ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS;
ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY
ARRANGEMENTS OF CERTAIN OFFICERS.
On April 1, 2019, SunOpta Inc. (the
“Company”) announced the appointment of Joseph D. Ennen as Chief Executive
Officer (“CEO”) of the Company. Mr. Ennen was also appointed to the board of
directors of the Company (the “Board”). Katrina L. Houde, who had been serving
as the Company’s interim CEO, stepped down as interim CEO as of April 1, 2019
and continues to serve as a member of the Board.
Mr. Ennen, age 52, served as President and CEO of Columbus
Manufacturing, a food processing company specializing in artisanal salami and
other prepared delicatessen meats, from early 2015 until its sale to Hormel
Foods in December 2017. Before joining Columbus Manufacturing, Mr. Ennen was
Senior Vice President and General Manager of Own Brands at Safeway, Inc., a
leading supermarket chain, from 2009-2015. Prior to Safeway, Mr. Ennen spent
four years as an executive at Pepsico/Frito Lay Division, including Group Vice
President, Innovation and Vice President Marketing, Core Brands. Previously, Mr.
Ennen held various leadership roles and general management, marketing and
finance positions with ConAgra Foods, Kellogg’s Company and General Mills. Mr.
Ennen graduated from the University of Minnesota with a Bachelor of Science
degree in business (Finance and Marketing majors) and an MBA (with
concentrations in Marketing and Corporate Strategy) from the University of
Michigan.
In connection with Mr. Ennen’s appointment as CEO of the
Company, the Company entered into an employment agreement (“Employment
Agreement”) with Mr. Ennen, which sets forth terms and conditions of his
employment. The Employment Agreement, which was approved on March 29, 2019, has
an effective date of April 1, 2019. Pursuant to the Employment Agreement, Mr.
Ennen will receive a base salary of at least $700,000 annually (subject to
annual review by the Board). Mr. Ennen will also be eligible to receive an
annual bonus based upon a target bonus amount of at least 125% of his base
salary, upon achieving one or more pre-established performance goals to be
determined by the Board or the Compensation Committee of the Board (the
“Compensation Committee”).
Additionally, as part of the Employment Agreement, the Company
and Mr. Ennen entered into the following agreements (collectively, the “Award
Agreements”), providing for the grant of one-time equity awards to Mr. Ennen:
(i) a Restricted Stock Award Agreement; (ii) a Stock Option Award Agreement; and
(iii) a Performance Share Unit Award Agreement.
Under the Restricted Stock Award Agreement, the Company granted
Mr. Ennen 297,619 restricted stock units (the “Special RSUs”) as of April 1,
2019. The Special RSUs will vest in three equal annual installments beginning
April 1, 2020. Each vested Special RSU will entitle Mr. Ennen to receive one
common share of the Company.
Under the Stock Option Award Agreement, the Company granted Mr.
Ennen 960,061 time-based stock options (the “Special Stock Options”) as of April
1, 2019. The vesting of the Special Stock Options is subject to Mr. Ennen’s
continued employment with the Company through April 1, 2022. Each vested Special
Stock Option will entitle Mr. Ennen to purchase one common share of the Company
at an exercise price of $3.36, which is equal to the closing price of the
Company’s common shares as reported on the NASDAQ Global Select Market on April
1, 2019.
The Performance Share Unit Award Agreement grants Mr. Ennen
1,785,714 performance stock units (the “Special Performance Units”) as of April
1, 2019. The vesting of the Special Performance Units is subject to (i) Mr.
Ennen’s continued employment with the Company through December 31, 2022 (the
“Performance Period”); and (ii) the satisfaction of certain fiscal year EBITDA
(50% weight) and stock price (50% weight) performance conditions during the
Performance Period. For the EBITDA performance conditions, 297,619 of the
Special Performance Units will vest upon the Company achieving annual adjusted
EBITDA of $80,000,000, another 297,619 will vest upon the Company achieving
annual adjusted EBITDA of $110,000,000, and the final 297,619 will vest upon the
Company achieving annual adjusted EBITDA of $140,000,000, and subject to
continued employment through the end of the fiscal year the EBITDA performance
condition is achieved. For the stock price performance conditions, 297,619 of
the Special Performance Units will vest upon achieving a volume weighted average
trading stock price of $5.00 per share, another 297,619 will vest upon achieving
a stock price of $9.00 per share, and the final 297,619 will vest upon achieving
a stock price of $14.00 per share, in each case for 20 consecutive trading days
and subject to continued employment through the date the stock price performance
condition is achieved. Each vested Special Performance Unit will entitle Mr.
Ennen to receive one common share of the Company without payment of additional
consideration.
The Company will issue additional Special RSUs, which will vest
in three equal annual installments beginning April 1, 2020, equal to the number
of common shares, not to exceed $1,000,000, purchased by Mr. Ennen on the open
market within sixty (60) calendar days after his employment begins, with the
value per share for this purpose equal to the average cost per share paid by Mr.
Ennen in making such purchases. The Board of Directors approved the terms and
conditions of the equity awards and the Award Agreements as inducement equity
awards outside the Company’s 2013 Stock Incentive Plan, in accordance with
NASDAQ Listing Rule 5635(c)(4).
The Employment Agreement also provides that, although Mr. Ennen
will be employed on an at-will basis, if his employment is terminated by the
Company without cause or by Mr. Ennen for good reason, he will be entitled to
receive (i) any accrued but unpaid base salary and unpaid annual bonuses from
prior years; (ii) a lump sum payment of up to two times his then-current base
salary, plus, his target bonus for the current year; and (iii) the immediate
vesting of any unvested Special RSUs and only if Mr. Ennen terminated his
employment for good reason all of the Special Stock Options. The Employment
Agreement also provides benefits in the event of death or total disability.
In addition to the compensation and equity terms set forth in
the Employment Agreement, the Employment Agreement contains customary covenants
on confidentiality, non-competition and non-solicitation.
The descriptions of the Employment Agreement and the Award
Agreements are qualified in their entirety by the complete terms and conditions
of the documents, each of which is filed as exhibit to this report.