UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________________
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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¨ | Preliminary Proxy Statement |
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ý | Definitive Proxy Statement |
¨ | Definitive Additional Materials |
¨ | Soliciting Material Pursuant to §240.14a-12 |
Post Holdings, Inc.
(Name of registrant as specified in its charter)
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December 10, 2015
Dear fellow shareholders:
You are cordially invited to attend our annual meeting of shareholders on Thursday, January 28, 2016. We will hold the meeting at 9:00 a.m., Central Time, at the Drury Inn & Suites Brentwood, 8700 Eager Road, St. Louis, Missouri 63144.
In connection with the annual meeting, we have prepared a notice of the meeting, a proxy statement, a proxy card and our annual report for the fiscal year ended September 30, 2015, which contain detailed information about us and our operating and financial performance. On or about December 10, 2015, we began mailing to our shareholders these materials or a Notice of Availability of Proxy Materials containing instructions on how to access these materials online.
Whether or not you plan to attend the meeting, we encourage you to vote your shares. You may vote by telephone or on the Internet, or if you received or requested to receive printed proxy materials, complete, sign and return the enclosed proxy card in the postage-paid envelope enclosed with the proxy materials. The prompt execution of your proxy will be greatly appreciated.
Sincerely, | |||
 |  | ||
William P. Stiritz | Robert V. Vitale | ||
Executive Chairman | President and Chief Executive Officer | ||
Post Holdings, Inc.
2503 S. Hanley Road
St. Louis, Missouri 63144
December 10, 2015
Notice of Annual Meeting of Shareholders
Dear shareholders:
The 2016 annual meeting of shareholders of Post Holdings, Inc. will be held at 9:00 a.m., Central Time, on Thursday, January 28, 2016, at the Drury Inn & Suites Brentwood, 8700 Eager Road, St. Louis, Missouri 63144. At the annual meeting, shareholders will consider the following matters:
1. | the election of two nominees for director; |
2. | the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm; |
3. | an advisory vote on executive compensation; |
4. | the approval of the Post Holdings, Inc. 2016 Long-Term Incentive Plan; and |
5. | any other business properly introduced at the annual meeting. |
The close of business on December 1, 2015 has been fixed as the record date for the determination of shareholders entitled to receive notice of and to vote at the annual meeting or any adjournment or postponement thereof. This notice of the meeting and the proxy statement and proxy card are first being sent or made available to shareholders on or about December 10, 2015.
We are pleased to take advantage of Securities and Exchange Commission rules that allow us to furnish these proxy materials and our Annual Report to Shareholders on the Internet. This means that most shareholders will not receive paper copies of our proxy materials and Annual Report. We will instead send shareholders a Notice Regarding the Availability of Proxy Materials (the “Notice”) with instructions for accessing the proxy materials and Annual Report on the Internet. We believe that posting these materials on the Internet enables us to provide shareholders with the information that they need more quickly, while lowering our costs of printing and delivery and reducing the environmental impact of our 2016 Annual Meeting.
Your vote is important. Please note that if you hold your shares through a broker, your broker cannot vote your shares on any matter except ratification of the appointment of our independent registered public accounting firm in the absence of your specific instructions as to how to vote. In order for your vote to be counted, please make sure that you submit your vote to your broker.
By order of the Board of Directors,
Diedre J. Gray
Senior Vice President, General Counsel
and Chief Administrative Officer, Secretary
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON JANUARY 28, 2016
This notice, the proxy statement attached to this notice, and our annual report to shareholders for the fiscal year ended September 30, 2015 are available at www.edocumentview.com/Post and on our website at www.postholdings.com.
PROXY STATEMENT
Table of Contents
Page | |
PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in this Proxy Statement. This summary is not a complete description, and you should read the entire Proxy Statement carefully before voting.
ANNUAL MEETING
Time and Date: | 9:00 a.m. central time on Thursday, January 28, 2016 | |
Place: | Drury Inn & Suites Brentwood 8700 Eager Road St. Louis, MO 63144 | |
Record Date: | December 1, 2015 | |
Voting: | Shareholders on the record date are entitled to one vote per share on each matter to be voted upon at the Annual Meeting. | |
VOTING ITEMS
Item | Board Recommendation | Page Reference | ||||
Item 1 | Election of Two Directors | For all nominees | 9 | |||
Item 2 | Ratification of the Selection of PricewaterhouseCoopers LLP as Independent Auditors for 2016 | For | 12 | |||
Item 3 | Advisory Vote on Executive Compensation | For | 42 | |||
Item 4 | Approval of the Post Holdings, Inc. 2016 Long-Term Incentive Plan | For | 43 | |||
Transact any other business that properly comes before the meeting. | ||||||
BOARD OF DIRECTORS
The following table provides summary information about each director nominee as of November 16, 2015. At our Annual Meeting, shareholders will be asked to elect the two director nominees in Class I listed in the table below.
Class I - Directors whose terms expire at the 2016 Annual Meeting of Shareholders and who are nominees for terms expiring at the 2019 Annual Meeting
Name | Director Since | Occupation and Experience | Independent | Board Committees(1) | ||||||||
AC | CGCC | EC | SFOC | |||||||||
Gregory L. Curl | 2012 | President of Temasek Holdings | Yes | X | X | |||||||
David P. Skarie | 2012 | Retired executive | Yes | X | X | |||||||
(1) | AC - Audit Committee; CGCC - Corporate Governance & Compensation Committee; EC - Executive Committee; SFOC - Strategy & Financial Oversight |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
As a matter of good governance, we are asking our shareholders to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2016.
EXECUTIVE COMPENSATION
Our board is asking that our shareholders vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement. This vote is not intended to address any specific item of our compensation program, but rather addresses our overall approach to the compensation of our named executive officers. Please read “Compensation Discussion and Analysis” beginning on page 14 and the executive compensation tables beginning on page 32 for additional details about our executive compensation programs.
2016 LONG-TERM INCENTIVE PLAN
We are seeking shareholder approval of our 2016 Long-Term Incentive Plan which will increase the number of shares authorized to fund awards under our long-term incentive compensation programs and will further enhance our corporate governance structure with respect to compensation. Our Board recommends a FOR vote because we believe that the ability to make equity awards to our executives, employees and directors is important to align their interests with that of our shareholders and to better attract and retain our employees.
PROXY AND VOTING INFORMATION
Why am I receiving these materials?
Our board of directors is soliciting proxies for the 2016 annual meeting of shareholders. This proxy statement, the form of proxy and the Company’s 2015 Annual Report to Shareholders will be available at www.edocumentview.com/Post beginning on December 10, 2015. On or about December 10, 2015, a Notice Regarding the Availability of Proxy Materials (the “Notice”) will be mailed to shareholders of record at the close of business on December 1, 2015. On the record date, there were 62,082,317 shares of our common stock outstanding.
How can I receive printed proxy materials?
We have elected to take advantage of the U.S. Securities and Exchange Commission (the “SEC”) rule that allows us to furnish proxy materials to you online. We believe electronic delivery will expedite shareholders’ receipt of materials, while lowering costs and reducing the environmental impact of our Annual Meeting by reducing printing and mailing of full sets of materials. On or about December 10, 2015, we mailed to many of our shareholders a Notice containing instructions on how to access our proxy statement and annual report online. If you received a Notice by mail, you will not receive a printed copy of the proxy materials unless you specifically request one. However, the Notice contains instructions on how to receive a paper copy of the materials.
Where and when is the annual meeting?
We will hold the annual meeting on Thursday, January 28, 2016, at 9:00 a.m., Central Time, at the Drury Inn & Suites Brentwood, 8700 Eager Road, St. Louis, Missouri 63144.
What am I being asked to vote on at the meeting?
We are asking our shareholders to consider the following items:
1. | the election of the two nominees for director named in this proxy statement; |
2. | the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm; |
3. | an advisory vote on executive compensation; |
4. | the approval of the Post Holdings, Inc. 2016 Long-Term Incentive Plan; and |
5. | any other business properly introduced at the annual meeting. |
How many votes do I have?
You have one vote for each share of our common stock that you owned at the close of business on the record date. These shares include:
• | shares registered directly in your name with our transfer agent, for which you are considered the “shareholder of record;” |
• | shares held for you as the beneficial owner through a broker, bank or other nominee in “street name;” and |
• | shares credited to your account in our savings investment plan. |
What is the difference between holding shares as a “shareholder of record” and as a “beneficial owner”?
If your shares are registered directly in your name with our transfer agent, you are considered the “shareholder of record” with respect to those shares. We have sent these proxy materials directly to you.
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of the shares held in street name. Your broker, bank or other nominee who is considered the shareholder of record with respect to those shares has forwarded these proxy materials to you. As the beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote your shares by using the voting instruction card included in the mailing or by following their instructions for voting by telephone or the Internet.
How can I vote my shares?
You can vote by proxy or in person.
How do I vote by proxy?
Pursuant to rules adopted by the SEC, we are providing you access to our proxy materials over the Internet. Accordingly, we are sending a Notice to our shareholders of record. If you received a Notice by mail, you will not receive a printed copy of the proxy materials, including a printed proxy card, unless you request to receive these materials. The Notice will instruct you
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as to how you may access and review the proxy materials on the Internet on the website referred to in the Notice. The Notice also instructs you as to how you may access your proxy card to vote on the Internet.
If you are a shareholder of record, you may vote by telephone, Internet or mail. Our telephone and Internet voting procedures are designed to authenticate shareholders by using individual control numbers that can be found on the proxy card.
Registered Shares:
• | Voting by telephone: You can vote by calling 800-652-VOTE (8683) and following the instructions provided. Telephone voting is available 24 hours a day, 7 days a week, until 1:00 a.m., Central Time, on Thursday, January 28, 2016. |
• | Voting by Internet: You can vote via the Internet by accessing www.envisionreports.com/POST and following the instructions provided. Internet voting is available 24 hours a day, 7 days a week, until 1:00 a.m., Central Time, on Thursday, January 28, 2016. |
• | Voting by mail: If you choose to vote by mail (if you request printed copies of the proxy materials by mail), simply mark your proxy card, date and sign it, and return it in the postage-paid envelope provided. |
Street Name Shares: If you hold shares through a bank, broker or other institution, you will receive material from that firm explaining how to vote.
If you submit your proxy using any of these methods, Jeff A. Zadoks or Diedre J. Gray, who have been appointed by our board of directors as the proxies for our shareholders for this meeting, will vote your shares in the manner you indicate. You may specify whether your shares should be voted for all, some, or none of the nominees for director and for or against any other proposals properly introduced at the annual meeting. If you vote by telephone or Internet and choose to vote with the recommendation of our board of directors, or if you vote by mail, sign your proxy card, and do not indicate specific choices, your shares will be voted “FOR” the election of the two nominees for director; “FOR” ratification of the appointment of our independent public accounting firm; and “FOR” the proposal regarding an advisory vote on executive compensation.
If any other matter is presented at the meeting, your proxy will authorize Jeff A. Zadoks or Diedre J. Gray to vote your shares in accordance with their best judgment. At the time this proxy statement was printed, we knew of no matters to be considered at the annual meeting other than those referenced in this proxy statement.
If you wish to give a proxy to someone other than Jeff A. Zadoks or Diedre J. Gray, you may strike out their names on the proxy card and write in the name of any other person, sign the proxy, and deliver it to the person whose name has been substituted.
How can I revoke my proxy?
You may revoke a proxy in any one of the following four ways:
• | submit a valid, later-dated proxy; |
• | vote again electronically after your original vote; |
• | notify our corporate secretary in writing before the annual meeting that you have revoked your proxy; or |
• | vote in person at the annual meeting. |
How do I vote in person?
If you are a shareholder of record, you will need to bring appropriate identification and you may cast your vote in person. If you hold shares in street name, then you will need to bring an account statement or letter from your broker, bank or other nominee indicating that you were the holder of your shares as of December 1, 2015.
If I hold shares in street name, how can I vote my shares?
You can submit voting instructions to your broker, bank or other nominee. In most instances, you will be able to do this by telephone, over the Internet or by mail. Please refer to the materials you receive from your broker, bank or other nominee.
How do I vote my shares in the savings investment plan?
If you are both a shareholder and a participant in our savings investment plan, you will receive a single proxy card that covers shares of our common stock credited to your plan account as well as shares of record registered in exactly the same name. Accordingly, your proxy card also serves as a voting instruction for the trustee of the plan. If your plan account is not carried in exactly the same name as your shares of record, you will receive separate proxy cards for individual and plan holdings. If you own shares through this plan and you do not return your proxy by 4:00 p.m., Central Time, on January 25, 2016, the trustee will vote your shares in the same proportion as the shares that are voted by the other participants in the plan.
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The trustee will also vote unallocated shares of our common stock held in the plan in direct proportion to the voting of allocated shares in the plan for which voting instructions have been received unless doing so would be inconsistent with the trustee’s duties.
Is my vote confidential?
Yes. Voting tabulations are confidential except in extremely limited circumstances. Such limited circumstances include contested solicitation of proxies, when disclosure is required by law, to defend a claim against us or to assert a claim by us, and when a shareholder’s written comments appear on a proxy or other voting material.
What “quorum” is required for the annual meeting?
In order to have a valid shareholder vote, a quorum must exist at the annual meeting. For us, a quorum exists when shareholders holding a majority of the outstanding shares entitled to vote at the meeting are present or represented at the meeting, provided that in no event shall a quorum consist of less than a majority of the outstanding shares entitled to vote.
What vote is required?
The affirmative vote of a majority of the shares present and entitled to vote at the meeting is required for a director nominee to be elected and for each of the items to be presented to the shareholders for approval.
How are the voting results determined?
A proxy card marked “withhold” for a nominee will not be voted for that nominee. A proxy card marked “abstain” on a matter will be considered to be represented at the annual meeting, but not voted for these purposes. If a broker indicates on its proxy that it does not have authority to vote certain shares held in “street name,” the shares not voted are referred to as “broker non-votes.” Broker non-votes occur when brokers do not have discretionary voting authority to vote certain shares held in “street name” on particular proposals under the rules of the New York Stock Exchange (“NYSE”), and the “beneficial owner” of those shares has not instructed the broker to vote on those proposals. If you are a beneficial owner, your broker, bank or other nominee is permitted to vote your shares only with regard to ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm, even if the holder does not receive voting instructions from you. Shares registered in the name of a broker, bank or other nominee, for which proxies are voted on some, but not all matters, will be considered to be represented at the annual meeting for purposes of determining a quorum and voted only as to those matters marked on the proxy card.
Is any other business expected at the meeting?
The board of directors does not intend to present any business at the annual meeting other than the proposals described in this proxy statement. However, if any other matter properly comes before the annual meeting, including any shareholder proposal omitted from the proxy statement and form of proxy pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), your proxies will act on such matter in their discretion.
Where can I find the voting results?
We intend to announce preliminary voting results at the annual meeting. We will publish the final results in a Current Report on Form 8-K, which we expect to file on or before February 3, 2016. You can obtain a copy of the Form 8-K by logging on to our website at www.postholdings.com, by calling the SEC at 800-SEC-0330 for the location of the nearest public reference room, or through the EDGAR system at www.sec.gov. Information on our website does not constitute part of this proxy statement.
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CORPORATE GOVERNANCE
Overview
We are dedicated to creating long-term shareholder value. It is our policy to conduct our business with integrity and an unrelenting passion for providing value to our customers and consumers. All of our corporate governance materials, including our corporate governance guidelines, our global standards of business conduct, our director code of ethics and board committee charters, are published under the Corporate Governance section within the Investor Relations portion of our website at www.postholdings.com. Information on our website does not constitute part of this proxy statement. The board of directors regularly reviews these materials, Missouri law, the rules and listing standards of the NYSE and SEC rules and regulations, as well as best practices suggested by recognized governance authorities, and modifies our corporate governance materials as warranted.
Director Independence
Our board of directors follows the categorical independence standards based on the NYSE listing standards and the SEC rules and regulations as described in our corporate governance guidelines. The guidelines contain categorical standards our board uses to make its determination as to the materiality of the relationships of each of our directors. Our board has determined, in its judgment, that all of our non-employee directors are independent directors as defined in the NYSE listing standards and the SEC rules and regulations.
The independent members of the board of directors meet regularly without the presence of management. These sessions are normally held following or in conjunction with regular board meetings. The lead independent director, or the chairman of the committee then in session, acts as the presiding director during executive sessions. As the Chairman of our Corporate Governance and Compensation Committee, Mr. Robert Grote currently serves as our lead independent director.
Code of Ethics
Our global standards of business conduct, applicable to all corporate officers and employees, sets forth our expectations for the conduct of business by corporate officers and employees. Our directors have adopted, and are required to abide by, a director code of ethics. We intend to post amendments to or waivers from (to the extent applicable to one of our corporate officers or directors) these documents on our website.
Conflicts of Interest
Pursuant to our conflict of interest policy, global standards of business conduct and director code of ethics, each director and corporate officer has an obligation not to engage in any transaction that could be deemed a conflict of interest. Our directors may not engage in any transaction that could impact their independence as a member of the board of directors.
The Corporate Governance and Compensation Committee is responsible for approving and ratifying transactions in which one or more directors may have an interest. The Committee reviews the material facts of all interested party transactions that require the Committee’s approval and either approves or disapproves of the entry into the interested party transaction. In the event management, in the normal course of reviewing our records, determines an interested party transaction exists which was not approved by the Committee, management will present the transaction to the Committee for consideration.
The Committee has adopted standing pre-approval of certain transactions in which a corporate officer or director may have an interest including (i) transactions involving competitive bids, (ii) certain charitable contributions, and (iii) certain banking related services. The Committee believes these transactions are immaterial to us and to any director or corporate officer. No director may participate in the approval of an interested party transaction for which he is a related party. If an interested party transaction will be ongoing, the Committee may establish guidelines for our management to follow in its ongoing dealings with the related party.
Structure of the Board of Directors
The board of directors is currently comprised of eight members. Our articles of incorporation and bylaws provide for a board of directors that is divided into three classes as equal in size as possible. The classes have three-year terms, and the term of one class expires each year in rotation at that year’s annual meeting. The size of the board of directors can be changed by a vote of its members, and in the event of any increase or decrease in the number of directors, the directors in each class shall be adjusted as necessary so that all classes shall be as equal as reasonably possible. However, no reduction in the number of directors shall affect the term of office of any incumbent director. Vacancies on the board of directors may be filled by a majority vote of the remaining directors, and the board of directors determines the class to which any director shall be assigned. A director elected to fill a vacancy, or a new directorship created by an increase in the size of the board of directors, serves until
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the next meeting of shareholders at which directors in his or her assigned class are elected, at which time he or she may stand for election if nominated by the full board.
Board Meetings and Committees
The board of directors has the following four committees: Audit, Corporate Governance and Compensation, Executive and Strategy and Financial Oversight. The table below contains information concerning the membership of each of the committees and the number of times the board of directors and each committee met during fiscal 2015. During fiscal 2015, each director attended at least 75% of the total number of meetings of the board of directors and the committee(s) on which he serves, except Mr. Kemper who was appointed to the board of directors effective September 1, 2015. Because our annual meeting is purely perfunctory in nature, our corporate governance guidelines do not require the directors to attend the annual meeting of shareholders, and accordingly, only two directors attended the 2015 annual meeting of shareholders. As of November 17, 2015, the Board and committee members were as follows:
Director | Board | Audit | Corporate Governance and Compensation | Executive | Strategy and Financial Oversight | |||||
William P. Stiritz | Δ | Δ | Δ | |||||||
Robert V. Vitale | • | • | • | |||||||
Jay W. Brown | • | • | • | |||||||
Edwin H. Callison | • | Δ | • | |||||||
Gregory L. Curl | • | • | • | |||||||
Robert E. Grote | • | Δ | ||||||||
David W. Kemper | • | • | ||||||||
David P. Skarie | • | • | • | |||||||
Meetings held in fiscal 2015 | 8 | 4 | 8 | 0 | 4 | |||||
Δ | – | Chair | • | – | Member |
Audit Committee
The Audit Committee’s primary responsibilities are to monitor and oversee (a) the quality and integrity of our financial statements and financial reporting, (b) the independence and qualifications of our independent registered public accounting firm, (c) the performance of our independent audit, (d) our systems of internal accounting, financial controls and disclosure controls, and (e) compliance with legal and regulatory requirements, codes of conduct and ethics programs.
The board of directors has determined, in its judgment, that the Audit Committee is comprised solely of independent directors as defined in the NYSE listing standards and Rule 10A-3 of the Exchange Act. The committee operates under a written charter, adopted by the board of directors, which is available under the Corporate Governance section within the Investor Relations portion of our website at www.postholdings.com. The board of directors has also determined, in its judgment, that Mr. Callison, the chair of our Audit Committee, qualifies as an “audit committee financial expert” as defined by SEC rules and that each member of the Audit Committee is “financially literate” as defined by NYSE rules. Our corporate governance guidelines do not currently restrict the number of audit committees of public companies on which members of our Audit Committee may serve, however, the board of directors has determined that none of the members of the Audit Committee currently serves on the audit committees of more than three public companies. The report of the Audit Committee can be found on page 13 of this proxy statement.
Corporate Governance and Compensation Committee
The Corporate Governance and Compensation Committee (a) determines the compensation level of the corporate officers, (b) reviews management’s Compensation Discussion and Analysis relating to our executive compensation programs and approves the inclusion of the same in our proxy statement and/or annual report, (c) issues a report confirming the committee’s review and approval of the Compensation Discussion and Analysis for inclusion in our proxy statement and/or annual report, (d) administers and makes recommendations with respect to incentive compensation plans and stock-based plans and (e) reviews and oversees risks arising from or in connection with our compensation policies and programs for all employees. The Corporate Governance and Compensation Committee also reviews and revises, as necessary, our corporate governance guidelines.
The board of directors has determined, in its judgment, that the Corporate Governance and Compensation Committee is comprised solely of independent directors as defined in the NYSE listing standards. The committee operates under a written charter, adopted by the board of directors, which is available under the Corporate Governance section within the Investor Relations portion of our website at www.postholdings.com. The charter was revised in June 2013 to make provision for new
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SEC and NYSE rules affecting compensation committees. The charter now provides for assessing potential conflicts of interest of compensation consultants and other advisers. The report of the Corporate Governance and Compensation Committee can be found on page 41 of this proxy statement.
Executive Committee
The Executive Committee may exercise all board authority in the intervals between board meetings, to the extent such authority is in compliance with our corporate governance guidelines and does not infringe upon the duties and responsibilities of other board committees.
Strategy and Financial Oversight Committee
The Strategy and Financial Oversight Committee periodically reviews financial and strategic matters with management in order to assist the board of directors in exercising its responsibilities regarding the financial condition, objectives and strategy of the Company.
Nomination Process for Election of Directors
The Corporate Governance and Compensation Committee has responsibility for assessing the need for new directors to address specific requirements or to fill a vacancy. The committee may, from time to time, initiate a search for a new candidate seeking input from our chairman and from other directors. The committee may retain an executive search firm to identify potential candidates. All candidates must meet the requirements specified in our corporate governance guidelines. Candidates who meet those requirements and otherwise qualify for membership on our board of directors are identified, and the committee initiates contact with preferred candidates. The committee regularly reports to the board of directors on the progress of the committee’s efforts. The committee meets to consider and approve final candidates who are then presented to the board of directors for consideration and approval. Our chairman or the chairman of the Corporate Governance and Compensation Committee may extend an invitation to join the board of directors.
The committee relies primarily on recommendations from management and members of the board of directors to identify director nominee candidates. However, the committee will consider timely written suggestions from shareholders. Such suggestions and the nominee’s consent to being nominated, together with appropriate biographical information (including principal occupation for the previous five years, business and residential addresses, and educational background) and other relevant information as outlined in our bylaws, should be submitted in writing to our corporate secretary. Shareholders wishing to suggest a candidate for director nomination for the 2017 annual meeting should mail their suggestions to Post Holdings, Inc., 2503 S. Hanley Road, St. Louis, Missouri 63144, Attn: Corporate Secretary. Suggestions must be received by the corporate secretary no earlier than September 30, 2016 and no later than October 30, 2016.
Role of the Board in Risk Oversight
The board of directors is responsible for the oversight of risk, while management is responsible for the day-to-day management of risk. The board of directors, directly and through its committees, carries out its oversight role by regularly reviewing and discussing with management the risks inherent in the operation of our business and applicable risk mitigation efforts. Management meets regularly to discuss our business strategies, challenges, risks and opportunities and reviews those items with the board of directors at regularly scheduled meetings.
We do not believe that our compensation policies and practices encourage excessive and unnecessary risk-taking. The design of our compensation policies and practices encourages employees to remain focused on both short- and long-term financial and operational goals. For example, cash bonus plans measure performance on an annual basis but are based on a wide variety of factors and, while recommended by the Chief Executive Officer, are subject to the Corporate Governance and Compensation Committee’s ultimate judgment and discretion. In addition, equity awards typically vest over a number of years, which we believe encourages employees to focus on sustained stock price appreciation over an extended period of time instead of on short-term financial results.
Board Leadership Structure
Our current board leadership structure consists of:
• | Separate Chairman of the Board and Chief Executive Officer roles; |
• | An independent Lead Director; |
• | All non-management directors except the Executive Chairman and Chief Executive Officer; |
• | Independent Audit and Corporate Governance and Compensation Committees; and |
• | Governance practices that promote independent leadership and oversight. |
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Separate Chairman and CEO
We do not have a formal policy with respect to separation of the offices of Chairman of the Board and Chief Executive Officer, and the board of directors believes that it should maintain flexibility to select our Chairman and board leadership structure from time to time. William P. Stiritz serves as Executive Chairman and Robert V. Vitale serves as our Chief Executive Officer. Both Mr. Stiritz and Mr. Vitale are also members of the board. The board believes that this leadership structure, which separates the Chairman and Chief Executive Officer roles, is optimal at this time because it allows Mr. Vitale to focus on operating and managing our company, while Mr. Stiritz can focus on the strategic direction of the Company. In addition, an independent director serves as lead director. As described below, we believe our governance practices ensure that skilled and experienced independent directors provide independent leadership.
When determining the leadership structure that will allow the board of directors to effectively carry out its responsibilities and best represent our shareholders’ interests, the board will consider various factors, including our specific business needs, our operating and financial performance, industry conditions, the economic and regulatory environment, board and committee annual self-evaluations, advantages and disadvantages of alternative leadership structures and our corporate governance practices.
Lead Director
Pursuant to our corporate governance guidelines, the Chairman of the Corporate Governance and Compensation Committee, currently Robert E. Grote, acts in the role of lead director. The lead director’s duties are described in our corporate governance guidelines and include: (i) chairing the meetings of the independent directors when the Executive Chairman is not present; (ii) working with the Chief Executive Officer to develop the board and committee agendas and approve the final agendas; (iii) coordinating, developing the agenda for and chairing executive sessions of the board’s independent directors; and (iv) working in conjunction with the Corporate Governance and Compensation Committee to identify for appointment the members of the various board committees.
In addition to the lead director, the board has a majority of independent directors. The Audit Committee and Corporate Governance and Compensation Committees are composed solely of independent directors. Consequently, independent directors directly oversee critical matters and appropriately monitor the Executive Chairman and the Chief Executive Officer. Our independent directors have the opportunity to meet in executive session at the conclusion of each of our board of director meetings.
Director Evaluations
On an annual basis, the Corporate Governance and Compensation Committee is expected to conduct an evaluation of the board of directors, the functioning of the committees and each individual member of the board. In addition to this evaluation, and as a part of this process, the board and each committee conducts a self-assessment. The Corporate Governance and Compensation Committee reviews the results of these self-assessments, and shares the same with the board and each committee, as appropriate, and makes any advisable recommendations based on this feedback.
Policy on Director Diversity
While the Corporate Governance and Compensation Committee does not have a written policy regarding diversity in identifying new director candidates, the committee takes diversity into account in looking for the best available candidates to serve on the board of directors. The committee looks to establish diversity on the board of directors through a number of demographics, experience (including operational experience), skills and viewpoints, all with a view to identify candidates who can assist the board with its decision making.
Communication with the Board
Shareholders and other parties interested in communicating directly with an individual director or with the non-management directors as a group may do so by writing to the individual director or group, c/o Post Holdings, Inc., 2503 S. Hanley Road, St. Louis, Missouri 63144, Attn: Corporate Secretary. The board of directors has directed our corporate secretary to forward shareholder communications to our chairman and any other director to whom the communications are directed. In order to facilitate an efficient and reliable means for directors to receive all legitimate communications directed to them regarding our governance or operations, our corporate secretary will use her discretion to refrain from forwarding the following: sales literature; defamatory material regarding us and/or our directors; incoherent or inflammatory correspondence, particularly when such correspondence is repetitive or was addressed previously in some manner; and other correspondence unrelated to the board of director’s corporate governance and oversight responsibilities.
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ELECTION OF DIRECTORS
(Proxy Item No. 1)
The terms of two current directors (Messrs. Curl and Skarie) will expire at the 2016 annual meeting. Our board of directors has nominated Messrs. Curl and Skarie for election for a three-year term that will expire in 2019. The board of directors is not aware that either of these nominees will be unwilling or unable to serve as a director. Each nominee has consented to be named in the proxy statement and to serve if elected. If, however, a nominee is unavailable for election, your proxy authorizes us to vote for a replacement nominee if the board of directors names one. As an alternative, the board of directors may reduce the number of directors to be elected at the meeting. Proxies may not be voted for a greater number of persons than the nominees presented.
Each nominee is currently a director. Each of these directors was elected to the board on February 3, 2012, immediately after the separation from Ralcorp Holdings, Inc. (“Ralcorp”) was completed.
The persons named on the proxy card intend to vote the proxy representing your shares for the election of Messrs. Curl and Skarie, unless you indicate on the proxy card that the vote should be withheld or you indicate contrary directions. If you deliver the proxy card without giving any direction, the persons named on the proxy card will vote the proxy representing your shares FOR the election of the nominee named on the proxy card.
If a nominee is unavailable to serve as a director, your proxies may vote for another nominee proposed by the board of directors, or the board may reduce the number of directors to be elected at the annual meeting.
The board of directors recommends a vote “FOR” these nominees.
Information about the Current Directors and Nominees for Election to the Board of Directors
Board Composition
We believe that our directors should possess the highest personal and professional integrity and values and be committed to representing the long-term interests of our stakeholders. We further believe that the backgrounds and qualifications of our directors, considered as a group, should provide a blend of business experience and competence, and professional and personal abilities, that will allow the board of directors to fulfill its responsibilities. The Corporate Governance and Compensation Committee works with the board to determine the appropriate mix of these backgrounds and qualifications that would establish and maintain a board with strong collective abilities.
To fulfill these objectives, the board of directors has determined that it is important to nominate directors with the skills and experiences set forth below, among others. The experiences, qualifications and skills that the board considered in each director’s re-nomination are included in their individual biographies.
• | Leadership Experience. We believe that directors with experience in significant leadership positions over an extended period generally possess strong abilities to motivate and manage others and to identify and develop leadership qualities in others. They also generally possess a practical understanding of organizations, processes, strategy, risk management and the methods to drive change and growth. |
• | Financial or Accounting Acumen. We believe that an understanding of finance and financial reporting processes enables our directors to evaluate and understand the impact of business decisions on our financial statements and capital structure. In addition, accurate financial reporting and robust auditing are critical to our ongoing success. |
• | Industry Experience. We seek directors with experience as executives, directors or in other leadership positions in industries relevant to our business, including consumer packaged goods, branded products, retail or consumer product manufacturing. |
• | Operational Experience. We believe that directors who are current or former executives with direct operational responsibilities bring valuable practical insight to helping develop, implement and assess our operating plan and business strategy. Operational experience includes experience in areas such as marketing, supply chain, sustainability and commodity management. |
• | Public Company Board Experience. Directors with experience as executives or directors of other publicly traded companies generally are well prepared to fulfill the board’s responsibilities of overseeing and providing insight and guidance to management, and help further our goals of greater transparency, accountability for management and the board, and protection of our shareholders’ interests. |
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In addition, when evaluating the suitability of individuals for nomination, the Corporate Governance and Compensation Committee considers other appropriate factors, including whether the individual satisfies applicable independence requirements.
The following information is furnished with respect to each nominee for election as a director and each continuing director. The ages of the directors are as of December 31, 2015.
NOMINEES FOR ELECTION
GREGORY L. CURL has served as a member of the board of directors since February 2012. Mr. Curl has been president of Temasek Holdings, an investment company owned by the Singapore government, since September 2010, following a banking career of over 35 years. From 1997 until January 2010, he served as vice chairman of corporate development and chief risk officer at Bank of America Corporation, retiring from Bank of America Corporation in March 2010. Prior to that, Mr. Curl served in a number of senior executive capacities. Mr. Curl has over 35 years of experience in the financial services industry, particularly in mergers and acquisitions. Age 67.
Director Qualifications
• | Leadership Experience, Financial or Accounting Acumen, Public Company Board Experience. |
DAVID P. SKARIE has served as a member of the board of directors since February 2012. Mr. Skarie previously served as co-chief executive officer and president of Ralcorp from September 2003 until his retirement in December 2011. Mr. Skarie also served on the board of directors of Ralcorp from 2003 until February 2012. Mr. Skarie has expertise and background in the consumer industry, including as a chief executive officer. Age 69.
Director Qualifications
• | Leadership Experience, Financial or Accounting Acumen, Industry Experience, Operational Experience, Public Company Board Experience. |
DIRECTORS CONTINUING IN SERVICE
WILLIAM P. STIRITZ has served as our executive chairman since November 1, 2014. Previously, Mr. Stiritz served as our chairman of the board of directors and our chief executive officer from February 2012 until November 1, 2014. Mr. Stiritz is a private equity investor and served as the chairman of the board of directors of Ralcorp from 1994 until February 2012. Since prior to 2005, Mr. Stiritz has been a partner at Westgate Group LLC, a consumer-oriented private equity firm. Mr. Stiritz was Chairman Emeritus of the board of directors of Energizer Holdings, Inc. from January 2007 to May 2008 and chairman of the board of directors of Energizer Holdings from 2000 to 2007. In addition, he served as a Director of Vail Resorts, Inc. from 1997 to 2009. Mr. Stiritz has extensive managerial expertise, including as chairman at a number of public and private companies, experience in financial operations, as well as diverse industry experience and expertise with large multinational corporations. Age 81.
Director Qualifications
• | Leadership Experience, Financial or Accounting Acumen, Industry Experience, Operational Experience, Public Company Board Experience. |
JAY W. BROWN has served as a member of the board of directors since February 2012 and is a retired senior executive with a long general management career in large consumer-oriented businesses. Most recently, Mr. Brown was a partner at Westgate Equity Partners, LLC, a consumer-focused private equity firm. At Westgate, Mr. Brown was responsible for operational management of portfolio companies. Prior to forming Westgate in 1998, Mr. Brown was a senior executive with the Ralston Purina Company, running several divisions of the multi-dimensional food and agribusiness company, including serving as president and chief executive officer of Protein Technologies International, a leading supplier of soy-based proteins to the food and paper processing industries, Continental Baking Company, a subsidiary of Ralston Purina and of Tri-Union Seafoods (a/k/a Van Camp Seafood Company), a provider of stable seafood products. Mr. Brown served as a director and chairman of the compensation committee of Jack in the Box Inc. from 1997 to 2003 and as a director of Agribrands International, Inc. from 1998 to 2001. Mr. Brown has expertise and background in the food and consumer products industries, particularly in mergers and acquisitions, including as a chief executive officer, board member and investor. Age 70.
Director Qualifications
• | Leadership Experience, Industry Experience, Operational Experience, Public Company Board Experience. |
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EDWIN H. CALLISON has served as a member of the board of directors since February 2012. Mr. Callison has been executive vice president of Wirtz Beverage Group, a leading national distributor of luxury and premium wine, spirits and beer brands, since June 2012, and also served Wirtz as Senior Vice President from June 2008 until June 2012. From 2003 to June 2008, he served as Vice President and General Manager for Judge & Dolph’s Spectrum division, an affiliate of the Wirtz Beverage Group. Prior to 2003, he spent more than 20 years in various leadership positions with Callison Distributing in Belleville, Illinois. Mr. Callison serves on the board of directors of the Wine and Spirits Wholesalers of America, the Wine and Spirits Distributors of Illinois and Wirtz Corporation. Mr. Callison has expertise and background in sales, marketing, finance, operations and logistics. Age 60.
Director Qualifications
• | Leadership Experience, Financial or Accounting Acumen, Operational Experience. |
ROBERT E. GROTE has served as a member of the board of directors since February 2012. Mr. Grote is, and has been for the past five years, a retired executive. Prior to 1998, Mr. Grote spent more than twenty years in management. He served in a number of executive positions at Washington Steel Corporation, an integrated, flat-rolled stainless steel producer, most recently as VP-Administration. He also served as general counsel for Washington Steel Corporation and on the company’s board of directors. Mr. Grote later ran two Pittsburgh, Pennsylvania non-profit organizations: Pittsburgh Center for the Arts and Central Blood Bank. Prior to joining Washington Steel, he practiced law in St. Louis, Missouri, and served for two years as an Assistant United States Attorney for the Eastern District of Missouri. Mr. Grote has expertise and background in legal affairs, human resources, employee relations, strategic planning, and management. Age 72.
Director Qualifications
• | Leadership Experience, Operational Experience, Public Company Board Experience. |
DAVID W. KEMPER has served as a member of the board of directors since September 1, 2015. Mr. Kemper has been chairman and chief executive officer of Commerce Bancshares, Inc. since 1990. Mr. Kemper is a director of Tower Properties Company and Enterprise Holdings, Inc. Mr. Kemper is a member of Civic Progress in St. Louis and previously served as president of the Federal Advisory Council to the Federal Reserve. Mr. Kemper also previously served on the board of directors of Ralcorp from 1994 to 2013. Mr. Kemper has extensive managerial expertise, including as a chief executive officer, experience in financial operations and expertise with large corporations. Age 65.
Director Qualifications
• | Leadership Experience, Financial or Accounting Acumen, Industry Experience, Operational Experience, Public Company Board Experience. |
ROBERT V. VITALE has served as our president and chief executive officer and a member of the board of directors since November 2014. Previously, Mr. Vitale served as our chief financial officer since October 2011 until November 1, 2014. Mr. Vitale previously served as president and chief executive officer of AHM Financial Group, LLC, a diversified provider of insurance brokerage and wealth management services from 2006 until 2011 and previously was a partner of Westgate Equity Partners, LLC, a consumer-focused private equity firm. Age 49.
Director Qualifications
• | Leadership Experience, Financial or Accounting Acumen, Industry Experience, Operational Experience. |
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RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
(Proxy Item No. 2)
The Audit Committee has selected PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2016, and the board of directors has directed that management submit the appointment of our independent registered public accounting firm for ratification by our shareholders at the annual meeting. PricewaterhouseCoopers LLP has served as our independent registered public accounting firm since February 2012. A representative of that firm will be present at the annual meeting, will have an opportunity to make a statement, if they desire, and will be available to respond to appropriate questions.
We are not required to obtain shareholder ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm. However, we are submitting the appointment of PricewaterhouseCoopers LLP to shareholders for ratification as a matter of good corporate practice. If our shareholders fail to ratify the appointment, the Audit Committee will reconsider whether or not to retain PricewaterhouseCoopers LLP. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time if they determine that such a change would be in our best interests and the best interests of our shareholders.
The following table sets forth the fees paid for audit services during the fiscal years ended September 30, 2014 and 2015 and for other services during those fiscal years.
Year Ended September 30, | ||||||||||
2014 | 2015 | |||||||||
Audit fees (1) | $ | 5,423,000 | (5) | $ | 5,680,000 | |||||
Audit-related fees(2) | $ | 82,000 | $ | — | ||||||
Tax fees(3) | $ | 55,000 | $ | 192,000 | ||||||
All other fees (4) | $ | 1,800 | $ | 186,300 | ||||||
_________
(1) | Audit fees relate primarily to the audit of our financial statements, comfort letter consents and review of SEC registration statements. |
(2) | Audit-related fees include accounting advisory services associated with a fiscal 2014 acquisition. |
(3) | Tax fees include consulting and compliance services and preparation of tax returns in Canada. |
(4) | All other fees include any fees for services received by PricewaterhouseCoopers LLP which are not included in any of the above categories. The other fees consist of licensing fees paid for accounting research software and other advisory services. |
(5) | Subsequent to the filing of last year’s proxy statement, the Audit Committee approved the payment of $161,000 of additional audit fees to PricewaterhouseCoopers LLP, resulting in total 2014 audit fees of $5,423,000. |
With regard to the fees listed above, the Audit Committee has considered whether the provision by PricewaterhouseCoopers LLP of services other than audit services is compatible with its ability to maintain its independence. Regardless of the size or nature of the other services, if any, to be provided, it is the Audit Committee’s policy and practice to approve any services not under the heading “Audit Fees” before any such other services are undertaken. Our audit was staffed primarily by full-time, permanent employees of PricewaterhouseCoopers LLP.
The board of directors recommends a vote “FOR” ratification of the appointment of our
independent registered public accounting firm.
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AUDIT COMMITTEE REPORT
The Audit Committee oversees our financial reporting process on behalf of the board of directors. Management is responsible for our internal controls, financial reporting processes and compliance with laws and regulations and ethical business standards. PricewaterhouseCoopers LLP, our independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (the “PCAOB”) and issuing a report thereon. Our internal auditors assist the Audit Committee with its responsibility to monitor and oversee the financial reporting process and internal controls. The committee discusses with our internal auditors and independent registered public accounting firm the overall scopes and plans for their respective audits. The Audit Committee meets, at least quarterly, with the internal auditors and independent registered public accounting firm, and at their discretion with and without management present, and discusses the results of their examinations, their evaluations of our internal controls, and the overall quality of our financial reporting.
With respect to our audited financial statements for the fiscal year ended September 30, 2015, management has represented to the committee that the financial statements were prepared in accordance with generally accepted accounting principles and the committee has reviewed and discussed those financial statements with management. The Audit Committee has also discussed with PricewaterhouseCoopers LLP the matters required to be discussed by PCAOB Auditing Standard No. 16 (Communications with Audit Committees) as modified or supplemented.
The Audit Committee has received the written disclosures from PricewaterhouseCoopers LLP required by PCAOB Rule 3526 (Communications with Audit Committees Concerning Independence), as modified or supplemented, and has discussed the independence of PricewaterhouseCoopers LLP with members of that firm.
Based on the review and discussions referred to above, the Audit Committee recommended to the board of directors that the audited consolidated financial statements for the fiscal year ended September 30, 2015 be included in our Annual Report on Form 10-K filed with the SEC for that year.
While the Audit Committee has the responsibilities and powers set forth in its charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that our financial statements are complete and accurate or are in accordance with generally accepted accounting principles. This is the responsibility of management and the independent registered public accounting firm.
Edwin H. Callison, Chairman
Jay W. Brown (until November 17, 2015)
Gregory L. Curl
David W. Kemper (beginning November 17, 2015)
David P. Skarie
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COMPENSATION OF OFFICERS AND DIRECTORS
COMPENSATION DISCUSSION & ANALYSIS
Introduction
The following Compensation Discussion and Analysis (“CD&A”) describes our fiscal 2015 executive compensation structure. This CD&A is intended to be read in conjunction with the tables beginning on page 32, which provide detailed historical compensation information for our following named executive officers, or NEOs.
Name | Title | ||
William P. Stiritz | Executive Chairman(1) | ||
Robert V. Vitale | President and Chief Executive Officer(2) | ||
Jeff A. Zadoks | SVP and Chief Financial Officer(3) | ||
James E. Dwyer, Jr. | EVP; President and CEO, Michael Foods Group | ||
Richard R. Koulouris | EVP; President and CEO, Private Brands | ||
Diedre J. Gray | SVP, General Counsel and Chief Administrative Officer, Secretary | ||
James L. Holbrook | Former EVP; President and CEO, Consumer Brands(4) | ||
Terence E. Block | Former President and Chief Operating Officer(5) | ||
_________
(1) | Effective November 1, 2014, Mr. Stiritz was appointed Executive Chairman. Previously, Mr. Stiritz served as the Chairman of our Board and Chief Executive Officer. |
(2) | Effective November 1, 2014, Mr. Vitale was promoted from our Chief Financial Officer to President and Chief Executive Officer. |
(3) | Effective November 1, 2014, Mr. Zadoks was promoted from Senior Vice President and Chief Accounting Officer to Senior Vice President and Chief Financial Officer. |
(4) | Effective March 13, 2015, following a reorganization of our business units, the Company separated employment with Mr. Holbrook. |
(5) | Effective November 1, 2014, as disclosed in last year’s proxy statement, Mr. Block retired from his positions as President and Chief Operating Officer and a member of the board of directors of the Company. |
Total Compensation Opportunity
Our executive compensation structure consists of three primary components: base salary, annual bonus (our Senior Management Bonus Program) and long-term incentives (equity awards). A fourth element of our compensation structure consists of our traditional benefits programs (e.g., limited perquisites and benefits).
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Executive Summary
Select Performance and Company Highlights for Fiscal 2015
Our compensation philosophy is designed to be aligned with our shareholders’ interests. We view the Company’s performance in two primary ways:
• | Operating and financial performance; and |
• | Return to shareholders over time, both on an absolute basis and relative to other companies, including the Russell 2000 companies. |
During fiscal 2015, we achieved a number of strategic accomplishments that we believe will benefit the Company and shareholders alike in the coming years.
Strategic and Financial Achievements |
● Delivered on Adjusted EBITDA commitment: – Improved operational performance and forecasting methodology – All business units, with the exception of Dymatize, surpassed budgeted Adjusted EBITDA for fiscal 2015 ● Closed three acquisitions and signed a fourth acquisition: – October 1, 2014 - Completed the acquisition of the PowerBar brand from Nestlé S.A. – November 1, 2014 - Completed the acquisition of American Blanching Company – May 4, 2015 - Completed the acquisition of MOM Brands Company – September 22, 2015 - signed a definitive agreement to acquire Willamette Egg Farms, L.L.C., which closed on October 3, 2015 |
Management Team Drives Performance and Creates Shareholder Value
Our management team’s efforts have resulted in growth in enterprise value and above-market shareholder returns. Since the Company’s February 2012 separation from Ralcorp Holdings, Inc. (“Ralcorp”) and from February 6, 2012 to September 30, 2015, our enterprise value grew from $1.8 billion to $8.4 billion.
Post is a shareholder value driven organization and our compensation philosophy is designed to be aligned with shareholder interests. Management’s objective is to maximize total shareholder return, and compensation decisions are guided by the principle of creating shareholder value.
2015 Say-on-Pay Vote - Our Response
Prior to 2015, we experienced very high and increasing levels of shareholder support for our executive compensation program. Specifically, in 2013 we received 96.6% support of votes cast, and in 2014 support was 98.6%; however, in 2015 the level of support declined to 59.5%. As a result, we engaged with shareholders to review our compensation policies and procedures to determine how to best address our shareholders’ concerns.
Shareholder Outreach - Compensation Actions
During 2015, we communicated with investors who represented approximately 35% of our outstanding shares of common stock. The meetings were led by the Chair of our Corporate Governance and Compensation Committee (the “Compensation Committee”) and joined by another member of the Compensation Committee, along with our SVP, General Counsel and Chief Administrative Officer.
During these meetings, shareholders provided feedback on a variety of topics and expressed an interest in our adoption of certain corporate governance policies they believed would enhance our executive compensation program. In response to this feedback, we made significant changes to our executive compensation program in 2015 as shown below and described in detail in this CD&A.
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Shareholder Concern - What We Heard | Our Response and Actions Taken | Intended Outcome | When Effective |
● Mr. Stiritz’s compensation history and the rationale for how it was structured were not well understood | ● We have provided enhanced disclosure in the section of this CD&A entitled “Executive Chairman Compensation Structure” | ● Ensure greater transparency in disclosure | ● Current proxy statement |
● Performance goals for the Senior Management Bonus Program were not disclosed in the CD&A | ● We implemented a more defined, objective Senior Management Bonus Program for 2015, and the performance goals approved by the Board are disclosed in the section of this CD&A entitled “Annual Bonus (Senior Management Bonus Program)” | ● Enhance bonus program to be more formulaic with identifiable performance goals and targets for accountability and transparency | ● Fiscal year 2015 |
● The long-term incentive plan could be improved by implementing a long-term performance plan based on the achievement of longer-term financial metrics ● Shareholders noted positive aspects of our ongoing long-term incentive approach using stock options and restricted stock units | ● We believe equity awards, such as RSUs and stock options, are performance-based compensation and align our executives’ interests with those of our shareholders | ● Improved long-term alignment with our shareholders’ interests | ● Discussions ongoing |
● The Company does not have in place compensation risk mitigating policies such as clawback, anti-hedging and anti-pledging policies | ● We adopted formal policies for all three risk categories during 2015 - each policy is described in the section of this CD&A entitled “Other Compensation Policies” | ● Improved compensation risk management, accountability and aligned interests with those of our shareholders | ● May 2015 |
● The Company’s management continuity agreements are not double-trigger | ● We amended our agreements with each executive to provide that the executive may only trigger benefits if there is a change in control and the executive is terminated by the Company without cause or if the executive terminations his or her employment for good reason | ● In alignment with market best practice and interests of our shareholders | ● Fiscal year 2015 |
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Corporate Governance Highlights
What We Do (Best Practice) | What We Don’t Allow | |||
ü | Separate the roles of Chairman and Chief Executive Officer | X | No hedging or pledging of company stock by executives or directors | |
ü | Enforce strict insider trading policies - adopted anti-hedging and anti-pledging policies and enforce blackout trading periods for executives and directors | X | No single-trigger or modified single-trigger change-in-control arrangements | |
ü | Adopted a clawback policy | X | No change-in-control severance multiple in excess of three times salary and target bonus | |
ü | Set stock ownership guidelines for executives and directors and required that Mr. Stiritz’s equity grants be held until termination of employment | X | No excise tax gross-ups upon a change in control | |
ü | Disclose performance goals and performance results related thereto for our Senior Management Bonus Program | X | No re-pricing or cash buyout of underwater stock options or SARs is allowed | |
ü | Set maximum payout limit on our Senior Management Bonus Program | X | No enhanced retirement formulas | |
ü | For fiscal 2015, pay for performance emphasis,with 80% of our Chief Executive Officer’s total pay opportunity being performance-based “at risk” compensation and an average of 75% being performance-based “at risk” compensation for our other NEOs | X | No guaranteed compensation | |
ü | Limit perquisites and other benefits | X | No market timing with granting of equity awards | |
ü | Incorporate general severance and change-in-control provisions in our management continuity agreements that are consistent with market practice, including double-trigger requirements for change-in-control protection | |||
ü | Retain an independent compensation consultant reporting directly to the Corporate Governance and Compensation Committee | |||
Our Compensation Philosophy
Our executive compensation program is intended to attract and retain executive officers and to align the interests of our executive officers and our shareholders. The Compensation Committee’s objectives for our program include, but are not limited to, the following:
• | Reflecting industry standards, offering competitive total compensation opportunities, and balancing the need for talent with reasonable compensation expense; |
• | Enhancing shareholder value by focusing management on financial metrics that drive value; |
• | Focusing on at-risk compensation versus fixed compensation; |
• | Attracting, motivating and retaining executive talent willing to commit to long-term shareholder value creation; and |
• | Aligning executive decision making with business strategy and discouraging excessive risk taking. |
The Committee determines the type and amount of compensation opportunity for our officers based on a thorough review of a variety of factors, including competitive market data, the executive’s current responsibilities and value to the Company, future leadership potential, and individual / corporate / business unit performance.
We believe that our executive compensation structure strikes a balance of incentive opportunities based on:
• | Financial metrics in the Senior Management Bonus Program that directly impact our stock price and enhance shareholder value, and |
• | Stock price appreciation to focus our executives on stock price performance (stock options and RSUs) and retention (RSUs). |
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The following table outlines our ongoing executive compensation structure for NEOs:
Component | Purpose | Characteristics | Fixed or Performance-Based |
Base Salary | Attract and retain executives through market-based pay | Compensate executives fairly and competitively for their role | Fixed |
Annual Bonus (Senior Management Bonus Program) | Encourage achievement of strategic and financial performance metrics that drive long-term shareholder value | Based on achievement of predefined corporate and business unit financial performance objectives | Performance- Based |
Long-Term Incentives | Align executives’ long-term compensation interests with shareholders’ investment interests | Value to the executive is based on long-term stock price performance | Performance- Based |
Stock Options | Motivate management behaviors to increase our stock price above the exercise price | Requires stock price growth above the exercise price for our executives to recognize value | |
Restricted Stock Units | Provide basic retention value and reinforce management behaviors to increase stock price after the grant date | Requires stock price growth for our executives to recognize an increase in value | |
Health/Welfare Plans and Retirement Benefits | Provide competitive benefits that promote employee health and productivity and support longer term physical and fiscal security | Similar to benefits offered to other employees | Fixed |
Perquisites | Provide limited personal benefits that are consistent with our overall philosophy and objective to attract and retain superior executive talent | Limited personal use of the corporate aircraft, with pre-approved authorization of our President and Chief Executive Officer (see page 30) | Fixed |
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Fiscal 2015 NEO Compensation Structure | ||
Component | Summary(1) | |
Base Salary | ■ Mr. Stiritz’s base salary remained $1.00 ■ Mr. Vitale’s base salary was increased from $500,000 to $800,000, effective November 1, 2014, to recognize his promotion from Chief Financial Officer to President and Chief Executive Officer ■ Mr. Zadoks’ base salary was increased from $285,000 to $375,000, effective November 1, 2014, to recognize his promotion from SVP and Chief Accounting Officer to SVP and Chief Financial Officer ■ Mr. Dwyer joined the Company with the acquisition of Michael Foods in June 2014. While his base salary at Michael Foods was $750,000, he agreed to a reduced base salary of $600,000 to be better aligned with the Company’s compensation structure ■ Mr. Koulouris joined the Company in February 2015, after a reorganization of our business units, with a base salary of $500,000 ■ Ms. Gray’s base salary was increased from $315,000 to $350,000 in November 2014 to recognize increased responsibilities ■ Mr. Holbrook’s salary was increased from $500,000 to $600,000, effective November 1, 2014, to reflect his promotion from EVP-Marketing to EVP; President and CEO, Consumer Brands ■ Mr. Block did not receive a salary increase in fiscal 2015 | |
Target Annual Bonus (Senior Management Bonus Program) | ■ Our 2015 Senior Management Bonus Program is based on Adjusted Free Cash Flow for Messrs. Vitale and Zadoks and Ms. Gray, and Adjusted EBITDA for the business units of Messrs. Dwyer and Koulouris ■ Mr. Stiritz does not participate in the Senior Management Bonus Program ■ Mr. Vitale’s target bonus opportunity was increased from 100% of base salary to 120% of base salary to recognize his promotion from Chief Financial Officer to President and Chief Executive Officer ■ Mr. Zadoks’ target bonus opportunity was increased from 80% of base salary to 100% of base salary to recognize his promotion from SVP and Chief Accounting Officer to SVP and Chief Financial Officer ■ Messrs. Koulouris and Dwyer’s target bonus opportunities were set at 100% of base salary ■ Ms. Gray’s target bonus opportunity was increased from 80% of base salary to 100% of base salary to recognize increased responsibilities ■ Messrs. Block and Holbrook’s target bonus opportunities did not change from 100% of salary | |
Long-Term Incentives (“LTI”) | ■ Our ongoing LTI structure includes annual grants of stock options and restricted stock units (RSUs) ■ For our regular ongoing 2013 and 2014 equity grants to our CEO (excluding promotional and special grants), our grants have consisted of approximately five stock options for every one RSU, translating into an LTI value mix of approximately 65% stock option value and 35% RSU value. ■ Our objectives are (a) to offer a balanced portfolio of LTI opportunity and (b) to ensure an executive’s LTI opportunity is linked to increases in shareholder value beyond grant date. We believe using a combination of LTI programs and employing an LTI mix weighted more heavily on stock option value accomplishes our objectives | |
Executive Chairman Compensation Structure (Applies Only to Mr. Stiritz) | ■ Mr. Stiritz’s total compensation opportunity consists of the following: – Base salary: Set at $1.00 – Annual bonus: None – Equity grants: Mr. Stiritz received equity grants in fiscal 2012, 2014 and 2015. In October 2014, commensurate with his appointment to Executive Chairman, the material change in our scope/size/complexity, and an extension of his employment agreement, he received a grant of 1,000,000 premium-priced stock options, with an exercise price set at approximately 63% above the stock price on grant date (exercise price of $55.00; closing stock price on grant date of $33.79) – Exercise / payment restrictions (mandatory holding period until termination of employment): All stock option and RSU grants to Mr. Stiritz since our February 2012 spin-off from Ralcorp generally vest ratably over three years. However, Mr. Stiritz's stock options may not be exercised and the delivery of vested RSUs must be deferred until he is no longer employed by Post | |
_________
(1) | 2014 targeted compensation adjustments for our NEOs described in the table above were based on competitive market data from the October 2014 total compensation study summarized in the CD&A section entitled “Role of Peer Companies and Competitive Market Data.” Mr. Block retired in November 2014, and Mr. Holbrook resigned in March 2015. |
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Total Compensation Mix
Compensation Decision Process
Role of the Compensation Committee
The Compensation Committee is responsible to our Board of Directors for oversight of our executive compensation program. The Compensation Committee consists of independent directors and is responsible for the review and approval of all aspects of our program. Among its duties, the Compensation Committee is responsible for:
• | Considering input from our shareholders; |
• | Reviewing and assessing competitive market data; |
• | Reviewing the CEO’s performance and determining the CEO’s compensation; |
• | Reviewing and approving incentive plan goals, achievement levels, objectives and compensation recommendations for NEOs; |
• | Evaluating the competitiveness of each executive’s total compensation package to ensure we can attract and retain critical management talent; and |
• | Approving any changes to the total compensation program for the NEOs including, but not limited to, base salary, annual bonuses, long-term incentives and benefits. |
Following review and discussion, the Compensation Committee submits recommendations to the Board for approval. The Committee is supported in its work by our Senior Vice President, General Counsel and Chief Administrative Officer and staff, as well as our independent compensation consultant.
Role of Management
For executives other than the CEO position, our President and Chief Executive Officer makes pay recommendations based on competitive market data and an assessment of individual performance. His recommendations to the Compensation Committee establish appropriate and market-competitive compensation opportunities for our NEOs, consistent with our overall pay philosophy. The Compensation Committee reviews and discusses the recommendations, in conjunction with the Compensation Committee’s independent compensation consultant, in making compensation decisions or recommendations to the full Board.
No member of management, including our President and Chief Executive Officer, has a role in making pay decisions for his or her own position.
Role of the Independent Compensation Consultant
From October 2014 through January 2015, the Compensation Committee retained the services of Frederick W. Cook & Co., Inc. (“FW Cook”). Beginning in February 2015, the Compensation Committee retained the services of Aon Hewitt, in accordance with the committee’s charter. Aon Hewitt reports directly to the Compensation Committee. The Compensation Committee retains sole authority to hire or terminate Aon Hewitt, approve its professional fees, determine the nature and scope of services and evaluate performance. A representative of Aon Hewitt attends Compensation Committee meetings, as requested, and communicates with the Compensation Committee chair between meetings. The Compensation Committee makes all final decisions.
Aon Hewitt’s specific compensation consultation roles include, but are not limited to, the following:
• | Advising the Compensation Committee on executive compensation trends and regulatory developments; |
• | Developing a peer group of companies for determining competitive compensation rates; |
• | Providing a total compensation study for executives against peer companies; |
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• | Providing advice to the Compensation Committee on governance best practices, as well as any other areas of concern or risk; |
• | Serving as a resource to the Compensation Committee chair for meeting agendas and supporting materials in advance of each meeting; |
• | Reviewing and commenting on proxy disclosure items, including the CD&A; and |
• | Advising the Compensation Committee on management’s pay recommendations. |
The Compensation Committee has assessed the independence of Aon Hewitt as required by the NYSE listing rules. The Committee reviewed its relationship with Aon Hewitt and considered all relevant factors, including those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Securities Exchange Act of 1934, as amended. Based on this review, the Compensation Committee concluded that there are no conflicts of interest raised by the work performed by Aon Hewitt.
Role of Peer Companies and Competitive Market Data
Annually, the Compensation Committee reviews total compensation market data provided by its compensation consultant. To assess market pay levels, the Committee reviews and approves the peer group used for comparisons.
In May 2012 and October 2014, the Compensation Committee reviewed a total compensation study by its compensation consultant at the time, FW Cook. The same peer group was used in both studies and was developed based on multiple criteria including industry, annual revenues, profitability, market capitalization and enterprise value.
The October 2014 peer group consisted of 15 companies with median annual revenues of approximately $2.15 billion. Post’s annual revenues for fiscal 2014 were approximately $2.4 billion. The October 2014 peer companies were:
Ÿ B&G Foods, Inc. Ÿ Brown-Forman Corporation Ÿ Central European Distribution Corporation Ÿ Coca-Cola Bottling Co. Ÿ Cott Corporation Ÿ Darling International Inc. Ÿ Diamond Foods, Inc. Ÿ Flowers Foods, Inc. Ÿ Keurig Green Mountain, Inc. | Ÿ The Hain Celestial Group, Inc. Ÿ Imperial Sugar Company Ÿ J&J Snack Foods Corp. Ÿ Monster Beverage Corporation Ÿ Sanderson Farms, Inc. Ÿ Snyder’s-Lance, Inc. Ÿ Sunopta Inc. Ÿ TreeHouse Foods, Inc. |
Post grew substantially in 2015. The Compensation Committee retained Aon Hewitt in 2015 to develop a new compensation peer group and to perform a total compensation study to assist with pay decisions for fiscal 2016. The peer group development criteria included:
• | Industry: Similar to Post based on the Global Industry Classification System (GICS) code of Packaged Foods and Meats; |
• | Company size: Approximately 0.4x to 3x times our annual revenues; |
• | Peers: Companies using Post in their compensation peer group; |
• | Peers of peers: Companies used in the peer groups of potential peer companies; and |
• | Competitors: Companies that compete with us for business and management talent. |
The new peer group consisted of 17 companies with median and average annual revenues of approximately $3.7 billion and $4.7 billion, respectively. Post’s annual revenues for fiscal 2015 were approximately $4.6 billion. The new peer companies were:
Ÿ B&G Foods, Inc. Ÿ Campbell Soup Company* Ÿ Cott Corporation Ÿ Dean Foods Company* Ÿ Flowers Foods, Inc. Ÿ The Hain Celestial Group Ÿ The Hershey Company* Ÿ Hormel Foods Corporation* Ÿ Jarden Corp. * Denotes new peer company | Ÿ McCormick & Company, Inc.* Ÿ Mead Johnson Nutrition* Ÿ Monster Beverage Corporation Ÿ Pinnacle Foods Inc.* Ÿ The J.M. Smucker Company* Ÿ Snyder’s-Lance, Inc. Ÿ TreeHouse Foods, Inc. Ÿ The White-Wave Foods Company* |
The Compensation Committee uses competitive compensation data from the annual total compensation study of peer companies to inform its decisions about overall compensation opportunities and specific compensation elements. Additionally,
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the Compensation Committee uses multiple reference points when establishing targeted compensation levels. The Compensation Committee does not benchmark specific compensation elements or total compensation to any specific percentile relative to the peer companies or the broader U.S. market. Instead, the committee applies judgment and discretion in establishing targeted pay levels, taking into account not only competitive market data, but also factors such as company, business unit and individual performance, scope of responsibility, critical needs and skill sets, leadership potential and succession planning.
Timing of Compensation Decisions
Pay recommendations for our executives, including the NEOs, are typically made by the Compensation Committee at its first scheduled meeting of the fiscal year, normally held in October or November. This meeting is normally held around the same time we report our fourth quarter and year-end financial results for the preceding fiscal year and provide our financial guidance for the upcoming year. This timing allows the Compensation Committee to have a complete financial performance picture prior to making compensation decisions.
Decisions with respect to prior year performance, as well as annual equity awards, base salary increases and target performance levels for the current year and beyond, are also typically made at this meeting. Further, any equity awards recommended by the Compensation Committee at this meeting, if approved, are dated as of the date of the Compensation Committee meeting. As such, the Compensation Committee does not time the grants of options or any other equity incentives to the release of material non-public information.
The exceptions to this timing are awards to executives who are promoted or hired from outside the company during the year. These executives may receive salary increases or equity awards effective or dated, as applicable, as of the date of their promotion or hire.
Determination of CEO Compensation
At its first meeting of the fiscal year, in executive session without management present, the Compensation Committee also reviews and evaluates CEO performance, and determines performance achievement levels, for the prior fiscal year. The Compensation Committee also reviews competitive compensation data. The Compensation Committee presents pay recommendations for the CEO to the independent members of the Board. During executive session, the Board conducts its own review and evaluation of the CEO’s performance taking into consideration the recommendations of the Compensation Committee.
2015 Compensation Elements
Base Salary
Base salaries are designed to recognize and reward the skill, competency, experience and performance an executive brings to the position. Changes in salary will result primarily from a comparison against peer group market data, individual and company performance, internal equity considerations, promotions and the executive’s specific responsibilities. The Compensation Committee reviews salaries for our executive officers annually.
Name | 2015 Salary(1) | Comment |
William P. Stiritz | $1 | Non-traditional compensation structure |
Robert V. Vitale | $800,000 | Reflects promotion to President and Chief Executive Officer |
Jeff A. Zadoks | $375,000 | Reflects promotion to SVP and Chief Financial Officer |
James E. Dwyer, Jr. | $600,000 | Mr. Dwyer was hired with the acquisition of Michael Foods in June 2014; his salary was reduced from $750,000 at his former employer to $600,000 to be in line with Post Holdings’ compensation structure |
Richard R. Koulouris | $500,000 | Mr. Koulouris was hired in February 2015 as part of the reorganization of business units; his salary was set based on an evaluation of the specifications of his role within our compensation structure |
Diedre J. Gray | $350,000 | Reflects additional administrative responsibilities, including extensive oversight of Human Resources department and M&A execution |
James L. Holbrook | $600,000 | Reflects promotion to EVP; President and CEO, Consumer Brands (employment terminated March 13, 2015) |
Terence E. Block | $550,000 | Mr. Block did not receive a salary increase prior to his retirement on November 1, 2014 |
_________
(1) | The Committee approved 2015 salaries for Mr. Stiritz, Mr. Vitale, Mr. Zadoks, Mr. Dwyer and Ms. Gray effective November 1, 2014, consistent with changes in the Company’s management structure. Mr. Koulouris joined the Company on February 9, 2015. |
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Annual Bonus (Senior Management Bonus Program)
Our NEOs are eligible to earn cash incentives based on fiscal year performance. The Senior Management Bonus Program is designed to reward our executives who attain superior annual performance in key areas that we believe create long-term value for shareholders. Performance is measured at both the corporate and business unit level.
For fiscal 2015, the Compensation Committee approved Adjusted Free Cash Flow (corporate) and Adjusted EBITDA (business unit) as the primary performance metrics at the corporate and business unit levels. Adjusted Free Cash Flow is used at the corporate level because we believe it is the best metric for tracking our performance relative to enhancement of shareholder value.
Potential financial adjustments to determine performance achievement levels include items such as changes in accounting principles, gains and losses on the sale of a business or business unit, M&A-related costs, goodwill write-off or asset impairment and other one-time, non-recurring or extraordinary items. These adjustments are consistent with our announced results.
Performance measure: The following financial targets were approved by the Committee for fiscal 2015:
Measure(1) | Threshold(2) | Target(2) | Maximum(2) |
Corporate - Adjusted Free Cash Flow(3) | $410M | $440M | $470M |
Michael Foods - Adjusted EBITDA(4) | $242M | $255M | $268M |
Post Foods - Adjusted EBITDA(5) | $216M | $227M | $238M |
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(1) | See definitions of Corporate - Adjusted Free Cash Flow, Michael Foods - Adjusted EBITDA and Post Foods - Adjust EBITDA in the footnotes to the “Fiscal 2015 Performance Achievement” table on page 24. |
(2) | When evaluating financial goals / results, the Committee generally excludes one-time, non-recurring or extraordinary items. |
(3) | Represents the sole financial performance requirements for Mr. Vitale, Mr. Zadoks and Ms. Gray. |
(4) | Represents the sole financial performance requirements for Mr. Dwyer. |
(5) | Represents the sole financial performance requirements for Mr. Koulouris. |
Upon completion of the fiscal year, the Compensation Committee determines achievement levels vs. the pre-approved financial requirements. Also, the Compensation Committee performs a comprehensive review of the overall financial performance at the corporate and business unit levels. For performance achievement between the threshold, target and maximum performance levels, earned amounts are interpolated on a straight-line basis between points. The Compensation Committee retains flexibility to make adjustments as needed to incorporate the results of their comprehensive financial review.
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Target award opportunities: The following target bonuses (as a percentage of base salary) were approved by the Compensation Committee for fiscal 2015:
Name | 2015 Target (1),(2) (% of Salary) | Comment |
William P. Stiritz | Not applicable | Non-traditional compensation structure |
Robert V. Vitale | 120% | Reflects promotion to President and Chief Executive Officer |
Jeff A. Zadoks | 100% | Reflects promotion to SVP and Chief Financial Officer |
James E. Dwyer, Jr. | 100% | Reflects incentive structure consistency for our senior executives, and our compensation philosophy of greater emphasis on at-risk compensation vs. fixed compensation |
Richard R. Koulouris | 100% | Reflects incentive structure consistency for our senior executives, and our compensation philosophy of greater emphasis on at-risk compensation vs. fixed compensation |
Diedre J. Gray | 100% | Reflects incentive structure consistency for our senior executives, and our compensation philosophy of greater emphasis on at-risk compensation vs. fixed compensation |
James L. Holbrook | 100%(3) | No change in fiscal 2015 prior to employment termination |
Terence E. Block | 100%(3) | No change in fiscal 2015 prior to retirement |
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(1) | The Compensation Committee approved 2015 targets for Mr. Vitale, Mr. Zadoks, Mr. Dwyer and Ms. Gray, effective November 1, 2014, consistent with changes in the Company’s management structure. Mr. Koulouris joined the Company on February 9, 2015. |
(2) | Participants may earn from 50% to 150% of his or her target bonus based on performance achievement between threshold and maximum. Payout opportunities for performance between threshold, target and maximum are interpolated on a straight-line basis. |
(3) | Mr. Block retired in November 2014, and Mr. Holbrook resigned in March 2015. |
Actual 2015 performance assessment and earned amounts: As previously noted, the Compensation Committee approved the following Adjusted Free Cash Flow and business unit Adjusted EBITDA goals for fiscal 2015:
Fiscal 2015 Performance Achievement | Threshold | Target | Maximum | Actual |
Corporate - Adjusted Free Cash Flow(1) | $410M | $440M | $470M | $498.6M |
Michael Foods - Adjusted EBITDA(2) | $242M | $255M | $268M | $276.6M |
Post Foods - Adjusted EBITDA(3) | $216M | $227M | $238M | $246.0M |
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(1) | Corporate - Adjusted Free Cash Flow is a non-GAAP measure which represents Adjusted EBITDA less cash capital expenditures from the Company’s Annual Report on Form 10-K, excluding the amount of cash capital expenditures related to the MOM Brands acquisition completed in May 2015. Adjusted EBITDA, as used herein, represents the consolidated net earnings of the Company excluding income taxes, net interest expense, depreciation and amortization, non-cash stock based compensation, restructuring and plant closure costs, transaction costs, integration costs, inventory valuation adjustments on acquired businesses, costs to effect the Company’s separation from Ralcorp, mark-to-market adjustments on commodity hedges, mark-to-market adjustments and settlements on interest rate swaps, losses on asset sales, gain on change in fair value of acquisition earn-out, legal settlement, gains from insurance and indemnification proceeds, foreign currency gains and losses on intercompany loans, gain on sale of plant, purchase price adjustments of acquisitions, intangible asset impairments and the financial results of the MOM Brands acquisition completed in May 2015. |
(2) | Michael Foods - Adjusted EBITDA is a non-GAAP measure which represents the segment profit of the Michael Foods Group segment from the Company’s Annual Report on Form 10-K, excluding the financial results of the Dakota Growers pasta business, depreciation and amortization, mark-to-market adjustments on commodity hedges, gains from insurance and indemnification proceeds and foreign currency gains and losses on intercompany loans. |
(3) | Post Foods - Adjusted EBITDA is a non-GAAP measure which represents the segment profit of the Post Consumer Brands segment from the Company’s Annual Report on Form 10-K, excluding the financial results of the MOM Brands acquisition completed in May 2015, depreciation and amortization, mark-to-market adjustments on commodity hedges, integration costs and intangible asset impairments. |
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Based on the actual 2015 financial performance results above, and the results of the Compensation Committee’s comprehensive financial review, the Compensation Committee approved the following bonus amounts:
Approved Fiscal 2015 Actual Bonuses | |||
Name(1) | 2015 Target Bonus (% of Salary) | 2015 Actual Bonus (% of Target) | 2015 Actual Bonus |
William P. Stiritz | Not applicable | Not applicable | Not applicable |
Robert V. Vitale | 120% | 150% | $1,440,000 |
Jeff A. Zadoks | 100% | 150% | $562,500 |
James E. Dwyer, Jr. | 100% | 150% | $900,000 |
Richard R. Koulouris(2) | 100% | 150% | $750,000 |
Diedre J. Gray | 100% | 150% | $525,000 |
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(1) | Mr. Block and Mr. Holbrook are not included in this table because they were not employed at the end of the fiscal year. |
(2) | Although Mr. Koulouris started with the Company in February 2015, the Compensation Committee exercised discretion and decided to pay Mr. Koulouris his full bonus to compensate his extensive efforts in structuring the MOM Brands transaction and ensuring a smooth transition. |
Long-Term Incentives - Annual Grants
The Compensation Committee believes in a balanced approach to long-term incentive compensation, with an emphasis on performance-based compensation. Our regular ongoing equity structure consists of stock options and RSUs. We firmly believe that stock options especially represent effective performance-based compensation.
The Compensation Committee uses market data from our annual total compensation study to assist with targeted long-term incentive value. In addition, the Compensation Committee considers individual performance, potential future contributions to our business, internal equity, and management’s recommendations. For our regular ongoing 2013 and 2014 equity grants to our CEO (excluding promotional and special grants), our grants have consisted of approximately five stock options for every one RSU, translating into an LTI value mix, on average, of approximately 65% stock option value and 35% RSU value.
Stock options: The value of stock options is based solely on stock price appreciation after the grant date. Stock option grants have a ten-year term and one-third of the grant vests on the first, second and third anniversaries of the grant date. The exercise price is determined based on our closing stock price on the grant date.
RSUs: The value of RSUs provides a base level of retention value as well as incentive for increasing shareholder value after the grant date. RSUs vest one-third per year on the first, second and third anniversaries of the grant date.
Long-term performance plan: Based on shareholder feedback, we are reviewing the appropriateness, form and proper timing of a long-term performance plan implementation using longer-term financial metrics.
Value of Option Awards
We determine the fair value of stock option grants in accordance with generally accepted accounted principles (“GAAP”) standard ASC 718 and the SEC’s Staff Accounting Bulletin Topic 14. Application of this guidance has historically caused our fair value estimates to be somewhat lower than those determined by external shareholder advisory firms primarily due to differences in assumptions for the expected term of the options. For Mr. Stiritz, we assumed an expected term of approximately 4.5 years based on a combination of Mr. Stiritz’s age and his employment term as our Executive Chairman. For our other standard three year vesting awards, we have used the simplified method allowed under GAAP as we do not have sufficient historical share option exercise experience. This approach resulted in an expected term of 6.5 years which represents the midpoint between the third year after grant, the vesting date, and the full 10-year term of the option. The advisory firms use a full ten-year expected term for their stock option valuations, regardless of circumstances.
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CEO Compensation Structure
The following table summarizes Mr. Vitale’s compensation for 2015:
Pay Element | Description |
Total Compensation Opportunity | Base salary, target bonus, and the regular equity grant were set below the 50th percentile of the peer companies (based on the October 2014 total compensation study) Including the amortized value of the one-time promotional equity grant, Mr. Vitale’s total compensation was competitively positioned at slightly above the 50th percentile |
Base Salary | $800,000 |
Target Bonus | 120% of base salary |
Equity Grant - Regular (Oct 2014)(1) | 125,000 stock options and 25,000 RSUs with three-year ratable vesting Approx. $2.2 million grant date fair value comprised of 61% option value and 39% RSU value |
Equity Grant - Promotion (Feb 2015)(1) | 300,000 stock options with three-year ratable vesting Approx. $4.9 million grant date fair value |
_________
(1) | The grant date fair values for our equity grants represent the ASC Topic 718 value for accounting and proxy reporting purposes. These values vary from the proxy advisory firms’ calculations due to differences in Black-Scholes stock option pricing model assumptions. We believe the ASC Topic 718 value is the most acceptable and consistent valuation model to utilize for these valuations. |
Longer-term grants: Following our May 2012 spin-off from Ralcorp and prior to his November 2014 promotion to President and Chief Executive Officer, Mr. Vitale received equity grants in his role as our Chief Financial Officer. Those grants were mostly subject to a three-year ratable vesting schedule. However, Mr. Vitale’s equity grants made in November of 2012 are subject to a seven-year vesting requirement, vesting in full on November 19, 2019. These grants significantly enhance retention value and a long-term outlook for shareholder value.
Mr. Vitale received two equity grants in fiscal 2015. The October 2014 grant was part of our regular ongoing equity grant cycle consisting of stock options and RSUs with three-year ratable vesting. The February 2015 stock option grant was a special one-time grant to recognize Mr. Vitale’s promotion to our President and Chief Executive Officer role, with similar three-year vesting provisions.
Executive Chairman Compensation Structure
Mr. Stiritz was the Chairman of the Board at Ralcorp from 1994 to February 2012. As Chairman, he directed our spin-off from Ralcorp effective February 2012. Our spin-off has generated above-market shareholder returns of 120% from the period of February 6, 2012 to September 30, 2015, along with growth in our enterprise value from $1.8 billion to $8.4 billion. Illustrated below is a timeline of Mr. Stiritz’s employment and compensation history at the Company.
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Total Compensation Strategy - Historical Perspective: In May 2012, the Company entered into a three-year employment agreement with Mr. Stiritz. The negotiated compensation structure was non-traditional in that it provided a total compensation opportunity solely in the form of equity grants. The arrangement was contemplated to cover three-years of total compensation opportunity at approximately the 50th percentile of competitive market practice (based on our compensation consultant’s 2012 total compensation study against industry peer companies). At that time, no additional future compensation actions were contemplated unless (per Mr. Stiritz’s employment agreement) there was a “material change in capitalization of the Company or a material change in the Company’s size and scope.” Mr. Stiritz’s 2012 compensation structure was established as follows:
Mr. Stiritz’s Fiscal 2012 Pay Element | Amount / Comment |
Total compensation objective | The regular grant represented approximately the total compensation 50th percentile over three years, with higher-than-market risk due to the all equity structure The special grant was intended to separately recognize Mr. Stiritz for his leadership role in the successful spin-off transaction The combined value of the regular and special recognition grants represented total compensation at approximately the 75th percentile of market practice (with higher-than-average risk vs. market practice) for three-years |
Base Salary | Set at $1.00 |
Annual Bonus | Not eligible |
Equity Grant - Regular | 1,550,000 stock options with a grant date fair value of $12.8 million on grant date Three-year ratable vesting |
Equity Grant - Special Recognition for Successful Spinoff Transaction | 312,500 RSUs with a grant date fair value of $9.8 million on grant date Three-year ratable vesting |
Special Provision | Exercise / payment restrictions (mandatory holding period until termination of employment): Mr. Stiritz's stock options may not be exercised and the delivery of vested RSUs must be deferred until he is no longer employed by Post |
From May 2012, when Mr. Stiritz signed his initial employment agreement, through the end of fiscal 2015, the Company experienced significant changes in size, scope and complexity. The following timeline summarizes our business transformation since February 2012:
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As evidenced by the business transformation timeline, by October 2013 the Company had materially changed in size, scope and complexity. Also in October 2013, future business changes that were consummated in January and February 2014 were in process and considered as part of the Board’s deliberations on whether to modify Mr. Stiritz’s compensation package.
The Board concluded that the Company had materially changed and recognized that Mr. Stiritz received no equity grants during fiscal 2013. The Board approved a one-year extension to Mr. Stiritz’s employment contract to May 2016 and approved the following compensation action:
Mr. Stiritz’s Fiscal 2014 Pay Element | Amount / Comment |
Total compensation objective | In connection with the one-year extension of employment services, the Board approved the October 2013 equity grant at the 75th percentile for annual long-term incentive value and between the 50th and 75th percentiles for annual total compensation value (with higher-than-average risk vs. market practice due to the all equity structure) |
Base Salary | Remained at $1.00 |
Annual Bonus | Remained not eligible |
Equity Grant | 600,000 stock options with a grant date fair value value of $5.5 million on grant date Three-year ratable vesting |
Special Provision | Exercise / payment restrictions (mandatory holding period until termination of employment): The Board approved the continuation of this restrictive provision. Mr. Stiritz's vested stock options may not be exercised and the delivery of vested RSUs must be deferred until he is no longer employed by Post |
Management succession strategy: During 2014, our Board established a management succession strategy to separate the roles of Chairman and Chief Executive Officer. The successful execution of that strategy was realized on November 1, 2014:
• | Mr. Vitale was promoted to the role of President and Chief Executive Officer; and |
• | Mr. Stiritz was appointed to the Executive Chairman role. |
To fully recognize the synergies of splitting the two roles, our Board created separate and distinct job profiles:
Mr. Stiritz Executive Chairman | Mr. Vitale Chief Executive Officer |
Provide overall strategic counsel | Head day-to-day operations |
Provide M&A insight / strategy | Direct execution and financing of M&A activity |
Coordinate Board / Committee activities | Manage shareholder and lender relationships |
Supervise and manage leaders of the business units | |
Communicate regularly with the Board | |
In October 2014, in addition to appointing Mr. Stiritz as our Executive Chairman and extending his employment term for approximately 18 months, the Board also concluded (as evidenced by our business transformation timeline) that the Company had transitioned through another material change in size, scope and complexity. For these reasons, the Board approved the following compensation action:
Mr. Stiritz’s Fiscal 2015 Pay Element | Amount / Comment |
Total compensation objective | Based on the rationale disclosed above, the Board approved an October 2014 equity grant near the 50th percentile for annual long-term incentive value, but below the 50th percentile for annual total compensation value (with much higher-than-average risk based on the premium exercise price requirement) |
Base Salary | Remained at $1.00 |
Annual Bonus | Remained not eligible |
Equity Grant | 1,000,000 premium-priced stock options with grant date fair value of $3.2 million on grant date Exercise price set at $55.00. Grant date stock price was $33.79. The exercise price was set based on the approximate value of our stock when we acquired Michael Foods in June 2014. Represents approximately a 63% premium that must be delivered to shareholders before Mr. Stiritz may recognize gain. Vesting again was set at three-year ratable |
Special Provision | Exercise / payment restrictions (mandatory holding period until termination of employment): The Board approved the continuation of this restrictive provision. Mr. Stiritz's vested stock options may not be exercised and delivery of vested RSUs must be deferred until he is no longer employed by Post |
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Other Compensation Policies
Stock Ownership Guidelines
We have stock ownership guidelines applicable to non-employee directors and corporate executive officers. Our board of directors believes it is in the best interests of the Company and our shareholders to align the financial interests of executive officers and non-employee directors with those of our shareholders. Our Executive Chairman is expected to own shares of Company stock in an amount equal to $15 million. Our President and Chief Executive Officer is expected to own shares of common stock valued at five times the base salary, and each of the other executive officers is expected to own stock valued at two times the base salary. Our non-employee directors are expected to own shares of common stock valued at two times the annual retainer.
Participants are expected to comply with the ownership requirements within five years of an appointment to a qualified position. As of September 30, 2015, two-thirds of participants were in compliance with the ownership requirements, and all who are not compliant are still within the five year timeframe for compliance. The guidelines were last amended in August 2015 to clarify the categories of stock ownership that satisfy the ownership criteria and provides that the following forms of ownership satisfy the ownership guidelines: shares owned directly or indirectly (e.g. by spouse or trust), unvested cash or stock-settled restricted stock or restricted stock units, shares invested in the Savings Investment Plan or the Executive Savings Investment Plan and share equivalents under deferred compensation plans. Unvested stock options and stock appreciation rights are not be included for determining compliance with the guidelines. The Compensation Committee is responsible for monitoring the application of the stock ownership guidelines and may modify the guidelines in its discretion, including as a result of dramatic or unexpected changes in the market value of Post common stock. The Compensation Committee has the discretion to enforce these stock ownership guidelines on a case-by-case basis.
Recoupment (“Clawback”) Policy
New for 2015 - In response to shareholders and in keeping with market best practice, we adopted a formal clawback policy on May 4, 2015. |
We have established an executive compensation “clawback” policy in connection with performance-based compensation. The clawback policy provides that in the event there is a restatement of the Company’s financial results, other than due to a change in applicable accounting methods, rules or interpretations, the Compensation Committee, to the extent allowable under applicable law, has the authority to recoup performance-based compensation paid to a director or executive officer during the three-year period preceding the restatement if (i) the restatement would result in the payment of a reduced award if the award were recalculated based on the restated results, and (ii) the director or executive officer engaged in fraud or intentional illegal conduct which materially contributed to the need for such restatement. The policy went into effect on May 4, 2015 and applies to all performance-based compensation granted, paid or credited after May 4, 2015.
Policy on Hedging and Pledging Company Stock
New for 2015 - Effective May 4, 2015, based on shareholder feedback, we adopted comprehensive anti-hedging and anti-pledging policies which apply to directors and executive officers. |
We maintain a policy that prohibits directors and executive officers from engaging in derivative or hedging transactions in the Company’s securities, and have a policy that prohibits pledging of shares by directors and executive officers. Specifically, the policy prohibits directors and executive officers from (i) purchasing any financial instrument or entering into any transaction that is designed to hedge or offset any decrease in the market value of the Company’s common stock or other equity securities, or (ii) pledging, hypothecating, or otherwise encumbering shares of the Company’s common stock or other equity securities as collateral for indebtedness, including holding such shares in a margin account. The policy was adopted on May 4, 2015.
Compensation Risk Assessment
The Committee is responsible for overseeing the risks relating to compensation policies and practices affecting senior management on an ongoing basis. The Committee believes our governance policies and compensation structure result in a compensation system that is not reasonably likely to lead to management decisions that would have a material adverse effect on the Company. The following features of our program mitigate this risk:
• | The Committee retains an independent compensation advisor to assist with annual compensation decisions; |
• | The Board approves the Senior Management Bonus Program financial goals at the start of the fiscal year, and approves the performance achievement level and final payments earned at the end of the fiscal year; |
• | The Senior Management Bonus Program caps potential payouts at 150% of the target opportunity to mitigate potential windfalls; |
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• | We utilize a mix of cash and equity variable incentive programs, and all equity awards are subject to multi-year vesting; |
• | We utilize a portfolio of equity award types; |
• | We utilize competitive general and change-in-control severance programs to help ensure executives continue to work towards the shareholders’ best interests in light of potential employment uncertainty; |
• | Executive officers are subject to minimum stock ownership guidelines and limitations on trading in our securities, including prohibitions on hedging and pledging; and |
• | An incentive clawback policy permits the Company to recoup compensation paid on the basis of financial results that are subsequently restated. |
Limitations on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code sets a limit on deductible compensation of $1,000,000 per person, per year for the chief executive officer and the next three highest-paid executives (excluding the chief financial officer). However, the deduction limit does not apply if the compensation is strictly performance based. In establishing total compensation for such officers, the Compensation Committee considers the effect of Section 162(m). However, corporate objectives may not always be consistent with the requirements for full deductibility. Therefore, deductibility is not the sole factor used in setting the appropriate compensation levels paid by Post and decisions leading to future compensation levels may not be fully deductible under Section 162(m). We believe this flexibility enables us to respond to changing business conditions or to an executive’s exceptional individual performance.
Benefits and Perquisites
Retirement - Deferred Compensation
We maintain deferred compensation plans for non-employee directors and key employees. The deferred compensation plan allows eligible employees to defer all or a portion of any bonus earned on a pre-tax basis. The committee that administers the plan may determine that matching contributions may be made for any of Post’s fiscal years. Absent such determination, no matching contribution is made. We also maintain an executive savings investment plan which permits eligible employees to make pre-tax deductions between 1% and 44% of their annual compensation. Income taxes on the amounts deferred and any investment gains are deferred until distributed. The plan does not provide for Company matching contributions. The plan does permit, if approved, a discretionary annual employer contribution.
Deferred compensation may be invested in Post common stock equivalents or in a number of funds operated by Vanguard Fund Group, Inc. with a variety of investment strategies and objectives. Under this plan, distribution of deferrals invested in common stock equivalents are made in cash in the amount of the value of such equivalents at the time of retirement from the Board, and deferrals invested in the Vanguard funds are made in cash. A number of investment funds are available as “benchmark” investment options. Amounts contributed continue to grow on a tax-deferred basis until distributed. We do not guarantee the rate of return of any fund. As with any deferred compensation plan, there are restrictions on deferral and distribution elections as well as potential financial exposure to changes in our financial health. These plans allow executives to accumulate funds for retirement. See Non-Qualified Deferred Compensation below for further information.
Perquisites
We provide executives limited perquisites and other personal benefits that we believe are reasonable and consistent with our overall compensation philosophy. These benefits help retain and attract superior employees for key positions. The Compensation Committee reviews the levels of perquisites and other benefits periodically.
Currently the only perquisite provided by Post is personal use of our corporate aircraft. Our executive officers may use the plane for personal use with prior authorization of the Chief Executive Officer. Our Compensation Committee has the authority to grant tax gross-ups related to such use. In fiscal 2012, the Committee authorized tax gross-ups related to such use provided that they not exceed $100,000 for any individual or $200,000 in the aggregate during any fiscal year, which limits remained in effect for fiscal 2015. The Compensation Committee reviews the levels of perquisites and other benefits periodically. Personal use of the Company aircraft is discussed in the Summary Compensation Table where applicable.
Management Continuity Agreements (Change-in-Control Coverage)
We have entered into management continuity agreements with all of our senior management, including the NEOs whose compensation is discussed herein, except Mr. Stiritz. These agreements are intended to promote stability and continuity of senior management in the event of an actual or anticipated change of control of Post. The board of directors authorized these agreements in recognition of the importance to us and our shareholders of avoiding the distraction and loss of key management personnel that may occur in connection with rumored or actual fundamental corporate changes. Our board of directors is of the
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opinion that a properly designed change in control agreement protects shareholder interest by providing (i) incentives to remain with the company despite uncertainties while a transaction is under consideration or pending, (ii) assurance of severance benefits for terminated employees, and (iii) access to equity components of total compensation after a change in control.
Under the agreement, an officer may receive (i) a lump sum severance payment (equal to two or three years of base pay depending on the officer), (ii) a lump sum payout equal to the present actuarial value of continued participation in certain welfare benefit plans or equivalent benefits, (iii) outplacement assistance, and (iv) reimbursement for certain litigation expenses.
Information regarding payments under the agreements for the corporate officers named in this proxy statement is provided in Potential Payments upon Termination of Employment or Change in Control below.
Executive Severance Plan
Prior to the approval of a new executive severance plan in fiscal 2015, employment terminations were handled on a case-by-case basis. In fiscal 2015, Mr. Block retired from the Company and Mr. Holbrook’s employment terminated following a reorganization of our business units. Further information can be found in the Potential Payments Upon Termination of Employment or Change In Control section below.
As part of Mr. Block’s retirement, on October 9, 2014, the Company entered into a Separation and Release Agreement which provided for: (a) a lump sum payment of $1.1 million; (b) the acceleration of vesting of 38,001 shares of restricted stock units and 200,000 non-qualified stock options; (c) Mr. Block to remain available on a consulting basis for the Company until December 31, 2014; and (d) a general release of all claims Mr. Block may have against the Company.
Mr. Holbrook’s separation, effective March 13, 2015, is governed by a Separation and Release Agreement, which generally provides that the Company will (a) pay Mr. Holbrook a lump sum payment of $1.2 million, and (b) accelerate the vesting of 55,667 shares of restricted stock units and 290,000 non-qualified stock options in exchange for (i) a non-compete and non-solicitation agreement, and (ii) a general release of all claims against the Company.
In fiscal 2015, we adopted an executive severance plan, which generally provides the following benefits in the event of a termination of employment by us without cause or by the executive for good reason:
• | Two times the executive’s annual base salary and target bonus; |
• | Prorated bonus for the year of termination; and |
• | 12 weeks of COBRA subsidy at active employee rates upon timely election of COBRA plus a lump sum payment of $20,000. |
In order to receive the benefit, the executive will need to sign a release of claims against the Company. We believe that these agreements are fair to the executives and to our stockholders and, because the severance benefits are negotiated at the time of the agreement, they avoid the need for protracted negotiations at the termination date.
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Summary Compensation Table
The following table shows information about the compensation of our Executive Chairman, our Chief Executive Officer, our Chief Financial Officer, the three most highly compensated officers who were serving as named executive officers at September 30, 2015, and two individuals for whom disclosure would have been provided but for the fact that the individuals were not serving as executive officers at September 30, 2015.
Name and Principal Position | Year | Salary ($) | Bonus ($)(5) | Stock Awards ($)(6) | Option Awards ($)(7) | Non-Equity Incentive Plan Compensation ($)(8) | Changes in Pension Value and Non- Qualified Deferred Compensation Earnings ($)(9) | All Other Compensation ($)(10) | Total ($) | |||||||||||||||||
William P. Stiritz | 2015 | 1 | — | — | 3,216,694 | — | — | 99,026 | 3,315,721 | |||||||||||||||||
Executive Chairman | 2014 | 1 | — | — | 5,500,375 | — | — | 183,229 | 5,683,605 | |||||||||||||||||
2013 | 1 | — | — | — | — | — | 130,111 | 130,112 | ||||||||||||||||||
Robert V. Vitale | 2015 | 775,000 | — | 844,750 | 6,308,581 | 1,440,000 | — | 97,594 | 9,465,925 | |||||||||||||||||
President & CEO | 2014 | 500,000 | — | 765,700 | 1,362,884 | 100,000 | 3,290 | 46,503 | 2,778,377 | |||||||||||||||||
2013 | 427,500 | — | 643,910 | 1,205,598 | 430,000 | 2,548 | 63,164 | 2,772,720 | ||||||||||||||||||
Jeff A. Zadoks | 2015 | 367,500 | — | 337,900 | — | 562,500 | — | 53,760 | 1,321,660 | |||||||||||||||||
SVP & CFO | 2014 | 285,000 | — | 1,330,850 | — | 205,200 | 5,116 | 18,353 | 1,844,519 | |||||||||||||||||
2013 | 248,333 | — | 169,450 | — | 200,000 | 4,233 | 19,886 | 641,902 | ||||||||||||||||||
James E. Dwyer, Jr. (1) | 2015 | 640,385 | — | 675,800 | 1,107,162 | 900,000 | — | 2,640 | 3,325,987 | |||||||||||||||||
EVP; President & CEO, | ||||||||||||||||||||||||||
Michael Foods Group | ||||||||||||||||||||||||||
Richard R. Koulouris (2) | 2015 | 322,115 | 50,000 | 954,000 | 1,556,800 | 750,000 | — | 57,934 | 3,690,849 | |||||||||||||||||
EVP; President & CEO, | ||||||||||||||||||||||||||
Private Brands | ||||||||||||||||||||||||||
Diedre J. Gray | 2015 | 347,083 | — | 337,900 | — | 525,000 | — | 51,475 | 1,261,458 | |||||||||||||||||
SVP, General Counsel & | ||||||||||||||||||||||||||
Chief Administrative Officer | ||||||||||||||||||||||||||
James L. Holbrook (3) | 2015 | 266,667 | — | 675,800 | 1,107,162 | — | — | 1,309,695 | 3,359,324 | |||||||||||||||||
Former EVP; President & | 2014 | 500,000 | — | 765,700 | 1,362,884 | 100,000 | 62,646 | 79,169 | 2,870,399 | |||||||||||||||||
CEO, Consumer Brands | 2013 | 427,500 | — | 643,910 | 1,205,598 | 430,000 | 35,008 | 69,531 | 2,811,547 | |||||||||||||||||
Terence E. Block (4) | 2015 | 45,833 | — | — | — | — | 41,028 | 1,199,848 | 1,286,709 | |||||||||||||||||
Former President & COO | 2014 | 550,000 | — | 765,700 | 1,362,884 | — | 60,226 | 124,643 | 2,863,453 | |||||||||||||||||
2013 | 500,000 | — | 643,910 | 1,050,765 | 500,000 | 4,921 | 100,511 | 2,800,107 | ||||||||||||||||||
_________
(1) | Mr. Dwyer joined the Company effective June 2, 2014. |
(2) | Mr. Koulouris joined the Company effective February 9, 2015. |
(3) | Mr. Holbrook resigned from the Company effective March 13, 2015. |
(4) | Mr. Block retired from the Company effective November 1, 2014. |
(5) | For Mr. Koulouris, this amount represents a signing bonus awarded upon joining the Company. |
(6) | The amounts relate to awards of restricted stock units granted in the fiscal year and reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718, and do not correspond to the actual value that will be realized by the named executive officers. See Note 17 to the Company’s fiscal year 2015 financial statements in the Company’s Annual Report on Form 10-K for a discussion of the determination of these amounts under FASB ASC Topic 718. |
(7) | The amounts relate to option awards granted in the fiscal year and reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 and do not correspond to the actual amount that will be realized upon exercise by the named executive officers. See Note 17 to the Company’s fiscal year 2015 financial statements in the Company’s Annual Report on Form 10-K for a discussion of the determination of these amounts under FASB ASC Topic 718. For Mr. Vitale, this amount includes two option awards: (i) an annual grant on October 9, 2014 and (ii) a grant on February 17, 2015 in recognition of his promotion to President and CEO. |
(8) | The amounts reported in this column reflect bonuses earned by the named executive officers during the fiscal year under our senior management bonus program, discussed above in our Compensation Discussion and Analysis. |
(9) | Normally represents the aggregate earnings on the respective named executive officer’s account under our executive supplemental investment plan and deferred compensation plan. However, the present value amounts were negative for fiscal year 2015 as follows: Mr. Vitale - ($6,144); Mr. Zadoks - ($3,341); Ms. Gray - ($5,116) and Mr. Holbrook ($5,815). These amounts are included in the Non-Qualified Deferred Compensation Plan table below. |
(10) | Amounts shown in the “All Other Compensation” column include the following: |
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Name | Year | Matching Contributions ($) | Life Insurance Premiums ($) | PTO Paid at Termination ($) | Severance Payment ($) | Personal Use of Aircraft ($) (a) | Tax Gross-Ups ($) (b) | Total ($) | |||||||||||||||
William P. Stiritz | 2015 | — | — | — | — | 75,000 | 24,026 | 99,026 | |||||||||||||||
2014 | — | — | — | — | 155,241 | 27,988 | 183,229 | ||||||||||||||||
2013 | — | — | — | — | 109,595 | 20,516 | 130,111 | ||||||||||||||||
Robert V. Vitale | 2015 | 72,600 | 1,478 | — | — | 17,121 | 6,395 | 97,594 | |||||||||||||||
2014 | 15,600 | 1,478 | — | — | 26,037 | 3,388 | 46,503 | ||||||||||||||||
2013 | 25,650 | 1,478 | — | — | 24,740 | 11,296 | 63,164 | ||||||||||||||||
Jeff A. Zadoks | 2015 | 45,612 | 1,478 | — | — | 5,303 | 1,367 | 53,760 | |||||||||||||||
2014 | 16,875 | 1,478 | — | — | — | — | 18,353 | ||||||||||||||||
2013 | 18,550 | 1,336 | — | — | — | — | 19,886 | ||||||||||||||||
James E. Dwyer, Jr. | 2015 | — | 1,649 | — | — | — | 991 | 2,640 | |||||||||||||||
Richard R. Koulouris | 2015 | — | 986 | — | — | 42,778 | 14,170 | 57,934 | |||||||||||||||
Diedre J. Gray | 2015 | 47,108 | 1,478 | — | — | 1,970 | 919 | 51,475 | |||||||||||||||
James L. Holbrook | 2015 | 12,047 | 739 | 75,776 | 1,200,000 | 12,879 | 8,254 | 1,309,695 | |||||||||||||||
2014 | 15,600 | 1,478 | — | — | 49,127 | 12,964 | 79,169 | ||||||||||||||||
2013 | 30,150 | 1,478 | — | — | 26,127 | 11,776 | 69,531 | ||||||||||||||||
Terence E. Block | 2015 | — | 246 | 71,217 | 1,100,000 | 17,727 | 10,658 | 1,199,848 | |||||||||||||||
2014 | 15,600 | 1,478 | — | — | 92,358 | 15,207 | 124,643 | ||||||||||||||||
2013 | 30,000 | 1,478 | — | — | 49,017 | 20,016 | 100,511 | ||||||||||||||||
_________
(a) | Amounts are based on the aggregate incremental cost to us of the named executive officer’s use of our aircraft. The incremental cost is calculated by dividing the total estimated variable costs (such as fuel, landing fees, employed pilot incidentals, contract pilot fees, on-board catering and flight crew expenses) by the total flight hours for such year and multiplying such amount by the individual’s total number of flight hours for non-business use for the year. Incremental costs do not include certain fixed costs that we incur by virtue of owning the plane, including depreciation, employed pilot salaries and benefits, hangar fees, and maintenance. Spouses and guests of executives occasionally fly on the aircraft as additional passengers on business flights. In those cases, the aggregate incremental cost is a de minimis amount, and no amounts are therefore reported; however, these flights are treated as taxable under the Internal Revenue Service’s Standard Industry Fare Level (“SIFL”) formula for imputing taxable income for such use. |
(b) | Executive officers may use the aircraft for personal use (including for spouses and guests) so long as the value of such use is treated as taxable compensation to the individual. We report the SIFL rates for such use in each executive’s taxable wages. We reimburse our executive officers for amounts necessary to offset the impact of income taxes relating to such use. |
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Grants of Plan-Based Awards for the Fiscal Year Ended September 30, 2015
The following table provides, for each of the named executive officers, information concerning cash awards under our annual incentive plan for fiscal 2015 and grants of equity awards made during fiscal 2015. The non-equity incentive plan awards disclosed below are part of the Post Holdings, Inc. Senior Management Bonus Program adopted on May 4, 2015. The plan has threshold, target and maximum payouts, as set forth below, based on achievement of personal and/or corporate performance measures. Awards of options or restricted stock units were made under our 2012 Long-Term Incentive Plan. In November 2015, the Compensation Committee met to review performance, and payments were made to each of the named executive officers based on a combination of achievement of the corporate performance measures and personal performance measures in the amounts set forth in the Summary Compensation Table under “Non-Equity Incentive Plan Compensation.”
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | All Other Stock Awards: Number of Shares of Stock or Units (#) (2) | All Other Option Awards: Number of Securities Underlying Options (#) (3) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | ||||||||||||||||||||||||||
Name | Grant Type | Grant Date | Threshold ($) | Target ($) | Maximum ($) | |||||||||||||||||||||||||
William P. Stiritz | Annual Incentive | — | — | — | — | — | ||||||||||||||||||||||||
Options | 10/09/2014 | 1,000,000 | $ | 55.00 | $ | 3,216,694 | ||||||||||||||||||||||||
Restricted Stock Units | — | — | ||||||||||||||||||||||||||||
Robert V. Vitale | Annual Incentive | 11/16/2015 | $ | 480,000 | $ | 960,000 | $ | 1,440,000 | ||||||||||||||||||||||
Options | 10/09/2014 | 125,000 | $ | 33.79 | $ | 1,383,952 | ||||||||||||||||||||||||
Options | 02/17/2015 | 300,000 | $ | 49.48 | $ | 4,924,629 | ||||||||||||||||||||||||
Restricted Stock Units | 10/09/2014 | 25,000 | $ | 884,750 | ||||||||||||||||||||||||||
Jeff A. Zadoks | Annual Incentive | 11/16/2015 | $ | 187,500 | $ | 375,000 | $ | 562,500 | ||||||||||||||||||||||
Options | — | — | ||||||||||||||||||||||||||||
Restricted Stock Units | 10/09/2014 | 10,000 | $ | 337,900 | ||||||||||||||||||||||||||
James E. Dwyer, Jr. | Annual Incentive | 11/16/2015 | $ | 300,000 | $ | 600,000 | $ | 900,000 | ||||||||||||||||||||||
Options | 10/09/2014 | 100,000 | $ | 33.79 | $ | 1,107,162 | ||||||||||||||||||||||||
Restricted Stock Units | 10/09/2014 | 20,000 | $ | 675,800 | ||||||||||||||||||||||||||
Richard R. Koulouris | Annual Incentive | 11/16/2015 | $ | 250,000 | $ | 500,000 | $ | 750,000 | ||||||||||||||||||||||
Stock Appreciation Rights | 05/04/2015 | 100,000 | $ | 47.70 | 1,556,800 | |||||||||||||||||||||||||
Restricted Stock Units | 05/04/2015 | 20,000 | $ | 954,000 | ||||||||||||||||||||||||||
Diedre J. Gray | Annual Incentive | 11/16/2015 | $ | 175,000 | $ | 350,000 | $ | 525,000 | ||||||||||||||||||||||
Options | — | — | ||||||||||||||||||||||||||||
Restricted Stock Units | 10/09/2014 | 10,000 | $ | 337,900 | ||||||||||||||||||||||||||
James L. Holbrook (5) | Annual Incentive | — | — | — | — | — | ||||||||||||||||||||||||
Options | 10/09/2014 | 100,000 | $ | 33.79 | $ | 1,107,162 | ||||||||||||||||||||||||
Restricted Stock Units | 10/09/2014 | 20,000 | $ | 675,800 | ||||||||||||||||||||||||||
Terence E. Block (6) | Annual Incentive | — | — | — | — | |||||||||||||||||||||||||
Options | — | — | ||||||||||||||||||||||||||||
Restricted Stock Units | — | — | ||||||||||||||||||||||||||||
_________
(1) | These columns consist of threshold, target and maximum annual incentive targets for fiscal 2015. The “Threshold” column represents the minimum amount payable to the named executive officers. The “Target” column represents the payout amount if the specified performance targets are achieved. The “Maximum” column represents the maximum payout possible under the applicable bonus program in fiscal 2015. See the Summary Compensation Table for actual amounts paid under these programs. |
(2) | This column contains the number of shares of RSUs granted in fiscal 2015. |
(3) | This column contains the number of non-qualified stock options and stock appreciation rights granted in fiscal 2015. |
(4) | Represents the grant date fair value of options, stock appreciation rights and RSUs, which were calculated in accordance with FASB ASC Topic 718 based on the closing market price per share of Post’s common stock on the date of grant ($33.79 per share on October 9, 2014 and $47.70 on May 4, 2015). |
(5) | Mr. Holbrook resigned from the Company effective March 13, 2015. Amounts in the table above represent awards granted while he will still employed by the Company. |
(6) | Mr. Block retired from the Company effective November 1, 2014. |
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Outstanding Equity Awards at September 30, 2015
The following table sets forth information on exercisable and unexercisable options and stock appreciation rights and unvested restricted stock unit awards held by the named executive officers named in this proxy statement on September 30, 2015.
Option/SAR Awards | Stock Awards | ||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options/SAR (#) Exercisable | Number of Securities Underlying Unexercised Options/SAR (#) Unexercisable | Option/SAR Exercise Price ($) | Option/SAR Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (15) | |||||||||||||
William P. Stiritz | 1,550,000 | (1) | — | 31.25 | 5/29/2022 | — | (8) | — | |||||||||||
Executive Chairman | 200,000 | (2) | 400,000 | 40.30 | 10/15/2023 | ||||||||||||||
1,000,000 | (3) | 55.00 | 10/9/2024 | ||||||||||||||||
Robert V. Vitale | 100,000 | (1) | — | 31.25 | 5/29/2022 | 19,000 | (9) | 1,122,900 | |||||||||||
Chief Executive Officer | 100,000 | (4) | 33.89 | 11/19/2022 | 12,667 | (10) | 748,620 | ||||||||||||
33,333 | (2) | 66,667 | 40.30 | 10/15/2023 | 25,000 | (11) | 1,477,500 | ||||||||||||
125,000 | (5) | 33.79 | 10/09/2024 | ||||||||||||||||
300,000 | (6) | 49.48 | 02/27/2025 | ||||||||||||||||
Jeff A. Zadoks | 1,667 | (12) | 98,520 | ||||||||||||||||
SVP, Chief Financial Officer | 5,000 | (10) | 295,500 | ||||||||||||||||
20,000 | (13) | 1,182,000 | |||||||||||||||||
10,000 | (11) | 591,000 | |||||||||||||||||
James E. Dwyer, Jr. | 100,000 | (5) | 33.79 | 10/9/2024 | 20,000 | (11) | 1,182,000 | ||||||||||||
EVP; President & CEO, Michael Foods Group | |||||||||||||||||||
Richard R. Koulouris | 100,000 | (7) | 47.70 | 5/4/2025 | 20,000 | (14) | 1,182,000 | ||||||||||||
EVP; President & CEO, Private Brands | |||||||||||||||||||
Diedre J. Gray | 1,667 | (12) | 98,520 | ||||||||||||||||
SVP, General Counsel & Chief Administrative Officer | 5,000 | (10) | 295,500 | ||||||||||||||||
16,000 | (13) | 945,600 | |||||||||||||||||
10,000 | (11) | 591,000 | |||||||||||||||||
James L. Holbrook | 100,000 | (2) | — | 40.30 | 3/13/2018 | — | — | ||||||||||||
Former EVP; President & CEO, Consumer Brands | |||||||||||||||||||
Terence E. Block | 100,000 | (2) | — | 40.30 | 11/1/2017 | — | — | ||||||||||||
Former President & COO | |||||||||||||||||||
_________
(1) | Non-qualified stock options; exercisable in equal installments on May 29, 2013, 2014 and 2015. For Mr. Stiritz, although option awards vested during fiscal 2015, Mr. Stiritz will not receive any financial benefit from such awards and cannot exercise those options until Mr. Stiritz is no longer an executive officer of the Company. |
(2) | Non-qualified stock options; exercisable in equal installments on October 15, 2014, 2015 and 2016. For Mr. Stiritz, although option awards vested during fiscal 2015, Mr. Stiritz will not receive any financial benefit from such awards and cannot exercise those options until Mr. Stiritz is no longer an executive officer of the Company. Pursuant to Mr. Holbrook’s Separation and Release Agreement dated March 13, 2015, the options became fully vested and are exercisable for three years from the date of the agreement. Pursuant to Mr. Block’s Separation and Release Agreement dated November 1, 2014, the options became fully vested and are exercisable for three years from the date of the agreement. |
(3) | Non-qualified stock options; exercisable in equal installments on October 9, 2015, 2016 and 2017. Although the stock price on the date of grant was $33.79, the option awards were granted to Mr. Stiritz at an exercise price of $55.00 and although the option awards will vest, Mr. Stiritz will not receive any financial benefit from such awards and cannot exercise those options until he is no longer an executive officer of the Company. |
(4) | Non-qualified stock options; exercisable in one installment on November 19, 2019. |
(5) | Non-qualified stock options; exercisable in equal installments on October 9, 2015, 2016 and 2017. |
(6) | Non-qualified stock options; exercisable in equal installments on February 27, 2016, 2017 and 2018. |
(7) | Stock appreciation rights; exercisable in equal installments on May 4, 2016, 2016 and 2017. Upon exercise of any vested portion of the SAR, Mr. Koulouris will receive a cash amount equal to the excess of the Fair Market Value of the shares over the purchase price per share. |
(8) | Although stock awards vested during fiscal 2015, Mr. Stiritz will not receive any financial benefit from such awards until he is no longer an executive officer of the Company. |
(9) | Restricted stock units; restrictions lapse in one installment on November 19, 2019. The restricted stock units will be paid in shares of the Company’s common stock within 60 days from each of the applicable vesting dates. |
(10) | Restricted stock units; restrictions lapse in equal installments on October 15, 2014, 2015 and 2016. The restricted stock units for Mr. Vitale will be paid in shares of the Company’s common stock within 60 days from each of the applicable vesting dates. The restricted stock units for Mr. Zadoks and Ms. Gray will be paid out in cash within 60 days from each of the applicable vesting dates. |
(11) | Restricted stock units; restrictions lapse in equal installments on October 9, 2015, 2016 and 2017. The restricted stock units for Messrs. Vitale and Dwyer will be paid in shares of the Company’s common stock within 60 days from each of the applicable vesting dates. The restricted stock units for Mr. Zadoks and Ms. Gray will be paid out in cash within 60 days from each of the applicable vesting dates. |
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(12) | Restricted stock units; restrictions lapse in equal installments on November 19, 2013, 2014 and 2015. The restricted stock units will be paid out in cash within 60 days from each of the applicable vesting dates. |
(13) | Restricted stock units that will be settled in cash; restrictions lapse in equal installments on June 17, 2020, 2021, 2022, 2023 and 2024. Each restricted stock unit for Mr. Zadoks and Ms.Gray will be paid out in cash equal to the greater of the grant date price of $51.43 or the fair market value of one share of the Company’s common stock on the applicable vesting dates and within 60 days from each of the applicable vesting dates. |
(14) | Restricted stock units; restrictions lapse in equal installments on May 4, 2016, 2017 and 2018. The restricted stock units will be paid in shares of the Company’s common stock within 60 days from each of the applicable vesting dates. |
(15) | Based on our closing stock price of $59.10 on September 30, 2015. |
Option and Stock Appreciation Rights Exercises and Stock Vested
for the Fiscal Year Ended September 30, 2015
Option/SAR Awards | Stock Awards | |||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||
William P. Stiritz | — | N/A | 104,167 | 4,506,264 | (1) | |||||||
Robert V. Vitale | — | N/A | 12,667 | 474,575 | ||||||||
Jeff A. Zadoks | — | N/A | 5,833 | 235,221 | ||||||||
James E. Dwyer, Jr. | — | N/A | — | — | ||||||||
Richard R. Koulouris | — | N/A | ||||||||||