, Schedule
or Registration Statement No.:
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300
Sixth Avenue
Pittsburgh,
Pennsylvania 15222
April 11,
2017
Dear
Stockholder,
You
are cordially invited to attend the Annual Meeting of Stockholders of GNC Holdings, Inc. (the “Company”) to be held
on Tuesday, May 23, 2017 at 8:00 A.M. Eastern Time at the Omni William Penn Hotel, 530 William Penn Place, Pittsburgh, Pennsylvania
15219.
The
agenda for the Annual Meeting includes:
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The
election of seven directors named in the attached proxy statement to our Board of Directors
(Proposal 1);
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An
advisory vote to approve the compensation paid to our Named Executive Officers described
herein (commonly known as a “say-on-pay” proposal) (Proposal 2);
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An
advisory vote on the frequency of holding a non-binding, advisory vote by our stockholders
to approve the compensation of our Named Executive Officers (commonly known as a “say-on-frequency”
vote) (Proposal 3); and
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The
ratification of the appointment of PricewaterhouseCoopers LLP as independent auditors
for our 2017 fiscal year (Proposal 4).
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Our
Board of Directors recommends that you vote FOR Proposals 1, 2, and 4 and recommends that you cast your vote on Proposal 3 to
hold the advisory “say-on-pay” vote
annually
.
Your
interest in the Company and your vote are very important to us. The enclosed proxy materials contain detailed information regarding
the business that will be considered at the Annual Meeting. We encourage you to read the proxy materials and vote your shares
as soon as possible. You may vote your proxy via the Internet or telephone or, if you received a paper copy of the proxy materials,
by mail by completing and returning the proxy card.
On
behalf of the Company, I would like to express our appreciation for your ongoing interest in GNC.
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Very truly yours,
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Robert F. Moran
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Interim Chief Executive Officer
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GNC
HOLDINGS, INC.
NOTICE
OF
2017
ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON MAY 23, 2017
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DATE AND TIME
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8:00 a.m. on Tuesday, May
23, 2017
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PLACE
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Omni William Penn Hotel
530 William Penn Place
Pittsburgh, Pennsylvania 15219
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ITEMS OF BUSINESS
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(1) To elect seven directors named in these
proxy materials to hold office until our 2018 annual meeting of stockholders and until their successors are duly elected and
qualified or until their earlier resignation or removal (Proposal 1).
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(2) To approve, by non-binding vote, the compensation
paid to our Named Executive Officers in 2016, as disclosed in these proxy materials (commonly known as a “say-on-pay”
proposal) (Proposal 2).
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(3) To approve, by non-binding vote, the frequency
of holding a non-binding, advisory vote by our stockholders to approve the compensation of our Named Executive Officers (commonly
known as a “say-on-frequency” vote) (Proposal 3).
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(4) To ratify the appointment of PricewaterhouseCoopers
LLP as independent auditors for our 2017 fiscal year (Proposal 4).
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(5) To transact such other business as may properly
be brought before the Annual Meeting or any adjournment or postponement thereof.
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RECORD DATE
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You are entitled to vote only if you were a
stockholder of record at the close of business on March 24, 2017.
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PROXY VOTING
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It is important that your shares be represented
and voted at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, we urge you to vote online at www.proxyvote.com
or via telephone by calling 1-800-690-6903, or to complete and return a proxy card (no postage is required).
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REQUIRED VOTE
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The affirmative vote of a majority of the votes
cast by our stockholders in person or represented by proxy at the Annual Meeting is required to approve each of Proposals
1, 2, and 4 described in these proxy materials. With respect to Proposal 3, the alternative receiving the greatest number
of votes will be the frequency that our stockholders will approve.
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Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on May 23, 2017
:
As permitted by rules adopted by the Securities and Exchange Commission, rather than mailing a full paper set of these proxy materials,
we are mailing to many of our stockholders only a notice of Internet availability of proxy materials containing instructions on
how to access these proxy materials and submit their respective proxy votes online. This proxy statement, our 2016 Annual Report
to stockholders and the proxy card are available at www.proxyvote.com. You will need your notice of Internet availability or proxy
card to access these proxy materials.
April 11,
2017
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Gavin M. O’Connor
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Vice President, Chief Compliance Officer and
Secretary
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TABLE
OF CONTENTS
300
Sixth Avenue
Pittsburgh,
Pennsylvania 15222
PROXY
STATEMENT
2017
ANNUAL MEETING OF STOCKHOLDERS
May 23,
2017
The
Board of Directors (the “Board”) of GNC Holdings, Inc., a Delaware corporation (the “Company,” “we,”
“us,” or “our”), has prepared this document to solicit your proxy to vote upon certain matters at our
2017 annual meeting of stockholders (the “Annual Meeting”).
These
proxy materials contain information regarding the Annual Meeting, to be held on Tuesday, May 23, 2017, beginning at 8:00
a.m. Eastern Time at the Omni William Penn Hotel, 530 William Penn Place, Pittsburgh, Pennsylvania 15219, and at any adjournment
or postponement thereof. As permitted by the rules adopted by the Securities and Exchange Commission (the “SEC”),
rather than mailing a full paper set of these proxy materials, we are mailing to many of our stockholders only a notice of Internet
availability of proxy materials (the “Notice”) containing instructions on how to access and review these proxy materials
and submit their respective proxy votes online. If you receive the Notice and would like to receive a paper copy of these proxy
materials, you should follow the instructions for requesting such materials located at www.proxyvote.com.
QUESTIONS
ABOUT THE ANNUAL MEETING AND THESE PROXY MATERIALS
It
is anticipated that we will begin mailing this proxy statement, the proxy card, our Annual Report to Stockholders for the year
ended December 31, 2016 (the “Annual Report”) and the Notice, and that these proxy materials will first be made
available online to our stockholders, on or about April 11, 2017. The information regarding stock ownership and other matters
in this proxy statement is as of March 24, 2017 (the “Record Date”), unless otherwise indicated.
What
may I vote on?
You
may vote on the following proposals:
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the
election of seven directors to serve until our 2018 annual meeting of stockholders (the
“2018 Annual Meeting”) and their respective successors have been duly elected
and qualified, or their earlier resignation or removal (Proposal 1);
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the
approval, by non-binding vote, of the compensation paid to our Named Executive Officers
in 2016, as disclosed in these proxy materials (commonly known as a “say-on-pay”
proposal) (Proposal 2);
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the
approval, by non-binding vote, of the frequency of holding a non-binding, advisory vote by our stockholders
to approve the compensation of our Named Executive Officers (commonly known as a “say-on-frequency”
vote) (Proposal 3); and
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the
ratification of the appointment of PricewaterhouseCoopers LLP (“PwC”) as
independent auditors for our 2017 fiscal year (Proposal 4).
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THE
BOARD RECOMMENDS A VOTE (1)
FOR
THE ELECTION OF EACH OF OUR DIRECTORS (PROPOSAL 1), (2)
FOR
THE APPROVAL, ON AN
ADVISORY BASIS, OF COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS IN 2016 (“SAY-ON-PAY”) (PROPOSAL 2), (3) TO RECOMMEND,
ON AN ADVISORY BASIS,
holding a non-binding advisory vote to approve the compensation
of our Named Executive Officers
annually
(“SAY-ON-FREQUENCY”) (PROPOSAL 3), AND (4)
FOR
THE RATIFICATION OF THE APPOINTMENT OF PWC AS INDEPENDENT AUDITORS (PROPOSAL 4).
Who
may vote?
Stockholders
of record of our Class A common stock, par value $0.001 per share (“Common Stock”), at the close of business on the
Record Date are entitled to receive the Notice and these proxy materials and to vote their respective shares at the Annual Meeting.
Each share of Common Stock is entitled to one vote on each matter that is properly brought before the Annual Meeting. As of the
Record Date, there were 68,564,078 shares of Common Stock issued and outstanding.
How
do I vote?
We
encourage you to vote your shares via the Internet. How you vote will depend on how you hold your shares of Common Stock.
Stockholders
of Record
If
your Common Stock is registered directly in your name with our transfer agent, American Stock, Transfer & Trust Company, LLC,
you are considered a stockholder of record with respect to those shares, and a full paper set of these proxy materials is being
sent directly to you. As a stockholder of record, you have the right to vote by proxy.
You
may vote by proxy in any of the following three ways:
Internet
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Go to www.proxyvote.com to use the Internet to transmit your voting instructions and for electronic delivery of information. Have
your proxy card in hand when you access the website.
Phone
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Call 1-800-690-6903 using any touch-tone telephone to transmit your voting instructions. Have your proxy card in hand when you
call.
Mail
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Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided, or return it to Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
Voting
by any of these methods will not affect your right to attend the Annual Meeting and vote in person. However, for those who will
not be voting in person at the Annual Meeting, your final voting instructions must be received by no later than 11:59 p.m. Eastern
Time on May 22, 2017.
Beneficial
Owners
Most
of our stockholders hold their shares through a stockbroker, bank or other nominee, rather than directly in their own names. If
you hold your shares in one of these ways, you are considered the beneficial owner of shares held in street name, and the Notice
is being forwarded to you by your broker, bank or nominee who is considered, with respect to those shares, the stockholder of
record. As the beneficial owner, you have the right to direct your broker, bank or nominee on how to vote. Your broker, bank or
nominee has enclosed a voting instruction form for you to use in directing the broker, bank or nominee on how to vote your shares.
If you hold your shares through a New York Stock Exchange (“NYSE”) member brokerage firm, that member brokerage firm
has the discretion to vote shares it holds on your behalf with respect to Proposal 4 (the ratification of PwC as independent auditors
for our 2017 fiscal year), but not with respect to Proposal 1 (the election of directors), Proposal 2 (the “say-on-pay”
proposal) or Proposal 3 (the “say-on-frequency” proposal) as more fully described under “What is a broker ‘non-vote’?”
below.
Can
I change my vote?
Yes.
If you are the stockholder of record, you may revoke your proxy before it is exercised by doing any of the following:
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voting
again over the Internet or by telephone prior to 11:59 p.m., Eastern Time on May 22,
2017;
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timely
sending a letter to us stating that your proxy is revoked;
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signing
a new proxy and timely sending it to us; or
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attending
the Annual Meeting and voting by ballot.
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Beneficial
owners should contact their broker, bank or nominee for instructions on changing their votes.
How
many votes must be present to hold the Annual Meeting?
A
“quorum” is necessary to hold the Annual Meeting. A quorum is a majority of the votes entitled to be cast by the stockholders
entitled to vote at the Annual Meeting. They may be present at the Annual Meeting or represented by proxy. Abstentions and broker
“non-votes” are counted as present and entitled to vote for purposes of determining a quorum.
How
many votes are needed to approve the proposals?
At
the Annual Meeting, a “FOR” vote by a majority of votes cast is required for Proposal 1 (the election of directors),
Proposal 2 (the “say-on-pay” proposal) and Proposal 4 (the ratification of PwC as independent auditors for our 2017
fiscal year). With respect to Proposal 3 (the “say-on-frequency” proposal), the alternative receiving the greatest
number of votes (every one year, two years or three years) will be the frequency that our stockholders approve, by non-binding
vote, to hold the say-on-pay proposal.
A
“FOR” vote by a “majority of votes cast” means that the number of shares voted “FOR” exceeds
the number of shares voted “AGAINST.”
What
is an abstention?
An
abstention is a properly signed proxy card that is marked “ABSTAIN.” Abstentions do not constitute votes “FOR”
or votes “AGAINST” any of the Proposals and, therefore, will have no effect on the outcome of any of those Proposals.
What
is a broker “non-vote?”
A
broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power for that particular item and has not received timely instructions
from the beneficial owner. Under current applicable rules, Proposal 4 (the ratification of PwC as independent auditors for our
2017 fiscal year) is a “discretionary” item upon which NYSE member brokerage firms that hold shares as nominee may
vote on behalf of the beneficial owners if such beneficial owners have not furnished voting instructions by the tenth day before
the Annual Meeting.
However,
NYSE member brokerage firms that hold shares as a nominee may not vote on behalf of the beneficial owners on Proposal 1 (the election
of directors), Proposal 2 (the “say-on-pay” proposal) or Proposal 3 (the “say-on-frequency” proposal)
unless you provide voting instructions. Therefore, if a NYSE member brokerage firm holds your Common Stock as a nominee, please
instruct your broker how to vote your Common Stock on each of these proposals. This will ensure that your shares are counted with
respect to each of these proposals. Broker “non-votes” do not constitute votes “FOR” or votes “AGAINST”
and therefore will have no effect on the outcome of any of the proposals.
Will
any other matters be acted on at the Annual Meeting?
If
any other matters are properly presented at the Annual Meeting or any adjournment or postponement thereof, the persons named in
the proxy will have discretion to vote on those matters. As of December 12, 2016, the date by which any proposal for consideration
at the Annual Meeting submitted by a stockholder must have been received by us to be presented at the Annual Meeting, and as of
the date of these proxy materials, we did not know of any other matters to be presented at the Annual Meeting.
Who
pays for this proxy solicitation?
We
will pay the expenses of soliciting proxies. In addition to solicitation by mail, proxies may be solicited in person or by telephone
or other means by our directors or associates for no additional compensation. We will reimburse brokerage firms and other nominees,
custodians and fiduciaries for costs incurred by them in mailing these proxy materials to the beneficial owners of Common Stock
held of record by such persons.
Whom
should I call with other questions?
If
you have additional questions about these proxy materials or the Annual Meeting, please contact: GNC Holdings, Inc., 300 Sixth
Avenue, Pittsburgh, Pennsylvania, 15222, Attention: Gavin M. O’Connor Telephone: (412) 288-4600.
ELECTION
OF DIRECTORS
(PROPOSAL 1)
The
Board proposes that each of the seven director nominees described below (the “Nominees”), who currently are members
of our Board, be re-elected for a one-year term expiring at our 2018 Annual Meeting and until the due election and qualification
of his or her successor, or until his or her earlier resignation or removal.
All
of the Nominees have indicated their willingness to serve if elected. If, at the time of the meeting, any Nominee is unable or
unwilling to serve, shares represented by properly executed proxies will be voted at the discretion of the persons named therein
for such other nominee as the Board may designate, or the Board may elect to decrease the size of the Board.
Set
forth below is information concerning each Nominee, and the key experience, qualifications and skills he or she brings to the
Board.
Recommendation
THE
BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR
THE ELECTION OF THE NOMINEES AS DIRECTORS.
The
Nominees
Robert
F. Moran
, 66, became one of our directors in June 2013 and our Interim Chief Executive Officer in July 2016. Mr. Moran
most recently served as Chairman and Chief Executive Officer of PetSmart, Inc., a leading specialty provider of pet products,
services and solutions (“PetSmart”), from February 2009 to June 2013. Prior to being appointed Chairman,
Mr. Moran was PetSmart’s President and Chief Executive Officer from June 2009 to January 2012 and its President
and Chief Operating Officer from December 2001 to June 2009. Before joining PetSmart in 1999, Mr. Moran was president
of Toys “R” Us Canada. Mr. Moran served on the boards of directors of Collective Brands, Inc. from March 2005
to October 2012 and of PetSmart from September 2009 to June 2013. He currently serves on the boards of directors
of Hanesbrands, Inc., for which he chairs the audit committee, and the USA Track & Field Foundation. Mr. Moran’s
more than 40 years of executive leadership experience, both domestically and internationally, and extensive retail experience
and expertise led to the conclusion that he should serve as a director on the Board.
Jeffrey
P. Berger
, 67, became one of our directors in March 2011. Mr. Berger currently is a private investor. From 2008
until April 2013, Mr. Berger served as a consultant to H. J. Heinz Company, a leading producer and marketer of healthy
and convenient foods (“Heinz”). From 2007 to 2008, Mr. Berger was the Chairman of Global Foodservice of Heinz.
From 2005 to 2007, Mr. Berger was the Executive Vice President, President and Chief Executive Officer of Heinz Foodservice.
From 1994 to 2005, Mr. Berger was President and Chief Executive Officer of Heinz North America Foodservice. Mr. Berger
currently serves on the board of directors of Big Lots, Inc., a discount retailer (“Big Lots”), for which he chairs
the nominating/corporate governance committee and serves as a member of the compensation committee. Mr. Berger’s years
of experience as an executive officer at Heinz, in addition to his public company board experience, led to the conclusion that
he should serve as a director on the Board.
Alan
D. Feldman
, 65, became one of our directors in June 2013. Mr. Feldman most recently served as Chairman, President
and Chief Executive Officer of Midas, Inc., a provider of retail automotive services, from May 2006 until its merger with
TBC Corporation in May 2012 and as its President and Chief Executive Officer from January 2003 until May 2006.
From 1994 through 2002, Mr. Feldman held senior management posts at McDonald’s Corporation and, prior to that, with
the Pizza Hut and Frito-Lay units of PepsiCo, Inc. Mr. Feldman also currently serves on the board of directors of Foot Locker,
Inc., for which he chairs the compensation and management resources committee and serves as a member of the executive committee
and the finance and strategic planning committee, and of John Bean Technologies Corporation, for which he chairs the audit committee
and serves as a member of the nominating and governance committee. Mr. Feldman also serves as chair-elect to the University
of Illinois Foundation. Mr. Feldman’s recognized leadership skills and years of broad-based experience in independent,
franchised retail operations, brand management and customer relations led to the conclusion that he should serve as a director
on the Board.
Michael
F. Hines
, 61, became one of our directors in November 2009. He was appointed Chairman of our Board in August 2014,
and prior to that, served as our Lead Independent Director since July 2012. Mr. Hines was the Executive Vice President
and Chief Financial Officer of Dick’s Sporting Goods, Inc., a sporting goods retailer, from 1995 to March 2007. From
1990 to 1995, he held management positions with Staples, Inc., most recently as Vice President, Finance. Earlier, he spent 12
years in public accounting, the last eight years with the accounting firm Deloitte & Touche, LLP in Boston. Mr. Hines
serves on the board of directors of The TJX Companies, Inc., a retailer of apparel and home fashions (“TJX”), and
is the chair of its audit committee and a member of its finance committee. He also serves on the board of directors of Dunkin
Brands Group, Inc., the parent company of Dunkin’ Donuts and Baskin-Robbins, for which he chairs the audit committee and
is a member of the nominating and corporate governance committee. Mr. Hines’s experience as a financial executive and
certified public accountant, coupled with his extensive knowledge of financial reporting rules and regulations, evaluating financial
results and generally overseeing the financial reporting process of large retailers, led to the conclusion that he should serve
as a director on the Board.
Amy
B. Lane
, 64, became one of our directors in June 2011. Ms. Lane was a Managing Director and Group Leader of the
Global Retailing Investment Banking Group at Merrill Lynch & Co., Inc., an investment bank, from 1997 until her retirement
in 2002. Ms. Lane previously served as a Managing Director at Salomon Brothers, Inc., an investment bank, where she founded
and led the retail industry investment banking unit. Ms. Lane serves on the board of directors of TJX, and is the chair of
its finance committee and a member of its audit and executive committees. Additionally, she serves on the board of directors of
Nextera Energy, Inc., an electric utility holding company, and as a member of its finance committee and on the board of directors
of Urban Edge Properties, a REIT spun off from Vornado Realty Trust. Ms. Lane’s experience as the leader of two investment
banking practices covering the global retailing industry has given her substantial experience with financial services, capital
markets, finance and accounting, capital structure, acquisitions and divestitures in the retail industry as well as management,
leadership and strategy, which led to the conclusion that she should serve as a director on the Board.
Philip
E. Mallott
, 59, became one of our directors in July 2012. Mr. Mallott retired as Vice President, Finance and Chief
Financial Officer of Intimate Brands, Inc., a clothing retailer and former subsidiary of Limited Brands, Inc., and is currently
a director of Big Lots, for which he serves as non-executive chair and as the chair of the audit committee. He most recently provided
retail stock research as an independent consultant to Westminster Research Associates LLC and, prior to that, as an analyst for
Coker & Palmer, Inc. Mr. Mallott previously served as a director of Tween Brands, Inc. from 2000 to 2009. Mr. Mallott’s
experience as a certified public accountant, his service on the boards of other public companies and charitable organizations,
and his experience in leadership roles with other retailers led to the conclusion that he should serve as a director on the Board.
Richard
J. Wallace
, 65, became one of our directors in July 2010. Mr. Wallace served as a Senior Vice President for Research
and Development at GlaxoSmithKline, a global pharmaceutical company (“GSK”), from 2004 until his retirement in 2008.
Prior to that, he served in various executive capacities for GSK and its predecessor companies and their subsidiaries from 1992
to 2004. Mr. Wallace is also a director of ImmunoGen, Inc., for which he serves as a member of the audit and nominating and
governance committees, and served as a director of Clinical Data Inc. from September 2007 to April 2011. Mr. Wallace’s
years of experience at several large pharmaceutical and consumer products companies and his significant corporate governance experience
through his service on the boards of directors of other companies led to the conclusion that he should serve as a director on
the Board.
The
affirmative vote of the holders of a majority of the votes cast by our stockholders in person or represented by proxy and entitled
to vote at the Annual Meeting is required to approve this Proposal 1.
OTHER
BOARD INFORMATION
Board
Composition
The
Board is currently composed of Robert F. Moran, Jeffrey P. Berger, Alan D. Feldman, Michael F. Hines, Amy B. Lane, Philip E. Mallott,
and Richard J. Wallace.
The
Board has adopted Corporate Governance Guidelines, which are available on the Corporate Governance page of the Investor Relations
section of our website located at www.gnc.com and will be provided to any stockholder free of charge upon request. The Corporate
Governance Guidelines provide that in the event the Chairperson of the Board is not an independent director, the Lead Independent
Director of the Board is to serve as the chairperson of any meetings of the Board in executive session. Mr. Hines, an independent
director, currently serves as Chairman of the Board.
Board
Meetings in 2016
The
Board held ten meetings during our fiscal year ended December 31, 2016.
Director
Attendance
During
our fiscal year ended December 31, 2016, each of our seven incumbent directors attended at least 75% of the total number
of meetings of the Board and committees on which he or she served. We encourage, but do not require, our directors to attend our
annual meetings of stockholders. All of our current directors who were serving on the Board at the time of our 2016 Annual Meeting
attended the meeting.
Director
Independence
Our
Common Stock is listed for trading on the NYSE under the symbol “GNC”. The Board, upon the findings of the Nominating
Committee, has determined that each of Ms. Lane and Messrs. Berger, Feldman, Hines, Mallott, and Wallace is “independent”
within the meaning of Rule 303A.02 of the NYSE Listed Company Manual, and no family relationships exist among such Nominees and
any of our executive officers. Additionally, the Nominating Committee had determined that C. Scott O’Hara, our former director
who served beginning in February 2013 through the 2016 annual meeting of stockholders, was “independent” within
the meaning of Rule 303A.02 of the NYSE Listed Company Manual, and no family relationship existed between Mr. O’Hara
and any of our executive officers during his tenure on the Board.
Leadership
Structure
The
Board has adopted guidelines that provide the Board with the discretion and flexibility to decide if the roles of the Chief Executive
Officer and Chairperson of the Board are to be separate or combined. Currently, the roles are separate, with Mr. Moran serving
as Interim Chief Executive Officer and Mr. Hines, an independent director, serving as Chairman of the Board. The Board has
determined that this is currently the appropriate leadership structure due to the fact that the separation of these positions
allows for better independence and accountability.
Risk
Oversight
The
Board plays an active role in overseeing management of our risks. The Board regularly reviews information regarding our credit,
liquidity and operations, as well as the risks associated with each. The Audit Committee and Finance Committee each have responsibilities
related to the oversight of management of financial risks. The Compensation and Organizational Development Committee of the Board
(the “Compensation Committee”) is responsible for overseeing the management of risks relating to our executive compensation
policies and arrangements. The Nominating and Corporate Governance Committee of the Board (the “Nominating Committee”)
is responsible for managing risks relating to our director compensation policies and arrangements, the independence of the Board
and other corporate governance matters. While each of the Committees is responsible for evaluating certain risks and overseeing
the management of such risks, the Board as a whole is regularly informed of the conclusions of such evaluations through reports
of the Committees. The risk oversight function does not impact the structure of the Board.
Board
Committees
Each
of the following Committees is a standing committee of the Board. The Board has adopted written charters for the Audit Committee,
the Compensation Committee, the Finance Committee and the Nominating Committee, each of which is available on the Corporate Governance
page of the Investor Relations section of our website located at www.gnc.com and will be provided to any stockholder free of charge
upon request. Further, each member of the Audit Committee, Compensation Committee, Finance Committee and Nominating Committee
has been determined by the Board to be independent under the NYSE’s current listed company standards.
Audit
Committee
The
Audit Committee, which is established in accordance with Section 3(a)(58)(A) of the Exchange Act, held eight meetings during our
fiscal year ended December 31, 2016 and currently consists of Jeffrey P. Berger, Michael F. Hines, and Philip E. Mallott,
who acts as its chair. The Board has determined that each of Messrs. Berger, Hines and Mallott qualifies as an “audit
committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K and has the attributes set forth in such
section.
The
principal duties and responsibilities of the Audit Committee are to:
|
|
●
|
approve,
review, and monitor our financial reporting process and internal control system;
|
|
|
●
|
appoint
and replace our independent registered public accounting firm from time to time, determine
its compensation and other terms of engagement and oversee its work;
|
|
|
●
|
oversee
our audit and financial statements and related disclosures;
|
|
|
●
|
oversee
the performance of our internal audit function; and
|
|
|
●
|
oversee
our compliance with legal, ethical and regulatory matters.
|
The
Audit Committee has the power to investigate any matter brought to its attention within the scope of its duties. It also has the
authority to retain counsel and advisors to fulfill its responsibilities and duties.
Compensation
and Organizational Development Committee
The
Compensation Committee, which held seven meetings during our fiscal year ended December 31, 2016, currently consists of Amy
B. Lane, Philip E. Mallott, and Richard J. Wallace, who acts as its chair.
The
principal duties and responsibilities of the Compensation Committee are to:
|
|
●
|
oversee
the development and implementation of our executive compensation policies and objectives;
|
|
|
●
|
determine
the structure of our executive compensation packages generally;
|
|
|
●
|
determine
the annual compensation paid to each of our senior executives;
|
|
|
●
|
evaluate
the performance of our Chief Executive Officer and non-CEO executives;
|
|
|
●
|
determine
stock ownership guidelines for the Company’s directors and executives and monitor
compliance with those guidelines;
|
|
|
●
|
review
potential risk to the Company from its compensation policies and program, including incentive
compensation plans;
|
|
|
●
|
review
and recommend to the Board for approval the frequency with which the Company will conduct
stockholder advisory votes on executive compensation, taking into account the results
of the most recent stockholder advisory vote;
|
|
|
●
|
work
with the Company’s Chief Executive Officer to develop succession plans for the
Company and development initiatives for our senior executives; and
|
|
|
●
|
review
and evaluate the implementation and effectiveness of such succession plans and development
initiatives.
|
Compensation
Committee Interlocks and Insider Participation
. For our fiscal year ended December 31, 2016, (i) no member of the Compensation
Committee (a) served as one of our officers or employees during or preceding their tenure on the Compensation Committee or (b)
had any relationship requiring disclosure under Item 404 of Regulation S-K, and (ii) none of our executive officers served as
a director or member of the compensation committee of another entity whose executive officers served on the Board or the Compensation
Committee. During our fiscal year ended December 31, 2016, our Compensation Committee included Amy B. Lane, Philip E. Mallott,
Richard J. Wallace and, prior to his appointment as Interim Chief Executive Officer, Robert F. Moran.
Finance
Committee
The
Finance Committee, which held four meetings during our fiscal year ended December 31, 2016, currently consists of Alan D.
Feldman, Michael F. Hines and Amy B. Lane, who acts as its chair. Mr. Moran served on the Finance Committee prior to his
appointment as Interim Chief Executive Officer.
The
principal duties and responsibilities of the Finance Committee are to:
|
|
●
|
review
and make recommendations to the Board with respect to the Company’s financial condition
and long-range financial plans and strategies, including as they relate to the management
of financial risk;
|
|
|
●
|
review
and make recommendations to the Board with respect to the Company’s capital structure
and the principal terms and conditions of significant proposed borrowings and issuances
of debt or equity securities by the Company and its subsidiaries;
|
|
|
●
|
review
and make recommendations to the Board with regard to the Company’s proposed dividend
policies and the repurchase or redemption of Company securities;
|
|
|
●
|
review
and oversee the Company’s investment and cash management policies;
|
|
|
●
|
review
and oversee the Company’s foreign currency exchange and other hedging policies;
|
|
|
●
|
review
and make recommendations to the Board with respect to capital investment criteria, capital
expenditures and annual lease commitments for the Company;
|
|
|
●
|
review
and make recommendations to the Board with respect to the Company’s insurance and
self-insurance programs (including directors’ and officers’ liability policies);
|
|
|
●
|
review
and make recommendations to the Board with respect to the Company’s defense profile,
strategies and plans for significant mergers, acquisitions, divestitures, joint ventures
and other investments and strategic plans; and
|
|
|
●
|
review
the Company’s stock ownership profile and the performance of the Company’s
Common Stock.
|
Nominating
and Corporate Governance Committee
The
Nominating Committee, which held four meetings during our fiscal year ended December 31, 2016, currently consists of Jeffrey
P. Berger, Richard J. Wallace and, Alan D. Feldman, who acts as its chair.
The
principal duties and responsibilities of the Nominating Committee are as follows:
|
|
●
|
to
establish criteria for board and committee membership and recommend to the Board proposed
nominees for election to the Board and for membership on committees of the Board;
|
|
|
●
|
oversee
the evaluation of the Board and its committees;
|
|
|
●
|
to
make recommendations to the Board regarding board governance matters and practices; and
|
|
|
●
|
to
determine the structure and oversee the development and implementation of the Company’s
compensation policies, objectives and administrative practices and all other matters
relating to the compensation of the Company’s non-employee directors.
|
Director
Qualifications; Nominating Committee Process
. The Nominating Committee’s policy is to identify potential director nominees
from any properly submitted nominations, including any properly submitted nominations from our stockholders, and subsequently
evaluate each potential nominee. Stockholders may nominate director candidates for consideration by the Nominating Committee as
set forth below.
In
accordance with the Company’s amended and restated by-laws, to be timely for consideration by the Nominating Committee,
notice of a proposed nomination must be delivered to or mailed and received at the Company’s principal executive offices
not earlier than the opening of business on the 120
th
day nor later than the close of business on the 90
th
day prior to the one year anniversary of the date of the preceding year’s annual meeting of its stockholders; provided,
however, that if the date of the annual meeting is more than 30 days prior to or delayed by more than 70 days after the anniversary
of the preceding year’s annual meeting, the nomination must be received not earlier than the opening of business on the
120
th
day prior to the date of such annual meeting nor later than the later of the close of business on the (i) 90
th
day prior to the date of such annual meeting or (ii) 10
th
day following the day on which public announcement
of such meeting date is first made.
In
addition to information regarding the nominating stockholder as set forth in the Company’s amended and restated by-laws,
in accordance with the Company’s corporate governance guidelines, such stockholder’s notice must set forth as to each
individual whom the stockholder proposes to nominate for election or reelection as a director:
|
|
●
|
the
name, age, business address and residence address of such individual;
|
|
|
●
|
the
class, series and number of any shares of stock of the Company that are beneficially
owned by such individual;
|
|
|
●
|
the
date such shares were acquired and the investment intent of such acquisition;
|
|
|
●
|
whether
such stockholder believes any such individual is, or is not, “independent”
as set forth in the requirements established by the NYSE or any other exchange or automated
quotation service on which the Company’s securities are listed, and information
regarding such individual that is sufficient, in the discretion of the Board or any committee
thereof or any authorized officer of the Company, to make either such determination;
and
|
|
|
●
|
all
other information relating to such individual that is required to be disclosed in solicitations
of proxies for election of directors in an election contest (even if an election contest
is not involved), or is otherwise required, in each case pursuant to Regulation 14A (or
any successor provision) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and the rules and regulations promulgated thereunder.
|
Any
such submission must be accompanied by the written consent of the individual whom the stockholder proposes to nominate to being
named in the proxy statement as a nominee and to serving as a director if elected.
The
Nominating Committee may, but is not required to, consider nominations not properly submitted in accordance with the Company’s
Corporate Governance Guidelines, and the Committee may request further information and documentation from any proposed nominee
or from any stockholder proposing a nominee. All nominees properly submitted to the Company (or which the Nominating Committee
otherwise elects to consider) will be evaluated and considered by members of the Nominating Committee using the same criteria
as nominees identified by the Nominating Committee itself.
In
evaluating the suitability of individual candidates (both new candidates and current Board members), in recommending candidates
for election, and in approving (and, in the case of vacancies, appointing) such candidates, the Nominating Committee considers,
in addition to such other factors as it shall deem relevant, the desirability of selecting directors who:
|
|
●
|
are
of high character and possess fundamental qualities of intelligence, honesty, good judgment,
integrity, fairness and responsibility;
|
|
|
●
|
have
the ability to make independent analytical inquiries and possess a general understanding
of marketing, finance, and other elements relevant to the success of a publicly traded
company;
|
|
|
●
|
are
accomplished in their respective fields, with superior credentials and recognition;
|
|
|
●
|
understand
our business on a technical level and have relevant expertise and experience upon which
to be able to offer advice and guidance to management;
|
|
|
●
|
have
sufficient time available to devote to the affairs of our Company;
|
|
|
●
|
are
able to work with the other members of the Board and contribute to our success;
|
|
|
●
|
can
represent the long-term interests of our stockholders as a whole; and
|
|
|
●
|
are
selected such that the Board represents a range of backgrounds and experience.
|
In
addition to the considerations set forth above, the Nominating Committee considers a candidate’s background and accomplishments
and candidates are reviewed in the context of the current composition of the Board and the evolving needs of our businesses. The
Nominating Committee conducts the appropriate and necessary inquiries (as determined by the Nominating Committee) with respect
to the backgrounds and qualifications of any potential nominees, without regard to whether a potential nominee has been recommended
by our stockholders, and, upon consideration of all relevant factors and circumstances, recommends to the Board for its approval
the slate of director nominees to be nominated for election at our annual meeting of stockholders. The Nominating Committee considers
potential nominees without regard to race, color, creed, religion, national origin, age, gender, sexual orientation or disability.
The Nominating Committee has not adopted a formal policy with respect to diversity.
Director
Compensation
The
following table presents information regarding the compensation of our non-employee directors with respect to our fiscal year
ended December 31, 2016 and should be read in conjunction with “Narrative to the Director Compensation Table”
below. No director who is or was at any time during 2016 an employee of the Company receives or has ever received any compensation
for serving on the Board during his or her time of employment. Compensation received by Mr. Moran, in his role as an employee
of the Company is discussed under “Compensation Discussion and Analysis” and “Named Executive Officer Compensation”
below. Mr. Moran is the only member of our Board who is also an employee of the Company.
|
|
|
Fees Earned or Paid in Cash
|
|
|
Stock Awards
|
|
|
All Other Compensation
|
|
|
Total
|
|
|
Name
|
|
($)
|
|
|
($) (1) (2)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey Berger
|
|
|
108,750
|
(3)
|
|
|
110,000
|
|
|
|
—
|
|
|
|
218,750
|
|
|
Alan Feldman
|
|
|
106,250
|
(4)
|
|
|
110,000
|
|
|
|
—
|
|
|
|
216,250
|
|
|
Michael Hines
|
|
|
195,000
|
(5)
|
|
|
110,000
|
(6)
|
|
|
—
|
|
|
|
305,000
|
|
|
Amy Lane
|
|
|
112,500
|
(7)
|
|
|
110,000
|
(6)
|
|
|
—
|
|
|
|
222,500
|
|
|
Philip Mallott
|
|
|
120,000
|
(8)
|
|
|
110,000
|
|
|
|
—
|
|
|
|
230,000
|
|
|
Robert Moran (9)
|
|
|
50,000
|
(10)
|
|
|
110,000
|
(6)
|
|
|
—
|
|
|
|
160,000
|
|
|
Scott O’Hara (11)
|
|
|
51,250
|
(12)
|
|
|
—
|
|
|
|
—
|
|
|
|
51,250
|
|
|
Richard Wallace
|
|
|
115,000
|
(13)
|
|
|
110,000
|
|
|
|
—
|
|
|
|
225,000
|
|
|
|
(1)
|
Reflects
the approximate aggregate grant date fair value of the 2016 annual restricted stock awards
(or restricted stock unit ( “RSU”) awards, as the case may be for directors
electing to defer receipt under the Non-Qualified Deferred Compensation Plan that we
maintain for our non-employee directors) granted to each of the directors computed in
accordance with FASB ASC Topic 718. For the assumptions underlying the calculation of
the aggregate grant date fair value, see Note 15, “Stock-Based Compensation Plans,”
to our audited consolidated financial statements included in the Annual Report. The 2016
annual awards were granted on May 23, 2016, had an approximate aggregate grant date
fair value of $110,000 for each director and will vest on the first anniversary of the
grant date, provided the director has remained in service until the vesting date.
|
|
|
(2)
|
The
table below sets forth the number of stock awards and the exercisable and unexercisable
stock options held by the listed directors as of December 31, 2016.
|
|
|
|
|
|
|
|
|
Option Awards Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Stock
Awards Outstanding
|
|
|
|
Exercisable
|
|
|
|
Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey Berger
|
|
|
4,448
|
|
|
|
14,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan Feldman
|
|
|
4,448
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Hines
|
|
|
4,448
|
|
|
|
36,920
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amy Lane
|
|
|
4,448
|
|
|
|
30,500
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip Mallott
|
|
|
4,448
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Moran
|
|
|
4,448
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott O’Hara (12)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard Wallace
|
|
|
4,448
|
|
|
|
35,000
|
|
|
|
—
|
|
|
|
(3)
|
Reflects
aggregate annual retainers paid to Mr. Berger, including $80,000 for his service
as a director, $10,000 for his service as a member of the Nominating Committee; $6,250
for his service as the Chairperson of the Nominating Committee until the May 23,
2016 meeting and $12,500 for his service as a member of the Audit Committee.
|
|
|
(4)
|
Reflects
aggregate annual retainers paid to Mr. Feldman, including $80,000 for his service
as a director, $10,000 for his service as a member of the Nominating Committee, $6,250
for his service as Chairperson of the Nominating Committee since the May 23, 2016
meeting and $10,000 for his service as a member of the Finance Committee.
|
|
|
(5)
|
Reflects
aggregate annual retainers paid to Mr. Hines, including $80,000 for his service
as a director, $12,500 for his service as a member of the Audit Committee, $2,500 for
his service as a member of the Finance Committee and $100,000 for his service as Chairman
of the Board.
|
|
|
(6)
|
Messrs. Hines
and Moran and Ms. Lane each deferred 100% of their 2016 equity award until his or
her separation from service.
|
|
|
(7)
|
Reflects
aggregate annual retainers paid to Ms. Lane, including $80,000 for her service as
a director, $10,000 for her service as a member of the Compensation Committee, $12,500
for her service as Chairperson of the Finance Committee and $10,000 for her service as
a member of the Finance Committee.
|
|
|
(8)
|
Reflects
aggregate annual retainers paid to Mr. Mallott, including $80,000 for his service
as a director, $12,500 for his service as a member of the Audit Committee, $17,500 for
his service as Chairperson of the Audit Committee and $10,000 for his service as a member
of the Compensation Committee.
|
|
|
(9)
|
Reflects
amounts received by Mr. Moran in his role as a director prior to his appointment
as the Interim Chief Executive Officer of the Company. Mr. Moran did not receive
any compensation in his role as a director for the period following his appointment as
the Interim Chief Executive Officer of the Company. The amounts received by Mr. Moran
in his role as Interim Chief Executive Officer are set forth in the Compensation Discussion
and Analysis Section of this proxy statement and the tables that follow.
|
|
|
(10)
|
Reflects
aggregate annual retainers earned by Mr. Moran, including $40,000 for his service
as a director, $5,000 for his service on the Compensation Committee and $5,000 for his
service as a member of the Finance Committee. Of these fees earned, Mr. Moran elected
to defer receipt of 50% of such amounts pursuant to the Non-Qualified Deferred Compensation
Plan that we maintain for our non-employee directors.
|
|
|
(11)
|
Mr. O’Hara
ceased to be a member of the Board after the 2016 annual meeting of stockholders.
|
|
|
(12)
|
Reflects
aggregate annual retainers paid to Mr. O’Hara, including $40,000 for his service
as a director, $6,250 for his service as a member of the Audit Committee and $5,000 for
his service as a member of the Nominating Committee.
|
|
|
(13)
|
Reflects
aggregate annual retainers paid to Mr. Wallace including $80,000 for his service
as a director, $15,000 for his service as Chairperson of the Compensation Committee,
$10,000 for his service as a member of the Compensation Committee and $10,000 for his
service as a member of the Nominating Committee.
|
Narrative
to the Director Compensation Table.
In July 2013, based in part on recommendations of Hay Group, a predecessor of Korn
Ferry Hay Group, we adopted a director compensation policy (the “Director Compensation Policy”) pursuant to which
each non-employee director is entitled to receive an annual cash retainer for his or her service as a member of our Board, as
well as additional cash retainers for his or her service as a member or Chairperson of one of the various Committees of the Board
and an annual equity award. The Board believes that payments of retainer fees provide an appropriate balance of incentives for
active participation and ease of administration, while the grant of annual equity awards align the long-term financial interests
of our directors and our stockholders. Specifically, each of our directors currently is entitled to (i) an annual cash retainer
for his or her Board service of $80,000, (ii) an incremental annual cash retainer of $17,500, $15,000, $12,500 or $12,500 for
service as Chairperson of the Audit Committee, Compensation Committee, Finance Committee or Nominating Committee, respectively,
(iii) an incremental annual cash retainer of $12,500 to the extent he or she otherwise serves as a member of the Audit Committee,
or $10,000 to the extent he or she otherwise serves as a member of the Compensation Committee, Finance Committee and/or Nominating
Committee, and (iv) $110,000 in annual equity awards. For information regarding Compensation Committee Interlocks and Insider
Participation, see Other Board Information above. In addition to compensation paid for general membership on the Board and its
various committees, the Chairman of the Board is entitled to receive an annual, incremental cash retainer of $100,000.
The
annual cash retainers paid to our non-employee directors under the Director Compensation Policy are generally paid in four equal
quarterly installments every March, June, September and December.
We
also maintain a deferred compensation plan under which our non-employee directors may elect to defer all or a portion of their
cash fees or restricted stock retainers until the earliest of separation from the Board, death, a specified future date or a change
in control of the Company. Annual stock retainers are deferred in the form of RSUs with identical vesting schedules to the shares
of restricted stock.
Director
Stock Ownership Guidelines
. We believe that, to align the interests of our non-employee directors with our stockholders, our
directors should hold a financial stake in the Company. The Board adopted a policy in December 2011 requiring each of our
non-employee directors to own stock in the Company equal to a minimum of five times such director’s annual cash retainer
for service on the Board (the “Director Stock Ownership Guidelines”). Our newly elected directors have five years
from the date of their election to comply with the Director Stock Ownership Guidelines, and should retain at least 50% of all
after-tax shares owned by or underlying equity awards granted to them (other than those granted on or prior to December 11,
2012) until the ownership thresholds are met. The Nominating Committee will evaluate whether exceptions should be made for any
director on whom this requirement would impose a financial hardship or for other appropriate reasons as determined by the Nominating
Committee. For the purposes of the Director Stock Ownership Guidelines, stock includes (i) directly held shares of our Common
Stock, (ii) shares of unvested restricted stock and unvested RSUs (other than unvested shares of performance-vested restricted
stock or unvested performance-vested restricted stock units) and (iii) vested shares of Common Stock allocated to the account
of a non-employee director who was formerly an employee of the Company under any plan qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended.
Code
of Ethics
We
have adopted a Code of Ethics applicable to our Chief Executive Officer and senior financial officers and a Code of Business Conduct
and Ethics that is applicable to all employees. Each document is available on the Corporate Governance page of the Investor Relations
section of our website located at www.gnc.com and will be provided to any stockholder free of charge upon request. Any amendments
to or waivers from our Code of Ethics with respect to our Chief Executive Officer and senior financial officers will also be disclosed
on our website. Employees generally receive annual training with respect to the expectations specified in the Code of Business
Conduct and Ethics, and acknowledge that they understand their responsibilities and will comply with all aspects of the Code of
Business Conduct and Ethics.
Certain
Relationships and Related Party Transactions
We
recognize that transactions between the Company and related persons present a potential for actual or perceived conflicts of interest.
Our general policies with respect to such transactions are included in our Code of Business Conduct and Ethics. All employees
are required to follow the Code of Business Conduct and Ethics, and the Audit Committee of the Board, along with Corporate Compliance
staff led by our Chief Legal Officer, oversee our Code of Business Conduct and Ethics, which provides that any actual or potential
conflict of interest is to be disclosed.
Although
we have not adopted formal procedures for the review, approval or ratification of transactions with related persons, the Board
reviews potential transactions with those parties we have identified as related parties prior to the consummation of the transaction,
and we adhere to the general policy that such transactions should only be entered into if they are approved by the Board, in accordance
with applicable law, and on terms that, on the whole, are no more or less favorable than those available from unaffiliated third
parties.
In
2016, we did not participate in any transactions involving an amount in excess of $120,000 in which any related person (as defined
in Instruction 1 to Item 404(a) of Regulation S-K) has or will have a direct or indirect material interest.
Communications
from Stockholders and Other Interested Parties
The
Board welcomes communications from our stockholders and other interested parties. Stockholders and other interested parties wishing
to communicate with the Board, our non-management directors or any particular director may send such communications to the following
address: GNC Holdings, Inc., 300 Sixth Avenue, Pittsburgh, Pennsylvania, 15222, Attention: Secretary. Such communications should
indicate clearly the director or directors to whom the communication is being sent so that each communication may be forwarded
directly to the appropriate director(s).
EXECUTIVE
OFFICERS
Set
forth below is information concerning our current executive officers.
|
Name
|
Age
|
Position
|
|
Robert
F. Moran
|
66
|
Interim
Chief Executive Officer
|
|
Tricia
K. Tolivar
|
48
|
Executive
Vice President and Chief Financial Officer
|
|
Jeffrey
R. Hennion
|
50
|
Executive
Vice President, Chief Marketing and e-Commerce Officer
|
|
Timothy
A. Mantel
|
46
|
Executive
Vice President and Chief Merchandising Officer
|
|
Guru
Ramanathan
|
54
|
Senior
Vice President and Chief Innovation Officer
|
|
Joseph
C. Gorman
|
46
|
Executive
Vice President, Operations
|
The
biography for Mr. Moran is set forth above under “Election of Directors (Proposal 1).”
Tricia
K. Tolivar
became our Executive Vice President and Chief Financial Officer in March 2015, having previously served in
leadership positions with Ernst & Young, LLP from October 2007 to February 2015, including most recently as Americas
Director of Finance, Advisory, with responsibility for the leadership of finance, accounting and operations of a $3 billion client
service organization in North and South America. Ms. Tolivar previously served as Chief Financial Officer of the Greater
Memphis Arts Council from January 2006 to December 2008 and in a series of executive leadership positions with AutoZone,
Inc. from 1996 to 2005. She is a graduate of Emory University.
Jeffrey
R. Hennion
became our Executive Vice President, Chief Marketing and e-Commerce Officer in September 2014, having previously
served as our Executive Vice President and Chief Marketing Officer from July 2011 to October 2012 and as our Executive
Vice President and Chief Branding Officer from January 2011 to July 2011. Mr. Hennion was the President and Chief
Financial Officer of Branding Brand, a privately-held provider of mobile commerce strategies to retailers, from October 2012
to September 2014 and previously spent 10 years at Dick’s Sporting Goods, a sporting goods retailer, including as Executive
Vice President and Chief Marketing Officer from January 2005 to September 2010 and as Senior Vice President –
Strategic Planning from 2004 to 2005. From 2002 to 2004, Mr. Hennion was Vice President – Finance at Dick’s Sporting
Goods, during the time of the company’s initial public offering, and from 2000 to 2002, he was Vice President and Treasurer.
Prior to his tenure at Dick’s Sporting Goods, Mr. Hennion spent 11 years in a variety of finance roles at Alcoa Inc.
Mr. Hennion has a BA in Economics from Northwestern University and an MBA in Finance, graduating with highest honors, from
Duquesne University. He currently serves as a director of Briggs & Stratton Corporation, where he is a member of the compensation
committee and the nominating and governance committee.
Timothy
Mantel
became our Executive Vice President and Chief Merchandising Officer in February 2016, following a 21-year career
with Target Corporation (“Target”), having most recently served as Senior Vice President, Household Essentials and
Food for Target from May 2014 to January 2015. Prior to that, he served as President of Target’s Sourcing Services
from 2010 to May 2014 and in a series of other executive positions at Target from 2007 to 2014. Mr. Mantel is a graduate
of the University of Wisconsin, Madison.
Guru
Ramanathan
,
Ph.D.
, joined our Company in 1998 and became our Senior Vice President and Chief Innovation Officer
in December 2009 having previously served as Senior Vice President of Product and Package Innovation since
February 2008 and Senior Vice President of Scientific Affairs since April 2007. He served as Vice President of
Scientific Affairs from December 2003 to April 2007. Prior to joining the Company, Dr. Ramanathan worked as
Medical Director and Secretary for the Efamol subsidiary of Scotia Pharmaceuticals in Boston and, in his capacity as a
pediatric dentist and dental surgeon, held various industry consulting and management roles, as well as clinical, research
and teaching appointments in Madras, India, and Tufts University and New England Medical Center in Boston, Massachusetts.
Dr. Ramanathan earned his Ph.D. in Innovation Management from Tufts University and his MBA from Duke University’s
Fuqua School of Business.
Joseph
C. Gorman
was appointed, effective as of March 7, 2017, as Executive Vice President, Operations. Prior to his appointment,
Mr. Gorman served as Senior Vice President, Store Operations from January to March, 2017 and Vice President, Western
Division, from December, 2015 to January, 2017. Prior to joining the Company in 2015, Mr. Gorman was President of Anomaly
Republic, a clothing retailer headquartered in Southern California from 2014 to 2015. Prior to that, Mr. Gorman spent approximately
six years at GameStop, an omni-channel video game and electronics retailer, where he held various field leadership positions from
2009 to 2014, and approximately 16 years before that at The Home Depot, a home improvement retailer, where he held various operational
roles in the field and headquarters.
ADVISORY
VOTE ON EXECUTIVE COMPENSATION
(PROPOSAL 2)
In
accordance with Section 14A of the Exchange Act, we are providing our stockholders the opportunity to cast a non-binding advisory
vote to approve the compensation of our Named Executive Officers as described in the Compensation Discussion and Analysis section
of this proxy statement, the compensation tables that follow and narrative discussions set forth in these proxy materials. This
proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views
on the compensation of our Named Executive Officers. Our Board recommended, and the stockholders approved at our 2012 annual meeting
of stockholders, that such advisory vote would be conducted on an annual basis.
As
described in the “Compensation Discussion and Analysis” section of this proxy statement, the primary objectives of
our executive compensation program are to (i) align cash and stock-based rewards with individual performance that creates stockholder
value, (ii) attract and retain high quality employees, (iii) build an ownership mentality among our key employees and (iv)
provide cost effective cash and stock-based rewards that are competitive with other organizations and fair to our stockholders
and employees. The foregoing objectives are applicable to the compensation of our Named Executive Officers.
We
believe that our executive compensation program achieves these objectives by emphasizing long-term stock-based incentive awards
and performance-based compensation, is appropriate in light of our overall compensation philosophy and objectives, and will play
an essential role in our future success.
Therefore,
the Board recommends a vote in favor of the following resolution:
“RESOLVED,
that the compensation paid to the Company’s Named Executive Officers for fiscal year ended December 31, 2016, as disclosed
pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative
discussion, is hereby APPROVED.”
As
an advisory vote, this proposal is not binding upon us. Notwithstanding the advisory nature of this vote, the Compensation Committee
values the opinions expressed by stockholders in their vote on this proposal, and will consider the outcome of the vote when making
future compensation decisions for our Named Executive Officers. Currently, we expect to hold an advisory vote on the compensation
paid to the Company’s Named Executive Officers each year and expect that the next such vote will occur at our 2018 Annual
Meeting.
The
affirmative vote of the holders of a majority of the votes cast by our stockholders in person or represented by proxy and entitled
to vote is required to approve this Proposal 2.
Recommendation
THE
BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE NAMED EXECUTIVE
OFFICERS FOR THE COMPANY’S FISCAL YEAR ENDED DECEMBER 31, 2016, AS DISCLOSED IN THESE PROXY MATERIALS.
COMPENSATION
DISCUSSION AND ANALYSIS
This
section discusses the material elements of compensation awarded to, earned by or paid to our principal executive officer, our
principal financial officer, our three other most highly compensated executive officers who were serving as such on December 31,
2016 and our former principal executive officer, who served as such for a portion of 2016. These individuals are referred to collectively
as the “Named Executive Officers.”
For
2016, the Named Executive Officers were:
|
Name
|
Title
|
|
|
|
|
Robert
F. Moran
|
Interim
Chief Executive Officer
|
|
|
|
|
Tricia
K. Tolivar
|
Chief
Financial Officer
|
|
|
|
|
Michael
D. Dzura
|
Former
Executive Vice President, Operations
|
|
|
|
|
Jeffrey
R. Hennion
|
Executive
Vice President, Chief Marketing and e-Commerce Officer
|
|
|
|
|
Guru
Ramanathan
|
Senior
Vice President and Chief Innovation Officer
|
|
|
|
|
Michael
G. Archbold
|
Former
Chief Executive Officer
|
The
Company had a change in its Named Executive Officers from 2015 to 2016. Mr. Archbold, former Chief Executive Officer, separated
from employment with the Company on July 27, 2016. We have included information concerning Mr. Archbold in the Summary
Compensation Table and other related tables in accordance with SEC rules and regulations, and we discuss matters relating to his
compensation in this Compensation Discussion and Analysis where relevant. Mr. Dzura, former Executive Vice President, Operations,
separated from employment with the Company as of March 7, 2017. For purposes of this Compensation Discussion and Analysis
and the shareholder advisory vote relating to 2016 compensation of our Named Executive Officers, Mr. Archbold and Mr. Dzura,
together with the other officers named in the table above, are our Named Executive Officers.
Executive
Summary
While
our business remains profitable, we continued to face ongoing and significant challenges to our strategy and our business during
2016. We have been experiencing varying degrees of declining traffic trends leading to lower same store sales in our retail stores.
After extensive consumer research and market/competitive analysis we determined that our business model needed to be reimagined.
Listening to the customer and addressing their key issues with our business led to the development and launch of the One New GNC
in December 2016. There are areas within our business where we were no longer competitive when compared to other retailers
or retail channels and we are addressing those, which include product innovation and loyalty. We also learned that our customers
were looking for more simplified prices and a more differentiated in-store experience.
Historically,
our executive compensation program has been structured to generate and reward superior company performance by establishing compensation
packages under which variable, or incentive, compensation is weighted more heavily than base salary. We have established compensation
programs to motivate our executives to focus on both our short- and long-term performance by providing a mix of short- and long-term
incentive compensation in the form of annual cash incentive compensation and long-term equity-based incentive compensation. We
believe that this approach, which allocates more compensation toward non-cash equity compensation, aligns the incentives of our
executives with the interests of our stockholders.
Long-term
Incentive Compensation
. We maintain a long-term incentive program that principally utilizes “full-value” awards,
such as restricted stock, restricted stock units (“RSUs”) and performance-vested restricted stock units (“PSUs”),
in combination with stock options. We believe that our long-term incentive program cultivates an ownership mentality among our
executives that serves to focus management on achieving our strategic and financial objectives, thereby more closely aligning
the interests of our executives with the long-term interests of our stockholders. In February 2016, our executives, including
our Named Executive Officers serving in that capacity at the time, received long-term incentive grants for 2016 that were comprised
entirely of stock options (30%), RSUs (30%) and PSUs (40%). For more information, see “ – Elements of Compensation
– Long-Term Incentive Compensation” below.
Annual
Cash Incentive Compensation
. For 2016, we approved an annual cash incentive compensation program for our executives based
upon two performance metrics: earnings per share (“EPS”) (weighted 60%) and retail and web sales comparables (weighted
40%). We believed that these criteria would incentivize our executives to focus on multiple performance drivers throughout our
business. The Company’s performance for 2016 resulted in no payment of bonuses under the plan to our Named Executive Officers.
For more information, see “ – Elements of Compensation – Annual Cash Incentive Compensation” below.
Other
2016 Compensation Highlights
|
|
●
|
At
our 2016 annual meeting, our stockholders approved, on a non-binding, advisory basis,
the “say-on-pay” proposal with respect to our 2015 executive compensation
program by more than 98% of the shares voted. We considered the results of this vote
and, in light of this overwhelming stockholder support, we did not make any specific
changes to our 2016 executive compensation program based on the outcome of the say-on-pay
vote.
|
|
|
●
|
In
February 2017, the Compensation Committee reviewed our executive compensation program
with management from a risk perspective and determined that there are no risks created
by our compensation policies and practices that are reasonably likely to have a material
adverse effect on the Company. In reaching this conclusion, the Compensation Committee
considered various factors, including the balance between annual and long-term compensation
and between fixed and variable compensation, the use of multiple types of long-term incentive
awards, the use of multiple performance criteria (including both short- and long-term
criteria) for payment of incentive compensation, the use of performance measures that
are intended to increase stockholder value if goals are achieved, and various compensation
policies and practices that mitigate excessive risk (including substantial stock ownership
requirements for key executives, the clawback feature of the Company’s equity awards,
the Compensation Committee’s negative discretion to reduce the amount of incentive
awards, and the prohibition on hedging or pledging of Company stock by executives).
|
Compensation
Policies and Objectives
The
primary objectives of our executive compensation program are to:
|
|
●
|
align
cash and stock-based awards with individual and corporate performance that creates stockholder
value;
|
|
|
●
|
attract
and retain high quality employees;
|
|
|
●
|
build
an ownership mentality among our key employees; and
|
|
|
●
|
provide
cost effective cash and stock-based rewards that are competitive with other organizations
and fair to our stockholders and employees.
|
To
facilitate these objectives, the Company provides base salary and related benefit plans, annual cash incentive compensation and
long-term incentive compensation. These objectives apply to the compensation of the Named Executive Officers and to the elements
of their respective executive compensation packages as follows:
Base
Salary
. The objective in determining base salaries for the Named Executive Officers is to set base salaries at levels that
are (i) sufficient to attract and retain high quality, qualified employees and (ii) considered fair to our stockholders and employees.
The Compensation Committee seeks to set base salaries at levels that are competitive with a peer group of companies. In addition,
base salaries are influenced by the complexity and level of the applicable position.
Annual
Cash Incentive Compensation
. We use annual cash incentive compensation to incentivize the Named Executive Officers to contribute
to our growth and financial performance and to provide rewards based on achievement of predetermined goals that are intended to
drive increases in stockholder value. As additional cash compensation that is contingent on our financial performance, annual
cash incentive compensation augments the base salary component while being tied to our financial performance.
Long-term
Incentive Compensation
. We believe that stock-based awards are important in building an ownership mentality among our executives
and aligning the long-term financial interests of our executives with those of our stockholders. Time and performance-vested awards
provide incentives to drive performance, but have long-term horizons because value to our executives is dependent on continued
employment, the achievement of pre-established performance goals (in the case of PSUs) and, ultimately, increases in the market
value of our Common Stock.
Benefits
and Perquisites
. The Named Executive Officers are entitled to participate in, and to receive benefits under, the benefit plans,
arrangements and policies available to our employees or executives generally. Other than the perquisites provided to Mr. Moran
in connection with his appointment as Interim Chief Executive Officer of the Company and certain other minimal perquisite amounts
identified in the Summary Compensation Tables, the Company does not provide perquisites or make payment of perquisite allowances
to any of its executives.
Executive
Compensation Process
Role
of the Compensation Committee
The
Compensation Committee oversees the development and implementation of our executive compensation policies and objectives, determines
the structure of our executive compensation packages generally, determines the actual compensation paid to each of our senior
executives and evaluates the performance of our Interim Chief Executive Officer. In addition, the Compensation Committee has the
authority to (i) review our incentive compensation plans, recommend changes to such plans to the Board and exercise all the authority
of the Board with respect to the administration of such plans, and (ii) retain, terminate and set the terms of our and the Compensation
Committee’s relationship with any consultants and other outside advisors who assist the Compensation Committee in carrying
out its duties.
Role
of Management
The
Compensation Committee considers the recommendations of management, principally our Interim Chief Executive Officer, when determining
the structure of our executive compensation packages generally and the actual compensation paid to each of our senior executives.
However, the Compensation Committee does not delegate any of its functions to others in setting compensation, and no Named Executive
Officer is a member of the Compensation Committee. In addition, our Interim Chief Executive Officer does not provide recommendations
with respect to his own compensation.
Role
of Outside Advisors
The
Compensation Committee has retained Korn Ferry Hay Group as an independent consultant to provide information, advice and recommendations
regarding our executive compensation policies and design. In 2016, the Compensation Committee engaged Korn Ferry Hay Group to
review and provide information, advice and recommendations regarding our executive compensation program generally, as well as
the individual compensation packages of each of our senior executives, including the Named Executive Officers. Korn Ferry Hay
Group was directed to benchmark executive salaries and other short-term and long-term compensation, including the mix of performance
based compensation. As discussed below under “–Use of Peer Group Data,” at the direction of the Compensation
Committee, Korn Ferry Hay Group worked with our Chief Executive Officer at that time and our Human Resources personnel to compare
our executive compensation packages to those of a group of comparable companies.
Korn
Ferry Hay Group provides advice and recommendations to the Compensation Committee and reports to the Compensation Committee. Prior
to its original engagement in 2011, Korn Ferry Hay Group, except for executive search services performed by Korn Ferry prior to
its acquisition of Hay Group and set forth below, had not previously worked with the Company in any capacity, nor has it served
us in any capacity, other than as a consultant to the Compensation Committee. The Compensation Committee has reviewed and considered
information provided to it by Korn Ferry Hay Group, the Compensation Committee members and our executive officers, and based on
its review and the factors described in the NYSE listing standards and such other factors as it deemed relevant, the Compensation
Committee has concluded that Korn Ferry Hay Group is independent, that the advice it receives from Korn Ferry Hay Group is objective
and that Korn Ferry Hay Group’s work has not raised any conflict of interest. In December 2015, Korn Ferry acquired Hay
Group, which became a wholly-owned subsidiary of Korn Ferry. GNC has engaged Korn Ferry to provide executive search services in
the past and may do so from time to time in the future.
Use
of Peer Group Data
The
Compensation Committee seeks to determine how our compensation programs compare to other publicly traded companies similar to
us. The Compensation Committee seeks to set compensation for the Named Executive Officers at levels that are competitive with
similar companies in our industry but consistent with our growth strategy and with an emphasis on variable compensation, rather
than fixed compensation.
With
the assistance of Korn Ferry Hay Group, the Compensation Committee updated its peer group in 2015 in order to appropriately reflect
companies with revenue sizes, sectors and business models similar to our own. The updated peer group (the “2016 Peer Group”),
which was used for comparative purposes in setting the levels of the 2016 long-term equity awards and cash compensation levels
for our Named Executive Officers (other than Mr. Moran, for whom 2016 compensation levels were determined in connection with his
appointment), was comprised of the following 18 companies:
|
American
Eagle Outfitters, Inc.
|
Lululemon
Athletica, Inc.
|
The
Finish Line, Inc.
|
|
|
|
|
|
Cabela’s,
Inc.
|
Mead
Johnson Nutrition Co.
|
The
Fresh Market.
|
|
|
|
|
|
Dick’s
Sporting Goods, Inc.
|
Panera
Bread Co.
|
Ulta
Salon Cosmetics
|
|
|
|
|
|
Deckers
Outdoor Corporation
|
Pier
1 Imports, Inc.
|
Vitamin
Shoppe, Inc.
|
|
|
|
|
|
Hain
Celestial Group, Inc.
|
Sally
Beauty Holdings, Inc.
|
Weight Watchers International, Inc.
|
|
|
|
|
|
Herbalife
Ltd.
|
Sprouts
Farmers Markets, Inc.
|
Williams
Sonoma, Inc.
|
Based
upon consultation with Korn Ferry Hay Group in September 2016, the Compensation Committee removed The Fresh Market from the previous
peer group, listed above, and added the following one company to the peer group (the “2017 Peer Group”):
Village
Super Market.
We
used the 2017 Peer Group for comparative purposes in setting our most recent long-term equity awards and 2017 cash compensation
levels for our executives, including the Named Executive Officers.
Elements
of Compensation
Base
Salary
We
pay base salaries to the Named Executive Officers. With respect to 2016, the Compensation Committee increased or established the
annual base salaries of the Named Executive Officers as follows:
|
Name
|
|
2015
Base Salary ($)
|
|
|
2016
Base
Salary
($)
|
|
|
Percentage
Increase
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Moran (1)
|
|
|
N/A
|
|
|
|
996,000
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tricia
Tolivar
|
|
|
425,000
|
|
|
|
460,000
|
|
|
|
8.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
Dzura (2)
|
|
|
500,000
|
|
|
|
510,000
|
|
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
Hennion
|
|
|
484,100
|
|
|
|
500,000
|
|
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guru
Ramanathan (3)
|
|
|
380,608
|
|
|
|
430,000
|
|
|
|
12.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
Archbold (4)
|
|
|
975,000
|
|
|
|
1,000,000
|
|
|
|
2.6
|
|
|
|
(1)
|
Mr.
Moran was appointed as the Interim Chief Executive Officer of the Company effective on
July 27, 2016 and base salary was paid commencing on August 1, 2016.
|
|
|
(2)
|
On
March 13, 2017, the Company announced the departure of Mr. Dzura as Executive Vice President,
Operations of the Company, effective as of March 7, 2017.
|
|
|
(3)
|
Dr.
Ramanathan received a 2.5% base salary increase in February 2016. Subsequently, he received
an increase in base salary of $40,000 due to an expansion of responsibilities.
|
|
|
(4)
|
On
July 28, 2016, the Company announced the departure of Mr. Archbold as Chief Executive
Officer of the Company and from the Board, effective on July 27, 2016.
|
Annual
Cash Incentive Compensation
Annual
cash incentive compensation is documented in an annual plan that is adopted by the Compensation Committee under the Company’s
stock and incentive plan prior to or during the first quarter of the applicable year. The annual performance bonus for each Named
Executive Officer has a threshold, target and maximum bonus amount expressed as a percentage of his or her annual base salary.
The respective percentages are determined by position and level of responsibility and are stated in the annual cash incentive
compensation plan adopted by the Compensation Committee.
The
annual cash incentive plan for 2016 performance (the “2016 Incentive Plan”) was adopted by the Compensation Committee
in February 2016 and provided for the following threshold, target and maximum bonus amounts, expressed as a percentage of base
salary:
|
|
|
2016
Incentive Plan
|
|
|
|
|
|
|
|
Level
|
|
Threshold
Amount
|
|
|
Target
Amount
|
|
|
Maximum
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief
Executive Officer(1)
|
|
|
25
|
%
|
|
|
100
|
%
|
|
|
200
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief
Financial Officer
|
|
|
15
|
%
|
|
|
60
|
%
|
|
|
120
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Vice President
|
|
|
15
|
%
|
|
|
60
|
%
|
|
|
120
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior
Vice President
|
|
|
11.25
|
%
|
|
|
45
|
%
|
|
|
90
|
%
|
|
|
(1)
|
Prior
to his departure from the Company, Mr. Archbold’s annual cash incentive compensation
was established based upon a Threshold Amount of 25%, Target Amount of 100% and Maximum
Amount of 200%.
|
Mr.
Moran’s annual cash incentive compensation was not established under the 2016 Incentive Plan, as he was appointed
as Interim Chief Executive Officer in July 2016. In connection with his appointment to Interim Chief Executive Officer, Mr. Moran
was entitled to receive a short-term cash incentive award with a target value of $300,000 (capped at $450,000), which could
be earned based on the Compensation Committee’s discretionary evaluation of Mr. Moran’s performance through
January 31, 2017.
The
targets under the 2016 Incentive Plan were generally based on our achievement of (i) a predetermined level of EPS, which is calculated
at the end of the year including certain specified adjustments disclosed in our quarterly earnings reports and (ii) year-over-year
comparables for retail and web sales. With respect to each of our Named Executive Officers, the targets were based on our achievement
of the EPS and retail and web sales comparables targets set forth in the table below. They were entitled to receive 60% of the
target bonus amount if we achieved budgeted EPS equal to the target and 40% if we achieved budgeted retail and web sales comparables
equal to the target.
The
thresholds and related goals for our Named Executive Officers under the 2016 Incentive Plan were as follows:
|
Performance
Measure
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Relative
Weight
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS
($/share)
(1)
|
|
$
|
3.10
|
|
|
$
|
3.40
|
|
|
$
|
3.80
|
|
|
|
60
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
and Web Sales Comparables (%)
|
|
|
0.0
|
%
|
|
|
1.0
|
%
|
|
|
3.0
|
%
|
|
|
40
|
%
|
|
(1)
|
As
this performance measures is a non-GAAP financial metric, please see Annex A for a presentation of the reconciliation between
EPS, as adjusted, and our GAAP financial metric based on the Company’s audited financial statements.
|
Results
of the 2016 Incentive Plan.
The Company’s performance for 2016 resulted in no awards of
bonuses to the Named Executive Officers for whom threshold, target and maximum levels were established at the beginning of the
fiscal year. Neither EPS nor Retail and Web Sales Comparables metrics achieved threshold levels. Specifically, our results achieved
for purposes of the 2016 Incentive Plan were as follows:
|
Performance
Measure
|
|
Achieved
Results
|
|
|
|
|
|
|
|
|
EPS
($/share)
|
|
$
|
2.19
|
|
|
|
|
|
|
|
|
Retail
and Web Sales Comparables (%)
|
|
|
-6.5
|
%
|
|
|
|
|
|
|
Based
on these results, under the terms of the 2016 Incentive Plan, our Named Executive Officers did not receive cash incentive compensation
payments.
Mr.
Moran Performance Bonus.
As noted above, Mr. Moran became eligible to receive a cash incentive award for the period ending
January 31, 2017, upon his appointment as Interim Chief Executive Officer. The Company paid a bonus to Mr. Moran based on an evaluation
of his performance during the six month period ending January 31, 2017. The Compensation Committee considered highlights from
Mr. Moran’s performance including the speed at which he analyzed the key challenges facing the Company and the appropriateness
of the focused changes and actions during the period. In addition, the Compensation Committee considered Mr. Moran’s extraordinary
efforts, contributions and leadership. In January 2017, based on this review, a bonus of $450,000 was awarded to Mr. Moran.
Long-term
Incentive Compensation
2016
Annual Long-Term Incentive Awards
. Substantially all of our employees, and the employees of our direct and indirect subsidiaries
and other affiliates, including the Named Executive Officers, are eligible for awards of stock options, restricted stock, RSUs
(including PSUs) and other stock-based awards under the terms of the 2015 Stock and Incentive Plan (the “2015 Stock Plan”),
which was adopted in 2015. The Compensation Committee is responsible for administering, selecting the individuals who are eligible
to participate in and determining the types and amounts of stock-based awards granted under the 2015 Stock Plan. The Compensation
Committee has discretion to delegate all or a portion of its authority under the 2015 Stock Plan. In 2007, we adopted the GNC
Acquisition Holdings Inc. 2007 Stock Incentive Plan (the “2007 Stock Plan”) and in 2011, we adopted the GNC Holdings,
Inc. 2011 Stock and Incentive Plan (the “2011 Stock Plan”), under which plans awards are outstanding. Following the
adoption of the 2015 Stock Plan, we have not granted and will not grant any additional awards under the 2007 Stock Plan or the
2011 Stock Plan.
Stock
options granted under the various plans generally are subject to vesting in annual installments and have terms of seven to ten
years. The Compensation Committee determines the size of stock-based awards for each Named Executive Officer in accordance with
the Named Executive Officer’s performance and level of position. Options and other stock-based awards under the 2011 Stock
Plan and the 2015 Stock Plan are subject to clawback by the Company if the participant engages in any “detrimental activity”
during the participant’s service or for one year after the participant’s service ends, which is generally defined
to include disclosing confidential information about the Company, engaging in activities that result (or would result if known)
in the termination of the participant’s service for cause, soliciting the Company’s employees on behalf of a competing
employer, or materially breaching any agreement between the participant and the Company.
The
Compensation Committee generally considers grants of long-term incentive compensation awards on an annual basis, except for new
hires. The Compensation Committee grants equity-based awards to our executives on both an annual and as-desired basis. We do not
have any program, plan or practice to time annual or ad hoc grants of equity-based awards in coordination with the release of
material non-public information or otherwise.
In
February 2016, we granted long-term incentive awards to our executives, including Mr. Hennion, Dr. Ramanathan, Ms. Tolivar, Mr.
Dzura and Mr. Archbold, under the 2015 Stock Plan. Base award values for these long-term incentive grants were determined based
in part on the results of Korn Ferry Hay Group’s analysis of the compensation packages of top executives at companies in
our peer group, and were intended to be competitive compared to long-term incentive awards granted to executives with comparable
titles and responsibilities within our peer group. The awards were composed of stock options (30%), time-vested RSUs (30%) and
PSUs (40%), with the RSUs vesting in annual installments over three years from the grant date and the PSUs earned based on the
achievement of the performance criteria over the period commencing on January 1, 2016 and ending on December 31, 2018 (the “Performance
Period”) and subject to the grantees continuous employment with the Company during the Performance Period.
For
the February 2016 awards, the number of RSUs and PSUs in each award was determined by dividing the portion of the total award
value attributable to RSUs or PSUs by $27.30, which was the closing price per share of our Common Stock on February 16, 2016.
For the February 2016 awards, the performance metric for grants of the PSUs is relative total shareholder return (“TSR”).
The total number of PSUs that will be earned by a grantee is based upon the Company’s TSR relative to the TSR of other companies
reported on the S&P Retail Select Industry Index (the “Index”) for the Performance Period. At the conclusion of
the Performance Period, the Compensation Committee will determine whether and the extent to which the performance criteria have
been achieved for the purpose of determining the percentage of the target amount of PSUs that have vested for the Performance
Period. Any PSUs that have not vested as of the end of the Performance Period, based upon the Compensation Committee’s determination,
will be forfeited. The Compensation Committee may, in its sole discretion, reduce the amount to less than the amount that is determined
to be vested in accordance with the agreements providing for the PSUs.
The
Company’s TSR is measured, using a 31-day average stock price, as a percentile ranking in comparison with the S&P Retail
Select Industry Index TSR for the Performance Period. The PSU starting stock price is based upon the average adjusted closing
stock price for the month preceding the start of the Performance Period (i.e., beginning on December 1, 2015 and ending on December
31, 2015). If the Company’s TSR for the Performance Period is less than the 30
th
percentile TSR of the Index
for the Performance Period, no PSUs will be earned by the grantee on December 31, 2018. If the Company’s TSR for the Performance
Period is achieved between the 30
th
and 40
th
percentile TSR of the Index for the Performance Period, then
35% of the total PSUs awarded may be earned by the grantee on December 31, 2018 at the 30
th
percentile achievement,
with an additional amount earned based on interpolation in relation to the cumulative performance condition. If the Company’s
TSR for the Performance Period is achieved between the 40
th
and 50
th
percentile TSR of the Index for the
Performance Period, then 75% of the total PSUs awarded may be earned by the grantee on December 31, 2018 at the 40
th
percentile achievement, with an additional amount earned based on interpolation in relation to the cumulative performance condition.
If the Company’s TSR for the Performance Period is achieved between the 50
th
and 75
th
percentile TSR
of the Index for the Performance Period, then 100% of the total PSUs awarded may be earned by the grantee on December 31, 2018 at the 50
th
percentile achievement, with an additional amount earned based on interpolation in relation to the cumulative
performance condition. If the Company’s TSR for the Performance Period is achieved at or above the 75
th
percentile
TSR of the Index for the Performance Period, then 200% of the total PSUs awarded may be earned by the grantee on December 31,
2018. In the event that the Company’s TSR for the Performance Period is at or above the 30
th
percentile TSR of
the Index for the Performance Period but is a negative amount, then the maximum number of awarded PSUs that may be earned for
the Performance Period is limited to 100% of the total number of PSUs awarded. In all events the grantee must remain continuously
employed through December 31, 2018 in order to earn the PSUs.
Appointment
of Mr. Moran as Interim Chief Executive Officer and Related Grants
. Effective on July 27, 2016, the Company appointed Mr.
Moran as the Interim Chief Executive Officer. In connection with his appointment as Interim Chief Executive Officer, on August
1, 2016 Mr. Moran received a grant of RSUs under the 2015 Stock Plan. RSUs granted relate to shares of the Company’s common
stock with an aggregate grant date fair market value of $1,000,000 to Mr. Moran, and are scheduled to vest, subject to Mr. Moran’s
continued employment with the Company or service to the Company as a director, in three equal installments on each of the first
three anniversaries of the grant date or, if earlier, upon a change in control of the Company. The structure and base value for
the initial long-term incentive grant to Mr. Moran was determined in consultation with Korn Ferry Hay Group, based in part on
its analysis of the compensation packages of top executives at companies in our peer group, and were intended to be competitive
compared to long-term incentive awards granted to executives with comparable titles and responsibilities within our peer group.
Summary
of 2016 Named Executive Officer Awards
. The total award values for the 2016 awards for our Named Executive Officers, together
with the corresponding number of (a) RSUs, (b) target PSUs and (c) stock options awarded to each of our Named Executive Officers,
is set forth below:
|
Name
|
|
Total
Award
Value ($)
|
|
|
Number
of Stock
Options (#)
|
|
|
Number
of RSUs
(#)
|
|
|
Target
Number of
PSUs (#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Moran(1)
|
|
|
1,000,000
|
|
|
|
—
|
|
|
|
50,075
|
|
|
|
—
|
|
|
Tricia
Tolivar
|
|
|
1,102,271
|
|
|
|
49,751
|
|
|
|
10,989
|
|
|
|
14,652
|
|
|
Michael
Dzura
|
|
|
771,576
|
|
|
|
34,825
|
|
|
|
7,692
|
|
|
|
10,256
|
|
|
Jeffrey
Hennion
|
|
|
936,923
|
|
|
|
42,288
|
|
|
|
9,340
|
|
|
|
12,454
|
|
|
Guru
Ramanathan
|
|
|
330,661
|
|
|
|
14,925
|
|
|
|
3,296
|
|
|
|
4,395
|
|
|
Michael
Archbold
|
|
|
3,857,947
|
|
|
|
174,129
|
|
|
|
38,461
|
|
|
|
51,282
|
|
|
|
(1)
|
On
August 1, 2016, Mr. Moran received a grant of RSUs related to shares of the Company’s
common stock with an aggregate grant date fair market value of $1,000,000.
|
The
performance metric for the PSU component of these long-term incentive awards is TSR. The Compensation Committee established threshold,
intermediate, target and maximum levels of achievement with respect to TSR. Performance is measured as of the end of the three-year
Performance Period on December 31, 2018. At the threshold level of performance with respect to each metric, 35% of the PSUs vest;
at the intermediate level, 75% of the PSUs vest; at the target level, 100% of the PSUs vest; and at or above the maximum level,
200% of the PSUs vest, provided, in each case, that the executive has remained employed until the end of the Performance Period.
The applicable portion of the PSUs is forfeited if performance is below the threshold level with respect to a particular metric.
The
threshold, target and maximum levels of performance with respect to each metric for the February 2016 PSU grants are as follows:
|
Metric
|
|
Threshold
(35%
payout)
|
|
Intermediate
(75%
payout)
|
|
Target
(100%
payout)
|
|
Maximum
(200%
payout)
|
|
|
|
|
|
|
|
|
|
|
|
Total
Shareholder Return (1)
|
|
30
th
Percentile
|
|
40
th
Percentile
|
|
50
th
Percentile
|
|
75
th
Percentile
|
|
|
(1)
|
The
Company’s TSR is measured, using a 31-day average stock price, as a percentile
ranking in comparison with the S&P Retail Select Industry Index TSR for the Performance
Period.
|
Benefits
and Perquisites
The
Company does not provide perquisites or make payment of perquisite allowances to any of its executives, other than the perquisites
provided to Mr. Moran in connection with the commencement of service as Interim Chief Executive Officer, for which the Company
provided temporary corporate housing in Pittsburgh, Pennsylvania and reasonable use of the Company’s corporate aircraft
for purposes of commuting to and from Pittsburgh, Pennsylvania to conduct Company business, and certain other minimal perquisite
amounts identified in the Summary Compensation Tables.
Non-qualified
Deferred Compensation Plan
We
maintain the GNC Live Well
®
Later Non-Qualified Deferred Compensation Plan for the benefit of a select group of
our highly compensated employees. Under this plan, certain eligible employees may elect to defer a portion of their future compensation
under the deferred compensation plan by electing such deferral prior to the beginning of the calendar year during which the deferral
amount would be earned. Ms. Tolivar, Mr. Dzura and Mr. Hennion made contributions to the deferred compensation plan in 2016. For
2016, the Compensation Committee approved a dollar-for-dollar match with respect to the first three percent of a participant’s
compensation deferred under the Non-Qualified Deferred Compensation Plan. For more information regarding the deferred compensation
plan, please see “2016 Non-Qualified Deferred Compensation Table” below.
Executive
Severance Pay Policy
The
Company maintains an Executive Severance Pay Policy for executive officers who are involuntarily terminated from employment and
otherwise meet the requirements for benefits. Upon an involuntary termination other than for Cause, as defined in the policy,
eligible executives are entitled to receive cash severance benefits of six months base salary, in the case of Vice Presidents,
or one year base salary, in the case of positions senior to Vice President. The severance is increased to one year and two years
for such positions, respectively, in the case of a termination of employment without Cause, or resignation for Good Reason, as
defined in the policy, occurring within 24 months following a Change in Control of Company, also as defined in the policy. In
addition, the Company will pay for a portion of the executive’s health benefits for the same period or, if earlier, until
the time the executive is covered by another health plan or is eligible for Medicare. Payments and benefits under the policy are
contingent upon the executive’s execution and non-revocation of a release of claims against the Company and compliance with
covenants set forth in the policy, which include confidentiality, non-competition and non-solicitation of the Company’s
employees.
Dr.
Ramanathan Employment Agreement
In
February 2012, we entered into an amended and restated employment agreement with Dr. Ramanathan for an initial two-year term ending
in February 2014, with automatic annual one-year renewals thereafter unless either party provides at least 30 days’ advance
notice of non-renewal. As no such notice was provided, Dr. Ramanathan’s agreement automatically renewed most recently in
February 2017 for an additional one-year term expiring in February 2018.
The
employment agreement provides that any incentive compensation payable to Dr. Ramanathan will be subject to the clawback policies
adopted or implemented by us, including in respect of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and
any rules promulgated thereunder. Please see “Potential Payments Upon Termination or Change in Control” below for
more information regarding such employment agreement and termination and payments made in connection with a change in control.
Mr.
Moran, Ms. Tolivar, and Mr. Hennion currently do not have employment agreements with the Company, and Mr. Dzura did not have an
employment agreement with the Company.
Separation
Arrangements with Mr. Archbold
On
July 28, 2016, the Company announced the departure of Mr. Archbold as Chief Executive Officer of the Company and from the Board.
Mr. Archbold had an employment agreement with the Company which terminated upon his separation from service. The following summary
relating to Mr. Archbold discusses the payment and benefits received as a result of his departure from the Company.
In
connection with Mr. Archbold’s departure, and subject to the terms and conditions of the employment agreement with the Company,
including Mr. Archbold’s execution and non-revocation of a release of claims against the Company, Mr. Archbold received
the compensation to which he was entitled under his employment agreement with the Company in the case of a termination by the
Company without “cause”.
In
accordance with his employment agreement, the Company agreed to pay him $2,000,000 representing an amount equal to two times his
base salary, payable in accordance with the Company’s normal payroll practices and procedures over the 24-month period beginning
on the 60
th
day after the date of his separation, $47,308 in accrued but unpaid vacation and $16,957 representing the
monthly cost of COBRA continuation coverage for Mr. Archbold for a period of 18 months following the date of his separation or
until he obtains comparable health coverage from another employer, if earlier. The total amount of these payments was $2,064,265.
As the performance objectives for the year of his separation were not achieved, Mr. Archbold did not receive any prorated share
of an annual bonus for 2016. The two times base salary was subject to Mr. Archbold’s execution of a release in the form
specified by his employment agreement. Mr. Archbold was also entitled to receive all amounts of unpaid base salary and welfare
and retirement benefits accrued and vested through the date of separation, which amounts were unrelated to his separation from
service.
Additionally,
Mr. Archbold’s equity-based awards vested on the 60
th
day after the date of separation as follows:
outstanding time-vested equity awards that would have become vested in accordance with their terms within the 24-month period
following the date of separation if Mr. Archbold had remained employed by the Company through such period vested (and
restrictions on restricted stock awards lapsed) as of the date of separation and stock options became exercisable for the
longer of a period of 90 days following the date of separation or for the exercise period specified in the applicable grant
agreement. In accordance with these terms, the vesting of stock options representing 174,565 shares, 23,746 shares of
restricted stock and RSUs representing 25,641 shares were accelerated. The value of the restricted stock and RSUs for which
vesting was accelerated was $472,308 and $509,999, respectively, as of the vesting date, calculated using the closing price
on the relevant date. The Company recognized $2,292,267 in expense relating to the acceleration of this non-cash
stock-based compensation. Also in accordance with these terms, the performance-based restricted stock representing 35,619
shares and market-based restricted stock units representing 51,282 shares granted in 2015 and 2016, respectively, in each
case stated at target, were retained by Mr. Archbold, which values, if any, will be pro-rated dependent upon performance over
the performance periods scheduled to end on December 31, 2017 and 2018, respectively.
Impact
of Accounting and Tax Considerations
As
a general matter, the Compensation Committee reviews and considers the various tax and accounting implications of the compensation
vehicles we utilize.
Section
162(m) of the Internal Revenue Code generally disallows public companies a tax deduction for compensation in excess of $1,000,000
paid to their chief executive officer and their three other most highly compensated executive officers (excluding the chief financial
officer) unless certain performance and other requirements are met.
Our
intent generally is to design and administer executive compensation programs in a manner that will preserve deductibility of compensation
paid to our executives, and we believe that a substantial portion of our current executive compensation program (including the
annual incentive program and the long-term incentive awards that may be granted under the 2015 Stock Plan) will satisfy the requirements
for exemption from the $1,000,000 deduction limitation. However, there can be no assurance that any amounts paid under such compensation
programs will be deductible under Section 162(m), including, without limitation, in special circumstances related to hirings and
separations. Additionally, we reserve the right to design programs and to structure other compensation arrangements that recognize
a full range of performance criteria important to our success or that contain different terms, even where the compensation paid
under such programs may not be deductible. The Compensation Committee will, in the exercise of its business judgment, continue
to monitor our executive compensation program as part of its primary objective of ensuring that compensation paid to our executives
is reasonable, performance-based and consistent with our goals and the goals of our stockholders.
Executive
Stock Ownership Guidelines
We
believe that, to align the long-term financial interests of our executive officers with those of our stockholders, our executives
should hold a financial stake in the Company. The Board adopted a policy in December 2011 (revised most recently in February 2015)
requiring our Chief Executive Officer and other executive officers to own stock in the Company (our “Executive Stock Ownership
Guidelines”). Specifically, our Executive Stock Ownership Guidelines specify that our (i) Chief Executive Officer should
own Company stock with an aggregate value at least equal to six times his or her annual base salary, (ii) Executive Vice Presidents
should own Company stock with an aggregate value at least equal to two times their respective base salaries and (iii) our Senior
Executive Officers subject to the Executive Stock Ownership Guidelines should own Company stock with an aggregate value at least
equal to their annual base salaries. The Executive Stock Ownership Guidelines provide that our newly appointed executive officers
have five years from the date of their appointment to comply with the Executive Stock Ownership Guidelines, and should retain
at least 50% of all after-tax shares owned by or underlying equity awards granted to them after December 11, 2012 until the ownership
thresholds are met. The Compensation Committee will evaluate whether exceptions should be made for any executive officer on whom
this requirement would impose a financial hardship or for other appropriate reasons as determined by the Compensation Committee.
For the purposes of the Executive Stock Ownership Guidelines, stock includes (i) directly held shares of our Common Stock, (ii)
shares of unvested restricted stock or RSUs (other than unvested shares of performance-vested restricted stock or unvested PSUs)
and (iii) vested shares of our Common Stock held in any plan qualified under Section 401(a) of the Internal Revenue Code of 1986,
as amended.
Policy
on Hedging and Pledging of Company Stock
We
have a policy applicable to our directors and all of our employees, including our Named Executive Officers, that prohibits such
persons from (i) within six months after purchasing any Company securities, selling any Company securities of the same class,
(ii) selling the Company’s securities short, (iii) buying or selling puts or calls or other derivative securities on the
Company’s securities, (iv) holding Company securities in a margin account or pledging Company securities as collateral for
a loan or (v) entering into hedging or monetization transactions or similar arrangements with respect to Company securities.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in these
proxy materials. Based on the Compensation Committee’s review of and the discussions with management with respect to the
Compensation Discussion and Analysis, the Compensation Committee recommended to the Board that the Compensation Discussion and
Analysis be included in these proxy materials and incorporated by reference in the Annual Report for filing with the SEC.
The
foregoing report is provided by the following directors, who constitute the Compensation Committee:
COMPENSATION
AND ORGANIZATIONAL DEVELOPMENT COMMITTEE
Richard
J. Wallace (Chairperson)
Amy
B. Lane
Philip
E. Mallott
Named
Executive officer Compensation
Summary
Compensation Table
The
following table sets forth information concerning compensation we paid to the Named Executive Officers for services rendered in
all capacities to us during our last three fiscal years. In accordance with SEC rules, the compensation described in this table
does not include the value of medical or group life insurance received by the Named Executive Officers that is available generally
to all of our salaried employees. Only 2016 compensation is presented for Mr. Moran, because 2016 was his first year as an employee
of the Company. Only 2016 and 2015 compensation is presented for Mr. Dzura and Ms. Tolivar, because neither was employed with
the Company during 2014. A “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column is not
presented because none of our Named Executive Officers participate in a pension plan or receive above-market or preferential earnings
on nonqualified deferred compensation.
Name and Principal
Position
|
|
Year
|
|
|
Salary ($)
|
|
|
Bonus
($) (1)
|
|
|
Option
Awards
($) (2)
|
|
|
Stock
Awards
($) (3)
|
|
|
Non-Equity
Incentive Plan
Compensation ($) (4)
|
|
|
All Other Compensation
($) (5)
|
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Moran
|
|
|
2016
|
|
|
|
415,000
|
|
|
|
450,000
|
|
|
|
—
|
|
|
|
1,000,000
|
|
|
|
—
|
|
|
|
290,455
|
|
|
|
2,155,455
|
|
|
Interim Chief Executive Officer (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tricia Tolivar
|
|
|
2016
|
|
|
|
450,571
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
802,271
|
|
|
|
—
|
|
|
|
16,436
|
|
|
|
1,569,278
|
|
|
Chief Financial Officer
|
|
|
2015
|
|
|
|
343,269
|
|
|
|
75,000
|
|
|
|
—
|
|
|
|
750,000
|
|
|
|
46,753
|
|
|
|
85,608
|
|
|
|
1,300,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Dzura
|
|
|
2016
|
|
|
|
507,304
|
|
|
|
—
|
|
|
|
210,000
|
|
|
|
561,576
|
|
|
|
—
|
|
|
|
17,223
|
|
|
|
1,296,103
|
|
|
Former Executive Vice President, Operations
|
|
|
2015
|
|
|
|
442,307
|
|
|
|
30,000
|
|
|
|
375,000
|
|
|
|
500,000
|
|
|
|
60,242
|
|
|
|
40,797
|
|
|
|
1,448,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey Hennion
|
|
|
2016
|
|
|
|
495,713
|
|
|
|
—
|
|
|
|
255,000
|
|
|
|
681,923
|
|
|
|
—
|
|
|
|
15,843
|
|
|
|
1,448,479
|
|
|
Executive Vice President, Chief Marketing and e-Commerce
|
|
|
2015
|
|
|
|
480,304
|
|
|
|
—
|
|
|
|
—
|
|
|
|
600,000
|
|
|
|
65,417
|
|
|
|
14,758
|
|
|
|
1,160,479
|
|
|
Officer
|
|
|
2014
|
|
|
|
117,500
|
|
|
|
30,000
|
|
|
|
187,500
|
|
|
|
187,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
522,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guru Ramanathan
|
|
|
2016
|
|
|
|
397,471
|
|
|
|
—
|
|
|
|
90,000
|
|
|
|
240,661
|
|
|
|
—
|
|
|
|
1,022
|
|
|
|
729,154
|
|
|
Senior Vice President and Chief Innovation Officer
|
|
|
2015
|
|
|
|
372,618
|
|
|
|
—
|
|
|
|
—
|
|
|
|
350,000
|
|
|
|
37,806
|
|
|
|
11,650
|
|
|
|
772,074
|
|
|
|
|
|
2014
|
|
|
|
341,503
|
|
|
|
—
|
|
|
|
—
|
|
|
|
249,938
|
|
|
|
—
|
|
|
|
41,601
|
|
|
|
633,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Archbold (7)
|
|
|
2016
|
|
|
|
600,881
|
|
|
|
—
|
|
|
|
1,050,000
|
|
|
|
2,807,947
|
|
|
|
—
|
|
|
|
322,072
|
|
|
|
4,780,900
|
|
|
Former Chief Executive Officer
|
|
|
2015
|
|
|
|
968,050
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,500,000
|
|
|
|
219,747
|
|
|
|
1,032
|
|
|
|
4,688,829
|
|
|
|
|
|
2014
|
|
|
|
365,385
|
|
|
|
545,833
|
|
|
|
1,871,310
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,865
|
|
|
|
2,792,393
|
|
|
|
(1)
|
For
2016, reflects a $450,000 bonus paid in January 2017, based on the Compensation Committee’s
assessment of Mr. Moran’s extraordinary efforts, contributions and leadership.
For 2015, reflects signing bonuses paid to Ms. Tolivar and Mr. Dzura. For 2014, reflects
(a) a signing bonus paid to Mr. Hennion and (b) a $150,000 signing bonus and a $395,833
annual bonus paid to Mr. Archbold pursuant to the terms of his employment agreement.
|
|
|
(2)
|
Reflects
the aggregate grant date fair value of options granted during each fiscal year, which
has been computed in accordance with FASB ASC Topic 718. For the assumptions underlying
the calculation of the aggregate grant date fair value, see Note 15, “Stock-Based
Compensation Plans,” to our audited consolidated financial statements included
in the Annual Report. The amounts may not correspond to the actual value that may be
realized by such persons with respect to these awards.
|
|
|
(3)
|
For
2014 and 2015, reflects the aggregate grant date fair value of time-vested restricted
stock and the RSUs granted, which has been computed in accordance with FASB ASC Topic
718. For 2016, reflects the aggregate grant date fair value of the PSUs and the RSUs
included as part of incentive awards granted to Ms. Tolivar, Dr. Ramanathan, and Messrs.
Dzura, Hennion, and Archbold in February 2016 and the RSUs to Mr. Moran in connection
with his appointment as Interim Chief Executive Officer, which has been computed in accordance
with FASB ASC Topic 718. For 2015, reflects the aggregate grant date fair value of PSAs
included as part of incentive awards granted to Ms. Tolivar in March 2015 and Mr. Dzura,
Mr. Hennion, Dr. Ramanathan and Mr. Archbold in February 2015. For 2014, reflects the
aggregate grant date fair value of the PSUs included as part of the incentive awards
granted to Dr. Ramanathan in February 2014. The grant date values for the PSAs and the
PSUs have been determined assuming 100% of target performance is achieved. If maximum
share payouts were achieved for the PSUs, the aggregate grant date fair value for these
units would be twice the amount disclosed in each year in the table related to the PSAs
and the PSUs. If we assume the maximum 200% of target performance would be achieved,
the grant date values of the (a) the PSUs granted to Ms. Tolivar, Mr. Dzura, Mr. Hennion,
Dr. Ramanathan and Mr. Archbold in 2016 would be $1,004,541, $703,151, $853,846, $301,321
and $3,515,894, respectively, (b) the PSAs granted to Ms. Tolivar, Mr. Dzura, Mr. Hennion,
Dr. Ramanathan and Mr. Archbold in 2015 would be $750,000, $500,000, $600,000, $350,000
and $3,500,000, and (c) the PSUs granted to Dr. Ramanathan would be $249,938 in 2014.
For the assumptions underlying the calculation of the aggregate grant date fair value,
see Note 15, “Stock-Based Compensation Plans,” to our audited consolidated
financial statements included in the Annual Report. The amounts shown in the table may
not correspond to the actual value that may be realized by such persons with respect
to these awards.
|
|
|
(4)
|
Reflects
the non-discretionary component of cash incentive compensation.
|
|
|
(5)
|
The
components of “All Other Compensation” for our fiscal year ended December
31, 2016 are set forth in the following table:
|
Named Executive
Officer
|
|
Perquisites
($) (a)
|
|
|
Imputed
Value
for Life
Insurance
Premiums
($)
|
|
|
Company
Contributions
to Deferred
Compensation
Plan ($) (b)
|
|
|
Severance
($) (c)
|
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Moran
|
|
|
290,455
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
290,455
|
|
|
Tricia Tolivar
|
|
|
2,559
|
|
|
|
360
|
|
|
|
13,517
|
|
|
|
—
|
|
|
|
16,436
|
|
|
Michael Dzura
|
|
|
420
|
|
|
|
1,584
|
|
|
|
15,219
|
|
|
|
—
|
|
|
|
17,223
|
|
|
Jeffrey Hennion
|
|
|
420
|
|
|
|
552
|
|
|
|
14,871
|
|
|
|
—
|
|
|
|
15,843
|
|
|
Guru Ramanathan
|
|
|
470
|
|
|
|
552
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,022
|
|
|
Michael Archbold
|
|
|
—
|
|
|
|
635
|
|
|
|
—
|
|
|
|
321,437
|
|
|
|
322,072
|
|
|
|
(a)
|
For
Mr. Moran, this column reflects: (i) $160,020 of incremental cost to the Company associated
with personal use of corporate aircraft, (ii) $42,962 in temporary corporate housing
in Pittsburgh, (iii) $35,445 of executive medical benefits, (iv) $33,609 of relocation
expenses including certain one-time reimbursements, (v) $16,419 of gross-up amounts reimbursed
for the payment of taxes, and (vi) taxable parking benefits. The amounts disclosed represent
aggregate incremental costs as follows: the actual monthly cost of providing medical
coverage and benefits to Mr. Moran; the actual cost incurred by Mr. Moran in relocating,
including certain one-time reimbursements; and the incremental cost of Mr. Moran’s
personal use of a corporate aircraft calculated in the following manner. Personal use
of corporate aircraft is calculated by using an incremental cost method that multiplies
the hours flown on a personal flight by the hourly direct operating charge for the aircraft
used. In addition, incremental costs for landing fees, crew hotels and meals, on-board
catering and taxes for personal flights are also included. Since the Company aircraft
is used primarily for business travel, this calculation methodology excludes the fixed
costs which do not change based on usage, such as pilots’ salaries, the lease costs
of Company aircraft, and the costs of maintenance. For the individuals other than Mr.
Moran, the column includes taxable parking benefits and for Ms. Tolivar this column also
reflects $2,279 of gross-up amount related to her relocation expenses.
|
|
|
(b)
|
Reflects
matching contributions by the Company with respect to compensation deferred by each executive
pursuant to the Company’s Non-Qualified Deferred Compensation Plan. For more information,
see the “2015 Non-Qualified Deferred Compensation Table” below.
|
|
|
(c)
|
Reflects severance equal to $269,231 representing the base salary, $47,308 representing accrued but unpaid vacation and $4,898 representing the COBRA continuation coverage paid during 2016.
|
|
(6)
|
Mr.
Moran was appointed Interim Chief Executive Officer upon the departure of Mr. Archbold
in July 2016. Fees and stock awards received for his service as an outside Director through
that date are not reflected in the table above but are disclosed under the “Director
Compensation” section above.
|
|
(7)
|
For
a description of the treatment of Mr. Archbold’s equity awards upon his separation
from service with the Company, see “Compensation Discussion and Analysis –
Separation Arrangements with Mr. Archbold.”
|
2016
Grants of Plan Based Awards Table
The
following table sets forth information concerning awards under the 2015 Stock Plan and the 2016 Incentive Plan granted to each
of the Named Executive Officers during our fiscal year ended December 31, 2016. Assumptions used in the calculation of certain
dollar amounts are included in Note 15 “Stock-Based Compensation Plans,” to our audited consolidated financial statements
included in the Annual Report.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Future Payouts
Under Non-Equity Incentive Plan
Awards (1)
|
|
|
Estimated Future Payouts
Under Equity Incentive Plan
Awards (2)
|
|
|
All
Other
Stock
Awards: Number of Shares
(#)
|
|
|
All
Other
Option
Awards: Number
of Shares
(#)
|
|
|
Exercise Price
of
Options ($)
|
|
|
Grant
Date Fair
Value of
Stock
and
Option
Awards
($) (3)
|
|
|
Name
|
|
Grant
Date
|
|
|
Threshold ($)
|
|
|
Target ($)
|
|
|
Maximum
($)
|
|
|
Threshold (#)
|
|
|
Target
(#)
|
|
|
Maximum (#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Moran (4)
|
|
|
N/A
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
450,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,075
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tricia Tolivar
|
|
|
2/16/2016
|
|
|
|
69,000
|
|
|
|
276,000
|
|
|
|
552,000
|
|
|
|
5,128
|
|
|
|
14,652
|
|
|
|
29,304
|
|
|
|
10,989
|
|
|
|
49,751
|
|
|
|
27.30
|
|
|
|
1,102,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Dzura
|
|
|
2/16/2016
|
|
|
|
76,500
|
|
|
|
306,000
|
|
|
|
612,000
|
|
|
|
3,589
|
|
|
|
10,256
|
|
|
|
20,512
|
|
|
|
7,692
|
|
|
|
34,825
|
|
|
|
27.30
|
|
|
|
771,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey Hennion
|
|
|
2/16/2016
|
|
|
|
75,000
|
|
|
|
300,000
|
|
|
|
600,000
|
|
|
|
4,358
|
|
|
|
12,454
|
|
|
|
24,908
|
|
|
|
9,340
|
|
|
|
42,288
|
|
|
|
27.30
|
|
|
|
936,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guru Ramanathan
|
|
|
2/16/2016
|
|
|
|
48,375
|
|
|
|
193,500
|
|
|
|
387,000
|
|
|
|
1,538
|
|
|
|
4,395
|
|
|
|
8,790
|
|
|
|
3,296
|
|
|
|
14,925
|
|
|
|
27.30
|
|
|
|
330,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Archbold
|
|
|
2/16/2016
|
|
|
|
250,000
|
|
|
|
1,000,000
|
|
|
|
2,000,000
|
|
|
|
17,948
|
|
|
|
51,282
|
|
|
|
102,564
|
|
|
|
38,461
|
|
|
|
174,129
|
|
|
|
27.30
|
|
|
|
3,857,947
|
|
|
(1)
|
The
amounts represent the threshold, target and maximum payout amounts under the 2016 Incentive Plan. See “Compensation
Discussion and Analysis – Elements of Compensation – Annual Cash Incentive Compensation” above for more
information regarding the thresholds under the 2016 Incentive Plan. As reported in the Summary Compensation Table, no amounts
were actually earned in 2016.
|
|
(2)
|
The
amounts represent the threshold, target and maximum number of shares of our common stock that may be earned under the PSU
awards. The PSU awards also provide for an intermediate number of shares of our common stock that may be earned, which falls
between the threshold and target. The intermediate number of shares, under the 2016 grants, is 10,989, 7,692, 9,340, 3,296
and 38,461 for Ms. Tolivar, Mr. Dzura, Mr. Hennion, Dr. Ramanathan and Mr. Archbold, respectively. The PSUs are scheduled
to vest on December 31, 2018 subject to company performance and each officer’s continued employment. See “Compensation
Discussion and Analysis – Elements of Compensation – Long Term Incentive Compensation” above for more information
regarding the PSUs.
|
|
(3)
|
For
Mr. Moran, reflects the grant date fair value of the RSUs granted to him on August 1, 2016, computed in accordance with FASB
ASC Topic 718. For our other Named Executive Officers, reflects the aggregate grant date fair value of the stock options,
the RSUs and the target PSUs granted to them in February 2016, computed in accordance with FASB ASC Topic 718. For the assumptions
underlying the calculation of the aggregate grant date fair value, see Note 15, “Stock-Based Compensation Plans,”
to our audited consolidated financial statements included in the Annual Report. The amounts shown in the table may not correspond
to the actual value that may be realized by such persons with respect to these awards.
|
|
(4)
|
Does
not reflect stock awards received for his service as a non-employee Director through the date of his appointment to Interim
Chief Executive Officer. The stock award received in his capacity as a non-employee Director is disclosed under the “Director
Compensation” section above.
|
Outstanding
Equity Awards as of December 31, 2016
The
following table sets forth information regarding outstanding equity awards held by the Named Executive Officers under the 2007
Stock Plan, the 2011 Stock Plan and the 2015 Stock Plan as of December 31, 2016.
|
|
|
|
Option Awards (1)
|
|
|
|
Stock Awards
|
|
|
Name
|
|
|
Date
of
Grant
|
|
|
|
Exercisable
|
|
|
|
Unexercisable
|
|
|
|
Option
Exercise Price($)
|
|
|
|
Option
Expiration
Date
|
|
|
|
Number
of Restricted Shares and RSUs That
Have Not
Yet Vested
(#) (2)
|
|
|
|
Market
Value of
Restricted Shares
and RSUs That Have
Not Yet
Vested
($) (3)
|
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
PSUs
(#) (4)
|
|
|
|
Equity
Incentive
Plan
Awards:
Market
or Payout Value of
Unearned
PSUs
($) (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Moran
|
|
|
8/1/2016
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,075
|
|
|
|
552,828
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
5/23/2016 (5)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,448
|
|
|
|
49,106
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tricia Tolivar
|
|
|
3/2/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,142
|
|
|
|
56,768
|
|
|
|
3,857
|
|
|
|
42,581
|
|
|
|
|
|
2/16/2016
|
|
|
|
—
|
|
|
|
49,751
|
|
|
|
27.30
|
|
|
|
02/16/2026
|
|
|
|
10,989
|
|
|
|
121,318
|
|
|
|
5,128
|
|
|
|
56,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Dzura
|
|
|
2/2/2015
|
|
|
|
6,537
|
|
|
|
19,613
|
|
|
|
43.88
|
|
|
|
2/2/2025
|
|
|
|
5,697
|
|
|
|
62,895
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
2/18/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,544
|
|
|
|
28,086
|
|
|
|
|
|
2/16/2016
|
|
|
|
—
|
|
|
|
34,825
|
|
|
|
27.30
|
|
|
|
02/16/2026
|
|
|
|
7,692
|
|
|
|
84,920
|
|
|
|
3,589
|
|
|
|
39,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey Hennion
|
|
|
10/22/2014
|
|
|
|
7,059
|
|
|
|
7,060
|
|
|
|
40.33
|
|
|
|
10/22/2024
|
|
|
|
1,550
|
|
|
|
17,112
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
2/18/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,070
|
|
|
|
44,933
|
|
|
|
3,053
|
|
|
|
33,705
|
|
|
|
|
|
2/16/2016
|
|
|
|
—
|
|
|
|
42,288
|
|
|
|
27.30
|
|
|
|
02/16/2026
|
|
|
|
9,340
|
|
|
|
103,114
|
|
|
|
4,358
|
|
|
|
48,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guru Ramanathan
|
|
|
2/4/2010
|
|
|
|
15,000
|
|
|
|
—
|
|
|
|
13.18
|
|
|
|
2/4/2020
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
2/4/2010
|
|
|
|
15,000
|
|
|
|
—
|
|
|
|
8.79
|
|
|
|
2/4/2020
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
4/21/2011
|
|
|
|
30,000
|
|
|
|
—
|
|
|
|
18.82
|
|
|
|
4/21/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
12/12/2011
|
|
|
|
18,238
|
|
|
|
—
|
|
|
|
27.70
|
|
|
|
12/12/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
11/5/2012
|
|
|
|
6,679
|
|
|
|
—
|
|
|
|
36.16
|
|
|
|
11/5/2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
2/19/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
931
|
|
|
|
10,278
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
2/18/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,374
|
|
|
|
26,209
|
|
|
|
1,780
|
|
|
|
19,651
|
|
|
|
|
|
2/16/2016
|
|
|
|
—
|
|
|
|
14,925
|
|
|
|
27.30
|
|
|
|
02/16/2026
|
|
|
|
3,296
|
|
|
|
36,388
|
|
|
|
1,538
|
|
|
|
16,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Archbold
|
|
|
8/4/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
2/2/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,809
|
|
|
|
196,611
|
|
|
|
|
|
2/16/2016
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,948
|
|
|
|
198,146
|
|
|
|
(1)
|
Time-vested
stock option awards made under the 2007 Stock Plan, the 2011 Stock Plan and the 2015
Stock Plan, which awards vest in four equal annual installments commencing on the first
anniversary of the date of grant, subject to continuing employment.
|
|
|
(2)
|
Includes
time-vested restricted stock and RSUs awarded under the 2007 Stock Plan, the 2011 Stock
Plan and the 2015 Stock Plan, which generally vest in three equal annual installments
commencing on the first anniversary of the date of grant, subject to continuing employment.
|
|
|
(3)
|
Market
value is based on the closing price of our Common Stock of $11.04 per share on December
30, 2016.
|
|
|
(4)
|
Represents
the threshold number of the PSUs granted in 2016, the PSAs granted in 2015 and the PSUs
granted in 2014, as indicated, under the 2011 Stock Plan and the 2015 Stock Plan. The
PSUs granted in February 2014 were scheduled to vest on December 31, 2016 (threshold
performance was not achieved and no portion of this award vested), the PSAs granted in
2015 are scheduled to vest on December 31, 2017 and the PSUs granted in 2016 are scheduled
to vest on December 31, 2018, in each case subject to Company performance and the Named
Executive Officer’s continued employment. The threshold award shown above represents
35% of the target award for the 2016 awards and 50% of the target award for the 2015
and 2014 awards; the actual number of PSAs or PSUs (as applicable) that may be earned
may range from 0% to 200% of the target number, as described under “Compensation
Discussion and Analysis – Long-Term Incentive Compensation” above.
|
|
|
(5)
|
Reflects
the stock award granted to Mr. Moran on May 23, 2016, under the 2015 Stock Plan, prior
to his appointment as Interim Chief Executive Officer, in his capacity as a non-employee
director, which had an approximate aggregate grant date fair value of $110,000 and is
scheduled to vest on the first anniversary of the grant date, provided that Mr. Moran
has remained in service until the vesting date.
|
2016
Option Exercises and Stock Vested Table
The
following table sets forth information regarding the vesting of RSUs and restricted stock and exercise of options by the Named
Executive Officers during our fiscal year ended December 31, 2016.
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Name
|
|
|
Number
of
Shares Acquired
(#)
|
|
|
|
Value
Realized
on Exercise ($)
|
|
|
|
Number
of
Shares
Acquired Upon
Vesting (#) (1)
|
|
|
|
Value
Realized
Upon Vesting ($)
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Moran
|
|
|
—
|
|
|
|
—
|
|
|
|
2,423
|
(3)
|
|
|
60,829
|
|
|
Tricia Tolivar
|
|
|
—
|
|
|
|
—
|
|
|
|
2,572
|
|
|
|
75,202
|
|
|
Michael Dzura
|
|
|
—
|
|
|
|
—
|
|
|
|
2,849
|
|
|
|
78,832
|
|
|
Jeffrey Hennion
|
|
|
—
|
|
|
|
—
|
|
|
|
3,585
|
|
|
|
90,090
|
|
|
Guru Ramanathan
|
|
|
—
|
|
|
|
—
|
|
|
|
4,824
|
|
|
|
137,609
|
|
|
Michael Archbold
|
|
|
—
|
|
|
|
—
|
|
|
|
61,260
|
|
|
|
1,319,728
|
|
|
|
(1)
|
For
Ms. Tolivar, reflects the gross number of shares acquired upon vesting of the first tranche
of her March 2015 restricted stock award. For Mr. Dzura, reflects the gross number of
shares acquired upon vesting of the first tranche of his February 2015 restricted stock
award. For Mr. Hennion, reflects the gross number of shares acquired upon vesting of
(i) the second tranche of his October 2014 RSU award and (ii) the first tranche of his
February 2015 restricted stock award. For Dr. Ramanathan, reflects the gross number of
shares acquired upon the vesting of (i) the third tranche of his April 2011 restricted
stock award, (ii) the third tranche of his December 2011 restricted stock award, (iii)
the second tranche of his February 2014 RSU award, and (iv) the first tranche of his
February 2015 restricted stock award. For Mr. Archbold, reflects the gross number of
shares acquired upon vesting of (i) his February 2015 award of restricted stock award
and (ii) the first and second tranche of his February 2016 RSU award. In each case, a
portion of the gross number of shares that vested was withheld to satisfy minimum tax
withholding obligations for each officer.
|
|
|
(2)
|
Market
value is based on the average of the high and low trading prices for our Common Stock
on the NYSE on the date of vesting.
|
|
|
(3)
|
Reflects
the gross number of restricted shares, granted to Mr. Moran, prior to his appointment
as Interim Chief Executive Officer, in his capacity as a non-employee director on May
21, 2015, which vested on May 21, 2016.
|
2016
Non-Qualified Deferred Compensation Table
We
maintain the GNC Live Well
®
Later Non-Qualified Deferred Compensation Plan for the benefit of a select group of
our highly compensated executives. Under this plan, employees may elect to defer a portion of their future salary and bonus compensation
up to a maximum of 25% of each component, or such other specified limit established by the Company, until a specified future year,
or until retirement. We may in our discretion elect to make a matching contribution to the plan for a calendar year, based on
amounts deferred by participants for that year. Participants may select the investment fund or funds in which such deferred amounts
are deemed to be invested for the purpose of crediting deferrals with investment gains and losses.
Ms.
Tolivar, Mr. Dzura and Mr. Hennion each elected to make contributions to the deferred compensation plan in 2016. The following
table identifies, for each Named Executive Officer, his or her contributions, our contributions, the aggregate earnings and withdrawals
in 2016 and the aggregate balance as of December 31, 2016:
|
|
|
Executive
Contributions
in Last Fiscal
Year
|
|
|
Registrant
Contributions
in Last Fiscal
Year
|
|
|
Aggregate
Earnings in
Last Fiscal
Year
|
|
|
Aggregate
Withdrawals/
Distributions
|
|
|
Aggregate
Balance at
Last
Fiscal Year
End
|
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)
|
|
|
($)(4)
|
|
|
Robert Moran
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Tricia
Tolivar
|
|
$
|
27,034
|
|
|
$
|
13,517
|
|
|
$
|
3,122
|
|
|
|
—
|
|
|
$
|
69,827
|
|
|
Michael Dzura
|
|
$
|
30,438
|
|
|
$
|
15,219
|
|
|
$
|
6,408
|
|
|
|
—
|
|
|
$
|
86,141
|
|
|
Jeffrey Hennion
|
|
$
|
29,743
|
|
|
$
|
14,871
|
|
|
$
|
3,563
|
|
|
|
—
|
|
|
$
|
76,995
|
|
|
Guru
Ramanathan
|
|
|
—
|
|
|
|
—
|
|
|
$
|
23,736
|
|
|
|
—
|
|
|
$
|
255,738
|
|
|
Michael Archbold
|
|
|
—
|
|
|
|
—
|
|
|
$
|
23
|
|
|
|
—
|
|
|
$
|
75,658
|
|
|
|
(1)
|
Amounts
reflected are included in the “Salary” column of the Summary Compensation
Table above.
|
|
|
(2)
|
Amounts
reflected are included in the “All Other Compensation” column of the Summary
Compensation Table above.
|
|
|
(3)
|
Amounts
reflected are not included as compensation for the relevant Named Executive Officers
in the Summary Compensation Table above.
|
|
|
(4)
|
For
Ms. Tolivar, Mr. Dzura, and Mr. Hennion, respectively, the amount reported includes $26,154,
$34,615, and $28,818 previously earned, but deferred, salary and matching contributions
reported in our Summary Compensation Table for 2015. For Dr. Ramanathan, the amount reported
includes $48,091 previously earned, but deferred, salary and matching contributions reported
in our Summary Compensation Table for 2015 and $58,704 for 2014 and $58,925 for 2013.
For Mr. Archbold, the amount reported includes $75,635 previously earned, but deferred,
salary and matching contributions reported in our Summary Compensation Table for 2014.
|
Potential
Payments Upon Termination or a Change in Control
The
termination and change in control arrangements for the Named Executive Officers (other than Dr. Ramanathan who has an employment
agreement with the Company) are generally governed by Company policy. As such, these arrangements generally are uniform and not
highly negotiated. The Compensation Committee does not generally consider the amounts payable in connection with termination and
change in control events when establishing the compensation of the Named Executive Officers. The Compensation Committee, together
with the Board, established the termination and change of control arrangements described herein to address and conform to our:
overall compensation objectives in attracting and retaining the caliber of executives that are integral to our growth; our market
competitiveness; maintaining management continuity, particularly through periods of uncertainty related to change in control events;
providing our key personnel with the assurance of fair and equitable treatment following a change in control and other events;
and ensuring that our management is held to high standards of integrity and performance.
In
general, such policies and arrangements are evidenced by the Company’s executive severance pay policy, as described in the
Compensation Discussion and Analysis section of this proxy statement.
The
following is a summary of the termination and change of control provisions in the employment agreement for Dr. Ramanathan and
the policies and arrangements otherwise applicable to Mr. Moran, Ms. Tolivar, Mr. Dzura and Mr. Hennion as of December 31, 2016.
Dr.
Ramanathan
Dr.
Ramanathan’s employment agreement also provides for certain benefits upon termination of employment. Upon Dr. Ramanathan’s
death or disability, he (or his estate) is entitled to his then-current base salary for the remainder of the employment period,
and, subject to the discretion of the Board or the Compensation Committee, a pro rata share of his current year annual bonus,
based on actual employment, provided bonus targets are met. The employment period is the two-year period from the initial effective
date of the employment agreement and for one-year periods thereafter. Upon termination of employment by us without cause or voluntarily
by Dr. Ramanathan for good reason, subject to the execution of a written release, he is also entitled to:
|
|
•
|
salary
continuation generally for one year or two years if the termination occurs upon or within
six months following a change in control;
|
|
|
•
|
subject
to the discretion of the Board or the Compensation Committee, a pro rata share of the
annual bonus based on actual employment and achievement of performance objectives; and
|
|
|
•
|
reimbursement
for any portion of the monthly cost of COBRA coverage that exceeds the amount of monthly
health insurance premium (with respect to Dr. Ramanathan’s coverage and any eligible
dependent coverage) payable by Dr. Ramanathan immediately prior to such termination,
such reimbursements to continue through the expiration of the agreement term or the severance
period, if earlier.
|
For
purposes of Dr. Ramanathan’s employment agreement, “cause” generally means his:
|
|
•
|
failure
to comply with any material obligation imposed by his employment agreement;
|
|
|
•
|
being
indicted for any felony or any misdemeanor that causes or is likely to cause harm or
embarrassment to us, in the reasonable judgment of the Board;
|
|
|
•
|
theft,
embezzlement or fraud in connection with the performance of his duties;
|
|
|
•
|
engaging
in any activity that gives rise to a material conflict of interest with us;
|
|
|
•
|
misappropriation
of any of our material business opportunities;
|
|
|
•
|
any
failure to comply with, observe or carry out our or the Board’s rules, regulations,
policies or codes of ethics or conduct;
|
|
|
•
|
substance
abuse or illegal use of drugs that, in the reasonable judgment of the Board, impairs
his performance or causes or is likely to cause harm or embarrassment to us; or
|
|
|
•
|
engagement
in conduct that he knows or should know is injurious to us.
|
For
purposes of Dr. Ramanathan’s employment agreement, “good reason” generally means, without Dr. Ramanathan’s
prior written consent and unless we timely cure the good reason:
|
|
•
|
our
failure to comply with material obligations under his employment agreement; or
|
|
|
•
|
a
material reduction in his base salary.
|
For
purposes of Dr. Ramanathan’s employment agreement, “change in control” generally means:
|
|
•
|
an
acquisition representing 50% or more of either our Common Stock or the combined voting
power of our securities entitled to vote generally in the election of the Board; or
|
|
|
•
|
the
approval by our stockholders of (i) a complete liquidation or dissolution of the Company
or (ii) the sale or other disposition (other than a merger or consolidation) of all or
substantially all of our or our subsidiaries’ assets.
|
Under
all circumstances, Dr. Ramanathan’s unvested equity awards will be forfeited as of the date of his termination unless otherwise
provided in the award agreement.
The
following tables quantify the estimated payments and benefits that the Named Executive Officers would have received if their employment
had terminated on December 31, 2016 under the circumstances shown or if we had undergone a change in control on such date. The
tables exclude (i) compensation amounts accrued through December 31, 2016 that would be paid in the normal course of continued
employment, such as accrued but unpaid salary, and (ii) vested account balances under our 401(k) plan that are generally available
to all of our salaried employees.
Where applicable, the information in the tables uses a fair market value per share of $11.04
for our Common Stock, which is equal to the closing price of our Common Stock on December 30, 2016.
Mr.
Moran
|
Benefit
|
|
Termination
without
Cause ($)
|
|
|
Termination
without
Cause or for
Good
Reason
Following a Change in
Control ($)
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
|
996,000
|
|
|
|
1,992,000
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
Incentive Compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
& Welfare Benefits
|
|
|
11,305
|
|
|
|
22,610
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Value
|
|
|
1,007,305
|
|
|
|
2,014,610
|
|
Ms.
Tolivar
|
Benefit
|
|
Termination
without
Cause ($)
|
|
|
Termination
without
Cause or for
Good
Reason
Following a
Change in
Control ($)
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
|
460,000
|
|
|
|
920,000
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
Incentive Compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
& Welfare Benefits
|
|
|
11,305
|
|
|
|
22,610
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Value
|
|
|
471,305
|
|
|
|
942,610
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
Dzura (1)
|
Benefit
|
|
Termination
without
Cause ($)
|
|
|
Termination
without
Cause or for
Good
Reason
Following a
Change in
Control ($)
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
|
510,000
|
|
|
|
1,020,000
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
Incentive Compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
& Welfare Benefits
|
|
|
11,305
|
|
|
|
22,610
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Value
|
|
|
521,305
|
|
|
|
1,042,610
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Upon Mr. Dzura’s separation from the Company as of March 7, 2017 he is entitled to receive $510,000, payable in installments
over a one year period and $12,070 representing continued health coverage for that period based upon the cost in 2017.
Mr.
Hennion
|
Benefit
|
|
Termination
without
Cause ($)
|
|
|
Termination
without
Cause or for
Good
Reason
Following a Change in
Control ($)
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
|
500,000
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
Incentive Compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
& Welfare Benefits
|
|
|
11,305
|
|
|
|
22,610
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Value
|
|
|
511,305
|
|
|
|
1,022,610
|
|
Dr.
Ramanathan
|
Benefit
|
|
Termination
without Cause or for Good
Reason
($)
|
|
|
Termination
without Cause or for Good Reason w/in 6 Months After a Change in Control ($)
|
|
|
Death
or
Disability
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary Continuation
|
|
|
430,000
|
|
|
|
860,000
|
|
|
|
72,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro
Rata Bonus
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health
& Welfare Benefits
|
|
|
8,455
|
|
|
|
16,910
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Value
|
|
|
438,455
|
|
|
|
876,910
|
|
|
|
72,111
|
|
The
employment agreement with Dr. Ramanathan provides that if any payment or benefit will be subject to or result in the imposition
of the excise tax imposed by Code Section 4999, then the amount of such payment or payments will be reduced to the highest amount
that may be paid by us without subjecting such payment to the excise tax. We have assumed that none of the payments or benefits
provided to Mr. Moran, Ms. Tolivar, Mr. Dzura, Mr. Hennion or Dr. Ramanathan would have been subject to or resulted in the imposition
of the excise tax imposed by Code Section 4999. Accordingly, no reductions in such payments and benefits have been applied in
the tables above.
The
2007 Stock Plan, the 2011 Stock Plan and the 2015 Stock Plan provide that, in the event of a change in control, unvested stock-based
awards generally may be fully vested, cancelled for fair value or substituted for awards that substantially preserve the applicable
terms of such stock-based awards, and with respect to the 2015 Stock Plan may provide for a limited time period for awards to
be exercised. We have assumed for purposes of the above tables that upon a change in control, equity-based awards would not be
accelerated, and instead would be substituted for awards that substantially preserve the applicable terms of the stock-based awards.
We
have not included Mr. Archbold in the tables above because he was not employed by us on December 31, 2016, and the amounts paid
or payable in 2016 to Mr. Archbold in connection with his separation from employment with the Company are included in the Summary
Compensation Table and the 2016 Option Exercises and Stock Vested Table and the related discussion above, including the Compensation
Discussion and Analysis section of this proxy statement.
For
more information regarding actual termination payments commencing in 2016, see “Compensation Discussion and Analysis –
Separation Arrangements with Mr. Archbold” beginning on page 30.
ADVISORY
VOTE ON SAY-ON-FREQUENCY VOTE
(PROPOSAL
3)
Pursuant
to Section 14A of the Exchange Act, the Company is periodically required to submit to stockholders a non-binding, advisory vote
as to whether the stockholder advisory vote to approve the compensation of its Named Executive Officers (commonly known as a “say-on-pay”
vote), set forth in Proposal 2 above, should occur every one, two or three years. You may cast your vote by choosing one year,
two years, or three years or you may abstain from voting when you vote for the resolution set forth below.
Our
Board recommended, and the stockholders approved, at our 2012 annual meeting of stockholders, that an advisory vote on the compensation
of our Named Executive Officers be conducted on an annual basis. As a result, we have submitted our say-on-pay proposal to our
stockholders at each annual meeting since 2012. We are required, by SEC rule, to submit a proposal to our stockholders regarding
the frequency of the advisory vote on the compensation of our Named Executive Officers no later than the 2018 Annual Meeting,
but are seeking the input of our stockholders, at the 2017 annual meeting of the stockholders and in accordance with the Exchange
Act Rule 14a-21(b), on this “say-on-frequency” proposal. It is expected that the next say-on-frequency vote will occur
at the 2023 annual meeting of our stockholders.
In
voting on this Proposal 3, stockholders are provided with four choices: stockholders may indicate their preference as to whether
the advisory vote to approve the compensation of the Named Executive Officers should occur once every one year, two years or three
years; stockholders may also abstain from voting.
After
careful consideration, it is the opinion of the Board that an annual advisory stockholder vote on the compensation of our Named
Executive Officers is the most appropriate option for us because it will allow our stockholders to provide more frequent, direct
input on our compensation policies and practices, and the resulting compensation for our Named Executive Officers. Stockholders
will have the opportunity to consider our most recent compensation decisions in the context of our pay for performance policy
and focus on increasing long-term stockholder value, and to provide feedback to us in a timely way. Finally, the Board believes
an annual advisory stockholder vote promotes corporate transparency.
While
the Board has determined that the say-on-pay vote shall be held annually, stockholders are not voting to approve or disapprove
of the Board’s determination. Rather, stockholders are being provided with a mechanism to provide input to the Board about
the frequency with which we will hold a non-binding, advisory vote by our stockholders to approve the compensation of our Named
Executive Officers. As an advisory vote, the result of the vote is not binding on us. However, the Board values the opinions of
our stockholders in their vote on this matter, and will consider the outcome of the vote when making a determination as to the
frequency of future advisory votes to approve the compensation of our Named Executive Officers. The alternative receiving the
greatest number of votes (once every one year, two years or three years) will be the resulting recommendation, on an advisory
basis, of our stockholders.
Recommendation
THE
BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE, ON AN ADVISORY BASIS, TO RECOMMEND HOLDING THE SAY-ON-PAY VOTE ONCE EVERY YEAR.
RATIFICATION
OF APPOINTMENT OF AUDITORS
(PROPOSAL 4)
In
accordance with the Audit Committee’s charter, the Audit Committee is responsible for the appointment and retention of our
independent auditors. In our fiscal years ended December 31, 2016 and 2015, all audit and non-audit services were pre-approved
by the Audit Committee in accordance with the Audit Committee’s charter.
The
Audit Committee has appointed PricewaterhouseCoopers LLP (“PwC”) to serve as our independent auditors for our fiscal
year ending December 31, 2017, subject to ratification by our stockholders. Representatives of PwC will be present at the Annual
Meeting to answer questions and will also have the opportunity to make a statement if they desire to do so. If the proposal to
ratify PwC’s appointment is not approved, other certified public accountants will be considered by the Audit Committee.
Even if the proposal is approved, the Audit Committee, in its discretion, may direct the appointment of new independent auditors
at any time during the year if it believes that such a change would be in the best interest of the Company and its stockholders.
Fees
Paid to PricewaterhouseCoopers LLP
The
fees incurred by us for professional services rendered by PwC for our fiscal years ended December 31, 2016 and 2015 were as follows:
|
Audit
Fees, Audit Related Fees, Tax Fees and All Other Fees
|
|
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit
Fees (1)
|
|
|
1,302,300
|
|
|
|
1,261,970
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit
Related Fees (2)
|
|
|
5,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
Fees (3)
|
|
|
110,000
|
|
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other Fees (4)
|
|
|
1,800
|
|
|
|
1,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,419,100
|
|
|
|
1,393,770
|
|
|
|
(1)
|
Includes
services related to the audit of the Company’s financial statements and internal
controls over financial reporting, statutory audits of subsidiaries, and various other
filings with the SEC.
|
|
|
(2)
|
Principally
includes review of franchise disclosure documents.
|
|
|
(3)
|
Includes
services related to Federal tax planning and advice, and certain individual tax compliance
services.
|
|
|
(4)
|
Represents
license fees for access to technical accounting information.
|
The
Audit Committee has concluded that the provision of the foregoing services is compatible with maintaining PwC’s independence.
The
affirmative vote of the holders of a majority of the votes cast by our stockholders in person or represented by proxy at the Annual
Meeting and entitled to vote is required to approve this Proposal 4.
Pre-Approval
Policies and Procedures
All
of the services performed for us by PwC during 2016 were pre-approved by the Audit Committee. The Audit Committee’s policy,
as reflected in its charter, requires that the Audit Committee pre-approve on an engagement-by-engagement basis all audit and
non-audit services to be performed by our independent auditors, provided that the Audit Committee may delegate the authority to
pre-approve such services to a subcommittee of the Audit Committee.
Recommendation
THE
BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF PWC AS INDEPENDENT AUDITORS FOR OUR FISCAL
YEAR ENDING DECEMBER 31, 2017.
AUDIT
COMMITTEE REPORT
The
Board has determined that each member of the Audit Committee meets the SEC and the NYSE independence and financial literacy requirements.
The Board has also determined that each of Messrs. Berger, Hines and Mallott qualifies as an “audit committee financial
expert.”
The
Audit Committee has reviewed and discussed our audited financial statements for the year ended December 31, 2016 with both management
and the independent auditors. The Audit Committee discussed the auditors’ review of our quarterly financial information
with the auditors prior to the release of such information and the filing of our quarterly reports with the SEC.
Further,
the Audit Committee discussed with the independent auditors the matters required to be discussed by Public Company Accounting
Oversight Board (“PCAOB”) Auditing Standard No. 1301 (Communications with Audit Committees), received the written
disclosures and the letter from the independent auditors required by applicable requirements of the PCAOB regarding the independent
accountant’s communications with the Audit Committee concerning independence and discussed with the auditors the auditors’
independence. The Audit Committee also discussed with the auditors financial management matters related to our internal control
over financial reporting. Based on these discussions, the Audit Committee’s review of our audited financial statements for
the year ended December 31, 2016 and the written disclosures received from the independent auditors, the Audit Committee recommended
that the Board include the audited financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31,
2016 for filing with the SEC.
This
audit committee report is not deemed filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, and is not incorporated by reference into any filings that we may make with the SEC.
|
|
AUDIT COMMITTEE
|
|
|
Philip E. Mallott (Chairperson)
|
|
|
Jeffrey P. Berger
|
|
|
Michael F. Hines
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table below sets forth information regarding the beneficial ownership of our Common Stock as of the Record Date by:
(i) each person, or group of affiliated persons, known by us to beneficially own more than five percent of our Common Stock; (ii)
the Named Executive Officers; (iii) each of our directors and nominees for director; and (iv) all of our current directors and
executive officers as a group, based on information furnished by each person.
Beneficial
ownership is determined in accordance with the Exchange Act and includes voting and investment power with respect to our Common
Stock. The following table includes Common Stock issuable within 60 days of the Record Date upon the exercise of all options and
other rights beneficially owned by the indicated stockholders on that date. Percentage of beneficial ownership is based on 68,564,078
shares of Common Stock outstanding as of March 24, 2017. Except as otherwise noted below, each person or entity named in the following
table has sole voting and investment power with respect to all shares of our Common Stock that he, she or it beneficially owns.
Unless
otherwise indicated, the address of each beneficial owner listed below is c/o GNC Holdings, Inc., 300 Sixth Avenue, Pittsburgh,
PA 15222.
|
Name
of Beneficial Owner
|
Position
|
Shares
|
Percentage
(%)
|
|
|
|
|
|
|
Robert
F. Moran
|
Interim
Chief Executive Officer and Director
|
603,196
(1)
|
*
|
|
|
|
|
|
|
Tricia
K. Tolivar
|
Chief
Financial Officer
|
29,102
(2)
|
*
|
|
|
|
|
|
|
Jeffrey
P. Berger
|
Director
|
81,664
(3)
|
*
|
|
|
|
|
|
|
Alan
D. Feldman
|
Director
|
10,937
(4)
|
*
|
|
|
|
|
|
|
Michael
D. Dzura
|
Former
Executive Vice President, Operations
|
35,003
(5)
|
*
|
|
|
|
|
|
|
Jeffrey
R. Hennion
|
Chief
Marketing and e-Commerce Officer
|
32,433
(6)
|
*
|
|
|
|
|
|
|
Michael
F. Hines
|
Director
|
205,909
(7)
|
*
|
|
|
|
|
|
|
Amy
B. Lane
|
Director
|
44,489
(8)
|
*
|
|
|
|
|
|
|
Philip
E. Mallott
|
Director
|
37,072
(9)
|
*
|
|
|
|
|
|
|
Guru
Ramanathan
|
Senior
Vice President and Chief Innovation Officer
|
147,037
(10)
|
*
|
|
|
|
|
|
|
Richard
J. Wallace
|
Director
|
48,989
(11)
|
*
|
|
|
|
|
|
|
Michael
G. Archbold
|
Former
Chief Executive Officer
|
67,657
(12)
|
*
|
|
|
|
|
|
|
All
directors and executive officers as a group (12 persons)
|
|
1,265,431
|
1.85%
|
*Less
than 1% of the outstanding shares of Common Stock.
|
|
(1)
|
Consists
of (i) 598,748 shares directly held and (ii) 4,448 shares of time-vested restricted stock.
|
|
|
(2)
|
Consists
of (i) 4,611 shares directly held, (ii) 4,339 shares of time-vested restricted stock,
(iii) 7,714 shares of performance-vested restricted stock, and (iv) 12,438 shares issuable
upon the exercise of options that are currently exercisable or will become exercisable
within 60 days following the Record Date.
|
|
|
(3)
|
Consists
of (i) 42,216 shares directly held, (ii) 4,448 shares of time-vested restricted stock
and (iii) 35,000 shares issuable upon the exercise of options that are currently exercisable
or will become exercisable within 60 days following the Record Date.
|
|
|
(4)
|
Consists
of (i) 6,489 shares directly held and (ii) 4,448 shares of time-vested restricted stock.
|
|
|
(5)
|
Consists
of (i) 5,284 shares directly held, (ii) 2,849 shares of time-vested restricted stock,
(iii) 5,088 shares of performance-vested restricted stock and (iv) 21,782 shares issuable
upon the exercise of options that are currently exercisable or will become exercisable
within 60 days following the Record Date.
|
|
|
(6)
|
Consists
of (i) 6,660 shares directly held, (ii) 2,035 shares of time-vested restricted stock,
(iii) 6,106 shares of performance-vested restricted stock and (iv) 17,632 shares issuable
upon the exercise of options that are currently exercisable or will become exercisable
within 60 days following the Record Date.
|
|
|
(7)
|
Consists
of (i) 189,541 shares directly held, (ii) 4,448 time-vested RSUs and (iii) 11,920 shares
issuable upon the exercise of options that are currently exercisable or will become exercisable
within 60 days following the Record Date.
|
|
|
(8)
|
Consists
of (i) 9,541 shares directly held, (ii) 4,448 time-vested RSUs (including units representing
accrued dividends on deferred amounts) and (iii) 30,500 shares issuable upon the exercise
of options that are currently exercisable or become exercisable within 60 days following
the Record Date.
|
|
|
(9)
|
Consists
of (i) 32,624 shares directly held and (ii) 4,448 shares of time-vested restricted stock.
|
|
|
(10)
|
Consists
of (i) 53,641 shares directly held, (ii) 1,187 shares of time-vested restricted stock,
(iii) 3,561 shares of performance-vested restricted stock, and (iv) 88,648 shares issuable
upon exercise of options that are currently exercisable or will become exercisable within
60 days following the Record Date.
|
|
|
(11)
|
Consists
of (i) 9,541 shares directly held, (ii) 4,448 shares of time-vested restricted stock
and (iii) 35,000 shares issuable upon the exercise of options that are currently exercisable
or will become exercisable within 60 days following the Record Date.
|
|
|
(12)
|
Consists
of (i) 32,038 shares directly held and (ii) 35,619 shares of performance-vested restricted
stock.
|
Based
on filings made under Section 13(d) and 13(g) of the Exchange Act reporting ownership of shares and percent of class as of December
31, 2016, as of March 24, 2017, the only persons known by us to be beneficial owners of more than 5% of our common stock were
as follows:
Beneficial Owners of 5% or More of Our Outstanding Common Stock
|
Shares
|
Percentage
(%)
|
|
|
|
|
|
FMR
LLC and certain affiliated parties (1)
245
Summer Street
Boston,
MA 02210
|
9,896,854
|
14.469%
|
|
Blackrock,
Inc. (2)
55
East 52
nd
Street
New
York, NY 10055
|
4,156,246
|
6.1%
|
|
The
Vanguard Group, Inc. (3)
100
Vanguard Blvd.
Malvern,
PA 19355
|
5,240,215
|
7.66%
|
|
|
(1)
|
Based
on the Amendment No. 4 to Schedule 13G filed with the SEC on February 14, 2017 by FMR
LLC, a parent holding company, Abigail P. Johnson, the Chairman and Chief Executive Officer
of FMR LLC and Fidelity Low-Priced Stock Fund (the “FLPS Fund”). In the Amendment
No. 4 to Schedule 13G, (i) FMR LLC discloses it has sole voting power over 858,169 shares
and sole dispositive power over 9,896,854 shares, (ii) Ms. Johnson discloses that she
has sole dispositive power over 9,896,854 shares and (iii) FLPS Fund discloses that it
has sole voting power over 5,368,500 shares. Members of the Johnson family are the predominant
owners, directly or through trusts, of the Series B voting common shares of FMR LLC,
representing 49% of the voting power of FMR LLC, and through a shareholders’ voting
agreement, members of the Johnson family may be deemed to form a controlling group with
respect to FMR LLC.
|
|
|
(2)
|
Based
on the Amendment No. 4 to Schedule 13G filed with the SEC on January 24, 2017 by Blackrock,
Inc. (“Blackrock”) in which Blackrock discloses that it has sole voting power
over 3,986,882 shares and sole dispositive power over 4,156,246 shares.
|
|
|
(3)
|
Based
on the Amendment No. 4 to Schedule 13G filed with the SEC on February 13, 2016 by The
Vanguard Group, Inc. (“Vanguard”). In the Amendment No. 4 to Schedule 13G,
Vanguard reports it has sole voting power over 136,783 shares, sole dispositive power
over 5,098,313 shares, shared voting power of 9,000 shares and shared dispositive power
over 141,902 shares.
|
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our
directors, executive officers and holders of more than 10% of our Common Stock are subject to the reporting requirements of Section
16(a) of the Exchange Act, which requires them to file reports with the SEC on Forms 3, 4 and 5 with respect to their ownership
and change of ownership of our Common Stock.
Based
solely upon a review of the copies of these forms or written representations, which we have received from such persons or entities
for transactions in our Common Stock and their Common Stock holdings for our fiscal year ended December 31, 2016, we believe that
all reporting requirements under Section 16(a) for such fiscal year were met in a timely manner by our directors, executive officers
and holders of more than 10% of our Common Stock, except that there was a failure to file Forms 4 by certain of our NEOs in connection
with exempt tax withholding transactions occurring upon the vesting of awards in 2016 as follows: Ms. Tolivar and Mr. Dzura (one
tax withholding transaction each); Mr. Hennion (two tax withholding transactions); Dr. Ramanathan (four tax withholding transactions);
and Mr. Archbold (three tax withholding transactions).
STOCKHOLDER
PROPOSALS FOR 2018 ANNUAL MEETING
Stockholder
proposals submitted pursuant to Rule 14a-8 of the Exchange Act for our 2018 Annual Meeting must be received by us no later than
December 12, 2017 to be presented at the 2018 Annual Meeting or to be eligible for inclusion in the proxy materials related thereto
under the SEC’s proxy rules. Such proposals can be sent to us at GNC Holdings, Inc., 300 Sixth Avenue, Pittsburgh, Pennsylvania
15222, Attention: Secretary.
Our
Fifth Amended and Restated Bylaws (the “Bylaws”) prescribe the procedures that a record stockholder must follow to
nominate directors for election at an annual meeting or to bring other business before an annual meeting (other than matters submitted
pursuant to Rule 14a-8 under the Exchange Act). The following summary of these procedures is qualified by reference to our Bylaws,
a copy of which can be obtained, without charge, upon written request to GNC Holdings, Inc., 300 Sixth Avenue, Pittsburgh, Pennsylvania
15222, Attention: Secretary.
Pursuant
to Article II, Section 5(b) of our Bylaws, a record stockholder must provide timely notice of any stockholder proposal (including
director nomination(s)) other than those submitted pursuant to Rule 14a-8 of the Exchange Act to be properly brought before the
2018 Annual Meeting. To be timely, such notice must be received by our secretary at our principal executive offices at 300 Sixth
Avenue, Pittsburgh, Pennsylvania 15222 between the opening of business on January 23, 2018 and the close of business on February
22, 2018. The notice must contain the information specified in our Bylaws regarding the stockholder giving the notice and the
business proposed to be brought before the meeting. For director nominations, the notice must also contain the information specified
in our Bylaws regarding each person whom the stockholder wishes to nominate for election as director and be accompanied by the
written consent of each proposed nominee to serve as director if elected. Such stockholder proposals must also be in compliance
with the additional requirements set forth in the Bylaws. However, if the date of the 2018 Annual Meeting is more than 30 days
before or more than 70 days after May 23, 2018, to be timely, such notice must be received no earlier than the 120th day prior
to the date of the 2018 Annual Meeting and not later than (i) the close of business on the 90th day prior to the date of the 2018
Annual Meeting or (ii) the tenth day following the day on which the public announcement of the date of the 2018 Annual Meeting
is first made.
With
respect to stockholder proposals not included in our proxy statement for the 2018 Annual Meeting, the persons named in the Board’s
proxy for the 2018 Annual Meeting will be entitled to exercise the discretionary voting power conferred by such proxy under the
circumstances specified in Rule 14a-4(c) under the Exchange Act.
OTHER
INFORMATION
Annual
Report on Form 10-K
Copies
of our Annual Report on Form 10-K can be obtained free of charge upon request to GNC Holdings, Inc., 300 Sixth Avenue, Pittsburgh,
Pennsylvania, 15222, Attention: Secretary.
ANNEX
A
Reconciliation
of Non-GAAP to GAAP financial metric
EPS,
which is calculated at the end of the year including certain specified adjustments disclosed in our quarterly earnings reports,
was used as a performance metric under the 2016 Incentive Plan. Below we have set forth a reconciliation of the adjusted EPS to
the GAAP financial metric. This reconciliation is based upon the Reported EPS from the Company’s audited financial statements.
GNC
HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation
of Net (Loss) Income and Diluted (Loss) EPS to Adjusted Net Income and Adjusted
Diluted
EPS
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31,
|
|
|
|
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2016
|
|
|
2015
|
|
|
|
|
Net (Loss)
|
|
|
Diluted
|
|
|
Net
|
|
|
Diluted
|
|
|
|
|
Income
|
|
|
(Loss) EPS
|
|
|
Income
|
|
|
EPS
|
|
|
Reported
|
|
$
|
(286,250
|
)
|
|
$
|
(4.12
|
)
|
|
$
|
219,299
|
|
|
$
|
2.60
|
|
|
Gains on refranchising
|
|
|
(19,112
|
)
|
|
|
(0.27
|
)
|
|
|
(7,571
|
)
|
|
|
(0.09
|
)
|
|
Long-lived asset impairments
|
|
|
476,553
|
|
|
|
6.85
|
|
|
|
28,333
|
|
|
|
0.34
|
|
|
Other SG&A (1)
|
|
|
5,513
|
|
|
|
0.07
|
|
|
|
7,522
|
|
|
|
0.09
|
|
|
Executive severance
|
|
|
4,453
|
|
|
|
0.07
|
|
|
|
—
|
|
|
|
—
|
|
|
Loss on sale of Discount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplements
|
|
|
—
|
|
|
|
—
|
|
|
|
2,729
|
|
|
|
0.04
|
|
|
Correction of immaterial payroll
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accrual error
|
|
|
—
|
|
|
|
—
|
|
|
|
2,762
|
|
|
|
0.03
|
|
|
Tax effect
|
|
|
(31,488
|
)
|
|
|
(0.45
|
)
|
|
|
(11,456
|
)
|
|
|
(0.14
|
)
|
|
Adjusted
|
|
$
|
149,669
|
|
|
$
|
2.15
|
|
|
$
|
241,618
|
|
|
$
|
2.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted common shares outstanding (2)
|
|
|
69,534
|
|
|
|
|
|
|
|
84,186
|
|
|
|
|
|
|
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(1)
|
Current
year includes legal accruals and store-closing-related costs and prior year includes
a legal accrual partially offset by the reversal of an international franchise receivable
reserve.
|
|
|
(2)
|
For
reported diluted loss per share in the current year, all outstanding stock-based awards
are excluded for diluted shares outstanding because the Company reported a net loss making
all awards antidilutive; however, for purposes of adjusted diluted EPS, the Company has
included the impact of dilutive stock-based awards as the Company reported net income
on an adjusted basis.
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