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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Dear Shareholder:
We would like to extend an invitation for you to join us at our annual meeting of shareholders on May 23, 2019 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 companys 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 December 28, 2019; |
4. | to hold a vote on a shareholder proposal regarding the elimination of supermajority vote requirements, if properly presented at the annual 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 9, 2019, we mailed to our shareholders a notice that contains instructions on how to access our 2019 proxy statement and 2018 annual report and vote online or to affirmatively elect to receive the proxy materials by mail.
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 9, 2019
Thomasville, Georgia
George E. Deese | Allen L. Shiver | |
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 23, 2019
Flowers Foods, Inc.s 2019 proxy statement and 2018 annual report are available at www.proxyvote.com.
Notice of Annual Meeting of Shareholders
|
May 23, 2019
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 23, 2019 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 companys 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 December 28, 2019; |
(4) | to hold a vote on a shareholder proposal regarding the elimination of supermajority vote requirements, if properly presented at the annual 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 21, 2019 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 9, 2019
1919 Flowers Circle
Thomasville, Georgia 31757
By order of the Board of Directors,
Stephen R. Avera
Chief Legal Counsel
FLOWERS FOODS, INC. - 2019 Proxy Statement 3
4 FLOWERS FOODS, INC. - 2019 Proxy Statement
FLOWERS FOODS, INC. - 2019 Proxy Statement 5
To assist you in reviewing Flowers Foods 2018 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 29, 2018 and the entire proxy statement before voting. Page references (XX) are supplied to help you find further information in this proxy statement.
2019 Annual Meeting of Shareholders
| Date and Time: Thursday, May 23, 2019 at 11:00 a.m., Eastern Time |
| Location: Thomasville Municipal Auditorium, 144 East Jackson Street, Thomasville, Georgia |
| Record Date: March 21, 2019 |
Voting Matters and Board Recommendations (page 45)
Board vote Recommendation | Page Reference (for more detail) |
|||||||
Election of Eight Director-Nominees |
FOR each Director-Nominee | 45 | ||||||
Advisory Vote on Executive Compensation | FOR | 46 | ||||||
Ratification of Independent Registered Public Accounting Firm |
FOR | 47 | ||||||
Shareholder Proposal Regarding the Elimination of Supermajority Vote Requirements |
AGAINST | 49 |
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 Annex A for a reconciliation of non-GAAP financial measures to the nearest financial measure reported under GAAP. |
6 FLOWERS FOODS, INC. - 2019 Proxy Statement
Governance of the Company (page 17)
Directors (page 15)
Name | Age | Director since |
Experience | Independent | Committee Memberships | Other Company Boards | ||||||||
George E. Deese |
73 | 2004 | Retired Chairman and Chief Executive Officer of Flowers Foods | Yes | | | ||||||||
Rhonda Gass |
55 | 2016 | Vice President and Chief Information Officer of Stanley Black & Decker | Yes | Audit and Finance Committees | | ||||||||
Benjamin H. Griswold, IV |
78 | 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 |
65 | 2014 | Former President of Hospital Corporation of Americas Capital Division | Yes | Audit and Finance Committees | Federal Reserve Bank of Richmond; W.P. Carey Inc. | ||||||||
Amos R. McMullian(1) |
81 | 2001 | Chairman Emeritus of Flowers Foods; retired Chairman of the Board and Chief Executive Officer of Flowers Foods | No | | | ||||||||
Allen L. Shiver(2) |
63 | 2013 | President and Chief Executive Officer of Flowers Foods | No | | | ||||||||
David V. Singer |
63 | 2010 | Retired Chief Executive Officer of Snyders Lance, Inc. | Yes | Nominating/Corporate Governance and Compensation Committees | SPX Flow, Inc.; Brunswick Corporation; Hanesbrands, Inc. | ||||||||
James T. Spear |
64 | 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. |
72 | 2004 | President, Norfolk State University; former Dean Emeritus, Whitman School of Management, Syracuse University | Yes | Nominating/Corporate Governance and Compensation Committees | Synovus Financial Corp.; Aflac Incorporated | ||||||||
C. Martin Wood III |
75 | 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) | Mr. McMullians term as director will expire upon his retirement effective at the 2019 annual meeting of shareholders. |
(2) | On February 19, 2019, the company announced that Mr. Shiver will retire from his positions as president and chief executive officer of the company and a member of the board of directors of the company, effective as of the 2019 annual meeting of shareholders. |
FLOWERS FOODS, INC. - 2019 Proxy Statement 7
2018 Executive Compensation (page 27)
2018 Compensation Developments
Summary of Our Compensation Practices (page 28)
Practices We Have Adopted | Practices We Do Not Engage In | |||
Moderate pay targeted to the size-adjusted 50th percentile of market data
Long-term incentives that are performance-based as well as service-based
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
Perquisites are not provided |
8 FLOWERS FOODS, INC. - 2019 Proxy Statement
2018 Executive Compensation Summary (page 36)
Named Executive Compensation
Set forth below is a summary of the 2018 compensation for each named executive officer of the company as determined under applicable SEC rules and regulations (the Named Executives). Stock awards made in 2018 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 30. 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 27 under Executive Compensation Compensation Discussion and Analysis and page 36 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 ($) |
Total ($) |
||||||||||||||||||
Allen L. Shiver President and Chief Executive Officer |
1,000,000 | 0 | 281,600 | 35,728 | 89,553 | 1,406,881 | ||||||||||||||||||
R. Steve Kinsey Chief Financial Officer and Chief Administrative Officer |
572,308 | 0 | 117,209 | 19,479 | 45,440 | 754,436 | ||||||||||||||||||
Bradley K. Alexander President, Fresh Packaged Bread Business Unit |
540,000 | 0 | 96,768 | 37,858 | 42,827 | 717,453 | ||||||||||||||||||
Stephen R. Avera Chief Legal Counsel |
484,230 | 0 | 86,774 | 5,804 | 37,094 | 613,902 | ||||||||||||||||||
D. Keith Wheeler Chief Sales Officer |
455,424 | 0 | 81,611 | 1,857 | 34,864 | 573,756 |
2018 Executive Total Compensation Mix (page 28)
The information below should be read in connection with the explanatory information beginning on page 28 under Executive Compensation Compensation Discussion and Analysis Mix of Compensation Opportunity, and is qualified in its entirety by reference to such information.
FLOWERS FOODS, INC. - 2019 Proxy Statement 9
FLOWERS FOODS, INC.
1919 Flowers Circle
Thomasville, Georgia 31757
PROXY STATEMENT FOR THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD MAY 23, 2019
This proxy statement and the accompanying form of proxy are being furnished to the shareholders of Flowers Foods, Inc. on or about April 9, 2019 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 23, 2019 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 2019 annual meeting, and you must be a Flowers Foods shareholder to register. The deadline for registration is May 20, 2019. All attendees will be required to present a valid, government-issued photo ID, such as a passport or drivers license, to gain admission.
Please visit www.flowersfoods.com, and click on Shareholders Meeting Pre-registration.
How does the board of directors recommend that I vote on each proposal?
The board of directors recommends that you vote:
10 FLOWERS FOODS, INC. - 2019 Proxy Statement
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?
12 FLOWERS FOODS, INC. - 2019 Proxy Statement
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?
Where can I find the voting results from the annual meeting?
FLOWERS FOODS, INC. - 2019 Proxy Statement 13
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
How and when may I submit a shareholder proposal for the 2020 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?
14 FLOWERS FOODS, INC. - 2019 Proxy Statement
DIRECTORS AND CORPORATE GOVERNANCE
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 Messrs. McMullian and Shiver, has been nominated to serve as a director until the 2020 annual meeting of shareholders. On October 10, 2018, Mr. Shields died unexpectedly. In addition, Messrs. McMullian and Shivers terms as directors will expire upon their retirement effective at the 2019 annual meeting of shareholders. The company would like to express its genuine gratitude for Messrs. McMullians, Shields and Shivers extended 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.
FLOWERS FOODS, INC. - 2019 Proxy Statement 15
DIRECTORS AND CORPORATE GOVERNANCE
16 FLOWERS FOODS, INC. - 2019 Proxy Statement
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 2018:
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 | X | ||||||
Amos R. McMullian(1) |
||||||||
Allen L. Shiver(1) |
||||||||
David V. Singer* |
X | Chair | ||||||
James T. Spear* |
Chair | X | ||||||
Melvin T. Stith, Ph.D.* |
X | X | ||||||
C. Martin Wood III* |
X | Chair | ||||||
NUMBER OF MEETINGS |
9 | 4 | 4 | 4 |
* | Independent Directors |
(1) | Messrs. McMullian and Shivers terms as director will expire upon their retirement effective at the 2019 annual meeting of shareholders. |
18 FLOWERS FOODS, INC. - 2019 Proxy Statement
DIRECTORS AND CORPORATE GOVERNANCE
Shareholder & Other Interested Party Communication with Directors
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.
2018 Director Compensation Package
22 FLOWERS FOODS, INC. - 2019 Proxy Statement
DIRECTORS AND CORPORATE GOVERNANCE
Given the above principles and market data, the non-employee director compensation package consisted of the following:
Compensation Element | 2017 Program | 2018 Program | ||||||
Annual Cash Retainer Committee Chair Retainers |
$100,000 | (1) | $100,000 | (1) | ||||
Audit Committee |
$ 15,000 | $ 15,000 | ||||||
Compensation Committee |
$ 15,000 | $ 15,000 | ||||||
Nominating/Corporate Governance Committee |
$ 10,000 | $ 10,000 | ||||||
Finance Committee |
$ 10,000 | $ 10,000 | ||||||
Audit Committee Member Retainer |
$ 7,500 | $ 7,500 | ||||||
Presiding Director Retainer |
$ 20,000 | $ 20,000 | ||||||
Non-Executive Chairman Retainer |
$270,000 | $170,000 | (2) | |||||
Annual Stock Award |
$130,000 | $130,000 | (3) |
(1) | Cash retainers may be deferred at the directors option; see Additional Compensation Program Details. |
(2) | The retainer for the non-executive chairman will be unchanged for 2019. |
(3) | Vests one year from the date of grant based upon the closing price of the companys common stock on May 23, 2019. |
Additional Compensation Program Details
We reimburse all directors for out-of-pocket expenses incurred in connection with attendance at board of directors meetings, or when traveling in connection with the performance of their services for the company.
FLOWERS FOODS, INC. - 2019 Proxy Statement 23
DIRECTORS AND CORPORATE GOVERNANCE
DIRECTOR SUMMARY COMPENSATION TABLE
The following table details compensation to non-employee members of the board of directors for the 2018 fiscal year:
Name | Fees Earned or ($)(1) |
Stock Awards ($)(2) |
Change
in Earnings ($)(3) |
All Other Comp. ($)(4) |
Total ($) |
|||||||||||||||
George E. Deese |
270,000 | 130,000 | 206,757 | 40,725 | 647,482 | |||||||||||||||
Rhonda Gass |
57,500 | 180,000 | 7,165 | | 244,665 | |||||||||||||||
Benjamin H. Griswold, IV |
130,000 | 130,000 | | | 260,000 | |||||||||||||||
Richard Lan(5) |
44,792 | | | | 44,792 | |||||||||||||||
Margaret G. Lewis |
107,500 | 130,000 | 6,624 | | 244,124 | |||||||||||||||
Amos R. McMullian(6) |
100,000 | 130,000 | 252,432 | | 482,432 | |||||||||||||||
J.V. Shields, Jr.(7) |
| 228,375 | | | 228,375 | |||||||||||||||
David V. Singer |
115,000 | 130,000 | | | 245,000 | |||||||||||||||
James T. Spear |
22,500 | 230,000 | | | 252,500 | |||||||||||||||
Melvin T. Stith, Ph.D. |
100,000 | 130,000 | | | 230,000 | |||||||||||||||
C. Martin Wood III |
117,500 | 130,000 | 84,600 | | 332,100 |
(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 2018, Ms. Gass elected to defer 50% of her annual board of directors retainer fees into the EDCP. In fiscal 2018, under the Omnibus Plan, Messrs. Shields and Spear elected to convert all of, and Ms. Gass elected to convert 50% of their annual board of directors retainer fees to deferred stock equal in value to the cash payments they 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 2018 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 directors 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 29, 2018 are as follows: |
Name | Deferred (#) |
Deferred ($) |
||||||
George E. Deese |
6,500 | 118,885 | ||||||
Rhonda Gass |
16,110 | 294,652 | ||||||
Benjamin H. Griswold, IV |
6,500 | 118,885 | ||||||
Richard Lan(5) |
| | ||||||
Margaret G. Lewis |
6,500 | 118,885 | ||||||
Amos R. McMullian(6) |
14,555 | 266,211 | ||||||
J.V. Shields, Jr.(7) |
| | ||||||
David V. Singer |
6,500 | 118,885 | ||||||
James T. Spear |
34,492 | 630,859 | ||||||
Melvin T. Stith, Ph.D. |
71,352 | 1,305,028 | ||||||
C. Martin Wood III |
6,500 | 118,885 |
(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. Lans term as a director expired after the 2018 annual meeting of shareholders. |
(6) | Mr. McMullians term as a director will expire upon his retirement effective at the 2019 annual meeting of shareholders. |
(7) | On October 10, 2018, Mr. Shields died unexpectedly. |
24 FLOWERS FOODS, INC. - 2019 Proxy Statement
TRANSACTIONS WITH MANAGEMENT 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) |
19,117,159 | 9.04% | ||||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055(3) |
16,238,328 | 7.68% | ||||||
T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202(4) |
14,987,472 | 7.09% |
(1) | Percent of class is based upon the number of shares of Flowers Foods common stock outstanding on March 21, 2019. |
(2) | The beneficial ownership reported is based upon a Schedule 13G/A filed by The Vanguard Group on February 11, 2019. The Schedule 13G/A indicates that The Vanguard Group has sole dispositive power as to 19,016,316 shares, sole voting power as to 87,383 shares, shared voting power as to 31,450 shares and shared dispositive power as to 100,843 shares. |
(3) | The beneficial ownership reported is based upon a Schedule 13G/A filed by BlackRock, Inc. on February 4, 2019. The Schedule 13G/A indicates that BlackRock, Inc. has sole dispositive power as to all shares reported and sole voting power as to 15,447,944 shares. |
(4) | The beneficial ownership reported is based upon a Schedule 13G/A filed by T. Rowe Price Associates, Inc. on February 14, 2019. 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 4,315,013 shares. |
FLOWERS FOODS, INC. - 2019 Proxy Statement 25
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Share Ownership of Certain Executive Officers and Directors
The following table lists information as of March 8, 2019 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:
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) |
Percent of Class |
||||||
Bradley K. Alexander |
319,946 | * | ||||||
Stephen R. Avera |
544,713 | (2) | * | |||||
George E. Deese |
3,214,753 | (3) | 1.52% | |||||
Rhonda Gass |
16,913 | (4) | * | |||||
Benjamin H. Griswold, IV |
329,712 | (5) | * | |||||
R. Steve Kinsey |
328,506 | * | ||||||
Margaret G. Lewis |
35,180 | (6) | * | |||||
Amos R. McMullian |
3,412,833 | (7) | 1.61% | |||||
Allen L. Shiver |
958,081 | (8) | * | |||||
David V. Singer |
96,398 | (9) | * | |||||
James T. Spear |
77,312 | (10) | * | |||||
Melvin T. Stith, Ph.D. |
114,646 | (11) | * | |||||
D. Keith Wheeler |
59,035 | * | ||||||
C. Martin Wood III |
7,774,199 | (12) | 3.68% | |||||
All Directors and Executive Officers as a Group (14 persons) |
17,282,227 | 8.17% |
* | 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 55,880 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) 175,000 shares held by a family LLC, over which shares Mr. Deese shares joint voting and dispositive power; (iii) 180,349 shares held by ten family trusts, over which shares Mr. Deese shares joint voting and dispositive power; and (iv) 5,416 shares of deferred stock, which would be distributed to Mr. Deese if he had separated his service from the company on March 8, 2019. |
(4) | Includes 7,449 shares of deferred stock, which would be distributed to Ms. Gass if she had separated her service from the company on March 8, 2019. |
(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) 5,416 shares of deferred stock, which would be distributed to Mr. Griswold if he had separated his service from the company on March 8, 2019. |
(6) | Includes 5,416 shares of deferred stock, which would be distributed to Ms. Lewis if she had separated her service from the company on March 8, 2019. |
(7) | Includes (i) 55,063 shares held by a corporation of which Mr. McMullian is a director and shares voting and dispositive power over the shares; and (ii) 13,471 shares of deferred stock, which would be distributed to Mr. McMullian if he had separated his service from the company on March 8, 2019. |
(8) | Includes 12,282 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) 9,537 shares held by a trust of which Mr. Singer is a trustee; and (ii) 5,416 shares of deferred stock, which would be distributed to Mr. Singer if he had separated his service from the company on March 8, 2019. |
(10) | Includes (i) 100 shares held by Mr. Spears child, over which shares Mr. Spear shares voting and investment authority; and (ii) 16,634 shares of deferred stock, which would be distributed to Mr. Spear if he had separated his service from the company on March 8, 2019. |
(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) 70,697 shares of deferred stock, which would be distributed to Dr. Stith if he had separated his service from the company on March 8, 2019. |
(12) | Includes (i) 17,934 shares held by a trust of which Mr. Wood is trustee and 6,587,672 shares owned by the spouse of Mr. Wood, in each case as to which shares Mr. Wood disclaims any beneficial ownership; and (ii) 5,416 shares of deferred stock, which would be distributed to Mr. Wood if he had separated his service from the company on March 8, 2019. |
26 FLOWERS FOODS, INC. - 2019 Proxy Statement
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 2018 by directors and executive officers.
Due to administrative error, a late Form 4 reporting an award of deferred stock granted to Ms. Gass that was due on January 4, 2018 was filed on February 13, 2018.
COMPENSATION DISCUSSION AND ANALYSIS
Consideration of 2018 Say on Pay Vote
We currently hold our say on pay vote every year. At our 2018 annual meeting of shareholders, more than 98% 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 2018 and in early 2019. 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 companys annual meeting of shareholders in 2023.
FLOWERS FOODS, INC. - 2019 Proxy Statement 27
EXECUTIVE COMPENSATION
Summary of Our Compensation Practices
Practices We Have Adopted | Practices We Do Not Engage In | |||
Moderate pay targeted to the size-adjusted 50th percentile of market data
Long-term incentives that are 100% performance-based for senior 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 |
No employment agreements
No dividend equivalents on unvested performance shares
No income tax gross-ups
No excise tax gross-ups on change of control severance
No backdating or repricing of stock options
No pension credited service for years not worked
No perquisites are provided |
EXECUTIVE COMPENSATION GENERALLY
Objectives of Executive Compensation
Mix of Compensation Opportunity
28 FLOWERS FOODS, INC. - 2019 Proxy Statement
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 incentives 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 2018, 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 | ||||
ACH American Sugar Refining Andersons Anheuser-Busch Arbys Restaurant Group Bush Brothers & Company Campbell Soup Cargill Coca-Cola Coca-Cola Refreshments Compass ConAgra Foods Dean Foods Diageo North America Dr. Pepper Snapple Group |
E & J Gallo Winery Ferrara Candy Company Flowers Foods General Mills Glanbia Group Services Hershey Hormel Foods J.M. Smucker Kellogg Kerry Group Keurig Green Mountain Keystone Foods Kraft Heinz Land OLakes Leprino Foods |
Mars Incorporated McCormick McDonalds Mission Produce Mondelez Nestle USA Parmalat PepsiCo Polar Beverages Schreiber Foods Schwan Food Company Simmons Foods Smithfield Foods Tyson Foods Ventura Foods |
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 high enough to be competitive and to attract, retain and motivate the most qualified executives, but not so high that they create negative perception among other constituencies.
The compensation committee concluded that the proposed 2018 compensation levels under the companys 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 companys goal to retain each Named Executive and to align his interests with those of the companys shareholders.
30 FLOWERS FOODS, INC. - 2019 Proxy Statement
EXECUTIVE COMPENSATION
Named Executive | 2018 Salary | 2017 Salary | Percent Change | |||||||||
President and Chief Executive Officer |
1,000,000 | 1,000,000 | 0.0 | % | ||||||||
Chief Financial Officer and Chief Administrative Officer |
572,308 | 540,000 | 6.0 | % | ||||||||
President, Fresh Packaged Bread Business Unit |
540,000 | 540,000 | 0.0 | % | ||||||||
Chief Legal Counsel |
484,230 | 475,000 | 1.9 | % | ||||||||
Chief Sales Officer |
455,424 | 421,270 | 8.1 | % |
Annual Executive Cash Incentive Awards
Named Executive | Target Bonus Percentage | |||||||
Allen L. Shiver |
110 | % | ||||||
R. Steve Kinsey |
80 | % | ||||||
Bradley K. Alexander |
70 | % | ||||||
Stephen R. Avera |
70 | % | ||||||
D. Keith Wheeler |
70 | % |
For 2018, a bonus was awarded to participating Named Executives based on the following formula:
| the Named Executives base salary; multiplied by |
| the Target Bonus Percentage; multiplied by |
| the Actual Bonus Percentage, a percentage based upon the companys 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 2018 EBITDA Goal achieved and the related Actual Bonus Percentages: |
Level of Achievement | % of EBITDA Goal Achieved |
Actual Bonus Percentage |
||||||
Maximum |
110 | % | 150 | % | ||||
Target |
100 | % | 100 | % | ||||
Actual |
85.12 | % | 25.6 | % | ||||
Threshold |
80 | % | 0 | % |
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 have historically chosen 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.
FLOWERS FOODS, INC. - 2019 Proxy Statement 31
EXECUTIVE COMPENSATION
Recoupment (Clawback) Provision
The companys 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
FLOWERS FOODS, INC. - 2019 Proxy Statement 33
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 | |
President, Fresh Packaged Bread Business Unit |
2 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 companys compensation plans, policies and programs. The compensation committee has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with the companys 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 29, 2018 filed with the SEC and proxy statement for the 2019 annual meeting of shareholders.
The Compensation Committee of the Board of Directors:
David V. Singer, Chair
Benjamin H. Griswold, IV
Melvin T. Stith, Ph.D.
FLOWERS FOODS, INC. - 2019 Proxy Statement 35
EXECUTIVE COMPENSATION
The following table summarizes the compensation of the Named Executives, which include the 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 29, 2018, December 30, 2017 and December 31, 2016.
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 ($) |
|||||||||||||||||||||
Allen L. Shiver |
2018 | 1,000,000 | 0 | 281,600 | 35,728 | 89,553 | 1,406,881 | |||||||||||||||||||||
President and |
2017 | 1,000,000 | 4,435,334 | 892,100 | 86,910 | 82,306 | 6,496,650 | |||||||||||||||||||||
Chief Executive Officer |
2016 | 1,000,000 | 3,975,616 | 536,800 | 52,212 | 84,366 | 5,648,994 | |||||||||||||||||||||
R. Steve Kinsey |
2018 | 572,308 | 0 | 117,209 | 19,479 | 45,440 | 754,436 | |||||||||||||||||||||
Chief Financial Officer and |
2017 | 540,000 | 897,194 | 350,352 | 48,276 | 39,175 | 1,874,997 | |||||||||||||||||||||
Chief Administrative Officer |
2016 | 531,923 | 842,428 | 207,663 | 32,259 | 40,361 | 1,654,634 | |||||||||||||||||||||
Bradley K. Alexander |
2018 | 540,000 | 0 | 96,768 | 37,858 | 42,827 | 717,453 | |||||||||||||||||||||
President, Fresh Packaged |
2017 | 540,000 | 897,194 | 350,352 | 99,375 | 39,200 | 1,926,121 | |||||||||||||||||||||
Bread Business Unit |
2016 | 534,231 | 859,321 | 208,564 | 60,400 | 40,492 | 1,703,008 | |||||||||||||||||||||
Stephen R. Avera |
2018 | 484,230 | 0 | 86,774 | 5,804 | 37,094 | 613,902 | |||||||||||||||||||||
Chief Legal Counsel |
2017 | 475,000 | 678,198 | 269,658 | 47,497 | 33,753 | 1,504,106 | |||||||||||||||||||||
2016 | 471,539 | 637,870 | 161,078 | 19,641 | 35,424 | 1,325,552 | ||||||||||||||||||||||
D. Keith Wheeler |
2018 | 455,424 | 0 | 81,611 | 1,857 | 34,864 | 573,756 | |||||||||||||||||||||
Chief Sales Officer |
2017 | 421,270 | 601,592 | 239,155 | 34,044 | 25,256 | 1,321,317 | |||||||||||||||||||||
2016 | 410,592 | 520,067 | 140,258 | 14,400 | 25,726 | 1,111,043 |
(1) | Named Executives may elect to defer amounts into the 401(k) Plan (up to Internal Revenue Service limits) and into the EDCP. Amounts of salary deferred during fiscal 2018 were as follows: |
Name | Salary Deferrals into 401(k) Plan ($) |
Salary Deferrals into EDCP ($) |
Total ($) |
|||||||||
Allen L. Shiver |
24,500 | 100,000 | 124,500 | |||||||||
R. Steve Kinsey |
24,500 | 34,338 | 58,838 | |||||||||
Bradley K. Alexander |
24,500 | 167,270 | 191,770 | |||||||||
Stephen R. Avera |
24,500 | 149,355 | 173,855 | |||||||||
D. Keith Wheeler |
24,500 | 27,325 | 51,825 |
(2) | Grant date fair value of performance-contingent restricted stock (reported in the Stock Awards column) made under the Omnibus Plan in 2016 and 2017 and compiled in accordance with ASC 718. There were no performance-contingent restricted stock award grants made in 2018. See Note 18 and Note 16 to the companys consolidated financial statements in our Annual Report on Form 10-K for the fiscal years ended December 30, 2017, and December 31, 2016, respectively, for a description of the assumptions made in the valuation of stock awards under ASC 718. |
(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 2018 are as follows. The change in pension value is negative for each Named Executive as follows: Mr. Shiver $(9,050); Mr. Kinsey $(18,511); Mr. Alexander $(28,589); Mr. Avera $(11,365); Mr. Wheeler $(27,224). Accordingly, pursuant to SEC guidance, a $0 change in pension value is reflected in the Summary Compensation Table is shown for each Named Executive in the table set forth below: |
Name | Change in Pension Value ($) |
Above-Market Nonqualified Deferred Comp. Earnings ($) |
Total ($) |
|||||||||
Allen L. Shiver |
0 | 35,728 | 35,728 | |||||||||
R. Steve Kinsey |
0 | 19,479 | 19,479 | |||||||||
Bradley K. Alexander |
0 | 37,858 | 37,858 | |||||||||
Stephen R. Avera |
0 | 5,804 | 5,804 | |||||||||
D. Keith Wheeler |
0 | 1,857 | 1,857 |
36 FLOWERS FOODS, INC. - 2019 Proxy Statement
EXECUTIVE COMPENSATION
(5) | Amounts reported in the All Other Comp. column for 2018 are reported in the table below. |
Name | Employer Contributions to Section 401(k) Plan ($) |
Employer Contributions to Nonqualified Deferred Comp. Plan ($) |
Total ($) |
|||||||||
Allen L. Shiver |
16,500 | 73,053 | 89,553 | |||||||||
R. Steve Kinsey |
16,500 | 28,940 | 45,440 | |||||||||
Bradley K. Alexander |
16,500 | 26,327 | 42,827 | |||||||||
Stephen R. Avera |
16,500 | 20,594 | 37,094 | |||||||||
D. Keith Wheeler |
16,500 | 18,364 | 34,864 |
Year | CEO Total Compensation ($) |
Median Employee Total Compensation ($) |
Ratio of CEO to Median Employee Total Compensation | |||
2018 |
1,428,884 | 68,669 |
20.8:1 |
Our chief executive officers annual total compensation is 20.8 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, 2018, with the exception of our chief executive officer, to identify the median employee. We did not include any (i) employees with 2018 compensation who were no longer active as of December 31, 2018, (ii) contract labor employees, (iii) independent distributors, (iv) leased labor employees or (v) employees hired prior to December 31, 2018 without 2018 compensation. We do not have any employees located outside of the United States. |
2. | We found the median employee using 2018 gross compensation reported to the U.S. Internal Revenue Service on Form W-2 for the period of January 1, 2018 to December 31, 2018. Specifically, we used Form W-2, Box 5, Medicare Wages and Tips. |
3. | The total compensation reported for our chief executive officer is from the Summary Compensation Table on page 36 of this proxy statement 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, 2018 to December 31, 2018 and also includes employer-provided health and wellness benefits. |
The pay ratio for 2018 is significantly less than the pay ratio for 2017. Based on the financial outlook for 2018, management recommended, and the compensation committee agreed, not to provide long-term incentive awards for 2018 to any of our named executive officers, including our chief executive officer. In addition, the change in pension value for 2018 was negative for each of our named executive officers, including our chief executive officer. Both of these factors significantly decreased our chief executive officers annual total compensation from $6,518,086 for 2017 to $1,428,884 for 2018, which accordingly reduced the pay ratio from 105.2:1 for 2017 to 20.8:1 for 2018.
The following table details grants made during the fiscal year ended December 29, 2018 pursuant to incentive plans in place at Flowers Foods as of that date:
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) |
Estimated Future Payouts Under Equity Incentive Plan Awards |
Grant Date Fair Value of Equity Incentive Plan Awards ($) |
||||||||||||||||||||||||||
Name and Grant | Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
||||||||||||||||||||||
Allen L. Shiver |
||||||||||||||||||||||||||||
Non-Equity Incentive Plan Award |
| 1,100,000 | 1,650,000 | | | | 0 | |||||||||||||||||||||
R. Steve Kinsey |
||||||||||||||||||||||||||||
Non-Equity Incentive Plan Award |
| 457,846 | 686,769 | | | | 0 | |||||||||||||||||||||
Bradley K. Alexander |
||||||||||||||||||||||||||||
Non-Equity Incentive Plan Award |
| 378,000 | 567,000 | | | | 0 | |||||||||||||||||||||
Stephen R. Avera |
||||||||||||||||||||||||||||
Non-Equity Incentive Plan Award |
| 338,961 | 508,442 | | | | 0 | |||||||||||||||||||||
D. Keith Wheeler |
||||||||||||||||||||||||||||
Non-Equity Incentive Plan Award |
| 318,796 | 478,194 | | | | 0 |
(1) | Under the terms of the Omnibus Plan, bonuses are awarded based on the achievement of a specified EBITDA goal. |
FLOWERS FOODS, INC. - 2019 Proxy Statement 37
EXECUTIVE COMPENSATION
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table details all equity awards granted and outstanding as of December 29, 2018, the companys most recent fiscal year end:
Stock Awards | ||||||||
Name and Grants | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) |
||||||
Allen L. Shiver |
||||||||
2017 Performance-Contingent Restricted Stock Award(2) |
204,960 | 3,748,718 | ||||||
R. Steve Kinsey |
||||||||
2017 Performance-Contingent Restricted Stock Award(2) |
41,460 | 758,303 | ||||||
Bradley K. Alexander |
||||||||
2017 Performance-Contingent Restricted Stock Award(2) |
41,460 | 758,303 | ||||||
Stephen R. Avera |
||||||||
2017 Performance-Contingent Restricted Stock Award(2) |
31,340 | 573,209 | ||||||
D. Keith Wheeler |
||||||||
2017 Performance-Contingent Restricted Stock Award(2) |
27,800 | 508,462 |
(1) | Based on December 28, 2018 closing market price of $18.29 for Flowers Foods common stock. |
(2) | The performance-contingent restricted stock award granted in 2017 under the Omnibus Plan vested on February 20, 2019. |
The following table details vesting of all restricted stock awards during the fiscal year ended December 29, 2018.
Restricted Stock Awards | ||||||||
Name | Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($) |
||||||
Allen L. Shiver(1) |
71,832 | 1,488,359 | ||||||
R. Steve Kinsey(2) |
15,221 | 315,379 | ||||||
Bradley K. Alexander(3) |
15,526 | 321,698 | ||||||
Stephen R. Avera(4) |
11,525 | 238,798 | ||||||
D. Keith Wheeler(5) |
9,396 | 194,686 |
(1) | Mr. Shiver was granted 174,140 shares of performance-contingent restricted stock on January 3, 2016 under the Omnibus Plan. This award vested on February 21, 2018. Because the company did not meet certain performance criteria at 100% of target, this award was decreased to 71,832 shares. |
(2) | Mr. Kinsey was granted 36,900 shares of performance-contingent restricted stock on January 3, 2016 under the Omnibus Plan. This award vested on February 21, 2018. Because the company did not meet certain performance criteria at 100% of target, this award was decreased to 15,221 shares. |
(3) | Mr. Alexander was granted 37,640 shares of performance-contingent restricted stock on January 3, 2016 under the Omnibus Plan. This award vested on February 21, 2018. Because the company did not meet certain performance criteria at 100% of target, this award was decreased to 15,526 shares. |
38 FLOWERS FOODS, INC. - 2019 Proxy Statement
EXECUTIVE COMPENSATION
(4) | Mr. Avera was granted 27,940 shares of performance-contingent restricted stock on January 3, 2016 under the Omnibus Plan. This award vested on February 21, 2018. Because the company did not meet certain performance criteria at 100% of target, this award was decreased to 11,525 shares. |
(5) | Mr. Wheeler was granted 22,780 shares of performance-contingent restricted stock on January 3, 2016 under the Omnibus Plan. This award vested on February 21, 2018. Because the company did not meet certain performance criteria at 100% of target, this award was decreased to 9,396 shares. |
The following table details the number of years of service credited and the present value of the accumulated benefits as of the December 29, 2018 measurement date related to the Retirement Plan.
Name | Plan Name | Number of Years Credited Service(1) |
Present Value of Accumulated Benefit ($) |
|||||||
Allen L. Shiver |
Retirement | 24 | 519,249 | |||||||
R. Steve Kinsey |
Retirement | 13 | 224,164 | |||||||
Bradley K. Alexander |
Retirement | 25 | 544,666 | |||||||
Stephen R. Avera |
Retirement | 16 | 411,622 | |||||||
D. Keith Wheeler |
Retirement | 16 | 225,675 |
(1) | Credited service does not match actual service because the plan was frozen as of December 31, 2005. |
NONQUALIFIED DEFERRED COMPENSATION
Name | Employee Contributions in FY 2018 ($)(1) |
Employer Contributions in FY 2018 ($)(2) |
Aggregate Earnings in FY 2018 ($)(3) |
Aggregate Withdrawals/ Distributions in FY 2018 ($) |
Aggregate Balance at 12/29/2018 ($)(4) |
|||||||||||||||
Allen L. Shiver |
100,000 | 73,053 | 83,104 | | 1,496,658 | |||||||||||||||
R. Steve Kinsey |
34,338 | 28,940 | 45,147 | | 792,559 | |||||||||||||||
Bradley K. Alexander |
167,270 | 26,327 | 87,771 | | 1,537,486 | |||||||||||||||
Stephen R. Avera |
149,355 | 20,594 | 13,812 | 35,120 | 273,580 | |||||||||||||||
D. Keith Wheeler |
27,325 | 18,364 | 4,515 | | 106,691 |
(1) | Amounts shown are deferrals of 2018 salary earned. |
(2) | Amounts are included in All Other Compensation in the Summary Compensation Table for the 2018 fiscal year. |
(3) | Above-market interest on nonqualified deferred compensation is included in the Summary Compensation Table as Nonqualified Deferred Compensation Earnings for the 2018 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. Shiver $35,728; Mr. Kinsey $19,479; Mr. Alexander $37,858; Mr. Avera $5,804; and Mr. Wheeler $1,857. |
(4) | The cumulative portion of the aggregate balance at December 29, 2018 reported in the Summary Compensation Table for all years prior to 2018 is as follows: Mr. Shiver $783,827; Mr. Kinsey $487,804; Mr. Alexander $309,452; Mr. Avera $72,377; and Mr. Wheeler $33,666. |
FLOWERS FOODS, INC. - 2019 Proxy Statement 39
EXECUTIVE COMPENSATION
Payments Made Upon Death or Disability, Retirement or Change of Control
Name | Death/ Disability ($) |
Retirement ($) |
Change of Control Without Termination ($) |
Termination Following Change of Control(1) ($) |
||||||||||||
Allen L. Shiver |
||||||||||||||||
Cash Severance |
| | | 6,300,000 | ||||||||||||
Equity Payout |
3,748,718 | 4,273,539 | | 4,367,257 | ||||||||||||
Other Benefits(2) |
| | | 52,656 | ||||||||||||
TOTAL |
3,748,718 | 4,273,539 | | 10,719,913 | ||||||||||||
R. Steve Kinsey |
||||||||||||||||
Cash Severance |
| | | 2,070,000 | ||||||||||||
Equity Payout |
758,303 | 864,466 | | 883,423 | ||||||||||||
Other Benefits(2) |
| | | 46,530 | ||||||||||||
TOTAL |
758,303 | 864,466 | | 2,999,953 | ||||||||||||
Bradley K. Alexander |
||||||||||||||||
Cash Severance |
| | | 1,836,000 | ||||||||||||
Equity Payout |
758,303 | 864,466 | | 883,423 | ||||||||||||
Other Benefits(2) |
| | | 46,530 | ||||||||||||
TOTAL |
758,303 | 864,466 | | 2,765,953 | ||||||||||||
Stephen R. Avera |
||||||||||||||||
Cash Severance |
| | | 1,649,000 | ||||||||||||
Equity Payout |
573,209 | 653,458 | | 667,788 | ||||||||||||
Other Benefits(2) |
| | | 50,394 | ||||||||||||
TOTAL |
573,209 | 653,458 | | 2,367,182 | ||||||||||||
D. Keith Wheeler |
||||||||||||||||
Cash Severance |
| | | 1,558,118 | ||||||||||||
Equity Payout |
508,462 | 579,647 | | 592,358 | ||||||||||||
Other Benefits(2) |
| | | 43,371 | ||||||||||||
TOTAL |
508,462 | 579,647 | | 2,193,847 |
(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. |
FLOWERS FOODS, INC. - 2019 Proxy Statement 41
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.
FLOWERS FOODS, INC. - 2019 Proxy Statement 45
PROPOSAL II | ADVISORY VOTE ON EXECUTIVE |
Proposal II requires the affirmative vote of the holders of a majority of the shares of our common stock present at the annual meeting in person or by proxy.
Your board of directors unanimously recommends that you vote FOR Proposal II.
46 FLOWERS FOODS, INC. - 2019 Proxy Statement
PROPOSAL III | RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
Fiscal 2018 and Fiscal 2017 Audit Firm Fee Summary
Proposal III requires the affirmative vote of the holders of a majority of the shares of our common stock present at the annual meeting in person or by proxy.
Your board of directors unanimously recommends that you vote FOR Proposal III.
FLOWERS FOODS, INC. - 2019 Proxy Statement 47
ANNEX A (NON-GAAP FINANCIAL MEASURES)
Information Regarding Non-GAAP Financial Measures
(Dollars in Thousands) | 2018 | |||
Net income |
$ | 157,160 | ||
Income tax expense |
$ | 40,001 | ||
Interest expense, net |
$ | 7,931 | ||
Depreciation and amortization |
$ | 144,124 | ||
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|
|||
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 | ||
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|
|||
Adjusted EBITDA |
$ | 411,465 | ||
MARGIN |
10.4% |
A-1 FLOWERS FOODS, INC. - 2019 Proxy Statement
ANNEX A (NON-GAAP FINANCIAL MEASURES)
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.
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 |
FLOWERS FOODS, INC. - 2019 Proxy Statement A-2
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||||
E67920-P17204 | 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. |
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 23, 2019.
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 21, 2019, 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 23, 2019.
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.
Thank you. | ||
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.
E67921-P17204
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 23, 2019
The undersigned hereby appoints Allen L. Shiver, R. Steve Kinsey and Stephen R. Avera 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 21, 2019, by the undersigned at the Annual Meeting of Shareholders to be held on May 23, 2019, 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. |
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 AND 3 AND AGAINST PROPOSAL 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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