Item 1.01
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Entry into a Material Definitive Agreement.
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The Hain Celestial Group, Inc., a Delaware
corporation (the
Company
), entered into an agreement dated as of September 27, 2017 (the
Agreement
) with certain individuals affiliated with and investment funds managed by Engaged Capital, LLC (the
Engaged Group
).
Pursuant to the Agreement, the size of the existing Board of Directors of the Company (the
Board
) has been temporarily increased to 14 directors and Dr. Celeste A. Clark, Dean R. Hollis, Shervin J. Korangy, Jack L. Sinclair, Glenn W. Welling and Dawn M. Zier (the
Initial Nominees
) have
been appointed as directors, effective immediately.
The Agreement further provides that, at the Companys 2017 annual meeting of
stockholders (the
2017 Annual Meeting
), it is expected that the size of the Board will be reduced to 11 directors and that three members of the incumbent Board will not stand for
re-election.
In addition, the Initial Nominees will be included in the Companys slate of nominees for election as directors at the 2017 Annual Meeting and at the 2018 annual meeting of stockholders (the
2018 Annual Meeting
). During the standstill period (the
Standstill Period
), which begins on the date of the Agreement and extends through and includes the date of the 2018 Annual Meeting, neither the Board nor
any committee of the Board shall modify the size of the Board from 11 directors without the unanimous approval of the Board.
The Board
will form a working group of the Board (the
Working Group
) which will work with an advisor to (1) review the Companys portfolio of businesses, brands and operating strategy, (2) evaluate alternatives to create
shareholder value and (3) make recommendations to the Board regarding such alternatives. Pursuant to the Agreement, the members of the Working Group will be Irwin D. Simon, the Companys President, Chief Executive Officer and Chairman of
the Board, Andrew R. Heyer, the Companys lead independent director, along with Messrs. Welling and Korangy, all to the extent elected to serve on the Board, through and until the 2018 Annual Meeting.
Promptly following the 2017 Annual Meeting, the Agreement provides that the Board will take all necessary actions to cause the Compensation
Committee of the Board to be comprised of Messrs. Welling, Zilavy and Sinclair, to the extent elected to serve on the Board through and until the 2018 Annual Meeting. It is expected that Mr. Zilavy shall serve as chairperson of the Compensation
Committee.
The Company will be relieved of its obligations described above in the event that the Engaged Group ceases to be the
beneficial owner of at least 4.9% of the Companys then outstanding common stock (the
Common Stock
).
With respect
to the shares of the Companys Common Stock owned by the Engaged Group and its Affiliates (as defined in the Agreement), the Engaged Group has agreed to certain standstill, voting and other similar provisions in connection with entry into the
Agreement, each as more thoroughly described in the Agreement. In particular, during the Standstill Period, the Engaged Group has agreed that it will, and shall cause each of its Affiliates to, among other things, vote all shares of Common Stock of
the Company beneficially owned by the Engaged Group or such Affiliate (or otherwise for which it has voting rights) at such meeting (A) in favor of the slate of directors recommended by the Board and any other proposal supported by a majority
of the Board; provided, however, the Engaged Group and its Affiliates are permitted to vote at their discretion with respect to the
say-on-pay
proposal
brought before the stockholders at the 2017 Annual Meeting, (B) against any stockholder proposals or director nominations at such annual or special meeting which are not supported by the Board, and (C) in favor of the ratification of the
appointment of such accounting firm as may be determined by the Board as the Companys independent registered public accounting firm for the relevant fiscal year.
Pursuant to the Agreement, during the Standstill Period, except following unanimous approval of the Board, the Engaged Group has agreed that
neither it nor its Affiliates will purchase or cause to be purchased or otherwise acquire (1) beneficial ownership of any Common Stock or other securities of the Company (other than securities issued pursuant to a plan established by the Board
for members of the Board or a stock split, stock dividend or similar corporate action initiated by the Company with respect to any securities beneficially owned by the members of the Engaged Group or its Affiliates), if immediately after the taking
of such action, the Engaged Group together with its Affiliates would, in the aggregate, beneficially own more than 14.9% of the then outstanding shares of Common Stock, or (2) interests in any of the Companys indebtedness;
The Agreement will terminate at the end of the Standstill Period or other date established by
mutual written agreement of the parties to the Agreement.
A copy of the Agreement is attached hereto as Exhibit 10.1 hereto, and the
description above is not complete and is qualified in its entirety by the full text of the Agreement as attached and incorporated herein by reference.