UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the
Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ]
Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ]
Soliciting Material Pursuant to §240.14a -12
SUNOPTA INC.
(Name
of Registrant as Specified In Its Charter)
________________________________________________________
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]
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No fee required
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11
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computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of
transaction:
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Total fee paid:
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Fee paid previously with
preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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SUNOPTA INC.
2233
Argentia Road
Suite 401, West Tower
Mississauga, ON L5N 2X7
905-821-9669
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Dear Fellow Shareholder:
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April 9, 2019
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It is our pleasure to cordially
invite you to attend in person, via the Internet or by telephone the
Annual and Special Meeting of the Shareholders of SunOpta Inc., which will
be held on Thursday, May 30, 2019 at our corporate offices located at 2233
Argentia Road, Suite 401, West Tower, Mississauga, Ontario, Canada at 3:00
P.M. Eastern Daylight Time.
At our Annual and Special Meeting, shareholders will vote
on: the election of our directors; the appointment of our independent
public registered accounting firm and auditor and authorization to fix
their remuneration; the compensation of our named executive officers; a
resolution to approve the Companys Amended 2013 Stock Incentive Plan; and
a resolution to reconfirm the Companys Amended and Restated Shareholder
Rights Plan, all as described in more detail in the accompanying proxy
statement.
You will have the opportunity to ask questions and
express your views to the senior management of SunOpta Inc. and certain
members of the Board of Directors who will be in attendance.
Your vote is important to us. Whether or not you intend
to attend the meeting, please read the enclosed proxy statement and submit
your vote by completing and returning the enclosed proxy card, or if you
are a beneficial owner of shares held in street name, you may vote by
telephone or via the Internet.
Sincerely,
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R. Dean Hollis
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Joseph Ennen
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Chair
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Chief Executive Officer
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SunOpta Inc.
2233 Argentia Road
Suite 401, West
Tower
Mississauga, ON L5N 2X7
T:(905) 821-9669 F:(905) 819-7971
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE
HELD MAY 30, 2019
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To the holders of the common shares (
Common Shares
)
and special shares, series 1 (
Special Voting Shares
) of SunOpta Inc.
(the
Company
):
Notice is hereby given that an Annual and Special Meeting of
Shareholders of SunOpta Inc. (the
Meeting
) will be held on Thursday,
May 30, 2019 at 3:00 P.M. Eastern Daylight Time, at the Companys corporate
offices located at 2233 Argentia Road, Suite 401, West Tower, Mississauga, ON,
Canada L5N 2X7 for the following purposes, all as described in more detail in
the accompanying proxy statement:
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1.
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to elect the directors of the Company;
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2.
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to appoint the Companys independent registered public
accounting firm and auditor and to authorize the Audit Committee to fix
their remuneration;
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3.
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to consider and, if deemed advisable, approve a
non-binding, advisory resolution to approve the compensation of the
Companys named executive officers;
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4.
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to consider and, if deemed advisable, to pass an ordinary
resolution approving the Companys Amended 2013 Stock Incentive Plan, a
copy of which is attached as Exhibit A;
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5.
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to consider and, if deemed advisable, to pass an ordinary
resolution to reconfirm the Companys Amended and Restated Shareholder
Rights Plan; and
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6.
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to consider and take action upon such other matters as
may properly come before the Meeting or any adjournment or adjournments
thereof.
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You may also access the Meeting live by teleconference or over
the Internet, by following the instructions provided in the accompanying Proxy
Statement in the section Questions and Answers About the Meeting and Voting -
How can I vote?
This Notice is accompanied by a Proxy Statement, a proxy card,
the Annual Report of the Company on Form 10-K for the year ended December 29,
2018, which includes the Audited Consolidated Financial Statements for the year
ended December 29, 2018 and related Managements Discussion and Analysis, and an
envelope to return the proxy card.
The Board of Directors has fixed the close of business on April
2, 2019 as the record date for the determination of the shareholders of the
Company entitled to receive notice of and to vote at the Meeting. All such
shareholders are cordially invited to attend the Meeting.
Your vote is important. Whether or not you intend to attend
the Meeting, please read the enclosed Proxy Statement and submit your vote by
completing and returning the enclosed proxy card or if you are a beneficial
owner of shares held in street name, you may vote by telephone or via the
Internet.
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS
FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 30, 2019.
This Proxy Statement, the accompanying proxy card and our
Annual Report to Shareholders for the fiscal year ended December 29, 2018 are
first being made available on or about April 9, 2019 to shareholders of the
Company entitled to receive notice of and vote at the Meeting as of the record
date, and such materials are also available on our website at www.sunopta.com,
under the Investor Relations link.
In order to be represented by proxy at the Meeting, you
must complete and submit the enclosed Form
of Proxy or another
appropriate form of proxy.
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SUNOPTA INC.
PROXY STATEMENT
TABLE OF
CONTENTS
BASIS OF PRESENTATION
In this document, all currency amounts are expressed in United
States (U.S.) dollars ($) unless otherwise stated. Amounts expressed in
Canadian dollars are preceded by the symbol Cdn $. Amounts expressed in euros
are preceded by the symbol €.
4
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
What is the Notice of Internet Availability of Proxy
Materials that I received instead of complete proxy materials?
The Securities and Exchange Commission (the
SEC
) rules
allow companies to furnish proxy materials, including this proxy statement and
our Annual Report to Shareholders, by providing access to these documents on the
Internet instead of mailing printed copies of our proxy materials to
shareholders. Most shareholders who reside in the United States have received a
Notice of Internet Availability of Proxy Materials (the
Notice
), which
provides instructions for accessing proxy materials on a website or for
requesting electronic or printed copies of the proxy materials.
If you would like to receive a paper copy of the proxy
materials for the Annual Meeting of Shareholders (the
Meeting
) of
SunOpta Inc. (sometimes referred to as
we
,
us
,
our
,
the Company
or
SunOpta
) and for all future meetings, please
follow the Notice instructions for requesting such materials. The chosen
electronic delivery option lowers costs and reduces environmental impacts of
printing and distributing the materials.
What is the date, time and place of the Meeting?
The Meeting will be held on Thursday, May 30, 2019 at 3:00 P.M.
Eastern Daylight Time at our corporate offices located at 2233 Argentia Road,
Suite 401, West Tower, Mississauga, ON L5N 2X7.
You may also access the Meeting live by teleconference or over
the Internet. To access the Meeting by teleconference, dial toll free at
1-877-312-9198 or international at 1-631-291-4622. To access the Meeting over
the Internet, go to the Companys website at www.sunopta.com. You should plan to
access the Companys website at least 15 minutes prior to the Meeting time in
order to register, download and install any necessary audio software.
Why am I receiving proxy materials?
We sent you the Notice or this proxy statement relating to the
Meeting (this
Proxy Statement
) and the accompanying proxy card because
our Board of Directors (sometimes referred to as the
Board
) is
soliciting your proxy to vote at the Meeting and at any adjournment or
postponement thereof. You are invited to attend the Meeting and we request that
you vote on the proposals described in this Proxy Statement. However, you do not
need to attend the Meeting to vote your shares. Instead, you may simply
complete, sign and return the enclosed proxy card, or vote by telephone or
Internet as described below under How can I vote?
What are the items of business scheduled for the Meeting?
There are five matters scheduled for a vote:
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the election of the director nominees specified in this Proxy Statement;
-
the appointment of Ernst & Young LLP as the Companys independent
registered public accounting firm and auditor and authorization for the Audit
Committee to fix their remuneration;
-
a non-binding, advisory resolution to approve the compensation of the
Companys named executive officers (
NEOs
);
-
a proposal to approve the Companys Amended 2013 Stock Incentive Plan, a
copy of which is attached as Exhibit A; and
-
a proposal to reconfirm the Companys Amended and Restated Shareholder
Rights Plan.
Shareholders will also consider and take action upon such other
matters as may properly come before the Meeting or any adjournment thereof. The
Board is not currently aware of any other matters to be presented at the
Meeting.
What is included in the proxy materials?
The proxy materials include:
5
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this Proxy Statement for the Meeting;
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the accompanying proxy card; and
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our Annual Report to Shareholders on Form 10-K for the year ended December
29, 2018, which includes the Audited Consolidated Financial Statements for the
year ended December 29, 2018 and the related Managements Discussion and
Analysis of Financial Condition and Results of Operations. The Annual Report
is not incorporated by reference into this Proxy Statement and is not deemed
to be a part hereof.
What is a proxy?
It is your legal designation of another person to vote the
shares you own. The other person is called a proxy. If you designate someone as
your proxy in a written document, that document is also called a proxy or a
proxy card.
The enclosed proxy card contemplates that Robert McKeracher,
Vice President and Chief Financial Officer, and Jill Barnett, General Counsel
and Secretary, each be appointed to act as your proxy. However, you may choose
another person to act as your proxy. If you wish to appoint as your proxy a
person other than the individuals named on the proxy card to attend the Meeting
and vote for you, you may do so by striking out the names on the proxy card and
inserting the name of your proxy in the blank space provided in the proxy card,
or you may complete another proper proxy card. Your appointed proxy need not be
a shareholder of the Company. If you appoint a non-management proxyholder,
please make them aware and ensure they will attend the meeting for the vote to
count.
Who is soliciting my proxy?
The proxy accompanying this Proxy Statement is solicited by
management and the Board of Directors of the Company. Proxies may be solicited
by officers, directors and regular employees of the Company. None of the
officers, directors or employees will be directly compensated for such services.
How many classes of shares are outstanding?
The Company currently has two classes of shares issued and
outstanding. The Common Shares are quoted for trading on NASDAQ (STKL) and are
listed for trading on the Toronto Stock Exchange (SOY). The Company also created
and issued Special Voting Shares in connection with a Series A Preferred Stock
(
Preferred Stock
) financing completed by our subsidiary, SunOpta Foods
Inc., in October 2016.
Unless the context otherwise requires, any reference in this
Proxy Statement to shares of the Company refers to both the Common Shares and
Special Voting Shares, and any reference to shareholders of the Company is
intended to refer to holders of either Common Shares or Special Voting
Shares.
Who can vote at the Meeting?
Subject to the restriction noted below under How many votes
are needed to approve each proposal, each holder of Common Shares and each
holder of Special Voting Shares is entitled to one vote for every share owned.
The holders of Common Shares and Special Voting Shares vote together as a single
class.
Only shareholders of record at the close of business on April
2, 2019, or the record date, will be entitled to vote at the Meeting. On the
record date, there were 87,575,447 Common Shares and 11,333,333 Special Voting
Shares issued and outstanding (98,908,780 shares in aggregate), representing
88.5% and 11.5%, respectively, of the aggregate voting rights attaching to all
of the Companys outstanding shares. Except as otherwise stated, all information
relating to the number of outstanding shares or other securities of the Company
in this Proxy Statement is as of April 2, 2019.
In the event a shareholder of record transfers his, her or its
Common Shares after the close of business on the record date, the transferee of
those shares will be entitled to vote the transferred shares at the Meeting
provided that he, she or it produces properly endorsed share certificates
representing the transferred shares to the Companys Secretary or transfer agent
or otherwise establishes ownership of the transferred shares at least 10 days
prior to the Meeting.
6
What is the difference between a shareholder of record and a
shareholder who holds shares in street name?
Most shareholders hold their shares through a broker, bank or
other nominee rather than directly in their own name. As summarized below, there
are important distinctions between shares held of record and those owned in
street name.
Shareholder of Record Shares Registered in Your Name
If on April 2, 2019 your shares were registered directly in
your name with our transfer agent, you are considered, with respect to those
shares, the shareholder of record. As the shareholder of record, you have the
right to grant your voting proxy directly to the individuals named on the proxy
card, or to vote in person at the Meeting. Whether or not you plan to attend the
Meeting, we urge you to fill out and return the enclosed proxy card to ensure
your vote is counted.
Beneficial Owner Shares Registered in the Name of Broker,
Bank or Nominee
If your shares are held in a stock brokerage account or by a
bank or other nominee, you are considered the beneficial owner of shares held in
street name, and the proxy materials are being forwarded to you by your broker
or nominee, which is considered, with respect to those shares, the shareholder
of record. As the beneficial owner, you have the right to direct your broker how
to vote and are also invited to attend the Meeting. However, since you are not
the shareholder of record, you may not vote these shares in person at the
Meeting unless you obtain a signed proxy from the shareholder of record giving
you the right to vote the shares. Your broker or nominee has provided voting
instructions for you to use in directing the broker or nominee how to vote your
shares. If you fail to provide sufficient instructions to your broker or
nominee, that shareholder of record may be prohibited from voting your shares.
See What if I do not specify how my shares are to be voted? and What are
broker non-votes? below.
How can I vote?
You may vote your shares by one of the following methods:
Vote in Person.
If you are the
shareholder of record with respect to your shares, you may vote the shares in
person at the Meeting. If you choose to vote in person at the Meeting, please
bring your proxy card or personal identification.
Shares held in street
name may be voted in person by you only if you obtain a legal proxy from the
shareholder of record giving you the right to vote your beneficially owned
shares.
Vote by Telephone.
To vote by
telephone, call toll free 1-800-690-6903. You will be prompted to provide your
16 digit control located on the Notice or your proxy card.
Please note that
telephone voting should not be used if you plan to attend the Meeting and vote
in person or designate a proxy to vote on your behalf at the Meeting.
Vote by Facsimile (Canadian
shareholders only).
You may also submit your proxy card via facsimile by
sending it to 1-866-623-5305.
Vote by Internet.
To vote via
the Internet, go to www.proxyvote.com and follow the simple instructions. You
will be required to provide your 16 digit control number located on the Notice
or your form of proxy.
Vote by Mail.
If you received a
printed set of proxy materials, you may complete, sign, date and mail the
separate proxy card or other proper form of proxy in the envelope provided with
this Proxy Statement.
If you vote by telephone, Internet or facsimile, please do
not mail your proxy card.
If you vote by telephone, facsimile or Internet, your vote must
be cast no later than the proxy cut-off of
4:00 P.M. Eastern Daylight Time on
Tuesday, May 28, 2019
(or 4:00 P.M. on the day before, excluding Saturdays,
Sundays and holidays, any adjournment or postponement of the Meeting). If you
vote by proxy, your completed proxy card must be received by Broadridge at 51
Mercedes Way, Edgewood, New York USA 11717,
prior to 4:00 P.M. Eastern
Daylight Time on Tuesday, May 28, 2019
(or 4:00 P.M. on the day
before, excluding Saturdays, Sundays and holidays, any adjournment or
postponement of the Meeting at which the proxy is to be used). The Chair of the
Meeting may waive or extend the proxy cut-off without notice at
his own discretion.
7
If your shares are held in street name by a broker, bank or
other nominee, please refer to the instructions provided by that broker, bank or
nominee regarding how to vote or how to revoke your voting instructions.
If you return a signed proxy card or use the telephone or
Internet to vote before the Meeting, the persons named as proxies in the proxy
card will vote your Common Shares as you direct.
Even if you currently plan to attend the Meeting, we
recommend that you also submit your proxy as described above so that your vote
will be counted if you later decide not to attend the Meeting. Submitting your
proxy via Internet, telephone or mail does not affect your right to vote in
person at the Meeting
.
How many votes are needed to approve each proposal?
The number of votes required to approve each of the proposals
scheduled to be presented at the Meeting is as follows:
Proposal One: Election of Directors
. Directors are
elected by a plurality of the votes cast, meaning the nominees who receive the
largest number of votes will be elected as directors, up to the maximum number
of directors to be elected. However, in accordance with our Majority Voting
Policy, any director who receives more withhold than for votes will be
required to immediately submit his or her resignation as a director. See
Proposal One Election of Directors Majority Voting Policy below.
Proposal Two: Appointment of Ernst & Young LLP as the
Companys independent registered public accounting firm and auditors and
authorization of the Audit Committee to fix their remuneration
. This
proposal will be approved if the votes cast in favor of the proposal constitute
a majority of the total votes cast on the proposal.
Proposal Three: Advisory vote regarding the compensation of
the Companys NEOs
. This proposal will be approved if the votes cast in
favor of the proposal constitute a majority of the total votes cast on the
proposal. Although the outcome of this vote is not binding on us, we will
consider the outcome of this vote when developing our compensation policies and
practices, and when making compensation decisions in the future.
Proposal Four:
Approval of the Companys Amended 2013
Stock Incentive Plan.
This proposal will be approved if the votes cast in
favor of the proposal constitute a majority of the total votes cast on the
proposal.
Proposal Five: Reconfirmation of the Companys Amended and
Restated Shareholder Rights Plan
. This proposal will be approved if the
votes cast in favor of the proposal constitute a majority of the total votes
cast on the proposal. Holders of Special Voting Shares or Common Shares
beneficially owned by the Investors (as such term is defined below in Proposal
Five Approval of the Amended and Restated Shareholder Rights Plan) or their
affiliates are not entitled to vote on this proposal.
What if I do not specify how my shares are to be voted?
Shareholders of Record
. If you are a shareholder of
record and you submit a proxy card, but you do not provide voting instructions,
your shares will be voted as follows:
FOR
each of the eight nominees
named in this Proxy Statement for election to the Companys Board of Directors;
FOR
the appointment of Ernst
& Young LLP as the Companys independent registered public accounting firm
and auditor and authorization of the Audit Committee to fix their remuneration;
FOR
the approval of the
non-binding advisory resolution regarding the compensation of the Companys
NEOs;
FOR
the proposal to approve the
Companys Amended 2013 Stock Incentive Plan; and
FOR
the proposal to reconfirm
the Companys Amended and Restated Shareholder Rights Plan.
8
The Board does not expect that any additional matters will be
brought before the Meeting. The persons appointed as proxies will vote in their
discretion on any other matters that may properly come before the Meeting or any
postponement or adjournment thereof, including any vote to postpone or adjourn
the Meeting. Moreover, if for any reason any of our nominees are not available
as a candidate for director, the persons named as proxies will vote for such
other candidate or candidates as may be nominated by the Board.
Beneficial Owners
. If you are a beneficial owner and you
do not provide the broker, bank or other nominee that holds your shares with
voting instructions, the broker or other nominee will determine if it has the
discretionary authority to vote on the particular matter. Therefore, if you do
not provide voting instructions to your broker, your broker may only vote your
shares on Proposal Two. See What are broker non-votes? below.
What are broker non-votes?
A broker non-vote occurs when a broker, bank or other nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have authority to vote on that particular proposal
without receiving voting instructions from the beneficial owner.
Under NASDAQ
rules, brokers that do not receive voting instructions from the beneficial owner
have the discretion to vote on certain routine matters, but do not have the
discretion to vote on the election of directors to the Board, executive
compensation matters or any other significant matter as determined by the SEC.
We believe that Proposal Two relating to the appointment of Ernst &
Young LLP as our independent registered public accounting firm is considered a
matter on which brokers may vote in their discretion on behalf of clients who
have not furnished voting instructions. However, under current NASDAQ rules, we
believe that brokers who have not received voting instructions from their
clients will not be authorized to vote in their discretion on Proposals One,
Three, Four or Five. Accordingly, for beneficial owners of shares, if you do not
give your broker specific instructions, your shares may not be voted on such
proposals.
How are abstentions and broker non-votes counted?
Abstentions and broker non-votes are counted for purposes of
determining whether a quorum exists at the Meeting. The shares represented by
proxies marked abstain will not be treated as affirmative or opposing votes.
Broker non-votes will not affect the outcome of the vote on any of the proposals
to be voted upon at the Meeting because the outcome of each vote depends on the
number of
votes cast
rather than the number of shares
entitled to
vote
.
How many votes do I have?
On each matter to be voted upon, you have one vote for each
Common Share you owned as of April 2, 2019.
Who counts the votes?
The Company has nominated Broadridge Financial Solutions, Inc.
to count and tabulate the votes. This is done independently of the Company to
preserve the confidentiality of individual shareholder votes. Proxies are
referred to the Company only in cases where a shareholder clearly intends to
communicate with management, the validity of the proxy is in question or where
it is necessary to do so to meet the requirements of applicable law.
Is my vote confidential?
The Companys transfer agents (identified below) preserve the
confidentiality of individual shareholder votes, except where a shareholder
clearly intends to communicate his or her individual position to the management
of the Company or as necessary in order to comply with legal requirements.
If I need to contact the Companys transfer agents, how do I
reach them?
You can contact the transfer agent in Canada by mail at: TSX
Trust Company, 100 Adelaide Street West, Suite 301, Toronto, Ontario, Canada M5H
4H1, or via telephone at (416) 361-0930. You can contact the transfer agent in
the USA by mail at: American Stock Transfer & Trust Company, LLC, 6201
15
th
Avenue, Brooklyn, NY USA 11219, or via telephone at (718)
921-8293.
9
What does it mean if I receive more than one copy of the
Notice or proxy card?
If you receive more than one copy of the Notice or more than
one proxy card, your shares are registered in more than one name or are
registered in different accounts. Please complete, sign and return each proxy
card or follow the instructions on each copy of the Notice to ensure that all of
your shares are voted.
How do I revoke or change my vote?
If you are a shareholder of record, you may revoke your proxy
at any time before it is voted by one of the following methods:
-
Voting again by telephone or by Internet prior to 4:00 P.M. Eastern
Daylight Time on May 28, 2019, as set forth above under How can I vote?;
-
Requesting, completing and mailing or delivering by facsimile a proper
proxy card, as set forth above under How can I vote?;
-
Sending written notice of revocation, signed by you (or your duly
authorized attorney), to the Company at its corporate offices at 2233 Argentia
Road, Suite 401, West Tower, Mississauga, ON L5N 2X7, at any time prior to the
last business day preceding the date of the Meeting; or
-
Attending the Meeting (or any adjournment thereof) and delivering written
notice of revocation prior to any vote to the Chair of the Meeting.
If you hold your shares in street name, you may revoke your
proxy by following the instructions provided by your broker, bank or other
nominee.
What is the quorum requirement?
Under NASDAQ listing rules and the Companys by-laws, the
presence at the Meeting, in person or represented by proxy, of at least two
shareholders holding not less than one-third (33 1/3%) of all the Companys
outstanding shares shall constitute a quorum for the purpose of transacting
business at the Meeting. As of the record date, there were 87,575,447 Common
Shares and 11,333,333 Special Voting Shares outstanding (98,908,780 shares in
the aggregate). Therefore, holders of at least 32,969,593 of the Companys
outstanding shares must be present, in person or represented by proxy, at the
Meeting in order to establish a quorum. The Company encourages all of its
shareholders to participate in the Meeting.
How can I find out the results of the voting at the Meeting?
Preliminary voting results will be announced at the Meeting. We
will publish final results in a Current Report on Form 8-K that we expect to
file with the SEC and with applicable Canadian securities regulatory authorities
within four business days of the Meeting. After the Form 8-K is filed, you may
obtain a copy by visiting our website, by viewing our public filings in the U.S.
at
www.sec.gov
or in Canada at
www.sedar.com
, by calling (905)
821-9669, by writing to Investor Relations, SunOpta Inc., 2233 Argentia Road,
Suite 401, West Tower, Mississauga, ON L5N 2X7 or by sending an email to
beth.mcgillivary@sunopta.com.
[Remainder of page left intentionally blank]
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following presents information regarding beneficial
ownership of our shares as of April 2, 2019 by:
-
each person who we know owns beneficially more than 5% of each class of our
shares;
-
each of our directors and nominees;
-
each of our NEOs; and
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all of our directors and executive officers as a group.
Under the regulations of the SEC, shares are generally deemed
to be beneficially owned by a person if the person directly or indirectly has
or shares voting power or investment power (including the power to dispose) over
the shares, whether or not the person has any pecuniary interest in the shares,
or if the person has the right to acquire voting power or investment power of
the shares within 60 days, including through the exercise of any option, warrant
or right. In accordance with the regulations of the SEC, in computing the number
of Common Shares beneficially owned by a person and the percentage ownership of
such person, we deemed to be outstanding all Common Shares subject to options or
other rights held by the person that are currently exercisable or exercisable
within 60 days of April 2, 2019. We did not deem such shares outstanding,
however, for the purpose of computing the percentage ownership of any other
person.
Based solely on our review of statements filed with the SEC
pursuant to Section 13(d) and 13(g) under the Securities Exchange Act of 1934,
as amended (the
Exchange Act)
the Company is not aware of any other
person or group that beneficially owns more than 5% of any class of voting
shares of the Company, except as noted below.
Name and Address of Beneficial
Owner
|
Title of Class
|
Amount and
Nature of
Beneficial
Ownership
|
Percentage
of
Class
(1)
|
Percentage
of all
Shares
(1)
|
Oaktree Capital Group, LLC
333 South Grand Avenue,
28
th
Floor,
Los Angeles, CA 90071
|
Common
Special Voting
|
19,426,032
(2)(3)
11,333,333
(4)
|
19.64%
100%
|
19.64%
11.46%
|
Engaged Capital, LLC
610 Newport Center Drive, Suite
250,
Newport Beach, CA 92660
|
Common
|
8,731,907
(5)
|
9.97%
|
8.83%
|
Point72 Asset Management, LP
72 Cummings Point Road,
Stamford, CT 06902
|
Common
|
7,514,411
(6)
|
8.58%
|
7.60%
|
Barrow, Hanley, Mewhinney & Strauss, LLC
2200 Ross
Avenue, 31
st
Floor,
Dallas, TX 75201-2761
|
Common
|
7,269,857
(7)
|
8.30%
|
7.35%
|
Ardsley Advisory Partners LP
262 Harbor Drive,
Stamford, CT 06902
|
Common
|
5,112,430
(8)
|
5.84%
|
5.17%
|
|
(1)
|
Percentage of Class and Percentage of all Shares is
calculated based on a total of 87,575,447 Common Shares and 11,333,333
Special Voting Shares outstanding, in each case as at April 2, 2019. In computing the number of Common Shares beneficially
owned by a person and the percentage ownership of such person, we deemed
to be outstanding all Common Shares subject to options or other rights
held by the person that are currently exercisable or exercisable within 60
days of April 2, 2019. We did not deem such shares outstanding, however,
for the purpose of computing the percentage ownership of any other
person. The percentages provided for Oaktree reflect an aggregate investment power and voting power of 19.64%. 11.46% of Oaktrees voting power is provided by the Special Voting shares.
|
|
|
|
|
(2)
|
Includes 8,092,699 Common Shares beneficially owned by
the Oaktree Funds (as defined below) and 11,333,333 Common Shares issuable
on the exchange of Preferred Stock.
|
|
|
|
|
(3)
|
On October 7, 2016, Oaktree Organics, L.P.
(
Organics
) and Oaktree Huntington Investment Fund II, L.P.
(
OHIF II LP
and together with Organics, the
Oaktree
Funds
) subscribed for 85,000 shares of Preferred Stock of SunOpta Foods Inc. for total
consideration of $85,000,000. Concurrently, the Company issued an
aggregate of 11,333,333 Special Voting Shares to the Oaktree Funds.
According to a Schedule 13D/A filed on December 18, 2017 by Oaktree
Capital Management, L.P. (
Oaktree
), Organics beneficially owns
6,734,134 Common Shares and 71,196 shares of Preferred Stock exchangeable
into 9,492,800 Common Shares at an exercise price of $7.50 per share, and
has the sole power to vote and dispose of those shares, and OHIF II LP
beneficially owns 1,358,565 Common Shares and 13,804 shares of Preferred
Stock exchangeable into 1,840,533 Common Shares at an exercise price of
$7.50 per share, and has the sole power to vote and dispose of those
shares. Also, according to the Schedule 13D/A, Oaktree Huntington
Investment Fund II GP, L.P. (
OHIF II GP
), the general partner of
OHIF II LP; Oaktree, the investment manager of OHIF II GP; and Oaktree
Holdings, Inc. (
Holdings, Inc.
), the general partner of Oaktree,
may be deemed to beneficially own the 3,199,098 Common Shares owned by
OHIF II LP. Additionally, Oaktree Fund GP, LLC (
GP LLC
), the
general partner of OHIF II GP; Oaktree Fund GP I, L.P. (
GP I
),
the managing member of GP LLC; Oaktree Capital I, L.P. (
Capital
I
), the general partner of GP I; OCM Holdings I, LLC (
Holdings
I
), the general partner of Capital I; Oaktree Holdings, LLC
(
Holdings
), the managing member of Holdings I; Oaktree Capital
Group, LLC (
OCG
), the sole shareholder of Holdings, Inc. and
management member of Holdings; and Oaktree Capital Group Holdings GP, LLC,
the manager of OCG, may be deemed to beneficially own the 19,426,032
shares owned in the aggregate by the Oaktree Funds.
|
11
|
(4)
|
The Special Voting Shares entitle the Oaktree Funds to
one vote per Special Voting Share on all matters submitted to a vote of
the holders of Common Shares, together as a single class, subject to
certain exceptions.
|
|
|
|
|
(5)
|
According to a Schedule 13D/A filed jointly by Engaged
Capital, LLC (
Engaged Capital
) and Glenn W. Welling on March 7,
2019, Engaged Capital Flagship Master Fund, LP (
Engaged Capital
Flagship Master
) beneficially owns 5,137,331 Common Shares, and has
the sole power to vote and dispose of those shares and Engaged Capital
Co-Invest IV, LP (
Engaged Capital Co-Invest IV
) beneficially owns
3,166,639 Common Shares, and has the sole power to vote and dispose of
those shares. In addition, a certain managed account of Engaged Capital
(the
Engaged Capital Account
) holds 427,937 Common Shares. Also,
according to the Schedule 13D/A, each of Engaged Capital Flagship Fund, LP
and Engaged Capital Flagship Fund, Ltd., as feeder funds of Engaged
Capital Flagship Master, may be deemed to beneficially own the 5,137,331
Common Shares owned by Engaged Capital Flagship Master. Additionally,
Engaged Capital, as the general partner and investment advisor of Engaged
Capital Flagship Master and Engaged Capital Co-Invest IV and the
investment adviser of the Engaged Capital Account, may be deemed to
beneficially own the 8,731,907 Common Shares owned in the aggregate by
Engaged Capital Flagship Master and Engaged Capital Co-Invest IV and held
in the Engaged Capital Account. Engaged Capital Holdings, LLC (
Engaged
Holdings
), as the managing member of Engaged Capital, may be deemed
to beneficially own the 8,731,907 Common Shares owned in the aggregate by
Engaged Capital Flagship Master and Engaged Capital Co-Invest IV and held
in the Engaged Capital Account. Mr. Welling, as the Founder and Chief
Investment Officer of Engaged Capital and sole member of Engaged Holdings,
may be deemed to beneficially own the 8,731,907 Common Shares owned in the
aggregate by Engaged Capital Flagship Master and Engaged Capital Co-Invest
IV and held in the Engaged Capital Account.
|
|
|
|
|
(6)
|
According to a Schedule 13G/A filed jointly by Point72
Asset Management, LP (
Point72 Asset Management
), Point72 Capital
Advisors, Inc.
(Point72 Capital Advisors
) and Steven A. Cohen on
February 14, 2019, Point72 Asset Management, Point72 Capital Advisors and
Mr. Cohen beneficially own 7,514,411 Common Shares and have shared voting
and dispositive power over those shares.
|
|
|
|
|
(7)
|
According to a Schedule 13G filed by Barrow, Hanley,
Mewhinney & Strauss, LLC (
Barrow Hanley
) on February 12,
2019, Barrow Hanley beneficially owns 7,269,857 Common Shares and has sole
and shared voting power over 5,061,429 and 2,208,428 Common Shares,
respectively, and sole dispositive power over 7,269,857 Common
Shares.
|
12
|
(8)
|
According to a Schedule 13G filed by Ardsley Advisory
Partners LP (Ardsley Advisory Partners) on February 12, 2019, with
respect to Common Shares beneficially owned by Ardsley Advisory Partners,
Ardsley Advisory Partners GP LLC, Philip J. Hempleman, Ardsley Partners I
GP LLC, Ardsley Partners Fund II, LP, Ardsley Partners Advanced Healthcare
Fund, LP, Ardsley Partners Renewable Energy Fund, LP, Ardsley Duckdive
Fund, LP and Ardsley Healthcare Fund, LP, Ardsley Advisory Partners
beneficially owns 5,112,430 Common Shares and has shared voting and
dispositive power over those shares.
|
Name and Address of
Beneficial Owner(1)
|
Amount and Nature of
Beneficial
Ownership(2)
|
Total
Number of
Common
Shares,
Vested
Options
and Vested
RSUs
|
Percentage
of Class(5)
|
Percentage
of all
Shares(5)
|
Common
Shares
|
Vested
Options(3)
|
Vested
RSUs(4)
|
Margaret Shân Atkins
Director
|
68,236
|
5,322
|
42,202
(6)
|
115,760
|
*
|
*
|
Dr. Albert Bolles
Director
|
77,469
|
5,322
|
11,688
|
94,479
|
*
|
*
|
Derek Briffett
Director
|
19,102
|
-
|
11,688
|
24,790
|
*
|
*
|
Michael Detlefsen
Director
|
88,374
(7)
|
20,322
|
43,834
(8)
|
152,530
|
*
|
*
|
Joseph Ennen, Chief Executive
Officer and
Director
(9)
|
4,000
|
-
|
-
|
4,000
|
*
|
*
|
R. Dean Hollis
(10)
Chair of
the Board
|
230,035
|
15,967
|
11,688
|
257,690
|
*
|
*
|
Katrina Houde
Director
|
149,995
|
45,322
|
17,688
(11)
|
213,005
|
*
|
*
|
Brendan Springstubb
(12)
Director
|
33,754
|
5,322
|
11,688
|
50,764
|
*
|
*
|
Robert McKeracher, Vice
President and
Chief Financial Officer
|
99,445
|
212,215
|
5,544
|
317,204
|
*
|
*
|
Gerard Versteegh
Senior Vice President,
Global Ingredients
|
128,669
|
140,833
|
6,955
|
276,457
|
*
|
*
|
Chris Whitehair, Senior Vice
President,
Operations
|
9,127
|
-
|
13,385
|
22,512
|
*
|
*
|
All directors and executive
officers as a group (18)
|
1,392,903
|
536,801
|
205,405
|
2,135,109
|
2.44%
|
2.16%
|
|
(1)
|
The address of each director and executive officer is
2233 Argentia Road, Suite 401, West Tower, Mississauga, ON L5N
2X7.
|
|
|
|
|
(2)
|
Unless otherwise indicated, the persons in this table
have sole voting and dispositive power with respect to the Common Shares
shown as beneficially owned by them. The information as to shares
beneficially owned or over which control or direction is exercised,
directly or indirectly, not being within the knowledge of the Company, has
been furnished by the respective directors and executive officers
individually.
|
|
|
|
|
(3)
|
The number of vested options includes options that will
become exercisable within 60 days of April 2, 2019. The exercise price of
vested options ranges from $3.27 to $13.86 per
share.
|
13
|
(4)
|
The number of vested Restricted Stock Units
(
RSUs
) includes RSUs that will vest within 60 days of April 2,
2019 as well as any RSUs that a director has deferred until his or her
departure from the Board, which are specifically noted within the
individual biography section.
|
|
|
|
|
(5)
|
Percentage of Class and Percentage of all Shares is
calculated based on a total of 87,575,447 Common Shares and 11,333,333
Special Voting Shares outstanding, in each case as at April 2, 2019
(*indicates less than 1% of the outstanding Common Shares).
|
|
|
|
|
(6)
|
Includes 30,514 RSUs that Ms. Atkins has deferred until
her departure from the Board.
|
|
|
|
|
(7)
|
Includes 2,000 Common Shares beneficially owned by Mr.
Detlefsens spouse, in respect of which Mr. Detlefsen has no voting or
dispositive power or authority.
|
|
|
|
|
(8)
|
Includes 32,146 RSUs that Mr. Detlefsen has deferred
until his departure from the Board.
|
|
|
|
|
(9)
|
Mr. Ennen was appointed CEO and to the Board on April 1,
2019.
|
|
(10)
|
Mr. Hollis also owns 500 limited partnership units of
Organics, which owns 6,734,134 Common Shares, 9,492,800 Special Voting
Shares and Preferred Stock which is exchangeable for 9,492,800 Common
Shares. See Note (2) under Security Ownership of Certain Beneficial
Owners and Management. However, Mr. Hollis does not directly or
indirectly exercise control or direction over the securities of the
Company held by Organics.
|
|
(11)
|
Includes 9,474 RSUs that Ms. Houde has deferred until her
departure date from the Board.
|
|
|
|
|
(12)
|
Pursuant to the terms of Mr. Springstubbs employment
arrangements with Engaged Capital, all options and RSUs were issued to
Engaged Capital.
|
Effective February 2018, the Company adopted a formal policy to
prohibit officers and directors from hedging against declines in the market
value of their equity-based compensation or equity securities through the use of
financial instruments. The Company is not aware of any officers or directors
engaging in any hedging transactions prior to or after this policy becoming
effective.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and
executive officers, among others, to file with the SEC an initial report of
ownership of our Common Shares on Form 3 and reports of changes in ownership on
Form 4 or Form 5. Persons subject to Section 16 are required by SEC regulations
to furnish us with copies of all Section 16 forms that they file related to
SunOpta stock transactions. Under SEC rules, certain forms of indirect ownership
and ownership of our Common Shares by certain family members are covered by
these reporting requirements. As a matter of practice, our administrative staff
assists our directors and executive officers in preparing initial ownership
reports and reporting ownership changes and typically files these reports on
their behalf.
Based solely on a review of the copies of Forms 4 and 5
furnished to us, or written representations from reporting persons that all
reportable transactions were reported, we believe that during the fiscal year
ended December 29, 2018, all of our executive officers, directors and greater
than 10% holders filed the reports required to be filed under Section 16(a) on a
timely basis, except that the Form 4 filings made on July 16, 2018 for Margaret
Shân Atkins, Dr. Albert Bolles, Derek Briffett, Michael Detlefsen, R. Dean
Hollis, Katrina Houde, Brendan Springstubb and Gregg Tanner and the Form 4
filings made on October 19, 2018 for Susanne Schuster and George Miketa were
late due to an administrative oversight. The ten late Form 4 filings reported a
total of fourteen transactions.
[Remainder of page left intentionally blank]
14
PROPOSAL ONE - ELECTION OF DIRECTORS
Nominees
The term of office of each director expires at the close of the
next Annual Meeting of Shareholders unless he or she resigns or his or her
office becomes vacant as a result of death, removal or other cause.
It is proposed that the following eight individuals be elected
as directors of the Company at the Meeting. Each of the nominees named below has
consented to be named herein and to serve as a director if elected. Management
has no reason to believe that any of the nominees will not be a candidate or, if
elected, will be unable to serve as a director. There are no family
relationships among the Companys directors, executive officers or persons
nominated or chosen to become directors.
Board of Director Nominees in Alphabetical Order:
Margaret Shân Atkins
Dr. Albert
Bolles
Derek Briffett
Michael Detlefsen
Joseph Ennen
R. Dean
Hollis
Katrina Houde
Brendan Springstubb
Recommendation of the Board of Directors; Vote
Required
The Board of Directors recommends that shareholders vote FOR
the election of each of the eight director nominees named above.
The eight
nominees who receive the greatest number of votes cast at the Meeting will be
elected as directors. In accordance with our by-laws, any director who receives
more withhold than for votes will be deemed to have tendered his or her
resignation as a director. See Majority Voting Policy below. Abstentions and
broker non-votes are counted only for purposes of determining whether a quorum
exists at the Meeting, but will have no effect on the results of the vote.
Brokers and other nominees will not have discretionary authority to vote your
shares if you hold your shares in street name and do not provide instructions as
to how your shares should be voted on this proposal. If any of the nominees for
director at the Meeting becomes unavailable for election for any reason, the
proxies on this proposal will have discretionary authority to vote pursuant to
the proxy for a substitute or substitutes.
Information about the Board Nominees
The biographies that follow provide certain information as of
April 2, 2019 with respect to each director nominee. The information presented
below for each director includes the specific experience, qualifications,
attributes and skills that led us to the conclusion that such director should be
nominated to serve on the Board in light of our business.
In addition to the factual information provided for each of the
nominees, the Board and the Corporate Governance Committee (as Nominating
Committee) also believe that each of the nominees has attributes that are
important to an effective board, including: sound judgment and analytical
skills; integrity and demonstrated high ethical standards; the ability to engage
management and one another in a constructive and collaborative manner; diversity
of background and experience; and the continued commitment to devote his or her
time, energy and skills to ensure the growth and prosperity of the Company.
Majority Voting Policy
The Board has adopted a policy providing that, in an
uncontested election of directors, shareholders will be able to vote in favor
of, or to withhold from voting, separately for each director nominee. If any
nominee receives a greater number of votes withheld than votes for, then that nominee
is required to tender his or her resignation to the Board immediately following
the relevant shareholder meeting. At the option of the nominee, his or her
resignation may be unconditional and effective immediately or may be subject to
or conditional upon acceptance by the Board and only effective upon acceptance
by the Board. If the resignation is conditional upon acceptance by the Board,
the Board will then refer the resignation for consideration by the Corporate
Governance Committee which, among other matters, is responsible for selecting or
recommending director nominees, and the Corporate Governance Committee will
provide a recommendation as to whether the resignation should be accepted. Any
director who tenders his or her resignation shall not participate in any meeting
of the Board or of the Corporate Governance Committee, if he or she is a member
of the Corporate Governance Committee, at which his or her resignation is
considered. The Board shall accept the resignation absent exceptional
circumstances. The Board will make its decision as to whether or not to accept
the resignation within ninety (90) days after the date the resignation is
tendered. The Board will promptly issue a news release with the Boards decision
and, if the decision is not to accept the resignation, shall include in the news
release the reasons for its decision. A copy of the news release will be filed
with the Toronto Stock Exchange and any other applicable regulatory authority.
15
Advance Notice By-Law
Effective November 10, 2015, the Board approved and adopted
by-law number 15 (the
Advance Notice By-Law
) providing for advance
notice requirements for the nomination of directors. The Companys shareholders
subsequently approved the Advance Notice By-law at the annual and special
meeting of shareholders held on May 10, 2016. A copy of the Advance Notice
By-law can be found under the Company's profile on the SEDAR website at
www.sedar.com
.
The Advance Notice By-Law establishes the conditions and
framework under which holders of record of Common Shares may exercise their
right to submit director nominations and is designed to ensure that shareholders
receive adequate notice of all director nominations to be considered at a
shareholders' meeting and sufficient information so that shareholders can cast
an informed vote.
The Advance Notice By-Law provides that for an annual meeting
of shareholders (including an annual and special meeting), advance notice of
director nominations to the Company must be given not less than thirty (30) days
prior to the date of the annual meeting. If the annual meeting is to be held on
a date that is less than fifty (50) days following the date of public
announcement of date of the annual meeting, notice must be given by the
nominating shareholder not later than the close of business on the tenth (10th)
day following the notice date. In the case of a special meeting of shareholders
(which is not also an annual meeting), called for the purpose of electing
directors (whether or not called for other purposes as well), notice to the
Company must be given not later than the close of business on the fifteenth
(15th) day following the day on which the first public announcement of the date
of the special meeting was made. The Advance Notice By-Law requires the
nominating shareholder to include in its notice to the Company certain
information regarding the nominating shareholder and the director nominees.
[Remainder of page left intentionally blank]
16
|
(1)
|
Ms. Atkins was a member of the Corporate Governance
Committee until July 23, 2018. Her attendance reflects the number of
meetings attended while a Committee member.
|
|
(2)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of April 2, 2019. 30,514 of the total
RSUs are RSUs that Ms. Atkins has deferred until her departure from the
Board.
|
|
(3)
|
The market value has been determined based on a price per
Common Share of $3.69, which was the closing price of the Common Shares on
April 2, 2019.
|
17
|
(1)
|
Dr. Bolles served as a member of the Audit Committee
until July 23, 2018. His attendance reflects the number of meetings while
a Committee member.
|
|
(2)
|
Dr. Bolles was appointed to the Compensation Committee on
July 24, 2018. His attendance reflects the number of meetings following
his appointment date.
|
|
(3)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of April 2, 2019.
|
|
(4)
|
The market value has been determined based on a price per
Common Share of $3.69, which was the closing price of the Common Shares on
April 2, 2019.
|
18
|
(1)
|
Mr. Briffett was appointed to Compensation Committee on
July 24, 2018. His attendance reflects the number of meetings following
his appointment date.
|
|
(2)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of April 2, 2019.
|
|
(3)
|
The market value has been determined based on a price per
Common Share of $3.69, which was the closing price of the Common Shares on
April 2, 2019.
|
19
|
(1)
|
Mr. Detlefsen served as a member of the Compensation
Committee until July 23, 2018. His attendance reflects the number of
meetings while a Committee member.
|
|
(2)
|
Mr. Detlefsen was appointed to the Corporate Governance
Committee on July 24, 2018. His attendance reflects the number of meetings
following his appointment date.
|
|
(3)
|
Includes 2,000 Common Shares beneficially owned by Mr.
Detlefsens spouse, in respect of which Mr. Detlefsen has no voting or
dispositive power or authority.
|
|
(4)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of April 2, 2019. 32,146 of the total
RSUs are RSUs that Mr. Detlefsen has deferred until his departure from the
Board.
|
|
(5)
|
The market value has been determined based on a price per
Common Share of $3.69, which was the closing price of the Common Shares on
April 2, 2019.
|
20
|
(1)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of April 2, 2019.
|
|
(2)
|
The market value has been determined based on a price per
Common Share of $3.69, which was the closing price of the Common Shares on
April 2, 2019.
|
21
|
(1)
|
Mr. Hollis also owns 500 limited partnership units of
Organics, which owns 6,734,134 Common Shares, 9,492,800 Special Voting
Shares and Preferred Stock which is exchangeable for 9,492,800 Common
Shares. See Note (3) under Security Ownership of Certain Beneficial
Owners and Management. However, Mr. Hollis does not directly or
indirectly exercise control or direction over the securities of the
Company held by Organics.
|
|
(2)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of April 2, 2019.
|
|
(3)
|
The market value has been determined based on a price per
Common Share of $3.69, which was the closing price of the Common Shares on
April 2, 2019.
|
22
|
(1)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of April 2, 2019. 9,474 of the total
RSUs are deferred RSUs that Ms. Houde has deferred until her departure
from the Board.
|
|
(2)
|
The market value has been determined based on a price per
Common Share of $3.69, which was the closing price of the Common Shares on
April 2, 2019.
|
23
|
(1)
|
Represents vested options and RSUs, including options and
RSUs that will vest within 60 days of April 2, 2019. Pursuant to the terms
of Mr. Springstubbs employment arrangements with Engaged Capital, all
options and RSUs were issued to Engaged Capital.
|
|
(2)
|
The market value has been determined based on a price per
Common Share of $3.69, which was the closing price of the Common Shares on
April 2, 2019.
|
24
CORPORATE GOVERNANCE
Introduction
The Board of Directors believes that effective corporate
governance contributes to improved corporate performance and enhanced
shareholder value. Consequently, the Board of Directors is committed to ensuring
that the Company follows best practices and continually seeks to enhance and
improve its corporate governance practices.
Board Mandate
The Board is responsible for the stewardship of the Company and
to supervise the management of the business and affairs of the Company in
accordance with the best interests of the Company and its shareholders. The
Board establishes overall policies and standards for the Company. Where
appropriate, the directors rely upon management and the advice of the Companys
outside advisors and auditors. The Board also delegates certain responsibilities
to its standing committees, based upon the approved charters of each such
committee.
In accordance with its mandate, the Board oversees and reviews
the development and implementation of the following significant corporate plans
and initiatives, among others:
-
the Companys strategic planning process;
-
the identification of the principal risks to the Companys business and
the implementation of systems to manage these risks, whether financial,
operational, environmental, safety-related or otherwise;
-
succession planning and evaluation of relative strengths of existing
management including the needs to ensure sufficient depth of management;
-
oversight of communications and public disclosure including the Companys
disclosure policy and receiving feedback from stakeholders;
-
analysis and approval of significant transactions including material
acquisitions and dispositions of businesses or other Company assets; and
-
the Companys internal controls and management information systems.
Board Composition, Size and Leadership
The articles of the Company provide that its Board of Directors
shall consist of a minimum of five and a maximum of fifteen directors. The Board
of Directors has fixed the number of directors at eight. These eight directors
are being nominated for re-election at the Meeting. Regretfully, Gregg Tanner, a
member of the Board since January 2017, passed away on January 24, 2019.
In accordance with its mandate, the Corporate Governance
Committee regularly considers the appropriate skills and characteristics
required of Board members, taking into consideration the Board's short-term
needs and long-term succession plans. The Corporate Governance Committee
believes that the Board should be comprised of directors with a broad range of
experience and expertise. Additionally, the committee develops and periodically
updates a long-term plan for the Board's composition taking into consideration
the independence, age, skills, experience and availability of service to the
Company of its members, as well as the opportunities, risks, and strategic
direction of the Company. Having regard for the results of the foregoing, the
Corporate Governance Committee makes recommendations to the full Board regarding
the size and composition of the Board and seeks to identify qualified
individuals to become Board members as deemed appropriate.
Each of the directors and executive officers of the Company is
required to certify on an annual basis that he or she has reviewed and is
knowledgeable as to the contents of the Companys Business Ethics and Code of
Conduct (the
Code
) and is not aware of any violations of the Code. All
new employees of the Company are required to certify at the time of hiring that
they have reviewed and are knowledgeable as to the contents of the Code. The
Company monitors compliance with the Code through management oversight and
regular communications with employees. In addition, the Company has established
and maintains, through an independent third-party service provider, a
confidential toll-free ethics reporting hotline which all directors, officers
and employees are advised of and encouraged to use to report matters which may
constitute violations of the Code.
25
The Board, each committee and each of the individual directors
are assessed annually at the end of the year as part of the Companys evaluation
process. During this annual assessment process, each director is required to
complete an individual assessment, which is prepared and reviewed by someone
other than the directors. The results of this review are reported to, and
discussed in detail at, a meeting of the full Board of Directors.
On February 21, 2019, David Colo was terminated from his
positions as President and Chief Executive Officer of the Company and resigned
as a director of the Company. Director Katrina Houde served as Interim CEO while
the Board conducted a search to identify a successor to Mr. Colo. Effective
April 1, 2019, Joseph Ennen was appointed Chief Executive Officer (
CEO
)
of the Company. In conjunction with this appointment, Mr. Ennen also became a
member of the Board and Ms. Houde continued her position on the Board.
Joseph Ennen, our CEO, currently serves on the Board of
Directors and R. Dean Hollis is the Chair of the Board. The Board does not have
a formal policy concerning the separation of the roles of CEO and Chair, as the
Board believes that it is in the best interests of the Company to make that
determination based on the position and direction of the Company and the
composition of the Board from time to time. As indicated above, these roles are
currently separate.
The Chair of the Board sets the agenda for meetings of the
Board with input and feedback from the directors. All committees of the Board
are chaired by independent directors. The Board and the Corporate Governance
Committee believe that the current Board leadership structure is an appropriate
structure for the Company and will continue to periodically evaluate whether the
structure is in the best interests of the Company and its shareholders.
Director Independence
Under NASDAQ listing rules, a majority of the members of the
Board must be independent directors. An independent director under NASDAQ
listing rules is a person other than an executive officer or employee or any
other individual having a relationship which, in the opinion of the Board, would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a director.
National Policy 58-201
Corporate Governance Guidelines
of the Canadian Securities Administrators (the
CSA
) recommends that
boards of directors of reporting issuers be composed of a majority of
independent directors. A director is considered independent only where the board
determines that the director has no material relationship with the Company.
Director independence of each of the current directors is determined by the
Board of Directors with reference to the requirements set forth by the CSA in
National Instrument 52-110 -
Audit Committees
, as well as the rules and
regulations of the Toronto Stock Exchange (the
TSX
), NASDAQ and SEC.
The Board has determined that each of the following seven
directors nominated for election are independent: Margaret Shân Atkins, Dr.
Albert Bolles, Derek Briffett, Michael Detlefsen, R. Dean Hollis, Katrina Houde
and Brendan Springstubb. Joseph Ennen, CEO, is currently an officer of the
Company, and is therefore not considered independent. Notwithstanding that Ms.
Houde served as Interim CEO for approximately one month prior to the appointment
of Mr. Ennen as CEO and was paid a salary for serving in that capacity, the
Board has confirmed that Ms. Houde has no direct or indirect material
relationship with the Company which could reasonably be expected to interfere
with the exercise of her independent judgment and therefore concluded that she
is independent in accordance with the applicable rules, policies and instruments
discussed above. As a result, if all of the director nominees are elected at the
Meeting, seven of the eight directors will be independent. These independent
directors currently comprise in full the membership of each standing Board
committee described in this Proxy Statement.
Executive Sessions
The independent directors meet without management and
non-independent directors at regularly scheduled in-person Board meetings,
generally following meetings of the full Board. The Chair of the Board presides
over these meetings.
26
Meeting Attendance
The Board held 13 duly called meetings during fiscal year 2018
and committees of the Board held a total number of 19 meetings. Each incumbent
board member attended 88% or more of his or her combined total meetings of the
Board and all committees on which he or she served. All directors were in
attendance at the 2018 Annual Meeting of the Shareholders on May 31, 2018.
Term and Age Limits
A directors term of office is from the date on which he or she
is elected or appointed until the close of the next annual meeting. The Board
believes that individual directors should be rigorously evaluated on the basis
of their skills, knowledge, experience, character, attendance and contributions
to the Board and the business of the Company and the specific needs and
requirements of the Board without regard to their term of service or age. At
this time, the Board has, therefore, not adopted term or age limits for
directors as it believes it is important to find a balance between ensuring a
mechanism for fresh ideas and viewpoints while not losing the insight,
experience and other benefits of continuity contributed by longer serving
directors. However, as the Board recognizes that diversity of views from
longer-term and newly-appointed directors can contribute to effective decision
making, the Board considers the term of service of individual directors, the
average term of the Board as a whole and turnover of directors in recent years
when proposing a slate of nominees.
Diversity
The Board believes that directors with diverse backgrounds and
experiences benefit the Company by enabling the Board to consider issues from a
variety of perspectives. In 2015, the Board approved a separate written
diversity policy, which is available at our website at
www.sunopta.com
, under the Investors link. In support
of the Companys commitment to diversity, when selecting qualified candidates to
serve on the Board, SunOpta will consider a wide range of diversity criteria
including gender, ethnicity, personal abilities, geographic location and other
factors. The Board seeks to include members not only with diverse backgrounds,
but also with skills and experience, including appropriate financial and other
expertise relevant to the business of the Company, in order to find the best
qualified candidates given the needs and circumstances of the Board. For these
reasons, the Board has not established specific targets relating to the
identification, nomination or representation on either the Board or among
executive officers based on gender or any other specific criteria.
Currently, the Board is comprised of two female directors (25%)
and six male directors (75%). Assuming all of the Companys nominees are
elected, the Board will continue to be comprised of two female directors (25%)
and six male directors (75%) following the Meeting. The Board hopes to increase
the representation of women on the Board as turnover occurs, taking into account
the skills, experience and knowledge desired at that particular time by the
Board.
With respect to executive officer positions, currently there is
one female (9%) and ten males (91%) at this level within the Company. While
there are currently no specific goals or plans with respect to women in
executive officer positions, the Company hopes to increase the representation of
women at the executive officer level as positions are available, taking into
account the skills, experience and knowledge desired at that particular time by
the Company.
Director Orientation and Continuing Education
The Company has a formal director orientation policy to ensure
that all new directors receive proper orientation to facilitate the level of
familiarity with the Companys practices, policies and operations required to
meet Board responsibilities.
The current process to orient new directors is as follows:
|
1)
|
The new director meets with the Chair of the Board and
the Companys CEO to discuss various information about the Company,
including history, vision, mission and values, organization structure,
shareholdings, strategic plan, fiscal business plan and budget, historical
and current year to date fiscal results.
|
27
|
2)
|
The new director meets with the Chair to discuss the
aspects of the Board such as organizational documents and Board and
committee minutes for the past year, Board administration matters, expense
reimbursement practices, and Company policies.
|
|
|
|
|
3)
|
The new director meets with other directors of the
Company and certain members of management which allows new directors an
opportunity to ask questions about the role of the Board, its committees
and directors and the nature and operation of the Company. Following
nomination, new directors are encouraged to meet other members of
management and to visit the Companys premises and view its
operations.
|
|
|
|
|
4)
|
New directors are provided access to the Companys
continuous disclosure documents as filed with the SEC and on SEDAR,
investor presentation material, director mandate and the Companys
Business Ethics and Code of Conduct policies. New directors are required
to affirm that they have read and understand the Companys Business Ethics
and Code of Conduct.
|
The Company also encourages directors to attend other
appropriate continuing education programs. Furthermore, the Board and its
committees received a number of presentations in 2018 to expand the Boards
knowledge of the Companys business, industry and principal risks and
opportunities. Presentation topics included retail consumption and consumer
trends, insurance coverages and risk mitigation, proxy advisor guidelines,
assessment of inventory and reserves, commodity risks, regulatory updates from
legal counsel, accounting updates and product development and innovation. In
addition to these presentations, written materials likely to be of interest to
directors that have been published in periodicals, newspapers or by legal or
accounting firms are routinely forwarded to directors or included with Board and
committee meeting materials.
Board Role in Risk Oversight
The Board has risk oversight responsibility and sets the tone
for risk tolerance within the Company. The Board strives to effectively oversee
the Companys enterprise-wide risk management in a way that balances managing
risks while enhancing the long-term value of the Company for the benefit of the
shareholders. The Board understands that its focus on effective risk oversight
is critical to setting the Companys culture towards effective risk management.
To administer its oversight function, the Board seeks to understand the
Companys risk philosophy by having discussions with management to establish a
mutual understanding of the Companys overall appetite for risk. The Board
maintains an active dialogue with management about existing risk management
processes and how management identifies, assesses and manages the Companys most
significant risk exposures. The Board receives regular updates from management
about the Companys most significant risks to enable it to evaluate whether
management is responding appropriately. During each regularly scheduled Board
meeting, the Board also reviews components of the Companys long-term strategic
plans and the principal issues, including foreseeable risks that the Company
expects to face in the future.
The Board oversees risk management directly, as well as through
its committees. For example, the Audit Committee reviews the Companys policies
and practices with respect to risk assessment and risk management, including
discussing with senior management major financial risks and the steps taken to
monitor and control exposure to such risk. The Corporate Governance Committee
considers risks related to succession planning and internal governance policies
and practices and the Compensation Committee considers risks related to the
attraction and retention of talent and risks relating to the design of executive
compensation programs and arrangements. See below for additional information
about the Boards committees. Each of these committees is required to make
regular reports of its actions and any recommendations to the Board, including
recommendations to assist the Board with its overall risk oversight
function.
Board Committees
The Board of Directors presently has three committees, with the
principal functions and membership described below. Each committee has a
charter, which is available at our website at
www.sunopta.com
, under the Investors link. The
following table summarizes the current membership of each of our three Board
committees. Each of the three committees is composed entirely of independent
directors.
28
Director
|
Audit Committee
|
Corporate Governance
Committee
|
Compensation
Committee
|
Margaret Shân Atkins
|
|
|
Chair
|
Dr. Albert Bolles
|
|
x
|
x
|
Derek Briffett
|
Chair
|
|
x
|
Michael Detlefsen
|
x
|
x
|
|
R. Dean Hollis
|
|
x
|
x
|
Katrina Houde
|
|
Chair
|
|
Brendan Springstubb
|
x
|
|
x
|
Audit Committee
The Audit Committees duties and responsibilities are
documented in a formal Audit Committee Charter, which is regularly updated.
These duties and responsibilities include (a) providing oversight of the
financial reporting process and managements responsibility for the integrity,
accuracy and objectivity of financial reports and related financial reporting
practices; (b) recommending to the Board the appointment and authorizing
remuneration of the Companys auditors; (c) providing oversight of the adequacy
of the Companys system of internal and related disclosure controls; and (d)
providing oversight of management practices relating to ethical considerations
and business conduct, including compliance with laws and regulations. The Audit
Committee meets a minimum of four times a year, once to review the Annual Report
on Form 10-K and annual Audited Consolidated Financial Statements, and once
prior to when earnings are filed for the first, second and third fiscal quarters
to review interim financial statements and the Quarterly Report on Form 10-Q
which is filed with the SEC in the U.S. and with applicable securities
regulators in Canada. Other meetings may be held at the discretion of the Chair
of the Audit Committee. The Audit Committee has free and unfettered access to
Ernst & Young LLP, the Companys independent registered accounting firm and
auditors, the Companys risk management and internal audit team and the
Companys internal and external legal advisors.
The Audit Committee maintains a company-wide whistle-blower
policy related to the reporting of concerns in accounting or internal controls.
This policy gives all employees of the Company the option of using a hot line
administered by a third party for communication of concerns dealing with a wide
range of matters including accounting practices, internal controls or other
matters affecting the Companys or the employees well-being.
Our Audit Committee is currently comprised of Derek Briffett
(Chair), Michael Detlefsen and Brendan Springstubb. The Board has determined
that each member of the Audit Committee (1) is independent as defined by
applicable SEC and CSA rules and NASDAQ and TSX listing rules; (2) has not
participated in the preparation of the financial statements of the Company or
any current subsidiary of the Company at any time during the past three years;
and (3) is able to read and understand fundamental financial statements,
including a balance sheet, income statement, and cash flow statement. In
addition, the Board has determined that Derek Briffett and Michael Detlefsen
each meet the definition of audit committee financial expert, as defined in
SEC and CSA rules, and has appointed Mr. Briffett as Chair of the Audit
Committee.
The report of the Audit Committee appears under the heading
Report of the Audit Committee below.
The Audit Committee met formally eight times during fiscal
2018.
Corporate Governance Committee (Nominating Committee)
The Corporate Governance Committees duties and
responsibilities are documented in a formal Corporate Governance Committee
Charter, which is updated regularly. These duties and responsibilities include:
(a) identifying individuals qualified to become members of the Board of
Directors, and selecting or recommending director nominees; (b) developing and recommending to the Board
of Directors corporate governance principles applicable to the Company; (c)
leading the Board of Directors in its annual review of the performance of the
Board of Directors; (d) recommending to the Board of Directors director nominees
for each committee; (e) discharging the responsibilities of the Board of
Directors relating to compensation of the Companys directors; (f) leading the
Board of Directors in its annual review of the performance of the CEO; and (g)
regularly assessing the effectiveness of the Companys governance policies and
practices.
29
The Corporate Governance Committee, in its capacity as the
Nominating Committee, concerns itself with the composition of the Board with
respect to depth of experience, balance of professional interests, required
expertise and other factors. The Nominating Committee evaluates prospective
nominees identified on its own initiative or referred to it by other Board
members, management, shareholders or external sources and all self-nominated
candidates. The Nominating Committee uses the same criteria for evaluating
candidates nominated by shareholders and self-nominated candidates as it does
for those proposed by other Board members, management and search companies. To
be considered for membership on the Board, the Nominating Committee will
consider certain necessary criteria that a candidate should meet, which would
include the following: (a) be of proven integrity with a record of substantial
achievement; (b) have demonstrated ability and sound judgment that usually will
be based on broad experience but, particularly, industry experience; (c) be able
and willing to devote the required amount of time to the Companys affairs,
including attendance at Board and committee meetings; (d) possess a judicious
and critical temperament that will enable objective appraisal of managements
plans and programs; and (e) be committed to building sound, long-term Company
growth. The committee also takes into consideration the range of skills and
expertise that should be represented on the Board, geographic experience with
businesses and organizations, and potential conflicts of interest that could
arise with director candidates. Evaluation of candidates occurs on the basis of
materials submitted by or on behalf of the candidate. If a candidate continues
to be of interest, additional information about her/him is obtained through
inquiries to various sources and, if warranted, interviews. The Company adheres
to its diversity policy and seeks to include members with diverse backgrounds,
skills and experience, including appropriate financial and other expertise
relevant to the business of the Company.
A shareholder may recommend a person as a nominee for election
as a director at the Companys next annual meeting of shareholders by writing to
the Secretary of the Company. In order for a shareholder to formally nominate a
person for election as a director, including by submitting a shareholder
proposal in accordance with the Canada Business Corporations Act, the
shareholder must comply with the Companys Advance Notice By-Law. See Proposal
One Election of Directors Advance Notice By-Law and Shareholder Proposals
for 2020 Annual Meeting of Shareholders; Shareholder Communications.
Our Corporate Governance Committee is currently comprised of
Katrina Houde (Chair), Dr. Albert Bolles, Michael Detlefsen and R. Dean Hollis,
each of whom has been determined by the Board to be independent.
The Corporate Governance Committee met formally four times
during fiscal 2018.
Compensation Committee
The Compensation Committees duties and responsibilities are
documented in a formal Compensation Committee Charter, which is updated
regularly. These duties and responsibilities include to (a) reward executives
for long-term strategic management and enhancement of shareholder value; (b)
support a performance-oriented environment that rewards achievement of internal
Company goals and recognizes the Companys performance compared to the
performance of similarly situated companies; (c) attract and retain executives
whose abilities are considered essential to the long-term success and
competitiveness of the Company through the Companys salary administration
program; (d) align the financial interests of the Companys executives with
those of the shareholders; and (e) ensure fair and equitable treatment for all
employees.
The function of the Compensation Committee is to determine the
compensation of the CEO as well as to review and approve the compensation
recommended by the CEO for certain officers of the Company and to review overall
general compensation policies and practices for all employees of the Company. In
addition, this committee oversees the administration of the Companys Amended
2013 Stock Incentive Plan and the Companys Amended and Restated 2002 Stock
Option Plan (collectively, the Stock Incentive Plans), Employee Stock Purchase
Plan and any other incentive plans that may be established for the benefit of
employees of the Company.
30
Our Compensation Committee is currently comprised of Margaret
Shân Atkins (Chair), Dr. Albert Bolles, Derek Briffett, R. Dean Hollis and
Brendan Springstubb. The Board has determined that the committee consists
entirely of non-employee directors, within the meaning of Rule 16b-3 under the
Exchange Act, outside directors within the meaning of Section 162(m) of the
Internal Revenue Code and independent directors within the meaning of NASDAQ
listing rules and National Policy 58-201 Corporate Governance Guidelines of
the CSA.
Our Compensation Committee has deep experience with
compensation matters. Specifically:
-
Ms. Atkins, the Chair of the Compensation Committee, has extensive
compensation related experience from both a senior operating and board
governance perspective having served as a senior operational executive and as
a Chair and member of compensation committees of other publicly traded and
private organizations.
-
Mr. Hollis, as the former President and Chief Operating Officer of the
Consumer Foods Division of ConAgra Foods, was responsible for employee annual
performance and salary reviews and has extensive compensation related
experience as a Chair and member of compensation committees of other publicly
traded organizations.
-
Mr. Briffett, through his experience as a senior finance executive at
Loblaw's, Kraft Foods, ConAgra Foods and Associated Brands has deep experience
in incentive plan design and reporting and salary review and administration.
-
Mr. Springstubb, as a representative of one of the Companys largest
stockholders, provides the Committee with a unique perspective on executive
compensation and the alignment of management incentives with shareholder value
creation.
The report of the Compensation Committee appears under the
heading Executive CompensationCompensation Committee Report below.
The Compensation Committee met formally seven times during
fiscal 2018.
Compensation Committee Interlocks and Insider
Participation
No member of our current Compensation Committee has served as
one of our officers or employees at any time over the past year. None of our
executive officers serves as a member of the compensation committee of any other
entity that has an executive officer serving as a member of our Board or
Compensation Committee. None of our executive officers serve as a member of the
board of directors of any other company that has an executive officer serving as
a member of our Compensation Committee.
Code of Ethics
The Company has a Code of Ethics policy titled Business Ethics
and Code of Conduct. The policy is applicable to all employees, including the
Companys executive officers and employees performing similar functions, as well
as all persons serving as directors and consultants to the Company. A copy of
the Business Ethics and Code of Conduct is available, without charge, at
www.sunopta.com
or upon written request to the
Company at SunOpta Inc., 2233 Argentia Road, Suite 401, West Tower, Mississauga,
ON L5N 2X7. Any amendments to, or waivers of, the Business Ethics and Code of
Conduct which specifically relate to any financial professional will be
disclosed promptly following the date of such amendment or waiver at
www.sunopta.com.
Insider Ownership Guidelines for Directors, Officers and
Executives
The Board approved insider ownership guidelines for all
non-employee directors and members of the senior management in May 2012 and in
August 2015 approved an amendment to the insider ownership guidelines for all
non-employee directors. These guidelines are reviewed on an annual basis and are
intended to align the interests of directors and management with those of our
shareholders.
The insider ownership guidelines encompass the following
parameters:
|
1.
|
Insider ownership guidelines are mandatory for all
non-employee members of the Board and members of the Senior Leadership
Team. All persons covered by these guidelines will have the option to
request an exemption from these requirements based on consideration of
their personal circumstances by the Compensation Committee.
|
|
|
|
|
2.
|
Stock ownership targets established as
follows:
|
31
|
a.
|
Chief Executive Officer five times base
salary
|
|
b.
|
Directors five times annual cash retainers
|
|
c.
|
Other NEOs (includes Chief Financial Officer and three
most highly compensated officers) two times base salary
|
|
d.
|
All other Senior Leadership Team members one times base
salary
|
|
3.
|
Targets are based on direct shareholdings only and do not
account for the value of in-the-money options.
|
|
|
|
|
4.
|
In determining whether the required investment levels
have been met, holdings are valued using the higher of the cost basis of
the stock when acquired, or the market closing price on the last trading
day of each fiscal quarter.
|
|
|
|
|
5.
|
All participants are provided a five-year transition
period to be in compliance with the ownership target. At the end of that
period, the CEO, other NEOs and the Senior Leadership Team not in
compliance will receive 50% of all subsequent short-term incentive
payments in the form of equity until such time as the minimum holding is
established.
|
As of December 29, 2018, four of the eight directors were in
compliance with the mandatory guidelines. As of April 2, 2019, five of the eight
director nominees were in compliance. The three director nominees that currently
do not meet the insider ownership guidelines are still within their transition
periods.
Compensation of Directors
Annual compensation for non-employee directors is comprised of
cash and equity-based compensation. Cash compensation consists of an annual
retainer and supplemental retainers for the chairs and members of Board
committees. Equity compensation is comprised of an annual grant of RSUs.
Non-employee directors may elect to receive stock in lieu of
cash compensation, including from 50% to 100% of the cash amount. Also,
non-employee directors have the option to defer receipt of annual equity
compensation that would otherwise be payable to them, subject to compliance with
the Companys Non-Employee Director Stock Deferral Plan and Section 409A of the
Internal Revenue Code.
In October 2018, the Board reviewed non-employee director
compensation and did not make any changes to the following schedule effective
October 1, 2016:
|
i.
|
Annual cash retainer of:
|
|
|
$50,000 for serving as a
director;
|
|
|
|
|
|
$50,000 for serving as the Chair
of the Board;
|
|
|
|
|
|
$17,000 for serving as the Chair
of the Audit Committee;
|
|
|
|
|
|
$12,500 for serving as the Chair
of the Compensation Committee;
|
|
|
|
|
|
$8,500 for serving as the Chair
of the Corporate Governance Committee;
|
|
|
|
|
|
$6,000 for serving on the Audit
Committee; and
|
|
|
|
|
|
$3,000 for serving on other
committees.
|
|
|
$1,250 for travel in excess of
four hours
|
|
iii.
|
Annual equity compensation:
|
|
|
RSUs valued at $90,000 with a
12-month vesting period
|
32
The following table summarizes total compensation paid to our
non-employee directors for fiscal year 2018.
Non-Employee Director Compensation Table
Name
|
Fees Earned
or Paid in
Cash
($)
|
Stock
Awards
($)(1)
|
Option
Awards
($)
|
Other
Compensation
($)(2)
|
Total
($)(3)
|
Margaret Shân Atkins
|
64,000
|
89,998
|
-
|
5,000
|
158,998
|
Dr. Albert Bolles
|
57,500
|
89,998
|
-
|
5,000
|
152,498
|
Derek Briffett
|
63,000
|
89,998
|
-
|
5,000
|
157,998
|
Michael Detlefsen
|
65,917
|
89,998
|
-
|
5,000
|
160,914
|
R. Dean Hollis
|
104,500
|
89,998
|
-
|
5,000
|
199,498
|
Katrina Houde
|
66,000
|
89,998
|
-
|
5,000
|
160,998
|
Brendan Springstubb(4)
|
59,000
|
89,998
|
-
|
5,000
|
153,998
|
Gregg Tanner
|
59,000
|
89,998
|
-
|
2,500
|
151,498
|
|
(1)
|
The fair value, as shown in this table, is determined in
accordance with FASB ASC Topic 718 based on the number of RSUs granted and
SunOptas closing stock price on the date of grant. The number of RSUs
granted in May 2018 was determined by dividing the scheduled Annual Equity
Compensation by SunOptas closing stock price on the grant date. RSUs vest
on the first anniversary of the grant date.
|
|
|
|
|
(2)
|
Other compensation consists of travel fees for all
directors.
|
|
|
|
|
(3)
|
Includes the fair market value of Common Shares issued in
lieu of cash retainers and travel fees, including elections of $16,309 for
Ms. Atkins, $38,920 for Mr. Briffett, $54,138 for Mr. Detlefsen, $109,500
for Mr. Hollis, $53,496 for Ms. Houde, $63,999 for Mr. Springstubb and
$61,499 for Mr. Tanner. For Mr. Briffett, Mr. Detlefsen, and Ms. Houde,
Canadian income tax and CPP is deducted from gross fees before calculating
the common shares granted in lieu of cash.
|
|
|
|
|
(4)
|
Pursuant to the terms of his employment arrangements with
Engaged Capital, all cash compensation and equity awards payable to Mr.
Springstubb are paid or issued to Engaged Capital.
|
The Board believes that compensation for non-employee directors
should be competitive and should fairly compensate directors for the time and
skills devoted to serving our Company but, for independent directors, should not
be so significant as to compromise independence.
All our directors are reimbursed for reasonable out-of-pocket
expenses incurred for attending meetings of our Board or its committees and for
other reasonable expenses related to the performance of their duties as
directors. The Board believes that our non-employee director compensation
package is competitive with the compensation offered by other companies and is
fair and appropriate considering the responsibilities and obligations of our
directors.
Penalties and Sanctions and Personal Bankruptcies
The information related to cease trade orders and bankruptcies,
not being within the knowledge of the Company, has been furnished by the
directors. Except as disclosed below, none of the proposed nominees for election
to the Board of Directors:
|
1)
|
is, as at the date of this Proxy Statement, or was within
10 years before the date of the Proxy Statement, a director or chief
executive officer or chief financial officer of any company (including the
Company) that:
|
33
|
(i)
|
was the subject of an order (as defined in Form 51-102F5
made under National Instrument 51-102 of the CSA) that was issued while
the director or executive officer was acting in the capacity as director,
chief executive officer or chief financial officer; or
|
|
|
|
|
(ii)
|
was subject to an order that was issued after the
director or executive officer ceased to be a director, chief executive
officer, or chief financial officer, and which resulted from an event that
occurred while that person was acting in the capacity as a director, chief
executive officer, or chief financial officer;
or
|
|
2)
|
is at the date hereof, or has been within 10 years before
the date of this Proxy Statement, a director or executive officer of any
company (including the Company) that while that person was acting in that
capacity, or within a year of that person ceasing to act in that capacity,
became bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency or was subject to or instituted any proceedings,
arrangement or compromise with creditors or had a receiver, receiver
manager or trustee appointed to hold its assets; or
|
|
|
|
|
3)
|
has, within the 10 years before the date of this Proxy
Statement, become bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency, or become subject to or instituted any
proceedings, arrangement or compromise with creditors, or had a receiver,
receiver manager or trustee appointed to hold the assets of the director,
executive officer or shareholder.
|
In December 2014, Michael Detlefsen was appointed as Chief
Restructuring Officer of Organic Meadow Inc. and its subsidiary, Organic Meadow
Ltd. (collectively,
Organic Meadow
) to guide Organic Meadow through a
proposed restructuring process when it was experiencing significant operational
and financial difficulties. As part of the restructuring process, Organic Meadow
filed a proposal for creditor protection pursuant to the Bankruptcy and
Insolvency Act (Canada) on April 1, 2015. Organic Meadow emerged from bankruptcy
protection on September 9, 2015 and was later sold in November 2015, following
which Mr. Detlefsen resigned as Chief Restructuring Officer.
[Remainder of page left intentionally blank]
34
PROPOSAL TWO APPOINTMENT AND REMUNERATION OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM AND AUDITOR
Appointment of Independent Registered Public Accounting Firm
and Auditor
The Audit Committee of the Board has recommended that Ernst
& Young LLP (
EY
) be appointed as the Companys independent
registered public accounting firm and auditor until the close of the next annual
meeting of shareholders. Shareholders will be asked to vote at the Meeting to
appoint EY as the Companys independent registered public accounting firm and
auditor until the close of the next annual meeting of shareholders and to
authorize the Audit Committee to fix their remuneration. EY was engaged to serve
as our auditors in June 2018 following a competitive tender process for the
Companys external audit engagement. One or more representatives of EY will
attend the Meeting and will have the opportunity to make a statement if he or
she desires to do so and will be available to respond to appropriate questions
from shareholders in attendance.
Recommendation of the Board of Directors; Vote
Required
The Board of Directors recommends that the shareholders vote
FOR the appointment of EY as the Companys independent registered public
accounting firm and auditor until the close of the next annual meeting of
shareholders and FOR authorizing the Audit Committee to fix their
remuneration
. In the event that shareholders do not appoint EY as the
Companys auditors at the Meeting and another accounting firm is not appointed,
the Audit Committee will reconsider its recommendation and the Board will select
another accounting firm to serve as the Companys independent registered public
accounting firm and auditor.
This proposal will be approved if a quorum is present at the
Meeting and the votes cast in favor of the proposal constitute a majority of the
total votes cast on the proposal. Abstentions and broker non-votes are counted
for purposes of determining whether a quorum exists at the Meeting, but will
have no effect on the results of the vote. Brokers and other nominees will have
discretionary authority to vote your shares if you hold your shares in street
name and do not provide instructions as to how your shares should be voted on
this proposal.
Auditor Fees
The following table sets forth fees for professional services
provided by our independent auditors for each of the last two fiscal years
(including out-of-pocket expenses):
Fee Category
|
Fiscal 2018
($)
|
Fiscal 2017
($)
|
Audit Fees
(1)
Audit-Related
Fees
(2)
Tax Fees
(3)
All Other
Fees
(4)
|
2,117,512
-
94,496
-
|
2,420,607
55,521
84,459
-
|
Total
|
2,212,008
|
2,560,587
|
Following is a description of the nature of services comprising
the fees disclosed under each category:
|
(1)
|
Audit fees relate to the annual audit of the Companys
consolidated financial statements included in the Companys Annual Reports
on Form 10-K, annual audits of the effectiveness of the Companys internal
control over financial reporting, reviews of interim financial statements
included in the Companys Quarterly Reports on Form 10-Q, and services
provided in connection with statutory audits and regulatory filings. Audit
fees for fiscal 2018 included approximately $0.4 million related to the
change in auditor.
|
|
|
|
|
(2)
|
Audit-related fees relate to accounting consultations and
attest services in connection with financial reporting matters and
internal control reviews, and other audit-related projects.
|
|
|
|
|
(3)
|
Tax fees relate to tax compliance, tax advice and tax
planning.
|
35
|
(4)
|
Other fees relate to miscellaneous matters other than
reported above.
|
Pre-Approval of Audit and Non-Audit Services
The Audit Committee has a policy for the pre-approval of audit
and non-audit services that may be provided by the Companys independent
registered public accounting firm. The committees policy is to require
pre-approval for all audit and permissible non-audit services provided by the
Companys external auditor prior to their engagement with the exception that
management is authorized to engage the external auditor in respect of services
to the extent that (a) such required services could not reasonably be completed
by another firm (e.g. assistance with responses to continuous disclosure review
comment letters from regulatory authorities, comfort letters, consent letters,
statutory audits), (b) each individual engagement is not more than $50,000, and
(c) the aggregate for all engagements does not exceed $100,000. Any pre-approval
is detailed as to the particular service or category of services and is
generally subject to a specific budget. The Audit Committee has delegated to its
Chair authority to pre-approve proposed audit and non-audit services that arise
between Audit Committee meetings, provided that the decision to approve the
service is presented to the full Audit Committee for consideration at the next
scheduled Audit Committee meeting. All audit and non-audit services performed by
EY during the fiscal year ended December 29, 2018 were approved in accordance
with this policy.
Financial Information Systems Design and Implementation Fees
No fees were billed to the Company by EY or Deloitte LLP, the
Companys prior auditor, during any of the last two fiscal years for
professional services described in Paragraph (c)(4)(ii) of Rule 2-01 of
Regulation S-X (financial information systems design and implementation
services).
[Remainder of page left intentionally blank]
36
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of the Company assists the
Board in fulfilling its oversight responsibilities with respect to the external
reporting process and the adequacy of the Companys internal controls. Specific
responsibilities of the Audit Committee are set forth in the Audit Committee
Charter, a copy of which can be found on SunOptas website at
www.sunopta.com
. The members of the Audit Committee are
Derek Briffett (Chair), Michael Detlefsen and Brendan Springstubb, each of whom
meets the independence requirements of Rule 10A-3 of the Securities Exchange Act
of 1934, as amended, and applicable independence requirements of the NASDAQ
listing rules and National Instrument 52-110
Audit Committees
of the
CSA.
The Audit Committee has reviewed and discussed the Companys
audited financial statements for the year ended December 29, 2018 with the
Companys management. The Audit Committee has discussed with EY, the Company's
independent registered public accounting firm and auditor, the matters required
to be discussed by the statement on Auditing Standards No. 61, as amended, as
adopted by the Public Company Accounting Oversight Board in Rule 3200T. The
Audit Committee has received the written disclosures and the letter from EY
required by applicable requirements of the Public Company Accounting Oversight
Board regarding EY communications with the Audit Committee concerning
independence, and has discussed with EY its independence.
In reliance on the review and the discussions referred to
above, the Audit Committee recommended to the Board that the audited financial
statements be included in the Annual Report on Form 10-K for the fiscal year
ended December 29, 2018, for filing with the SEC and applicable Canadian
securities regulators.
This report has been submitted by Derek Briffett (Chair),
Michael Detlefsen and Brendan Springstubb, all members of the Audit Committee.
The information contained in this report shall not be deemed
to be soliciting material or to be filed with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates it by reference in such filing.
[Remainder of page left intentionally blank]
37
PROPOSAL THREE ADVISORY VOTE REGARDING THE COMPENSATION OF
NAMED
EXECUTIVE OFFICERS
Background
In order to ensure an appropriate level of director
accountability to the Companys shareholders and to ensure that shareholders
have an opportunity to engage with the Board of Directors about executive
compensation matters, the Company has had a policy since 2010 to seek an
advisory vote on an annual basis from shareholders on the Companys executive
compensation practices. Shareholders have previously voted on an advisory basis
for the Company to hold an advisory vote regarding the compensation of NEOs on
an annual basis. The Board understands that our shareholders have a meaningful
interest in our executive compensation policies, and believes that shareholders
should have the opportunity to fully understand the objectives, philosophy and
principles the Board has used to make executive compensation decisions. The
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the
Dodd-Frank Act, now mandates that the Company enable shareholders to vote to
approve, on an advisory, non-binding basis, the compensation of the NEOs named
in the Summary Compensation Table set forth in this Proxy Statement.
Resolution
In accordance with Company policy and Section 14A of the
Exchange Act, we are asking shareholders to indicate their support for the
compensation of the NEOs. This proposal, commonly known as a say-on-pay
proposal, gives shareholders the opportunity to express their views on the NEOs
compensation. Accordingly, we will ask shareholders to vote FOR the following
resolution at the Meeting.
RESOLVED, that the Companys shareholders approve, on an
advisory basis, the compensation of the NEOs, as disclosed in the Companys
Proxy Statement for the 2019 Annual and Special Meeting of Shareholders pursuant
to the compensation disclosure rules of the SEC, including the Compensation
Discussion and Analysis, the Summary Compensation Table and other related tables
and narrative discussion under the Executive Compensation caption.
The say-on-pay vote is advisory, and therefore not binding on
the Company, the Compensation Committee or our Board of Directors. The Board of
Directors and the Compensation Committee value the opinions of our shareholders
and to the extent there is any significant vote against the NEO compensation as
disclosed in this Proxy Statement, we will consider our shareholders concerns
and the Compensation Committee will evaluate whether any actions are necessary
to address those concerns.
Recommendation of the Board of Directors; Vote
Required
The Board of Directors recommends that the shareholders vote
FOR the advisory resolution regarding the compensation of the Companys
NEOs
.
This proposal will be approved if a quorum is present at the
Meeting and the votes cast in favor of this proposal constitute a majority of
the total votes cast on this proposal. While this vote is required by law, it
will neither be binding on the Company or the Board of Directors, nor will it
create or imply any change in the fiduciary duties of, or impose any additional
fiduciary duty on, the Company or the Board of Directors. Abstentions and broker
non-votes are counted for purposes of determining whether a quorum exists at the
Meeting, but will have no effect on the results of the vote. Brokers and other
nominees will not have discretionary authority to vote your shares if you hold
your shares in street name and do not provide instructions as to how your shares
should be voted on this proposal.
38
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
Compensation Discussion and Analysis
Dear Fellow Shareholder,
We are pleased to provide you with SunOptas Compensation
Discussion and Analysis (
CD&A
) which is designed to help you
understand SunOptas approach to executive compensation.
Value Creation Plan and Compensation Decision Highlights
SunOpta is in the midst of a business transformation. The
Companys efforts to execute this transformation began in November 2016, with
the announcement of the Value Creation Plan (the
plan
or the VCP) to
expand the profitability and increase the growth rate of the business with the
goal of creating long-term shareholder value. The plan consists of four key
pillars as illustrated below:
To align the executives with the objectives of the Value
Creation Plan, the Compensation Committee made several changes to the overall
compensation program:
|
|
To focus on adjusted EBITDA as the key financial measure
in the short-term incentive plan; and
|
|
|
|
|
|
Provide long-term incentives that are significantly
performance-based, emphasizing sustained long- term stock price increases.
|
The Compensation Committee believes that these changes, in
conjunction with the Value Creation Plan, position the Company to create
shareholder value, and align the interests of shareholders and management. As a
result of these updated designs, and the performance delivered, 2018
compensation was below the targeted levels:
|
|
No payouts were made under the fiscal year 2018
short-term incentive plan, as adjusted EBITDA performance was below the
threshold level.
|
39
|
|
As of December 29, 2018, performance-based equity grants
have not yet vested as price hurdles have not been achieved.
|
Conclusion
The executive compensation programs are intended to drive
shareholder value creation, emphasize pay for performance and provide a
framework to effectively attract and retain talent. As we implement these
philosophies, we take the preferences and perspectives of our shareholders
seriously. We welcome constructive dialogue regarding the opportunities
available to SunOpta and the executive compensation arrangements we institute to
align with these opportunities.
More complete details of our compensation program and actions
are provided in the remainder of this CD&A, specifically:
-
Compensation Philosophy
-
Elements of Compensation Program
-
Other Compensation
-
Compensation Tables
-
Potential Payments on Termination or Change of Control and Tables
-
CEO Pay Ratio
Based on that review and discussion, the Committee has
recommended to the Board of Directors that the CD&A be included in this
Proxy Statement.
The Compensation Committee of SunOpta Inc.:
Margaret Shân Atkins - Chair
Al
Bolles
Derek Briffett
R. Dean Hollis
Brendan Springstubb
Say on Pay Vote Recommendation
|
|
We
believe
that
shareholder
support
for
our
compensation
programs
is
warranted,
for
all
the
reasons
described
herein,
and
we
ask
for
your
vote
in
support.
|
|
Previous Say on Pay and Shareholder Engagement
The
Board and Compensation Committee are committed to the concept of
pay-for-performance. Consequently, our executive compensation programs are
designed to reward achievement and over-achievement of goals, and to penalize
performance shortfalls. At the 2018 Annual Meeting of the Shareholders,
approximately 97.0% of the shares voted were in favor of the advisory resolution
to support executive compensation, no change from the 97.0% of shares that voted
in favor of this resolution at the 2017 Annual and Special Meeting.
40
Compensation Practices
The Compensation Committee utilizes best practices in governing
our executive compensation programs. Therefore, there are certain things that we
do and do not do, as a matter of practice
:
41
Compensation opportunities provided to executives are intended
to approximate market median pay levels, assuming the targeted level of
performance is delivered.
Performance targets are generally set in relation to the
Companys internal budget goals. Then, using the target as the starting point,
upside and downside payout ranges around the target are developed. These ranges
provide additional compensation opportunity to executives if results exceed
targets, while penalizing under-performance. Through this design, our executive
compensation program motivates our team, while delivering true
pay-for-performance from a shareholder perspective.
Peer Group
In order to help ensure the competitiveness of our executive
compensation, the Compensation Committee considers competitive compensation
practices from relevant sources. To do this, we review general market survey
data as well as comparisons from our executive compensation peer group.
For 2018, the peer group remained unchanged from that used in
2017 and included companies similar to SunOpta from a size, business mix and
labor market perspective and with a comparable revenue to market capitalization
profile and operational model.
To support the Compensation Committee in making its
determinations, the Committee retained the services of Willis Towers Watson
(
WTW
) as its independent executive compensation consultant in 2018. The
Committee reviewed and confirmed the independence of WTW. WTW provided services
at the direction of the Committee, and the Committee had specific authority in
managing all work by WTW. In 2019, SunOpta engaged Pearl Meyer as its
independent executive compensation consultant.
42
Elements of SunOptas Compensation Program
To meet our compensation philosophy, we provide the following
compensation components:
43
As these charts illustrate, our compensation design is intended
to deliver a significant portion of our senior executives total target
compensation in the form of pay-at-risk.
For 2018, the following individuals were SunOptas Named
Executive Officers (
NEOs
):
Executive
|
Role
|
David Colo
|
President and CEO
|
Robert McKeracher
|
Vice President and Chief
Financial Officer
|
John Ruelle
|
Senior Vice President, RMSS and
Corporate Development
|
Gerard Versteegh
|
Senior Vice President, Global
Ingredients
|
Chris Whitehair
|
Senior Vice President, Operations
|
Base Salary
For fiscal year 2018, consistent with the compensation
philosophy noted above, base salary levels for executive officers were set based
on assessments of the Companys performance, each individuals performance,
external market comparisons and other external and internal factors.
The following annualized salary rates were effective for our
NEOs during 2018. These salaries are unchanged in the currencies paid from those
paid at the end of 2017.
Executive
|
Base Salary
|
David Colo
|
$650,000
|
Robert McKeracher*
|
$360,966
|
John Ruelle
|
$417,843
|
Gerard Versteegh**
|
$437,481
|
Chris Whitehair
|
$385,000
|
* Robert McKeracher's salary is converted from CAD to USD
using the one-year average exchange rate for fiscal 2018 of $.7723 CAD to $1 USD
**Gerard Versteegh's salary is converted from EUR to USD using the one-year
average exchange rate for fiscal 2018 of $1 EUR to $1.1812 USD.
Short-Term Incentive Plan
The purpose of the Short-Term Incentive Plan (the
STIP
) is to establish alignment across the organization and recognize
individuals impact on organizational performance, focusing employees on desired
behaviors which link to demonstrated results.
The STIP has been designed to align with the goals of the Value
Creation Plan, which was instituted to accelerate significant improvements in
EBITDA, while maintaining rigorous expectations for quality and safety. In an
effort to add focus to the achievement of these improvements, adjusted EBITDA
was chosen as the sole performance metric for the plan. The Committee believes
that the use of EBITDA in the STIP heightens managements focus on implementing
and delivering the operational improvements contemplated in the Value Creation
Plan.
Additionally, the payout structure associated with the STIP was
revised to stress the importance of executing upon the Value Creation Plan, as
well as effectively motivate the executive team to exceed the goals and
milestones of the plan. For these reasons, achievement of the budget will pay
less than 100% of the target incentive.
44
This structure is consistent with the desire to maintain pay
and performance alignment, while providing incentives for EBITDA stabilization
as the Value Creation Plan gains traction.
For 2018, the corporate parameters we established for the STIP
were:
Measure
|
Threshold
(78.9% Budget)
|
Budget (75%
Payout)
|
105% Budget
(100% payout)
|
Maximum
(125% Budget)
|
SunOpta Adjusted EBITDA*
|
$75M
|
$95M
|
$99.8M
|
$118.8M
|
*Adjusted EBITDA shall be measured as operating income plus
depreciation, amortisation and stock-based compensation, as calculated by the
Company based on the Companys audited financials and consistent with the
Companys calculation of adjusted EBITDA as a non-GAAP financial measure
reported to its shareholders.
Each NEO had the following range of short-term incentive
opportunities in 2018, depending on the corporate result achieved:
Executive
|
Threshold
Payout
(% of Salary)
|
Budget
Payout
(%
of Salary)
|
100% Payout
(% of
salary)
|
Maximum
Payout
EBITDA*
(% of Salary)
|
David Colo
|
12.5%
|
93.75%
|
125%
|
250%**
|
Robert McKeracher
|
5%
|
37.5%
|
50%
|
100%
|
John Ruelle
|
5%
|
37.5%
|
50%
|
100%
|
Gerard Versteegh
|
5%
|
37.5%
|
50%
|
100%
|
Chris Whitehair
|
5%
|
37.5%
|
50%
|
100%
|
*For 2018, the plan does not pay above 200% of target for
anyone.
**Mr. Colos maximum payout cannot exceed 250% per his
employment agreement.
If adjusted EBITDA performance is below threshold, there is no
payout. If performance is above maximum, the payout is capped at the levels
noted above. In 2018, adjusted EBITDA performance was below 78.9% of budget;
therefore, there were no payouts under the STIP.
For 2019, SunOpta has adopted a modification to the STIP. In
order to reinforce the link to shareholder interests and to encourage stock
ownership, earned STIP awards for the named executives and other executive
participants (excluding the CEO) will be paid in SunOpta PSUs for amounts
earned up to target performance. Earned awards above target, up to the maximum
potential award, will be settled in cash. This modification to the STIP
constitutes the primary purpose of the share authorization request described in
Proposal 4 - Approval of the Companys Amended 2013 Stock Incentive Plan.
45
Long-Term Incentives
In fiscal year 2017, we redesigned the long-term incentive plan
(the
LTIP
). In part, the key elements of this plan place greater
emphasis on improving stock price, as well as strengthening the long-term
financial performance of the Company. The 2017 LTIP is a 3-year plan, and no
award changes were made under the LTIP in fiscal year 2018.
Specific details and design attributes of the 2017 LTIP are
summarized below:
The Compensation Committee believes the performance-based
awards described above provide significant alignment between the interests of
the Companys shareholders and the executives because the PSUs will not vest
without significant stock price appreciation, while the stock options only
provide value in the event of a stock price increase. Additionally, the vesting
provisions in all awards provide additional retention incentive to each of the
executives. Finally, the Committee intends for these awards to represent a
front-loading of long-term incentive compensation; i.e., the Committee does
not expect to grant regular long-term incentive awards to current NEOs prior to
the completion of the three-year performance period.
The targeted value for each executive was split between PSUs
(50%), stock options (25%) and RSUs (25%), based on the 30-day average stock
price as of May 24, 2017, as follows:
Executive
|
Annual Target LTI
(% of
Salary)
|
2017 Stock Options*
(# of
Options)
|
2017-2019 PSUs*
(Target # of
Units)
|
2017 RSUs*
(# of Units)
|
David Colo**
|
N/A
|
473,940
|
277,780
|
100,000
|
Robert McKeracher
|
50%
|
37,131
|
83,172
|
16,634
|
John Ruelle
|
50%
|
43,983
|
98,521
|
19,704
|
Gerard Versteegh
|
50%
|
46,576
|
104,329
|
20,866
|
Chris Whitehair
|
50%
|
40,525
|
90,777
|
18,155
|
* The 2017 front-loaded LTIP awards are 3 times the Annual
Target LTIP opportunity.
**Mr. Colo was hired as CEO effective February 6, 2017. In
connection with his hiring, Mr. Colo received an inducement equity award on
February 6, 2017. Additionally, Mr. Colo received a special RSU award on March
9, 2017. These awards are discussed in detail in the section titled CEO Equity
Grants.
46
CEO Equity Grants
On February 6, 2017, the Company announced the hiring of David
J. Colo as CEO. In connection with Mr. Colos hiring, the Board of Directors
approved an inducement equity award to Mr. Colo, which included 50,000
restricted stock units (
Special RSUs
), 473,940 performance-based stock
options (
Special Stock Options
) and 277,780 performance stock units
(
Special PSUs
). The Special RSUs were scheduled to vest in three equal
annual installments beginning February 6, 2018. The vesting of the Special Stock
Options and the Special PSUs were subject to the satisfaction of stock price
performance conditions during the three-year period ending February 6, 2020.
One-third of the Special Stock Options and the Special PSUs were to vest upon
achieving a stock price of $11.00, one-third were to vest upon achieving a stock
price of $14.00, and one-third were to vest upon achieving a stock price of
$18.00, in each case for 20 consecutive trading days, subject to Mr. Colo's
continued employment during the three-year performance period. On March 9, 2017,
the Company granted Mr. Colo 50,000 RSUs that were to vest in three equal annual
installments beginning February 6, 2018. Under the terms of Mr. Colos
employment agreement, the Company agreed to issue an additional 50,000 RSUs to
Mr. Colo if he purchased an aggregate value of $1,000,000 of Common Shares in
the open market by the later of (i) March 17, 2017 or (ii) the date that is the
10th stock trading date after February 6, 2017 that Mr. Colo was eligible to
purchase Common Shares under the Companys insider trading policy. Mr. Colo
satisfied this condition on March 8, 2017. The Committee intended for these
awards to represent a front-loading of long-term incentive compensation; i.e.,
the Committee did not expect to grant regular long-term incentive awards to Mr.
Colo prior to the completion of the three-year performance period. On February
26, 2019, Mr. Colos termination as CEO was announced. In accordance with the
terms of his employment agreement, Mr. Colos outstanding Special RSUs vested
immediately upon his date of termination. The Special Stock Options and Special
PSUs were forfeited and cancelled.
On April 1, 2019, the Company announced the hiring of Joseph D.
Ennen as CEO. In connection with Mr. Ennens hiring, the Board of Directors
approved an inducement equity award to Mr. Ennen, which included 297,619
restricted stock units (
Special RSUs
), 960,061 time-based stock options
(
Special Stock Options
) and 1,785,714 performance stock units
(
Special PSUs
). The Special RSUs are scheduled to vest in three equal
annual installments beginning April 1, 2020. The Special Stock Options will vest
on April 1, 2022 and are subject to Mr. Ennens continued employment with the
Company through April 1, 2022. The vesting of the Special PSUs will be subject
to the satisfaction of EBITDA and stock price performance conditions during the
performance period beginning April 1, 2019 and ending December 31, 2022. For the
EBITDA performance conditions, 297,619 of the Special PSUs 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 PSUs 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. The Committee intends for
these awards to represent a front-loading of long-term incentive compensation;
i.e., the Committee does not expect to grant regular long-term incentive awards
to Mr. Ennen prior to the completion of the performance periods noted above.
CFO Retention
On March 28, 2018, the Committee approved the terms and
conditions of a Letter Agreement between the Company and Robert McKeracher (the
Retention Agreement
). The Retention Agreement provides that if Mr.
McKeracher voluntarily remains an employee of the Company through the later of
(i) the date the Companys Annual Report on Form 10-K for the fiscal year ending
December 28, 2019 is filed with the Securities and Exchange Commission or (ii)
March 31, 2020 (the latest of such dates to occur being referred to in the
Retention Agreement as the
Retention Date
), he will receive a retention
bonus equivalent to sixty percent (60%) of his annual base salary as of the Retention Date (the
Retention Bonus
). The Retention
Bonus is comprised of a 50% cash payment and a 50% grant of Restricted Stock
Units (the
RSUs
). The cash portion of the Retention Bonus, less all
applicable withholdings, will be paid to Mr. McKeracher on the first regular
payroll date following the Retention Date. The RSUs were issued within ten (10)
days after the date of the Retention Agreement and will vest on the Retention
Date if Mr. McKeracher is entitled to receive the Retention Bonus.
47
Other Compensation
Our executive officers are eligible to receive the same types
of benefits that we make available to other employees, including:
-
Group health benefits, which includes medical, dental, vision and
prescription drug coverage, group life insurance and short-term and long-term
disability plans; and
-
Retirement benefits in the form of a 401(k) plan for U.S. employees, a
Registered Retirement Savings Plan match for Canadian employees and a defined
benefit pension plan for certain European employees.
In addition, from time to time executive officers receive
modest additional perquisites that are not generally available to other
employees, most commonly automobile benefits. In recent years, we have
substantially reduced the scope of these perquisites. For additional information
regarding other compensation during 2018, see the All Other Compensation
column in the Summary Compensation Table which follows.
We have entered into employment or other agreements with our
NEOs, most of which provide for certain benefits upon a change of control of the
Company or upon a termination of employment by the Company without cause. These
arrangements are intended to meet both business and human resources needs,
encouraging the executives to weigh potential transitions based on shareholder
interests, rather than personal ones, and to provide a measure of security to
executives in the event of an actual or potential change in corporate
ownership/control. The potential benefits received by the NEOs in connection
with a change-in-control or termination of employment under certain
circumstances below under Estimated Potential Payments upon Termination of
Employment.
Stock Ownership Guidelines
We expect our senior executives to maintain substantial
ownership of SunOpta stock:
Category
|
Ownership Guideline
|
CEO
|
5x base salary
|
Other NEOs
|
2x base salary
|
Other Senior Leadership Team Members
|
1x base salary
|
Independent Directors
|
5x annual cash retainer
|
We believe this creates important alignment with shareholders.
Executive participants have five years to be in accordance with these
guidelines. If, at the end of five years, the CEO or other NEOs and members of
the Senior Leadership Team are not in compliance, 50% of all short-term
incentive payouts are provided in equity rather than cash until the guideline is
met.
Assessment of Risk
The Compensation Committee conducts an annual review of risk
associated with the compensation programs. The 2018 review found the programs to
be within acceptable parameters.
Clawback Policy
If material non-compliance with any financial reporting
requirement leads to an accounting restatement, the Company has authority, as
part of the STIP and the Companys standalone Clawback Policy, to recover from
current and former executives any incentive-based pay which would not
have been awarded based on the restated financials. This authority extends to
the three years preceding the restatement.
48
Limitations on Deductions
With respect to tax years beginning before December 31, 2017,
Section 162(m) of the Internal Revenue Code generally limited the deductibility
of executive compensation paid to our CEO and the other NEOs to $1,000,000 per
year but contained an exception for certain performance-based compensation. The
exemption from Section 162(m)s deduction limit for performance-based
compensation has been repealed, effective for taxable years beginning after
December 31, 2017, such that compensation paid to our CEO and the other NEOs in
excess of $1,000,000 will no longer be deductible unless it qualifies for
transition relief applicable to certain arrangements in place as of November 2,
2017. It had been our general policy to preserve the deductibility of
compensation paid to executive officers, where applicable. However, the
Compensation Committee reserved the right to approve the payment of compensation
to our executive officers that does not qualify as performance-based within
the meaning of Section 162(m) and therefore, may not be deductible for federal
income tax purposes. In addition, because of uncertainties as to the scope of
the transition relief, no assurance can be given that compensation intended to
satisfy the requirements for exemption from the deduction limit of Section
162(m) in fact will be eligible for transition relief.
[Remainder of page left intentionally blank]
49
Compensation of Named Executive Officers-Summary Compensation
Table
Name and Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)(1)
|
Stock
Awards
($)(2)
|
Option
Awards
($)(3)
|
Non-Equity
Incentive Plan
Compensation
($)
|
All Other
Compensation
($)(4)
|
Total ($)
|
David Colo, President
and Chief Executive
Officer
|
2018
2017
|
650,000
583,929
|
-
-
|
-
1,475,006
|
-
870,470
|
-
-
|
13,167
9,280
|
663,167
2,938,685
|
Robert McKeracher (5),
Vice President and
Chief Financial Officer
|
2018
2017
2016
|
360,966
347,318
298,146
|
-
-
-
|
140,211
648,738
64,583
|
-
158,265
62,021
|
-
-
-
|
26,739
26,700
24,999
|
527,916
1,181,021
449,749
|
John Ruelle, Senior
Vice President RMSS
and Corporate Development
|
2018
2017
2016
|
417,840
411,721
384,756
|
-
208,922
-
|
-
768,462
61,967
|
-
187,471
59,508
|
-
-
-
|
14,199
12,785
13,538
|
432,039
1,589,361
519,769
|
Gerard Versteegh (6)
Senior Vice
President,
Global Ingredients
|
2018
2017
2016
|
437,481
415,788
314,304
|
-
112,810
-
|
-
813,768
37,896
|
-
198,523
604,393
|
-
-
-
|
-
-
-
|
437,481
1,540,889
956,593
|
Chris Whitehair, Senior
Vice President
Operations
|
2018
2017
|
385,000
271,242
|
-
-
|
-
851,058
|
-
172,731
|
-
-
|
10,121
226,163
|
395,121
1,521,194
|
|
(1)
|
For Mr. Ruelle and Mr. Versteegh, consists of retention
bonuses.
|
|
|
|
|
(2)
|
Consists of the grant-date fair value of RSUs and PSUs
granted to NEOs. Please see Note 15, Stock-Based Compensation, to the
Companys consolidated financial statements included in our Annual Report
on Form 10-K for a detailed description of the assumptions used to
calculate the fair value of PSUs. For additional information on our
long-term equity incentive awards, see Compensation Discussion and
AnalysisLong Term Incentives. In 2018, Mr. McKeracher was the only NEO
to receive a stock award grant as part of his Retention
Agreement.
|
|
|
|
|
(3)
|
Consists of the aggregate grant-date fair value of stock
options granted to NEOs, calculated in accordance with FASB ASC Topic 718.
Please see Note 15, Stock-Based Compensation, to the
Companys consolidated financial statements included in our Annual
Report on Form 10-K for a detailed description of the assumptions used to
calculate the fair value of options. For additional information on our
long-term equity incentive awards, see Compensation Discussion and
AnalysisLong Term Incentives. No Option awards were granted to NEOs in
2018.
|
50
|
(4)
|
Represents retirement savings contributions, automobile
benefits, life and long-term disability insurance benefits, and wellness
rewards. See All Other Compensation table below.
|
|
|
|
|
(5)
|
Mr. McKeracher is paid in Canadian dollars. His
compensation has been converted to U.S. dollars using the average annual
exchange rate applicable for each year. For 2018, 2017 and 2016, these
rates were 0.7723, 0.7708, and 0.7548 Canadian dollars for each U.S.
dollar, respectively
|
|
|
|
|
(6)
|
Mr. Versteegh is paid in euros. His compensation has been
converted to U.S. dollars using the average annual exchange rate
applicable for each year. For 2018, 2017 and 2016, these rates were
1.1812, 1.1281, and 1.1066 euros for each U.S. dollar,
respectively.
|
The following table details the various components included in
the All Other Compensation column for 2018.
All Other Compensation
Name
|
Retirement
Plan/401(k)
Contributions
($)
|
Auto
($)
|
Life and
Long-Term
Disability
Insurance
($)
|
Other
($)
|
Total
($)
|
David Colo
|
12,375
|
-
|
792
|
-
|
13,167
|
Robert McKeracher
|
10,044
|
14,621
|
2,074
|
-
|
26,739
|
John Ruelle
|
10,125
|
3,282
|
792
|
-
|
14,199
|
Gerard Versteegh
|
-
|
-
|
-
|
-
|
-
|
Chris Whitehair
|
9,329
|
-
|
792
|
-
|
10,121
|
[Remainder of page left intentionally blank]
51
The following table summarizes grants of long-term equity
incentive awards to our NEOs in fiscal 2018, and the estimated possible payouts
under our short-term incentive plan for fiscal 2018. Short-term incentive plan
for fiscal 2018 did not pay out.
Grants of Plan-Based Awards
Name
|
Grant
Date
|
Estimated
Possible Payouts Under
Non-Equity Incentive Plan Awards (1)
|
Estimated
Possible Payouts Under
Equity Incentive Plan Awards (2)
|
All Other
Stock
Awards:
Number of
Shares of
Stock
or
Units
(#)(3)
|
All Other
Option
Awards:
Number of
Securities
Under-
lying
Options
(#)(4)
|
Exercise
or Base
Price
of
Option
Awards
($/Share)
|
Grant Date
Fair Value
of Stock
and Option
Awards
($)(5)
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
David Colo
|
N/A
02/06/2017
02/06/2017
02/06/2017
03/09/2017
|
81,250
-
-
-
-
|
812,500
-
-
-
-
|
1,625,000
-
-
-
-
|
-
92,593
-
-
-
|
-
185,186
-
-
-
|
-
277,780
-
-
-
|
-
-
50,000
-
50,000
|
-
-
-
473,940
-
|
-
-
-
7.00
-
|
-
775,006
350,000
870,470
350,000
|
Robert
McKeracher
|
N/A
04/05/2018
05/24/2017
05/24/2017
05/24/2017
|
18,048
-
-
-
|
180,483
-
-
-
|
360,966
-
-
-
|
-
27,724
-
-
|
-
55,448
-
-
|
-
83,172
-
-
|
-
19,207
-
16,634
-
|
-
-
-
37,131
|
-
-
-
9.50
|
-
140,211
490,715
158,023
158,265
|
John Ruelle
|
N/A
05/24/2017
05/24/2017
05/24/2017
|
21,863
-
-
-
|
218,629
-
-
-
|
417,843
-
-
-
|
-
32,840
-
-
|
-
65,680
-
-
|
-
98,521
-
-
|
-
-
19,704
-
|
-
-
-
43,983
|
-
-
-
9.50
|
-
581,274
187,188
187,471
|
Gerard
Versteegh
|
N/A
05/24/2017
05/24/2017
05/24/2017
|
21,874
-
-
-
|
218,741
-
-
-
|
437,481
-
-
-
|
-
34,776
-
-
|
-
69,552
-
-
|
-
104,329
-
-
|
-
-
20,866
-
|
-
-
-
46,576
|
-
-
-
9.50
|
-
615,541
198,227
198,523
|
Chris Whitehair
|
N/A
05/24/2017
05/24/2017
05/24/2017
|
19,250
-
-
-
|
192,500
-
-
-
|
385,000
-
-
-
|
-
30,259
-
-
|
-
60,518
-
-
|
-
90,777
-
-
|
-
-
18,155
-
|
-
-
-
40,525
|
-
-
-
9.50
|
-
535,584
172,473
172,732
|
|
(1)
|
Reflects each NEOs possible payouts under our STIP for
fiscal 2018. Amounts shown indicate each NEOs potential bonus assuming
successful achievement of the NEOs performance objectives. For additional
information on our STIP, see Compensation Discussion and AnalysisShort
Term Incentive Plan. No amounts were paid for 2018 because the
performance criteria were not satisfied.
|
52
|
(2)
|
Represents grants of PSU awards to receive Common Shares.
The number of PSUs that may vest and be converted into Common Shares is
subject to the satisfaction of certain stock price performance conditions
during a three-year performance period ending February 6, 2020 for Mr.
Colo and May 24, 2020 for the other NEOs. One-third of the PSUs will vest
upon achieving a stock price of $11.00, one-third will vest upon achieving
a stock price of $14.00, and one-third will vest upon achieving a stock
price of $18.00, in each case for 20 consecutive trading days, and subject
to continued employment through the three-year performance period ending
on February 6, 2020 for Mr. Colo and May 24, 2020 for the other NEOs. If
stock price hurdles are not attained, no PSUs will vest. Mr. Colos PSUs
were forfeited and cancelled upon his date of termination. For additional
information on our long-term equity incentive awards, see Compensation
Discussion and AnalysisLong Term Incentives.
|
|
|
|
|
(3)
|
Represents grants of RSUs to receive Common Shares, which
vest one-third annually beginning on the first anniversary of the grant
date.
|
|
|
|
|
(4)
|
Represents grants of stock options to purchase Common
Shares. For Mr. Colo, the vesting of the stock options is subject to the
satisfaction of certain stock price performance conditions during a
three-year performance period ending February 6, 2020. One-third of the
stock options will vest upon achieving a stock price of $11.00, one-third
will vest upon achieving a stock price of $14.00, and one-third will vest
upon achieving a stock price of $18.00, in each case for 20 consecutive
trading days, and subject to Mr. Colos continued employment through the
three-year performance period ending February 6, 2020. Mr. Colos stock
options were forfeited and cancelled upon his date of termination. For all
NEOs other than Mr. Colo, stock options vest on the third anniversary of
the grant date. All stock options expire on the tenth anniversary of the
grant date.
|
|
|
|
|
(5)
|
Consists of the aggregate grant-date fair value of equity
incentive awards granted to our NEOs, calculated in accordance with FASB
ASC Topic 718. Please see Note 15, Stock-Based Compensation, to SunOpta
Inc.s consolidated financial statements included in our Annual Report on
Form 10-K for a detailed description of the assumptions used to calculate
the fair value of stock-based awards.
|
[Remainder of page left intentionally blank]
53
The following table summarizes the outstanding equity award
holdings of our NEOs as of December 29, 2018. This table incudes unexercised and
unvested option awards and unvested PSUs and RSUs.
Outstanding Equity Awards at Fiscal Year End
Name
|
Option Awards
|
Stock Awards
|
Date of
Grant
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)
|
Equity
Incentive
Plan Awards:
Securities
Underlying
Unexercised,
Unearned
Options
(2)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number of
Shares or
Units That
Have Not
Vested
(#)(3)
|
Market
Value of
Shares or
Units That
Have Not
Vested
($)(3)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)(4)
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($)(4)
|
David Colo
|
02/06/2017
02/06/2017
02/06/2017
03/09/2017
|
-
-
-
-
|
-
-
-
-
|
473,940
-
-
-
|
7.00
-
-
-
|
02/06/2027
-
-
-
|
-
-
33,333
33,333
|
-
-
127,999
127,999
|
-
277,780
-
-
|
-
1,066,675
-
-
|
Robert McKeracher
|
05/08/2012
05/07/2013
05/13/2014
05/12/2015
05/24/2016
05/24/2017
05/24/2017
05/24/2017
04/05/2018
|
70,000
60,000
15,089
13,272
30,439
14,661
-
-
-
|
-
-
3,772
8,848
15,219
22,470
-
-
-
|
-
-
-
-
-
-
-
-
-
|
5.73
7.36
11.30
10.08
3.27
9.50
-
-
-
|
05/08/2022
05/07/2023
05/13/2024
05/12/2025
05/24/2026
05/24/2027
-
-
-
|
-
-
-
-
-
-
11,089
-
19,207
|
-
-
-
-
-
-
42,582
-
73,755
|
-
-
-
-
-
-
-
83,172
|
-
-
-
-
-
-
-
319,380
|
John Ruelle
|
05/08/2012
05/07/2013
05/13/2014
05/12/2015
05/24/2016
05/24/2017
05/24/2017
05/24/2017
|
70,000
36,000
17,774
20,525
1,716
-
-
-
|
-
-
956
3,910
26,632
43,983
-
-
|
-
-
-
-
-
-
-
-
|
5.73
7.36
11.30
10.08
3.27
9.50
-
-
|
05/08/2022
05/07/2023
05/13/2024
05/12/2025
05/24/2026
05/24/2027
-
-
|
-
-
-
-
-
-
13,136
-
|
-
-
-
-
-
-
50,442
-
|
-
-
-
-
-
-
-
98,521
|
-
-
-
-
-
-
-
378,321
|
54
Name
|
Option Awards
|
Stock Awards
|
Date of
Grant
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)
|
Equity
Incentive Plan
Awards:
Securities
Underlying
Unexercised,
Unearned
Options
(2)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number of
Shares or
Units That
Have Not
Vested
(#)(3)
|
Market
Value of
Shares or
Units That
Have Not
Vested
($)(3)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)(4)
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($)(4)
|
Gerard Versteegh
|
03/05/2012
05/08/2012
05/07/2013
05/13/2014
05/12/2015
05/24/2016
11/08/2016
05/24/2017
05/24/2017
05/24/2017
|
35,000
35,000
35,000
8,522
9,450
17,861
-
-
-
-
|
-
-
-
2,131
6,300
8,930
200,000
46,576
-
-
|
-
-
-
-
-
-
-
-
|
5.15
5.73
7.36
11.30
10.08
3.27
6.65
9.50
-
-
|
03/05/2018
05/08/2022
05/07/2023
05/13/2024
05/12/2025
05/24/2026
11/08/2026
05/24/2027
-
-
|
-
-
-
-
-
-
-
-
13,911
-
|
-
-
-
-
-
-
-
-
53,418
-
|
-
-
-
-
-
-
-
-
-
104,329
|
-
-
-
-
-
-
-
-
-
400,623
|
Chris
Whitehair
|
05/24/2017
05/24/2017
04/10/2017
05/24/2017
|
-
-
-
-
|
40,525
-
-
-
|
-
-
-
-
|
9.50
-
-
-
|
05/24/2017
-
-
-
|
14,667
12,103
|
56,321
46,475
|
90,777
|
348,584
|
|
(1)
|
Stock options granted prior to 2016 vest at a rate of 20%
per year over five years. Stock options granted to NEOs on May 24, 2016
vest one-third per year over three years. Stock options granted to Mr.
Versteegh on November 8, 2016 vest 100% after three years. Stock options
granted to NEOs in 2017 vest 100% after three years.
|
|
|
|
|
(2)
|
The vesting of stock options granted to Mr. Colo is
subject to the satisfaction of certain stock price performance conditions
during a three-year performance period ending February 6, 2020. One-third
of the option awards will vest upon achieving a stock price of $11.00,
one-third will vest upon achieving a stock price of $14.00, and one-third
will vest upon achieving a stock price of $18.00, in each case for 20
consecutive trading days, and subject to Mr. Colos continued employment
through the three-year performance period ending February 6, 2020. Mr. Colos
stock options were forfeited and cancelled upon his date of termination.
The number of shares shown in the above table related to these stock
options is the maximum number of Common Shares that could be issued at the
end of the performance period.
|
55
|
(3)
|
Represents grants of RSU awards. RSUs vest one-third per
year over three years. The market value of the RSUs is based on the
closing market price of the Common Shares on the last trading day of
fiscal 2018 of $3.84.
|
|
|
|
|
(4)
|
Represents grants of PSU awards. For PSUs granted in
2016, the number of PSUs that may vest is based on the Companys
performance relative to a predetermined performance measure at the end of
a three-year performance period ending on December 29, 2018. If the
targeted performance measure is exceeded, the maximum number of Common
Shares that could be issued upon vesting of these PSUs is 200% of the
number of PSUs granted. If the Companys performance is below an
established minimum threshold of the performance measure, no amount of
these PSUs will vest. The number of shares shown in the above table
related to these PSUs is based on the number of Common Shares that would
be issued at the end of the performance period at the target level of
performance, subject to the NEOs continued employment.
|
|
|
|
|
|
For PSUs granted in 2017, vesting is subject to the
satisfaction of certain stock price performance conditions during a
three-year performance period ending February 6, 2020 for Mr. Colo and May
24, 2020 for the other NEOs. One-third of these PSUs will vest upon
achieving a stock price of $11.00, one-third will vest upon achieving a
stock price of $14.00, and one-third will vest upon achieving a stock
price of $18.00, in each case for 20 consecutive trading days, and subject
to continued employment through the three-year performance period ending
on February 6, 2020 for Mr. Colo and May 24, 2020 for the other NEOs. If
stock price hurdles are not attained, no amount of these PSUs will vest.
The number of shares shown in the above table related to these PSUs is the
maximum number of Common Shares that could be issued at the end of the
performance period. Mr. Colos PSUs were forfeited and cancelled upon his
date of termination.
|
|
|
|
|
|
The market value of the PSUs is based on the closing
market price of the Common Shares on the last trading day of fiscal 2018
of $3.84.
|
[Remainder of page left intentionally blank]
56
Option Exercises and Stock Vested During Fiscal 2018
The following table details certain information concerning
stock options exercised by the NEOs and stock awards that vested during the
fiscal year ended December 29, 2018.
Option Exercises and Stock Vested
Name
|
Option Awards
|
Stock Awards
|
Number of Shares
Acquired on
Exercise
(#)
|
Value Realized on
Exercise
($)
|
Number of Shares
Acquired on
Vesting
(#)
|
Value Realized on
Vesting
($)(1)
|
David Colo
|
-
|
-
|
33,334
|
230,005
|
Rob McKeracher
|
-
|
-
|
5,545
|
42,697
|
John Ruelle
|
-
|
-
|
6,568
|
50,574
|
Gerard Versteegh
|
-
|
-
|
6,955
|
53,554
|
Chris Whitehair
|
-
|
-
|
13,385
|
99,031
|
(1)
|
Value realized is based on the market value of the
underlying Common Shares on the vesting date.
|
[Remainder of page left intentionally blank]
57
Potential Payments on Termination or Change of
Control
The Companys Amended 2013 Stock Incentive Plan provides that,
in the event of a merger, consolidation or plan of exchange involving the
Company pursuant to which outstanding shares are converted into cash or other
stock, securities or property, or a sale, lease or exchange or other transfer of
all or substantially all of the assets of the Company, the Companys Board of
Directors may, in its sole discretion, provide that outstanding awards under the
plan shall be treated in accordance with any of the following alternatives: (i)
the outstanding award may be converted into a similar award based on the stock
of the surviving or acquiring company, taking into account the relative values
of the companies involved in the transaction; (ii) the outstanding award may be
cancelled by the Company and the holder would receive cash in an amount equal to
the value of the award, as determined by the Companys Board of Directors; or
(iii) the outstanding award may become fully exercisable and the Companys Board
of Directors would provide an arrangement pursuant to which the holder would
have a reasonable opportunity to exercise any award or otherwise realize the
value of the award. In the absence of express provisions in an NEOs employment
or other agreement the vesting of options granted on or after May 28, 2013 does
not automatically accelerate upon a change of control or a subsequent
termination of employment.
We have entered into employment or other agreements with our
current NEOs and we have a SunOpta Foods, Inc. Severance Pay Plan (effective
October 1, 2016), which provide for certain benefits upon a change of control of
the Company or upon a termination of employment by the Company without cause or
by the NEO with good reason, all as provided in the applicable agreement.
Although some agreements with NEOs entered into prior to August 2016 provide for
accelerated vesting of equity awards upon a change of control (so-called
single-trigger provisions), employment agreements entered into with NEOs and
other executive officers of the Company after August 2016 generally provide for
accelerated vesting of awards only if the executives employment is terminated
under specified circumstances within a specified period before or following a
change of control (so-called double-trigger provisions). The definition of
change of control varies among the agreements and generally includes (i) the
acquisition of stock representing a majority of the voting power of the
Companys stock; (ii) at any time during a period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (
Incumbent Directors
) shall cease for any
reason to constitute at least a majority thereof; provided, however, that the
term Incumbent Director shall also include each new director elected during
such two-year period whose nomination or election was approved by two-thirds of
the Incumbent Directors then in office; (iii) any consolidation, merger or plan
of exchange involving the Company as a result of which the holders of
outstanding stock of the Company immediately prior to the transaction do not
continue to hold at least 50% of the combined voting power of the outstanding
voting securities of the surviving corporation or a parent corporation of the
surviving corporation immediately after the transaction; and (iv) the sale of
all or substantially all of the assets of the Company. The definition of cause
varies among the agreements.
The benefits to be received by the NEOs under the terms of
their applicable employment or other agreements in connection with a change of
control or upon termination of employment under certain circumstances are
summarized as follows:
David Colo
Termination without cause or by executive for good
reason:
In the event Mr. Colos employment is terminated by the Company
without cause or by Mr. Colo 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 equal to one times his base salary (the
Lump Sum
Payment
); (iii) a pro-rated annual bonus for the current year (the
Bonus Payment
), and (iv) the immediate vesting of any unvested Special
RSUs and a prorated portion of unvested Special Stock Options and Special
Performance Units for which the stock price hurdles have been satisfied. For
terminations on or after the 18-month anniversary of Mr. Colos employment
agreement, the Lump Sum Payment is equal to the sum of (i) one and a half times
his base salary and (ii) the lesser of his prior year bonus and target bonus.
Termination of employment following a Change of
Control
: In the event Mr. Colos employment is terminated by the Company
without cause or by Mr. Colo for good reason within 12 months following a change
of control of the Company or, under certain circumstances, within a two month
period prior to such transaction, Mr. Colo shall be entitled to the same
benefits as in the event of termination without cause or by executive for good
reason plus he will be entitled to receive a lump sum payment equal to the
difference of (a) the sum of two times his then-current base salary, plus, a
pro-rata amount of his target bonus for that year; and (b) the sum of the Lump
Sum Payment and the Bonus Payment. If any of the payments or benefits received
by Mr. Colo in connection with a change of control result in a 280G excise tax,
within the meaning of Section 280G of the Internal Revenue Code, then the
Companys payments to Mr. Colo will potentially be reduced if such reduction
will result in a greater net benefit to Mr. Colo.
58
Termination of employment in the event of death or
disability:
Upon a termination of Mr. Colos employment due to
death or disability, the Company would provide the following compensation: (i)
immediate vesting on all of Mr. Colos unvested Special RSUs; and (ii) immediate
vesting on all of his unvested Special PSUs and Special Options, including only
the shares for which the stock price hurdle vesting requirements have been
satisfied.
Robert McKeracher
Change of Control and Termination Following a Change in
Control:
Upon a change of control, all of Mr. McKerachers
unvested options granted prior to 2017 will immediately vest and any unvested
performance share units granted prior to 2017 will vest according to the
performance payout factor calculated as if the performance period ended on the
last day of the Companys most recently completed fiscal quarter prior to the
date of the transaction (with the performance measure adjusted for the shorter
performance period). For grants awarded in 2017 and 2018, upon termination
within 12 months following a change of control without cause or for good reason
(i) any unvested options and restricted stock units will vest upon termination,
and (ii) any unvested performance share units will vest if the stock price
hurdle vesting requirements have been satisfied. If material changes are
proposed to Mr. McKerachers position, he will have the option of terminating
his employment and receiving a lump sum severance payment equal to 12 months
(plus an additional one month per year of service from October 2011 up to a
maximum of 18 months) of his base salary and a bonus payment as described below
and continuation of his auto allowance and certain medical, dental and insurance
benefits for between 12 and 18 months, depending on his length of service. For
purposes of calculating the lump sum severance payment, the bonus payment will
be based on the higher of (i) the average of his bonus for the year in which
termination occurs, on a prorated basis based on year to date results (assuming
a minimum of six months have elapsed during the year in which employment
termination occurs) and his bonus for the preceding year; or (ii) the average of
his bonus payouts for the previous two years of employment.
Termination by the Company without Cause:
Upon a termination of Mr. McKerachers employment without cause, he would
receive similar benefits as described above relating to a change of control,
except that the vesting of unvested equity awards would not be accelerated.
Under a retention agreement, if Mr. McKeracher is terminated without cause prior
to the later of (i) the date the Companys Annual Report on Form 10-K for the
fiscal year ending December 28, 2019 is filed with the Securities and Exchange
Commission or (ii) March 31, 2020 (the latest of such dates to occur being
referred to in the Retention Agreement as the Retention Date), he would
receive 60% of his base salary, comprised of a 50% cash payment and a 50% grant
of Restricted Stock Units, which shall be paid or fully vest upon
termination.
John Ruelle
Change of Control and Termination Following a Change in
Control
: Upon a change of control, all of Mr. Ruelles unvested options
granted prior to 2017 will immediately vest and any unvested performance share
units granted prior to 2017 will vest according to the performance payout factor
calculated as if the performance period ended on the last day of the Companys
most recently completed fiscal quarter prior to the date of the transaction
(with the performance measure adjusted for the shorter performance period). For
grants awarded in 2017, upon termination within 12 months following a change of
control, including termination without cause or for good reason (i) any unvested
options and restricted stock units will vest upon termination, and (ii) any
unvested performance share units will vest if the stock price hurdle vesting
requirements have been satisfied. In addition, if material changes are proposed
to Mr. Ruelles position, he will have the option of terminating his employment
and receiving a lump sum severance payment equal to 12 months (plus an
additional one month per year of service from October 2011 up to a maximum of 18 months) of his base salary and a bonus payment as
described below and continuation of his auto allowance and certain medical,
dental and insurance benefits for between 12 and 18 months, depending on his
length of service. For purposes of calculating the lump sum severance payment,
the bonus payment will be based on the higher of (i) the average of his bonus
for the year in which termination occurs, on a prorated basis based on year to
date results (assuming a minimum of six months have elapsed during the year in
which employment termination occurs) and his bonus for the preceding year or
(ii) the average of his bonus payouts for the previous two years of employment.
59
Termination by the Company without Cause
: Upon a
termination of Mr. Ruelles employment without cause, he would receive similar
severance benefits as described above under a change of control, except that the
vesting of unvested equity awards would not be accelerated.
Gerard Versteegh
Termination without Cause
: Upon a termination of
Mr. Versteeghs employment without cause, he will receive the higher of
severance benefits equivalent to 12 months base salary, including holiday
allowance and bonus (based on the average amount of the previous two years), or
severance benefits calculated as per the formula provided by the Dutch Cantonal
Court formula. The Dutch Cantonal Court formula fixes the redundancy payment for
severance at a number of months salary. The formula includes factoring years of
service, age, base salary, and reasonable compensation for the termination
circumstance.
Termination of employment following a Change in
Control
: If, at any time during a period of 12 months following a change
of control, the Company terminates Mr. Versteeghs employment without cause, or
the Company causes good reason (as defined in the agreement) Versteegh shall be
entitled to the same benefits as in the event of termination without cause and
(i) all unvested options granted prior to 2017 will immediately vest and any
unvested performance share units granted prior to 2017 will vest according to
the performance payout factor calculated as if the performance period ended on
the last day of the Companys most recently completed fiscal quarter prior to
the date of the transaction (with the performance measure adjusted for the
shorter performance period), and (ii) for grants awarded in 2017, (a) any
unvested options and restricted stock units will vest upon termination, and (b)
any unvested performance share units will vest if the stock price hurdle vesting
requirements have been satisfied.
Chris Whitehair
Change of Control and Termination Following a Change of
Control
: Upon a change of control, all of Mr. Whitehairs unvested
options shall immediately vest if a Change in Control (as defined in the Plan)
occurs and at any time within 12 months after the Change in Control, (a) his
employment is terminated by the Company (or its successor) without Cause, or (b)
his employment is terminated by the him for Good Reason, provided that he
executes and delivers a release of claims. Options that became vested pursuant
to this event may be exercised at any time before the Expiration Date or the
expiration of 45 days after the employment termination date, whichever is the
shorter period. All outstanding RSUs shall immediately vest if a Change in
Control occurs. In addition, upon a termination of Mr. Whitehairs employment
without Cause, he will receive severance in accordance with the Termination by
the Company without Cause, as noted below.
Termination by the Company without Cause
: Upon a
termination of Mr. Whitehairs employment without cause, Mr. Whitehair is
entitled to benefits under the SunOpta Foods, Inc. Severance Pay Plan (effective
October 1, 2016) and will receive a lump sum severance payment equal to a
multiple of his weekly base pay, where such multiple is determined as two weeks
per year with a minimum and maximum of 39 and 52 weeks, respectively. In
addition, the Company will pay, for a period of up to 12 months, the cost of
medical insurance coverage for Mr. Whitehair and his dependents.
[Remainder of page left intentionally blank]
60
Estimated Potential Payments upon Termination of Employment
Based on the applicable agreements with the NEOs described
above, the following table sets forth the estimated benefits that would have
been payable to the NEOs if a change of control had occurred and each NEOs
employment was terminated on the last day of the Companys 2018 fiscal year
under circumstances specified in the applicable agreements:
Potential Payments Upon
Termination Change of Control
|
Name
|
Lump Sum
Severance
Payment
($)
|
Continuation
of Benefits
($)
|
Pro-Rata
Vesting
of
Cash
Retention
($)
|
Accelerated
Vesting of
RSUs
($)(1)
|
Accelerated
Vesting of
Stock
Options
($)(2)
|
Accelerated
Vesting of
PSUs
($)(3)
|
Total
($)
|
David Colo
|
$2,112,500
|
|
|
$256,001
|
$0
|
$0
|
$2,368,501
|
Robert McKeracher (4)
|
$540,396
|
|
$216,293
|
$116,337
|
$17,350
|
$0
|
$890,376
|
John Ruelle
|
$640,265
|
$15,688
|
|
$50,442
|
$16,647
|
$0
|
$723,042
|
Gerard Versteegh (5)
|
$472,480
|
|
|
$53,418
|
$10,181
|
$0
|
$536,079
|
Chris Whitehair
|
$288,750
|
11,845
|
|
$102,797
|
$0
|
$0
|
$403,392
|
|
(1)
|
These amounts represent the value of unvested RSUs that
would vest in the event of a termination of employment following a change
of control, assuming a stock price of $3.84 per share, which was the
closing price on December 29, 2018, the last trading day of the Companys
fiscal year.
|
|
|
|
|
(2)
|
These amounts represent, for unvested stock options that
would vest in the event of a termination of employment following a change
of control (or upon a change of control for options granted prior to 2017
to Mr. McKeracher and Mr. Ruelle) the difference between $3.84 per share,
which was the closing price on December 29, 2018, the last trading day of
the Companys fiscal year, and the applicable exercise of the stock
options. The stock price hurdles applicable to Mr. Colos 2017 Special
Options have not been satisfied as of the end of fiscal 2018, and,
therefore, zero value is included in these calculations for those
awards.
|
|
|
|
|
(3)
|
These amounts represent the value of unvested PSUs that
would vest in the event of a termination of employment following a change
of control (or upon a change in control for the 2016 PSUs), assuming a
stock price of $3.84 per share, which was the closing price on December
29, 2018, the last trading day of the Companys fiscal year. The stock
price hurdles applicable to the 2017 PSUs have not been satisfied as of
the end of the fiscal year, and, therefore, zero value is included in
these calculations for those awards. For the 2016 PSUs, the number of
shares issued upon a change of control would be determined by the payout
factor calculated as if the performance period ended on the last day of
the Companys most recently completed fiscal quarter prior to the date of
the change of control (with the performance measures adjusted by the Board
for the shorter performance period). For the purposes of this table, the
2016 PSU amounts are estimated based on the target number of units
granted.
|
|
|
|
|
(4)
|
Calculated based on the average annual exchange rate for
the year of CDN $1.00 = $0.7723
|
|
|
|
|
(5)
|
Calculated based on the average annual exchange rate for
the year of €1.00 = $1.1812
|
[Remainder of page left intentionally blank]
61
Based on the applicable agreements with the NEOs described
above, the following table sets forth the estimated benefits that would have
been payable to the NEOs if each officers employment was terminated by the
Company without cause in the absence of a change of control on the last day of
the Companys 2018 fiscal year:
Potential Payments Upon
Termination Involuntary Termination Without Cause
|
Name
|
Lump Sum
Severance
Payment
($)
|
Continuation
of Benefits
($)
|
Pro-Rata
Vesting
of
Cash
Retention
($)
|
Accelerated
Vesting of
RSUs
($)(2)
|
Accelerated
Vesting of
Stock
Options
($)(3)
|
Accelerated
Vesting of
PSUs
($)(4)
|
Total
($)
|
David Colo (1)
|
$1,050,000
|
|
|
$256,001
|
-
|
-
|
$1,306,001
|
Robert McKeracher (5)
|
$540,396
|
$30,362
|
$216,158
|
|
|
|
$786,916
|
John Ruelle
|
$640,265
|
$15,688
|
|
|
|
|
$655,953
|
Gerard Versteegh (6)
|
$472,480
|
|
|
|
|
|
$472,480
|
Chris Whitehair
|
$288,750
|
$11,845
|
|
|
|
|
$300,595
|
|
(1)
|
These potential payments to Mr. Colo are also applicable
in the event of a termination initiated by him for good reason, as defined
in his employment agreement. Also, the potential payments to Mr. Colo in
connection with the vesting of RSUs, stock options, and PSUs are also
applicable in the event of a termination as a result of death or
disability.
|
|
(2)
|
This amount represents the value of Mr. Colos unvested
2017 Special RSUs that would vest in the event of a termination of
employment upon a change of control, assuming a stock price of $3.84 per
share, which was the closing price on December 29, 2018, the last trading
day of the Companys fiscal year.
|
|
(3)
|
This amount represents the value of Mr. Colos unvested
2017 Special Options that would vest in the event of a termination of
employment following a change of control. However, the applicable stock
price hurdles have not been satisfied as of the end of fiscal 2018, and,
therefore, zero value is included in these calculations for those
awards.
|
|
(4)
|
This amount represents the value of Mr. Colos unvested
2017 Special PSUs that would vest in the event of a termination of
employment following a change of control. However, the applicable stock
price hurdles have not been satisfied as of the end of fiscal 2018, and,
therefore, zero value is included in these calculations for those
awards.
|
|
(5)
|
Calculated based on the average annual exchange rate for
the year of CDN $1.00 = $0.7723
|
|
(6)
|
Calculated based on the average annual exchange rate for
the year of €1.00 = $1.1812
|
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62
CEO Pay Ratio
Set below is information about the relationship of the annual
total compensation of David Colo, who served as our CEO during the fiscal year
ended December 29, 2018, and the median annual total compensation of our
employees other than Mr. Colo.
For 2018:
-
The annual total compensation of Mr. Colo, as reported in the Summary
Compensation Table presented elsewhere in this Proxy Statement, was $663,617.
Because Mr. Colo did not receive any equity grants in fiscal year 2018, the
total compensation is made up of salary and all other non-equity compensation.
-
The median annual total compensation of our employees (other than Mr. Colo)
was $41,000.
-
The ratio of the annual total compensation of Mr. Colo to the median annual
total compensation of our other employees was 16 to 1.
In estimating the ratio set forth above, we used the following
methodology:
-
As of December 29, 2018, we had 2,351 full-time, part-time and seasonal
employees globally, consisting of 1,379 employees in the U.S. and 972
employees in non-U.S. jurisdictions. In determining the identity of our median
employee, we excluded 112 employees employed in the following non-U.S.
jurisdictions: 104 employees in Ethiopia, 5 employees in Germany, and 3
employees in France, representing approximately 4.7% of our total employees.
After excluding the countries and employees described above, we determined the
identity of our median employee from a population of 2,239 employees,
consisting of 1,379 employees in the U.S. and 860 employees in non-U.S.
jurisdictions.
To identify the median employee from this employee population,
we first calculated each employee's annual base compensation rate, we then used
statistical sampling to identify employees who were paid within a 2.5% range of
the median and we then selected an employee from that group who was reasonably
representative of our workforce.
[Remainder of page left intentionally blank]
63
Amended 2013 Stock Incentive Plan
The Amended 2013 Stock Plan (the
Amended 2013 Plan
)
is administered by the Compensation Committee of the Board of Directors (the
Committee
). The Committee may promulgate rules and regulations for the
operation of the Amended 2013 Plan and related agreements and generally
supervises the administration of the Amended 2013 Plan. See Proposal 4 -
Approval of Amended 2013 Stock Incentive Plan for additional information
regarding the Amended 2013 Plan.
Employee Stock Purchase Plan
Pursuant to the Companys employee stock purchase plan (the
ESPP
), a total of 3,000,000 Common Shares have been reserved for the
grant of options under the ESPP, subject to adjustment upon changes in
capitalization of the Company. The purpose of the ESPP is to provide employees
of the Company and its designated subsidiaries with an opportunity to purchase
Common Shares. It is the intention of the Company to have the ESPP qualify as an
"Employee Stock Purchase Plan" under Section 423 of the United States Internal
Revenue Code of 1986, as amended (the
Code
). The ESPP will continue in
effect until June 30, 2025 unless sooner terminated by the Board.
Any person who has been continuously employed as an employee
for thirty days and works at least 20 hours per week (each an
Employee
)
is eligible to participate, subject to the requirements and limitations of the
ESPP. No Employee may be granted an option under the ESPP (i) if, immediately
after the grant, such Employee (or any other person whose Common Shares would be
attributed to such Employee pursuant to Section 424(d) of the Code) would own
Common Shares and/or hold outstanding options to purchase Common Shares
possessing five percent or more of the total combined voting power or value of
all classes of shares of the Company or of any subsidiary of the Company, or
(ii) which permits his or her rights to purchase stock under all employee stock
purchase plans (described in Section 423 of the Code) of the Company and its
subsidiaries to accrue at a rate which exceeds USD $25,000 or the Canadian
equivalent based on the exchange rate on the previous December 31 (determined at
the time such option is granted) for each calendar year in which such option is
outstanding at any time.
The ESPP is implemented by a series of
Offering
Periods
, namely the period of either twelve or fourteen weeks commencing on
March 1, June 1, September 1 and December 1 of each year (or at such other time
or times as may be determined by the Board). Each participant may elect to have
payroll deductions made on each payroll during the Offering Period in an amount
not less than 1% and not more than 10% of such participant's compensation on
each such payroll. On the last business day of each Offering Period (the
Exercise Date
), each eligible Employee participating in such Offering
Period is granted the option to purchase a number of shares of the Common Stock
determined by dividing such Employee's contributions accumulated prior to the
Exercise Date by the applicable Exercise Price.
Exercise Price
means,
with respect to an Offering Period, an amount equal to the average of the
closing price of the Common Shares for the period of five consecutive trading
days ending on the last trading day of such Offering Period multiplied by 100%,
minus 15%. Unless a participant withdraws from the ESPP, his or her option for
the purchase of Common Shares will be exercised automatically on the last
business day of the Offering Period, and the maximum number of full Common
Shares subject to the option will be purchased for him or her at the applicable
Exercise Price with the accumulated contributions in his or her account.
During a participant's lifetime, a participant's option to
purchase Common Shares is exercisable only by him or her. Neither contributions
credited to a participant's account nor any rights with regard to the exercise
of an option or to receive Common Shares under the ESPP may be assigned,
transferred, pledged or otherwise disposed of in any way (other than by will,
the laws of descent and distribution or as a designated beneficiary provided
herein) by the participant. Any such attempt at assignment, transfer, pledge or
other disposition will be ineffective, except that the Company may treat such
act as an election to withdraw funds from the ESPP. Upon termination of the
participant's employment for any reason, including retirement or death, the
contributions credited to his or her account will be returned to him or her or,
in the case of his or her death, to the person or persons entitled thereto and
his or her option will be automatically terminated.
64
The Board may at any time terminate or amend the ESPP. No such
termination may affect options previously granted, nor may an amendment make any
change in any option theretofore granted which adversely affects the rights of
any participant provided that an Offering Period may be terminated by the Board
on an Exercise Date or by the Board's setting a new Exercise Date with respect
to an Offering Period then in progress if the Board determines that termination
of the Offering Period is in the best interests of the Company and the
stockholders or if continuation of the Offering Period would cause the Company
to incur adverse accounting charges in the generally-accepted accounting rules
applicable to the ESPP.
In addition, to the extent necessary to comply with Section 423
of the Code (or any successor rule or provision or any applicable law or
regulation), the Company will obtain stockholder approval in such a manner and
to such a degree as so required. Without stockholder consent and without regard
to whether any participant rights may be considered to have been adversely
affected, the Board is entitled to change the Offering Periods, change the
discount factor between 0% and 15%, limit the frequency and/or number of changes
in the amount withheld during an Offering Period, establish the exchange ratio
applicable to amounts withheld in a currency other than Canadian or United
States dollars, permit payroll withholding in excess of the amount designated by
a participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
participant properly correspond with amounts withheld from the participant's
compensation, and establish such other limitations or procedures as the Board
determines in its sole discretion advisable that are consistent with the ESPP.
Annual Burn Rate
In accordance with the policies of the TSX, the following table
sets out the burn rate of the awards granted under the Companys security-based
compensation arrangements, namely the Stock Incentive Plans and Employee Stock
Purchase Plan, as of the end of the financial year ended December 29, 2018 and
for the two preceding financial years. The burn rate is calculated by dividing
the number of securities granted under each security-based compensation
agreement during the relevant fiscal year by the weighted-average number of
Common Shares outstanding for the applicable fiscal year.
Compensation Plan
|
2018
|
2017
|
2016
|
Stock Incentive Plans
|
*
|
4.97%
|
2.25%
|
Employee Stock Purchase Plan
|
*
|
*
|
*
|
*indicates less than 1% of the weighted-average number of
Common Shares outstanding
[Remainder of page left intentionally blank]
65
PROPOSAL FOUR APPROVAL OF AMENDED 2013 STOCK INCENTIVE
PLAN
Overview
The Companys 2013 Stock Incentive Plan was originally approved
by shareholders in May 2013. An amended plan increasing the number of Common
Shares reserved for issuance pursuant to the plan from 1,750,000 to 3,000,000
was approved by shareholders in May 2016 and in May 2017 the shareholders
approved an amended plan increasing the number of Common Share reserved for
issuance pursuant to the plan from 3,000,000 to 6,800,000 (as amended through
May 2017, the
Existing 2013 Plan
). As of March 29, 2019, there were
4,214,976 shares subject to outstanding awards under the Existing 2013 Plan and
only 4,422,021 shares available for future grants. The Board of Directors
reviewed the Existing 2013 Plan and determined that the current number of
available Common Shares under the Existing 2013 Plan is insufficient to meet the
Companys objectives with respect to its ability to attract and retain talented
individuals on a going-forward basis. The Board of Directors also determined to
make certain other changes to the Existing 2013 Plan to, among other things,
better align management and employee incentives with the interests of the
Company. As a result, on April 5, 2019 the Board of Directors adopted, subject
to shareholder and Toronto Stock Exchange approvals, the Amended 2013 Stock
Incentive Plan in the form attached as set forth in Exhibit A (the
Amended
2013 Plan)
. The Amended 2013 Plan increases the maximum number of Common
Shares that can be issued by 1,000,000 Common Shares so that the total number of
Common Shares reserved for issuance under the Amended 2013 Plan is 7,800,000.
The Amended 2013 Plan also reflects certain other changes as described below.
The Board of Directors believes that increasing the number of Common Shares
available for equity incentives is necessary to allow the Company to continue to
utilize equity-based compensation awards to retain and attract the services of
key individuals essential to the Companys growth and success. The Board of
Directors also believes equity incentives enable participants to share in the
Companys future success. In addition, in order to reinforce the link to
shareholder interests and to encourage stock ownership, the Board of Directors
has revised the Companys short-term incentive plan for 2019 so that
certain bonuses
paid to executive officers and other management level employees are paid in
shares rather than cash.
We are therefore asking our shareholders to approve the Amended
2013 Plan which would result in the following principal changes to the Existing
2013 Plan, all as set forth in the Amended 2013 Plan and described in more
detail below:
-
In additional to employees, officers and directors of the Company,
consultants who provide services to the Company or a parent or subsidiary of
the Company or a corporation, limited liability company, partnership, joint
venture or other entity in which the Company has an interest are eligible to
receive awards under the Amended 2013 Plan, and conforming changes are
reflected in the stated purpose of the plan.
-
The number of Common Shares reserved for purposes of the Amended 2013 Plan
is increased by 1,000,000 shares, for a total number of Common Shares reserved
for the Amended 2013 Plan of 7,800,000 Common Shares plus any shares available
for grant under the Companys 2002 Stock Option Plan (the
Prior
Plan
);
-
The maximum number of Full Value Awards (as defined below) is increased
from 4,550,000 Common Shares to 5,550,000 Common Shares; and
-
For awards granted under the Amended 2013 Plan after March 1, 2017, the
Amended 2013 Plan requires a minimum service period of one year from the grant
date, subject to limited exceptions, including that this prohibition does not
apply to (i) 5% of the sum of the number of shares available under the Amended
2013 Plan following the Meeting plus the number of additional shares that
thereafter become available and (ii) up to 600,000 shares at target
performance pursuant to awards under the Companys 2019 short term incentive
plan granted after March 1, 2019.
The complete text of the Amended 2013 Plan is attached to this
Proxy Statement as Exhibit A, marked to show changes from the Existing 2013
Plan. The descriptions of the Amended 2013 Plan and the amendments are qualified
in their entirety by reference to the full text of the Amended 2013 Plan.
66
Description of the Amended 2013 Plan
Eligibility
.
All natural persons who are
employees, officers, directors, or consultants of the Company and its
subsidiaries are eligible for selection for participation in the Amended 2013
Plan.
Administration
.
The Amended 2013 Plan is
administered by the Compensation Committee of the Board of Directors (the
Committee
). The Committee may promulgate rules and regulations for the
operation of the Amended 2013 Plan and related agreements and generally
supervises the administration of the Amended 2013 Plan. The Committee determines
the individuals to whom awards are made under the Amended 2013 Plan, the type of
awards, the amount of the awards and the other terms and conditions of the
awards. The Committee may also accelerate any exercise date, waive or modify any
restriction with respect to an award or extend any exercise period, subject to
the terms of the Amended 2013 Plan.
Types of Awards
.
The Amended 2013 Plan
permits the Committee to grant a variety of awards, including stock options,
stock appreciation rights, restricted stock, restricted stock units and
performance-based awards.
Shares Reserved for the Amended 2013 Plan
.
A total of 7,800,000 Common Shares, plus any Common Shares available for
grant under the Prior Plan and any additional Common Shares that become
available for re-grant under the Prior Plan due to the cancelation or expiration
of stock options, are reserved for issuance under the Amended 2013 Plan. Only
5,550,000 Common Shares may be awarded as Full Value Awards.
Full Value
Awards
are stock awards for which the recipient pays no cash consideration
or cash consideration of less than the fair market value of the underlying
shares as of the grant date (as determined in accordance with the Amended 2013
Plan), except that shares issued in lieu of cash compensation otherwise payable
to a participant are not Full Value Awards.
Duration of the Amended 2013 Plan; Amendments
.
The Amended 2013 Plan will continue until all Common Shares available for
issuance under the Amended 2013 Plan have been issued and all restrictions on
such shares have lapsed. The Board of Directors has the power to suspend,
terminate, modify or amend the Amended 2013 Plan at any time, except that
shareholder approval is required to add additional shares to the Amended 2013
Plan, increase the number of shares that can be issued as Full Value Awards or
amend the provision prohibiting option re-pricing. Except in connection with a
change in capital structure or certain transactions, however, no change in an
award already granted shall be made without the written consent of the award
holder if the change would adversely affect the holder.
No Dividends on Unvested Awards.
No award granted
under the Amended 2013 Plan shall provide for the payment of dividends on shares
subject to the award before the shares have Vested. However, dividends
accumulated between the grant date of an award and the Vesting date on shares
that become Vested under the award may be paid to the recipient at or after the
time the shares become Vested.
Vested
means that shares have been
delivered to the recipient and are no longer subject to a substantial risk of
forfeiture (as defined in regulations under Section 83 of the U.S. Internal
Revenue Code of 1986, as amended (the
U.S. Code
)).
Minimum Service Period.
No award granted under
the Amended 2013 Plan after March 1, 2017 shall become Vested if the recipient
does not remain in the service of the Company until the first anniversary of the
date of grant, unless the recipients service is terminated as a result of the
recipients death or physical disability (as defined in the applicable award
agreement), or such earlier Vesting occurs in connection with a Change in
Control of the Company, as defined in and to the extent permitted by the Amended
2013 Plan. However, the foregoing prohibition shall not apply to (i) 5% of the
sum of the number of shares available for awards under the Amended 2013 Plan
immediately following the 2017 annual meeting of shareholders plus the number of
additional shares that thereafter become available and (ii) up to 600,000 shares
at target performance pursuant to awards under the Companys 2019 short term
incentive plan granted after March 1, 2019.
Restrictions on Change in Control Vesting.
No
award granted under the Amended 2013 Plan after March 1, 2017 shall provide for
any excuse from satisfaction of the continued service conditions of the award as
a result of a Change in Control of the Company, except that an award
agreement may excuse the recipient from the continued service obligation if:
67
i. the recipients employment or service
relationship is terminated by the employer or the Company without cause or by
the recipient for good reason in connection with the Change in Control under
terms specified in the award agreement; or
ii.
the award is not converted into an award for stock of the surviving or acquiring
corporation in the Change in Control transaction under terms specified in the
award agreement or pursuant to the Amended 2013 Plan; provided that any
performance-based awards and other awards with performance-based vesting
provisions that are settled or for which vesting is accelerated in connection
with a Change in Control are settled or accelerated either on a pro-rata basis
based on time elapsed during the performance period from the grant date or with
performance measured for a performance period ending prior to the Change in
Control under terms specified in the award agreement.
A Change in Control is generally defined in the Amended 2013
Plan to include (i) any merger in which the holders of Common Shares immediately
prior to the merger do not continue to hold at least 50% of the voting power of
outstanding securities of the surviving corporation or its parent corporation
immediately after the merger, (ii) any sale of all or substantially all of the
assets of the Company, (iii) at any time during a period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors (
Incumbent Directors
) cease for any reason to constitute at
least a majority thereof; provided, however, that the term Incumbent Director
shall also include each new director elected during such two-year period whose
nomination or election was approved by two-thirds of the Incumbent Directors
then in office; or (iv) any person (other than the Company or any employee
benefit plan sponsored by the Company), as a result of a tender or exchange
offer, open market purchases or privately negotiated purchases from anyone other
than the Company, has become the beneficial owner of 50% or more of the
outstanding Common Shares.
Stock Options
.
The Committee may grant
stock options to eligible individuals under the Amended 2013 Plan. No employee
or consultant may be granted options or stock appreciation rights for more than
an aggregate of 1,500,000 Common Shares in any fiscal year. The Committee
determines the individuals to whom options are granted, the exercise price of
each option, the number of shares to be covered by each option, the period of
each option, the times at which each option may be exercised, and whether each
option is an Incentive Stock Option (intended to meet all of the requirements of
an Incentive Stock Option as defined in Section 422 of the U.S. Code) or a
non-statutory stock option. The exercise price of each option may not be less
than 100% of the fair market value of the underlying shares on the date of
grant, except that if a grantee of an Incentive Stock Option at the time of
grant owns stock possessing more than 10% of the combined voting power of all
classes of stock of the Company, the exercise price may not be less than 110% of
the fair market value of the underlying shares on the date of grant. For
purposes of determining the exercise price of options granted under the Amended
2013 Plan, the fair market value of the Common Shares will be deemed to be the
closing price of the Common Shares as reported by NASDAQ, or such other reported
value of the Common Shares as shall be specified by the Committee, on the date
of grant. No monetary consideration will be paid to the Company upon the
granting of options.
Options may be granted for varying periods established at the
time of grant. Incentive Stock Options are non-transferable except in the event
of the death of the holder. The Committee has discretion to allow non-statutory
stock options to be transferred to immediate family members of the optionee,
subject to certain limitations. Options will be exercisable in accordance with
the terms of an option agreement entered into at the time of the grant. In the
event of the death or other termination of an optionees employment with the
Company, the Amended 2013 Plan provides that, unless otherwise determined by the
Committee, the optionees options may be exercised for specified periods
thereafter (12 months in the case of termination by reason of death or
disability and 30 days in the case of termination for any other reason). The
Amended 2013 Plan also provides that upon any termination of employment, the
Committee may extend the exercise period for any period up to the expiration
date of the option and may increase the portion of the option that is
exercisable.
68
The purchase price for shares purchased pursuant to the
exercise of options must be paid in cash or, with the consent of the Committee,
in whole or in part in Common Shares. With the consent of the Committee, an
optionee may request the Company to withhold shares from the exercise to cover
required tax withholding or to satisfy the exercise price. Upon the exercise of
an option, the number of shares subject to the option and the number of shares
available for issuance under the Amended 2013 Plan will be reduced by the number
of shares issued upon exercise of the option plus the number of shares, if any,
withheld upon exercise to satisfy the exercise price or required tax
withholding. Option shares that are not purchased prior to the expiration,
termination or cancellation of the related option will become available for
future awards under the Amended 2013 Plan.
Re-pricing Prohibition
.
The Amended 2013
Plan provides that, unless shareholder approval is obtained, no stock option may
be (i) amended to reduce the exercise price, or (ii) canceled in exchange for
cash, another award or any other consideration at a time when the exercise price
of the option exceeds the fair market value of the Common Shares.
Stock Appreciation Rights
.
The Committee
may grant stock appreciation rights (
SARs
) to eligible individuals
under the Amended 2013 Plan. SARs may, but need not, be granted in connection
with an option. A SAR gives the holder the right to payment from the Company of
an amount equal in value to the excess of the fair market value on the date of
exercise of one common share over its fair market value on the date of grant
(or, if granted in connection with an option, the exercise price per share under
the option to which the SAR relates), multiplied by the number of shares covered
by the portion of the SAR or option that is surrendered. The fair market value
of the Common Shares on the date of exercise will be deemed to be the closing
price of the Common Shares as reported by NASDAQ, or such other reported value
of the Common Shares as shall be specified by the Committee, on the date of
exercise, or if such date is not a trading day, then on the immediately
preceding trading day. A SAR holder will not pay the Company any cash
consideration upon either the grant or exercise of a SAR, except for tax
withholding amounts upon exercise.
A SAR is exercisable only at the time or times established by
the Committee. If a SAR is granted in connection with an option, it is
exercisable only to the extent and on the same conditions that the related
option is exercisable. Payment by the Company upon exercise of a SAR may be made
in Common Shares valued at fair market value, or in cash, or partly in stock and
partly in cash, as determined by the Committee. If a SAR is not exercised prior
to the expiration, termination or cancellation of the SAR, the unissued shares
subject to the SAR will become available for future awards under the Amended
2013 Plan. Upon the exercise of a SAR for shares, the number of shares reserved
for issuance under the Plan shall be reduced by the number of shares covered by
the SAR. Cash payments for SARs will not reduce the number of shares available
for awards under the Amended 2013 Plan.
Stock Awards, including Restricted Stock and Restricted
Stock Units
.
The Committee may grant Common Shares to eligible
individuals as stock awards (including restricted stock and restricted stock
units) under the Amended 2013 Plan. The Committee will determine the individuals
to receive stock awards, the number of shares to be awarded, the time of the
award and any consideration to be paid by the participant. Generally, no cash
consideration (other than required tax withholding) will be paid by award
recipients to the Company in connection with stock awards. Stock awards shall be
subject to the terms, conditions and restrictions determined by the Committee.
Restrictions may include restrictions concerning transferability, forfeiture of
the shares issued, or such other restrictions as the Committee may determine.
Stock awards subject to restrictions may be either restricted stock awards under
which shares are issued immediately upon grant subject to forfeiture if vesting
conditions are not satisfied, or restricted stock unit awards under which shares
are not issued until after vesting conditions are satisfied. Upon the issuance
of shares under a stock award after March 1, 2017, the number of shares reserved
for issuance under the Plan shall be reduced by the number of shares issued plus
any shares withheld to satisfy tax withholding obligations.
Performance-Based Awards
. The Committee may grant
performance-based awards, payable in stock or cash as determined by the
Committee. All or part of the Common Shares subject to the awards will be earned
(or cash will be paid) if performance targets established by the Committee for
the period covered by the award are met and the recipient satisfies any other
requirements established by the Committee. The performance targets may be
expressed as one or more targeted levels of performance with respect to one or
more of the following objective measures with respect to the Company or any subsidiary, division or other
unit of the Company: earnings, earnings per share, stock price increase, total
shareholder return (stock price increase plus dividends), return on equity,
return on assets, return on capital, economic value added, revenues, operating
income, inventories, inventory turns, cash flows, earnings before interest and
taxes (EBIT), earnings before interest, taxes, depreciation and amortization
(EBITDA) or any of the foregoing before the effect of acquisitions,
divestitures, accounting changes, restructuring or other special charges.
Performance-based awards may be made as awards of restricted shares subject to
forfeiture if performance goals are not satisfied, awards under which shares are
not issued until the performance conditions are satisfied or as cash-based
awards. No recipient may be granted in any fiscal year performance-based awards
under which the maximum number of shares that may be issued exceeds 500,000
shares or the maximum dollar amount that may be paid exceeds $5,000,000. The
payment of a performance-based award in cash shall not reduce the number of
Common Shares reserved for issuance under the Amended 2013 Plan. Upon the
issuance of shares under a performance-based award after March 1, 2017, the
number of Common Shares reserved for issuance under the Amended 2013 Plan will
be reduced by the number of shares issued plus any shares withheld to satisfy
tax withholding obligations. The number of shares issued pursuant to stock
awards and performance-based awards that are forfeited to the Company will
become available for future grants under the Amended 2013 Plan.
69
Corporate Mergers
.
The Committee may make
awards under the Amended 2013 Plan that have terms and conditions that vary from
those specified in the Amended 2013 Plan when such awards are granted in
substitution for, or in connection with the assumption of, existing awards made
by another corporation and assumed or otherwise agreed to be provided for by the
Company in connection with a corporate merger or other similar transaction to
which the Company or an affiliated Company is a party.
Changes in Capital Structure
.
The Amended
2013 Plan provides that if the outstanding Common Shares are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of any stock split or certain other
events, appropriate adjustment will be made by the Board of Directors in the
number and kind of shares available for grants under the Amended 2013 Plan and
in all other share amounts set forth in the Amended 2013 Plan and in Stock
Awards. In the event of a merger, consolidation or plan of exchange involving
the Company pursuant to which outstanding shares are converted into cash or
other stock, securities or property, or a sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, the assets of the Company, the Board of Directors, may, in
its sole discretion, provide that outstanding awards under the Plan shall be
treated in accordance with any of the alternatives set forth in the Amended 2013
Plan.
Limits on Non-Employee Director Compensation.
The
total compensation paid or granted by the Company in any form (including cash
and awards under the Amended 2013 Plan) to any non-employee director for service
as a director for any fiscal year shall not exceed $500,000. For this purpose,
awards under the Plan shall be valued at the time of grant based on the grant
date fair value as determined by the Company for financial accounting purposes.
U.S. Tax Consequences
Certain options authorized to be granted under the Amended 2013
Plan are intended to qualify as Incentive Stock Options for U.S. federal
income tax purposes. Under U.S. federal income tax law in effect as of the date
of this Proxy Statement, an optionee will recognize no regular income upon grant
or exercise of an Incentive Stock Option. The amount by which the market value
of shares issued upon exercise of an Incentive Stock Option exceeds the exercise
price, however, is included in the optionees alternative minimum taxable income
and may, under certain conditions, be taxed under the alternative minimum tax.
If an optionee exercises an Incentive Stock Option and does not dispose of any
of the shares thereby acquired within two years following the date of grant and
within one year following the date of exercise, then any gain realized upon
subsequent disposition of the shares will be treated as income from the sale or
exchange of a capital asset. If an optionee disposes of shares acquired upon
exercise of an Incentive Stock Option before the expiration of either the
one-year holding period or the two-year holding period specified in the
foregoing sentence (a disqualifying disposition), the optionee will realize
ordinary income in an amount equal to the lesser of (i) the excess of the fair
market value of the shares on the date of exercise over the option price or (ii)
the excess of the fair market value of the shares on the date of disposition
over the option price.
70
Any additional gain realized upon the disqualifying disposition
will constitute capital gain. The Company will not be allowed any deduction for
federal income tax purposes at either the time of grant or the time of exercise
of an Incentive Stock Option. Upon any disqualifying disposition by an optionee,
the Company will generally be entitled to a deduction to the extent the optionee
realizes ordinary income.
Certain options authorized to be granted under the Amended 2013
Plan will be treated as non-statutory stock options for U.S. federal income tax
purposes. Under U.S. federal income tax law in effect as of the date of this
Proxy Statement, no income is generally realized by the grantee of a
non-statutory stock option until the option is exercised. At the time of
exercise of a non-statutory stock option, the optionee will realize ordinary
income, and the Company will generally be entitled to a deduction, in the amount
by which the fair market value of the shares subject to the option at the time
of exercise exceeds the exercise price. The Company is required to withhold
income taxes on such income if the optionee is an employee. Upon the sale of
shares acquired upon exercise of a non-statutory stock option and held for the
applicable capital gains holding period, the optionee will realize capital gain
or loss equal to the difference between the amount realized from the sale and
the fair market value of the shares on the date of exercise.
An individual who receives stock under the Amended 2013 Plan
will generally realize ordinary income under U.S. federal tax law at the time of
receipt unless the shares are not substantially vested for purposes of Section
83 of the U.S. Code. Absent an election under Section 83(b), an individual who
receives shares that are not substantially vested will realize ordinary income
in each year in which a portion of the shares substantially vests. The amount of
ordinary income recognized in any such year will be the fair market value of the
shares that substantially vest in that year less any consideration paid for the
shares. The Company will generally be entitled to a deduction in the amount
includable as ordinary income by the recipient at the same time or times as the
recipient recognizes ordinary income with respect to the shares. The Company is
required to withhold income taxes on such income if the recipient is an
employee.
With respect to tax years beginning before December 31, 2017,
Section 162(m) of the Internal Revenue Code generally limited the deductibility
of executive compensation paid to our CEO and the other NEOs to $1,000,000 per
year but contained an exception for certain performance-based compensation,
including stock options and stock appreciation rights. The exemption from
Section 162(m)s deduction limit for performance-based compensation has been
repealed, effective for taxable years beginning after December 31, 2017, such
that compensation paid to our CEO and the other NEOs, including pursuant to
stock options and stock appreciation rights, in excess of $1,000,000 will no
longer be deductible unless it qualifies for transition relief. Transition
relief generally applies to stock options and stock appreciation rights
outstanding as of November 2, 2017. That relief will not apply, however, to any
stock option or stock appreciation right are materially modified after November
2, 2017, and no assurance can be given that compensation intended to satisfy the
requirements for exemption from the deduction limit of Section 162(m) in fact
will be eligible for transition relief.
Amended 2013 Plan Benefits
Information regarding stock options and PSUs granted in fiscal
2018 to NEOs under the Existing 2013 Plan is set forth in Grants of Plan-Based
Awards during 2018 above. Information regarding RSUs granted in fiscal 2018 to
non-employee directors under the Existing 2013 Plan is set forth in 2018
Director Compensation above. Stock options for a total of 0 Common Shares, RSUs
for a total of 112,711 of Common Shares and PSUs for a total of 0 Common Shares
(at target level) were granted under the Existing 2013 Plan in fiscal 2018 to
all executive officers as a group. Stock options for a total of 53,000 Common
Shares, RSUs for a total of 45,000 Commons Shares and PSUs for a total of 0
Common Shares (at target level), were granted under the Existing 2013 Plan in
fiscal 2018 to employees who are not executive officers. Stock options for a
total of 0 Common Shares, RSUs for a total of 93,504 Common Shares and 51,916
Common Shares (in lieu of cash) were granted in fiscal 2018 to all non-employee
directors as a group. All grants under the Amended 2013 Plan are subject to the
discretion of the Board of Directors.
[Remainder of page left intentionally blank]
71
As of the date of this proxy statement, no determinations have
been made with respect to any future awards and, except for the following awards
the Company intends to grant under the Companys Short-term Incentive Plan for
2019, future awards are not determinable.
Name and Position
|
Dollar Value (USD)
|
Number of Shares
|
Robert McKeracher
|
$179,765
|
64,524
|
Chris Whitehair
|
$192,500
|
69,095
|
Executive officers as a group
|
$1,368,265
|
491,118
|
Non-executive officers as a group
|
$6,505,389
|
2,334,904
|
Total
|
$7,873,654
|
2,826,022
|
Equity Compensation Plan Information
The following table provides information as at December 29,
2018, with respect to our common shares that may be issued under the Companys
stock incentive and employee share purchase plans:
|
|
Number of
|
|
|
|
Number of Securities
|
|
|
Securities to be
|
|
Weighted-
|
|
Remaining Available
|
|
|
Issued Upon
|
|
Average Exercise
|
|
for Future Issuance
|
|
|
Exercise of
|
|
Price of
|
|
Under Equity
|
|
|
Outstanding
|
|
Outstanding
|
|
Compensation Plans
|
|
|
Options,
|
|
Options,
|
|
(Excluding Securities
|
|
|
Warrants, and
|
|
Warrants and
|
|
Reflected in Column
|
Plan
Category
|
|
Rights
|
|
Rights
|
|
(a))
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
|
|
|
|
|
Equity compensation plans approved by securities holders:
|
|
|
|
|
|
|
2013
Stock Incentive Plan
(1)
|
|
4,658,283
|
|
$7.76
(3)
|
|
4,028,729
|
Employee Stock Purchase
Plan
|
|
-
|
|
-
|
|
999,915
|
Equity compensation plans not approved by
securities holders:
|
|
|
|
|
|
|
CEO Plan
(2)
|
|
818,386
|
|
$7.00
(3)
|
|
-
|
Total
|
|
5,476,669
|
|
$7.65
|
|
5,028,644
|
|
(1)
|
Represents Common Shares of the Company issuable in
respect of 2,698,550 stock options, 597,837 RSUs and 1,361,896 PSUs
granted to selected employees and directors of the Company.
|
|
(2)
|
Represents Common Shares of the Company issuable in
respect of 473,940 performance-based stock options, 66,666 RSUs and
277,780 PSUs granted to Mr. Colo in connection with his hiring. The 66,666
unvested RSUs vested immediately at the date of Mr. Colos termination,
and all of the performance-based stock options and PSUs granted to Mr.
Colo were forfeited and cancelled as of that date.
|
|
(3)
|
Vested RSUs and PSUs entitle the holder to receive one
Common Share per unit without payment of additional consideration.
Accordingly, these units are disregarded for purposes of computing the
weighted-average exercise price.
|
As at April 2, 2019: (i) options to purchase an aggregate of
3,424,661 Common Shares are outstanding, representing approximately 3.9% of the
issued and outstanding Common Shares; (ii) RSUs to acquire an aggregate of
865,215 Common Shares are outstanding, representing approximately 1.0% of the
issued and outstanding Common Shares; and (ii) PSUs to acquire an aggregate of
2,939,828 Common Shares are outstanding, representing approximately 3.4% of the issued and outstanding Common Shares. These figures
include Common Shares of the Company issuable in respect of 960,061 options,
297,619 RSUs and 1,785,714 PSUs granted to Mr. Ennen on April 1, 2019, in
connection with his appointment as CEO of the Company. As at April 2, 2019, a
total of 4,450,687 Common Shares, representing approximately 5.1% of the issued
and outstanding Common Shares, are available for grant under the Companys
Amended 2013 Plan.
72
During the financial year ended December 29, 2018: (i) an
aggregate of 222,880 options were exercised resulting in the issuance of an
equal number of Common Shares; (ii) an aggregate of 399,576 RSUs vested
resulting in the issuance of 347,660 Common Shares, net of Common Shares
withheld for withholding taxes; (iii) no PSUs vested; and
(iv) an
aggregate of 112,158 Common Shares were issued under the Employee Stock Purchase
Plan.
Shareholder Approval
At the Meeting, shareholders will be asked to consider and, if
deemed advisable, approve the following resolution to approve the Amended 2013
Plan:
BE IT RESOLVED AS AN ORDINARY
RESOLUTION OF THE SHAREHOLDERS OF SUNOPTA INC. THAT:
|
1.
|
The Amended 2013 Plan in the form of Exhibit A is hereby
approved, ratified and confirmed in all respects;
|
|
|
|
|
2.
|
The Company is hereby authorized to file the Amended 2013
Plan with the Toronto Stock Exchange and make any revisions to the text of
the 2013 Amended Plan if and as required by the Toronto Stock Exchange;
and
|
|
|
|
|
3.
|
Any director or officer of the Company is hereby
authorized to take all such steps, actions and proceedings and to sign,
execute and deliver all such documents that such director or officer may,
in his or her discretion, determine to be necessary or desirable in order
to give full force and effect to the intent and purpose of this
resolution.
|
Recommendation of the Board of Directors; Vote Required
The Board of Directors recommends that the shareholders vote
FOR approval of the Amended 2013 Plan.
This proposal will be approved if a quorum is present at the
Meeting and the votes cast in favor of this resolution constitute a majority of
the total votes cast on this resolution. Brokers and other nominees will not
have discretionary authority to vote your shares if you hold your shares in
street name and do not provide instructions as to how your shares should be
voted on this proposal. Abstentions and broker non-votes are counted for
purposes of determining whether a quorum exists at the Meeting, but will have no
effect on the results of the vote.
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73
PROPOSAL FIVE AMENDED AND RESTATED SHAREHOLDER RIGHTS
PLAN
Overview
The Company has in place a shareholder rights plan pursuant to
the Amended and Restated Shareholder Rights Plan Agreement, dated November 10,
2015, amended and restated as of April 18, 2016, between the Company and
American Stock Transfer & Trust Company, LLC (the
Rights Plan
).
Holders of rights under the Rights Plan (
Rights
), other than the
triggering holder, would be entitled to, in effect, purchase Common Shares at a
significant discount to the then-current market price, upon the occurrence of a
Flip-in Event (as defined below). A Flip-in Event occurs if a holder
beneficially owns 20% or more of the outstanding common shares and shares of the
Company entitled to vote (
Voting Shares
).
The Rights Plan will expire as of the close of the Meeting
unless reconfirmed. The full text of the resolution to reconfirm the Rights Plan
is below under the heading Shareholder Approval. Reconfirmation requires the
approval of the majority of votes cast by the shareholders at the Meeting, other
than the votes attached to any Special Voting Shares or Common Shares
beneficially owned by Oaktree and its affiliates. Oaktree and its affiliates
currently own 19.7% of the outstanding Common Shares on a partially-diluted
basis assuming the exchange of all Preferred Shares.
Purpose of the Rights Plan
The key objective of the Rights Plan is ensuring that
shareholders have an equal opportunity to participate in a change of control
transaction. It does this by restricting creeping bids; creeping bids are
acquisitions of shares with the intention of acquiring effective control of the
Company through market purchases and private agreements that are exempt from the
take-over bid rules. The Rights Plan is not intended to, and will not, entrench
directors or management or prevent a change of control.
Specifically, the Board believes that a rights plan is
necessary to protect shareholders from certain actions that could result in
unequal treatment of shareholders, including the following:
(i)
a person could acquire effective control of the Company under one or more
private agreements at a premium to the market price, resulting in a change of
control transaction without the sharing of the premium with all
shareholders,
(ii) a
person could slowly accumulate shares of the Company through stock exchange
acquisitions over time, resulting in an acquisition of effective control without
payment of fair value for control,
(iii) a
person seeking to acquire control of the Company could enter into agreements
with shareholders who, together with the acquiror, hold more than 20% of the
outstanding shares of the Company irrevocably committing such holders to tender
their shares of the Company to a take-over bid, the effect of which would be to
significantly hamper, if not terminate, any reasonable prospect for the Board to
run a value enhancing auction process, and
(iv) it may
be possible for a person to engage in transactions outside of Canada without
regard to the take-over bid protections of Canadian securities laws.
The purpose of the Rights Plan is to address these concerns and
ensure that shareholders have an equal opportunity to participate in a change of
control transaction.
Prior Shareholder Approval and Requirement for Proposal Five
The Board adopted the Rights Plan effective November 10, 2015.
On April 18, 2016, the Company amended the Rights Plan in response to comments
from ISS Proxy Advisory Services, a proxy voting advisory and corporate
governance services firm. On May 10, 2016, shareholders ratified the Rights
Plan. On May 24, 2017, the shareholders waived the application of the Rights Plan in
respect of in-kind payments made by the Company to holders of Preferred
Stock.
74
The Rights Plan requires the Board to submit the Rights Plan to
shareholders for reconfirmation at the third annual meeting of shareholders
following the Rights Plans original ratification on May 10, 2016. The Meeting
is the meeting on the third anniversary of the Rights Plans original
ratification. If a majority of the shareholders voting on reconfirmation do not
vote in favor, the Rights Plan will expire. Accordingly, in order for the Rights
Plan to remain effective, shareholders must reconfirm the Rights Plan by way of
an ordinary resolution, the full text of which is below under the heading
Shareholder Approval.
Mechanics of the Rights Plan
The following description of the principal terms and conditions
of the Rights Plan is a summary only, is not comprehensive and is qualified in
its entirety by reference to the full text of the Rights Plan. A copy of the
Rights Plan is available on SEDAR at
www.sedar.com
.
Term
The Rights Plan is in effect from and after November 10, 2015
with a record date for the issuance of the Rights of November 23, 2015. If the
Rights Plan is reconfirmed by shareholders at the Meeting, then the Rights Plan
and any outstanding Rights will continue in effect until the third annual
meeting of shareholders of the Company following the Meeting. If the Rights Plan
is not reconfirmed by shareholders at the Meeting, then the Rights Plan will be
of no further force or effect and all Rights issued thereunder will be void from
the termination of such meeting.
Issue of Rights
The Company has issued one Right in respect of each Common
Share to holders of record as at the Record Time (as defined in the Rights
Plan). One Right will be issued in respect of each Common Share issued after the
Record Time and prior to the earlier of the Separation Time (as defined below)
and the Expiration Time (as defined in the Rights Plan).
Exercise of Rights
The Rights are not exercisable initially. The Rights will
separate from the Common Shares and become exercisable at the close of business
on the tenth business day after the earliest of (i) the first public
announcement of facts indicating that any person has acquired Beneficial
Ownership (as defined in the Rights Plan) of 20% or more of the Voting Shares;
(ii) the date of commencement of, or first public announcement of the intent of
any person to make, a take-over bid that would result in such person
Beneficially Owning 20% or more of the Voting Shares (other than a Permitted Bid
or a Competing Permitted Bid (each as defined in the Rights Plan); and (iii) the
date upon which a Permitted Bid or Competing Permitted Bid ceases to be such, or
such later date as the Board may determine (in any such case, the "
Separation
Time
"). After the Separation Time, but prior to the occurrence of a Flip-in
Event (as defined below), each Right may be exercised to purchase one Common
Share at an exercise price per Right (the
"Exercise Price
") equal to five
times the market price of the Common Shares as at the Separation Time. The
exercise price payable and the number of securities issuable upon the exercise
of the Rights are subject to adjustment from time to time upon the occurrence of
certain corporate events affecting the Common Shares.
Flip-in Event
Subject to certain exceptions (as discussed below), upon the
acquisition by any person (an "
Acquiring Person
") of Beneficial Ownership
of 20% or more of the Voting Shares (a "
Flip-in Event
") and following the
Separation Time, each Right, other than Rights Beneficially Owned by an
Acquiring Person, its affiliates and associates, their respective joint actors
and certain transferees, may be exercised to purchase that number of Common
Shares which have an aggregate market value equal to two times the Exercise
Price of the Rights for an amount in cash equal to the Exercise Price. Rights
beneficially owned by an Acquiring Person, its affiliates and associates, their
respective joint actors and certain transferees will be void.
75
Certificates and Transferability
Prior to the Separation Time, certificates for Common Shares
will also evidence one Right for each Common Share represented by the
certificate. Certificates issued after the Record Time, but prior to the earlier
of the Separation Time and the Expiration Time, will bear a legend to this
effect. Prior to the Separation Time, Rights will not be transferable separately
from the associated Common Shares. From and after the Separation Time, the
Rights will be evidenced by Rights certificates which will be transferable and
trade separately from the Common Shares.
Permitted Bids
The Rights Plan will not be triggered by a Permitted Bid or
Competing Permitted Bid. A Permitted Bid is one that: (i) is made by means of a
take-over bid circular; (ii) is made to all holders of Voting Shares; (iii) is
open for at least 60 days or such longer period as may be prescribed as the
minimum deposit period under applicable Canadian law; (iv) contains an
irrevocable condition that no Voting Shares will be taken up and paid for until
more than 50% of the Voting Shares held by the independent shareholders of the
Company have been tendered and not withdrawn; (v) contains an irrevocable
condition that Voting Shares may be deposited at any time during the period of
time between the date of the take-over bid and the date on which the shares
subject to the take-over bid are taken up and paid for, and withdrawn until they
are taken up and paid for; and (vi) contains an irrevocable provision that, if
50% of the Voting Shares held by the independent shareholders of the Company are
tendered, the bidder will make an announcement to that effect and keep the bid
open for at least 10 more business days.
Acquiring Person
In general, an Acquiring Person is a person who Beneficially
Owns 20% or more of the outstanding Voting Shares. Excluded from the definition
of "Acquiring Person" are (i) the Company and its subsidiaries; (ii) an
underwriter or member of a banking or selling group that acquires Voting Shares
in connection with a distribution by the Company of securities pursuant to a
prospectus or by way of a private placement; and (iii) any person who becomes
the Beneficial Owner of 20% or more of the outstanding Voting Shares as a result
of one or more or any combination of a Permitted Bid Acquisition, an Exempt
Acquisition, a Pro-Rata Acquisition, a Convertible Security Acquisition or an
acquisition, redemption or cancellation by the Company of Voting Shares. The
definitions of a "Permitted Bid Acquisition", "Exempt Acquisition", "Pro-Rata
Acquisition" and "Convertible Security Acquisition" are set out in the Rights
Plan. However, in general:
|
(a)
|
a "
Permitted Bid Acquisition
" means an acquisition
of Voting Shares made pursuant to a Permitted Bid or a Competing Permitted
Bid;
|
|
|
|
|
(b)
|
an "
Exempt Acquisition
" means an acquisition of
Voting Shares or convertible securities: (i) in respect of which the Board
has waived the application of the Rights Plan; or (ii) made as an
intermediate step in a series of related transactions in connection with
an acquisition by the Company or its subsidiaries of a person or assets,
provided that the person who acquires such Voting Shares distributes or is
deemed to distribute such Voting Shares to its securityholders within 10
business days of the completion of such acquisition, and following such
distribution no Person has become the Beneficial Owner of 20% or more of
the Companys then outstanding Voting Shares;
|
|
|
|
|
(c)
|
a "
Convertible Security Acquisition
" means an
acquisition of Voting Shares upon the exercise of convertible securities
received by a Person pursuant to a Permitted Bid Acquisition, an Exempt
Acquisition or a Pro-Rata Acquisition; and
|
|
|
|
|
(d)
|
a "
Pro-Rata Acquisition
" means an acquisition by a
person of Voting Shares or convertible securities: (i) as a result of a
stock dividend, a stock split or other event pursuant to which such person
receives or acquires Voting Shares or convertible securities on the same
pro-rata basis as all other holders of securities of the particular class,
classes or series; (ii) pursuant to a regular dividend reinvestment plan
or other plan made available by the Company to holders of all of its
Voting Shares where such plan permits the holder to direct that the
dividends paid in respect of such Voting Shares be applied to the purchase from the Company of further securities of the Company; (iii) pursuant to the receipt and/or exercise by the person of rights (other than the Rights) issued by the Company on a pro-rata basis to all of the holders of a class or series of Voting Shares to subscribe for or purchase Voting Shares or convertible securities, provided that such rights are acquired directly from the Company and not from any other person, and provided that the person does not thereby Beneficially Own a greater percentage of the Voting Shares than the percentage of Voting Shares Beneficially Owned by such person immediately prior to such acquisition; or (iv) pursuant to a distribution by the Company of Voting Shares, or securities convertible into or exchangeable for Voting Shares (and the conversion or exchange of such convertible or exchangeable securities) made pursuant to a prospectus or by way of private placement by the Company provided that such person does not thereby Beneficially Own a greater percentage of Voting Shares so offered than the percentage of Voting Shares Beneficially Owned by such person immediately prior to such acquisition.
|
76
Additionally, the Rights Plan provides that a person (a
"
Grandfathered Person
") who is the Beneficial Owner of 20% or more of the
outstanding Voting Shares as at November 10, 2015 shall not be an Acquiring
Person. This exception shall not, and shall cease to, apply if after the
November 10, 2015 the Grandfathered Person: (i) ceases to own 20% or more of the
outstanding Voting Shares; or (ii) becomes the Beneficial Owner of more than 1%
of the number of outstanding Voting Shares then outstanding in addition to those
Voting Shares such Person already holds (other than pursuant to one or more or
any combination of a Permitted Bid Acquisition, an Exempt Acquisition, a
Pro-Rata Acquisition, a Convertible Security Acquisition or an acquisition,
redemption or cancellation by the Company of Voting Shares). The Company is not
aware of any person who owned 20% or more of the Voting Shares as at November
10, 2015.
Redemption and Waiver
At any time prior to the occurrence of a Flip-in Event, the
Board may redeem the Rights at a redemption price of $0.00001 per Right with the
prior approval of the holders of Voting Shares or Rights. The Board will be
deemed to have elected to redeem the Rights if a person, who has made a
Permitted Bid, a Competing Permitted Bid or a take-over bid in respect of which
the Separation Time has occurred and in respect of which the Board has waived
the application of the Rights Plan, takes up and pays for Voting Shares pursuant
to the terms and conditions of such Permitted Bid, Competing Permitted Bid or
take-over bid.
At any time prior to the occurrence of a Flip-in Event and with
the prior approval of the holders of Voting Shares or Rights, the Board may
waive the flip-in provisions where a Flip-in Event would occur by reason of an
acquisition of Voting Shares otherwise than pursuant to a take-over bid made by
means of a take-over bid circular to all holders of record of Voting Shares.
If the provisions of the Rights Plan that apply upon the
occurrence of a Flip-in Event are waived in respect of a take- over bid made by
means of a take-over bid circular to all holders of record of Voting Shares,
then the provisions of the Rights Plan that apply upon the occurrence of a
Flip-in Event will also be deemed to be waived in respect of any other Flip-in
Event occurring by reason of any take-over bid made by any other offeror by
means of a take-over bid circular to all holders of record of Voting Shares
prior to the expiry of any take-over bid in respect of which a waiver is, or is
deemed to have been, granted.
In addition, the operation of the Rights Plan may be waived
where a person has inadvertently become an Acquiring Person and has reduced its
Beneficial Ownership of Voting Shares such that it is no longer an Acquiring
Person.
Amendment of the Rights Plan
Shareholder approval is required for amendments to the Rights
Plan other than those required to correct clerical or typographical errors or to
maintain the validity of the Rights Plan as a result of a change of law.
Shareholder Approval
At the Meeting, shareholders will be asked to consider and, if
deemed advisable, approve the following ordinary resolution to approve the
Rights Plan:
77
BE IT RESOLVED AS AN ORDINARY
RESOLUTION OF THE SHAREHOLDERS OF SUNOPTA INC. (the Company) THAT:
1.
the amended and restated shareholder rights agreement dated April 16, 2016
between the Company and American Stock Transfer & Trust Company, LLC, as
rights agent is hereby reconfirmed; and
2.
any director or officer of the Company is hereby authorized to take all such
steps, actions and proceedings and to sign, execute and deliver all such
documents that such director or officer may, in his or her discretion, determine
to be necessary or desirable in order to give full force and effect to the
intent and purpose of this resolution.
Recommendation of the Board of Directors; Vote Required
The Board of Directors of the Company believes that the
reconfirmation of the Rights Plan is in the best interests of the Company and
its shareholders and, accordingly, recommends that the shareholders vote FOR the
reconfirmation of the Rights Plan.
The Board believes that a rights plan is necessary to
protect shareholders from creeping bids that could result in unequal treatment
of shareholders under Canadian securities laws as described above under the
heading Purpose of the Rights Plan.
This proposal will be approved if a quorum is present at the
Meeting and the votes cast in favor of this resolution constitute a majority of
total number of votes cast on this resolution, without giving effect to votes
cast: (i) by Oaktree and its affiliates (ii) by any shareholder that, directly
or indirectly, on its own or in concert with others, holds or exercises control
over more than twenty percent (20%) of the outstanding Voting Shares, if any;
and (iii) by the associates, affiliates and insiders of shareholders referred to
in (ii) above. Brokers and other nominees will not have discretionary authority
to vote your shares if you hold your shares in street name and do not provide
instructions as to how your shares should be voted on this proposal. Abstentions
and broker non-votes are counted for purposes of determining whether a quorum
exists at the Meeting, but will have no effect on the results of the vote. The
votes of Oaktree and its affiliates are excluded as indicated in (i) above
pursuant to the Investor Rights Agreement and the Voting Trust Agreement entered
into in connection with the subscription for Preferred Shares.
[Remainder of page left intentionally blank]
78
CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH INSIDERS AND
RELATED PERSONS
The Audit Committee reviews any material transactions in which
we are or will be a participant and in which any of our 5% shareholders,
directors or executive officers, or any of their immediate family members, has a
direct or an indirect material interest. After its review the Audit Committee
will only approve or ratify those transactions that the Audit Committee
determines are in, or are not inconsistent with, our best interests and the
Audit Committee, in its sole discretion, may impose such conditions as it deems
appropriate on us or the related person in connection with approval of the
transaction.
No informed person (as such term is defined in National
Instrument 51-102 of the CSA), any proposed director of the Company or any
associate or affiliate of the foregoing or any related person (as such term is
defined in Item 404(a) of Regulation S-K) has or will have any material
interest, direct or indirect, in any transaction since the commencement of the
Companys most recently completed fiscal year or in any currently proposed
transaction in which the Company was or is to be a participant and the amount
involved exceeds $120,000 or which otherwise has materially affected or would
materially affect the Company or any of its subsidiaries.
[Remainder of page left intentionally blank]
79
EXECUTIVE OFFICERS
Joseph Ennen
(Age 52) serves as Chief Executive
Officer of the Company. Prior to his appointment on April 1, 2019 as the
Companys Chief Executive Officer, Mr. Ennen served as President, 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. In the past
five years, Mr. Ennen has not served on any reporting issuers Board of
Directors.
Robert McKeracher
(Age 42) serves as Vice
President and Chief Financial Officer of the Company overseeing all financial
reporting, compliance and corporate treasury activities. He previously served as
Vice President of Financial Reporting for SunOpta from June 2008 until October
2011, and as Director of Financial Reporting from August 2007 to June 2008.
Prior to joining the Company, Mr. McKeracher was the Manager of Business
Planning and Treasury at Magna Entertainment Corp. from May 2003 to August 2007,
after spending four years in public accounting in the assurance and business
advisory practice at PricewaterhouseCoopers LLP. In the past five years, Mr.
McKeracher has not served on any reporting issuers Board of Directors.
Gerard Versteegh
(Age 58) serves as Senior Vice
President of Global Ingredients. Mr. Versteegh joined the Company in April 2008
as President and co-founder of Tradin Organic Agriculture. Mr. Versteegh has
over 30 years of expertise in the global sourcing, processing and distribution
of organic raw materials in a broad range of categories. In the past five years,
Mr. Versteegh has not served on any reporting issuers Board of Directors.
Chris Whitehair
(Age 54) serves as Senior Vice
President of Operations. Prior to his appointment to this role in April 2017,
Mr. White was Senior Vice President of Operations at Treehouse Foods since 2015.
Before joining Treehouse Foods, Mr. Whitehair was employed by Conagra Foods as
Vice President of Operations and Supply Chain for Private Brands from 2012 to
2015 and Vice President of Operations for Snacks and International from 2005 to
2012. In the past five years, Mr. Whitehair has not served on any reporting
issuers Board of Directors.
Jill Barnett
(Age 45) serves as Vice President,
General Counsel and Corporate Secretary and is responsible for the legal affairs
of the Company. Prior to joining the Company in July 2014, Ms. Barnett spent
twelve years as in-house counsel for Best Buy Co., Inc. holding various
positions and providing legal support to numerous areas of the business,
including Best Buys global sourcing and exclusive brands business. In the past
five years, Ms. Barnett has not served on any reporting issuers Board of
Directors.
Michael Buick
(Age 44) serves as Senior Vice
President and General Manager of CPG. He previously served as Senior Vice
President and General Manager of Beverage and Snacks. Prior to joining the
Company in February 2017, Mr. Buick was the General Manager of Trailmix and Bars
Business Unit for Treehouse Foods from 2016 until 2017 and Marketing Director
for Flagstone Foods (acquired by Treehouse Foods) from 2015 until 2016. Before
working at Treehouse, Mr. Buick spent ten years working for Conagra Foods in
various positions including Brand Director of Chef Boyardee from 2012 to 2015
and Brand Director of Private Label Wholesome Snacks from 2010 to 2012. In the
past five years, Mr. Buick has not served on any reporting issuers Board of
Directors.
Rob Duchscher
(Age 58) serves as Chief
Information Officer. Prior to starting with the Company in March 2017, Mr.
Duchscher served as Chief Information Officer at Starkey Hearing Technologies
from January 2010 through February 2017, where he led the transformation of both
the information technology and software engineering departments. Mr. Duchscher
initially started at Starkey Hearing Technologies in April 2002 as
Vice-President of Software Engineering and R&D PMO. In the past five years,
Mr. Duchscher has not served on any reporting issuers Board of Directors.
80
Jeff Gough
(Age 55) serves as Chief Human
Resources Officer. Prior to joining the Company in April 2017, Mr. Gough was
employed at Smithfield Foods between 2007-2016 in various roles including Senior
Vice President of Human Resources and Safety from 2011 to 2016, Senior Vice
President of Logistics from 2011 to 2013 and Vice President of Human Resources
and Safety from 2007 to 2011. Mr. Gough served as Vice President of Human
Resources and Safety for Premium Standard Farms (acquired by Smithfield Foods)
from 2001 to 2007. In the past five years, Mr. Gough has not served on any
reporting issuers Board of Directors.
Rob Grant
(Age 55) serves of Senior Vice
President of Supply Chain and is responsible for logistics, transportation,
warehousing, customer service, and sales and operations planning (S&OP) for
the Company. Prior to joining the Company in February 2017, Mr. Grant was Vice
President and General Manager at Diamond of California LLC (a subsidiary of
Snyders Lance) from 2016-2017 and Senior Vice President of Supply Chain of
Diamond Foods from 2013 to 2016. Mr. Grant served as Vice President of Supply
Chain Logistics at Bimbo Bakeries USA from 2011 to 2013 and Vice President of
Supply Chain at Mission Foods from 2007 to 2011. In the past five years, Mr.
Grant has not served on any reporting issuers Board of Directors.
James Gratzek
(Age 54) serves as Senior Vice
President of Research and Development and Quality. Mr. Gratzek started with the
Company in June 2014 as Senior Vice President of Research and Development and
was appointed Senior Vice President of Quality in June 2016. He spent more than
10 years at General Mills, where he focused on new product development, cost and
process improvement, and technology development, completing his tenure as a
Director of R&D. Prior to General Mills, he worked at Tetra Pak as Aseptic
Technology Director and various program leadership roles at Campbells. In the
past five years, Mr. Gratzek has not served on any reporting issuers Board of
Directors.
George Miketa
(Age 55) serves as Chief Customer
Officer for the Company. Prior to joining the Company in November 2017, Mr.
Miketa was Senior Vice President of Sales, Private Brands for Conagra Foods,
later acquired by Treehouse Foods, from 2015 to 2017. From 2011 to 2015, he
served as Executive Vice President of Sales for Flagstone Foods (acquired by
Treehouse Foods) with a focus on private brands in snack nuts, trail mix, and
dried fruit categories. Mr. Miketa also worked for Conagra Foods from 2001 to
2010, holding various positions including Vice President of Sales, Private
Brands, Vice President Business Development, Snack Brands, and Vice President of
Sales. In the past five years, Mr. Miketa has not served on any reporting
issuers Board of Directors.
[Remainder of page left intentionally blank]
81
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED
UPON
Except insofar as they may be shareholders of the Company or as
otherwise disclosed in this Proxy Statement, no person who has been a director
or executive officer of the Company at any time since the beginning of its last
completed fiscal year, any proposed nominee for election as a director of the
Company or any associate or affiliate of such persons has any substantial
interest, direct or indirect, by way of beneficial ownership of securities or
otherwise, in any matter to be acted upon at the Meeting.
SHAREHOLDER PROPOSALS FOR 2020 ANNUAL MEETING OF
SHAREHOLDERS;
SHAREHOLDER COMMUNICATIONS
The Companys shareholders may submit proposals on matters
appropriate for shareholder action at meetings of shareholders in accordance
with Rule 14a-8 promulgated under the Securities Exchange Act of 1934 and
Section 137 of the CBCA. For such proposals to be included in the Companys
proxy materials relating to its 2020 Annual Meeting of Shareholders, all
applicable requirements of Rule 14a-8 and the CBCA must be satisfied and, under
the CBCA, such proposals must be received by the Company no later than January
8, 2020. Such proposals should be delivered to SunOpta Inc., Attn: Corporate
Secretary, 2233 Argentia Road, Suite 401, West Tower, Mississauga, ON L5N 2X7.
Shareholders may recommend a person as a nominee for director
by writing to the Secretary of the Company and providing the information
required pursuant to the Advance Notice By-Law. Under SEC rules, notice of a
nomination for the 2020 Annual Meeting of Shareholders submitted outside the
processes of Rule 14a-8 and Section 137 of the CBCA must be received by the
Corporate Secretary of the Company at our principal executive offices at least
30 days prior to the date fixed by the Company for its next annual meeting of
shareholders as required by the Advance Notice By-Law (unless such meeting is
convened on less than 50 days' notice, in which case notice of any such
nomination must be provided not later than the tenth (10th) day following public
notice of the meeting date). The proxy solicited by the Board for the 2020
Annual Meeting of Shareholders will confer discretionary authority to vote on
any proposal or nomination submitted by a shareholder at that meeting with
respect to which the Company has received notice after such date.
Shareholders may communicate with the Board. Communications
should be in writing and marked to the attention of the Board of Directors or
any of its individual committees, or the Chair of the Board. Any such
communications should be delivered to the Company at is principal executive
offices located at 2233 Argentia Road, Suite 401, West Tower, Mississauga, ON
L5N 2X7.
SOLICITATION OF PROXIES
Proxies solicited in connection with this proxy statement are
being solicited by the Board of Directors of the Company. Proxies may be
solicited by officers, directors and regular employees of the Company. None of
the officers, directors or employees will be directly compensated for such
services. Solicitations of proxies may be made personally or by mail, facsimile,
telephone, messenger, or e-mail. The Company will bear all proxy solicitation
costs, including the costs of preparing, assembling, printing and mailing this
Proxy Statement, the accompanying proxy card, the Notice and any additional
solicitation material that the Company may provide to shareholders.
We will request fiduciaries, custodians, brokerage houses and
similar parties to forward copies of proxy materials to beneficial owners of the
Common Shares, and we will reimburse these parties for their reasonable and
customary charges for expenses of distribution.
FORM 10-K AND OTHER INFORMATION
The Company will mail without charge, upon written request,
a copy of its Annual Report on Form 10-K for the fiscal year ended December 29,
2018, including the consolidated financial statements, Managements
Discussion and Analysis of Financial Condition and Results
of Operations (
MD&A
), schedules and list of exhibits,
and any particular exhibit specifically requested. Requests should be sent to:
SunOpta Inc., Attn: Beth McGillivary,
2233 Argentia Road, Suite 401, West
Tower, Mississauga, ON L5N 2X7
.
The Annual Report on Form 10-K and
additional information relating to the Company is also available at
www.sunopta.com
, on EDGAR at
www.sec.gov
and on SEDAR at
www.sedar.com
. Financial information is provided in the
Companys comparative financial statements and MD&A for the fiscal year
ended December 29, 2018.
82
OTHER MATTERS
The Board knows of no other matters to be presented for
shareholder action at the Meeting. However, if other matters do properly come
before the Meeting or any adjournments or postponements thereof, the Board
intends that the persons named in the proxies will vote upon such matters in
accordance with their best judgment.
This proxy statement may include forward-looking statements
(as defined in the Private Securities Litigation Reform Act of 1995). These
statements are based on our current expectations and involve risks and
uncertainties, which may cause results to differ materially from those set forth
in the statements. The forward-looking statements may include statements
regarding actions to be taken by us. We do not undertake any obligation to
update our forward-looking statements after the date of this report for any
reason, even if new information becomes available or other events occur in the
future, except as may be required under applicable securities laws.
Forward-looking statements should be evaluated together with the many
uncertainties that affect our business, particularly those mentioned in the risk
factors in our Annual Report on Form 10-K for the year ended December 29, 2018
and in our periodic reports on Form 10-Q and Form 8-K.
Dated this 9th day of April, 2019.
|
By Order of the Board of Directors
|
|
|
|
/s/ Joseph Ennen
|
|
Joseph Ennen
|
|
Chief Executive Officer
|
83
EXHIBIT A
SUNOPTA INC.
AMENDED 2013 STOCK INCENTIVE PLAN
(as amended April 5, 2019, subject to shareholder approval
at the 2019 Annual and Special Meeting)
1.
Purpose
. The purpose of
this 2013 Stock Incentive Plan (the Plan) is to enable SunOpta Inc. (the
Company) to attract and retain the services of selected employees,
officers
,
and
directors
and consultants
of the
Company. For purposes of this Plan, a person is considered to be employed by or
in the service of the Company if the person is employed by or in the service of
any entity (the Employer) that is the Company, a parent or subsidiary of the
Company or a corporation, limited liability company, partnership, joint venture
or other entity in which the Company has an interest
(each
a Covered
Entity)
.
2.
Shares Subject to the
Plan
. Subject to adjustment as provided below and in Section 10, the shares
to be offered under the Plan shall consist of Common Stock of the Company, and
the total number of shares of Common Stock that may be issued under the Plan
shall be
6,800,000
7,800,000
shares plus (i) shares that
are available under the Companys 2002 Stock Option Plan (the Prior Plan) as
of the Effective Date of the Plan (as defined in Section 3.1) and (ii) shares
subject to outstanding options under the Prior Plan as of the Effective Date of
the Plan if the options are cancelled or terminated or expire after the
Effective Date of the Plan without the issuance of the shares subject to the
options. If an option, stock appreciation right, Stock Award (as defined in
Section 7) or Performance-Based Award (as defined in Section 9) granted under
the Plan expires, terminates or is cancelled, the unissued shares thereto shall
again be available under the Plan. If shares subject to a Stock Award or
Performance-Based Award are forfeited to or repurchased by the Company, the
number of shares forfeited or repurchased shall again be available under the
Plan. Notwithstanding any provision in the Plan, the maximum number of shares
that can be issued under the Plan as Full Value Awards shall be
4,550,000
5,550,000
shares. For purposes of the Plan,
Full Value Award means a Stock Award (as defined in Section 7) for which the
recipient pays no cash consideration or cash consideration of less than the fair
market value of the underlying shares as of the grant date (as determined in
accordance with Section 6.2 -4), except that shares issued to a participant in
lieu of cash compensation to which the participant is otherwise entitled are not
Full Value Awards.
3.
Effective Date and Duration
of Plan
.
3.1
Effective Date
. The Plan shall become effective as of
the
date it is approved by shareholders of the Company (the Effective Date of the
Plan).
3.2
Duration
. The Plan shall continue in effect until all shares
available for issuance under the Plan have been issued and all restrictions on
the shares have lapsed. The Board of Directors of the Company (Board of
Directors) may suspend or terminate the Plan at any time except with respect to
awards then outstanding or subject to restrictions under the Plan. Termination
shall not affect any outstanding awards or any right of the Company to
repurchase shares or the forfeitability of shares issued under the Plan.
4.
Administration
.
4.1
Board of Directors
. The Plan shall be administered by the Board of
Directors, which shall determine and designate the individuals to whom awards
shall be made, the amount of the awards and the other terms and conditions of
the awards. Subject to the provisions of the Plan, the Board of Directors may
adopt and amend rules and regulations relating to administration of the Plan,
advance the termination of any waiting period, accelerate any exercise or
vesting date, waive or modify any restriction applicable to shares (except those
restrictions imposed by law) and make all other determinations in the judgment
of the Board of Directors necessary or desirable for the administration of the
Plan. The interpretation and construction of the provisions of the Plan and
related agreements by the Board of Directors shall be final and conclusive. The
Board of Directors may correct any defect or supply any omission or reconcile
any inconsistency in the Plan or in any related agreement in the manner and to
the extent it deems expedient to carry the Plan into effect, and the Board of
Directors shall be the sole and final judge of such expediency.
4.2
Committee
. The Board of Directors may delegate to any committee of
the Board of Directors (the Committee) any or all authority for administration
of the Plan. If authority is delegated to the Committee, all references to the
Board of Directors in the Plan shall mean and relate to the Committee, except
(i) as otherwise provided by the Board of Directors and (ii) that only the Board
of Directors may amend or terminate the Plan as provided in Sections 3 and
11.
4.3
No Dividends on Unvested Awards.
No award granted under the Plan
shall provide for the payment of dividends on shares subject to the award before
the shares have Vested; provided, however, that dividends accumulated between
the grant date of an award and the Vesting date on shares that become Vested
under the award may be paid to the recipient at or after the time the shares
become Vested. Vested means that shares have been delivered to the recipient
and are no longer subject to a substantial risk of forfeiture (as defined in
regulations under Section 83 of the Internal Revenue Code of 1986, as amended
(the Code).
4.4
Minimum Service Period.
No award granted under the Plan after
March 1, 2017 shall become Vested if the recipient does not remain in the
service of the Company until the first anniversary of the date of grant, unless
the recipients service is terminated as a result of the recipients death or
physical disability (as defined in the applicable award agreement), or such
earlier Vesting occurs in connection with a Change in Control of the Company to the extent permitted by Section
4.5; provided, however, that the foregoing prohibition shall not apply to
(i)
five percent of the sum of the number of shares available for awards under
the Plan immediately following the 2017 annual meeting of shareholders plus the
number of additional shares that thereafter become available
and (ii)
up to 600,000 shares at target performance pursuant to awards under the
Companys 2019 short term incentive plan granted after March 1, 2019
.
2
4.5
Restrictions on Change in Control Vesting.
No award granted under
the Plan after March 1, 2017 shall provide for any excuse from satisfaction of
the continued service conditions of the award as a result of a Change in Control
of the Company, except that an award agreement may excuse the recipient from the
continued service obligation if:
i.
the recipients employment or service relationship is terminated by the employer
or the Company without cause or by the recipient for good reason in connection
with the Change in Control under terms specified in the award agreement; or
ii.
the award is not converted into an award for stock of the surviving or acquiring
corporation in the Change in Control transaction under terms specified in the
award agreement or pursuant to Section 10.2 of the Plan; provided that any
Performance-Based Awards and other awards with performance-based vesting
provisions that are settled or for which vesting is accelerated in connection
with a Change in Control are settled or accelerated either on a pro-rata basis
based on time elapsed during the performance period from the grant date or with
performance measured for a performance period ending prior to the Change in
Control under terms specified in the award agreement.
4.6
Change in Control Definition.
For purposes of the Plan, a Change
in Control of the Company shall mean the occurrence of any of the following
events:
i.
The consummation of:
(1)
any consolidation, merger or plan of share exchange involving the Company (a
Merger) as a result of which the holders of outstanding securities of the
Company ordinarily having the right to vote for the election of directors
(Voting Securities) immediately prior to the Merger do not continue to hold at
least 50% of the combined voting power of the outstanding Voting Securities of
the surviving corporation or a parent corporation of the surviving corporation
immediately after the Merger, disregarding any Voting Securities issued to or
retained by such holders in respect of securities of any other party to the
Merger; or
(2)
any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, the assets of the Company;
ii.
At any time during a period of two consecutive years, individuals who at the beginning of such period constituted the
Board (Incumbent Directors) shall cease for any reason to constitute at least
a majority thereof; provided, however, that the term Incumbent Director shall
also include each new director elected during such two-year period whose
nomination or election was approved by two-thirds of the Incumbent Directors
then in office; or
3
iii.
Any person (as such term is used in Section 14(d) of the Securities Exchange Act
of 1934, other than the Company or any employee benefit plan sponsored by the
Company) shall, as a result of a tender or exchange offer, open market purchases
or privately negotiated purchases from anyone other than the Company, have
become the beneficial owner (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of Voting Securities
representing fifty percent (50%) or more of the combined voting power of the
then outstanding Voting Securities.
5.
Types of Awards,
Eligibility, Limitations
. The Board of Directors may, from time to time,
take the following actions, separately or in combination, under the Plan: (i)
grant Incentive Stock Options, as defined in Section 422 of the Code, as
provided in Sections 6.1 and 6.2; (ii) grant options other than Incentive Stock
Options (Non-Statutory Stock Options) as provided in Sections 6.1 and 6.3;
(iii) grant Stock Awards as provided in Section 7; (iv) grant stock appreciation
rights as provided in Section 8; and (v) grant Performance-Based Awards as
provided in Section 9. Awards may be made to
natural
persons who are
employees, including employees who are officers or directors,
officers
,
and
directors
or consultants in the
Companys service or the service of a Covered Entity, as
selected by
the Board of Directors; provided, however, that only employees of the Company or
any parent or subsidiary of the Company (as defined in subsections 424(e) and
424(f) of the Code) are eligible to receive Incentive Stock Options under the
Plan. The maximum number of shares that can be issued under the Plan as
Incentive Stock Options is
6,800,000
7,800,000
shares. No
employee
or consultant
may be granted options or stock appreciation
rights for more than an aggregate of 1,500,000 shares of Common Stock in any
fiscal year. The total compensation paid or granted by the Company in any form
(including cash and awards under the Plan) to any non-employee director for
service as a director for any fiscal year shall not exceed $500,000. For this
purpose, awards under the Plan shall be valued at the time of grant based on the
grant date fair value as determined by the Company for financial accounting
purposes.
6.
Option Grants
.
6.1
General Rules Relating to Options
.
6.1-1
Terms of Grant
. The Board of Directors may grant options under the
Plan. With respect to each option grant, the Board of Directors shall determine
the number of shares subject to the option, the exercise price, the period of
the option, the time or times at which the option may be exercised and whether
the option is an Incentive Stock Option or a Non-Statutory Stock Option.
4
6.1-2
Exercise of Options
. Except as provided in Section 6.1 -4 or as
determined by the Board of Directors, no option granted under the Plan may be
exercised unless at the time of exercise the optionee is employed by or in the
service of the Company and shall have been so employed or provided such service
continuously since the date the option was granted. Except as provided in
Sections 6.1 -4 and 10, options granted under the Plan may be exercised from
time to time over the period stated in each option in amounts and at times
prescribed by the Board of Directors, provided that options may not be exercised
for fractional shares. Unless otherwise determined by the Board of Directors, if
an optionee does not exercise an option in any one year for the full number of
shares to which the optionee is entitled in that year, the optionees rights
shall be cumulative and the optionee may purchase those shares in any subsequent
year during the term of the option.
6.1-3
Nontransferability
. Except as provided below, each Incentive Stock
Option granted under the Plan by its terms shall be nonassignable and
nontransferable by the optionee, either voluntarily or by operation of law, and
during the optionees lifetime, shall be exercisable only by the optionee. A
stock option may be transferred by will or by the laws of descent and
distribution of the state or country of the optionees domicile at the time of
death. A Non-Statutory Stock Option shall also be transferable pursuant to a
qualified domestic relations order as defined under the Code or Title I of the
Employee Retirement Income Security Act. The Committee may, in its discretion,
authorize all or a portion of a Non-Statutory Stock Option granted to an
optionee to be on terms which permit transfer by the optionee to (i) the spouse,
children or grandchildren of the optionee (Immediate Family Members), (ii) a
trust or trusts for the exclusive benefit of Immediate Family Members, or (iii)
a partnership in which Immediate Family Members are the only partners, provided
that (x) there may be no consideration for any transfer, (y) the stock option
agreement pursuant to which the options are granted must expressly provide for
transferability in a manner consistent with this paragraph, and (z) subsequent
transfers of transferred options shall be prohibited except by will or by the
laws of descent and distribution. Following any transfer, options shall continue
to be subject to the same terms and conditions as were applicable immediately
prior to transfer, provided that for purposes of Section 6.1 -5 the term
optionee shall be deemed to refer to the transferee. The events of termination
of employment of Section 6.1 -4, shall continue to be applied with respect to
the original optionee, following which the options shall be exercisable by the
transferee only to the extent, and for the periods specified, and all other
references to employment, termination of employment, life or death of the
optionee, shall continue to be applied with respect to the original optionee.
6.1-4
Termination of Employment or Service
.
6.1-4(a)
General Rule
. Unless otherwise determined by the Board of
Directors, if an optionees employment or service with the Company terminates
for any reason other than because of total disability or death as provided in
Sections 6.1 -4(b) and (c), his or her option may be exercised at any time
before the expiration date of the option or the expiration of 30 days after the
date of termination, whichever is the shorter period, but only if and to the extent
the optionee was entitled to exercise the option at the date of termination.
5
6.1-4(b)
Termination Because of Total Disability
. Unless otherwise
determined by the Board of Directors, in the event of the termination of
employment or service because of total disability, the option may be exercised
at any time prior to the expiration date of the option or the expiration of 12
months after the date of termination, whichever is the shorter period, but only
if and to the extent the optionee was entitled to exercise the option at the
date of termination. The term total disability means a mental or physical
impairment which is expected to result in death or which has lasted or is
expected to last for a continuous period of 12 months or more and which causes
the optionee to be unable, in the opinion of the Company, to perform his or her
duties as an employee, director or officer of the Company. Total disability
shall be deemed to have occurred on the first day after the Company has made a
determination of total disability.
6.1-4(c)
Termination Because of Death
. Unless otherwise determined by the
Board of Directors, in the event of the death of an optionee while employed by
or providing service to the Company or a subsidiary, the option may be exercised
at any time prior to the expiration date of the option or the expiration of 12
months after the date of death, whichever is the shorter period, but only if and
to the extent the optionee was entitled to exercise the option at the date of
death and only by the person or persons to whom such optionees rights under the
option shall pass by the optionees will or by the laws of descent and
distribution of the state or country of domicile at the time of death.
6.1-4(d)
Amendment of Exercise Period Applicable to Termination
. The Board
of Directors may at any time extend the 30-day and 12-month exercise periods any
length of time not longer than the original expiration date of the option. The
Board of Directors may at any time increase the portion of an option that is
exercisable, subject to terms and conditions determined by the Board of
Directors.
6.1-4(e)
Failure to Exercise Option
. To the extent that the option of any
deceased optionee or any optionee whose employment or service terminates is not
exercised within the applicable period, all further rights to purchase shares
pursuant to the option shall terminate.
6.1-4(f)
Leave of Absence
. Absence on leave approved by the Employer or on
account of illness or disability shall not be deemed a termination or
interruption of employment or service. Unless otherwise determined by the Board
of Directors, vesting of options shall continue during a medical, family or
military leave of absence, whether paid or unpaid, and vesting of options shall
be suspended during any other unpaid leave of absence.
6.1-5
Purchase of Shares
.
6
6.1-5(a)
Notice of Exercise
. Unless the Board of Directors determines
otherwise, shares may be acquired pursuant to an option granted under the Plan
only upon the Companys receipt of written notice from the optionee of the
optionees binding commitment to purchase shares, specifying the number of
shares the optionee desires to purchase under the option and the date on which
the optionee agrees to complete the transaction, and, if required to comply with
the Securities Act of 1933, containing a representation that it is the
optionees intention to acquire the shares for investment and not with a view to
distribution.
6.1-5(b)
Payment
. Unless the Board of Directors determines otherwise, on or
before the date specified for completion of the purchase of shares pursuant to
an option exercise, the optionee must pay the Company the full purchase price of
those shares in cash or by check or, with the consent of the Board of Directors,
in whole or in part, in Common Stock of the Company valued at fair market value
and other forms of consideration. With the consent of the Board of Directors, an
optionee may pay the exercise price, in whole or in part, by instructing the
Company to withhold from the shares to be issued upon exercise shares of Common
Stock valued at fair market value. The fair market value of Common Stock of the
Company provided or withheld in payment of the purchase price shall be the
closing price of the Common Stock of the Company as reported on Nasdaq or such
other reported value of the Common Stock of the Company as shall be specified by
the Board of Directors, on the date the option is exercised, or if such date is
not a trading day, then on the immediately preceding trading day.
6.1-5(c)
Tax Withholding
. Each optionee who has exercised an option shall,
immediately upon notification of the amount due, if any, pay to the Company in
cash or by check amounts necessary to satisfy any federal, state and local tax
withholding requirements. If additional withholding is or becomes required (as a
result of exercise of an option or as a result of disposition of shares acquired
pursuant to exercise of an option) beyond any amount deposited before delivery
of the certificates, the optionee shall pay the additional withholding amount,
in cash or by check, to the Company on demand. If the optionee fails to pay the
amount demanded, the Company or the Employer may withhold that amount from other
amounts payable to the optionee, including salary, subject to applicable law.
With the consent of the Board of Directors, an optionee may satisfy this
obligation, in whole or in part, by instructing the Company to withhold some of
the shares to be issued upon exercise or by delivering to the Company other
shares of Common Stock. The fair market value of Common Stock of the Company
withheld or delivered to satisfy withholding obligation shall be the closing
price of the Common Stock of the Company as reported on Nasdaq or such other
reported value of the Common Stock of the Company as shall be specified by the
Board of Directors, on the date the option is exercised, or if such date is not
a trading day, then on the immediately preceding trading day.
6.1-5(d)
Reduction of Reserved Shares.
Upon the exercise of an option, the
number of shares reserved for issuance under the Plan shall be reduced by the number of shares issued upon exercise of the
option plus any shares withheld in payment of the exercise price or to satisfy
withholding requirements.
7
6.1-6
No Repricing
. Except for actions approved by the shareholders of the
Company or adjustments made pursuant to Section 10, the option price for an
outstanding option granted under the Plan may not be decreased after the date of
grant nor may the Company grant a new option or pay any cash or other
consideration (including another award under the Plan) in exchange for any
outstanding option granted under the Plan at a time when the option price of the
outstanding option exceeds the fair market value of the Shares covered by the
option.
6.2
Incentive Stock Options
. Incentive Stock Options shall be subject
to the following additional terms and conditions:
6.2-1
Limitation on Amount of Grants
. If the aggregate fair market value of
stock, determined as of the date the option is granted, for which Incentive
Stock Options granted under this Plan (and any other stock incentive plan of the
Company or its parent or subsidiary corporations, as defined in subsections
424(e) and 424(f) of the Code) are exercisable for the first time by an employee
during any calendar year exceeds $100,000, the portion of the option or options
not exceeding $100,000, to the extent of whole shares, will be treated as an
Incentive Stock Option and the remaining portion of the option or options will
be treated as a Non-Statutory Stock Option. The preceding sentence will be
applied by taking options into account in the order in which they were granted.
If, under the $100,000 limitation, a portion of an option is treated as an
Incentive Stock Option and the remaining portion of the option is treated as a
Non-Statutory Stock Option, unless the optionee designates otherwise at the time
of exercise, the optionees exercise of all or a portion of the option will be
treated as the exercise of the Incentive Stock Option portion of the option to
the full extent permitted under the $100,000 limitation. If an optionee
exercises an option that is treated as in part an Incentive Stock Option and in
part a Non-Statutory Stock Option, the Company will designate the portion of the
stock acquired pursuant to the exercise of the Incentive Stock Option portion as
Incentive Stock Option stock by issuing a separate certificate for that portion
of the stock and identifying the certificate as Incentive Stock Option stock in
its stock records.
6.2-2
Limitations on Grants to 10 percent Shareholders
. An Incentive Stock
Option may be granted under the Plan to an employee possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary (as defined in subsections 424(e) and 424(f)
of the Code) only if the option price is at least 110 percent of the fair market
value, as described in Section 6.2 -4, of the Common Stock subject to the option
on the date it is granted and the option by its terms is not exercisable after
the expiration of five years from the date it is granted.
6.2-3
Duration of Options
. Subject to Sections 6.1 -2, 6.1 -4 and 6.2 -2,
Incentive Stock Options granted under the Plan shall continue in effect for the
period fixed by the Board of Directors, except that by its terms no
Incentive Stock Option shall be exercisable after the expiration of 10 years
from the date it is granted.
8
6.2-4
Option Price
. The option price per share shall be determined by the
Board of Directors at the time of grant. Except as provided in Section 6.2 -2,
the option price shall not be less than 100 percent of the fair market value of
the Common Stock covered by the Incentive Stock Option at the date the option is
granted. The fair market value shall be deemed to be the closing price of the
Common Stock of the Company as reported on Nasdaq on the date the option is
granted, or if there has been no sale on that date, on the last preceding date
on which a sale occurred, or such other reported value of the Common Stock of
the Company as shall be specified by the Board of Directors.
6.2-5
Limitation on Time of Grant
. No Incentive Stock Option shall be
granted on or after the tenth anniversary of the last action by the Board of
Directors adopting the Plan or approving an increase in the number of shares
available for issuance under the Plan, which action was subsequently approved
within 12 months by the shareholders.
6.2-6
Early Dispositions
. If, within two years after an Incentive Stock
Option is granted or within 12 months after an Incentive Stock Option is
exercised, the optionee sells or otherwise disposes of Common Stock acquired on
exercise of the Option, the optionee shall within 30 days of the sale or
disposition notify the Company in writing of (i) the date of the sale or
disposition, (ii) the amount realized on the sale or disposition and (iii) the
nature of the disposition (e.g., sale, gift, etc.).
6.3
Non-Statutory Stock Options
. Non-Statutory Stock Options shall be
subject to the following terms and conditions, in addition to those set forth in
Section 6.1 above:
6.3-1
Option Price
. The option price for Non-Statutory Stock Options shall
be determined by the Board of Directors at the time of grant. The option price
shall not be less than 100 percent of the fair market value of the Common Stock
covered by the Non-Statutory Stock Options at the date the option is granted.
The fair market value shall be deemed to be the closing price of the Common
Stock of the Company as reported on Nasdaq on the date the option is granted, or
if there has been no sale on that date, on the last preceding date on which a
sale occurred, or such other reported value of the Common Stock of the Company
as shall be specified by the Board of Directors.
6.3-2
Duration of Options
. Non-Statutory Stock Options granted under the
Plan shall continue in effect for the period fixed by the Board of Directors.
7.
Stock Awards
. The Board
of Directors may issue shares, including restricted stock, or rights to receive
shares, including restricted stock units, under the Plan (Stock Awards) for
any consideration, including services, determined by the Board of Directors. A
restricted stock unit represents the right to receive one share of Common Stock subject to satisfaction of the conditions set forth in
the applicable award agreement. Stock Awards shall be subject to the terms,
conditions and restrictions determined by the Board of Directors and set forth
in an award agreement. The terms may include restrictions concerning
transferability, repurchase by the Company and forfeiture of the shares issued
or awarded, deferral of the date for receipt of any shares and any other terms
determined by the Board of Directors. The Company may require any recipient of a
Stock Award to pay to the Company in cash or by check upon demand amounts
necessary to satisfy any federal, state or local tax withholding requirements.
If the recipient fails to pay the amount demanded, the Company or the Employer
may withhold that amount from other amounts payable to the purchaser, including
salary, subject to applicable law. With the consent of the Board of Directors, a
participant may satisfy this obligation, in whole or in part, by instructing the
Company to withhold some of the shares to be issued or by delivering to the
Company shares of Common Stock. The fair market value of Common Stock of the
Company withheld to satisfy withholding obligations shall be the closing price
of the Common Stock of the Company as reported on Nasdaq or such other reported
value of the Common Stock of the Company as shall be specified by the Board of
Directors, on the date the shares are withheld, or if such date is not a trading
day, then on the immediately preceding trading day. Upon the issuance of shares
under a Stock Award after March 1, 2017, the number of shares reserved for
issuance under the Plan shall be reduced by the number of shares issued plus any
shares withheld to satisfy tax withholding obligations.
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8.
Stock Appreciation
Rights
.
8.1
Grant
. Stock appreciation rights may be granted under the Plan by
the Board of Directors, subject to such rules, terms, and conditions as the
Board of Directors prescribes.
8.2
Exercise
.
8.2-1
General
. Each stock appreciation right shall entitle the holder, upon
exercise, to receive from the Company in exchange therefor an amount equal in
value to the excess of the fair market value on the date of exercise of one
share of Common Stock of the Company over its fair market value on the date of
grant or such higher amount as the Board of Directors shall determine (or, in
the case of a stock appreciation right granted in connection with an option, the
excess of the fair market value of one share of Common Stock of the Company over
the exercise price per share under the option to which the stock appreciation
right relates), multiplied by the number of shares covered by the stock
appreciation right or the option, or portion thereof, that is surrendered. No
stock appreciation right shall be exercisable at a time that the amount
determined under this subsection is negative. Payment by the Company upon
exercise of a stock appreciation right may be made in Common Stock valued at
fair market value, in cash, or partly in Common Stock and partly in cash, all as
determined by the Board of Directors.
8.2-2
Time of Exercise
. A stock appreciation right shall be exercisable only
at the time or times established by the Board of Directors. If a stock
appreciation right is granted in connection with an option, the following rules
shall apply: (i) the stock appreciation right shall be exercisable only to the
extent and on the same conditions that the related option could be exercised;
(ii) upon exercise of the stock appreciation right, the option or portion
thereof to which the stock appreciation right relates terminates; and (iii) upon
exercise of the option, the related stock appreciation right or portion thereof
terminates.
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8.2-3
Conditions
. The Board of Directors may impose any conditions upon the
exercise of a stock appreciation right or from time to time adopt rules
affecting the rights of holders of stock appreciation rights. These rules may
govern the right to exercise stock appreciation rights granted prior to adoption
or amendment of the rules as well as stock appreciation rights granted
thereafter.
8.2-4
Fair Market Value
. For purposes of this Section 8, the fair market
value of the Common Stock shall be determined using the methods set forth in
Section 6.1 -5(b).
8.2-5
Fractional Shares
. No fractional shares shall be issued upon exercise
of a stock appreciation right. In lieu thereof, cash may be paid in an amount
equal to the value of the fraction or, if the Board of Directors determines, the
number of shares may be rounded downward to the next whole share.
8.2-6
Nontransferability
. Each stock appreciation right granted in
connection with an Incentive Stock Option and, unless otherwise determined by
the Board of Directors, each other stock appreciation right granted by its terms
shall be nonassignable and nontransferable by the holder, either voluntarily or
by operation of law, except by will or by the laws of descent and distribution
of the state or country of the holders domicile at the time of death, and each
stock appreciation right by its terms shall be exercisable during the holders
lifetime only by the holder; provided, however, that a stock appreciation right
not granted in connection with an Incentive Stock Option shall also be
transferable pursuant to a qualified domestic relations order as defined under
the Code or Title I of the Employee Retirement Income Security Act.
8.2-7
Taxes
. Each participant who has exercised a stock appreciation right
shall, upon notification of the amount due, pay to the Company in cash amounts
necessary to satisfy any federal, state and local tax withholding requirements.
If the participant fails to pay the amount demanded, the Company may withhold
that amount from other amounts payable by the Company to the participant
including salary, subject to applicable law. With the consent of the Board of
Directors a participant may satisfy this obligation, in whole or in part, by
having the Company withhold from shares to be issued upon the exercise that
number of shares that would satisfy the withholding amount due or by delivering
Common Stock to the Company to satisfy the withholding amount. The fair market
value of Common Stock of the Company withheld or delivered to satisfy
withholding requirements shall be the closing price of the Common Stock of the
Company as reported on Nasdaq or such other reported value of the Common Stock
of the Company as shall be specified by the Board of Directors, on the date
the stock appreciation right is exercised, or if such date is not a trading day,
then on the immediately preceding trading day. Upon the exercise of a stock
appreciation right for shares, the number of shares reserved for issuance under
the Plan shall be reduced by the number of shares covered by the stock
appreciation right. Cash payments of stock appreciation rights shall not reduce
the number of Shares reserved for issuance under the Plan.
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9.
Performance-Based
Awards
. The Board of Directors may grant awards intended to qualify as
qualified performance-based compensation under Section 162(m) of the Code and
the regulations thereunder (Performance-Based Awards). Performance-Based
Awards shall be denominated at the time of grant either in Common Stock (Stock
Performance Awards) or in dollar amounts (Dollar Performance Awards). Payment
under a Stock Performance Award or a Dollar Performance Award shall be made, at
the discretion of the Board of Directors, in Common Stock (Performance
Shares), or in cash or in any combination thereof. Performance-Based Awards
shall be subject to the following terms and conditions:
9.1
Award Period
. The Board of Directors shall determine the period of
time for which a Performance-Based Award is made (the Award Period).
9.2
Performance Goals and Payment
. The Board of Directors shall
establish in writing objectives (Performance Goals) that must be met by the
Company or any subsidiary, division or other unit of the Company (Business
Unit) during the Award Period as a condition to payment being made under the
Performance-Based Award. The Performance Goals for each award shall be one or
more targeted levels of performance with respect to one or more of the following
objective measures with respect to the Company or any Business Unit: earnings,
earnings per share, stock price increase, total shareholder return (stock price
increase plus dividends), return on equity, return on assets, return on capital,
economic value added, revenues, operating income, inventories, inventory turns,
cash flows, earnings before interest and taxes (EBIT), earnings before interest,
taxes, depreciation and amortization (EBITDA) or any of the foregoing before the
effect of acquisitions, divestitures, accounting changes, and restructuring and
special charges (determined according to criteria established by the Board of
Directors). The Board of Directors shall also establish the number of
Performance Shares or the amount of cash payment to be made under a
Performance-Based Award if the Performance Goals are met or exceeded, including
the fixing of a maximum payment (subject to Section 9.4) . The Board of
Directors may establish other restrictions to payment under a Performance-Based
Award, such as a continued employment requirement, in addition to satisfaction
of the Performance Goals. Some or all of the Performance Shares may be issued at
the time of the award as restricted shares subject to forfeiture in whole or in
part if Performance Goals or, if applicable, other restrictions are not
satisfied.
9.3
Computation of Payment
.
During or after an Award Period,
the performance of the Company or Business Unit, as applicable, during the
period shall be measured against the Performance Goals. If the Performance
Goals are not met, no payment shall be made under a Performance-Based Award. If
the Performance Goals are met or exceeded, the Board of Directors shall certify
that fact in writing and certify the number of Performance Shares earned or the
amount of cash payment to be made under the terms of the Performance-Based
Award.
12
9.4
Maximum Awards
. No participant may receive in any fiscal year
Stock Performance Awards under which the aggregate amount payable under the
Awards exceeds the equivalent of 500,000 shares of Common Stock or Dollar
Performance Awards under which the aggregate amount payable under the Awards
exceeds $5,000,000.
9.5
Tax Withholding
. Each participant who has received Performance
Shares shall, upon notification of the amount due, pay to the Company in cash or
by check amounts necessary to satisfy any applicable federal, state and local
tax withholding requirements. If the participant fails to pay the amount
demanded, the Company or the Employer may withhold that amount from other
amounts payable to the participant, including salary, subject to applicable law.
With the consent of the Board of Directors, a participant may satisfy this
obligation, in whole or in part, by instructing the Company to withhold from any
shares to be issued or by delivering to the Company other shares of Common
Stock.
9.6
Reduction of Reserved Shares
. The payment of a Performance-Based
Award in cash shall not reduce the number of shares of Common Stock reserved for
issuance under the Plan. Upon the issuance of shares under a Performance-Based
Award after March 1, 2017, the number of shares of Common Stock reserved for
issuance under the Plan shall be reduced by the number of shares issued plus any
shares withheld to satisfy withholding obligations.
10.
Changes in Capital
Structure
.
10.1
Stock Splits, Stock Dividends
. If the outstanding Common Stock of
the Company is hereafter increased or decreased or changed into or exchanged for
a different number or kind of shares or other securities of the Company by
reason of any stock split, combination of shares, dividend payable in shares,
recapitalization or reclassification, appropriate adjustment shall be made in
the number and kind of shares available for grants under the Plan and in all
other share amounts set forth in the Plan. In addition, appropriate adjustment
shall be made in the number and kind of shares subject to Stock Awards as to
which shares have not been issued and as to which outstanding options and stock
appreciation rights, or portions thereof then unexercised, shall be exercisable,
so that the holders proportionate interest before and after the occurrence of
the event is maintained. Notwithstanding the foregoing, the Board of Directors
shall have no obligation to effect any adjustment that would or might result in
the issuance of fractional shares, and any fractional shares resulting from any
adjustment may be disregarded or provided for in any manner determined by the
Board of Directors. Any adjustments made by the Board of Directors pursuant to
this Section 10.1 shall be conclusive.
13
10.2
Corporate Transactions.
Unless otherwise provided at the time of
grant, if during the term of an option, stock appreciation right or restricted
stock unit award, there shall occur a merger, consolidation or plan of exchange
involving the Company pursuant to which outstanding shares are converted into
cash or other stock, securities or property, or a sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, the assets of the Company, then the Board of Directors, may,
in its sole discretion, provide that outstanding awards under the Plan shall be
treated in accordance with any of the following alternatives:
10.2-1 The option, stock appreciation right, restricted stock unit award shall be
converted into an option, stock appreciation right or restricted stock unit
award to acquire stock of the surviving or acquiring corporation in the
applicable transaction for a total purchase price equal to the total price
applicable to the unexercised portion of the option, stock appreciation right or
restricted stock unit award, and with the amount and type of shares subject
thereto and exercise price per share thereof to be conclusively determined by
the Board of Directors, taking into account the relative values of the companies
involved in the applicable transaction and the exchange rate, if any, used in
determining shares of the surviving corporation to be held by holders of Shares
following the applicable transaction, and disregarding fractional shares;
10.2-2 The option, stock appreciate right or restricted stock unit shall be
cancelled effective immediately prior to the consummation of the transaction,
and, in full consideration of the cancellation, pay at such time or at other
times as determined by the Board of Directors to the holder thereof an amount in
cash, for each share subject to the award, equal to the value, as determined by
the Board of Directors, of the award, provided that with respect to any
outstanding option such value shall be equal to the excess of (A) the value, as
determined by the Board of Directors, of the property (including cash) received
by the holder of a share of stock as a result of the transaction over (B) the
exercise price of such option; or
10.2-3 All unissued shares subject to restricted stock unit awards shall be issued
immediately prior to the consummation of such transaction, all options and stock
appreciation rights will become exercisable for 100 percent of the shares
subject to the option or stock appreciation right effective as of the
consummation of such transaction, and the Board of Directors shall approve some
arrangement by which holders of options and stock appreciation rights shall have
a reasonable opportunity to exercise all such options and stock appreciation
rights effective as of the consummation of such transaction or otherwise realize
the value of these awards, as determined by the Board of Directors. Any option
or stock appreciation right that is not exercised in accordance with procedures
approved by the Board of Directors shall terminate.
10.3
Rights Issued by Another Corporation
. The Board of Directors may
also grant options, stock appreciation rights, Stock Awards and
Performance-Based Awards under the Plan with terms, conditions and provisions
that vary from those specified in the Plan, provided that any such awards are granted in
substitution for, or in connection with the assumption of, existing options,
stock appreciation rights, Stock Awards and Performance-Based Awards or other
awards granted, awarded or issued by another corporation and assumed or
otherwise agreed to be provided for by the Company pursuant to or by reason of a
merger, combination consolidation, acquisition or similar corporate transaction.
In the case of any award under this Section 10.3, shares issued or issuable in
connection with the substitute award shall not be counted against the number of
shares reserved under the Plan, but shall be governed by the Plan by virtue of
the Companys assumption of the plan or arrangement of the acquired company or
business.
14
11.
Amendment of the Plan
.
The Board of Directors may at any time modify or amend the Plan in any respect,
except that shareholder approval shall be required to (i) increase the number of
shares reserved for the Plan, (ii) increase the maximum number of shares that
can be issued as Full Value Awards and (iii) amend Section 6.1 -6 of the Plan.
Except as provided in Section 10, no change in an award already granted shall be
made without the written consent of the holder of the award if the change would
adversely affect the holder.
12.
Approvals
. The
Companys obligations under the Plan are subject to the approval of state and
federal authorities or agencies with jurisdiction in the matter. The Company
will use its best efforts to take steps required by state or federal law or
applicable regulations, including rules and regulations of the Securities and
Exchange Commission and any stock exchange on which the Companys shares may be
listed, in connection with the grants under the Plan. The foregoing
notwithstanding, the Company shall not be obligated to issue or deliver Common
Stock under the Plan if issuance or delivery would violate state or federal
securities laws.
13.
Employment and Service
Rights
. Nothing in the Plan or any award pursuant to the Plan shall (i)
confer upon any employee any right to be continued in the employment of an
Employer or interfere in any way with the Employers right to terminate the
employees employment at will at any time, for any reason, with or without
cause, or to decrease the employees compensation or benefits, or (ii) confer
upon any person engaged by an Employer or the Company any right to be retained
or employed by the Employer or the Company or to the continuation, extension,
renewal or modification of any compensation, contract or arrangement with or by
the Employer or the Company.
14.
Rights as a
Shareholder
. The recipient of any award under the Plan shall have no rights
as a shareholder with respect to any shares of Common Stock until the recipient
becomes the holder of record of those shares. Except as otherwise expressly
provided in the Plan, no adjustment shall be made for dividends or other rights
for which the record date occurs before the date the recipient becomes the
holder of record.
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