Flowers Foods Inc PRE 14A, filed Mar 20, 2020
Flowers Foods Inc (FLO)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
| ☑ Filed by the registrant | ☐ Filed by a party other than the registrant |
| Check the appropriate box: | ||
| ☑ | Preliminary Proxy Statement | |
| ☐ | CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2)) | |
| ☐ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material Pursuant to ss.240.14a-12 | |
FLOWERS FOODS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| Payment of filing fee (check the appropriate box): | ||
| ☑ | No fee required. | |
| ☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 | |
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(1) Title of each class of securities to which transaction applies:
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| (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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| (4) Proposed maximum aggregate value of transaction:
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| (5) Total fee paid
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| ☐ | Fee paid previously with preliminary materials. | |
| ☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |
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PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION, DATED MARCH 20, 2020
Dear Shareholder:
We would like to extend an invitation for you to join us at our annual meeting of shareholders on May 21, 2020 at 11:00 a.m., Eastern Time, at the Thomasville Municipal Auditorium in Thomasville, Georgia for the following purposes, as more fully described in this proxy statement:
| 1. | to elect as directors of the company the eight nominees identified in this proxy statement, each to serve for a term of one year; |
| 2. | to hold an advisory vote on the compensation of the company’s named executive officers; |
| 3. | to ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for Flowers Foods, Inc. for the fiscal year ending January 2, 2021; |
| 4. | to hold a vote on a management proposal to amend the company’s restated articles of incorporation and amended and restated bylaws to reduce supermajority vote requirements, including the supermajority threshold required to call a special meeting; and |
to transact any other business as may properly come before the annual meeting and at any adjournment or postponement thereof.
In addition, Flowers Foods’ senior management team will report on the performance of the company and respond to questions from shareholders.
The company has implemented the “Notice and Access” rule of the Securities and Exchange Commission that permits companies to send their shareholders a notice that proxy materials are available — in electronic form on the Internet or in printed form by request — instead of mailing a printed proxy statement and annual report to every shareholder. By utilizing Notice and Access, we are able to speed delivery of the proxy materials, lower our distribution costs and reduce the environmental impact of proxy delivery. On or about April [•], 2020, we mailed to our shareholders a notice that contains instructions on how to access our 2020 proxy statement and 2019 annual report and vote online or to affirmatively elect to receive the proxy materials by mail.
* As part of our precautions regarding the coronavirus or COVID-19, to the extent permitted by Georgia law, we are planning for the possibility that the meeting may be held solely by means of remote communications. If we take this step, we will announce the decision to do so in advance, and details on how to participate, including details on how to inspect a list of shareholders of record, will be posted on our website and filed with the SEC as proxy material.
Please carefully review the proxy materials. Your vote is important to us and to our business. We encourage you to vote using telephone or Internet voting prior to the annual meeting, so that your shares of Flowers Foods common stock will be represented and voted at the annual meeting even if you cannot attend. If you elected to receive paper copies of the proxy materials by mail, you may vote by signing, dating and mailing the proxy card in the envelope provided.
We hope to see you in Thomasville.
April [•], 2020
Thomasville, Georgia
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| |
| George E. Deese | A. Ryals McMullian | |
| Non-Executive Chairman of the Board | President and Chief Executive Officer |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on May 21, 2020
Flowers Foods, Inc.’s 2020 proxy statement and 2019 annual report are available at www.proxyvote.com.
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Notice of Annual Meeting of Shareholders
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May 21, 2020
11:00 a.m., Eastern Time
Thomasville Municipal Auditorium, 144 East Jackson Street, Thomasville, Georgia
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Flowers Foods, Inc. will be held on May 21, 2020 at 11:00 a.m., Eastern Time, at the Thomasville Municipal Auditorium, 144 East Jackson Street, Thomasville, Georgia for the following purposes:
| (1) | to elect as directors of the company the eight nominees identified in this proxy statement, each to serve for a term of one year; |
| (2) | to hold an advisory vote on the compensation of the company’s named executive officers; |
| (3) | to ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for Flowers Foods, Inc. for the fiscal year ending January 2, 2021; |
| (4) | to hold a vote on a management proposal to amend the company’s restated articles of incorporation and amended and restated bylaws to reduce supermajority voting requirements, including the supermajority threshold required to call a special meeting; and |
to transact any other business as may properly come before the annual meeting and at any adjournment or postponement thereof; all as set forth in the proxy statement accompanying this notice.
Only record holders of issued and outstanding shares of our common stock at the close of business on March 19, 2020 are entitled to notice of, and to vote at, the annual meeting, or any adjournment or postponement thereof. A list of such shareholders will be open for examination by any shareholder at the annual meeting.
April [•], 2020
1919 Flowers Circle
Thomasville, Georgia 31757
By order of the Board of Directors,
Stephanie B. Tillman
Chief Legal Counsel
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To assist you in reviewing Flowers Foods’ 2019 performance and executive compensation program, this summary highlights certain key elements of our financial performance and our proxy statement that are discussed in more detail elsewhere in these proxy materials. This summary does not contain all of the information that you should consider, and you should carefully review our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 and the entire proxy statement before voting. Page references (“XX”) are supplied to help you find further information in this proxy statement.
2020 Annual Meeting of Shareholders
| • | Date and Time: Thursday, May 21, 2020 at 11:00 a.m., Eastern Time |
| • | Location: Thomasville Municipal Auditorium, 144 East Jackson Street, Thomasville, Georgia |
| • | Record Date: March 19, 2020 |
Voting Matters and Board Recommendations (page [•])
| Board vote Recommendation | Page Reference (for more detail) |
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| Election of Eight Director-Nominees |
FOR each Director-Nominee | [•] | ||||||
| Advisory Vote on Executive Compensation | FOR | [•] | ||||||
| Ratification of Independent Registered Public Accounting Firm |
FOR | [•] | ||||||
| Management Proposal to Reduce Supermajority Voting Requirements, Including the Supermajority Threshold Required to Call a Special Meeting |
FOR | [•] | ||||||
Business Highlights
| (1) | Adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share and adjusted net income differ from the measures reported under U.S. generally accepted accounting principles (“GAAP”). See Appendix A for a reconciliation of non-GAAP financial measures to the nearest financial measure reported under GAAP. |
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Governance of the Company (page [•])
Forward-Leaning Corporate Governance
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Directors (page [•])
| Name | Age | Director since |
Experience | Independent | Committee Memberships |
Other Company Boards | ||||||||
| George E. Deese |
74 | 2004 | Retired Chairman and Chief Executive Officer of Flowers Foods | Yes | — | — | ||||||||
| Rhonda Gass |
56 | 2016 | Vice President and Chief Information Officer of Stanley Black & Decker | Yes | Audit and Finance Committees | — | ||||||||
| Benjamin H. Griswold, IV |
79 | 2005 | Partner and Chairman of Brown Advisory; retired Senior Chairman of Deutsche Bank Securities | Yes | Nominating/Corporate Governance and Compensation Committees | W.P. Carey Inc. | ||||||||
| Margaret G. Lewis |
66 | 2014 | Former President of Hospital Corporation of America’s Capital Division | Yes | Nominating/Corporate Governance and Compensation Committees |
W.P. Carey Inc. | ||||||||
| A. Ryals McMullian(1) |
50 | 2019 | President and Chief Executive Officer of Flowers Foods | No | — | — | ||||||||
| David V. Singer(2) |
64 | 2010 | Retired Chief Executive Officer of Snyder’s Lance, Inc. | Yes | Nominating/Corporate Governance and Compensation Committees | SPX Flow, Inc.; Brunswick Corporation; Hanesbrands, Inc.; Performance Food Group Company | ||||||||
| James T. Spear |
65 | 2015 | Retired Executive Vice President and Chief Financial Officer of Cadence Health | Yes | Audit and Finance Committees | The Trust Company of Illinois | ||||||||
| Melvin T. Stith, Ph.D. |
73 | 2004 | Former Interim President, Norfolk State University; former Dean Emeritus, Whitman School of Management, Syracuse University | Yes | Nominating/Corporate Governance and Compensation Committees | Aflac Incorporated | ||||||||
| C. Martin Wood III |
76 | 2001 | Partner of Wood Associates; retired Senior Vice President and Chief Financial Officer of Flowers Foods | Yes | Audit and Finance Committees | Archbold Medical Center; Archbold Foundation | ||||||||
| (1) | On August 16, 2019, the board of directors elected Mr. McMullian, the president and chief executive officer, as a director, effective immediately. |
| (2) | Mr. Singer is not being nominated for election as a director and his term as director will expire effective at the 2020 annual meeting of shareholders. |
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2019 Executive Compensation (page [•])
2019 Compensation Developments
Summary of Our Compensation Practices (page [•])
| Practices We Have Adopted | Practices We Do Not Engage In | |||
| • Pay targeted to the size-adjusted 50th percentile of market data
• Long-term incentives that are entirely performance-based for Named Executives
• Multiple performance measures used in incentive plans
• Capped incentives
• Clawback policy
• Stock ownership guidelines for executives and outside directors and share retention requirements for executives
• Moderate change of control severance arrangements
• Double-trigger equity vesting upon a change of control
• Annual review of tally sheets by the compensation committee
• Incentives that are risk-mitigated through plan design and administration
• Compensation committee comprised solely of independent directors
• Independent compensation consultant who reports directly to the compensation committee
• Anti-hedging policy for executives and outside directors |
• Employment agreements
• Dividend equivalents on unvested performance shares
• Income tax gross-ups
• Excise tax gross-ups on change of control severance
• Backdating or repricing of stock options
• Pension credited service for years not worked
• Employee/director perquisites |
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2019 Executive Compensation Summary (page [•])
Named Executive Compensation
Set forth below is a summary of the 2019 compensation for each named executive officer of the company as determined under applicable SEC rules and regulations (the “Named Executives”). Stock awards made in 2019 are performance-contingent and are established at market levels based on the industry survey data discussed under “Executive Compensation — Compensation Discussion and Analysis — Compensation Benchmarking” on page [•]. All other compensation consists solely of employer contributions to retirement plans, as we offer no perquisites to our Named Executives. The information below should be read in connection with the explanatory information contained on page [•] under “Executive Compensation — Compensation Discussion and Analysis” and page [•] under “Executive Compensation — Summary Compensation Table,” and is qualified in its entirety by reference to such information.
| Name and Principal Position | Salary ($) |
Stock Awards ($) |
Non-Equity Incentive Plan Compensation ($) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) |
All Other Compensation ($) |
Total ($) |
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| A. Ryals McMullian(1) President and Chief Executive Officer |
640,577 | 2,599,513 | 363,720 | 21,542 | 40,565 | 3,665,917 | ||||||||||||||||||
| Allen L. Shiver(2) Former President and Chief Executive Officer |
400,000 | 4,498,931 | (3) | — | 130,704 | 1,362,833 | 6,392,468 | |||||||||||||||||
| R. Steve Kinsey Chief Financial Officer and Chief Administrative Officer |
585,781 | 1,063,333 | 291,485 | 73,509 | 40,603 | 2,054,711 | ||||||||||||||||||
| Bradley K. Alexander Chief Operating Officer |
545,623 | 863,584 | 258,062 | 155,077 | 37,586 | 1,859,932 | ||||||||||||||||||
| Stephen R. Avera Chief Legal Counsel |
494,093 | 775,870 | 215,128 | 77,684 | 33,713 | 1,596,488 | ||||||||||||||||||
| D. Keith Wheeler Chief Sales Officer |
466,862 | 733,209 | 203,272 | 55,773 | 31,759 | 1,490,875 | ||||||||||||||||||
| (1) | Mr. McMullian served as chief operating officer until the 2019 annual meeting of shareholders when he was appointed to the position of president and chief executive officer. |
| (2) | Mr. Shiver retired from his position as president and chief executive officer, effective as of the 2019 annual meeting of shareholders. |
| (3) | Forfeited upon retirement. |
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2019 Executive Total Compensation Mix (page [•])
The information below should be read in connection with the explanatory information beginning on page [•] under “Executive Compensation — Compensation Discussion and Analysis — Mix of Compensation Opportunity,” and is qualified in its entirety by reference to such information.
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Social Responsibility (page [•])
At Flowers Foods, we recognize our responsibility to uphold the company’s founding values, which for 100 years, have always centered on working ethically, responsibly and with integrity. We also look for ways to make a positive difference in our community.
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FLOWERS FOODS, INC.
1919 Flowers Circle
Thomasville, Georgia 31757
PROXY STATEMENT FOR THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD MAY 21, 2020
This proxy statement and the accompanying form of proxy are being furnished to the shareholders of Flowers Foods, Inc. on or about April [•], 2020 in connection with the solicitation of proxies by the board of directors for use at the annual meeting of shareholders to be held on May 21, 2020 at 11:00 a.m., Eastern Time, at the Thomasville Municipal Auditorium, 144 East Jackson Street, Thomasville, Georgia, and any adjournment or postponement thereof.
THE ANNUAL MEETING AND VOTING
What is the purpose of the annual meeting?
At the annual meeting, shareholders will:
How do I attend the annual meeting in person?
Important note: If you plan to attend the annual meeting, you must follow these instructions to gain admission.
Pre-registration is required for attendance at the 2020 annual meeting, and you must be a Flowers Foods shareholder to register. The deadline for registration is May 18, 2020. All attendees will be required to present a valid, government-issued photo ID, such as a passport or driver’s license, to gain admission.
Please visit www.flowersfoods.com, and click on Shareholders Meeting Pre-registration.
We intend to hold our annual meeting in person. However, as part of our precautions regarding the coronavirus or COVID-19, to the extent permitted by Georgia law, we are planning for the possibility that the meeting may be held solely by means of remote communications. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be posted on our website and filed with the SEC as proxy material.
How does the board of directors recommend that I vote on each proposal?
The board of directors recommends that you vote:
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
If I am a registered shareholder, what if I do not give any instructions on a particular matter described in this proxy statement when voting by mail?
Can I change my vote after I have mailed my proxy card or after I have authorized the voting of my shares by Internet or telephone?
How do I vote my 401(k) shares?
Can I vote if my shares are held in “street name” by a bank, broker or other record holder?
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
How will abstentions be treated?
What if a quorum is not present at the meeting?
What vote is required for each matter to be voted upon at the annual meeting?
How will broker “non-votes” be treated?
Will any other business be conducted at the annual meeting or will other matters be voted on?
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Where can I find the voting results from the annual meeting?
How and when may I submit a shareholder proposal for the 2021 annual meeting?
Who pays the costs of soliciting proxies?
How can I obtain an Annual Report on Form 10-K?
Can I elect to receive future notices and proxy materials electronically?
Who should I contact if I have any questions?
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DIRECTORS AND CORPORATE GOVERNANCE
Below is certain information about our directors, their principal occupation, business experience as well as other matters, and the board of directors’ assessment of their individual qualifications to serve on our board of directors. Each of the individuals named below, with the exception of Mr. Singer, has been nominated to serve as a director until the 2021 annual meeting of shareholders. Mr. Singer has not been nominated for re-election and his term as director will expire upon his retirement effective at the 2020 annual meeting of shareholders. The company would like to express its genuine gratitude for Mr. Singer’s service to the company and its shareholders. Effective at the time of such retirement, the size of the board of directors will be reduced to eight.
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DIRECTORS AND CORPORATE GOVERNANCE
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DIRECTORS AND CORPORATE GOVERNANCE
The Board of Directors and Committees of the Board of Directors
The following table describes the current members of each of the committees and the number of meetings held during fiscal 2019:
| Audit Committee |
Nominating/Corporate Governance Committee |
Compensation Committee |
Finance Committee | |||||
| George E. Deese* |
||||||||
| Rhonda Gass* |
X | X | ||||||
| Benjamin H. Griswold, IV* |
Chair | X | ||||||
| Margaret G. Lewis* |
X | Chair | ||||||
| A. Ryals McMullian |
||||||||
| David V. Singer(1) |
X | X | ||||||
| James T. Spear* |
Chair | X | ||||||
| Melvin T. Stith, Ph.D.* |
X | X | ||||||
| C. Martin Wood III* |
X | Chair | ||||||
| NUMBER OF MEETINGS |
9 | 5 | 4 | 5 |
| * | Independent Directors |
| (1) | Mr. Singer’s term as director will expire upon his retirement effective at the 2020 annual meeting of shareholders. |
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DIRECTORS AND CORPORATE GOVERNANCE
Shareholder & Other Interested Party Communication with Directors
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Workplace Highlights
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| ✓ We foster a work environment that is safe, inclusive, respectful, and fair – and that allows people of different backgrounds, experiences, and perspectives to reach common business and professional goals. ✓ The safety of our team members is a top priority. ✓ Flowers Foods prohibits discrimination and harassment of any type without regard to race, color, religion, age, sex, national origin, disability status, genetics, protected veteran status, sexual orientation, gender identity or expression, or any other characteristic protected by federal, state or local laws. ✓ We are successful because of our employees, and they share in that success, as we provide competitive wages and benefits, and when annual company goals are met, eligible team members at all levels are rewarded with a bonus.
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DIRECTORS AND CORPORATE GOVERNANCE
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Community Involvement Highlights
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| ✓ Donated a total of $10.2 million in bakery foods toward the mission of Feeding America in 2019.* ✓ Through our Wonder Bread and Tastykake brands, we have made a commitment to donate up to $1 million to the USO by the end of 2020. ✓ We recruit U.S. military veterans, employing more than 700 veterans in 2018.** ✓ Established in 2015, the Dave’s Killer Bread Foundation strives to inspire other businesses to become Second Chance Employers. Nearly 30% of the workforce in the Dave’s Killer Bread Oregon bakery has a criminal background.
*Total value of product donations in wholesale dollars **A veteran is any individual who has served honorably on active duty in the Armed Forces of the United States.
|
Based upon the recommendations of the nominating/corporate governance committee, the board of directors considers and establishes director compensation. An employee of the company who also serves as a director does not receive any additional compensation for serving as a director or as a member or chair of a board committee.
2019 Director Compensation Package
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DIRECTORS AND CORPORATE GOVERNANCE
Given the above principles and market data, the non-employee director compensation package consisted of the following:
| Compensation Element | 2018 Program | 2019 Program | ||||||
| Annual Cash Retainer |
$ | 100,000 | $ | 100,000 | (1) | |||
| Committee Chair Retainers: |
||||||||
| • Audit Committee |
$ | 15,000 | $ | 22,500 | (2) | |||
| • Compensation Committee |
$ | 15,000 | $ | 20,000 | ||||
| • Nominating/Corporate Governance Committee |
$ | 10,000 | $ | 15,000 | ||||
| • Finance Committee |
$ | 10,000 | $ | 15,000 | ||||
| Audit Committee Member Retainer |
$ | 7,500 | $ | 7,500 | ||||
| Presiding Director Retainer |
$ | 20,000 | $ | 20,000 | ||||
| Non-Executive Chairman Retainer |
$ | 170,000 | $ | 170,000 | (3) | |||
| Annual Stock Award |
$ | 130,000 | $ | 130,000 | (4) | |||
| (1) | Cash retainers may be deferred at the director’s option; see “ — Additional Compensation Program Details.” |
| (2) | Includes audit committee member retainer. |
| (3) | The retainer for the non-executive chairman will be $100,000 for 2020. |
| (4) | Vests one year from the date of grant based upon the closing price of the company’s common stock on May 23, 2019. |
Additional Compensation Program Details
We reimburse all directors for out-of-pocket expenses incurred in connection with attendance at board of directors meetings, or when traveling in connection with the performance of their services for the company. Individuals in their service as directors do not receive any additional retirement benefits. Any retirement benefits received are due to legacy participation in benefit programs when they were employees of the company.
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DIRECTORS AND CORPORATE GOVERNANCE
DIRECTOR SUMMARY COMPENSATION TABLE
The following table details compensation to non-employee members of the board of directors for the 2019 fiscal year:
| Name | Fees Earned or Paid in Cash ($)(1) |
Stock Awards ($)(2) |
Change in Pension Value and Nonqualified Deferred Comp. Earnings ($)(3) |
All Other Comp. ($)(4) |
Total ($) |
|||||||||||||||
| George E. Deese |
270,000 | 130,000 | 146,145 | 34,599 | 580,744 | |||||||||||||||
| Rhonda Gass |
57,500 | 180,000 | 11,038 | — | 248,538 | |||||||||||||||
| Benjamin H. Griswold, IV |
132,917 | 130,000 | — | — | 262,917 | |||||||||||||||
| Margaret G. Lewis |
107,500 | 130,000 | 8,419 | — | 245,919 | |||||||||||||||
| Amos R. McMullian(5) |
41,667 | — | 150,855 | — | 192,522 | |||||||||||||||
| David V. Singer(6) |
117,917 | 130,000 | — | — | 247,917 | |||||||||||||||
| James T. Spear |
122,500 | 130,000 | — | — | 252,500 | |||||||||||||||
| Melvin T. Stith, Ph.D. |
100,000 | 130,000 | — | — | 230,000 | |||||||||||||||
| C. Martin Wood III |
120,417 | 130,000 | 50,572 | — | 300,989 | |||||||||||||||
| (1) | Directors have the option under the Omnibus Plan to convert their annual board of directors retainer fees into deferred stock equal in value to the cash payments these directors would have otherwise received. Directors may also elect to defer all or a portion of their annual retainer and cash committee fees, if any, through the EDCP. In 2019, Ms. Gass elected to defer 50% of her annual board of directors retainer fees into the EDCP. In fiscal 2019, under the Omnibus Plan, Ms. Gass elected to convert 50% of her annual board of directors’ retainer fees to deferred stock equal in value to the cash payments she would have received. Such deferred stock vests pro rata over one year from the date of grant and is delivered to the grantee along with accumulated dividends at a designated time selected by the grantee at the date of the grant. The deferred stock is accounted for in accordance with the provisions of Financial Accounting Standards Board (“FASB”) ASC Topic 718 (“ASC 718”). |
| (2) | The stock awards represent the grant date fair value computed in accordance with ASC 718 of deferred stock granted to each non-employee director under the Omnibus Plan in fiscal 2019 and deferred stock granted in connection with certain directors’ elections to convert annual retainer fees into deferred stock. Deferred stock awards vest one year from the date of grant and deferred stock granted in connection with a director’s election to convert annual board of directors retainer fees into deferred stock under the Omnibus Plan vests pro rata over a one-year period from the date of grant. Details regarding the deferred stock outstanding (vested and non-vested) by director as of December 28, 2019 are as follows: |
| Name | Deferred (#) |
Deferred ($) |
||||||
| George E. Deese |
5,780 | 125,657 | ||||||
| Rhonda Gass |
24,597 | 534,739 | ||||||
| Benjamin H. Griswold, IV |
5,780 | 125,657 | ||||||
| Margaret G. Lewis |
5,780 | 125,657 | ||||||
| Amos R. McMullian(5) |
— | — | ||||||
| David V. Singer(6) |
5,780 | 125,657 | ||||||
| James T. Spear |
28,592 | 621,590 | ||||||
| Melvin T. Stith, Ph.D. |
77,132 | 1,676,850 | ||||||
| C. Martin Wood III |
5,780 | 125,657 | ||||||
| (3) | Amounts reported in this column represent above-market earnings on deferred compensation under the EDCP for Messrs. Deese and McMullian and Mses. Gass and Lewis and, for Messrs. Deese, McMullian and Wood for changes in pension value under the Retirement Plan (as defined below). |
| (4) | Amounts reported as “All Other Compensation” in the Director Summary Compensation Table above is primarily administrative support provided to Mr. Deese by the company for his service as non-executive chairman of the board of directors. |
| (5) | Mr. McMullian’s term as a director expired upon his retirement effective at the 2019 annual meeting of shareholders. |
| (6) | Mr. Singer is not being nominated for election as a director and his term as a director will expire upon his retirement effective at the 2020 annual meeting of shareholders. |
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AND OTHERS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists information regarding the ownership of our common stock by the only non-affiliated individuals, entities or groups known to us to be the beneficial owner of more than 5% of our common stock:
| Name and Address of Beneficial Owner | Shares of Common Stock Beneficially Owned |
Percent of Class(1) |
||||||
| The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355(2) |
18,896,769 | 8.93% | ||||||
| BlackRock, Inc. 55 East 52nd Street New York, NY 10055(3) |
18,307,306 | 8.65% | ||||||
| T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202(4) |
16,178,249 | 7.65% | ||||||
| (1) | Percent of class is based upon the number of shares of Flowers Foods common stock outstanding on March 5, 2020. |
| (2) | The beneficial ownership reported is based upon a Schedule 13G/A filed by The Vanguard Group on February 12, 2020. The Schedule 13G/A indicates that The Vanguard Group has sole dispositive power as to 18,788,779 shares, sole voting power as to 104,610 shares, shared voting power as to 34,279 shares and shared dispositive power as to 107,990 shares. |
| (3) | The beneficial ownership reported is based upon a Schedule 13G/A filed by BlackRock, Inc. on February 5, 2020. The Schedule 13G/A indicates that BlackRock, Inc. has sole dispositive power as to all shares reported and sole voting power as to 17,481,951 shares. |
| (4) | The beneficial ownership reported is based upon a Schedule 13G/A filed by T. Rowe Price Associates, Inc. on February 14, 2020. The Schedule 13G/A indicates that T. Rowe Price Associates, Inc. has sole dispositive power as to all shares reported and sole voting power as to 5,243,659 shares. |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Share Ownership of Certain Executive Officers and Directors
The following table lists information as of March 5, 2020 regarding the number of shares owned by each director and each executive officer listed on the Summary Compensation Table included later in this proxy statement and by all of our directors and executive officers as a group. The address of each person in the table is Flowers Foods, Inc., 1919 Flowers Circle, Thomasville, Georgia 31757.
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) |
Percent of Class |
||||||
| Bradley K. Alexander |
320,331 | * | ||||||
| Stephen R. Avera |
542,433 | ( 2) | * | |||||
| George E. Deese |
3,209,162 | (3) | 1.52% | |||||
| Rhonda Gass |
18,128 | (4) | * | |||||
| Benjamin H. Griswold, IV |
335,612 | (5) | * | |||||
| R. Steve Kinsey |
328,580 | * | ||||||
| Margaret G. Lewis |
42,220 | (6) | * | |||||
| A. Ryals McMullian |
850,316 | (7) | * | |||||
| Allen L. Shiver |
958,399 | (8) | * | |||||
| David V. Singer |
101,298 | (9) | * | |||||
| James T. Spear |
90,386 | (10) | * | |||||
| Melvin T. Stith, Ph.D. |
120,732 | (11) | * | |||||
| D. Keith Wheeler |
59,101 | * | ||||||
| C. Martin Wood III |
10,405,307 | (12) | 4.92% | |||||
| All Directors and Executive Officers as a Group (14 persons) |
17,382,005 | 8.21% | ||||||
| * | Represents beneficial ownership of less than 1% of Flowers Foods common stock. |
| (1) | Unless otherwise indicated, each person has sole voting and dispositive power with respect to all shares listed opposite his or her name. |
| (2) | Includes 52,460 shares held by a trust of which Mr. Avera is a co-trustee, as to which shares Mr. Avera disclaims any beneficial ownership. |
| (3) | Includes (i) 50,301 shares owned by the spouse of Mr. Deese, as to which shares Mr. Deese disclaims any beneficial ownership; (ii) 675,000 shares held by a family LLC, over which shares Mr. Deese shares joint voting and dispositive power; (iii) 193,239 shares held by ten family trusts, over which shares Mr. Deese shares joint voting and dispositive power; and (iv) 4,816 shares of deferred stock, which would be distributed to Mr. Deese if he had separated his service from the company on March 5, 2020. |
| (4) | Includes 7,705 shares of deferred stock, which would be distributed to Ms. Gass if she had separated her service from the company on March 5, 2020. |
| (5) | Includes (i) 5,062 shares owned by the spouse of Mr. Griswold, as to which shares Mr. Griswold disclaims any beneficial ownership; and (ii) 4,816 shares of deferred stock, which would be distributed to Mr. Griswold if he had separated his service from the company on March 5, 2020. |
| (6) | Includes 4,816 shares of deferred stock, which would be distributed to Ms. Lewis if she had separated her service from the company on March 5, 2020. |
| (7) | Includes (i) time-based restricted stock units of 43,330 shares, all of which are subject to forfeiture; (ii) 18,401 shares held by the spouse of Mr. McMullian and 87,975 shares held by family trusts for the benefit of Mr. McMullian’s minor children, in each case as to which shares Mr. McMullian disclaims any beneficial ownership; and (iii) 55,063 shares held by a corporation of which Mr. McMullian is a director and shares voting and dispositive power over the shares. |
| (8) | Includes 12,600 shares held by Mr. Shiver as custodian for his child and 4,437 shares held by the spouse of Mr. Shiver, in each case as to which shares Mr. Shiver disclaims any beneficial ownership. |
| (9) | Includes (i) 8,537 shares held by a trust of which Mr. Singer is a trustee; and (ii) 4,816 shares of deferred stock, which would be distributed to Mr. Singer if he had separated his service from the company on March 5, 2020. |
| (10) | Includes (i) 100 shares held by Mr. Spear’s child, over which shares Mr. Spear shares voting and investment authority; and (ii) 11,218 shares of deferred stock, which would be distributed to Mr. Spear if he had separated his service from the company on March 5, 2020. |
| (11) | Includes (i) 50 shares held by the spouse of Dr. Stith as custodian for a minor child, as to which shares Dr. Stith disclaims any beneficial ownership; and (ii) 76,168 shares of deferred stock, which would be distributed to Dr. Stith if he had separated his service from the company on March 5, 2020. |
| (12) | Includes (i) 17,934 shares held by a trust of which Mr. Wood is trustee, 6,587,672 shares owned by the spouse of Mr. Wood and 2,626,110 shares held by trusts of which the spouse of Mr. Wood is independent trustee, in each case as to which shares Mr. Wood disclaims any beneficial ownership; and (ii) 4,816 shares of deferred stock, which would be distributed to Mr. Wood if he had separated his service from the company on March 5, 2020. |
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of our records and written representations by the persons required to file these reports, except as set forth below, all stock transaction reports required to be filed by Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), with the SEC were timely filed in fiscal 2019 by directors and executive officers.
Due to administrative errors, late Form 4s reporting awards of deferred stock granted to Ms. Gass and Mr. Spear that were due on January 4, 2019 were filed on January 7, 2019 and a late Form 4 reporting shares held by family trusts for which Mr. Deese is a co-trustee that was due on March 7, 2019 was filed on May 28, 2019.
COMPENSATION DISCUSSION AND ANALYSIS
Consideration of 2019 Say on Pay Vote
We currently hold our say on pay vote every year. At our 2019 annual meeting of shareholders, more than 97% of the shares voted were cast in support of our executive compensation program. As a result of the significant level of approval, we continued to apply similar principles to our executive compensation decisions during the remainder of 2019 and in early 2020. Shareholders will have an opportunity to cast an advisory vote on the frequency of future say on pay votes at least every six years. The next required advisory vote on the frequency of future say on pay votes will occur no later than the company’s annual meeting of shareholders in 2023.
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EXECUTIVE COMPENSATION
Summary of Our Compensation Practices
| Practices We Have Adopted | Practices We Do Not Engage in | |||
|
• Pay targeted to the size-adjusted 50th percentile of market data
• Long-term incentives that are entirely performance-based for Named Executives
• Multiple performance measures used in incentive plans
• Capped incentives
• Clawback policy
• Stock ownership guidelines for executives and outside directors and share retention requirements for executives
• Moderate change of control severance arrangements
• Double-trigger equity vesting upon a change of control
• Annual review of tally sheets by the compensation committee
• Incentives that are risk-mitigated through plan design and administration
• Compensation committee comprised solely of independent directors
• Independent compensation consultant who reports directly to the compensation committee
• Anti-hedging policy for executives and outside directors |
• Employment agreements
• Dividend equivalents on unvested performance shares
• Income tax gross-ups
• Excise tax gross-ups on change of control severance
• Backdating or repricing of stock options
• Pension credited service for years not worked
• Employee/director perquisites | |||
EXECUTIVE COMPENSATION GENERALLY
Objectives of Executive Compensation
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EXECUTIVE COMPENSATION
Because there are not many food companies the size of Flowers Foods, a specific set of peer companies is not used for market compensation comparisons. We use market pay data for base salary, target bonus and long-term incentive opportunity based on available food industry and general industry peers’ pay data from published surveys. We use an average of food industry and general industry (the “Relevant Market Sector”) survey data when making market comparisons, and the data is adjusted to reflect pay for companies with annual revenues comparable to the company (the “Relevant Market Data”). When establishing pay levels for fiscal 2019, data was collected from the Willis Towers Watson Executive Compensation Database using both general industry data (from 700+ companies) and data from the Food & Beverage industry cut comprised of the following companies:
| WILLIS TOWERS WATSON EXECUTIVE COMPENSATION DATABASE — FOOD & BEVERAGE COMPANIES | ||||
| American Sugar Refining Anheuser-Busch Arby’s Restaurant Group Beam Suntory Brown-Forman Bunge Bush Brothers & Company Campbell Soup Chewy.com Coca-Cola Coca-Cola Refreshments Community Coffee ConAgra Foods Dairy Farmers of America Dean Foods Diageo North America E.A. Sween Company |
Farmer Brothers Ferrara Candy Company General Mills Glanbia Group Services Grande Cheese Hershey Hormel Foods Ilitch Holdings Itochu Corporation Kellogg Keurig Green Mountain Keystone Foods Kraft Heinz Lamb Weston Holdings Land O’Lakes Leprino Foods Mars Incorporated |
McCain Foods McCormick Mondelez Nestle USA OSI Group Parmalat PepsiCo Rich Products Schreiber Foods Smithfield Foods Trinchero Family Estates Tyson Foods Ventura Foods Wayne Farms Wells Enterprises | ||
The Relevant Market Data obtained from the companies above was for pay opportunity, not actual payout, and was regressed (size-adjusted) to reflect appropriate scope of revenue responsibility. The Relevant Market Data is calculated using the simple average of the regressed food industry and general industry market rates. Both are established at levels that approximate the size-adjusted 50th percentile for each component of pay opportunity (i.e., base salary, target bonus and long-term incentive opportunity). This approach sets executive pay opportunities at appropriate levels to be competitive and to attract, retain and motivate the most qualified executives.
The compensation committee concluded that the proposed 2019 compensation levels under the company’s incentive and equity compensation plans for each Named Executive, and their total compensation opportunities, were consistent with a pay-for-performance philosophy, as well as appropriate to meet the company’s goal to retain each Named Executive and to align his interests with those of the company’s shareholders.
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EXECUTIVE COMPENSATION
| Named Executive | 2019 Salary (Actual) |
2018 Salary (Actual) |
Percent Change | |||||||||
| A. Ryals McMullian, President and Chief Executive Officer |
$ | 640,577 | $ | 414,419 | 54.6 | % | ||||||
| Allen L. Shiver, Former President and Chief Executive Officer |
$ | 400,000 | $ | 1,000,000 | (60.0 | %) | ||||||
| R. Steve Kinsey, Chief Financial Officer and Chief Administrative Officer |
$ | 585,781 | $ | 572,308 | 2.4 | % | ||||||
| Bradley K. Alexander, Chief Operating Officer |
$ | 545,623 | $ | 540,000 | 1.0 | % | ||||||
| Stephen R. Avera, Chief Legal Counsel |
$ | 494,093 | $ | 484,230 | 2.0 | % | ||||||
| D. Keith Wheeler, Chief Sales Officer |
$ | 466,862 | $ | 455,424 | 2.5 | % | ||||||
Annual Executive Cash Incentive Awards
| Named Executive | Target Bonus Percentage | |||
| A. Ryals McMullian,(1) President and Chief Executive Officer |
90.3 | % | ||
| Allen L. Shiver,(2) Former President and Chief Executive Officer |
110.0 | % | ||
| R. Steve Kinsey, Chief Financial Officer and Chief Administrative Officer |
80.0 | % | ||
| Bradley K. Alexander,(3) Chief Operating Officer |
76.1 | % | ||
| Stephen R. Avera, Chief Legal Counsel |
70.0 | % | ||
| D. Keith Wheeler, Chief Sales Officer |
70.0 | % | ||
| (1) | Mr. McMullian’s Target Bonus Percentage increased from 75% to 100% on May 23, 2019. His effective Target Bonus Percentage was calculated using the weighted average of his Target Bonus Percentage before and after May 23, 2019. |
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EXECUTIVE COMPENSATION
| (2) | Mr. Shiver forfeited his annual cash incentive award upon retirement. |
| (3) | Mr. Alexander’s Target Bonus Percentage increased from 70% to 80% on May 23, 2019. His effective Target Bonus Percentage was calculated using the weighted average of his Target Bonus Percentage before and after May 23, 2019. |
2019 bonuses were awarded to participating Named Executives based on the following formula:
| • | the Named Executive’s base salary; multiplied by |
| • | the Target Bonus Percentage; multiplied by |
| • | the “Actual Bonus Percentage,” a percentage based upon the company’s actual EBITDA for the fiscal year as compared to the payout scale below which uses straight-line interpolation between points. The scale also shows the percentage of the 2019 EBITDA Goal (as defined below) achieved and the related applicable bonus percentages: |
| Level of Achievement | % of EBITDA Goal Achieved |
Applicable Bonus Percentage |
||||||
| Maximum |
115 | % | 200 | % | ||||
| Target |
100 | % | 100 | % | ||||
| Actual |
94.59 | % | 62.2 | % | ||||
| Threshold |
90 | % | 30 | % | ||||
LONG-TERM INCENTIVE COMPENSATION
The objective of providing long-term incentive compensation is to focus executives on metrics that lead to increased shareholder value over a longer period of time. It rewards achievement of the specific metrics described below. We choose to grant long-term incentive compensation opportunity because it aligns Named Executives’ interests with those of shareholders and helps to retain a stable management team.
Equity and Performance Compensation Awards
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EXECUTIVE COMPENSATION
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EXECUTIVE COMPENSATION
Recoupment (“Clawback”) Provision
The company’s insider trading policy prohibits short-term, speculative trading practices and hedging by executive officers, including any Named Executives, and directors.
RETIREMENT & OTHER POST-EMPLOYMENT BENEFITS
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EXECUTIVE COMPENSATION
Executive Share Ownership Guidelines
| Named Executive | Share Ownership Guideline | |||
| President and Chief Executive Officer |
6 times base salary | |||
| Chief Financial Officer and Chief Administrative Officer |
3 times base salary | |||
| Chief Operating Officer |
3 times base salary | |||
| Chief Legal Counsel |
2 times base salary | |||
| Chief Sales Officer |
2 times base salary | |||
Tax Deductibility of Executive Compensation
The compensation committee is responsible for evaluating and approving the company’s compensation plans, policies and programs. The compensation committee has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with the company’s management and, based on this review and discussion, recommended to the board of directors that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 filed with the SEC and proxy statement for the 2020 annual meeting of shareholders.
The Compensation Committee of the Board of Directors:
Margaret G. Lewis, Chair
Benjamin H. Griswold, IV
David V. Singer
Melvin T. Stith, Ph.D.
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EXECUTIVE COMPENSATION
The following table summarizes the compensation of the Named Executives, which include the former chief executive officer, chief executive officer, chief financial officer and each of the three other most highly compensated executive officers of Flowers Foods for the fiscal years ended December 28, 2019, December 29, 2018 and December 30, 2017, except with respect to Mr. McMullian, for whom only fiscal 2019 compensation is reported because he was not a Named Executive in the prior years.
| Name and Principal Position | Year | Salary ($)(1) |
Stock Awards ($)(2) |
Non-Equity Incentive Plan Comp. ($)(3) |
Change in Pension Value and Nonqualified Deferred Comp. Earnings ($)(4) |
All Other Comp. ($)(5) |
Total ($) |
|||||||||||||||||||||
| A. Ryals McMullian |
2019 | 640,577 | 2,599,513 | 363,720 | 21,542 | 40,565 | 3,665,917 | |||||||||||||||||||||
| President and |
||||||||||||||||||||||||||||
| Chief Executive Officer |
||||||||||||||||||||||||||||
| Allen L. Shiver(6) |
2019 | 400,000 | 4,498,931 | (7) | — | 130,704 | 1,362,833 | 6,392,468 | ||||||||||||||||||||
| Former President and |
2018 | 1,000,000 | — | 281,600 | 35,728 | 89,553 | 1,406,881 | |||||||||||||||||||||
| Chief Executive Officer |
2017 | 1,000,000 | 4,435,334 | 892,100 | 86,910 | 82,306 | 6,496,650 | |||||||||||||||||||||
| R. Steve Kinsey |
2019 | 585,781 | 1,063,333 | 291,485 | 73,509 | 40,603 | 2,054,711 | |||||||||||||||||||||
| Chief Financial Officer and |
2018 | 572,308 | — | 117,209 | 19,479 | 45,440 | 754,436 | |||||||||||||||||||||
| Chief Administrative Officer |
2017 | 540,000 | 897,194 | 350,352 | 48,276 | 39,175 | 1,874,997 | |||||||||||||||||||||
| Bradley K. Alexander |
2019 | 545,623 | 863,584 | 258,062 | 155,077 | 37,586 | 1,859,932 | |||||||||||||||||||||
| Chief Operating Officer |
2018 | 540,000 | — | 96,768 | 37,858 | 42,827 | 717,453 | |||||||||||||||||||||
| 2017 | 540,000 | 897,194 | 350,352 | 99,375 | 39,200 | 1,926,121 | ||||||||||||||||||||||
| Stephen R. Avera |
2019 | 494,093 | 775,870 | 215,128 | 77,684 | 33,713 | 1,596,488 | |||||||||||||||||||||
| Chief Legal Counsel |
2018 | 484,230 | — | 86,774 | 5,804 | 37,094 | 613,902 | |||||||||||||||||||||
| 2017 | 475,000 | 678,198 | 269,658 | 47,497 | 33,753 | 1,504,106 | ||||||||||||||||||||||
| D. Keith Wheeler |
2019 | 466,862 | 733,209 | 203,272 | 55,773 | 31,759 | 1,490,875 | |||||||||||||||||||||
| Chief Sales Officer |
2018 | 455,424 | — | 81,611 | 1,857 | 34,864 | 573,756 | |||||||||||||||||||||
| 2017 | 421,270 | 601,592 | 239,155 | 34,044 | 25,256 | 1,321,317 | ||||||||||||||||||||||
| (1) | Named Executives may elect to defer amounts into the 401(k) Plan (up to the U.S. Internal Revenue Service (“IRS”) limits) and into the EDCP. Amounts of salary deferred during fiscal 2019 were as follows: |
| Name | Salary Deferrals into 401(k) Plan ($) |
Salary Deferrals into EDCP ($) |
Total ($) |
|||||||||
| A. Ryals McMullian |
19,000 | 52,875 | 71,875 | |||||||||
| Allen L. Shiver |
25,000 | 41,923 | 66,923 | |||||||||
| R. Steve Kinsey |
25,000 | 40,985 | 65,985 | |||||||||
| Bradley K. Alexander |
25,000 | 133,278 | 158,278 | |||||||||
| Stephen R. Avera |
25,000 | 92,773 | 117,773 | |||||||||
| D. Keith Wheeler |
25,000 | 37,331 | 62,331 | |||||||||
| (2) | Grant date fair value of performance-contingent restricted stock (reported in the “Stock Awards” column) made under the Omnibus Plan in 2017 and 2019 and compiled in accordance with ASC 718 based on the probable outcome of the performance goals as of the grant date. There were no performance-contingent restricted stock award grants made in 2018. See Note 19 and Note 18 to the company’s consolidated financial statements in our Annual Report on Form 10-K for the fiscal years ended December 28, 2019, and December 30, 2017, respectively, for a description of the assumptions made in the valuation of stock awards under ASC 718. Mr. Shiver forfeited his awards upon retirement. Based on the maximum allowable payout value of the ROIC-based performance-contingent restricted stock awards granted in 2019, if the maximum number of shares are earned under the Omnibus Plan for the three-year performance period ending January 1, 2022, using the price of the company’s common stock at December 27, 2019, the awards would have the following values: Mr. McMullian, $1,011,736; Mr. Kinsey, $724,768; Mr. Alexander, $588,611; Mr. Avera, $176,268; and Mr. Wheeler, $499,759. Mr. Shiver forfeited his ROIC-based performance-contingent restricted stock awards granted upon retirement. Based on the maximum allowable payout value of the TSR-based performance-contingent restricted stock awards granted in 2019, if maximum performance is achieved under the Omnibus Plan for the three-year performance period ending December 31, 2021, using the price of the company’s common stock at December 27, 2019, the awards would have the following values: Mr. McMullian, $1,618,760; Mr. Kinsey, $1,159,612; Mr. Alexander, $941,777; Mr. Avera, $282,033; and Mr. Wheeler, $799,597. Mr. Shiver forfeited his TSR-based performance-contingent restricted stock awards granted upon retirement. Due to Mr. Avera’s retirement on December 28, 2019, he will receive one-third of his stock awards granted in 2019 at the time of vesting. |
| (3) | Non-equity incentive plan compensation includes all performance-based cash awards under the Omnibus Plan earned by the Named Executives during the fiscal year. |
| (4) | Amounts reported in the “Change in Pension Value and Nonqualified Deferred Comp. Earnings” column for 2019 are as follows. Mr. McMullian was not a participant in the Retirement Plan, as he was hired after the Plan was closed to new entrants; therefore his Change in Pension Value is $0. |
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EXECUTIVE COMPENSATION
| Name | Change in Pension Value ($) |
Above-Market Nonqualified Deferred Comp. Earnings ($) |
Total ($) |
|||||||||
| A. Ryals McMullian |
— | 21,542 | 21,542 | |||||||||
| Allen L. Shiver |
80,149 | 50,555 | 130,704 | |||||||||
| R. Steve Kinsey |
46,442 | 27,067 | 73,509 | |||||||||
| Bradley K. Alexander |
101,412 | 53,665 | 155,077 | |||||||||
| Stephen R. Avera |
67,800 | 9,884 | 77,684 | |||||||||
| D. Keith Wheeler |
51,668 | 4,105 | 55,773 | |||||||||
| (5) | Amounts reported in the “All Other Comp.” column for 2019 are reported in the table below. |
| Name | Retirement ($) |
Employer Contributions to Section 401(k) Plan ($) |
Employer Contributions to Nonqualified Deferred Comp. Plan ($) |
Total ($) |
||||||||||||
| A. Ryals McMullian |
— | 16,800 | 23,765 | 40,565 | ||||||||||||
| Allen L. Shiver |
1,319,231 | 16,800 | 26,802 | 1,362,833 | ||||||||||||
| R. Steve Kinsey |
— | 16,800 | 23,803 | 40,603 | ||||||||||||
| Bradley K. Alexander |
— | 16,800 | 20,786 | 37,586 | ||||||||||||
| Stephen R. Avera |
— | 16,800 | 16,913 | 33,713 | ||||||||||||
| D. Keith Wheeler |
— | 16,800 | 14,959 | 31,759 | ||||||||||||
| (6) | Mr. Shiver retired effective May 23, 2019. |
| (7) | Forfeited upon retirement. |
| Year | CEO Total Compensation ($) |
Median Employee Total Compensation ($) |
Ratio of CEO to Median Employee Total Compensation | |||
| 2019 | 3,822,322 | 75,995 | 50:1 |
Our chief executive officer’s annual total compensation is 50 times that of the median of the annual total compensation of all our employees. The pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. We used the following methodology in calculating the pay ratio:
| 1. | We included all employees active as of December 31, 2019, with the exception of our current chief executive officer, to identify the median employee. We did not include any (i) employees with 2019 compensation who were no longer active as of December 31, 2019, (ii) contract labor employees, (iii) independent distributors, (iv) leased labor employees or (v) employees hired prior to December 31, 2019 without 2019 compensation. We do not have any employees located outside of the United States. |
| 2. | We found the median employee using 2019 gross compensation reported to the U.S. Internal Revenue Service on Form W-2 for the period of January 1, 2019 to December 31, 2019. Specifically, we used Form W-2, Box 5, Medicare Wages and Tips. |
| 3. | In light of the chief executive officer transition that occurred in May 2019, as permitted by SEC rules, we elected to annualize our chief executive officer compensation for purposes of the pay ratio based on the compensation of Mr. McMullian, who was serving as chief executive officer on December 31, 2019. The compensation reported for the chief executive officer’s annual total compensation is from the Summary Compensation Table on page [•] of this proxy statement, annualized where practicable per SEC rules, and also includes employer-provided health and wellness benefits. The total compensation reported for the median employee is the total amount of compensation paid to the median employee during the period of January 1, 2019 to December 31, 2019 and also includes employer-provided health and wellness benefits. |
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EXECUTIVE COMPENSATION
The following table details grants made during the fiscal year ended December 28, 2019 pursuant to incentive plans in place at Flowers Foods as of that date:
| Grant Date for Equity- Based Awards |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) |
Estimated Future Payouts Under Equity Incentive Plan Awards |
All Other Stock Awards: Number of Shares of Stock or Units (#) |
Grant Date Fair Value of Stock Awards ($)(3) |
||||||||||||||||||||||||||||||||
| Name and Grant | Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
||||||||||||||||||||||||||||||
| A. Ryals McMullian |
||||||||||||||||||||||||||||||||||||
| Non-Equity Incentive Plan Award |
— | 584,760 | 1,169,520 | — | ||||||||||||||||||||||||||||||||
| ROIC-Based Performance Contingent Restricted Stock Grant |
12/30/2018 | — | 26,200 | 32,750 | 479,198 | |||||||||||||||||||||||||||||||
| TSR-Based Performance Contingent Restricted Stock Grant |
1/1/2019 | — | 26,200 | 52,400 | 565,396 | |||||||||||||||||||||||||||||||
| ROIC-Based Performance Contingent Restricted Stock Grant |
05/23/2019 | — | 11,030 | 13,788 | 254,572 | |||||||||||||||||||||||||||||||
| TSR-Based Performance Contingent Restricted Stock Grant |
05/23/2019 | — | 11,030 | 22,060 | 300,347 | |||||||||||||||||||||||||||||||
| Time-Based Restricted Stock Units |
05/23/2019 | — | 43,330 | 1,000,000 | ||||||||||||||||||||||||||||||||
| Allen L. Shiver |
||||||||||||||||||||||||||||||||||||
| Non-Equity Incentive Plan Award(2) |
— | 1,100,000 | 2,200,000 | — | ||||||||||||||||||||||||||||||||
| ROIC-Based Performance Contingent Restricted Stock Grant(2) |
12/30/2018 | — | 112,840 | 141,050 | 2,063,844 | |||||||||||||||||||||||||||||||
| TSR-Based Performance Contingent Restricted Stock Grant(2) |
1/1/2019 | — | 112,840 | 225,680 | 2,435,087 | |||||||||||||||||||||||||||||||
| R. Steve Kinsey |
||||||||||||||||||||||||||||||||||||
| Non-Equity Incentive Plan Award |
— | 468,625 | 937,250 | — | ||||||||||||||||||||||||||||||||
| ROIC-Based Performance Contingent Restricted Stock Grant |
12/30/2018 | — | 26,670 | 33,338 | 487,794 | |||||||||||||||||||||||||||||||
| TSR-Based Performance Contingent Restricted Stock Grant |
1/1/2019 | — | 26,670 | 53,340 | 575,539 | |||||||||||||||||||||||||||||||
| Bradley K. Alexander |
||||||||||||||||||||||||||||||||||||
| Non-Equity Incentive Plan Award |
— | 414,890 | 829,780 | — | ||||||||||||||||||||||||||||||||
| ROIC-Based Performance Contingent Restricted Stock Grant |
12/30/2018 | — | 21,660 | 27,075 | 396,161 | |||||||||||||||||||||||||||||||
| TSR-Based Performance Contingent Restricted Stock Grant |
1/1/2019 | — | 21,660 | 43,320 | 467,423 | |||||||||||||||||||||||||||||||
| Stephen R. Avera |
||||||||||||||||||||||||||||||||||||
| Non-Equity Incentive Plan Award |
— | 345,865 | 691,730 | — | ||||||||||||||||||||||||||||||||
| ROIC-Based Performance Contingent Restricted Stock Grant |
12/30/2018 | — | 19,460 | 24,325 | 355,923 | |||||||||||||||||||||||||||||||
| TSR-Based Performance Contingent Restricted Stock Grant |
1/1/2019 | — | 19,460 | 38,920 | 419,947 | |||||||||||||||||||||||||||||||
| D. Keith Wheeler |
||||||||||||||||||||||||||||||||||||
| Non-Equity Incentive Plan Award |
— | 326,804 | 653,608 | — | ||||||||||||||||||||||||||||||||
| ROIC-Based Performance Contingent Restricted Stock Grant |
12/30/2018 | — | 18,390 | 22,988 | 336,353 | |||||||||||||||||||||||||||||||
| TSR-Based Performance Contingent Restricted Stock Grant |
1/1/2019 | — | 18,390 | 36,780 | 396,856 | |||||||||||||||||||||||||||||||
42 FLOWERS FOODS, INC. - 2020 Proxy Statement
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EXECUTIVE COMPENSATION
| (1) | Under the terms of the Omnibus Plan, bonuses are awarded based on the achievement of a specified EBITDA goal. |
| (2) | Forfeited upon retirement on May 23, 2019. |
| (3) | Grant date fair value of performance-contingent restricted stock compiled in accordance with ASC 718 based on the probable outcome of the performance goals as of the grant date. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table details all equity awards granted and outstanding as of December 28, 2019, the company’s most recent fiscal year end:
| Stock Awards | ||||||||||||||||||||
| Name and Grants | Grant Date for Equity- Based Awards(1) |
Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of Shares or Units of Stock That Have Not Vested ($) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) |
|||||||||||||||
| A. Ryals McMullian |
||||||||||||||||||||
| ROIC-Based Performance Contingent Restricted Stock Grant |
12/30/2018 | 26,200 | 569,588 | |||||||||||||||||
| TSR-Based Performance Contingent Restricted Stock Grant |
1/1/2019 | 26,200 | 569,588 | |||||||||||||||||
| ROIC-Based Performance Contingent Restricted Stock Grant |
05/23/2019 | 11,030 | 239,792 | |||||||||||||||||
| TSR-Based Performance Contingent Restricted Stock Grant |
05/23/2019 | 11,030 | 239,792 | |||||||||||||||||
| Time-Based Restricted Stock Units |
05/23/2019 | 43,330 | 941,994 | — | — | |||||||||||||||
| Allen L. Shiver |
||||||||||||||||||||
| ROIC-Based Performance Contingent Restricted Stock Grant(3) |
12/30/2018 | — | — | |||||||||||||||||
| TSR-Based Performance Contingent Restricted Stock Grant(3) |
1/1/2019 | — | — | |||||||||||||||||
| R. Steve Kinsey |
||||||||||||||||||||
| ROIC-Based Performance Contingent Restricted Stock Grant |
12/30/2018 | 26,670 | 579,806 | |||||||||||||||||
| TSR-Based Performance Contingent Restricted Stock Grant |
1/1/2019 | 26,670 | 579,806 | |||||||||||||||||
| Bradley K. Alexander |
||||||||||||||||||||
| ROIC-Based Performance Contingent Restricted Stock Grant |
12/30/2018 | 21,660 | 470,888 | |||||||||||||||||
| TSR-Based Performance Contingent Restricted Stock Grant |
1/1/2019 | 21,660 | 470,888 | |||||||||||||||||
| Stephen R. Avera |
||||||||||||||||||||
| ROIC-Based Performance Contingent Restricted Stock Grant |
12/30/2018 | 19,460 | 423,060 | |||||||||||||||||
| TSR-Based Performance Contingent Restricted Stock Grant |
1/1/2019 | 19,460 | 423,060 | |||||||||||||||||
| D. Keith Wheeler |
||||||||||||||||||||
| ROIC-Based Performance Contingent Restricted Stock Grant |
12/30/2018 | 18,390 | 399,799 | |||||||||||||||||
| TSR-Based Performance Contingent Restricted Stock Grant |
1/1/2019 | 18,390 | 399,799 | |||||||||||||||||
FLOWERS FOODS, INC. - 2020 Proxy Statement 43
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EXECUTIVE COMPENSATION
| (1) | The performance measurement periods for the 2019 ROIC-Based Performance-Contingent Restricted Stock awards and the 2019 TSR-Based Performance-Contingent Restricted Stock awards run from December 30, 2018 to January 1, 2022 and from January 1, 2019 to December 31, 2021, respectively, and both awards vest upon the filing of the Annual Report on Form 10-K for the company’s 2021 fiscal year. |
| (2) | Achievement to date at the threshold level, based on December 27, 2019 closing market price of $21.74 for Flowers Foods’ common stock. |
| (3) | 112,840 shares of ROIC-based performance-contingent restricted stock and 112,840 shares of TSR-based performance-contingent restricted stock granted on December 30, 2018. Forfeited upon retirement on May 23, 2019. |
The following table details vesting of all restricted stock awards during the fiscal year ended December 28, 2019.
| Restricted Stock Awards | ||||||||
| Name | Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($) |
||||||
| A. Ryals McMullian(1) |
4,924 | 103,306 | ||||||
| Allen L. Shiver(2) |
233,654 | 4,902,061 | ||||||
| R. Steve Kinsey(3) |
47,263 | 991,578 | ||||||
| Bradley K. Alexander(4) |
47,263 | 991,578 | ||||||
| Stephen R. Avera(5) |
35,727 | 749,552 | ||||||
| D. Keith Wheeler(6) |
31,692 | 664,898 | ||||||
| (1) | Mr. McMullian was granted 4,320 shares of performance-contingent restricted stock on January 1, 2017 under the Omnibus Plan. This award vested on February 21, 2019. Because the company met certain performance criteria at 100% of target (75% of target for ROIC-based performance-contingent restricted stock awards and 153% of target for TSR-based performance-contingent restricted stock awards), this award was increased to 4,924 shares. |
| (2) | Mr. Shiver was granted 204,960 shares of performance-contingent restricted stock on January 1, 2017 under the Omnibus Plan. This award vested on February 21, 2019. Because the company met certain performance criteria at 100% of target (75% of target for ROIC-based performance-contingent restricted stock awards and 153% of target for TSR-based performance-contingent restricted stock awards), this award was increased to 233,654 shares. |
| (3) | Mr. Kinsey was granted 41,460 shares of performance-contingent restricted stock on January 1, 2017 under the Omnibus Plan. This award vested on February 21, 2019. Because the company met certain performance criteria at 100% of target (75% of target for ROIC-based performance-contingent restricted stock awards and 153% of target for TSR-based performance-contingent restricted stock awards), this award was increased to 47,263 shares. |
| (4) | Mr. Alexander was granted 41,460 shares of performance-contingent restricted stock on January 1, 2017 under the Omnibus Plan. This award vested on February 21, 2019. Because the company met certain performance criteria at 100% of target (75% of target for ROIC-based performance-contingent restricted stock awards and 153% of target for TSR-based performance-contingent restricted stock awards), this award was increased to 47,263 shares. |
| (5) | Mr. Avera was granted 31,340 shares of performance-contingent restricted stock on January 1, 2017 under the Omnibus Plan. This award vested on February 21, 2019. Because the company met certain performance criteria at 100% of target (75% of target for ROIC-based performance-contingent restricted stock awards and 153% of target for TSR-based performance-contingent restricted stock awards), this award was increased to 35,727 shares. |
| (6) | Mr. Wheeler was granted 27,800 shares of performance-contingent restricted stock on January 1, 2017 under the Omnibus Plan. This award vested on February 21, 2019. Because the company met certain performance criteria at 100% of target (75% of target for ROIC-based performance-contingent restricted stock awards and 153% of target for TSR-based performance-contingent restricted stock awards), this award was increased to 31,692 shares. |
The following table details the number of years of service credited and the present value of the accumulated benefits as of the December 28, 2019 measurement date related to the Retirement Plan.
| Name | Plan Name | Number of Years Credited Service(1) |
Present Value of Accumulated Benefit ($) |
|||||||
| A. Ryals McMullian(2) |
Retirement | — | — | |||||||
| Allen L. Shiver |
Retirement | 24 | 599,398 | |||||||
| R. Steve Kinsey |
Retirement | 13 | 270,606 | |||||||
| Bradley K. Alexander |
Retirement | 25 | 646,078 | |||||||
| Stephen R. Avera |
Retirement | 16 | 479,422 | |||||||
| D. Keith Wheeler |
Retirement | 16 | 277,343 | |||||||
44 FLOWERS FOODS, INC. - 2020 Proxy Statement
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EXECUTIVE COMPENSATION
| (1) | Credited service does not match actual service because the plan was frozen as of December 31, 2005. |
| (2) | Mr. McMullian was not a participant in the Retirement Plan, as he was hired after the Plan was closed to new entrants. |
NONQUALIFIED DEFERRED COMPENSATION
| Name | Employee Contributions in FY 2019 ($)(1) |
Employer Contributions in FY 2019 ($)(2) |
Aggregate Earnings in FY 2019 ($)(3) |
Aggregate Withdrawals/ Distributions in FY 2019 ($) |
Aggregate Balance at 12/28/2019 ($)(4) |
|||||||||||||||
| A. Ryals McMullian |
52,875 | 23,765 | 41,470 | — | 732,780 | |||||||||||||||
| Allen L. Shiver |
41,923 | 26,802 | 97,329 | 253,356 | 1,409,356 | |||||||||||||||
| R. Steve Kinsey |
40,985 | 23,803 | 52,112 | — | 909,459 | |||||||||||||||
| Bradley K. Alexander |
133,278 | 20,786 | 103,245 | — | 1,794,795 | |||||||||||||||
| Stephen R. Avera |
92,773 | 16,913 | 19,195 | 38,971 | 363,490 | |||||||||||||||
| D. Keith Wheeler |
37,331 | 14,959 | 7,982 | — | 166,963 | |||||||||||||||
| (1) | Amounts shown are deferrals of 2019 salary earned. |
| (2) | Amounts are included in “All Other Compensation” in the Summary Compensation Table for the 2019 fiscal year. |
| (3) | Above-market interest on nonqualified deferred compensation is included in the Summary Compensation Table as “Nonqualified Deferred Compensation Earnings” for the 2019 fiscal year. Interest is above-market if earned at a rate which is 120% or more of the applicable federal long-term rate. Earnings in the EDCP are interest-based credits which exceed this threshold. The amount of above-market interest for each executive included in the Summary Compensation Table is as follows: Mr. McMullian $21,542; Mr. Shiver $50,555; Mr. Kinsey $27,067; Mr. Alexander $53,665; Mr. Avera $9,884; and Mr. Wheeler $4,105. |
| (4) | The cumulative portion of the aggregate balance at December 28, 2019 reported in the Summary Compensation Table for all years prior to 2019 is as follows: Mr. McMullian $0; Mr. Shiver $939,984; Mr. Kinsey $561,891; Mr. Alexander $423,550; Mr. Avera $106,783; and Mr. Wheeler $56,545. |
FLOWERS FOODS, INC. - 2020 Proxy Statement 45
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EXECUTIVE COMPENSATION
Payments Made Upon Death or Disability, Retirement or Change of Control
| Name | Death/ Disability ($) |
Retirement ($) |
Change of Control Without Termination ($) |
Termination Following Change of Control(1) ($) |
||||||||||||
| A. Ryals McMullian |
||||||||||||||||
| Cash Severance |
— | — | — | 4,200,000 | ||||||||||||
| Equity Payout |
2,560,755 | N/A | — | 2,560,755 | ||||||||||||
| Other Benefits(2) |
— | — | — | 55,341 | ||||||||||||
| TOTAL |
2,560,755 | N/A | — | 6,816,096 | ||||||||||||
| Allen L. Shiver(3) |
||||||||||||||||
| Cash Severance |
N/A | 1,319,231 | — | N/A | ||||||||||||
| Equity Payout |
N/A | — | — | N/A | ||||||||||||
| Other Benefits(2) |
— | — | — | N/A | ||||||||||||
| TOTAL |
N/A | 1,319,231 | — | N/A | ||||||||||||
| R. Steve Kinsey |
||||||||||||||||
| Cash Severance |
— | — | — | 2,121,750 | ||||||||||||
| Equity Payout |
1,159,612 | 386,537 | — | 1,159,612 | ||||||||||||
| Other Benefits(2) |
— | — | — | 49,136 | ||||||||||||
| TOTAL |
1,159,612 | 386,537 | — | 3,330,498 | ||||||||||||
| Bradley K. Alexander |
||||||||||||||||
| Cash Severance |
— | — | — | 1,980,000 | ||||||||||||
| Equity Payout |
941,777 | 313,926 | — | 941,777 | ||||||||||||
| Other Benefits(2) |
— | — | — | 49,136 | ||||||||||||
| TOTAL |
941,777 | 313,926 | — | 2,970,913 | ||||||||||||
| Stephen R. Avera(4) |
||||||||||||||||
| Cash Severance |
— | — | — | 1,690,225 | ||||||||||||
| Equity Payout |
846,121 | 282,040 | — | 846,121 | ||||||||||||
| Other Benefits(2) |
— | — | — | 54,210 | ||||||||||||
| TOTAL |
846,121 | 282,040 | — | 2,590,556 | ||||||||||||
| D. Keith Wheeler |
||||||||||||||||
| Cash Severance |
— | — | — | 1,597,068 | ||||||||||||
| Equity Payout |
799,597 | 266,532 | — | 799,597 | ||||||||||||
| Other Benefits(2) |
— | — | — | 48,161 | ||||||||||||
| TOTAL |
799,597 | 266,532 | — | 2,444,826 | ||||||||||||
| (1) | In addition to amounts payable under the Change of Control Plan, each Named Executive is entitled to his pro rata share of any award earned under the Omnibus Plan in the year of termination. |
| (2) | Other Benefits includes the estimated cost of outplacement services and a lump sum amount equal to 18 months of continued health and welfare benefits in accordance with the terms of the Change of Control Plan. |
| (3) | Upon Mr. Shiver’s retirement, Mr. Shiver: (i) received a retirement payment of $1,319,231, which is equivalent to one week of base salary for each year of service to the company plus 26 weeks of prorated cash bonus at 100% of Target Bonus Percentage under the company’s annual executive bonus plan; (ii) received six months of continued health care premiums under COBRA; and (iii) retained all benefits vested in accordance with their terms as of the transition date under the company’s benefit programs. |
| (4) | Mr. Avera retired from his position as chief legal counsel at the end of 2019. He will receive an equity payout upon the vesting of his awards. |
FLOWERS FOODS, INC. - 2020 Proxy Statement 47
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| PROPOSAL I | ELECTION OF DIRECTORS |
Each of the eight nominees for director who receive a majority of the votes cast at the meeting in person or by proxy will be elected (meaning the number of shares voted “for” a director-nominee must exceed the number of shares voted “against” that director-nominee), subject to the board of directors’ existing policy regarding resignations by directors who do not receive a majority of “for” votes, which is described in our corporate governance guidelines.
Your board of directors unanimously recommends that you vote “FOR” each of the above-named director-nominees.
50 FLOWERS FOODS, INC. - 2020 Proxy Statement
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| PROPOSAL II | ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Proposal II requires the votes cast within the voting group favoring the action to exceed the votes cast opposing the action.
Your board of directors unanimously recommends that you vote “FOR” Proposal II.
FLOWERS FOODS, INC. - 2020 Proxy Statement 51
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| PROPOSAL III | RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
Fiscal 2019 and Fiscal 2018 Audit Firm Fee Summary
Proposal III requires the votes cast within the voting group favoring the action to exceed the votes cast opposing the action.
Your board of directors unanimously recommends that you vote “FOR” Proposal III.
52 FLOWERS FOODS, INC. - 2020 Proxy Statement
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APPENDIX A (NON-GAAP FINANCIAL MEASURES)
Information Regarding Non-GAAP Financial Measures
| (Dollars in Thousands) | 2019 | |||
| Net income |
$ | 164,538 | ||
| Income tax expense |
$ | 47,545 | ||
| Interest expense, net |
$ | 11,097 | ||
| Depreciation and amortization |
$ | 144,228 | ||
|
|
|
|||
| EBITDA |
$ | 367,408 | ||
| Restructuring and related impairment charges |
$ | 23,524 | ||
| Executive retirement agreement |
$ | 763 | ||
| (Recovery) on inferior ingredients |
$ | (37 | ) | |
| Project Centennial consulting costs |
$ | 784 | ||
| Legal settlements |
$ | 28,014 | ||
| Other pension costs |
$ | 2,248 | ||
| Acquisition-related costs |
$ | 22 | ||
|
|
|
|||
| Adjusted EBITDA |
$ | 422,726 | ||
| MARGIN |
10.3% | |||
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APPENDIX A (NON-GAAP FINANCIAL MEASURES)
Net Income to Adjusted EBITDA
| (Dollars in Thousands) | 2018 | |||
| Net income |
$ | 157,160 | ||
| Income tax expense |
$ | 40,001 | ||
| Interest expense, net |
$ | 7,931 | ||
| Depreciation and amortization |
$ | 144,124 | ||
|
|
|
|||
| EBITDA |
$ | 349,216 | ||
| Restructuring and related impairment charges |
$ | 9,767 | ||
| Pension plan settlement loss |
$ | 7,781 | ||
| Loss on inferior ingredients |
$ | 3,212 | ||
| Project Centennial consulting costs |
$ | 9,723 | ||
| Legal settlements |
$ | 21,452 | ||
| Acquisition-related costs |
$ | 4,476 | ||
| Non-restructuring impairment costs |
$ | 3,516 | ||
| Multi-employer pension plan withdrawal costs |
$ | 2,322 | ||
|
|
|
|||
| Adjusted EBITDA |
$ | 411,465 | ||
| MARGIN |
10.4% | |||
Net Income Per Diluted Common Share to Adjusted Net Income Per Diluted Common Share
| 2019 | ||||
| Earnings per diluted common share |
$ | 0.78 | ||
| Restructuring and related impairment charges |
$ | 0.08 | ||
| Executive retirement agreement |
$ | NM | ||
| (Recovery) on inferior ingredients |
$ | NM | ||
| Project Centennial consulting costs |
$ | NM | ||
| Legal settlements |
$ | 0.10 | ||
| Acquisition-related costs |
$ | NM | ||
| Adjusted earnings per diluted share |
$ | 0.96 | ||
NM – Not meaningful.
Net Income Per Diluted Common Share to Adjusted Net Income Per Diluted Common Share
| 2018 | ||||
| Earnings per diluted common share |
$ | 0.74 | ||
| Restructuring and related impairment charges |
$ | 0.03 | ||
| Pension plan settlement loss |
$ | 0.03 | ||
| Loss on inferior ingredients |
$ | 0.01 | ||
| Project Centennial consulting costs |
$ | 0.03 | ||
| Legal settlements |
$ | 0.08 | ||
| Acquisition-related costs |
$ | 0.02 | ||
| Non-restructuring impairment costs |
$ | 0.01 | ||
| Multi-employer pension plan withdrawal costs |
$ | 0.01 | ||
| Impact of the Tax Cuts and Jobs Act |
$ | (0.03 | ) | |
| Adjusted earnings per diluted share |
$ | 0.94 | ||
Certain amounts may not compute due to rounding.
FLOWERS FOODS, INC. - 2020 Proxy Statement A-2
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APPENDIX A (NON-GAAP FINANCIAL MEASURES)
Net Income to Adjusted Net Income
| (Dollars in Thousands) | 2019 | |||
| Net income |
$ | 164,538 | ||
| Restructuring and related impairment charges |
$ | 17,584 | ||
| Executive retirement agreement |
$ | 570 | ||
| (Recovery) on inferior ingredients |
$ | (28 | ) | |
| Project Centennial consulting costs |
$ | 586 | ||
| Legal settlements |
$ | 21,063 | ||
| Acquisition-related costs |
$ | 16 | ||
| Adjusted net income |
$ | 204,329 | ||
Net Income to Adjusted Net Income
| (Dollars in Thousands) | 2018 | |||
| Net income |
$ | 157,160 | ||
| Restructuring and related impairment charges |
$ | 7,301 | ||
| Pension plan settlement loss |
$ | 5,816 | ||
| Loss on inferior ingredients |
$ | 2,401 | ||
| Project Centennial consulting costs |
$ | 7,268 | ||
| Legal settlements |
$ | 16,035 | ||
| Acquisition-related costs |
$ | 3,346 | ||
| Non-restructuring impairment costs |
$ | 2,628 | ||
| Multi-employer pension plan withdrawal costs |
$ | 1,736 | ||
| Impact of the Tax Cuts and Jobs Act |
$ | (5,575 | ) | |
| Adjusted net income |
$ | 198,116 | ||
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APPENDIX B (PROPOSED AMENDED AND RESTATED ARTICLES OF INCORPORATION)
Attached as Appendix B is the text of the Company’s Amended and Restated Articles of Incorporation as proposed by Proposal IV. Proposed additions are indicated by double underlining, and proposed deletions are indicated by strike-outs.
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
FLOWERS FOODS, INC.,
(As amended through June 5 [•],
20152020)
I.
The name of the corporation is Flowers Foods, Inc. (the “Corporation”).
II.
SECTION 1. Authorized Capital Stock. The Corporation shall have the authority to issue not more than five hundred one million (501,000,000) shares of capital stock consisting of five hundred million (500,000,000) shares of Common Stock having a par value of $.01 per share, and one million (1,000,000) shares of Preferred Stock of which: (i) two hundred thousand (200,000) shares shall be designated Series A Junior Participating Preferred Stock, having a par value per share of $100 (the “Series A Preferred Stock”) and (ii) eight hundred thousand (800,000) shares of preferred stock, having a par value per share of $0.01 (the “Preferred Stock”) to be issued in one or more series, in the manner provided below.
The Board of Directors is hereby authorized to issue the shares of undesignated Preferred Stock in such series and to fix from time to time before issuance the number of shares to be included in any series and the designation, relative powers, preferences and rights and qualifications, limitations or restrictions of all shares of such series. The authority of the Board of Directors with respect to each series shall include, without limiting the generality of the foregoing, the determination of any or all of the following:
(a) the number of shares of any series and the designation to distinguish the shares of such series from the shares of all other series;
(b) the voting powers, if any, and whether such voting powers are full or limited in such series;
(c) the redemption provisions, if any, applicable to such series, including the redemption price or prices to be paid;
(d) whether dividends, if any, shall be cumulative or noncumulative, the dividend rate of such series, and the dates and preferences of dividends on such series;
(e) the rights of such series upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the Corporation;
(f) the provisions, if any, pursuant to which the shares of such series are convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation or any other corporation, and the price or prices or the rates of exchange applicable thereto;
(g) the right, if any, to subscribe for or to purchase any securities of the Corporation or any other corporation;
(h) the provisions, if any, of a sinking fund applicable to such series; and
(i) any other relative, participating, optional or other special powers, preferences, rights, qualifications, limitations or restrictions thereof;
all as shall be determined from time to time by the Board of Directors and stated in the resolution or resolutions providing for the issuance of such Preferred Stock (a “Preferred Stock Designation”).
SECTION 2. Voting Entitlement. A holder of Common Stock shall be entitled to one (1) vote on each matter submitted to a vote at a meeting of shareholders for each share of the Common Stock held of record by such holder as of the record date for such meeting. Except as may be provided by applicable law, in these Articles of Incorporation or by the Board of Directors in a Preferred Stock Designation, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes, and holders of Preferred Stock shall not be entitled to receive notice of any meeting of shareholders at which they are not entitled to vote or consent.
SECTION 3. Preemptive Rights. No holder of shares of any class of stock shall have preemptive rights, and the Corporation shall have the right to issue and to sell any shares of its Common Stock without first offering such shares to any holder of shares of Common Stock of the Corporation.
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APPENDIX B (PROPOSED AMENDED AND RESTATED ARTICLES OF INCORPORATION)
III.
SECTION 1. Designation and Amount. There shall be a series designated as “Series A Junior Participating Preferred Stock” (the “Series A Preferred Stock”). The number of shares constituting such series shall be 200,000 and such series shall have the rights and preferences and limitations set forth below.
SECTION 2. Dividends and Distributions.
(a) The holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the payment date of any quarterly dividend for the Common Stock, or if there should be no such payment date, then on the 45th day after the end of each fiscal quarter (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (i) $50 or (ii) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock of the Corporation or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the Corporation shall at any time after the date hereof declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be automatically adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in subparagraph (a) of this Section 2 immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $50 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.
SECTION 3. Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation shall at any time after the date hereof declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event shall be automatically adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one voting group on all matters submitted to a vote of shareholders of the Corporation.
(c) Except as set forth herein, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock and any other capital stock of the Corporation having general voting rights as set forth herein) for taking any corporate action.
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APPENDIX B (PROPOSED AMENDED AND RESTATED ARTICLES OF INCORPORATION)
SECTION 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not:
(1) declare or pay dividends on, or make any other distributions on, any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;
(2) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
(3) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(4) purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under subsection (a) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.
SECTION 5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.
SECTION 6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (a) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $1,000 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to holders of Common Stock, or (b) to the holders of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all other such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time after the date hereof declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (a) of the preceding sentence shall be automatically adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
SECTION 7. Consolidation, Merger etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the date hereof declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
SECTION 8. No Redemption. The shares of Series A Preferred Stock shall not be redeemable.
SECTION 9. Rank. The Series A Preferred Stock shall rank junior with respect to payment of dividends and on liquidation to all other series of the Corporation‘s Preferred Stock outstanding on the date hereof and to all such other series that specifically provide that they shall rank senior to the Series A Preferred Stock.
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APPENDIX B (PROPOSED AMENDED AND RESTATED ARTICLES OF INCORPORATION)
SECTION 10. Amendment. The Articles of Incorporation of the Corporation shall not be amended in any manner that would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of two-thirds of the outstanding shares of Series A Preferred Stock, voting together as a single class.
IV.
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Georgia Business Corporation Code.
V.
The Board of Directors shall have the power to make, amend and
repeal the Bylaws of the Corporation. Any Bylaws made by the Board of Directors under the powers conferred hereby may be amended or repealed by the Board of Directors (except as specified in any such Bylaw so made or amended) or by the shareholders
in the manner provided in the Bylaws of the Corporation. or by applicable law. The Corporation may in its Bylaws confer powers upon its Board of Directors in addition to
the foregoing and in addition to the powers and authorities expressly conferred upon the Board of Directors by applicable law. Notwithstanding anything contained in these Articles of Incorporation to the contrary, unless otherwise required by
applicable law, the affirmative vote of the holders of at least 66-2/3%a majority of the voting power of the then outstanding shares
of Common Stock shall be required to amend or repeal, or to adopt any provisions inconsistent with, this Article V.
VI.
Any action required or permitted to be taken by the shareholders of the Corporation mustmay
be effected at a duly called annual or special meeting of shareholders of the Corporation or by the consent in writing of the holders of at least 75% of the voting power of the then outstanding shares of Common Stock entitled to vote on the action.
Special meetings of shareholders of the Corporation may be called only byin the Chairman of the Board of Directors, or by the Chairman of the Board of Directors or
the Secretary within 10 days after receipt of the written request of a majority of the total number of Directors which the Corporation would have if there were no vacancies or upon receipt of the written request of the holders of at least 75% of the
voting power of the then outstanding shares of Common Stockmanner provided for in the Bylaws. At any annual meeting or special meeting of shareholders of the Corporation, only such
business shall be conducted or considered as shall have been brought before such meeting in the manner provided in these Articles of Incorporation or the Bylaws of the Corporation.
Notwithstanding anything contained in these Articles of Incorporation to the contrary, unless otherwise required by applicable law, the affirmative vote of at least 66-2/3% of the voting power of the
then outstanding shares of Common Stock shall be required to amend or repeal, or adopt any provision inconsistent with this Article VI.
VII.
SECTION 1. Number, Election and Terms of Directors. The number of the Directors of the Corporation shall not be less than 3 nor more than 16 and shall be fixed from time to time in the manner described in the Bylaws.
Beginning at the 2015 annual meeting of shareholders, the Directors whose terms expire at that meeting (or such Directors’
successors) shall be elected to hold office for a one-year term expiring at the 2016 annual meeting of shareholders; at the 2016 annual meeting of shareholders, the Directors whose terms expire at that meeting
(or such Directors’ successors) shall be elected to hold office for a one-year term expiring at the 2017 annual meeting of shareholders; and at the 2017 annual meeting of
shareholders andAt each annual meeting of shareholders thereafter, all Directors shall be elected to hold office for a
one-year term expiring at the next annual meeting of shareholders and until such Director’s successor shall have been elected and qualified.
Elections of Directors need not be by written ballot unless requested by the Chairman of the Board of Directors or by the holders of a majority of the voting power of the then outstanding shares of Common Stock present in person or represented by proxy at a meeting of the shareholders at which Directors are to be elected. A nominee for Director shall be elected by the vote of the majority of the votes cast with respect to that nominee’s election at any meeting held for the election of Directors at which a quorum is present, provided, however, that if the number of nominees exceeds the number of Directors to be elected, the nominees receiving the greatest number of votes (up to the number of Directors to be elected) shall be elected. For purposes of the preceding sentence, a “majority of the votes cast” means that the number of shares of Common Stock voted “for” a nominee’s election exceeds the number of shares of Common Stock voted “against” that nominee’s election.
SECTION 2. Nomination of Director Candidates. Advance notice of shareholder nominations for the election of Directors shall be given in the manner provided in the Bylaws of the Corporation.
SECTION 3. Newly Created Directorships and Vacancies. Unless otherwise required by applicable law, newly created directorships resulting from any increase in the number of Directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled solely by the affirmative vote of a majority of the remaining Directors then in office, even though less than a quorum of the Board of Directors, or by a sole remaining Director. Any Director elected by reason of an increase in the number of Directors shall be elected only for
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a term of office continuing until the next election of Directors by the shareholders and until the election and qualification of such Director’s successor. Any Director elected to fill a vacancy not resulting from an increase in the number of Directors shall have the same remaining term as that of his or her predecessor. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of an incumbent Director.
SECTION 4. Removal. Unless otherwise required by
applicable law, any Director serving for a term expiring at the third annual meeting of shareholders following the election of such Director shall be removable only for cause, and all other Directors, including all Directors elected at the
2017 annual meeting of shareholders and thereafter, shall be removable either with or without cause. At any annual meeting or special meeting of the shareholders of the Corporation, the notice of which shall state that the removal of a
Director or Directors is among the purposes of the meeting, unless otherwise required by applicable law, the affirmative vote of the holders of at least
66-2/3%a majority of the voting power of the then outstanding Common Stock shall be required to remove such Director or Directors.
SECTION 5. Amendment, Repeal, Etc. Notwithstanding anything contained in these Articles of Incorporation to the contrary, unless otherwise required by applicable
law, the affirmative vote of at least 66-2/3%a majority of the voting power of the then outstanding Common Stock shall be required
to amend or repeal, or adopt any provision inconsistent with, this Article VII.
VIII.
In discharging the duties of their respective positions and in determining what is believed to be in the best interests of the Corporation, the Board of Directors, committees of the Board of Directors, and individual Directors, in addition to considering the effects of any action on the Corporation or its shareholders, may consider the interests of employees, customers, suppliers and creditors of the Corporation and its subsidiaries, the communities in which offices or other establishments of the Corporation and its subsidiaries are located, and all other factors such Directors deem pertinent; provided, however, that this Article VIII shall be deemed solely to grant discretionary authority to the Directors and shall not be deemed to provide to any constituency any right to be considered.
IX.
A Director of the Corporation shall not be liable to the Corporation or its shareholders for or with respect to any acts or omissions in the performance of his duties as a Director, except to the extent such exemption from liability or limitation thereof is not permitted under the Georgia Business Corporation Code as currently in effect or as the same may be hereafter amended or under any other applicable law currently or hereafter in effect. No amendment, modification or repeal of this Article IX shall adversely affect any right or protection of a Director that exists at the time of such amendment, modification, or repeal.
X.
Each person who is or was or had agreed to become a Director or officer of the Corporation, or each such person who is or was serving or who had agreed to serve at the request of the Board of Directors or an officer of the Corporation as an employee or agent of the Corporation or as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executors, administrators or estate of such person), shall be indemnified by the Corporation to the fullest extent permitted by the Georgia Business Corporation Code or any other applicable laws as presently or hereafter in effect. The right to indemnification granted by this Article X shall include the right to be paid in advance expenses incurred in defending a proceeding. The Corporation may, by action of the Board of Directors, provide indemnification to other employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of Directors and officers. The right of indemnification provided in this Article X shall not be exclusive of any other rights to which any person seeking indemnification may otherwise be entitled, and shall be applicable to matters otherwise within its scope irrespective of whether such matters arose or arise before or after the adoption of this Article X. Without limiting the generality or the effect of the foregoing, the Corporation may adopt Bylaws, or enter into one or more agreements with any person, which provide for indemnification greater or different than that provided in this Article X. No amendment, modification or repeal of this Article X shall adversely affect any right or protection of a Director, officer, employee or agent that exists at the time of such amendment, modification or repeal.
XI.
Any issued and outstanding shares of stock of the Corporation which are repurchased by the Corporation shall become treasury shares which shall be held in treasury by the Corporation until resold or retired and canceled in the discretion of the Board of Directors. Any treasury shares which are retired and canceled shall constitute authorized but unissued shares.
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APPENDIX C (PROPOSED AMENDED AND RESTATED BYLAWS)
Attached as Appendix C is the text of the Company’s Amended and Restated Bylaws as proposed by Proposal IV. Proposed additions are indicated by double underlining, and proposed deletions are indicated by strike-outs.
AMENDED AND RESTATED BYLAWS
OF
FLOWERS FOODS, INC.
(As amended through June 5[●], 20152020)
ARTICLE 1.
OFFICES
Flowers Foods, Inc. (the “Corporation”) shall maintain at all times a registered office in the State of Georgia and a registered agent at that address, but may have other offices located within or without the State of Georgia as the Board of Directors may determine.
ARTICLE 2.
MEETINGS OF SHAREHOLDERS
2.1 Place and Time of Meetings. All meetings of the shareholders shall be held at such time and at such place, within or without the State of Georgia, as may be designated by the Board of Directors or, in the absence of a designation by the Board of Directors, by the Chairman of the Board of Directors, the President or the Secretary, and stated in the notice of the meeting. The Chairman of the Board of Directors may postpone and reschedule any previously scheduled annual or special meeting of the shareholders of the Corporation.
2.2 Annual Meeting. An annual meeting of the shareholders shall be held at such date, time and place as shall be designated from time to time by the Board of Directors, at which meeting the shareholders shall elect, in accordance with the Articles of Incorporation, the Directors to succeed those whose terms expire and shall transact such other business as may be properly brought before the meeting in accordance with Section 2.10 of these Bylaws.
2.3 Special Meetings.
(a) Special meetings of the shareholders may be called only as provided in this
Section 2.3these Bylaws or the Articles of Incorporation. Special meetings may be called by the Chairman of the Board of Directors, and shall
be called by the Chairman of the Board of Directors or the Secretary within 10 days after receipt of the written request of a majority of the total number of Directors which the Corporation would have if there were no vacancies (the “Whole
Board”) or upon receipt of the written request of the holders (each, a “Requesting Shareholder”) of at least
7525% of the voting power of the then outstanding shares of Common Stock (the “Requisite
Percentage”); provided that the shares constituting the Requisite Percentage are determined to be Net Long Shares (as defined in Section 2.3(c)) that have been held continuously for at least one year prior to the date the request for a
special meeting is submitted by the Requesting Shareholders (the “One-Year Period”). Any such request by a majority of the Whole Board or the holders of at least 75% of the voting power
of the then outstanding shares of Common Stock shall be sent to the Chairman of the Board of Directors and the Secretary and shall state the purpose or purposes of the proposed meeting.
Any such request by a Requesting Shareholder shall comply with the requirements set forth in these Bylaws. At a special meeting of shareholders, only such business shall be conducted or
considered as shall have been stated in the notice of the meeting given by or at the direction of the Board of Directors. If the request for the meeting is received from shareholders pursuant
to this Section 2.3, the Board of Directors shall have the authority to submit additional matters to the shareholders and to cause other business to be transacted.
(b) Notwithstanding the provisions of Section 2.3(a), a special meeting shall not be held if requested by the shareholders and (i) the written request does not comply with these Bylaws, (ii) the business specified in the written request is not a proper subject for shareholder action under applicable law, (iii) the Board of Directors has called or calls for an annual or special meeting of shareholders to be held within 60 days after the Secretary receives the written request and the Board of Directors determines that the business of such meeting includes (among any other matters properly brought before the annual or special meeting) the business specified in the written request, (iv) the written request is received by the Secretary during the period commencing 90 days prior to the anniversary date of the prior year’s annual meeting of shareholders and ending on the date of the final adjournment of the next annual meeting of shareholders, (v) an identical or substantially similar item (a “Similar Item”) was presented at any meeting of shareholders held within 60 days prior to receipt by the Secretary of the written request (and, for purposes of this clause (v), the nomination, election or removal of Directors shall be deemed a “Similar Item” with respect to all items of business involving the nomination, election or removal of Directors, the changing of the size of the Board of Directors and the filling of vacancies or newly created Directorships), or (vi) the written request was made in a manner that involved a violation of applicable law. If none of the Requesting Shareholders appear or send a qualified representative to present the item of business for consideration at the special meeting, such item of business shall not be submitted for vote of the shareholders at
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such special meeting. Whether the Requesting Shareholders have complied with the requirements of this Section 2.3 and related provisions of these Bylaws shall be determined in good faith by the Board of Directors, which determination shall be exclusive and binding on the Corporation and the shareholders of the Corporation.
(c) For purposes of determining the Requisite Percentage, “Net Long Shares” shall be determined with respect to each Requesting Shareholder in accordance with the definition of “net long position” set forth in Rule 14e-4 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”); provided that (i) for purposes of such definition, (A) “the date that a tender offer is first publicly announced or otherwise made known by the bidder to the holders of the security to be acquired” shall be the date of the relevant request for a special meeting submitted by the Requesting Shareholders, (B) the “highest tender offer price or stated amount of the consideration offered for the subject security” shall refer to the closing sales price of Common Stock on the NYSE (or any successor thereto) on such date (or, if such date is not a trading day, the next succeeding trading day), (C) the “person whose securities are the subject of the offer” shall refer to the Corporation, and (D) a “subject security” shall refer to the outstanding Common Stock; and (ii) the net long position of such holder shall be reduced by the number of shares of Common Stock as to which such holder does not, or will not, have the right to vote or direct the vote at the requested special meeting or as to which such holder has, at any time during the One-Year Period, entered into any derivative or other agreement, arrangement or understanding that hedges or transfers, in whole or in part, directly or indirectly, any of the economic consequences of ownership of such shares and which derivative or other agreement, arrangement or understanding remains in effect. Whether shares constitute “Net Long Shares” shall be decided in good faith by the Board of Directors.
2.4 Notice of Meeting. Written notice of every meeting of the shareholders, stating the place, day, and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given by the Corporation not fewer than ten (10) nor more than sixty (60) days before the date of the meeting to
each shareholder of record entitled to vote at such meeting. Within thirty (30) days of receipt from the shareholders of the Corporation of sufficient written demands for a special meeting which comply with and satisfy the requirements of
Section 2.3, Section 2.10(e) and Section 3.5 for the call of a special meeting, the Secretary of the Corporation will issue notice calling for a special meeting of the
shareholders to be held within sixty (60) days of such notice. Written notice shall be given personally, by mail, by private courier, by facsimile transmission, or by telegraph, teletype or other form of wire or wireless
communicationor by electronic transmission. If mailed, notice shall be deemed to be delivered when deposited in the United States mail with first-class postage thereon prepaid,
addressed to the shareholder at his address as it appears on the stock transfer books of the Corporation. When a meeting of the shareholders is adjourned to another place, date or time, by the holders of a majority of the voting power of the voting
shares represented at a meeting, whether or not a quorum is present, notice need not be given of the adjourned meeting if the date, time, and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken;
provided, however, if the Board is required to fix a new record date pursuant to Section 7.5(a) of these Bylaws, notice must be given to persons who are shareholders as of the new record date entitled to vote as such meeting. At an adjourned
meeting at which a quorum is present or represented, any business that could have been transacted at the meeting originally called may be transacted.
2.5 Waiver of Notice. Notice of a meeting need not be given to any shareholder who signs a waiver of notice, in person or by proxy, either before or after the date and time stated in the notice. Waiver must be in writing and delivered to the Corporation for inclusion in the minutes or for filing with the corporate records. Attendance of a shareholder at a meeting, either in person or by proxy, shall of itself constitute waiver of notice and waiver of any and all objections to: (1) lack of notice or defective notice of a meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and (2) consideration at the meeting of a particular matter that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. Neither the business transacted nor the purpose of the meeting need be specified in the waiver, except that any waiver by a shareholder of the notice of a meeting of shareholders with respect to an amendment of the Articles of Incorporation, a plan of merger or share exchange, a sale of assets, or any other action which would entitle the shareholder to dissent and obtain payment for his shares shall not be effective unless: (a) prior to execution of the waiver, the shareholder is furnished with the same material required to be sent to the shareholder in a notice of the meeting, including notice of any applicable dissenters‘ rights; or (b) the waiver expressly waives the right to receive the materials required to be furnished.
2.6 Inspectors. The Board of Directors shall appoint one or more inspectors of election to act as judges of the voting and to determine those entitled to vote at any meeting of the shareholders, or any adjournment thereof, in advance of such meeting, but if the Board of Directors fails to make such appointment(s) or if an appointee fails to serve, the presiding officer of the meeting of the shareholders may appoint one or more inspectors (or substitute inspectors) to act at the meeting.
2.7 Quorum. Except as may be provided in the Articles of Incorporation, a majority of the votes entitled to be cast on a matter by the voting group, represented in person or by proxy, shall constitute a quorum of that voting group for action on that matter. Once a share is represented at a meeting for any purpose, other than solely to object to holding the meeting or transacting business at the meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for the adjourned meeting.
2.8 Voting. Except as provided in the Articles of Incorporation or as otherwise provided by law, each outstanding share shall be entitled to one vote on each matter submitted to a vote at a meeting of the shareholders. The vote upon any question brought before a meeting of the shareholders may be by voice vote, unless otherwise required by the Articles of Incorporation or these Bylaws or unless the presiding officer or the holders of a majority of the voting power of the then outstanding shares of all classes of stock entitled to vote thereon present in person or by proxy at such meeting shall determine otherwise. Every vote taken by written ballot shall be counted by the inspector(s) of election. Except as provided in these Bylaws, the Articles of Incorporation or by law, if a quorum exists, action on a matter (other than the election of Directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action. Directors shall be elected at the annual meeting in accordance with the Articles of Incorporation.
2.9 Proxies. A shareholder may vote his shares in person or by proxy. A shareholder may appoint a proxy by executing a writing which authorizes another person or persons to vote or otherwise act on the shareholder‘s behalf. Execution may be accomplished by any reasonable means,
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including facsimile transmission. A proxy is effective when received by the inspector of elections and is valid for eleven (11) months from the date of its execution, unless a longer period is expressly provided in the appointment form. An appointment of proxy is revocable by a shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest.
2.10 Order of Business.
(a) The Chairman of the Board of Directors, or such officer of the Corporation designated by a majority of the Whole Board (as such term is defined in Section 2.3 of these Bylaws), shall call meetings of the shareholders of the Corporation to order and shall act as presiding officer thereof. Unless otherwise determined by the Board of Directors prior to the meeting, the presiding officer of the meeting of the shareholders shall determine the order of business and shall have the authority in his discretion to regulate the conduct of any such meeting, including, without limitation, by imposing restrictions on the persons (other than shareholders of the Corporation or their duly appointed proxies) who may attend any such shareholders‘ meeting; by excluding any shareholder or his proxy from any such meeting based upon the determination by the presiding officer, in his sole discretion, that any such person has unduly disrupted or is likely to disrupt the proceedings thereat; and by determining the circumstances in which any person may make a statement or ask questions at any such meeting.
(b) At an annual meeting of the shareholders, only such business shall be conducted or considered as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of a majority of the Whole Board, or (iii) otherwise properly requested to be brought before the meeting by a shareholder of the Corporation.
(c) For
business to be properly requested to be brought before aan annual meeting by a shareholder of the Corporation, the shareholder (i) must be a shareholder of record at
the time of the giving of the notice for such annual meeting provided for in the Bylaws of this Corporation, (ii) must be entitled to vote at such meeting, and (iii) must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a shareholder‘s notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the date on which
the preceding year’s annual meeting of shareholders took place; provided, however, that in the event that the date of the annual meeting is changed by more than 30 days before or more than 60 days after such anniversary date, notice by the
shareholder to be timely must be so received not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the 90th day prior to the date of such annual meeting, or if the public announcement of
the date of the annual meeting is less than 100 days prior to the date of such meeting, the 10th day following the day on which public announcement is first made of the changed date of the meeting.
(d) A shareholder‘sshareholder’s notice to the
Secretary shall set forth as to each matter the shareholder proposes to bring before the meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting,
(ii) the name and address, as they appear on the Corporation’s books, of the shareholder and any Shareholder Associated Person (as defined herein) proposing such business, (iii) the class and number of shares of the Corporation that
are owned beneficially and of record by the shareholder and any Shareholder Associated Person, (iv) any derivative positions related to any class or series of securities of the Corporation held or beneficially held by the shareholder and any
Shareholder Associated Person, and (v) whether and the extent to which any hedging, swap or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including
any short position or any borrowing or lending of shares of stock) has been made, the effect or intent of which is to mitigate loss to, or manage risk of share price changes for, or to increase the voting power of, the shareholder or any Shareholder
Associated Person with respect to any shares of stock of the Corporation (all of which information in this Section 2.10(d) shall be supplemented by such shareholder if any of the facts set forth in this notice change during the period between
the date such notice is sent and the date of the meeting, not later than five days after the event giving rise to such change). For the avoidance of doubt, this Section 2.10(d) shall be the exclusive means for a shareholder to
submit business (other than business included in the Corporation‘sCorporation’s notice of meeting pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) before an annual or
special meeting of shareholders.
(e) For business to be properly requested to be brought before a special meeting by a shareholder
or shareholders of the Corporation, the shareholder (i) must be a shareholder of record at the time of the giving of the notice for such
special meeting provided for in the Bylaws of this Corporation, (ii) must be entitled to vote at such meeting, and (iii) must have given timely notice thereof in writing
to the Secretary of the Corporation, and such notice shall comply with the notice procedures set forth in Section 2.10(d). To be timely, a shareholder‘s
notice must be delivered to or mailed and received at the principal executive offices of the Corporation not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the date
of the special meeting (or if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the 10th day following the day on which public announcement of the date of such special
meeting is first made by the Corporation).Requesting Shareholder(s) must provide documentary evidence to the Secretary that the Requisite Percentage of Net Long Shares have been held continuously for the
One-Year Period by each Requesting Shareholder. Further, the Requesting Shareholder(s)’s written request for a special meeting shall contain the information required to be included in a shareholder’s
notice pursuant to clauses (i) – (v) of Section 2.10(d), including the requirement that such information be supplemented. In addition to the information required by clauses (i) – (v) of Section 2.10(d), the Requesting
Shareholder(s)’s written request for a special meeting must (i) set forth the text of the proposal or business (including the text of any resolutions proposed for consideration) and, if the business includes a proposal to amend the Bylaws
or Articles of Incorporation, the language of the proposed amendment, (ii) provide a representation that at least one of the Requesting Shareholders will appear to present the item of business at the special meeting, (iii) include an
acknowledgement by each Requesting Shareholder that any decrease after the date on which the special meeting request is delivered to the Chairman of the Board of Directors or the Secretary in the number of Net Long Shares held by each Requesting
Shareholder shall be deemed a revocation of the special meeting request with respect to such shares and that such shares will no longer be included in determining whether the Requisite Percentage has been satisfied, and (iv) provide a
description of all arrangements or understandings between each Requesting Shareholder and any Shareholder Associated Persons or other persons, including their names, in connection with the proposed business of the special meeting and any material
interest of each Requesting Shareholder and Shareholder Associated Person in such proposed business.
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(f) For purposes of Section 2.10 “business” shall mean all matters other than
nomination of candidates for, and the election of, directors. Shareholder nominations of directors for election is governed solely by Section 3.5 of these Bylaws. Notwithstanding anything in this Section 2.10 to the contrary, no business
shall be conducted at any shareholders meeting except in accordance with the procedures set forth in this Section 2.10. The presiding officer of the meeting shall, if the facts warrant, determine that business was not properly brought before
the meeting in accordance with the procedures prescribed in this Section 2.10 and, if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
Notwithstanding the foregoing provisions of this Section 2.10, a shareholder shall also comply with all applicable requirements of the Exchange Act, and the rules and regulations thereunder with respect to the matters set forth in this
Section 2.10; provided, however, that any references in these Bylaws to the Exchange Act, or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to shareholder proposals. Nothing in this Bylaw
shall be deemed to apply to or affect any rights of shareholders to request inclusion of proposals in the
Corporation‘sCorporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act
by satisfying the notice and other requirements of Rule 14a-8 in lieu of satisfying the requirements of this Bylaw. For purposes of Section 2.10 and Section 3.5 of these Bylaws, a “Shareholder
Associated Person” of any shareholder shall mean (A) any person controlling, directly or indirectly, or acting in concert with, such shareholder, (B) any beneficial owner of shares of stock of the Corporation owned of record or
beneficially by such shareholder and (C) any person controlling, controlled by or under common control with such Shareholder Associated Person. For purposes of Section 2.10 and Section 3.5 of these Bylaws, “public
announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service, in a document publicly filed by the Corporation with the Securities and Exchange Commission
pursuant to Sections 13, 14 or 15(d) of the Exchange Act, or in shareholder correspondence or a shareholder report.
ARTICLE 3.
DIRECTORS
3.1 Powers. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Articles of Incorporation directed or required to be exercised or done by the shareholders.
3.2 Number, Qualification and Term of Office. The authorized number of Directors may be determined from time to time
only by a vote of a majority of the Whole Board (as defined in Section 2.3 of these Bylaws) or by the affirmative vote of the holders of at least
66-2/3%a majority of the voting power of the then outstanding shares of
capitalall classes of stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, but in no case
shall the number of Directors be fewer than 3 or more than 16. The Directors shall be natural persons of the age of eighteen (18) years or older, but need not be residents of the State of Georgia or hold shares of stock in the Corporation. At
each annual meeting of shareholders beginning at the 2015 annual meeting of shareholders, Directors whose terms expire at that meeting (or such Directors’ successors) shall be elected in accordance with
the Articles of Incorporation for a one-year term. Accordingly, at the 2015 annual meeting of shareholders, the Directors whose terms expire at that meeting (or such
Directors’ successors) shall be elected to hold office for a one-year term expiring at the 2016 annual meeting of shareholders; at the 2016 annual meeting of
shareholders, the Directors whose terms expire at that meeting (or such Directors’ successors) shall be elected to hold office for a one-year term expiring at the 2017
annual meeting of shareholders; and at the 2017 annual meeting of shareholders and each annual meeting of shareholders thereafter, all Directors shall be elected to hold office for a one-year term
expiring at the next annual meeting of shareholders or until such Director’s successor shall have been elected and qualified.
3.3 Vacancies and Newly Created Directorships. Newly created directorships resulting from any increase in the number of Directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled solely by the affirmative vote of a majority of the remaining Directors then in office, even though less than a quorum of the Board of Directors, or by a sole remaining Director. Any Director elected by reason of an increase in the number of Directors shall be elected only for a term of office continuing until the next election of Directors by the shareholders and until the election and qualification of such Director’s successor. Any Director elected to fill a vacancy not resulting from an increase in the number of Directors shall have the same remaining term as that of his or her predecessor. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of an incumbent Director. A vacancy that will occur at a specific date (including but not limited to a resignation that specifies a later date) may be filled before the vacancy occurs, but the new Director may not take office until the vacancy occurs.
3.4 Removal of Directors. Any Director serving for a term expiring at the
third annual meeting of shareholders following the election of such Director shall be removable only for cause, and all other Directors, including all Directors elected at the 2017 annual meeting of shareholders and thereafter,
shallshall be removable either with or without cause. The removal of any Director, whether with or without cause, shall require the affirmative vote of the holders of at
least 66-2/3%a majority of the voting power of the then outstanding shares of
capitalall classes of stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class. A Director may
be removed by the shareholders only at a meeting called for the purpose of removing him, and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the Director.
3.5 Nominations of Directors; Election.
(a) Only persons who are nominated in accordance with the following procedures shall be eligible for election as Directors of the Corporation. Nominations of persons for election as Directors of the Corporation may be made by (i) the Board of Directors or a committee appointed by the Board of Directors, or (ii) any person who is a shareholder of record at the time of giving of notice for the meeting provided for in these Bylaws, who is entitled to vote for the election of Directors and who complies with the procedures set forth in this Section 3.5. All nominations by shareholders shall be made pursuant to timely notice in proper written form to the Secretary of the Corporation. To be timely, a shareholder‘s notice shall be delivered to or mailed and received at the principal executive offices of the Corporation: (i) in the case of an annual meeting, not less than 90 days nor more than 120 days prior to the first anniversary of the date on which the preceding year’s annual meeting of shareholders took place; provided, however,
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that in the event that the date of the annual meeting is changed by more than 30 days before or more than 60 days after such anniversary date, notice by the shareholder to be timely must be so received not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the 90th day prior to the date of such annual meeting, or if the public announcement of the date of the annual meeting is less than 100 days prior to the date of such meeting, the 10th day following the day on which public announcement is first made of the changed date of the meeting; and (ii) in the case of a special meeting at which Directors are to be elected, not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the date of the special meeting (or if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the 10th day following the day on which public announcement of the date of such special meeting and of the nominees proposed by the Board of Directors is first made by the Corporation). To be in proper written form, such shareholder‘s notice shall set forth or include (i) the name and address, as they appear on the Corporation’s books, of the shareholder and any such Shareholder Associated Person giving the notice; (ii) a representation that the shareholder and any Shareholder Associated Person giving the notice is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (iii) the class and number of shares of stock of the Corporation owned beneficially and of record by the shareholder and any Shareholder Associated Person; (iv) a description of all arrangements or understandings between or among any of (A) the shareholder giving the notice, (B) any Shareholder Associated Person, (C) each nominee, and (D) any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder giving the notice; (v) any derivative positions related to any class or series of securities of the Corporation held or beneficially held by the shareholder and any Shareholder Associated Person; (vi) whether and the extent to which any hedging, swap or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock) has been made, the effect or intent of which is to mitigate loss to, or manage risk of share price changes for, or to increase the voting power of, the shareholder, any Shareholder Associated Person, or nominee with respect to any shares of stock of the Corporation; (vii) such other information regarding each nominee proposed by the shareholder giving the notice as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (viii) the signed consent of each nominee to serve as a Director of the Corporation if so elected. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a Director shall furnish to the Secretary of the Corporation that information required to be set forth in a shareholder‘s notice of nomination which pertains to the nominee (all of which information in this Section 3.5(a) shall be supplemented by such shareholder if any of the facts set forth in this notice change during the period between the date such notice is sent and the date of the meeting, not later than five days after the event giving rise to such change). For the avoidance of doubt, the foregoing provisions of this Section 3.5(a) shall be the exclusive means for a shareholder to make nominations (other than business included in the Corporation‘s notice of meeting pursuant to Rule 14a-8 under the Exchange Act) before an annual or special meeting of shareholders. The presiding officer of the meeting for election of Directors shall, if the facts warrant, determine that a nomination was not made in accordance with the procedures prescribed by this Section 3.5, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this Section 3.5, a shareholder shall also comply with all applicable requirements of the Exchange Act, and the rules and regulations thereunder with respect to the matters set forth in this Section 3.5; provided, however, that any references in these Bylaws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to shareholder nominations. Nothing in this Bylaw shall be deemed to apply to or affect any rights of shareholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act by satisfying the notice and other requirements of Rule 14a-8 in lieu of satisfying the requirements of this Bylaw.
(b) In addition, to be eligible to be a nominee for election or reelection as a director of the Corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Section 3.5(a)) to the Secretary at the principal executive offices of the Corporation a written representation and agreement (in the form provided by the Secretary upon written request) that such person (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (2) any Voting Commitment that could limit or interfere with such person‘s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (C) in such person‘s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply, with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.
3.6 Resignation. Any Director may resign at any time by giving written notice of his resignation to the Board of Directors, the Chairman of the Board of Directors or the Corporation.
3.7 Compensation. The Board of Directors may establish the compensation for, and reimbursement of the expenses of, Directors for membership on the Board of Directors and on committees of the Board of Directors, attendance at meetings of the Board of Directors or committees of the Board of Directors, and for other services by Directors to the Corporation.
3.8 Interested Director Transactions. An interested Director is one who is a party to a contract or transaction with the Corporation or who is an officer or Director of, or has a financial interest in, another corporation, partnership, association, or other entity which is a party to a contract or transaction with the Corporation. Transactions involving such a Director shall be governed by Section 14-2-860, et seq., of the Georgia Business Corporation Code, as the same may hereinafter be amended.
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ARTICLE 4.
MEETINGS OF THE BOARD
4.1 Regular Meetings. Regular meetings of the Board of Directors may be held without notice immediately after the annual meeting of the shareholders and at such other time and place either within or without the State of Georgia as shall from time to time be determined by the Board of Directors.
4.2 Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board of Directors or the President,
on one day‘s written notice to each Director by whom such notice is not waived. Notice shall be given personally, by mail, by private courier, by facsimile transmission, or by telegraph, teletype or other form of wire or wireless
communicationor by electronic transmission, and need not describe the business to be transacted at, or the purpose of, the special meeting. Special meetings of the Board of
Directors may be held at such time and place either within or without the State of Georgia as is determined by the Board of Directors or specified in the notice of any such meeting.
4.3 Waiver of Notice. A Director may waive any notice either before or after the date and time stated in the notice. Such a waiver must be in writing, signed by the Director and delivered to the Corporation for inclusion in the minutes or filing with the corporate records. Attendance of a Director at a meeting shall constitute a waiver of notice of that meeting unless the Director at the beginning of the meeting (or promptly upon arrival) objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.
4.4 Quorum. A quorum of the Board of Directors consists of a majority of the number of Directors then in office. If a quorum is present, the acts of a majority of the Directors in attendance shall be the acts of the Board of Directors. A Director who is present at a meeting of the Board of Directors when corporate action is taken is deemed to have assented to the action taken unless: (a) that Director objects at the beginning of the meeting (or promptly upon arrival) to holding the meeting or to transacting business at the meeting; (b) the dissent or abstention of that Director from the action taken is entered into the minutes of the meeting; or (c) that Director delivers written notice of dissent or abstention to the presiding officer of the meeting before, or to the Corporation immediately after, adjournment of the meeting. The right of dissent is not available to a Director who votes in favor of an action taken.
4.5 Adjournment. A meeting of the Board of Directors may be adjourned by a majority of the Directors present, whether or not a quorum exists. Notice of the time and the place of the adjourned meeting and of the business to be transacted thereat, other than by announcement at the meeting at which the adjournment is taken, shall not be necessary. At an adjourned meeting at which a quorum is present, any business may be transacted which could have been transacted at the meeting originally called.
4.6 Participation in Meetings Other Than in Person. Members of the Board of Directors may participate in a meeting of the Board by any means of communication by which all persons participating in the meeting can hear each other. Participation in a meeting in such manner shall constitute presence in person at such meeting.
4.7 Rules. The Board of Directors may adopt rules and regulations that are not inconsistent with law or these Bylaws for the conduct of their meetings and the management of the affairs of the Corporation.
ARTICLE 5.
COMMITTEES
5.1 Formation and Powers. The Board of Directors, by resolution passed by a majority of the Whole Board (as defined in Section 2.3 of these Bylaws), may create one or more committees and appoint members of the Board of Directors to serve thereon. Each committee shall have such lawfully delegable powers and duties as the Board of Directors may confer. However, a committee shall not have the power to: (i) approve or propose to shareholders action that the Georgia Business Corporation Code requires to be approved by shareholders; (ii) fill vacancies on the Board of Directors or on any of its committees; (iii) amend the Articles of Incorporation pursuant to Section 14-2-1002 of the Georgia Business Corporation Code, as it may hereafter be amended; (iv) adopt, amend or repeal these Bylaws; or (v) approve a plan of merger not requiring shareholder approval. Any committee or committees so designated by the Board of Directors shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Unless otherwise prescribed by the Board of Directors, a majority of the members of the committee shall constitute a quorum for the transaction of business, and the act of a majority of the members present at a meeting at which there is a quorum shall be the act of such committee. Each committee shall prescribe its own rules for calling and holding meetings and its method of procedure, subject to any rules prescribed by the Board of Directors or by applicable law, and shall keep a written record of all actions taken by it.
5.2 Removal. The Board of Directors shall have power at any time to remove any member of any committee, with or without cause, to fill vacancies on any committee, and to dissolve any committee.
ARTICLE 6.
OFFICERS
6.1 Generally. The officers of the Company shall be elected by the Board of Directors and shall consist of a Chief Executive Officer, a President, a Secretary, and a Treasurer. The Board of Directors may also choose any or all of the following: a Controller, one or more Vice Presidents (who may be given particular designations with respect to authority, function, or seniority), and such other officers as the Board of Directors may from time to
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time determine. Notwithstanding the foregoing, by specific action the Board of Directors may authorize the Chairman of the Board of Directors to appoint any person to any office of the Corporation other than the Chief Executive Officer, who shall be elected by the Board of Directors. Any number of offices may be held by the same person. Any of the offices may be left vacant from time to time as the Board of Directors may determine. In the case of the absence or disability of any officer of the Company or for any other reason deemed sufficient by a majority of the Board of Directors, the Board of Directors may delegate the absent or disabled officer‘s powers or duties to any other officer or to any Director.
6.2 Compensation. The compensation of all officers and agents of the Company who are also Directors of the Company shall be fixed by the Board of Directors or by a committee of the Board of Directors. The Board of Directors may fix the compensation of other officers and agents of the Company or delegate the power to fix such compensation to an officer of the Company.
6.3 Succession. The officers of the Company will hold office until their successors are elected and qualified. Any officer may be removed at any time by the affirmative vote of a majority of the Whole Board. Any vacancy occurring in any office of the Company may be filled by the Board of Directors or by the Chairman of the Board of Directors as provided in Section 6.1 of these Bylaws.
6.4 Authority and Duties. Each of the officers of the Corporation shall have such authority and shall perform such duties as are customarily incident to their respective offices, or as may be specified from time to time by the Board of Directors.
6.5 Interested Officer Transactions. An interested officer is one who is a party to a contract or transaction with the Corporation or who is an officer or Director of, or has a financial interest in, another corporation, partnership, association, or other entity which is a party to a contract or transaction with the Corporation. Transactions involving such an officer shall be governed by Section 14-2-864 of the Georgia Business Corporation Code, as the same may hereinafter be amended.
ARTICLE 7.
CAPITAL STOCK
7.1 Certificates. The interest of each shareholder may be evidenced by a certificate or certificates representing shares of stock of the Corporation, which shall be in such form as the Board of Directors may from time to time adopt, shall be numbered and shall be entered in the books of the Corporation as they are issued. Each share certificate shall state, on its face, the name of the Corporation and that it is organized under the laws of Georgia, the name of the person to whom it is issued, and the number and class of shares and the designation of the series, if any, that the certificate represents. Also, each certificate may bear the seal of the Corporation or a facsimile thereof and shall be signed, either manually or in facsimile, by any one of the following: the President, the Secretary or an Assistant Secretary, or other officer designated by the Board of Directors for such purpose. If the certificate is signed in facsimile, it must be countersigned by a transfer agent or registered by a registrar other than the Corporation itself or an employee of the Corporation. The transfer agent or registrar may sign either manually or by facsimile.
7.2 Transfers. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue, or to cause its transfer agent to issue, a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.
7.3 Lost, Stolen or Destroyed Certificates. The Secretary may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact, satisfactory to the Secretary, by the person claiming the certificate of stock to be lost, stolen or destroyed. As a condition precedent to the issuance of a new certificate or certificates, the Secretary may require the owners of such lost, stolen or destroyed certificate or certificates to give the Corporation a bond in such sum and with such surety or sureties as the Secretary may direct as indemnity against any claims that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of the new certificate.
7.4 Certificateless Shares. The Board of Directors of the Corporation may authorize the issuance of some or all of the shares of stock, of any or all of its classes or series, without certificates. Within a reasonable time after the issue or transfer of the shares without certificates, the Corporation shall send the shareholder to whom a share is to be issued a written statement specifying the name of the Corporation, that the Corporation is organized under the laws of Georgia, the name of the person to whom the shares are issued or transferred, the number and class of shares and the designation of the series, if any, that the certificate represents, and any applicable restriction on the transfer of such shares.
7.5 Record Dates.
(a) In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to take any other action, the Board of Directors shall in advance fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 70 days before the date of such meeting. If no record date is fixed, the record date for determining shareholders entitled to notice of or to vote at any meeting of shareholders shall be the close of business on the day before the first notice is delivered to shareholders. A determination of shareholders of record entitled to notice of or to vote at a meeting of the shareholders shall apply to any adjournment of the meeting; provided, however, if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting, the Board of Directors shall fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the shareholders entitled to receive payment of any dividend or other distribution, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall not be more than 70 days prior to such payment. If no record date is fixed, the record date for determining shareholders for any such purpose shall be at the close of business on the day on which the Board of Directors authorizes the distribution.
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(c) The Corporation shall be entitled to treat the person in whose name any share of its stock is registered as the owner thereof for all purposes, and shall not be bound to recognize any equitable or other claim to, or interest in, such share on the part of any other person, whether or not the Corporation shall have notice thereof, except as expressly provided by applicable law.
ARTICLE 8.
MISCELLANEOUS
8.1 Amendments. Notwithstanding anything
contained in the Corporation‘s Articles of Incorporation to the contrary, unless otherwise required by applicable law, Sections 2.3 (Special Meetings), 2.10 (Order of Business), 3.2 (Number, Qualification and Term of Office), 3.3 (Vacancies and
Newly Created Directorships), 3.4 (Removal of Directors), 3.5 (Nominations of Directors; Election), 8.8 (Fair Price Requirements) and 8.9 (Business Combinations with Interested Shareholders) of these Bylaws shall not be amended or repealed by the
shareholders, and no provision inconsistent therewith shall be adopted by the shareholders, without the affirmative vote of the holders of at least 66 2/3%a majority of the
voting power of the then outstanding shares of Common Stock and outstanding shares of preferred stock voting together, to the extent the outstanding shares of preferred stock are afforded voting rights and powers generally equal to the voting rights
and powers of shares of Common Stock.
8.2 Inspection of Books.
(a) A shareholder may inspect and copy, during regular business hours at the Corporation‘s principal office, the following if he gives the Corporation written notice of his demand at least five (5) business days prior to the requested date of inspection: (1) the Corporation’s Articles of Incorporation and all amendments to them currently in effect; (2) the Corporation‘s Bylaws and all amendments to them currently in effect; (3) resolutions adopted by either the shareholders or Board of Directors increasing or decreasing the number of Directors, the classification of Directors, if any, and the names and residence addresses of all members of the Board of Directors; (4) resolutions adopted by the Board of Directors creating one or more classes or series of shares, and fixing their relative rights, preferences, and limitations, if shares issued pursuant to those resolutions are outstanding, and any resolutions adopted by the Board of Directors that affect the size of the board of Directors; (5) the minutes of all shareholders‘ meetings, executed waivers of notice of meetings, and executed written consents evidencing all action taken by shareholders without a meeting, for the previous three years; (6) all written communications to shareholders generally within the previous three years and the financial statements required to be made available to the shareholders for the previous three years under Section 14-2-1620 of the Georgia Business Corporation Code as it may hereinafter be amended; (7) a list of the names and business addresses of its current Directors and officers; and (8) the Corporation’s most recent annual registration delivered to the Secretary of State under Section 14-2-1622 of the Georgia Business Corporation Code.
(b) A shareholder may inspect and copy, during regular business hours at a reasonable location specified by the Corporation
(1) excerpts from minutes of any meeting of the Board of Directors, records of any action of a committee of the Board of Directors while acting in place of the Board of Directors on behalf of the Corporation, minutes of any meeting of the
shareholders, and records of action taken by the shareholders or Board of Directors without a meeting, to the extent not subject to inspection under Section 8.18.2(a); (2)
accounting records of the Corporation; and (3) the record of shareholders. A shareholder may inspect these records of the Corporation only if: (i) his demand is made in good faith and for a proper purpose that is reasonably relevant to his
legitimate interest as a shareholder; (ii) he describes with reasonable particularity his purpose and the records he desires to inspect; (iii) the records are directly connected with his purpose; (iv) the records are to be used only
for the stated purpose; and (v) the shareholder owns more than two percent (2%) of the outstanding shares of the Corporation at the date of his request.
8.3 Seal. The corporate seal shall be in such form as the Board of Directors may from time to time determine. In the event that it is inconvenient at any time to use the corporate seal of the Corporation, the words “Seal” or “Corporate Seal” enclosed in parentheses or scroll shall be deemed the corporate seal of the Corporation.
8.4 Checks, Notes, Drafts, Etc. Checks, notes, drafts, acceptances, bills of exchange, and other orders or obligations for the payment of money shall be signed by such officer or officers or person or persons as the Board of Directors by resolution shall from time to time designate.
8.5 Fiscal Year. The fiscal year of the Corporation shall be fixed from time to time by the Board of Directors.
8.6 Reliance upon Books, Reports and Records. Each Director, each member of a committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon such information, opinions, reports or statements, including financial statements and other financial data, prepared or presented to the Corporation by: (i) any of the Corporation‘s officers or employees who the Director reasonably believes to be reliable and competent in the matters presented; (ii) legal counsel, public accountants, investment bankers or other persons engaged by the Corporation as to matters the Director reasonably believes are within the person’s professional or expert competence; or (iii) committees of the Board of Directors of which he is not a member if the Director reasonably believes the committee merits confidence.
8.7 Time Periods. In applying any provision of these Bylaws that requires that an act be done or not be done a specified number of days prior to an event, or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.
8.8 Fair Price Requirements. The Corporation shall be governed by all of the requirements of Part 2 of Article 11 of the Georgia Business Corporation Code, as amended.
8.9 Business Combinations with Interested Shareholders. The Corporation shall be governed by all of the requirements of Part 3 of Article 11 of the Georgia Business Corporation Code, as amended.
FLOWERS FOODS, INC. - 2020 Proxy Statement C-8
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APPENDIX C (PROPOSED AMENDED AND RESTATED BYLAWS)
8.10 Indemnification. Each person who is or was or had agreed to become a Director or officer of the Corporation, or each such person who is or was serving or who had agreed to serve at the request of the Board of Directors or an officer of the Corporation as an employee or agent of the Corporation or as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executors, administrators or estate of such person), shall be indemnified by the Corporation to the fullest extent permitted by the Georgia Business Corporation Code or any other applicable laws as presently or hereafter in effect. The right to indemnification granted by this Section 8.10 shall include the right to be paid in advance expenses incurred in defending a proceeding. The Corporation may, by action of the Board of Directors, provide indemnification to other employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of Directors and officers. The right of indemnification provided in this Section 8.10 shall not be exclusive of any other rights to which any person seeking indemnification may otherwise be entitled, and shall be applicable to matters otherwise within its scope irrespective of whether such matters arose or arise before or after the adoption of this Section 8.10. Without limiting the generality or the effect of the foregoing, the Corporation may enter into one or more agreements with any person, which provide for indemnification greater or different than that provided in this Section 8.10. No amendment, modification or repeal of this Article shall adversely affect any right or protection of a Director, officer, employee or agent that exists at the time of such amendment, modification or repeal.
C-9 FLOWERS FOODS, INC. - 2020 Proxy Statement
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| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||||
| D00129-P33899 | KEEP THIS PORTION FOR YOUR RECORDS | |||
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
DETACH AND RETURN THIS PORTION ONLY | |
| Please date this Proxy and sign it exactly as your name or names appear(s) on the stock certificates or on a label affixed hereto. When shares are held jointly, EACH joint owner should sign. When signing as attorney, executor, administrator, trustee, guardian, corporate officer, etc., give full title as such. If shares are held by a corporation, please sign in full the corporate name by its president or other authorized officer. If shares are held by a partnership, please sign in the partnership name by an authorized person. |
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FLOWERS FOODS, INC.
Dear Shareholder,
Please take note of the important information enclosed with this Proxy. Your vote is important, and we encourage you to exercise your right to vote these shares. Please mark the boxes on the reverse side of this proxy card to indicate your vote. Then sign the card and return it in the enclosed postage-paid envelope, or follow the instructions on the reverse side of this proxy card for Internet or telephone voting. Your vote must be received prior to the Annual Meeting of Shareholders on May 21, 2020.
If you are a participant in the Flowers Foods, Inc. 401(k) Retirement Savings Plan, you have the right to direct Great-West Trust Company, LLC, the Trustee of the 401(k) plan, how to vote the Flowers Foods, Inc. common shares allocated to the account. Any unvoted or unallocated shares will be voted by the Trustee in the same proportion on each proposal as the Trustee votes the shares of stock credited to the 401(k) plan participants’ accounts for which the Trustee receives voting directions from the 401(k) plan participants. The number of shares that are eligible to vote is based on the balance in the 401(k) plan on March 19, 2020, the record date for the Annual Meeting. Because all of the shares in the 401(k) plan are registered in the name of Great-West Trust Company, LLC, as Trustee, you will not be able to vote these shares in the 401(k) plan in person at the Annual Meeting on May 21, 2020.
If stock is owned directly in your own name as well as in the 401(k) plan, separate share totals are indicated on the reverse side of this voting instruction form. If you own stock indirectly through a bank or broker, as well as in the 401(k) plan, you will receive a separate voting instruction form from the bank or broker.
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Thank you. | ||
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Flowers Foods, Inc. |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
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D00130-P33899
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FLOWERS FOODS, INC. 1919 Flowers Circle Thomasville, Georgia 31757 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 21, 2020
The undersigned hereby appoints A. Ryals McMullian, R. Steve Kinsey and Stephanie B. Tillman as proxies, with power to act without the other, and with full power of substitution, and hereby authorizes them to represent and vote, as designated on the reverse side, all the shares of common stock of Flowers Foods, Inc. held of record on March 19, 2020, by the undersigned at the Annual Meeting of Shareholders to be held on May 21, 2020, and at any adjournment or postponement thereof. The above-named proxies of the undersigned are authorized to vote, in their discretion, upon such other matters as may properly come before the Annual Meeting or any adjournment or postponement thereof.
If you are a participant in the Flowers Foods, Inc. 401(k) Retirement Savings Plan, you have the right to direct Great-West Trust Company, LLC, the Trustee of the 401(k) plan, how to vote the Flowers Foods, Inc. common shares allocated to the account. This proxy card also acts as a voting instruction form to provide voting directions to the Trustee.
The proxies will vote on the proposals set forth in the Notice of Annual Meeting and Proxy Statement as specified on the reverse side and are authorized to vote, in their discretion, on any other matters that may properly come before the Annual Meeting or any adjournment or postponement thereof. |
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WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS INDICATED ON THE REVERSE SIDE. IF NO INDICATION IS MADE, ANY EXECUTED PROXY WILL BE VOTED “FOR” THE ELECTION OF ALL OF THE DIRECTOR-NOMINEES LISTED ON THE REVERSE SIDE, “FOR” PROPOSALS 2, 3 AND 4, AND IN THE DISCRETION OF THE PROXIES AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE AND RETURN THE PROXY
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