Clawback Policy
The Compensation Committee has adopted a mandatory clawback policy for current and former executive officers aligned with the rules of the SEC and the Nasdaq Stock Market (the “Clawback Policy”). Under the Clawback Policy, in the event of an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, the Company will recover erroneously awarded incentive compensation received by current and former executive officers during the three completed fiscal years immediately preceding the restatement date, unless one of the exceptions specified in the Clawback Policy is applicable to the particular circumstances.
2024 Compensation - Analysis
As described above, J & J delivered record sales and profitability performance in 2024. While the adjusted EBITDA results were a less than the Company’s plan for the year (approximately 96% of the plan), the Compensation Committee recognized all of the other accomplishments in the year, many of which will have a significant impact on the Company’s performance in future years. Accordingly, the Compensation Committee approved 2024 non-equity incentive payments to our NEOs at 98% of the target amounts.
Chief Executive Officer
On February 14, 2023, the Company entered into an Employment Agreement with Mr. Fachner (the “Fachner Agreement”), pursuant to which, among other things, Mr. Fachner will (i) receive a base salary of at least $950,000, (ii) receive an annual bonus with an annual target no less than Mr. Fachner’s base salary, (iii) receive an annual equity incentive award of not less than $1,500,000, and (iv) receive paid time off and other benefits on the same basis generally made available to other, similarly situated executives. The Fachner Agreement is for an initial term of four years (the “Term”) but may be extended upon mutual agreement of Mr. Fachner and the Company. If Mr. Fachner remains employed by the Company for the entire Term and the Company obtains a target EBITDA of $600 million in the aggregate over the course of fiscal years 2023 through 2026, Mr. Fachner will earn an additional bonus of $5,000,000. In the event the Fachner Agreement is terminated prior to the expiration of the Term or is not renewed, Mr. Fachner will be eligible to receive one of three severance packages, depending upon the timing and reason for his termination or the non-renewal.
Mr. Fachner was paid base salary at a rate of $950,000 per annum for the first few months of fiscal year 2024, and $1,000,000 per annum for the remainder of the fiscal year beginning in January 2024.
Based on our performance for 2024, both quantitative and qualitative as discussed above, Mr. Fachner received a 2024 non-equity incentive payment of $980,000, ninety-eight percent (98%) of the target amount. The Compensation Committee was particularly focused on rewarding Mr. Fachner for his strong leadership of the Company, continuing to drive the right strategic initiatives in furtherance of the Company’s long-term success.
On November 17, 2023, Mr. Fachner was granted 4,454 time-vesting restricted stock units and 4,454 performance-vesting restricted stock units. On January 1, 2024, Mr. Fachner was granted an additional 1,795 time-vesting restricted stock units and 1,795 performance-vesting restricted stock units. The time-vesting restricted stock units vest in equal one-third annual installments over a three-year service period. The performance-vesting restricted stock units vest at the target level based on our achievement of $422.24 million in cumulative adjusted EBITDA over a two-year performance period, provided Mr. Fachner remains employed for an additional year thereafter. Our Compensation Committee believes that the combination of these grants will have a retentive influence over Mr. Fachner and, at the same time, incentivize him to achieve our goals.
Chief Financial Officer
Mr. Plunk was paid base salary at a rate of $522,500 per annum for the first few months of fiscal year 2024, and $540,787 per annum for the remainder of the fiscal year beginning in January 2024. Based on our performance for 2024, both quantitative and qualitative as discussed above, Mr. Plunk received a 2024 non-equity incentive payment of $397,479, ninety-eight percent (98%) of the target amount.
On November 17, 2023, Mr. Plunk was granted 1,188 time-vesting restricted stock units and 1,187 performance-vesting restricted stock units. The time-vesting restricted stock units vest in equal one-third annual installments over a three-year service period. The performance-vesting restricted stock units vest at the target level based on our achievement of $422.24 million in cumulative adjusted EBITDA over a two-year performance period, provided Mr. Plunk remains employed for an additional year thereafter. As previously announced, Mr. Plunk retired at the end of the 2024 calendar year.
