RMCF Rocky Mountain Chocolate Factory Inc

PROPOSAL 1 — ELECTION OF DIRECTORS

Director Nominees

Our Board currently consists of seven directors. Upon recommendation of the Nominating Committee, the Special Committee and, pursuant to the terms of the GVIC Cooperation Agreement, our Board has nominated Rahul Mewawalla, Bryan J. Merryman, Gabriel Arreaga, Elisabeth B. Charles, Jeffrey R. Geygan, Brett P. Seabert and Mary K. Thompson for election to serve on the Board until the 2022 annual meeting of stockholders and until their respective successors are duly elected and qualified as shown on the WHITE proxy card. See “Certain Relationship and Related Person Transactions—GVIC Cooperation Agreement” in this proxy statement for additional information on the GVIC Cooperation Agreement.

In August 2021, Franklin E. Crail, the Company’s co-founder and former President, Chief Executive Officer and Chairman of the Board, announced his retirement from the Board and that he would not be standing for re-election as a director at the Annual Meeting.

With the election of Ms. Thompson to the Board in January 2020, the appointment of Mr. Mewawalla to the Board in June 2021, the appointment of Mr. Geygan to the Board in August 2021, and the nomination of Mr. Arreaga and Ms. Charles for election at the Annual Meeting, assuming the election of the Board’s nominees at the Annual Meeting, over a majority of the Board (5 of 7 directors) will have been refreshed over the last two years, all of whom are independent. The Board believes the qualifications and experience of the Company’s nominees put them in the best position to decide on a course of action that will enhance stockholder value at this important time for the Company.

Andrew T. Berger, a current director, is the Managing Member of AB Value. In connection with the AB Value Nomination Notice, the Board has not re-nominated Mr. Berger to stand for re-election to the Board.

If a proxy pursuant to a WHITE proxy card or WHITE voting instruction form is authorized, but voting directions are not made, such proxy will be voted, unless authority to vote is withheld by the stockholder, “FOR ALL” seven of Mses. Charles and Thompson and Messrs. Mewawalla, Merryman, Arreaga, Geygan and Seabert to serve until the 2022 annual meeting of stockholders and until the election and qualification of their respective successors, unless you indicate on the WHITE proxy card a vote to “FOR ALL EXCEPT” your vote with respect to any of these nominees. If any such nominee shall be unable to serve or will not serve for any reason, proxies pursuant to a WHITE proxy card or WHITE voting instruction form may be voted for such other person or persons as shall be determined by the proxy holders in their discretion, to the extent authorized under Rule 14a-4(c)(1) under the Exchange Act. If any such substitute nominee(s) are designated, we will file an amendment to the proxy statement and a WHITE proxy card that, as applicable, identifies the substitute nominee(s), discloses that such nominee(s) have consented to being named in the revised proxy statement and to serve if elected, and includes biographical and other information about such nominee(s) as required by the rules of the SEC. Each of the nominees has consented to being named in this proxy statement. 

Set forth below is certain information and age as of [●], 2021 concerning each nominee for election as a director:

The Board believes that its nominees, as a whole, provide the diversity of experience and skills necessary for a well-functioning Board. All of the Board’s nominees have substantial senior executive level experience. The Board highly values the ability of individual directors to contribute to a constructive Board environment and the Board believes that its nominees, collectively, will perform in such a manner.

Set forth below is a more complete description of each director nominee’s background, professional experiences, qualifications and skills.

Rahul Mewawalla. Mr. Mewawalla was appointed Chairperson of the Board on July 30, 2021 and has served on our Board since June 2021. Mr. Mewawalla is a digital, product, technology, and business leader. He has extensive strategic and operational leadership experience across digital, product, technology, platforms, internet, software, telecommunications, financial services and media companies. He served as Chief Executive Officer/President of Xpanse Inc. and concurrently as Executive Vice President, Platforms and Technology Businesses and Chief Digital Officer at Freedom Mortgage Corporation from 2020 to 2021, as Chief Executive Officer and President at Zenplace Inc. from 2014 to 2020, as Vice President at Nokia Corporation from 2010 to 2012, as Vice President at General Electric Company’s NBCUniversal from 2008 to 2010, as Senior Director at Yahoo! Inc. from 2005 to 2008, in addition to experience across various other leadership and management roles. Mr. Mewawalla has also served as Senior Advisor to the San Francisco Mayor’s Office on Innovation, as Advisor to Stanford University's Persuasive Technology Lab, and as Committee Chair of the VC TaskForce SIG on Systems and Services. He has also been a board member, investor and advisor to various other private companies and philanthropic organizations. Mr. Mewawalla earned an MBA from the Kellogg School of Management at Northwestern University and a BBS from the University of Delhi. We believe that Mr. Mewawalla’s robust digital, product, technology, innovation, e-commerce expertise, his deep strategic, operational and transformational skills, as well as his extensive leadership and executive experience qualify him to serve as a director of the Company.

Bryan J. Merryman. Mr. Merryman joined us in December 1997 as Chief Financial Officer and Vice President - Finance. Since April 1999, Mr. Merryman also served as our Chief Operating Officer and as a director, and since January 2000, as our Treasurer. In February 2019, Mr. Merryman was appointed as our Chief Executive Officer, and was elected Chairman of the Board, a position he held until July 2021. From January 1997 to December 1997, Mr. Merryman was a principal in Knightsbridge Holdings, Inc., a leveraged buyout firm. Mr. Merryman also served as Chief Financial Officer of Super Shops, Inc., a retailer and manufacturer of after-market auto parts, from July 1996 to November 1997, and prior to July 1996, was employed for more than 11 years by Deloitte & Touche LLP, most recently as a Senior Manager. Mr. Merryman also currently serves as Chief Executive Officer of U-Swirl, Inc. (“U-Swirl”), a consolidated subsidiary of the company, a position he has held since October 2014, and has served as Chairman of the Board of U-Swirl since January 2013. Mr. Merryman’s extensive operational, accounting and financial expertise, along with his extensive knowledge of our business and broad industry expertise, provides significant value and insights to the Board.

Gabriel Arreaga. Mr. Arreaga is a director nominee. Mr. Arreaga has served as Senior Vice President of Chief Supply Chain of The Kroger Co. since October 2020. Previously, Mr. Arreaga served as Senior Vice President, Integrated Supply Chain North America of Mondelez International, Inc. from August 2018 to September 2020. Prior to that time, he served as Vice President of Global Supply Chain of Stanley Black & Decker, Inc. from July 2016 to August 2018. From January 2003 to June 2016, Mr. Arreaga held multiple positions of increasing responsibility at Unilever, including Vice President, Supply Chain & Product Group. Mr. Arreaga received his MBA from the Harvard Graduate School of Business Administration / INCAE Business School, Costa Rica and his Bachelor of Science in Business and Finance from Guilford College / Universidad del Valle de Nicaragua, Nicaragua. Mr. Arreaga brings vast experience in the areas of supply chain, manufacturing and operations to the Board, given his local and global experience in both confectionary and non-confectionary businesses.

Elisabeth B. Charles. Ms. Charles is a director nominee. Ms. Charles served as Chief Marketing Officer for Rodan + Fields from November 2017 to December 2019. Previously, she served as Senior Vice President and General Manager of Old Navy Outlet from November 2016 to August 2017. She also served as Old Navy’s Interim Chief Marketing Officer from May 2016 to October 2016. Prior to joining Old Navy, Ms. Charles was Senior Vice President, Chief Marketing Officer of Athleta from March 2015 through May 2016. From February 2009 through August 2014, Ms. Charles was Senior Vice President and Chief Marketing Officer of Petco Animal Supplies, Inc. She also served as Executive Vice President of Marketing of Victoria Secret Stores from February 2005 through October 2008 and served as its Vice President of Marketing from July 2004 through January 2005. Prior to 2005, Ms. Charles held a variety of marketing positions with Herbalife International of America, Inc., Ideaforest.com and Tricon Restaurants International (YUM Brands). Ms. Charles began her career as an Associate Consultant with Bain & Company. Ms. Charles served on the board of directors of At Home Group Inc. (“At Home”) (Nasdaq: HOME) from December 2016 until July 2021, when At Home was acquired by investment funds advised by Hellman & Friedman LLC. Ms. Charles also serves on the advisory board of Sezzle Inc., which she joined in November 2020 and was on the non-profit board of Alliance for Girls, the nation’s largest regional alliance of girl-serving organizations, from 2017 to 2020. Ms. Charles received her MBA from the Harvard Graduate School of Business Administration and her Bachelor of Arts in International Political Economy from the University of California at Berkeley. Ms. Charles has over 30 years of marketing experience at significant consumer brands and has held senior leadership roles at numerous national and international retail companies, including her most recent position as Chief Marketing Officer of Rodan + Fields. From such experience, Ms. Charles brings significant consumer retail industry experience in brand management and sales, e-commerce, digital marketing, loyalty merchandising, product development, strategic planning, data analytics and franchising to the Board.

Jeffrey R. Geygan. Mr. Geygan has served on our Board since August 2021 and is being nominated to the Board pursuant to the GVIC Cooperation Agreement. Mr. Geygan has served as the Chief Executive Officer and President of GVIC, an investment research and advisory services firm, since he founded it in 2007. Since February 2018, Mr. Geygan has served as a director of Wayside Technology Group, Inc. (Nasdaq: WSTG), a value-added global IT channel company providing innovative sales and distribution solutions for emerging technology vendors, and as Board Chair of Wayside since May 2018. Prior to founding GVIC, Mr. Geygan served as a Senior Portfolio Manager at UBS Financial Services. GVIC beneficially owns [●]% of the Company’s common stock as of [●], 2021. Mr. Geygan has taught undergraduate and graduate-level courses at IE University in Madrid, Spain, the University of Wisconsin–Milwaukee Lubar School of Business, and the College of Charleston. He serves on the Advisory Board of the University of Wisconsin–Madison Department of Economics. Mr. Geygan received a Bachelor of Arts degree in Economics from the University of Wisconsin. The Board believes that Mr. Geygan’s extensive financial and corporate governance expertise, and in his role as one of the largest stockholders of the Company, provides significant value, experience and insights to the Board, and qualifies him to serve as a director of the Company.

Brett P. Seabert. Mr. Seabert has served on our Board since April 2017. Mr. Seabert, a certified public accountant (“CPA”), has 29 years of experience in business management, operations, finance and administration. Mr. Seabert currently serves in various capacities, including as a director or executive officer of various companies, including Tanamera Construction, LLC, a high-end real estate development and construction company (since April 2007), TD Construction, LLC, a construction company (since September 2009), Caughlin Club Management Partners, LLC, a health and tennis club and preschool owner and operator (since July 2008), and B&L Investments, Inc., a management and holding company (since March 2003). From 2001 to 2008, Mr. Seabert served as Chief Financial and Operating Officer of Tanamera Commercial Development, LLC. Between 1989 and 2001, Mr. Seabert served in various positions at CMS International, an owner and management company operating several casinos, in the U.S. and one in the Caribbean, most recently as Executive Vice President and Chief Financial Officer, including oversight of internal audit, risk management and human resource functions. Mr. Seabert has been primarily engaged in commercial and residential real estate development and construction since 2001. From 1984 to 1989, Mr. Seabert was a practicing CPA with Deloitte & Touche LLP. Mr. Seabert received a Bachelor’s degree in Accounting from the University of Nevada-Reno. Mr. Seabert’s extensive management, accounting and financial experience brings operational, investment, and strategic value and insights to the Board.

Mary K. Thompson. Ms. Thompson has served on our Board since January 2020. Ms. Thompson is a veteran of the franchising industry. Since 2015, she has served as the Chief Operating Officer of Neighborly Brands (“Neighborly”), a service provider focused on repairing, maintaining and enhancing customers’ homes and businesses, where she oversees the ongoing business operations within the company. Neighborly is the holding company for 22 service-based franchise organizations focused on repairing, maintaining and enhancing homes and business properties. Neighborly provides a diverse array of specialty services through more than 3,700 franchised locations in ten countries with system-wide revenue of $1.8 billion in 2018. Prior to her appointment as Neighborly’s Chief Operating Officer, Ms. Thompson served as the President of Mr. Rooter Plumbing Corporation, a franchisor focused on independently owned and operated plumbing franchisees, from October 2006 to July 2015. From December 1994 to October 2006, Ms. Thompson served as the President of and held other various leadership positions (including being a multi-unit franchisee) with Cookies by Design, a franchise concept specializing in customized cookie gifts produced at mall-based retail locations. Ms. Thompson served as an Officer in the United States Marine Corps from December 1985 to April 1993. She earned her B.A. in English from the University of Texas at Austin and completed the mini MBA Program in franchise management at the University of St. Thomas College of Business. We believe that Ms. Thompson’s extensive business experience, especially with franchised companies, qualifies her to serve as a director of the Company.

Family Relationships

No family relationships exist between any director or executive officer and any other of our directors or executive officers.

CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS

We are committed to best-in-class corporate governance and the addition of robust strategic, operational and transformational expertise to the Board. As discussed above and in more detail below, upon the completion of the search process referred to in this proxy statement and the other Board appointments made in 2020 and 2021, assuming the election of the Board’s nominees at the Annual Meeting, over a majority of the Board (5 of 7 directors) will have been refreshed over the last two years, all of whom are independent. The Board has formalized several policies, procedures and standards of corporate governance, some of which are described below. We continue to monitor best practices and legal and regulatory developments with a view to further revising our governance policies and procedures, as appropriate.

The Board has been enhanced by the addition of four new independent directors in 2021, and Ms. Thompson in January 2020. In addition, in July 2021, the Company formed the Special Committee to oversee the process of identifying new qualified, independent directors for the Company’s next chapter of growth, innovation and transformation. The Special Committee is comprised of Ms. Thompson and Messrs. Mewawalla and Seabert, all disinterested, independent directors of the Company. The establishment of the Special Committee represented the next step in the Company’s stated commitment to refresh the Board with a view towards the future and further enhancing corporate governance structures and practices at the Company. In connection with this process, as announced on August 10, 2021, the Company retained leading global search firm, RRA, to identify world-class candidates for the Board’s consideration. The Special Committee conducted a rigorous and thoughtful nationwide evaluation to identify several world-class, independent directors. The result of this process is the nomination of Gabriel Arreaga and Elisabeth B. Charles for election at the Annual Meeting.

Furthermore, as announced in August 2021 and discussed in greater detail in “Certain Relationship and Related Person Transactions—GVIC Cooperation Agreement,” we entered into the GVIC Cooperation Agreement with GVIC. GVIC beneficially owns [●]% of the Company’s common stock as of [●], 2021. The Company greatly values the input and perspective of all its stockholders and, as part of this ongoing engagement, the Board welcomed Mr. Geygan as a director. The GVIC Cooperation Agreement reflects our commitment to have a Board with diverse experience, expertise and perspective that is best positioned to maximize stockholder value and support the Company through its next exciting chapter of growth.

In addition, as announced in July 2021, the Board committed to separating the roles of Chairperson of the Board and Chief Executive Officer of the Company. Accordingly, effective July 30, 2021, Mr. Mewawalla was appointed as the independent Chairperson of the Board. The Board believes that separating the roles and appointing an independent director as Chairperson of the Board will further enhance the Company’s corporate governance structure and enhance stockholder value.

Additionally, in connection with the separation of the Chairperson and Chief Executive Officer (“CEO”) roles, the Board announced its intention to identify a new President and CEO for the Company for our next chapter of growth. 

The Board believes these actions build on the Company’s commitment to best-in-class corporate governance and the addition of robust strategic, operational and transformational expertise to your Board.

Board Refreshment

The Board believes that its members, as a group, should possess skills and qualifications that best enable it to formulate and oversee the implementation of the Company’s strategy, including diversity in professional and personal experience, background, race, gender, age and other factors of diversity that promote fresh perspectives and new ideas. The retail industry has rapidly evolved over the last decade with significant growth in omni-channel and e-commerce operations, and, as a result, the appropriate skill set for our leadership has evolved with it. The Board has therefore also evolved over the years to best serve the short- and long-term needs of the Company and its stockholders, with an increased focus on leadership with branded, digital and technological expertise.

In order to address evolving needs, our Board has an ongoing refreshment program, actively assessing itself against the Company’s current and expected future needs and seeking the advice of outside experts and its stockholders. Assuming the election of the Board’s nominees at the Annual Meeting, over a majority of the Board (5 of 7 directors) will have been refreshed over the last two years, all of whom are independent. In connection with the Board refreshment program, the Company retained leading global search firm, RRA, to identify world-class candidates for the Board’s consideration. As a result of this thorough nationwide search process, the Board is pleased to nominate Gabriel Arreaga and Elisabeth B. Charles as highly qualified, independent directors to the Board. Also, in August 2021, the Board appointed Jeffrey R. Geygan, who brings public company board experience, business strategy, financial statement analysis expertise and investment management experience. In addition, in June 2021, the Board added Rahul Mewawalla as a director and on July 30, 2021, elected him as Chairperson of the Board, and his strategic, growth and digital expertise and leadership experience to accomplish transformation, innovation and enhancement of stockholder value aligns with the Board’ strategic and operational vision for the Company. Similarly, in January 2020, the Board added Mary K. Thompson, who has extensive experience with franchised companies. Upon election of the Board’s nominees at the Annual Meeting, our average director tenure will be 3.9 years with an average director age of 55 years old.

With the additions of Mr. Mewawalla and Ms. Thompson, and the election of Ms. Charles and Mr. Arreaga at the Annual Meeting, the diversity of our Board would increase such that approximately 57% of our directors and director nominees would be diverse with respect to race, ethnicity or gender.

The Board is committed to continuing its efforts to identify effective directors to lead the Company into the future.

Director Continuing Education

Our Board believes that director continuing education is vital to the ability of directors to fulfill their responsibilities and supports increasing the effectiveness of the Board and its committees. Both as a group and as individuals, Board members keep themselves current on Board-related matters by reading corporate governance periodicals and hearing from the Company's outside counsel and management on pertinent topics such as corporate governance, finance, human resources, merchandising, facilities, supply chain, product development and marketing.

In addition, in connection with the Company’s commitment to good corporate governance, we have enrolled in the National Association of Corporate Directors (“NACD”), a leading authority on boardroom insights, to assist our directors in continuing their director education, and maintaining the skills and knowledge necessary or appropriate for the performance of their responsibilities as Board members.

Director Independence

The Board has determined that Rahul Mewawalla, Gabriel Arreaga, Elisabeth B. Charles, Jeffrey R. Geygan, Brett P. Seabert and Mary K. Thompson is each an independent director nominee. Mr. Merryman is not independent due to his service as a current executive officer of the Company.

The Board makes a determination regarding the independence of each director annually based on relevant facts and circumstances. Applying the standards and independence criteria defined by The Nasdaq Stock Market LLC (“Nasdaq”) listing standards, the Board has made a determination as to each independent director that no relationships exist which, in the opinion of the Board, would interfere with the exercise of his or her independent judgment in carrying out the responsibilities of a director.

We believe these proxy access parameters reflect a well-designed and balanced approach to proxy access that mitigates the risk of abuse and protects the interests of all of our stockholders. Stockholders who wish to nominate directors for inclusion in our proxy statement in accordance with proxy access must follow the procedures in Section 2.13 of our bylaws.

Code of Ethics and Code of Conduct

We have adopted a Code of Ethics for Senior Financial Officers that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. In addition, in accordance with Nasdaq listing rules, we have adopted a Code of Conduct applicable to all our officers, directors and employees. The text of each of the Code of Ethics for Senior Financial Officers and the Code of Conduct (together, the “Codes”) is available under Corporate Governance on the Investor Relations page of our website at www.rmcf.com. If we waive, or implicitly waive, any material provision of either of the Codes, or substantively amend either of the Codes, we will disclose that fact on our website within four business days.

Board Meetings

During fiscal year 2021, the Board held 17 meetings. Each director attended 75% or more of the aggregate of (i) the total number of meetings of the Board held during the period for which he or she has been a director and (ii) the total number of meetings held by all committees of the Board on which he or she served.

Board Attendance at the Annual Meeting

Although we encourage our directors to attend the Annual Meeting, we do not have a formal policy regarding a directors’ attendance at the Annual Meeting. All of our directors at the time of the meeting attended our 2020 annual meeting of stockholders.

Board Leadership Structure and Role in the Oversight of Risk Management

Since we were founded in 1981, we had employed a traditional board leadership model, with our Chief Executive Officer also serving as Chairman of our Board. In July 2021, the Board announced its commitment to separate the roles of Chairperson of the Board and Chief Executive Officer of the Company because it believed that such action would be in the best interests of stockholders. Accordingly, on July 30, 2021, Rahul Mewawalla was appointed as the independent Chairperson of the Board. The Board does not have a formal policy regarding separation of the roles of Chief Executive Officer and Chairperson of the Board. The Board believes it is in our best interests to make that determination based on current circumstances. The Board has, however, determined that an independent director serving as Chairperson is in the best interests of our stockholders at this time. This structure ensures a greater role of independent directors in the active oversight of our business, including strategy and risk management oversight, and in setting agendas and establishing Board priorities and procedures. This structure also allows the Chief Executive Officer to focus to a greater extent on the management of our day-to-day operations. The Board believes this split structure recognizes the time, effort, and energy the Chief Executive Officer is required to devote to the position in the current business environment, as well as the benefits of having an independent director with extensive strategic, operational and leadership expertise serve as the Chairperson.

Our Board oversees our risk management activities and implements its risk oversight functions through delegation to its committees. The Audit Committee is responsible for overseeing our financial reporting processes and systems of internal controls regarding finance and accounting and certain other risk management functions as are delegated to the Audit Committee by the Board. The Audit Committee provides a forum for communication among the Board, the independent auditors and our financial and senior management to facilitate open dialogue and promote effective risk management within our Company. In addition, the Audit Committee oversees our whistleblower/complaint procedures for accounting and auditing matters, which procedures provide that complaints or reports of suspected fraud, deficiencies or noncompliance relating to any accounting, internal controls or auditing matters should be promptly reported on an anonymous basis in writing to the chair of our Audit Committee. Similarly, under our Code of Ethics for Senior Financial Officers, persons who become aware of suspected violations of the Code of Ethics for Senior Financial Officers are encouraged to report such suspected violations promptly to the chair of the Audit Committee. Under these policies, the Audit Committee monitors, investigates and makes determinations and recommendations for action to the Board as a whole with respect to suspected violations. The Compensation Committee oversees risks relating to our compensation plans and programs. The Compensation Committee has reviewed and considered our compensation policies and programs in light of the Board’s risk assessment and management responsibilities and will do so in the future on an annual basis. The Compensation Committee believes that we have no compensation policies and programs that give rise to risks reasonably likely to have a material adverse effect on us. Our Nominating Committee is responsible for (i) assisting the Board in identifying individuals qualified to become members of the Board and (ii) approving and recommending qualified director candidates to the Board.

The Board and its committees encourage management to promote a corporate culture that understands risk management and incorporates it into the overall corporate strategy and day-to-day business operations of the Company. The Company’s risk management structure also includes an ongoing effort to assess and analyze the most likely areas of future risk for the Company and to address them in its planning process.

Board Committees

The Board has a standing Audit Committee, Compensation Committee and Nominating Committee. Each of these committees operate under a written charter that has been approved by our Board. Each committee charter is available under Corporate Governance on the Investor Relations page of our website at www.rmcf.com.

The following table is a summary of our current committee structure and members on each of our committees:

		Audit		Compensation		Nominating
		Committee		Committee		Committee
Rahul Mewawalla
Brett P. Seabert
Jeffrey R. Geygan
Mary K. Thompson
Bryan J. Merryman
Andrew T. Berger(1)

Chairperson

Member

Financial Expert

Audit Committee

The responsibilities of our Audit Committee include, among other things:

The Board has determined that Brett P. Seabert is an “audit committee financial expert” as defined in Item 407 of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and thus possesses “financial sophistication” as that term is used in applicable Nasdaq listing rules. The Audit Committee held five meetings in fiscal year 2021.

The Board has also determined that each of Brett P. Seabert, Rahul Mewawalla, Jeffrey R. Geygan, Mary K. Thompson and Andrew T. Berger, representing all of the members of the Audit Committee, is an “independent director” under applicable Nasdaq listing rules and SEC regulations applicable to Audit Committee members.

Compensation Committee

The responsibilities of our Compensation Committee include, among other things:

The Compensation Committee has full authority delegated to it by the Board to determine compensation for our executive officers and non-employee directors. Under applicable corporate laws and regulations, the Compensation Committee may delegate any of its responsibilities to a subcommittee comprised of one or more members of the Compensation Committee. The Compensation Committee determines compensation for our executive officers based on recommendations from our Chief Executive Officer. The Chief Executive Officer is not present during voting or deliberation on his own compensation. The Compensation Committee relies on its judgment when making compensation decisions after reviewing our performance and evaluating each executive’s performance, leadership ability and responsibilities, current compensation arrangements, and other factors. The Compensation Committee has not historically used compensation consultants in connection with performance of its duties. The Compensation Committee also oversees the administration of the Company’s equity-based compensation plans. The Compensation Committee did not hold any meetings in fiscal year 2021 and instead took action by unanimous written consent on one occasion.

The Board has determined that each of Rahul Mewawalla, Jeffrey R. Geygan and Mary K. Thompson is an “independent director” under Nasdaq listing standards and SEC rules applicable to Compensation Committee members.

Nominating Committee

The responsibilities of our Nominating Committee include, among other things:

The Nominating Committee held one meeting in fiscal year 2021. The Board has determined that each of Mary K. Thompson, Rahul Mewawalla and Brett P. Seabert, representing all of the members of the Nominating Committee is an “independent director” under applicable Nasdaq listing standards.

Special Committee

As discussed above, in July 2021, the Board formed the Special Committee to oversee the process of identifying new qualified, independent directors for the Company’s next chapter of growth, innovation and transformation. The Special Committee is comprised of Ms. Thompson and Messrs. Mewawalla and Seabert, all disinterested, independent directors of the Company.

Director Nomination Process and Director Qualifications

The purposes of the Nominating Committee include (i) assisting the Board in identifying individuals qualified to become members of the Board; and (ii) approving and recommending qualified director candidates to the Board. For the Annual Meeting, the Special Committee was delegated authority to assist the Nominating Committee in director nominations.

The Nominating Committee (or Special Committee) considers director candidates recommended by stockholders when such recommendation is made in writing and (i) delivered pursuant to our Policy on Shareholder Communications with the Board, and (ii) received by us within the time period specified in our bylaws and as set forth in “Deadlines for Submitting Stockholder Proposals and Director Nominations” below. Other than as set forth below, we did not receive any such nominations (though such nominations were not made within the time period specified in our bylaws and as set forth in “Deadlines for Submitting Stockholder Proposals and Director Nominations” in the definitive proxy statement for our 2020 annual meeting of stockholders), and no other nominations for election to our Board may be made by stockholders at the Annual Meeting.

In determining whether an individual is qualified to serve on our Board, whether recommended by the Nominating Committee, the Special Committee or by stockholders, the Nominating Committee (or the Special Committee) considers relevant factors, including, but not limited to, an individual’s independence, knowledge, skill, training, experience and willingness to serve on the Board. Any stockholder wishing to recommend a candidate for consideration by the Company may do so by submitting a written recommendation to the Nominating Committee in accordance with the procedures set forth under “Other Information—Deadlines for Submitting Stockholder Proposals and Director Nominations.”

In identifying potential candidates for the Board, the Nominating Committee (or the Special Committee) generally relies on a variety of resources to identify potential candidates, which, among other things and depending on the circumstances, may include its and the Board’s network of contacts, corporate search resources, and, if the Nominating Committee (or the Special Committee) deems appropriate, a professional search firm. In August 2021, the Special Committee retained a third-party search firm (RRA) for a fee to help facilitate the identification, screening and interview process of potential director nominees, including Gabriel Arreaga and Elisabeth B. Charles. By utilizing a broad variety of resources as deemed appropriate by the Nominating Committee and Special Committee in light of the then-current mix of Board attributes and any previously identified potential candidates, the Nominating Committee and the Special Committee believes it will be able to identify, evaluate and consider a diverse range of qualified candidates, including candidates that increase the gender, racial, ethnic and/or cultural diversity of the Board. We do not have a formal policy with respect to the consideration of diversity in identifying director candidates, however, in reviewing director nominee candidates, the Nominating Committee, the Special Committee and the Board does consider diversity, including diversity of experience, gender, race, ethnicity, skills and backgrounds, so that, as a group, the Board will possess a broad perspective and the appropriate talent, skills and expertise to oversee our business.

The Nominating Committee and the Special Committee also takes into consideration any written arrangements for director nominations the Company is a party to, including the GVIC Cooperation Agreement.

Stockholder Communications with the Board of Directors

The Board has adopted a Policy on Shareholder Communications with the Board in order to facilitate stockholder communications with the Board. Under the Policy on Shareholder Communications with the Board, stockholders are encouraged to contact the Board or any individual director or group of directors in writing by sending communications to Rocky Mountain Chocolate Factory, Inc., 265 Turner Drive, Durango, Colorado 81303, Attn: Secretary, Stockholder Communication. A copy of the Policy on Shareholder Communications with the Board is available under Corporate Governance on the Investor Relations page of the Company’s website at www.rmcf.com.

Anti-Hedging and Anti-Pledging Practices

We generally do not allow our management or directors to pledge our stock to secure loans or other obligations, including in margin accounts. Although we do not have a formal policy related to hedging transactions, we discourage our management and directors from engaging in hedging and monetization transactions in connection with our securities, such as zero-cost collars, prepaid variable forward sale contracts, equity swaps and exchange funds.

Please see “Proposal 1 — Election of Directors—Director Nominees” above for information regarding Mr. Merryman. 

Gregory L. Pope. Mr. Pope has served as Senior Vice President – Franchise Development since May 2004. Since joining the Company in October 1990, he has served in various positions, including store manager, new store opener and franchise field consultant. In March 1996, he became Director of Franchise Development and Support. In June 2001, he became Vice President of Franchise Development, a position he held until he was promoted to his present position.

Edward L. Dudley. Mr. Dudley has served as Senior Vice President – Sales and Marketing since June 2001. Previously, he served as Vice President of Sales and Marketing from January 1997 to June 2001. Prior to joining the Company, Mr. Dudley spent 10 years with Baxter Healthcare Corporation, a medical devices and services company, where he served in a number of senior marketing and sales management capacities, including most recently that of Director, Distribution Services from March 1996 to January 1997.

Donna L. Coupe. Ms. Coupe has served as Vice President – Franchise Support and Training since June 2008. From 1992 to 1997, she managed franchised Rocky Mountain Chocolate Factory stores in Northern California for absentee owners. Since joining the Company in October 1997, she has served in various positions including Field Consultant, Regional Manager and Director of Franchise Support.

Ryan R. McGrath. Mr. McGrath has served as Vice President – Information Technology since August 2017. Since joining the Company in October 2009, he has served in various positions, including Systems Analyst and Director of Information Technology. Prior to joining the Company, he held various operating and information technology roles, including work for Sports Express, a travel logistics company, where he focused on software, database and application development.