UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended June 30, 2022
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
Commission file number: 001-34249
(Exact Name of Registrant as Specified in Its Charter)
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Address of Principal Executive Offices; Zip Code)
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(Registrant’s Telephone Number, Including Area Code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on Which Registered
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ No ☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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☐
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☑
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Non-accelerated filer
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☐
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES ☐ NO ☑
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of December 31, 2021, the last
business day of the registrant’s most recently completed second fiscal quarter, was $96.3 million based upon the closing price reported for
such date on the Nasdaq Global Select Market.
As of October 1, 2022, the registrant had 19,279,970
shares outstanding of its common stock, par value $1.00 per share, which is the registrant’s only class of common stock.
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PART III
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ITEM 10.
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1 |
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ITEM 11.
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9 |
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ITEM 12.
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33 |
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ITEM 13.
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36 |
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ITEM 14.
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38 |
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PART IV
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ITEM 15.
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40 |
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EXPLANATORY NOTE
Farmer Bros. Co. (“Farmer Bros.” or the “Company”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment”) to its Form
10-K for the fiscal year ended June 30, 2022, which was filed with the Securities and Exchange Commission (the “SEC”) on September 2, 2022 (the “Original Filing”).
This Amendment is being filed for the purpose of providing the information required by Items 10 through 14 of Part III of Form 10-K. This
information was previously omitted from the Original Filing in reliance on General Instruction G(3) to Form 10-K, which permits the above-referenced Items to be incorporated in the Annual Report on Form 10-K by reference from a definitive proxy
statement, if such definitive proxy statement is filed no later than 120 days after the last day of the Company’s fiscal year on June 30, 2022.
In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the cover page to the Original Filing and
Items 10 through 14 of Part III of the Original Filing are hereby amended and restated in their entirety. In addition, pursuant to Rule 12b-15 under the Exchange Act, the Company is including Item 15 of Part IV, solely to file the certifications
required under Section 302 of the Sarbanes-Oxley Act of 2002 with this Amendment.
Except as described above, no other changes have been made to the Original Filing.
This Amendment does not affect any other section of the Original Filing not otherwise discussed herein and continues to speak as of the date of the Original Filing. The Company has not updated the disclosures contained in the Original Filing to
reflect any events that occurred subsequent to the date of the Original Filing. Accordingly, this Amendment should be read in conjunction with the Company’s other filings made with the SEC subsequent to the filing of the Original Filing.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Amendment and other documents we file with the SEC contain “forward-looking statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, that are based on current expectations, estimates, forecasts and projections about us, our future performance, our financial condition, our products, our business
strategy, our beliefs and our management’s assumptions. In addition, we, or others on our behalf, may make forward-looking statements in press releases or written statements, or in our communications and discussions with investors and analysts in the
normal course of business through meetings, webcasts, phone calls and conference calls. These forward-looking statements can be identified by the use of words like “anticipates,” “estimates,” “projects,” “expects,” “plans,” “believes,” “intends,”
“will,” “could,” “may,” “assumes” and other words of similar meaning. These statements are based on management’s beliefs, assumptions, estimates and observations of future events based on information available to our management at the time the
statements are made and include any statements that do not relate to any historical or current fact. These statements are not guarantees of future performance and they involve certain risks, uncertainties and assumptions that are difficult to
predict. Actual outcomes and results may differ materially from what is expressed, implied or forecast by our forward-looking statements due in part to the risks, uncertainties and assumptions set forth in Part I, Item 1.A., Risk Factors as well as Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and
Results of Operations, of the Original Filing, as well as those discussed elsewhere in the Original Filing and other factors described from time to time in our filings with the SEC.
Factors that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to, disruption to
our business and customers from the COVID-19 pandemic (including the effects of emerging and novel variants of the virus and any virus containment measures such as stay-at-home orders or government mandates) and severe winter weather, levels of
consumer confidence in national and local economic business conditions, the duration and magnitude of the pandemic’s impact on labor conditions, the success of our strategy to recover from the effects of the pandemic, the success of our turnaround
strategy, the impact of capital improvement projects, the adequacy and availability of capital resources to fund our existing and planned business operations and our capital expenditure requirements, the relative effectiveness of compensation-based
employee incentives in causing improvements in our performance, the capacity to meet the demands of our large national account customers, the extent of execution of plans for the growth of our business and achievement of financial metrics related to
those plans, our success in retaining and/or attracting qualified employees, our success in adapting to technology and new commerce channels, the effect of the capital markets as well as other external factors on stockholder value, fluctuations in
availability and cost of green coffee, competition, organizational changes, the effectiveness of our hedging strategies in reducing price and interest rate risk, changes in consumer preferences, our ability to achieve sustainability goals in ways
that do not materially impair profitability, changes in the strength of the economy, including any effects from inflation, business conditions in the coffee industry and food industry in general, our continued success in attracting new customers,
variances from budgeted sales mix and growth rates, weather and special or unusual events, as well as other risks described in Amendment and other factors described from time to time in our filings with the SEC.
Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. Any or all of the
forward-looking statements contained in this Amendment and any other public statement made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events,
changes in assumptions or otherwise, except as required under federal securities laws and the rules and regulations of the SEC.
PART III
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Directors, Executive Officers and Corporate Governance
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Directors
At the 2019 Annual Meeting of Stockholders, stockholders approved the proposal to amend and restate the Company’s Certificate of Incorporation to
provide for the phased-in declassification of the Board of Directors. Prior to that time, the Board of Directors was divided into three classes, each class consisting, as nearly as possible, of one-third of the total number of directors, with members
of each class serving for a three-year term. Each year only one class of directors was subject to a stockholder vote. Class I consisted of three directors whose term of office will expire at the 2022 Annual Meeting, Class II consisted of two
directors whose term of office expired at the 2020 Annual Meeting, and Class III consisted of one director, whose term of office expired at the 2021 Annual Meeting of Stockholders. Beginning at the 2020 Annual Meeting, any director elected to the
Board shall be for a one-year term.
The authorized number of directors is set forth in the Company’s Certificate of Incorporation and shall consist of not less than five nor more than
nine members, the exact number of which shall be fixed from time to time by resolution of the Board of Directors. The authorized number of directors is currently eight. In no event shall a decrease in the number of directors remove or shorten the
term of any incumbent director. Any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the directors then in office, provided that a quorum is present, and any other vacancy
occurring on the Board of Directors may be filled by a majority of the directors then in office, even if less than a quorum, or by the sole remaining director. Any director elected to fill a vacancy not resulting from an increase in the number of
directors will have the same remaining term as that of his or her predecessor.
All of the directors were elected to their current terms by the stockholders. There are no family relationships among any directors or executive
officers of the Company. Except as disclosed below, none of the directors are a director of any other publicly held company.
Set forth below are the biographies of each Director, including their ages and positions and offices held with the Company.
Allison M. Boersma, age 57, has served on our Board since 2017 and is currently the Chief Financial Officer and Chief Operating Officer of BRG Sports Inc., a corporate holding company of leading brands that
design, develop and market innovative sports equipment, protective products, apparel and related accessories. The company’s core football brand, Riddell, is the industry leader in football helmet technology and innovation. Ms. Boersma has served as
the finance and operations leader for BRG Sports since April 2016, responsible for financial oversight, including planning, treasury and risk management; leadership of global sourcing, manufacturing and distribution; strategic planning and
acquisitions; and manufacturing strategy. Ms. Boersma has also served as Chief Financial Officer and Chief Operating Officer of Riddell Inc., since May 2014, and Senior Vice President Finance and Chief Financial Officer of Riddell, from February
2009 to May 2014. Previously, Ms. Boersma was a finance executive with Kraft Foods, a multinational confectionery, food and beverage conglomerate, for over 17 years, with various positions of increasing responsibility, including serving as Senior
Director Finance, Global Procurement, from May 2007 to February 2009, with leadership and oversight of commodity hedging and risk management, including for coffee; execution of global strategies to improve supplier performance; commodity tracking
and derivative accounting. Other positions with Kraft included Controller, Grocery Sector; Controller, Meals Division; Director, Sales Finance, Kraft Food Services Division; and Senior Manager, Corporate Financial Business Analysis. Ms. Boersma
began her career as a Senior Auditor with Coopers & Lybrand. Ms. Boersma received her undergraduate degree in Accountancy from the University of Illinois Champaign-Urbana, and her Masters of Management, Marketing and Finance, from JL Kellogg
Graduate School of Management.
Stacy Loretz-Congdon, age 63, has served on our Board since 2018. She retired at the end of 2016 after 26 years of service at Core-Mark, one of the largest marketers of fresh and broad-line supply solutions to
the convenience retail industry in North America, where she served in various capacities, including as Senior Vice President, Chief Financial Officer and Assistant Secretary from December 2006 to May 2016 and Executive Advisor from May 2016 through
December 2016. From January 2003 to December 2006, Ms. Loretz-Congdon served as Core-Mark’s Vice President of Finance and Treasurer and from November 1999 to January 2003 served as Core-Mark’s Corporate Treasurer. Ms. Loretz-Congdon joined
Core-Mark in 1990. Ms. Loretz-Congdon’s experience at Core-Mark included oversight of all finance functions, including all corporate finance disciplines, strategy execution, risk mitigation, investor relations, as well as involvement with benefits,
executive compensation and technology initiatives. During her tenure as Senior Vice President and Chief Financial Officer, Ms. Loretz-Congdon served on the Information Technology Steering Committee and the Investment Committee at Core-Mark, as well
as a board member of all Core-Mark subsidiaries. Core-Mark was a Fortune 500, publicly traded company listed on the Nasdaq Global Market until September 2021 when it merged with Performance Food Group Company, NYSE. In 2015, Ms. Loretz-Congdon was
named as one of the Top 50 female CFOs in the Fortune 500 by Business Insider and Woman of the Year by Convenience Store News. Ms. Loretz-Congdon is an NACD Board Leadership Fellow. Prior to joining Core-Mark, Ms. Loretz-Congdon was an auditor for
Coopers & Lybrand. Ms. Loretz-Congdon received her Bachelor of Science degree in Accounting from California State University, San Francisco.
Charles F. Marcy, age 72, is a food industry consultant. He served as Chief Executive Officer of Turtle Mountain, LLC, a privately held natural foods company, and the maker of the So Delicious brand of dairy free products from
May 2013 until April 2015. Prior to this, he was a principal with Marcy & Partners, Inc., providing strategic planning and acquisition consulting to consumer products companies. Mr. Marcy served as President and Chief Executive Officer and a
member of the Board of Directors of Healthy Food Holdings, a holding company for branded “better-for-you” foods and the maker of YoCrunch Yogurt and Van’s Frozen Waffles from 2005 through April 2010. Previously, Mr. Marcy served as President, Chief
Executive Officer and a Director of Horizon Organic Holdings, then a publicly traded company listed on Nasdaq with a leading market position in the organic food business in the United States and the United Kingdom, from 1999 to 2005. Mr. Marcy also
previously served as President and Chief Executive Officer and a member of the Board of Directors of the Sealright Corporation, a manufacturer of food and beverage packaging and packaging systems, from 1995 to 1998. From 1993 to 1995, Mr. Marcy was
President of the Golden Grain Company, a subsidiary of Quaker Oats Company and maker of the Near East brand of all-natural grain-based food products. From 1991 to 1993, Mr. Marcy was President of National Dairy Products Corp., the dairy division of
Kraft General Foods. From 1974 to 1991, Mr. Marcy held various senior marketing and strategic planning roles with Sara Lee Corporation and Kraft General Foods. Mr. Marcy currently serves as First Vice Chair on the Board of Trustees of Washington
and Jefferson College and has served on the Board of Directors of B&G, Foods, Inc. (“B&G”), a manufacturer and distributor of shelf-stable food and household products across the United States, Canada and Puerto Rico and a publicly traded
company listed on the New York Stock Exchange, since 2010. Mr. Marcy served on the Strategy Committee and currently serves as a member of the Audit Committee, a member of the Compensation Committee and a member of the Risk Committee of the Board of
Directors of B&G. Mr. Marcy received his undergraduate degree in Mathematics and Economics from Washington and Jefferson College, and his MBA from Harvard Business School. Mr. Marcy is an NACD Board Leadership Fellow and has demonstrated his
commitment to boardroom excellence by completing NACD’s advanced corporate governance program for directors. Mr. Marcy has served on the Company’s Board of Directors since 2014 and is currently a member of the Nominating and Corporate Governance
Committee and Chair of the Compensation Committee.
D. Deverl Maserang II, age 59, is President and Chief Executive Officer of the Company, since September 2019. Prior to joining the Company, from 2017 to 2019, Mr. Maserang served as President and Chief Executive
Officer of Earthbound Farm Organic, a global leader in organic food and farming. From 2016 to 2017, Mr. Maserang served as Managing Partner of TADD Holdings, a business advisory firm. From 2013 to 2016, Mr. Maserang was Executive Vice President
Global Supply Chain for Starbucks Corporation, a global coffee roaster and retailer, where he was responsible for end-to-end supply chain operations globally spanning manufacturing, engineering, procurement, distribution, planning, transportation,
inventory management and worldwide sourcing. Prior to that, he held leadership roles at Chiquita Brands International, Peak Management Group, FreedomPay, Installation Included, Pepsi Bottling Group and United Parcel Service. Mr. Maserang received
his Bachelor of Science degree from Texas Tech University.
Christopher P. Mottern, age 78, has served as Chairman of the Board of Directors since January 2020. He acted as interim President and Chief Executive Officer of Farmer Bros. Co. from May through October 2019.
Prior to joining Farmer Bros. Co. in his interim role, Mr. Mottern was an independent business consultant. He served as President and Chief Executive Officer of Peet’s Coffee & Tea, Inc., a specialty coffee and tea company, from 1997 to 2002
and a director of Peet’s Coffee & Tea, Inc., from 1997 through 2004. From 1992 to 1996, Mr. Mottern served as President of The Heublein Wines Group, a manufacturer and marketer of wines, now part of Diageo plc, a multinational alcoholic
beverage company. From 1986 through 1991, he served as President and Chief Executive Officer of Capri Sun, Inc., one of the largest single-service juice drink manufacturers in the United States. He has served as a director, including lead director,
and member of the finance committee, of a number of private companies. Mr. Mottern received his undergraduate degree in Accounting from the University of Connecticut.
Alfred Poe, age 73, has served on our Board of Directors since 2020 and is currently the Chief Executive Officer of AJA Restaurant Corp., serving as such since 1999. From 1997 to 2002, he was the Chief Executive Officer
of Superior Nutrition Corporation, a provider of nutrition products. He was Chairman of the Board and Chief Executive Officer of MenuDirect Corporation from 1997 to 1999. Mr. Poe was a Corporate Vice President of Campbell Soup Company from 1991
through 1996. From 1993 through 1996, he was the President of the Campbell’s Meal Enhancement Group. From 1982 to 1991, Mr. Poe held various positions, including Vice President, Brands Director and Commercial Director with Mars, Inc. Mr. Poe
currently serves on the Board of Directors of B&G, Foods, Inc., a manufacturer and distributor of shelf-stable food and household products across the United States, Canada and Puerto Rico and a publicly traded company listed on the New York
Stock Exchange, since 1997. Mr. Poe has previously served on the boards of directors of Centerplate, Inc. and State Street Bank.
John D. Robinson, age 63, has served on our Board since 2021 and is currently an operating partner focusing on food and beverage opportunities at Sequel Holdings, a private equity firm, serving in such role since 2017.
Currently, Mr. Robinson serves as CEO of Chairmans Foods, a Sequel portfolio company. Prior to joining Sequel, from 2009 to 2015, Mr. Robinson was Managing Partner for Rutherford Wine Studios LLC, dba The Ranch Winery, a wine co-packing and
processing facility in Napa Valley, CA, which was sold to E&J Gallo Winery in 2015. Prior to that, he held leadership roles at Morningstar Foods, Dean Foods Company and Robinson Dairy. Mr. Robinson received a Bachelor of Science in Business
Administration from the University of Arizona.
Waheed Zaman, age 62, has served on our Board since September 2021 and is currently the Chief Executive Officer of W&A Consulting, a consulting and advisory firm, where he advises senior executives on transformational
change and consults with leaders and teams on personal success and leadership practices to ensure organizational effectiveness and strategy execution, serving as such since April 2017. He also serves as Advisor to Thematiks, a business research
company. From April 2013 to March 2017, he was the Senior Vice President, Chief Corporate Strategy & Administrative Officer at the Hershey Company, a food manufacturer. Prior to that, he held leadership roles at Chiquita Brands International
and Procter & Gamble. Mr. Zaman holds a bachelor’s degree with a double major in Computer Science and Policy Studies from Dartmouth College.
Executive Officers
The following table sets forth the executive officers of the Company as of the date hereof. At each annual meeting of the Board of Directors, the
Board of Directors formally re-appoints the executive officers, and all executive officers serve at the pleasure of the Board of Directors. No executive officer has any family relationship with any director or nominee, or any other executive officer.
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Name
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Age
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Title
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Executive Officer
Since
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D. Deverl Maserang II(1)
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59
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President and Chief Executive Officer
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2019
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Scott R. Drake
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53
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Chief Financial Officer
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2020
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Amber D. Jefferson
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51
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Chief Human Resources Officer
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2021
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Ruben E. Inofuentes
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55
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Chief Supply Chain Officer
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2019
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Maurice S.J. Moragne
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58
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Chief Sales Officer
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2020
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Jared Vitemb
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39
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Vice President, General Counsel, Chief Compliance Officer and Secretary
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2022
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(1) For D. Deverl Maserang, II, please see his biography under “Directors” above.
Scott R. Drake joined the Company as Chief Financial Officer in March 2020. As Chief Financial Officer, Mr. Drake’s current
responsibilities include overseeing the Finance and Accounting functions. Prior to joining the Company, Mr. Drake served as Senior Vice President of Finance and Treasurer of GameStop Corp., an omnichannel video game retailer, from July 2015 to
March 2020, where he was responsible for financial planning and analysis, treasury, risk management and events/travel functions. From 2001 through 2015, Mr. Drake held various senior management positions with 7-Eleven, Inc., an international
convenience store chain, most recently as their Vice President of Finance, Strategy and Communications. Prior to 2001, he held finance and accounting positions with Arthur Andersen, La Madeleine French Bakery and Café, Coca-Cola Enterprises and
Coopers & Lybrand. Mr. Drake received a B.B.A. in Finance and Accounting and an M.B.A. in Corporate Finance from Texas A&M University. He is a Certified Public Accountant.
Amber D. Jefferson joined the Company as Chief Human Resources Officer in October 2021. As Chief Human Resources Officer, Ms. Jefferson’s
responsibilities include overseeing the Human Resources, Risk Management and Safety functions. Prior to joining the Company, Ms. Jefferson served as Head of Human Resources KNA Sales & e-Commerce at the Kellogg Company, a global consumer
packaged goods company specializing in cereal, cookies, crackers, natural organic and salty snacks production from October 2012 to October 2021, where she was responsible for leading all facets of talent strategies, organizational effectiveness,
leadership & capability development, and day-to-day HR operations across the North America region. From 2012 through 2018, Ms. Jefferson held HR leadership roles across various divisions within Kellogg including their Away From Home and Walmart
business. Prior to 2012, she held leadership roles with Brinker International, Sabre, Texas Health Resources, The American Lung Association and The American Red Cross. Ms. Jefferson received a Bachelor of Science degree from Texas A&M
University and a Master of Science in Healthcare Administration and a Master of Business Administration from Texas Woman’s University.
Ruben E. Inofuentes joined the Company as Chief Supply Chain Officer in November 2019. As Chief Supply Officer, Mr.
Inofuentes’ current responsibilities include overseeing the operations, manufacturing, logistics, procurement, coffee brewing equipment, research and development, green coffee buying, sustainability, supply and demand planning and quality
functions. Prior to joining the Company, Mr. Inofuentes served as the Chief Operations Officer of JR286, Inc. (“JR286”), a sports equipment and accessories company from 2005 to 2019, where he was responsible for developing platforms to enable
aggressive growth plans and market strategies. Prior to joining JR286, from 2003 to 2005, Mr. Inofuentes was the Vice President of Supply Chain Services for Advocare International, LP, a dietary supplement company. He was responsible for
procurement, inventory planning, manufacturing, transportation, logistics, and information technology. Mr. Inofuentes received his undergraduate degree in Industrial Engineering from Iowa State University.
Maurice S. J. Moragne joined the Company as Chief Sales Officer in June 2020. As Chief Sales Officer, Mr. Moragne’s current
responsibilities include oversight of the company’s sales and marketing organizations. Prior to joining the Company, Mr. Moragne served as Chief Executive Officer, Chief Sales Officer and Co-Founder of International Agriculture Group LLC, an
ingredient technology company, from August 2015 to June 2020, where he was responsible for managing investor financing, as well as assembling sales, marketing and technical teams. From July 2011 to July 2015, Mr. Moragne served as General Manager
of the Chiquita Fruit Solutions business division of Chiquita Brands International, Inc., an agriculture production company, where he directed the daily operations, including oversight of Accounting, Finance, IT, Sales, Logistics, Quality,
Operations, R&D, Marketing, Innovation, and Customer Service operations. Prior to 2011, he held various management positions with Naturipe Foods, LLC, Chiquita Brands International, Inc., L’Oreal and British American Tobacco. Mr. Moragne
received a B.A. in Political Science and Government from Edinboro University of Pennsylvania.
Jared Vitemb joined the Company as Vice President, General Counsel, Chief Compliance Officer and Secretary in March 2022. Mr. Vitemb’s
current responsibilities include overseeing the Company’s Legal and Compliance functions. Prior to joining the Company, Mr. Vitemb held various positions with FTS International Services, Inc., an oilfield services company, from September 2017 to
March 2022, where he last served as Senior Vice President, General Counsel, Chief Compliance Officer and Secretary. From March 2014 to September 2017, Mr. Vitemb worked as an in-house attorney for Dean Foods Company, a dairy processing and
distribution company. Prior to 2014, he was in private practice, primarily with the law firm of Gardere Wynne Sewell LLP in Dallas, Texas. Mr. Vitemb received a B.A. in History and a J.D. from The University of Texas.
Corporate Governance
Board Meeting and Attendance
The Board of Directors held seven meetings during the year ended June 30, 2022 (“fiscal 2022”), including four regular meetings and three special
meetings. During fiscal 2022, each director attended at least 75% of the total number of meetings of the Board of Directors (held during the period for which he or she served as a director) and committees of the Board on which he or she served
(during the periods that he or she served). The independent directors generally meet in executive session in connection with each regularly scheduled Board meeting. Under the Company’s Corporate Governance Guidelines, continuing directors are
expected to attend the Company’s annual meeting of stockholders absent a valid reason. Seven of eight directors who were then serving were present at the 2021 Annual Meeting of Stockholders.
Charters; Code of Conduct and Ethics; Corporate Governance Guidelines
The Board of Directors maintains charters for its committees, including the Audit Committee, Compensation Committee, Nominating and Corporate
Governance Committee, and the ad hoc Technology Committee. In addition, the Board of Directors has adopted a written Code of Conduct and Ethics for all employees, officers and directors. The Board of
Directors maintains Corporate Governance Guidelines as a framework to promote the functioning of the Board and its committees and to set forth a common set of expectations as to how the Board should perform its functions. Current standing committee
charters, the Code of Conduct and Ethics and the Corporate Governance Guidelines are available on the Company’s website at www.farmerbros.com. Information contained on the website is not incorporated by
reference in, or considered part of, this Amendment.
Board Committees
The Board of Directors has three standing committees: the Audit Committee, Compensation Committee, and Nominating and
Corporate Governance Committee. Summary information about each of these committees is set forth below.
Additionally, from time to time, the Board of Directors has established ad hoc or other committees, on an interim basis, to assist the Board with its
consideration of specific matters, and it expects to continue to do so as it may determine to be prudent and advisable in the future. In December 2021, the Board of Directors established an ad hoc Technology
Committee for the purpose of assisting with the review of the technological and cybersecurity needs of the Company (the “Technology Committee”).
Audit Committee
The Audit Committee is a standing committee of the Board of Directors established in accordance with Section 3(a)(58)(A) of the Exchange Act. The
Audit Committee’s principal purposes are to oversee, on behalf of the Board, the accounting and financial reporting processes of the Company and the audit of the Company’s financial statements. As described in its charter, available on the Company’s
website under Corporate Governance - Committee Charters, the Audit Committee’s responsibilities include assisting the Board of Directors in overseeing: (i) the integrity of the Company’s financial statements; (ii) the independent auditor’s
qualifications and independence; (iii) the performance of the Company’s independent auditor and internal audit function; (iv) the Company’s compliance with legal and regulatory requirements relating to accounting and financial reporting matters; (v)
the Company’s system of disclosure controls and procedures, internal control over financial reporting that management has established, and compliance with ethical standards adopted by the Company; and (vi) the Company’s framework and guidelines with
respect to risk assessment and risk management. The Audit Committee is directly and solely responsible for the appointment, dismissal, compensation, retention and oversight of the work of any independent auditor engaged by the Company for the purpose
of preparing or issuing an audit report or performing other audit, review or attest services for the Company. The independent auditor reports directly to the Audit Committee.
During fiscal 2022, the Audit Committee held four regular meetings and three special meetings. Allison M. Boersma currently serves as Chair, and Stacy
Loretz-Congdon, John D. Robinson and Waheed Zaman currently serve as members of the Audit Committee. All directors who currently serve on the Audit Committee meet the Nasdaq composition requirements, including the requirements regarding financial
literacy and financial sophistication, and the Board of Directors has determined that all such directors are independent under the Nasdaq Listing Rules and the rules of the SEC regarding audit committee membership. The Board of Directors has
determined that Ms. Boersma and Ms. Loretz-Congdon are “audit committee financial experts” as defined in Item 407(d) of Regulation S-K under the Exchange Act.
Compensation Committee
The Compensation Committee is a standing committee of the Board of Directors. As described in its charter, available on the Company’s website under
Corporate Governance - Committee Charters, the Compensation Committee’s principal purposes are to discharge the Board’s responsibilities related to compensation of the Company’s executive officers and administer the Company’s incentive and equity
compensation plans. The Compensation Committee’s objectives and philosophy with respect to the fiscal 2022 executive compensation program, and the actions taken by the Compensation Committee in fiscal 2022 with respect to the compensation of our
Named Executive Officers, are described below under the heading “Compensation Discussion and Analysis.”
The Compensation Committee also is responsible for evaluating and making recommendations to the Board of Directors regarding director compensation. In
addition, the Compensation Committee is responsible for conducting an annual risk evaluation of the Company’s compensation practices, policies and programs.
During fiscal 2022, the Compensation Committee held four regular meetings and three special meetings. Charles F. Marcy currently serves as Chair and
Alfred Poe and John D. Robinson currently serve as members of the Compensation Committee. The Board of Directors has determined that all current Compensation Committee members are independent under the Nasdaq Listing Rules.
Compensation Committee Interlocks and Insider Participation
Messrs. Robinson, Marcy, and Poe were members of the Compensation Committee during fiscal 2022. None of the members of the Compensation Committee is
or has been an executive officer of the Company, nor did any of them have any relationships requiring disclosure by the Company under Item 404 of Regulation S-K. None of the Company’s executive officers served as a director or a member of a
compensation committee (or other committee serving an equivalent function) of any other entity, an executive officer of which served as a director of the Company or member of the Compensation Committee during fiscal 2022.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is a standing committee of the Board of Directors. As described in its charter, available on the
Company’s website under Corporate Governance - Committee Charters, the Nominating and Corporate Governance Committee’s principal purposes are (i) monitoring the Company’s corporate governance structure; (ii) assisting the Board in fulfilling its
oversight responsibilities with respect to the management of risks associated with corporate governance; (iii) ensuring that the Board is appropriately constituted in order to meet its fiduciary obligations, including by identifying individuals
qualified to become Board members and members of Board committees, recommending to the Board director nominees for the next annual meeting of stockholders or for appointment to vacancies on the Board, and recommending to the Board membership on Board
committees (including committee chairs); (iv) leading the Board in its annual review of the Board’s performance; (v) conducting the annual performance review of the Chief Executive Officer and communicating the results to the Board; and (vi)
overseeing succession planning for senior management.
During fiscal 2022, the Nominating and Corporate Governance Committee held four regular meetings. Ms. Loretz-Congdon currently serves as Chair, and
Charles F. Marcy, John D. Robinson and Alfred Poe currently serve as members of the Nominating and Corporate Governance Committee. The Board of Directors has determined that all current Nominating and Corporate Governance Committee members are
independent under the Nasdaq Listing Rules.
Other Committees
In July 2020, the Board of Directors created an ad hoc Search Committee to assist the Nominating and Corporate Governance Committee in identifying and
evaluating potential candidates for future director positions. The Search Committee no longer exists.
In December 2021, the Board of Directors established the Technology Committee for the purpose of assisting with the review of the technological and
cybersecurity needs of the Company. As described in its charter, available on the Company’s website under Corporate Governance - Committee Charters, the Technology Committee’s principal purposes include: (i) overseeing the quality and effectiveness
of the Company’s cybersecurity strategy; and (ii) overseeing the Company’s technology strategy. Waheed Zaman currently serves as Chair, and Allison M. Boersma and Alfred Poe currently serve as members of the Technology Committee. The Technology
Committee met four times in fiscal 2022.
Board Diversity
The below Board Diversity Matrix reports self-identified diversity statistics for the Board of Directors.
|
Board Diversity Matrix (As of September 1, 2022)
|
||||
|
Total Number of Directors
|
8
|
|||
|
Female
|
Male
|
Non-Binary
|
||
|
Part I: Gender Identity
|
2
|
6
|
0
|
|
|
Part II: Demographic Background
|
||||
|
African American or Black
|
0
|
1
|
0
|
|
|
Alaskan or Native American
|
0
|
0
|
0
|
|
|
Asian or South Asian
|
0
|
1
|
0
|
|
|
Hispanic
|
0
|
0
|
0
|
|
|
Pacific Islander
|
0
|
0
|
0
|
|
|
White
|
2
|
4
|
0
|
|
|
Two or More Races or Ethnicities
|
0
|
0
|
0
|
|
|
LGBTQ+
|
0
|
0
|
0
|
|
|
Military Veterans
|
0
|
1
|
0
|
|
|
Directors with Disabilities
|
0
|
0
|
0
|
|
Board Leadership Structure
Under our By-Laws, the Board of Directors, in its discretion, may choose a Chairman of the Board of Directors. If there is a Chairman of the Board of
Directors, such person may exercise such powers as provided in the By-Laws or assigned by the Board of Directors. Christopher P. Mottern was appointed as Chairman of the Board in January 2020. Mr. Mottern has served on our Board of Directors since
2013.
Notwithstanding the current separation of Chairman of the Board and Chief Executive Officer, our Chairman of the Board of Directors is generally
responsible for soliciting and collecting agenda items from other members of the Board and the Chief Executive Officer, and the Chief Executive Officer is generally responsible for leading discussions during Board meetings. This structure allows for
effective and efficient Board meetings and information flow on important matters affecting the Company. As required under the Nasdaq Listing Rules, a majority of the members of a listed company’s board of directors must qualify as “independent,” as
affirmatively determined by the board of directors. The Board of Directors has determined that, other than Mr. Maserang, all members of the Board of Directors are independent and each of the Audit, Compensation, and Nominating and Corporate
Governance Committees of the Board are composed solely of independent directors. Due principally to the size of the Board of Directors, the Board has not formally designated a lead independent director and believes that as a result thereof,
non-employee director and executive sessions of the Board of Directors, which are attended solely by non-employee directors or independent directors, as applicable, result in an open and free flow of discussion of any and all matters that any
director may believe relevant to the Company and/or its management.
Although the roles of Chairman and Chief Executive Officer are currently filled by different individuals, no single leadership model is right for all
companies at all times, and the Company has no bylaw or policy in place that mandates this leadership structure. The Nominating and Corporate Governance Committee will evaluate and recommend to the Board of Directors any changes in the Board’s
leadership structure.
Board’s Role in Risk Oversight
The Board of Directors recognizes that although management is responsible for identifying risk and risk
controls related to business activities and developing programs and recommendations to determine the sufficiency of risk identification and the appropriate manner in which to control risk, the Board plays a critical role in the oversight of risk.
The Board of Directors implements its risk oversight responsibilities by having management provide periodic briefing and informational sessions on the significant risks that the Company faces and how the Company is seeking to control risk if and
when appropriate. In some cases, a Board committee is responsible for oversight of specific risk topics. For example, the Audit Committee has oversight responsibility of risks associated with financial accounting and audits, internal control over
financial reporting, and the Company’s major financial risk exposures, including commodity risk and risks relating to hedging programs. Regarding cybersecurity, the Board of Directors temporarily assigned primary oversight responsibility to the
Technology Committee, but placed the Chairwoman of the Audit Committee on the Technology Committee and made a second member of the Audit Committee the Chairman of the Technology Committee to ensure that the Audit Committee remained well informed of
the Company’s cybersecurity risks. The Compensation Committee has oversight responsibility of risks relating to the Company’s compensation policies and practices. At each regular meeting, or more frequently as needed, the Board of Directors
considers reports from the Audit Committee and Compensation Committee which provide detail on risk management issues and management’s response. The Board of Directors, as a whole, examines specific business risks in its periodic reviews of the
individual business units, and also of the Company as a whole as part of its regular reviews, including as part of the strategic planning process, annual budget review and approval, and data and cyber security review. Beyond formal meetings, the
Board of Directors and its committees have regular access to senior executives, including the Company’s Chief Executive Officer and Chief Financial Officer. The Company believes that its leadership structure promotes effective Board oversight of
risk management because the Board of Directors directly, and through its various committees, is regularly provided by management with the information necessary to appropriately monitor, evaluate and assess the Company’s overall risk management, and
all directors are involved in the risk oversight function.
Compensation-Related Risk
As part of its risk oversight role, our Compensation Committee annually considers whether our compensation policies and practices for all employees,
including our executive officers, create risks that are reasonably likely to have a material adverse effect on our Company. In fiscal 2022, the Compensation Committee noted several design features of our compensation programs that reduce the
likelihood of excessive risk-taking, including, but not limited to, the following:
| • |
A good balance of fixed and at-risk compensation, as well as an appropriate balance of cash and equity-based compensation.
|
| • |
Management incentive programs are based on multiple metrics, including strategic, individual and operational measures.
|
| • |
The Compensation Committee is directly involved in setting short- and long-term incentive performance targets and payout intervals, assessing performance against targets, and reviewing/approving the performance goals for the CEO and other
executives.
|
| • |
Executive annual short-term incentive awards are generally capped at 200% of the target opportunity and the performance-based restricted stock units in the long-term incentive plan are capped at 180% of target opportunity.
|
| • |
Long-term equity awards are generally made on an annual basis which creates overlapping vesting periods and ensures that management remains exposed to the risks of their decision-making through their unvested equity-based awards for the
period during which the business risks are likely to materialize.
|
| • |
Long-term compensation for senior executives is comprised of restricted stock units that vest ratably over three years and performance-based restricted stock units that are earned based on three-year performance goals. Company shares are
inherently subject to the risks of the business, and the combination of options and performance-based restricted stock units ensure that management participates in these risks.
|
| • |
The number of performance-based restricted stock units ultimately earned by the Company’s executives and employees are determined at the end of a three-year performance period based on adjusted EBITDA performance and total shareholder
return (“TSR”) metrics that are tracked during the performance period.
|
| • |
The Company has significant share ownership requirements for executives and non-employee directors. Executive officers are required to hold share-based compensation awards until meeting their ownership requirements. Company shares held by
management are inherently subject to the risks of the business.
|
| • |
Executive compensation is benchmarked annually relative to pay levels and practices at peer companies.
|
| • |
The Company has a clawback policy in place that allows for recovery of incentive compensation if there is a material restatement of financial results caused by the fraud or misconduct of an individual which resulted in an over payment of
incentives.
|
| • |
The Company prohibits employees and directors from hedging or pledging its securities.
|
| • |
The Compensation Committee is composed solely of independent directors and retains an independent compensation consultant to provide a balanced perspective on compensation programs and practices. The Compensation Committee approves all pay
decisions for executive officers.
|
Stockholder Engagement
The Company has a history of actively engaging with our stockholders. We believe that strong corporate governance should include regular engagement
with our stockholders. We have a long-standing, robust stockholder outreach program through which we solicit feedback on our corporate governance, executive compensation program, disclosure practices, and environmental and social impact programs and
goals. Investor feedback is shared with our Board of Directors as received.
Corporate Governance Cycle and 2022 Outreach
Engagement
As part of our stockholder outreach program, and in response to the results of the say-on-pay advisory vote at our 2021 Annual Meeting, we reached out
to 16 of our 29 largest stockholders in 2022, representing approximately 47% of our total shares outstanding as of our 2021 Annual Meeting, to solicit and gain a better understanding of stockholder feedback regarding our executive compensation
program. Six of the 16 holders elected to participate in this compensation-specific outreach program. The feedback we received from our stockholders about our executive compensation program was collected directly by members of our Compensation
Committee. The Compensation Committee made changes to our plan design in light of the feedback we received during this process.
Additionally, our CEO and CFO engage in meaningful dialogue with our stockholders through our quarterly earnings calls and investor-related outreach
events.
Topics
Key areas of discussion included:
| • |
Corporate Governance
|
| • |
Executive Compensation
|
| • |
Inclusion and Diversity
|
| • |
Human Capital Management
|
| • |
Sustainability Programs
|
| • |
Supply Chain
|
| • |
Company Policy
|
| • |
Brand/Public Affairs
|
| • |
Risk Management
|
| • |
Long-term Growth Strategy
|
| • |
Financial Performance
|
For additional information, please see “2022 Stockholder Outreach” in Item 11 of this Amendment.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, certain of our officers, and persons who beneficially own more than 10% of the Company’s
common stock to file reports of stock ownership and changes in ownership (Forms 3, 4 and 5) in shares with the SEC. To our knowledge, based solely on our records and certain written representations received from our executive officers and directors,
during the fiscal year ended June 30, 2022, all persons related to the Company that are required to file these insider trading reports have filed them in a timely manner, except for a Form 4 filed on May 11, 2022 for Scott R. Drake to correct the
amount of securities granted to him in a transaction that occurred on September 13, 2021; a Form 4 filed on July 19, 2022 for Maurice S. J. Moragne to correct the amount of securities granted to him in a transaction that occurred on September 13,
2021; a Form 4 filed on July 19, 2022 for Ruben Inofuentes to correct the amount of securities granted to him in a transaction that occurred on September 13, 2021 and to correct the amount of securities beneficially owned by him in subsequent
transactions through July 18, 2022; a Form 4 filed on July 19, 2022 for D. Deverl Maserang II to disclose reportable transactions that occurred on July 16, 2021, September 13, 2021, December 2, 2021, and July 18, 2022; and a Form 4/A filed on August
2, 2022 for Christopher P. Mottern to correct the amount of securities beneficially owned by him. Copies of the insider trading reports can be found on the Company’s website at www.farmerbros.com.
| Item 11. |
Executive Compensation
|
Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes our executive compensation philosophy, objectives, and programs, the decisions made under those
programs and factors considered by our Compensation Committee in fiscal 2022 with respect to the compensation of our Named Executive Officers.
Fiscal 2022 Named Executive Officers
|
Name
|
Title (as of June 30, 2022)
|
|
|
D. Deverl Maserang II
|
President and Chief Executive Officer
|
|
|
Scott R. Drake
|
Chief Financial Officer
|
|
|
Ruben E. Inofuentes
|
Chief Supply Chain Officer
|
|
|
Maurice S. J. Moragne
|
Chief Supply Chain Officer
|
|
|
Amber D. Jefferson
|
Chief Human Resources Officer
|
Executive Summary
Our executive compensation programs are designed to:
| • |
attract, retain, and motivate talented executives with competitive pay and incentives;
|
| • |
reward positive results by aligning the economic interests of our executive officers with those of our stockholders;
|
| • |
motivate executive officers to achieve our short-term and long-term goals by providing “at risk” compensation, the value of which is ultimately based on our future performance, without creating undue risk-taking behavior nor unduly
emphasizing short-term performance over long-term value creation; and
|
| • |
maintain total compensation and relative amounts of base salary, annual, and long-term incentive compensation competitive with those amounts paid by peer companies to remain competitive in the market for talent.
|
We believe that this design appropriately focuses our executive officers on the creation of long-term value without creating undue risk-taking
behavior. We continued to focus on these key design elements in addressing the impact of and our response to the COVID-19 pandemic and its related impact on our compensation programs.
Impact of and Response to COVID-19
Below we summarize key actions the Company undertook to protect our employees, stockholders, business, and customers throughout COVID-19 pandemic.
Management quickly responded to the revised business landscape, purposefully managed liquidity and remained focused on our strategic projects to deliver long-term stockholder value.
In fiscal 2022, although both our DSD and Direct Ship sales channels continued to be impacted by the COVID-19 pandemic, there was significant recovery
in these channels throughout the year ended June 30, 2021 (“fiscal 2021”) and fiscal 2022. Net sales in fiscal 2022 increased $71.3 million, or 18%, to $469.2 million from $397.9 million in fiscal 2021. The increase in net sales was primarily due to
the continued recovery from the impact of the COVID-19 pandemic on both our DSD and Direct Ship sales channels, along with price increases and delivery surcharges implemented during fiscal 2022.
During fiscal 2022, we delivered higher gross margins compared to the prior year primarily due to the pandemic’s impact on sales volume, which had a
larger impact on our higher margin customers in fiscal 2021. Overall, gross margins increased by 3.8%, from 25.4% in fiscal 2021 to 29.2% in fiscal 2022 due in part to the continued recovery from the COVID-19 pandemic. A decline in our unfavorable
production variances and inventory scrap write-downs due to the closure of our aged Houston, Texas plant during fiscal 2021 also contributed to such increase. These improvements were partially offset by higher freight costs due to global supply chain
challenges. The price increases and delivery surcharges implemented across our DSD network beginning in the three months ended December 31, 2021 helped mitigate the impact of higher supply chain and product costs.
Our capital expenditures for fiscal 2022 were $15.2 million, as compared to $15.1 million in fiscal 2021, an increase of $0.1 million. This was driven
by lower expansionary capital spend of $5.8 million in fiscal 2022 compared to fiscal 2021, offset by a $5.8 million increase in maintenance capital spend in fiscal 2022. Also included in the $15.2 million of capital expenditures in fiscal 2022 was
$1.6 million for expansion projects and $10.1 million of coffee brewing equipment spend to execute several key strategic initiatives pertaining to fiscal 2022. The expansionary capital spending reductions were driven by several key initiatives put in
place, including a focus on refurbished coffee brewing equipment to drive cost savings, and reductions across some capital categories due to additional cost controls put in place during the COVID-19 pandemic.
What we did for our employees
We implemented the following measures to assist our employees:
| • |
Implemented Company health guidelines that included social distancing, shift spacing, protective equipment, temperature monitoring and a remote work option for employees able to do so;
|
| • |
Provided up to 10 additional days of sick time at no cost for certain employees in locations with a confirmed COVID-19 case or who were quarantined due to COVID-19 related symptoms/exposure;
|
| • |
Provided COVID-19 testing for team members on our health plan at no charge;
|
| • |
Extended company-paid medical benefits for employees enrolled in benefit plans who had been placed on furlough due to the COVID-19 outbreak;
|
| • |
Reinforced access for team members to telehealth options available through our health plans; and
|
| • |
Reinforced availability of our existing Employee Assistance Program (EAP) that is available to all employees and their families at no cost. The EAP provides helpful tools for managing anxiety and fears for employees and their children.
|
What we did for our Stockholders
| • |
We engaged stockholders in direct conversations regarding our pandemic actions and corresponding changes to our compensation program;
|
| • |
Our Board was regularly informed about all major aspects of our business and remains actively engaged with management. Our Board and the Compensation Committee met and continue to meet more frequently (relative to prior years) to
understand the unique challenges we are encountering; and
|
| • |
Invested in and reallocated capital in a focused approach, allowing team members to continue to deliver on projects to optimize our manufacturing and distribution network during challenging times.
|
What we did for our Business
Recognizing that maintaining ample liquidity is key to withstanding the pandemic and emerging in a position of strength, we prudently managed cash,
including:
| • |
Amended our prior credit facility in April 2021 and subsequently entered into a new $127.5 million, four-year financing arrangement, providing a lower overall cost of borrowing and reducing or eliminating several negative covenants in its
prior credit facility;
|
| • |
Amended our credit facility a second time in August 2022, providing a further reduction in the overall cost of borrowing and repayment of our term loan agreement, which resulted in the removal of several negative covenants that existed in the term loan agreement.
|
| • |
Drove cost-reduction and cash preservation strategies to weather the impact of the pandemic;
|
| • |
Remained disciplined in capital allocation priorities, including deferring capital expenditures, as appropriate;
|
| • |
Focused on key initiatives that would drive our business transformation; and
|
| • |
Renegotiated unprofitable contracts to meet evolving business needs.
|
Compensation Policies and Practices—Good Governance
Consistent with our commitment to strong corporate governance, in fiscal 2022, our Board followed the compensation policies and practices described
below to drive performance and serve our stockholders’ long-term interests:
What We Do
Our Compensation Committee is composed solely of independent directors, and regularly meets in executive session
without members of management present. Our Compensation Committee retains an independent compensation consultant to provide it with advice on matters related
to executive compensation. Our Compensation Committee regularly reviews and assesses the potential risks of our compensation policies and
practices. The structure of our executive compensation program includes a mix of cash and equity-based compensation, with an
emphasis on performance-based compensation. The competitiveness of our executive compensation program is assessed by comparison to the compensation programs of
peer group companies that are similar to us in terms of industry, annual revenue, and/or other business characteristics. Our claw-back policy requires the recoupment of certain incentive compensation from our executive officers in the event
of a material restatement of the Company’s financial results due to fraud or misconduct. We maintain meaningful stock ownership guidelines for directors and executive officers that promote a long-term
stockholder perspective.What We Do Not Do
We do not provide for excise tax gross-ups in connection with severance or other payments or benefits arising in
connection with a change in control. We do not provide for “single trigger” change in control payments or benefits. We do not provide guaranteed base salary increases or guaranteed bonuses. We do not provide supplemental pension benefits to our Named Executive Officers. We do not provide excessive perquisites. We do not permit (absent stockholder approval in the case of repricing/exchanging), and have not engaged in, the
practice of backdating or re-pricing/exchanging stock options. We do not allow directors or executive officers to hedge or short sell Company stock. We do not allow directors or executive officers to pledge shares as collateral for a loan or in a margin account.2022 Stockholder Outreach
Every year, the Company provides stockholders with the opportunity for an annual vote to approve its executive compensation program on an advisory
basis. At our 2021 Annual Meeting, approximately 47% of our stockholders supported our advisory vote on executive compensation. Following this vote, we conducted an extensive engagement campaign with our stockholders. For additional information, see
“Corporate Governance Cycle and 2022 Outreach” in Item 10 of this Amendment.
We reached out to investors representing approximately 47% of our common shares outstanding, as of our 2021 Annual Meeting, with invitations to
discuss our officer compensation program and provide direct feedback to members of our Compensation Committee. We held discussions with investors representing approximately 15% of our common shares outstanding as of our 2021 Annual Meeting. Below
are key learnings from these direct discussions with investors. The Compensation Committee will continue to engage directly with stockholders on a periodic basis on officer compensation matters.
Key Themes from Stockholder Engagement
Stockholders that accepted invitations to discuss compensation matters with members of our Compensation Committee were generally supportive of the
Farmer Bros. officer compensation programs. Discussions tended to focus on the following categories:
Compensation Amounts: Stockholders did not express concern about the amount of
compensation paid to the officers, nor did they express concern about any misalignment between pay and performance.
Mix of Compensation: Stockholders generally expressed a preference that the
officer team have a uniform mix of long-term incentives.
Benchmarking Peer Group: Stockholders were supportive of the set of companies
selected by the Compensation Committee to benchmark officer compensation. Certain stockholders expressed a view that peer companies should be similar in size and industry to Farmer Bros.
Incentives Plan Metrics: Stockholders were generally supportive of using EBITDA
as the featured annual incentive plan metric, and understood the unique approach to goal-setting given the Company’s challenging situation. Several suggested that the Compensation Committee consider return on capital, revenue growth, cash flow,
working capital and measuring performance on a per-share basis going forward. Several stockholders expressed a desire for TSR to have a greater weighting for future PBRSU awards.
Incentive Plan Design: Shareholders generally understood and supported the
unique annual and long-term incentive design adopted by the Committee as a response to the challenging operating environment caused by the COVID-19 pandemic, as described in our prior year proxy disclosure. Shareholders did express a preference
for measuring PBRSU performance over a full three-year period.
Compensation Committee Response to Stockholder Feedback
The Compensation Committee is thankful to the stockholders that accepted invitations to engage and provide feedback on the Company’s officer
compensation programs. The Compensation Committee has, and will continue, to discuss the specific feedback and perspective provided by stockholders and intends to consider such feedback for future compensation decisions. The Compensation Committee
took immediate action for certain features for fiscal 2023 officer compensation as a direct response to stockholder feedback:
| • |
The Compensation Committee removed several companies from the compensation peer group that were relatively larger than the Company in terms of revenue, and added several that are closer in revenues to the
Company. These changes are described in greater detail the section below titled “Benchmarking and Peer Group Companies.”
|
| • |
For fiscal 2023 PBRSU awards, the TSR modifier has been changed to have greater influence on the award outcome. For fiscal 2023 awards, TSR goals have been set based on the Company’s absolute cumulative TSR
over a full three-year period (fiscal 2023 through 2025). The Company’s absolute TSR over this three year period can modify amounts earned by adjusted EBITDA performance by a factor of 0.80x to 1.5x (an increase from the 1.2x factor from
prior awards). Adjusted EBITDA will be measured over three one-year measurement periods and generate a payout factor at the end of the three years based on the average achievement over the three years. This payout factor will then be subject
to modification based on the Company’s absolute cumulative three-year as follows:
|
|
Absolute 3-year Cumulative TSR
|
Modification Factor
|
||
|
≤ 25.0%
|
0.8x
|
||
|
-25.0% to +24.9%
|
1.0x
|
||
|
+25.0% to +49.9%
|
1.20x
|
||
|
+50.0% to +99.9%
|
1.33x
|
||
|
≥ 100%
|
1.50x
|
The purpose of the absolute TSR modifier above is to incentivize achievement of superior shareholder returns over a three-year period.
| • |
In addition to placing greater weighting on TSR, shareholders generally expressed a preference that all officers have the same mix of long-term incentive award vehicles with at least 50% of the awards granted
in PBRSUs. As such, 50% of LTI granted to officers for the fiscal 2023 was granted in PBRSUs (an increase from 40% from prior year for NEOs other than our CEO which has been awarded 50% of LTI in PBRSUs in prior years).
|
Additional details about the fiscal 2023 long-term incentive awards will be reported in the Company’s proxy statement for fiscal 2023.
Oversight of the Executive Compensation Program
Compensation Committee
Under its charter, the Compensation Committee has the duty, among other things, to assess the overall executive compensation structure of the Company,
including the compensation for our President and Chief Executive Officer and each of our other Named Executive Officers. In exercising this authority, the Compensation Committee determines the forms and amount of executive compensation appropriate to
achieve the Compensation Committee’s strategic objectives, including base salary, bonus, incentive or performance-based compensation, equity awards and other benefits.
Compensation Consultant
The Compensation Committee has the authority to retain the services of outside consultants to assist it in performing its responsibilities. In fiscal
2022, the Compensation Committee engaged Meridian Compensation Partners, LLC, an independent compensation consultant (“Meridian”) to provide advisory and consulting services relating to the Company’s executive officer and director compensation
programs, consultation regarding short-term and long-term incentive plan design, consultation regarding CEO pay ratio disclosure, and consultation regarding corporate governance practices and general Compensation Committee matters and processes. In
fiscal 2022, the Compensation Committee also engaged Meridian to help determine the compensation of our President and Chief Executive Officer, as well as our other Named Executive Officers.
Meridian provided no other services to the Company or its affiliates during fiscal 2022 other than as described above. The Compensation Committee has
determined that Meridian is “independent” according to the criteria required by the SEC in Rule 10C-1 of the Exchange Act.
Management’s Role in Establishing Compensation
The compensation of the Named Executive Officers is determined by the Compensation Committee, taking into account the input and recommendations of our
President and Chief Executive Officer regarding compensation for those executive officers, and taking into account the input of the Nominating and Corporate Governance Committee and Chairman regarding performance of our President and Chief Executive
Officer. The Compensation Committee has sole authority for all final compensation determinations regarding our President and Chief Executive Officer. In fiscal 2022, our President and Chief Executive Officer, Chief Human Resources Officer and General
Counsel routinely attended the meetings of the Compensation Committee to provide input, as requested by the Compensation Committee and, in the case of the General Counsel, to act as secretary for the meeting; however, no executive officer has any
role in approving his or her own compensation, and neither our President and Chief Executive Officer nor any other Named Executive Officer is present during the portion of the meeting at which the Compensation Committee considers their compensation.
The Compensation Committee regularly meets in executive session, without members of the management team present, when discussing and approving executive compensation.
Benchmarking and Peer Group Companies
The Compensation Committee compares the pay levels and programs for the Company’s executive officers to compensation information from a relevant peer
group as well as information from published survey sources. The Compensation Committee uses this comparative data as a reference point in its review and determination of executive compensation but also considers competitive compensation practices and
other relevant factors based on the members’ collective experience in setting pay. Accordingly, the Compensation Committee does not generally establish compensation at specific benchmark percentiles.
When setting compensation, the Compensation Committee considers other factors in addition to market data, including:
| • |
individual performance;
|
| • |
impact on long-term stockholder value creation;
|
| • |
impact on development and execution of Company strategy;
|
| • |
experience and tenure in role;
|
| • |
retention;
|
| • |
trends and competitive factors impacting the labor market;
|
| • |
internal alignment;
|
| • |
the impact of the COVID-19 pandemic on the business and management’s actions to respond to the uncertain market in fiscal 2022; and
|
| • |
scope of responsibility.
|
The Compensation Committee, with the assistance of Meridian, developed and approved the following peer group for purposes of benchmarking the
compensation levels of our Named Executive Officers relative to our peers and informing fiscal 2022 pay levels for our Named Executive Officers:
|
B&G Food, Inc.
|
The Boston Beer Company, Inc.
|
|
Seneca Food Corporation
|
Cal-Maine Foods, Inc.
|
|
Lancaster Colony Corporation
|
Medifast, Inc.
|
|
Hostess Brands, Inc.
|
The Chef’s Warehouse, Inc.
|
|
Calavo Growers, Inc.
|
Utz Brands, Inc.
|
|
J & J Snack Foods Corp.
|
The Simply Good Foods Company
|
|
John B. Sanfilippo & Son, Inc.
|
SunOpta, Inc.
|
|
Beyond Meat, Inc.
|
MGP Ingredients, Inc.
|
|
Freshpet, Inc.
|
New Age Beverage Corporation
|
|
Bridgford Foods Corporation
|
The Compensation Committee evaluates our peer group annually and makes adjustments to this peer group when appropriate to reflect changes in relative
size or operations of the Company or its peers, or to address changes resulting from mergers, acquisitions or other structural changes. The Compensation Committee found this peer group to be appropriate because it represented a meaningful sample of
comparable companies in terms of, as applicable, industry, annual revenue, and other business characteristics. In 2022, for fiscal 2023 compensation, the Compensation Committee has decided to remove B&G Foods, Inc., The Chefs’ Warehouse, Inc.,
The Boston Beer Company, Inc., Lancaster Colony Corporation, Medifast, Inc., Cal-Maine Foods, Inc., and Seneca Foods Corporation from the peer group, and to add Whole Earth Brands, Inc., The Duckhorn Portfolio, Inc., and Vital Farms, Inc. The
changes to the peer group were made to include companies with similar business lines and revenues more comparable to those of the Company.
Fiscal 2022 Named Executive Officer Compensation Mix
In fiscal 2022, the Compensation Committee’s compensation decisions with respect to our Named Executive Officers once again reflected strong alignment
between pay and performance. We believe that our fiscal 2022 compensation programs were therefore also strongly aligned with the long-term interests of our stockholders.
The following charts illustrate, with respect to our President and Chief Executive Officer and our other Named Executive Officers as a group, the base
salary, target short-term cash incentive compensation, and target long-term equity incentive compensation as a percentage of target total direct compensation for fiscal 2022. As shown below, a significant portion of Named Executive Officer target
direct compensation is “at risk” variable compensation rather than fixed compensation, reflecting our philosophy of aligning Named Executive Officer compensation with performance generally and stockholder value creation specifically.
Key Elements of Fiscal 2022 Executive Compensation Program
Below are the key elements of the Company’s fiscal 2022 executive compensation program applicable to our Named Executive Officers.
|
What We Pay
|
Why and How We Pay It
|
|||
|
Base Salary
|
• Base salary comprises fixed cash compensation that is designed to provide a reasonable level of Company-wide and individual performance.
• Base salaries are reviewed annually and adjusted when appropriate (increases are neither fixed nor guaranteed).
• Competitive base salaries are a key component of attracting and retaining executive talent.
|
|||
|
Short-Term Cash Incentives
|
• Annual cash incentives constitute variable “at risk” compensation, payable in cash based on Company-wide and individual performance. These awards are designed
to reward achievement of annual financial objectives as well as near-term strategic objectives that create momentum that is expected to foster the long-term success of the Company’s business.
• Company-wide metrics and targets are derived from, and intended to promote, our near-term business strategy.
• Individual targets are consistent with our focus on both quantitative and qualitative priorities and thereby reward both attainment of objective metrics and
individual contributions.
|
|||
|
Long-Term Incentives
|
• Stock options, Restricted Stock Units (“RSUs”) and Performance-based Restricted Stock Units (“PBRSUs”) subject to both performance- and time-based vesting
conditions are designed to create direct alignment with stockholder objectives, provide a focus on long-term value creation, retain critical talent over extended timeframes and enable key employees to share in value creation.
• Performance-based award metrics and targets align with long-term business strategy as well as stock price appreciation creating shareholder value.
|
|||
|
Severance Benefits
|
• Severance benefits provide income and health insurance protection to our Named Executive Officers in connection with certain involuntary terminations of
employment. These severance benefits are designed to enable the Named Executive Officers to focus on the best interests of the Company and its stockholders, including in circumstances that may jeopardize the individual’s job security.
• Enhanced severance benefits are available if the termination of employment occurs in connection with a change in control to ensure continued focus on the best
alternatives for the Company and its stockholders, free from distractions caused by personal uncertainties associated with the heightened risk to job security that arises for senior executives in the transactional context.
• Severance benefits are also key to attracting and retaining key talent.
|
|||
|
Retirement and Welfare Benefits
|
• A standard complement of retirement, health, welfare and insurance benefits, offered to our Named Executive Officers on terms generally similar to those
available to other employees, provides important protections and stability for our Named Executive Officers and their families that help enable our Named Executive Officers to remain focused on their work responsibilities.
• These are generally low-cost benefits with a higher perceived value that are intended to help keep our overall compensation package competitive.
|
|||
|
Perquisites
|
• We provide limited perquisites as well as relocation assistance, each intended to facilitate the operation of the Company’s business and to assist the Company
in recruiting and retaining key executives.
• These are also low-cost benefits with a higher perceived value that are intended to help keep our overall compensation package competitive.
|
Base Salary
Consistent with the established executive compensation philosophy and objectives described above, and utilizing the peer comparisons provided by
Meridian, the Compensation Committee approved fiscal 2022 annual base salaries for the Named Executive Officers as shown in the table below.
|
Named Executive Officers:
|
Fiscal 2022
Annual Base Salary(1)
|
Fiscal 2021
Annual Base Salary(1)
|
Annual Base
Salary Percentage
Change
|
|||||||||
|
D. Deverl Maserang II
|
$
|
680,000
|
$
|
660,000
|
3.0
|
%
|
||||||
|
Scott R. Drake
|
$
|
450,000
|
$
|
375,000
|
20.0
|
%
|
||||||
|
Ruben E. Inofuentes
|
$
|
350,000
|
$
|
340,000
|
3.0
|
%
|
||||||
|
Maurice S. J. Moragne
|
$
|
355,000
|
$
|
340,000
|
4.4
|
%
|
||||||
|
Amber D. Jefferson
|
$
|
320,000
|
N/A
|
N/A
|
||||||||
|
(1)
|
Annual base salary as of the end of the applicable fiscal year.
|
Short-Term Cash Incentives for Fiscal 2022
Fiscal 2022 awards were designed to place a significant portion of each Named Executive Officer’s annual cash compensation “at risk” and were designed
to align the near-term focus of our Named Executive Officers with our business goals for the relevant period. Due to the impact of COVID-19 on the predictability of our business, the Company’s 2022 short-term incentive plan focused on achieving a
minimum performance threshold for Company-wide financial results.
For the fiscal 2022 Short-Term Cash Incentive Program, the Compensation Committee used adjusted EBITDA as the relevant performance metric and set a
minimum threshold for achievement (described below) which, if achieved, the Compensation Committee believed would reflect a meaningful level of Company profitability and would be aligned with our strategic plan to deliver long-term value to our
stockholders. Generating EBITDA is critically important during this unprecedented time in the company’s history which is why adjusted EBITDA was the primary performance metric for the fiscal 2022 annual cash incentive program and an important factor
in the fiscal 2022 PBRSU awards. The Company must remain in compliance with bank covenants, and as such, the Compensation Committee believes it is important to incentivize management to drive adjusted EBITDA in excess of what is required by the
bank. However, this challenging time makes goal-setting difficult while ensuring that any payouts generated from EBITDA achievement are affordable and does not put the Company in a compromising cash situation. For this reason, the Committee
determined that any payouts above threshold adjusted EBITDA achievement levels would be discretionary. Notwithstanding the foregoing, the Compensation Committee determined that no Short-Term Incentive payments would be made to the extent that doing
so would reduce the Company’s adjusted EBITDA below the minimum level required by the Company’s then-existing bank covenants. The Committee will revisit this design for future years and expects to return to a more conventional program in future
years when business conditions stabilize.
For this purpose, “adjusted EBITDA” was defined as net (loss) income excluding the impact of: (i) income taxes; (ii) interest expense; (iii) income
from short-term investments; (iv) depreciation and amortization expense; (v) ESOP and share-based compensation expense; (vi) non-cash impairment losses; non-cash pension withdrawal expense; (viii) other similar non-cash expenses; (ix) restructuring
and other transition expenses; (x) non-recurring stockholder-related expenses; (xi) acquisition costs (and related revenues only during the same fiscal year); (xii) capital issuance expenses; (xiii) out of period external legal expenses; (xiv)
business segment disposition expenses (and exclusion of related gain on sales); (xv) net gain or loss on sale of assets other than M&A or business segment disposition; and (xvi) non-recurring and/or extraordinary expenses.
In fiscal 2022, our Named Executive Officers were eligible to earn annual cash incentive awards under the Short-Term Cash Incentive Program of 50% of
the applicable Named Executive Officer’s target annual bonus for threshold performance. Any performance in excess of the threshold would be considered in determining the overall payout at the discretion of the Compensation Committee. Annual cash
incentives are capped at a maximum payout opportunity of 200% of target.
As a result of achieving above the threshold level on adjusted EBITDA, the Compensation Committee determined that the plan should pay out at 80% of
each executive’s target annual bonus, subject to adjustment for individual performance. In determining to pay the bonus at this level, the Compensation Committee considered management’s leadership of key initiatives within the company’s optimization
strategy that were completed during the fiscal year, including the continued improvement in the Company’s financial performance despite unforeseen lingering impacts of the COVID-19 pandemic, supply chain bottlenecks and the significant increase in
the cost of raw coffee. The Compensation Committee also considered the continued uncertainty presented by the COVID-19 pandemic, the inflationary environment, and the need for liquidity to execute the Company’s strategic initiatives in evaluating
whether to payout in excess of target given the adjusted EBITDA performance. The Compensation Committee believes that it was important to reward executives for the completion of these key initiatives and to keep those executives motivated because the
achievement of these milestones is essential to the Company’s plans to deliver long-term value to stockholders.
The following table shows such achievement compared to Company-wide performance threshold for fiscal 2022.
|
Metric
|
AEBITDA Target
|
Threshold Goal
(80% of Target
Performance)
|
Actual
Achievement
|
Actual
Achievement
Compared to
Target
Performance
|
Payout for Fiscal 2022
Company-wide
Performance
|
|||||||||||||||
|
Adjusted EBITDA
|
$
|
20.3
|
M
|
$
|
17.9
|
M
|
$
|
19.1
|
M
|
93.9
|
%
|
85.0
|
%
|
|||||||
The following table shows such target achievement compared to actual earned short-term cash incentive for fiscal 2022.
|
Named Executive Officers:
|
Fiscal 2022
Target Short Term
Cash Incentive
|
Fiscal 2022
Target Short Term
Earned Cash Incentive
|
||||||
|
D. Deverl Maserang II
|
$
|
680,000
|
$
|
598,400
|
||||
|
Scott R. Drake
|
$
|
337,500
|
$
|
297,000
|
||||
|
Ruben E. Inofuentes
|
$
|
210,000
|
$
|
159,600
|
||||
|
Maurice S. J. Moragne
|
$
|
213,000
|
$
|
170,400
|
||||
|
Amber D. Jefferson
|
$
|
192,000
|
$
|
168,960
|
||||
Long-Term Incentive Compensation
Awards
The fiscal 2022 long-term incentives were designed to be competitive with market and directly align our incentives with our long-term business
priorities and compensation outcomes to Company performance. The Compensation Committee believes that the fiscal 2021 long-term incentive program facilitates strong pay for performance alignment in that the RSUs only appreciate in value to the extent
that the stock price appreciates, and the PBRSUs only vest to the extent that the performance goals are achieved, placing the emphasis on stock price and stockholder alignment on internal company performance and business strategy. The Compensation
Committee also believes that long-term incentives serve as a retention tool for key executives, which is particularly important in this competitive market for talent.
Our practice historically has been to grant annual normal-cycle long-term incentive awards generally in the second quarter of the fiscal year, with
interim grants for new hires and promotions after the annual grant date being made on the first day of the calendar month following the hire or promotion, as applicable. Our grants have historically taken the form of 50% PBRSUs vesting over a
three-year performance period and 50% in stock options. However, in an attempt to conserve our authorized shares under our equity plan, the Compensation Committee started utilizing RSUs instead of stock options.
Fiscal 2022 Awards
Restricted Stock Units
In fiscal 2022, the RSUs granted to our Named Executive Officers under the Farmer Bros. Co. Amended and Restated 2017 Long-Term Incentive Plan (the
“2017 Plan”) vest ratably over three years, with one-third of the total number of shares subject to each such RSUs vesting on each of the first three anniversaries of the grant date, contingent on continued employment. The RSU grants made to Ms.
Jefferson, however, cliff vest after three years and were made under the 2020 Inducement Plan.
Performance-Based Restricted Stock Units
In fiscal 2022, the PBRSUs granted to our Named Executive Officers under the 2017 Plan cliff vest at the end of the three-year performance period
based upon achievement of adjusted EBITDA (as defined above for purposes of fiscal 2022 cash incentive) performance goals for the performance period July 1, 2021 through June 30, 2024. During this unprecedented period of uncertainty and challenging
operating environment for Farmer Bros., generating EBITDA is critically important to our success, including our ability to meet financing covenants, create shareholder value and afford incentive compensation to attract and retain key talent in a
highly competitive labor market. As such, adjusted EBITDA is the featured performance metric for both our short- and long-term incentive plans. The Compensation Committee continuously evaluates alternative incentive plan performance metrics and
expects that the use of the same metric in both short- and long-term plans is only a temporary practice until the Company returns to a more stable operating environment and can return to a more diversified suite of metrics across short- and long-term
incentives. For the fiscal 2022 awards, adjusted EBITDA targets for each year of the performance period are set independently at the beginning of the year due to the rapidly changing realities of our business during the pandemic. This preserves the
incentive of pay-for-performance by making the targets challenging but achievable based on the business environment for the applicable performance year.
Performance against adjusted EBITDA targets for each year will determine a payout factor for that year which can range from 0% to 130% of target. At
the end of the 3-year performance period, the average payout factor for each of the three one-year adjusted EBITDA measurement periods will be calculated. This three-year average payout factor for adjusted EBITDA performance is then subject to
modification based on Farmer Bros. three-year TSR (the “three-year TSR modifier”) which is applied to the preliminary payout factor determined by the EBITDA target to determine a final payout factor between 0% and 150% of target for the full 3-year
measurement period for PBRSUs. No PBRSUs can be earned or paid prior to the conclusion of the full three-year measurement period when the final full three-year achievement is determined.
Our performance goals for adjusted EBITDA are based on business forecasts, our ability to recover from the COVID-19 pandemic and relevant expectations
reflecting our strategic plans and aspirations to grow our business. The Compensation Committee has historically established aggressive, yet achievable performance goals intended to motivate the Company’s executive officers to achieve internal goals
and results that will benefit the Company’s stockholders, while maintaining strong alignment between pay and performance. With the limited number of shares available for issuance under the 2017 Plan, this annual as opposed to three-year target
setting preserves the incentive of equity awards. Actual achievement of the three-year performance goals for the PBRSU awards granted in fiscal 2022 will be reflected in our proxy statement that reports the payouts at the end of the three-year
performance period.
For additional information regarding changes to our PBRSU grant practices for fiscal 2023, please see “Compensation Committee Response to Shareholder
Feedback” above.
Employment and Change in Control Severance Agreements
The Company has entered into an employment agreement with our President and Chief Executive Officer, Deverl Maserang (“Employment Agreement”), as well
as a Change in Control Severance Agreement with each of the Named Executive Officers. A detailed description of the severance benefits each Named Executive Officer is due to receive based on their Employment Agreement and/or Change in Control
Severance Agreement is set forth below under the heading “Named Executive Officer Compensation-Potential Payments Upon Termination or Change in Control.”
These agreements were entered into, and continue in effect, to achieve the following objectives: (a) assure the Named Executive Officers’ full
attention and dedication to the Company, free from distractions caused by personal uncertainties and risks related to a pending or threatened change in control; (b) assure the Named Executive Officers’ objectivity with respect to stockholders’
interests in a change in control scenario; (c) assure the fair treatment of the Named Executive Officer in case of involuntary termination following a change in control or in connection with a threatened change in control; and (d) attract and retain
key talent during uncertain times. The agreements are structured so that payments and benefits are provided only if there is both a change in control or threatened change in control and a qualifying termination of employment (“double trigger”),
either by us (other than for “Cause,” “Disability” or death), or by the Named Executive Officer in connection with a “Resignation for Good Reason” (as each is defined in the change in control severance agreements).
Retirement and Welfare Benefits
The Named Executive Officers receive the same welfare benefits as those received by our employees generally, including medical, dental, life,
disability and accident insurance.
The Named Executive Officers are eligible on the same basis as our employees generally to participate in the Company’s 401(k). plan. The value of the
Named Executive Officers’ 401(k) plan balances depends solely on the performance of investment alternatives selected by the applicable Named Executive Officer from among the alternatives offered to all participants. All investment options in the
401(k) plan are market-based, meaning there are no “above-market” or. guaranteed rates of return. In the beginning of the year ended June 30, 2021 (“fiscal 2020”), the Company offered a discretionary match of the employees’ annual contributions under
the 401(k) plan equal to 50% of an employee’s annual contribution, up to 6% of the employee’s eligible income. As a result of the COVID-19 crisis and the corresponding impact on our business, the match was suspended effective April 1, 2020 and was
reinstated effective with the July 9, 2021 paycheck for each eligible employee.
Today, the Company offers two different types of contributions: (1) a “non-elective” contribution that does not require the team member to contribute
and is equal to 4% of eligible earnings; and (2) a company match of 100% of the first 3% of eligible earnings that eligible employees contribute. The Company match is currently made in Company stock to help the Company manage its cash position as it
emerges from the impacts of COVID-19. Through our shareholder outreach program, we learned that many of our shareholders are concerned about dilution. So, effective January 1, 2023, we will eliminate the 4% non-elective contribution and change the
Company match to 100% of the first 3% each eligible employee contributes plus 50% on the next 2% they contribute. This model will allow the Company to take advantage of the “safe harbor” provisions of the regulations applicable to its 401(k) and
remain competitive in a challenging labor market, while reducing the dilutive effects of the match.
Perquisites
We believe that offering certain limited perquisites facilitates the operation of our business, allows our Named Executive Officers to better focus
their time, attention and capabilities on our business, and assists the Company in recruiting and retaining key executives. We also believe that the perquisites offered to our Named Executive Officers are generally consistent with practices among
companies in our peer group.
It is the Company’s and the Compensation Committee’s intention to continually assess business needs and evolving practices to ensure that perquisite
offerings are competitive and reasonable.
Compensation Policies and Practices
Stock Ownership Guidelines
The Board has adopted Stock Ownership Guidelines to further align the interests of the Company’s executive officers with the interests of the
Company’s stockholders. Under the stock ownership guidelines, an executive officer is not permitted to sell any shares of Common Stock received as a result of grants under the Company’s long-term incentive plans unless the executive officer achieves
and maintains the applicable threshold share ownership level set forth in the table below. Further, under the stock ownership guidelines, a non-employee director is expected to own and hold during his or her service as a Board member a number of
shares of Common Stock with a value of at least four times his or her annual cash retainer for service on the Board, and is not permitted to sell any shares of Common Stock received as grants under the Company’s long-term incentive plans unless and
until the non-employee director achieves and maintains this threshold share ownership level.
Shares of Common Stock that count toward satisfaction of these guidelines include: (i) shares of Common Stock owned outright by the executive officer
or non-employee director and his or her immediate family members who share the same household, whether held individually or jointly; (ii) restricted stock or restricted stock units (whether or not the restrictions have lapsed); (iii) shares of Common
Stock held in trust for the benefit of the executive officer or non-employee director or his or her family; and (iv) shares of Common Stock issuable under vested options held by the executive officer or non-employee director.
|
Position
|
Value of Shares Owned
|
|
|
Chief Executive Officer
|
3x base salary
|
|
|
Other Executive Officers
|
1x base salary
|
|
|
Non-Employee Directors
|
4x Annual Cash Retainer
|
Insider Trading Policy (Including Anti-Hedging and Anti-Pledging Policies)
Our insider trading policy prohibits all employees, officers, directors, consultants and other associates of the Company and certain of their family
members from, among other things, purchasing or selling any type of security, whether the issuer of that security is the Company or any other company, while aware of material, non-public information relating to the issuer of the security or from
providing such material, non-public information to any person who may trade while aware of such information. The insider trading policy also prohibits employees from engaging in short sales with respect to our securities, purchasing or pledging
Company stock on margin and entering into derivative or similar transactions (i.e., puts, calls, options, forward contracts, collars, swaps or exchange agreements) with respect to our securities. We also have procedures that require trades by certain
insiders, including our directors and executive officers, to be pre-cleared by appropriate Company personnel. Additionally, such insiders are generally prohibited from conducting transactions involving the purchase or sale of the Company’s securities
from 12:01 a.m. New York City time on the fourteenth calendar day before the end of each of the Company’s four fiscal quarters (including fiscal year end) through 11:59 p.m. New York City time on the business day following the date of the public
release containing the Company’s quarterly (including annual) results of operations.
Clawback Policy on Executive Compensation in Restatement Situations
In the event of a material restatement of the financial results of the Company, the Board, or the appropriate committee thereof, will review all
bonuses and other incentive and equity compensation awarded to the Company’s executive officers on the basis of having met or exceeded performance targets for performance periods that occurred during the restatement period. If such bonuses and other
incentive and equity compensation would have been lower had they been calculated based on such restated results, the Board, or the appropriate committee thereof, may, to the extent permitted by governing law and as appropriate under the
circumstances, seek to recover for the benefit of the Company all or a portion of such bonuses and incentive and equity compensation awarded to executive officers whose fraud or misconduct caused or partially caused such restatement, as determined by
the Board, or the appropriate committee thereof.
Accounting Standards
Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 requires us to recognize an expense for the fair value
of share-based compensation awards. Grants of stock options, restricted stock and PBRSUs under the Company’s long-term incentive plans are accounted for under FASB ASC Topic 718. The Compensation Committee considers the accounting implications of
significant compensation decisions, especially in connection with decisions that relate to our long-term incentive program. As accounting standards change, the Company may revise certain programs to appropriately align accounting expenses of our
share-based compensation awards with our overall executive compensation philosophy and objectives.
Summary Compensation Table
The following table sets forth summary information concerning compensation awarded to, earned by, or paid to each of our Named Executive Officers for
all services rendered in all capacities to the Company and its subsidiaries in the last three fiscal years. For a complete understanding of the table, please read the footnotes and narrative disclosures that follow the table.
|
A
|
B |
|
C |
|
D |
|
E |
|
F |
|
G |
|
H |
|
I |
|
||||||||
|
Name and
Principal Position
|
Fiscal
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
All Other
Compensation
($)
|
Total
($)
|
||||||||||||||||
|
D. Deverl Maserang II (1)
|
2022
|
676,154
|
—
|
2,006,755
|
—
|
598,400
|
20,900
|
3,292,209
|
||||||||||||||||
|
President and Chief Executive Officer
|
2021
|
615,574
|
—
|
1,899,995
|
—
|
660,000
|
11,114
|
3,186,683
|
||||||||||||||||
|
2020
|
487,385
|
—
|
499,990
|
999,997
|
—
|
13,200
|
2,000,572
|
|||||||||||||||||
|
Scott R. Drake (2)
|
2022
|
397,500
|
—
|
712,160
|
—
|
297,000
|
19,119
|
1,425,779
|
||||||||||||||||
|
Chief Financial Officer
|
2021
|
349,758
|
—
|
344,989
|
—
|
281,250
|
14,226
|
990,223
|
||||||||||||||||
|
2020
|
80,769
|
—
|
—
|
199,999
|
—
|
—
|
280,768
|
|||||||||||||||||
|
Ruben E. Inofuentes (3)
|
2022
|
348,077
|
—
|
245,266
|
—
|
159,600
|
20,675
|
773,618
|
||||||||||||||||
|
Chief Supply Chain Officer
|
2021
|
317,114
|
—
|
359,992
|
—
|
204,000
|
11,248
|
892,354
|
||||||||||||||||
|
2020
|
192,231
|
—
|
125,000
|
124,999
|
—
|
96,368
|
538,598
|
|||||||||||||||||
|
Maurice S. J. Moragne (4)
|
2022
|
352,115
|
—
|
267,567
|
—
|
170,400
|
20,606
|
810,688
|
||||||||||||||||
|
Chief Sales Officer
|
2021
|
340,000
|
—
|
289,986
|
74,998
|
204,000
|
10,994
|
844,980
|
||||||||||||||||
|
Amber D. Jefferson (5)
|
2022
|
221,538
|
—
|
249,996
|
—
|
168,960
|
10,359
|
650,853
|
||||||||||||||||
|
Chief Human Resources Officer
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1) Mr. Maserang joined as our President and Chief Executive Officer effective September 13, 2019.
(2) Mr. Drake joined as our Chief Financial Officer effective March 23, 2020.
(3) Mr. Inofuentes joined as our Chief Supply Chain Officer effective November 15, 2019.
(4) Mr. Moragne joined as our Chief Sales Officer effective June 8, 2020.
(5) Ms. Jefferson joined as our Chief Human Resources Officer effective October
11, 2021.
Salary (Column C)
The amounts reported in column C represent base salaries earned by each of the Named Executive Officers for the fiscal year indicated, prorated based
on applicable start dates during the fiscal year or the dates of resignation or termination. The amounts shown include amounts contributed by the employee to the Company’s 401(k) plan and reflects the reduction in base salary from April 1, 2020
through March 15, 2021 as a result of the unprecedented impact of the COVID-19 pandemic on the food and beverage industry and our business, as described above.
Bonus (Column D)
This column reflects that no cash-based bonus payments outside of an incentive plan were made during the fiscal years set forth. All non-equity
incentive plan compensation for services performed during the fiscal year by the Named Executive Officers under the 2017 Plan is shown in column G.
Stock Awards (Column E)
The amounts in column E for fiscal 2020 represent the aggregate grant date fair value of the PBRSU award received by each of Mr. Maserang and Mr.
Inofuentes in connection with the commencement of their respective employment in fiscal 2020. The amounts in column E for fiscal 2021 include the aggregate grant date fair value of the annual PBRSU awards received by each of Messrs. Maserang, Drake,
Inofuentes, and Moragne and the annual RSU awards received by each of Messrs. Maserang, Drake, Inofuentes and Moragne. The amounts in column E for fiscal 2022 include the aggregate grant date fair value of the annual PBRSU awards received by each of
Messrs. Maserang, Drake, Inofuentes, and Moragne and the annual RSU awards received by each of Messrs. Maserang, Drake, Inofuentes and Moragne and Ms. Jefferson. A discussion of the assumptions used in calculating the amounts in this column may be
found in Note 13 to our audited consolidated financial statements for the fiscal year ended June 30, 2022 included in our 2022 Form 10-K, except that, as required by applicable SEC rules, we did not reduce the amounts in this column for any
forfeitures relating to service-based (time-based) vesting conditions.
For annual PBRSU awards in each of fiscal 2022, fiscal 2021 and fiscal 2020, we have reported the fair value of the award based upon the probable
satisfaction of the performance conditions as of the grant date. The maximum aggregate grant date fair value that would have been received if the highest level of performance was achieved in fiscal 2020 would have been $999,981 for Mr. Maserang and
$250,000 for Mr. Inofuentes. The maximum aggregate grant date fair value that would have been received if the highest level of performance was achieved in fiscal 2021 would have been $1,709,998 for Mr. Maserang, $155,246 for Mr. Drake, $161,998 for
Mr. Inofuentes, and $96,744 for Mr. Moragne. The maximum aggregate grant date fair value that would have been received if the highest level of performance was achieved in fiscal 2022 would have been $1,505,077 for Mr. Maserang, $187,297 for Mr.
Drake, $147,166 for Mr. Inofuentes, and $160,540 for Mr. Moragne. These amounts do not reflect the Company’s expense for accounting purposes for these awards, and do not represent the actual value that may be realized by the Named Executive
Officers. For further information on these awards, see the Grants of Plan-Based Awards Table and Outstanding Equity Awards at Fiscal Year-End Table in this Amendment.
Option Awards (Column F)
The amounts reported in column F represent the aggregate grant date fair value of stock option awards computed in accordance with FASB ASC Topic 718.
The stock option awards granted in fiscal 2020 reflects an award received by Messrs. Maserang, Inofuentes and Drake in connection with commencement of their respective employment. The stock option awards granted in fiscal 2021 reflects awards
received by Mr. Moragne in connection with commencement of his employment. A discussion of the assumptions used in calculating the amounts in this column may be found in Note 13 to our audited consolidated financial statements for the fiscal year
ended June 30, 2022 included in our 2022 Form 10-K, except that, as required by applicable SEC rules, we did not reduce the amounts in this column for any risk of forfeiture relating to service-based (time-based) vesting conditions. For further
information on these awards, see the Grants of Plan-Based Awards Table and Outstanding Equity Awards at Fiscal Year-End Table in this Amendment.
Non-Equity Incentive Plan Compensation (Column G)
The amounts reported in column G represent the aggregate dollar value of the annual incentives earned by the Named Executive Officers under the 2017
Plan for fiscal 2022 and 2021 under the short-term incentive plan for the relevant fiscal year. In accordance with SEC rules, the actual annual incentive amounts earned by the Named Executive Officers are reflected in the Summary Compensation Table
in the fiscal year earned, even though these annual incentive amounts are paid in the subsequent fiscal year.
As a result of the Company’s failure to achieve threshold levels of performance in fiscal 2021, no payouts are reported for any of the Named Executive
Officers during that period.
All Other Compensation (Column H)
The amounts reported in column H include the following:
All Other Compensation (1)
|
Company
Contributions to
401(k) Plan (2)($)
|
Relocation
Expense ($)
|
Relocation Tax
Gross-Up ($)
|
||||||||
|
D. Deverl Maserang II
|
2022
|
20,900
|
—
|
—
|
||||||
|
|
2021 |
11,114
|
—
|
—
|
||||||
|
|
2020 |
13,200
|
—
|
—
|
||||||
|
Scott R. Drake
|
2022
|
19,119
|
—
|
—
|
||||||
|
|
2021 |
14,226
|
—
|
—
|
||||||
|
|
2020 |
—
|
—
|
—
|
||||||
|
Ruben E. Inofuentes
|
2022
|
20,675
|
—
|
—
|
||||||
|
|
2021 |
11,248
|
—
|
—
|
||||||
|
|
2020 |
7,637
|
70,550
|
18,181
|
||||||
|
Maurice S.J. Moragne
|
2022
|
20,606
|
—
|
—
|
||||||
|
2021
|
10,994
|
—
|
—
|
|||||||
|
Amber D. Jefferson
|
2022
|
10,359
|
—
|
—
|
(1) Except as set forth in the table, the total value of all perquisites and other personal benefits received by each of our Named Executive Officers
did not exceed $10,000 in fiscal 2022 and has been excluded from the table.
(2) Represents the Company’s contribution under the 401(k) plan including the company matching contribution and the Qualified Non-elective
Contribution (QNEC). Company contributions (and any earnings thereon) are 100% vested. The QNEC contributions are given in Company Common Stock.
Total Compensation (Column I)
The amounts reported in column I are the sum of columns C through H for each of the Named Executive Officers.
Fiscal 2022 Grants of Plan-Based Awards
The following table sets forth, for each of our Named Executive Officers, the plan-based awards granted to each of our Named Executive Officers during
fiscal 2022.
|
Estimated Future Payouts Under Non-
Equity Incentive Plan Awards
|
Estimated Future Payouts
Under Equity Incentive Plan
Awards(1) |
||||||||||||||||||||||||||||||
|
Name
|
Grant Date
|
Threshold ($)(3)
|
Target ($)(3)
|
Maximum ($)(3)
|
Threshold (#)
|
Target (#)
|
Maximum (#)
|
All Other Stock
Awards: Number
of Shares of
Stock or Units
(#)
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
|
Grant Date
Fair Value of
Stock and
Option
Awards ($)(2)
|
||||||||||||||||||||
|
D. Deverl Maserang II
|
9/13/2021
|
−
|
−
|
−
|
−
|
−
|
−
|
112,612
|
−
|
−
|
1,003,373
|
||||||||||||||||||||
|
9/13/2021
|
−
|
−
|
−
|
0
|
112,613
|
202,703
|
−
|
−
|
−
|
1,003,382
|
|||||||||||||||||||||
|
Scott R. Drake
|
9/13/2021
|
−
|
−
|
−
|
−
|
−
|
−
|
21,021
|
−
|
−
|
187,297
|
||||||||||||||||||||
|
9/13/2021
|
−
|
−
|
−
|
0
|
14,014
|
25,255
|
−
|
−
|
−
|
124,865
|
|||||||||||||||||||||
|
5/09/2022
|
−
|
−
|
−
|
−
|
−
|
−
|
73,529
|
−
|
−
|
399,998
|
|||||||||||||||||||||
|
Ruben E. Inofuentes
|
9/13/2021
|
−
|
−
|
−
|
−
|
−
|
−
|
16,516
|
−
|
−
|
147,158
|
||||||||||||||||||||
|
9/13/2021
|
−
|
−
|
−
|
0
|
11,011
|
19,820
|
−
|
−
|
−
|
98,108
|
|||||||||||||||||||||
|
Maurice S.J.
Moragne
|
9/13/2021
|
−
|
−
|
−
|
−
|
−
|
−
|
18,018
|
−
|
−
|
160,540
|
||||||||||||||||||||
|
9/13/2021
|
−
|
−
|
−
|
0
|
12,012
|
21,622
|
−
|
−
|
107,027
|
||||||||||||||||||||||
|
Amber D. Jefferson
|
11/1/21
|
−
|
−
|
−
|
−
|
−
|
−
|
32,851
|
−
|
−
|
|||||||||||||||||||||
(1) Represents PBRSU awards granted to our Named Executive Officers in fiscal 2022 which cliff vest based upon achievement of
adjusted EBITDA performance goals and TSR for the performance period of July 1, 2021 through June 30, 2024. Each year, performance targets for adjusted EBITDA will be established, performance in each of those years will create a bank of shares
between 0% to 130% of the target amount, depending on the extent to which the Company meets or exceeds the achievement of the performance goals. At the end of the three-year performance period a TSR modifier is applied which can increase or
decrease the cumulative number of shares earned based on adjusted EBITDA by as much as 15%. All shares, including banked shares will be forfeited if the executive voluntarily leaves the Company prior to the end of the performance period.
(2) Reflects the grant date fair value of restricted stock and PBRSU awards computed in accordance with FASB ASC Topic 718. A
discussion of the assumptions used in calculating the amounts in this column may be found in Note 14 to our audited consolidated financial statements for the fiscal year ended June 30, 2022, included in our 2022 Form 10-K, except that, as required
by applicable SEC rules, we did not reduce the amounts in this column for any risk of forfeiture relating to service-based (time-based) vesting conditions. The amount reported for PBRSU awards is based upon the probable satisfaction of the
performance conditions as of the grant date.
(3) Represents annual cash incentive opportunities under the Short-Term Cash Incentive Program based on the Company’s achievement of
certain metrics, as determined by the Compensation Committee. Our Named Executive Officers received a cash payout at Target under the Short-Term Cash Incentive Program in fiscal 2022, based on the Compensation Committee’s discretion once threshold
performance was achieved. Annual cash incentive awards earned by our Named Executive Officers for performance in respect of a fiscal year are paid during the subsequent fiscal year. Such earned awards are included in the “Non-Equity Incentive Plan
Compensation” column of the Summary Compensation Table.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth summary information regarding the outstanding equity awards at June 30, 2022 granted to each of our Named Executive
Officers.
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||||||
|
Name
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable (#)(1)
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)(1)
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Units of
Stock That
Have Not
Vested (#) (2)
|
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($) (3)
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units
or Other
Rights
That
Have
Not
Vested
(#)(4)
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value
Of Unearned
Shares, Units
or Other Rights
That Have Not
Vested
($)(3)
|
|||||||||||||||||||
|
D. Deverl Maserang II
|
147,650
|
76,063
|
−
|
13.13
|
9/13/2026
|
−
|
−
|
−
|
−
|
|||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
−
|
−
|
231,707
|
1,086,706
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
−
|
−
|
112,613
|
528,155
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
105,030
|
492,591
|
−
|
−
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
112,612
|
528,150
|
−
|
−
|
||||||||||||||||||||
|
Scott R. Drake
|
58,406
|
30,089
|
6.72
|
4/01/2027
|
−
|
−
|
−
|
−
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
−
|
−
|
21,036
|
98,659
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
−
|
−
|
14,014
|
65,726
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
19,071
|
89,443
|
||||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
13,341
|
62,569
|
−
|
−
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
21,021
|
98,589
|
−
|
−
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
73,529
|
344,851
|
−
|
−
|
||||||||||||||||||||
|
Ruben E. Inofuentes
|
17,973
|
9,260
|
14.92
|
11/15/2026
|
−
|
−
|
−
|
−
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
−
|
−
|
8,378
|
39,293
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
−
|
−
|
21,951
|
102,950
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
−
|
−
|
11,011
|
51,642
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
19,900
|
93,331
|
−
|
−
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
13,921
|
65,289
|
−
|
−
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
16,516
|
77,460
|
−
|
−
|
||||||||||||||||||||
|
Maurice S.J. Moragne
|
9,821
|
19,940
|
7.23
|
7/01/2027
|
−
|
−
|
−
|
−
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
−
|
−
|
13,109
|
61,481
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
−
|
−
|
12,012
|
56,336
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
10,373
|
48,649
|
−
|
−
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
11,855
|
55,741
|
−
|
−
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
8,314
|
38,993
|
−
|
−
|
||||||||||||||||||||
|
−
|
−
|
−
|
−
|
−
|
18,018
|
84,504
|
−
|
−
|
||||||||||||||||||||
|
Amber D. Jefferson
|
−
|
−
|
−
|
−
|
−
|
32,851
|
154,071
|
−
|
−
|
|||||||||||||||||||
(1) Stock options vest in equal ratable installments on each of the first three anniversaries of the date of grant, contingent on
continued employment through the applicable vesting date, and subject to accelerated vesting in certain circumstances.
(2) Restricted stock units vest in equal ratable installments on each of the first three anniversaries of the date of grant,
contingent on continued employment through the applicable vesting date, and subject to accelerated vesting in certain circumstances.
(3) The market value was calculated by multiplying the closing price of our Common Stock on June 30, 2022 ($4.69) by the number of
shares of Common Stock underlying the unvested restricted stock or PBRSUs.
(4) PBRSU awards cliff vest following the expiration of the three-year performance period upon the certification by the Compensation
Committee of the Company’s achievement of performance goals for the three-year performance, subject to certain continued employment conditions and subject to the acceleration provisions of the 2017 Plan and restricted stock unit award agreement. At
the end of the three-year performance period, the number of PBRSUs that actually vest will be 0% to 200% of the target amount, depending on the extent to which the Company meets or exceeds the achievement of those performance goals measured over
the full three-year performance period, with payouts for performance between threshold and target, and between target and maximum determined by reference to a matrix established by the Compensation Committee. The target number of PBRSUs is
presented in the table.
Option Exercises and Stock Vested
None of our Named Executive Officers exercised options nor did any of their stock awards vest during fiscal year ended June 30, 2022.
Pension Benefits
None of our Named Executive Officers are entitled to payments or other benefits at, following, or in connection with retirement.
Change in Control and Termination Arrangements
Change in Control Agreements
The Company has entered into change in control severance agreement (“Severance Agreement”) with each of the Named Executive Officers. The Severance
Agreements provide certain severance benefits in the event of a termination of employment in connection with a Change in Control (as defined below).
Under each of the Severance Agreements, a “Change in Control” generally will be deemed to have occurred at any of the following times: (i) upon the
acquisition by any person, entity or group of beneficial ownership of 50% or more of either the then outstanding Common Stock or the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of
directors; (ii) at the time individuals who were members of the Board at the effective time of the Severance Agreement (or whose election, or nomination for election, was approved by a vote of at least a majority of the members of the Board at the
effective time of the Severance Agreement, but excluding any such individual whose initial election or assumption of office occurs as a result of either an actual or threatened election contest) (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; or (iii) the approval of the stockholders of the Company of a reorganization, merger, consolidation, complete liquidation, or dissolution of the Company, the sale or disposition of all or substantially all
of the assets of the Company or any similar corporate transaction (other than any transaction with respect to which persons who were the stockholders of the Company immediately prior to such transaction continue to hold shares of Common Stock
representing at least 50% of the outstanding Common Stock of the Company or such surviving entity or parent or affiliate thereof immediately after such transaction). Further, a “Threatened Change in Control” generally will be deemed to have occurred
upon the first day that any bona fide pending tender offer for any class of the Company’s outstanding shares of Common Stock, any pending bona fide offer to acquire the Company by merger or consolidation, or any other pending action or plan to
effect, or which would lead to, a Change in Control, as determined by the Incumbent Board, becomes manifest, and will continue in effect when such action is abandoned or a Change in Control occurs.
In the event of a Named Executive Officer’s termination of employment other than for “Cause” or due to death or “Disability”, or in the event of a
Named Executive Officer’s “Resignation for Good Reason” (each, as defined in the Severance Agreements), in each case, in connection with a Change in Control or Threatened Change in Control, each of the Named Executive Officers will be entitled to the
payments and benefits shown in the tables below.
Each Severance Agreement provides that while the relevant Named Executive Officer is receiving compensation and benefits thereunder, that Named
Executive Officer will not in any manner attempt to induce or assist others to attempt to induce any officer, employee, customer or client of the Company to terminate its association with the Company, nor do anything directly or indirectly to
interfere with the relationship between the Company and any such persons or concerns. In the event such Named Executive Officer breaches this provision, all compensation and benefits under the Severance Agreement will immediately cease.
Employment Agreements
Under Mr. Maserang’s Employment Agreement, he is eligible for severance payments in the event of termination without Cause or for resignation with
Good Reason (each, as defined in Mr. Maserang’s Employment Agreement) that are not in conjunction with a Change in Control. In the aforementioned events, he would receive the following severance payments:
| • |
the sum of his base salary and target annual bonus payable over twelve months,
|
| • |
partially Company-paid COBRA coverage under the Company’s health plan for a period of 12 months
|
| • |
a pro rata bonus, if earned for the year of termination and
|
| • |
if such termination occurs after the end of the fiscal year but before any bonus for the fiscal year is paid, then the payment of any such earned bonus.
|
The potential amount of these payments are reflected in the table below.
Potential Payments Upon Termination or Change in Control
The following tables describe potential payments and benefits upon termination (including resignation, severance, retirement or a constructive
termination) or a change in control to which the Named Executive Officers would be entitled. The actual amount of payments and benefits can only be determined at the time of such a termination or change in control and therefore the actual amounts may
vary from the estimated amounts in the tables below. Descriptions of how such payments and benefits are determined under the circumstances, material conditions and obligations applicable to the receipt of payments or benefits and other material
factors regarding such agreements, as well as other material assumptions that we have made in calculating the estimated compensation, follow these tables.
The estimated amount of compensation payable to each Named Executive Officer in each situation is listed in the tables below and, with respect to each
Named Executive Officer, assumes that the termination and/or change in control of the Company occurred on June 30, 2022.
|
D. Deverl Maserang II
|
Change in Control and
Involuntarily Terminated or
Resignation for Good Reason
Within 24 Months of Change in
Control
|
Threatened
Change in Control
and Involuntarily
Terminated or
Resignation for
Good Reason
|
Termination
Without Cause
or Resignation
With Good
Reason
|
|
Base Salary Continuation
|
1,360,000
|
1,360,000
|
680,000
|
|
Annual Incentive Payments
|
680,000
|
680,000
|
680,000
|
|
Value of Accelerated Stock Options
|
0
|
0
|
|
|
Value of Accelerated Restricted Stock
|
1,020,741
|
1,020,741
|
1,020,741
|
|
Value of Accelerated PBRSUs
|
1,614,861
|
1,614,861
|
1,614,861
|
|
Health and Dental Insurance
|
34,014
|
34,014
|
17,007
|
|
Outplacement Services
|
25,000
|
25,000
|
25,000
|
|
Total Pre-Tax Benefit
|
2,099,014
|
2,099,014
|
4,037,609
|
Scott R. Drake
|
Base Salary Continuation
|
900,000
|
900,000
|
0
|
|
Annual Incentive Payments
|
337,500
|
337,500
|
0
|
|
Value of Accelerated Stock Options
|
0
|
0
|
0
|
|
Value of Accelerated Restricted Stock
|
595,452
|
595,452
|
0
|
|
Value of Accelerated PBRSUs
|
164,385
|
164,385
|
0
|
|
Health and Dental Insurance
|
34,014
|
34,014
|
0
|
|
Outplacement Services
|
25,000
|
25,000
|
0
|
|
Total Pre-Tax Benefit
|
1,312,966
|
1,312,966
|
0
|
Ruben E. Inofuentes
|
Base Salary Continuation
|
700,000
|
700,000
|
0
|
|
Annual Incentive Payments
|
210,000
|
210,000
|
0
|
|
Value of Accelerated Stock Options
|
0
|
0
|
0
|
|
Value of Accelerated Restricted Stock
|
236,080
|
236,080
|
0
|
|
Value of Accelerated PBRSUs
|
193,885
|
193,885
|
0
|
|
Health and Dental Insurance
|
49,972
|
49,972
|
0
|
|
Outplacement Services
|
25,000
|
25,000
|
0
|
|
Total Pre-Tax Benefit
|
984,972
|
984,972
|
0
|
Maurice S.J. Moragne
|
Base Salary Continuation
|
710,000
|
710,000
|
0
|
|
Annual Incentive Payments
|
213,000
|
213,000
|
0
|
|
Value of Accelerated Stock Options
|
0
|
0
|
0
|
|
Value of Accelerated Restricted Stock
|
227,887
|
227,887
|
0
|
|
Value of Accelerated PBRSUs
|
117,817
|
117,817
|
0
|
|
Health and Dental Insurance
|
34,486
|
34,486
|
0
|
|
Outplacement Services
|
25,000
|
25,000
|
0
|
|
Total Pre-Tax Benefit
|
984,486 | 984,486 | 0 |
Amber D. Jefferson
|
Base Salary Continuation
|
640,000
|
640,000
|
0
|
|
Annual Incentive Payments
|
192,000
|
192,000
|
0
|
|
Value of Accelerated Stock Options
|
0
|
0
|
0
|
|
Value of Accelerated Restricted Stock
|
154,071
|
154,071
|
0
|
|
Value of Accelerated PBRSUs
|
0
|
0
|
0
|
|
Health and Dental Insurance
|
17,332
|
17,332
|
0
|
|
Outplacement Services
|
25,000
|
25,000
|
0
|
|
Total Pre-Tax Benefit
|
874,332
|
874,332
|
0
|
Base Salary Continuation
Severance Agreements
Under each Severance Agreement, if (i) a Change in Control occurs and a Named Executive Officer’s employment is terminated within the two years
following the occurrence of the Change in Control by the Company other than for Cause, Disability or death, or is terminated due to the Named Executive Officer’s Resignation for Good Reason, or (ii) a Threatened Change in Control occurs and the
executive officer’s employment is terminated during the “Threatened Change in Control Period” (as defined in the Severance Agreement) by the Company other than for Cause, Disability or death, or is terminated due to the Named Executive Officer’s
Resignation for Good Reason (each, a “Change in Control Qualifying Termination”), such Named Executive Officer will be entitled to base salary continuation for a period of 12-month or 24-months depending upon the terms of their individual agreement,
with such payment to be made in installments in accordance with the Company’s standard payroll practices over such period.
Bonus and Annual Incentive Payments
Severance Agreements
Under each Severance Agreement, if a Change in Control Qualifying Termination occurs, the Named Executive Officer will receive a lump sum payment
equal to 100% of the executive officer’s target annual cash bonus for the fiscal year in which the date of termination occurs (or, if no target annual cash bonus has been assigned as of the date of termination, the average annual cash bonus paid to
such Named Executive Officer for the last three completed fiscal years or for the number of completed fiscal years such person has been in the employ of the Company if fewer than three).
Value of Accelerated Vesting of Stock Options and Restricted Stock
Under the terms of the Named Executive Officers’ outstanding awards, in the event of death or “Disability” (as defined in the applicable plan):
| • |
100% of any unvested stock options will vest;
|
| • |
a pro rata portion of any unvested restricted stock will vest; and
|
| • |
outstanding PBRSU awards will remain outstanding and the participant will be eligible to earn a pro-rata portion of the number of PBRSU awards that would have been earned based on actual performance through the end of the performance
period (amounts shown in the tables above assume 100% of the target PBRSU awards were earned at the end of the performance period).
|
Under the applicable award agreement, if a Change in Control (as defined in the applicable plan) occurs and a participant’s awards are not continued,
converted, assumed or replaced by the Company or a parent or subsidiary of the Company, or a Successor Entity (as defined in the applicable plan), such awards will become fully exercisable and/or payable, and all forfeiture, repurchase and other
restrictions on such awards will lapse immediately prior to such Change in Control. In the case of PBRSU awards, the vested shares will be a prorated number of the target PBRSU awards. The amounts in the tables above assume all awards were continued,
converted, assumed, or replaced in connection with a Change in Control.
If there is a Change in Control and the Named Executive Officer’s employment is terminated by the Company without Cause or by the participant for Good
Reason, in either case, within twenty-four months following the Change in Control:
| • |
100% of any unvested stock options will vest;
|
| • |
100% of any unvested restricted stock or restricted stock units will vest; and
|
| • |
the target number of PBRSU awards will be deemed to have immediately vested as of the date of termination of service.
|
The value of accelerated awards shown in the tables above was calculated using the closing price of our Common Stock on June 30, 2022 ($4.69). The
value of accelerated stock options is based on the difference between the exercise price and such closing price for all accelerated stock options that were in-the-money as of such date.
Under the applicable plan, the Plan Administrator also has discretionary authority regarding accelerated vesting of awards in certain circumstances.
The amounts in the tables above assume such discretionary authority was not exercised.
Health and Dental Insurance
Severance Agreements
Under each Severance Agreement, if a Change in Control Qualifying Termination occurs, the health, dental, and life insurance benefits coverage
provided to the Named Executive Officer at his or her date of termination will be continued by the Company during the 12-month or 24-month period following the Named Executive Officer’s date of termination, based on the terms of their individual
agreement unless he or she commences employment prior to the end of the relevant period and qualifies for substantially equivalent insurance benefits with his or her new employer, in which case such insurance coverage will end on the date of
qualification. The Company will generally provide for such insurance coverage at its expense at the same level and in the same manner as in effect at the applicable date of termination. Any additional coverage the Named Executive Officer had at the
time of termination, including dependent coverage, will also be continued for such period on the same terms, to the extent permitted by the applicable policies or contracts. If the terms of any benefit plan do not permit such continued coverage, the
Company will arrange for other coverage at its expense providing substantially similar benefits. Estimated payments shown in the tables above represent the current net annual cost to the Company of the Named Executive Officer’s participation in the
Company’s health and/or dental insurance program offered to all non-union employees.
Company Benefit Plans
The tables and discussion above do not reflect the value of accrued and unused paid days off, disability benefits under the Company’s group health
plan, the value of retiree medical, vision and dental insurance benefits, and group life insurance, if any, that would be paid and/or provided to each Named Executive Officer following termination of employment, because, in each case, these benefits
are generally available to all regular Company employees similarly situated in age, years of service and date of hire and do not discriminate in favor of the Named Executive Officers.
Outplacement Services
Under each of the 12-month or 24-month Severance Agreements, if a Change in Control Qualifying Termination occurs, the Company will provide the Named
Executive Officer with outplacement services at the expense of the Company, in an amount of $15,000 or $25,000, respectively.
CEO to Median Employee Pay Ratio
In accordance with applicable SEC rules, we are providing the ratio of the annual total compensation of our CEO to the median of the annual total
compensation of our other employees, excluding our CEO. For fiscal 2022, as calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, the annual total compensation of our CEO was $3,292,209 as disclosed in the “Summary
Compensation Table”, the median of the annual total compensation of our employees other than the CEO was $44,452, and the ratio of our CEO’s annual total compensation to the median of the annual total compensation of our other employees was 74 to 1.
We believe the ratio presented above is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. We determined our
median employee based on total direct compensation paid to all of our employees (consisting of approximately 1,068 individuals active as of June 30, 2022) for the fiscal year ended June 30, 2022. Total direct compensation was calculated using
internal human resources records and included base salary (wages earned based on our payroll records), cash incentive awards earned for the period, and the annual grant date fair value of long-term incentive awards during fiscal 2022.
Because the SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow
companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio
reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
Director Compensation
Non-Employee Director Compensation
The compensation program for our non-employee directors is intended to fairly compensate our non-employee directors for the time and effort required
of a director given the size and complexity of the Company’s operations. Portions of the compensation program utilize our stock in order to further align the interests of the directors with all other stockholders of the Company and to motivate the
directors to focus on the long-term financial interest of the Company. Directors who are Company employees are not paid any additional fees for serving on the Board or for attending Board meetings.
The Company’s non-employee director compensation program is as follows:
|
Form of Non-Employee Director
Compensation
|
Director Compensation Program
|
|
Annual Board Cash Retainer
|
$60,000
|
|
Committee Chair Cash Retainer
|
$10,000 for Nominating and Corporate Governance Committee and Technology Committee
$15,000 for Compensation Committee
$20,000 for Audit Committee
|
|
Non-Chair Committee Cash Retainer
|
$7,500 for Compensation Committee and Nominating and Corporate
Governance Committee
$10,000 for Audit Committee
|
|
Chairman of the Board Cash Retainer
|
$50,000, with no additional fees for committee service
|
|
Meeting Fees
|
$2,000, only paid for Board or committee meetings in excess of seven in a fiscal year
|
|
Annual Equity Award Value
|
$95,000
|
|
Expense Reimbursement
|
Payment or reimbursement of reasonable travel expenses from outside the greater Dallas-Fort Worth area, in accordance with Company policy, incurred in connection with attendance at Board and committee meetings, as
well as payment or reimbursement of amounts incurred in connection with director continuing education
|
|
Other
|
Ad hoc committee fees are determined from time to time by the Board, as needed.
|
The annual grant of restricted stock is generally made on the date on which the Company holds its annual meeting of stockholders or such other date as
the Board may determine, in each case, subject to any blackout period under the Company’s insider trading policy. In fiscal 2022, the annual grant of restricted stock was made on December 15, 2021. Each non-employee director received a grant of
14,683 shares of restricted stock based on the $6.47 closing price per share of our Common Stock on December 15, 2021 (for an aggregate amount of $94,999.01), with the exception of Mr. Zaman. Mr. Zaman received a grant of 17,613 shares of restricted
stock based on the $6.47 closing price per share of our Common Stock on December 15, 2021 (for an aggregate amount of $113,956.11). Mr. Zaman received a larger grant because he joined the Board on September 1, 2021 but did not receive an equity grant
for his approximately 3.5 months of service prior to December 15, 2021. Such grants cliff vest on the one-year anniversary of the grant date, subject to continued service to the Company through the vesting date and the acceleration provisions of the
2017 Plan and the restricted stock award agreement.
Stock Ownership Guidelines
Under the Company’s stock ownership guidelines, a non-employee director is expected to own and hold during his or her service as a Board member a
number of shares of Common Stock with a value of at least four times their annual retainer, and is not permitted to sell any shares of Common Stock received as grants under the Company’s long-term incentive plans unless and until the non-employee
director achieves and maintains this threshold share ownership level.
Shares of Common Stock that count toward satisfaction of these guidelines include (to the extent applicable): (i) shares of Common Stock owned
outright by the non-employee director and his or her immediate family members who share the same household, whether held individually or jointly; restricted stock or restricted stock units (whether or not the restrictions have lapsed); (iii) shares
of Common Stock held in trust for the benefit of the non-employee director or his or her family; and (iv) shares of Common Stock issuable under vested options held by the non-employee director.
Director Compensation Table
The following table sets forth non-employee director compensation for fiscal 2022:
|
Director
|
Fees Earned or
Paid in
Cash ($)
|
Stock
Awards ($)(1)
|
Total ($)
|
||||||
|
Allison M. Boersma
|
85,000
|
95,000
|
180,000
|
||||||
|
Stacy Loretz-Congdon
|
80,000
|
95,000
|
175,000
|
||||||
|
Charles F. Marcy
|
80,000
|
95,000
|
175,000
|
||||||
|
Christopher P. Mottern
|
110,000
|
95,000
|
205,000
|
||||||
|
Alfred Poe
|
83,750
|
95,000
|
178,750
|
||||||
|
John D. Robinson
|
46,042
|
95,000
|
141,042
|
||||||
|
Waheed Zaman
|
63,333
|
113,956
|
177,289
|
(1) Represents the full grant date fair value of restricted stock granted to each non-employee director in fiscal 2022, computed in accordance with
FASB ASC Topic 718. A discussion of the assumptions used in calculating the amounts in this column may be found in Note 16 to our audited consolidated financial statements for the fiscal year ended June 30, 2022, included in our Annual Report on Form
10-K for the fiscal year ended June 30, 2022, except that, as required by applicable SEC rules, we did not reduce the amounts in this column for any risk of forfeiture relating to service-based (time-based) vesting conditions.
Director Indemnification
Under the Company’s Certificate of Incorporation and By-Laws, the current and former directors are entitled to indemnification and advancement of
expenses from the Company to the fullest extent permitted by Delaware corporate law. The Board of Directors has approved a form of Indemnification Agreement (“Indemnification Agreement”) to be entered into between the Company and its directors and
officers. The Company’s Board of Directors may from time to time authorize the Company to enter into additional indemnification agreements with future directors and officers of the Company.
The Indemnification Agreements provide, among other things, that the Company will, to the extent permitted by applicable law, indemnify and hold
harmless each indemnitee if, by reason of his or her corporate status as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of the Company or of any other enterprise which such person is or was serving at the
request of the Company, such indemnitee was, is or is threatened to be made, a party to or a participant (as a witness or otherwise) in any threatened, pending or completed proceeding, whether formal or informal, whether brought in the right of the
Company or otherwise and whether of a civil, criminal, administrative or investigative nature, against all expenses, judgments, fines, penalties and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in
connection with such proceeding. In addition, the Indemnification Agreements provide for the payment, advancement or reimbursement of expenses incurred by the indemnitee in connection with any such proceeding to the fullest extent permitted by
applicable law. The Indemnification Agreements also provide that, in the event of a Potential Change in Control (as defined in the Indemnification Agreements), the Company will, upon request by the indemnitee, create a trust for the benefit of the
indemnitee and fund such trust in an amount sufficient to satisfy expenses reasonably anticipated to be incurred in connection with investigating, preparing for, participating in or defending any proceedings, and any judgments, fines, penalties and
amounts paid in settlement in connection with any proceedings. The Indemnification Agreements do not exclude any other rights to indemnification or advancement of expenses to which the indemnitee may be entitled, including any rights arising under
the Certificate of Incorporation or By-Laws of the Company, or the General Corporation Law of the State of Delaware. The Company is also obligated to maintain directors’ and officers’ liability insurance coverage, including tail coverage under
certain circumstances.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on the review and
discussions, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Amendment and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2022.
|
Compensation Committee
|
|
of the Board of Directors
|
|
Charles F. Marcy, Chair
|
|
Alfred Poe
|
|
John D. Robinson
|
| Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Securities Authorized for Issuance under Equity Compensation Plans
The following table sets forth information as of June 30, 2022 with respect to the shares of Common Stock that may be issued upon the exercise of
options and other rights under our existing equity compensation plans and arrangements in effect as of June 30, 2022. The information includes the number of shares covered by, and the weighted average exercise price of, outstanding options and the
number of shares remaining available for future grant, excluding the shares to be issued upon exercise of outstanding options, warrants and rights.
|
Plan Category
|
Number of
Shares to be
Issued Upon
Exercise / Vesting
of
Outstanding
Options or
Rights(2) |
Weighted
Average
Exercise
Price of
Outstanding
Options(3)
|
Number of
Shares
Remaining
Available
for Future
Issuance(4)
|
|||||||||
|
Equity compensation plans approved by stockholders(1)
|
641,205
|
$
|
14.36
|
1,581,299
|
||||||||
|
Equity compensation plans not approved by stockholders (5)
|
118.256
|
$
|
6.85
|
99,537
|
||||||||
|
Total
|
759,461
|
1,680,836
|
||||||||||
(1) Includes shares issued under the Amended and Restated 2007 Long-Term Incentive Plan, and its predecessor plan, the Farmer Bros. Co. 2007 Omnibus
Incentive Plan (together, the “Prior Plans”) and the 2017 Plan. The 2017 Plan succeeded the Prior Plans. On the Effective Date of the 2017 Plan, the Company ceased granting awards under the Prior Plans; however, awards outstanding under the Prior
Plans will remain subject to the terms of the applicable Prior Plan.
(2) Includes shares that may be issued upon the achievement of certain financial and other performance criteria as a condition to vesting in addition
to time-based vesting pursuant to PBRSUs granted under the 2017 Plan. The PBRSUs included in the table include the maximum number of shares that may be issued under the awards. Under the terms of the awards, the recipient may earn between 0% and 200%
of the target number of PBRSUs depending on the extent to which the Company meets or exceeds the achievement of the applicable financial performance goals.
(3) Does not include outstanding PBRSUs.
(4) The 2017 Plan authorizes the issuance of (i) 3,550,000 shares of Common Stock plus (ii) the number of shares of Common Stock subject to awards
under the Prior Plans that are outstanding as of the Effective Date and that expire or are forfeited, cancelled or similarly lapse following the Effective Date. Subject to certain limitations, shares of Common Stock covered by awards granted under
the 2017 Plan that are forfeited, expire or lapse, or are repurchased for or paid in cash, may be used again for new grants under the 2017 Plan. Shares of Common Stock granted under the 2017 Plan may be authorized but unissued shares, shares
purchased on the open market or treasury shares. In no event will more than 3,550,000 shares of Common Stock be issuable pursuant to the exercise of incentive stock options under the 2017 Plan. The 2017 Plan provides for the grant of stock options
(including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, performance shares and other stock- or cash-based awards to eligible participants.
Non-employee directors of the Company and employees of the Company or any of its subsidiaries are eligible to receive awards under the 2017 Plan. If the Plan Amendment is adopted, the Company’s consultants would also be eligible to receive awards
under the 2017 Plan.
(5) Consists of grants made under the Farmer Bros. Co. 2020 Inducement Incentive Award Plan (the “Inducement Award Plan”), which in accordance with
Rule 5635(c)(4) of the Nasdaq Listing Rules (“Rule 5635(c)(4)”) permits grants of up to 300,000 shares of Common Stock to newly hired employees who have not previously been a member of the Board, or to an employee who is being rehired following a
bona fide period of non-employment by the Company or a subsidiary, as a material inducement to the employee’s entering into employment with the Company or its subsidiary. Subject to certain limitations, shares of Common Stock covered by awards
granted under the Inducement Award Plan that are forfeited, expire or lapse, or are repurchased for or paid in cash, may be used again for new grants under the Amended and Restated 2017 Plan. The Inducement Award Plan allows for the grant of
non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, and dividend equivalents.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial ownership of the Company’s voting securities as of
October 1, 2022 by (i) each of our current directors, (ii) each of our executive officers required to be listed pursuant to Item 402 of Regulation S-K, (iii) all of our current directors and executive officers as a group, and (iv) each person, or
group of affiliated persons, known to us to be the beneficial owner of more than five percent (5%) of our outstanding Common Stock, based on 19,279,970 shares of Common Stock outstanding as of October 1, 2022.
The amounts and percentages of shares beneficially owned are reported on the basis of SEC regulations governing the determination
of beneficial ownership of securities. Under SEC rules, a person is deemed to be a “beneficial” owner of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of
such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are not deemed to be outstanding for purposes of
computing any other person’s percentage. Under these rules, more than one person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.
Except as otherwise indicated in these footnotes, each of the individuals or entities listed below has, to our knowledge, sole voting and investment
power with respect to the shares of Common Stock. Unless otherwise indicated below, the address for each natural person listed below is c/o Farmer Bros. Co., 1912 Farmer Brothers Drive, Northlake, Texas 76262.
|
Name of Beneficial Owner
|
Amount and
Nature of Beneficial
Ownership
|
Percent of
Class(1)
|
|
Non-Employee Directors:
|
|
|
|
Allison M. Boersma(2)
|
45,913
|
*
|
|
Stacy Loretz-Congdon(2)
|
45,641
|
*
|
|
Charles F. Marcy(3)
|
58,283
|
*
|
|
Christopher P. Mottern(4)
|
103,379
|
*
|
|
Alfred Poe(2)
|
33,764
|
*
|
|
John Robinson(2)
|
14,683
|
*
|
|
Waheed Zaman(5)
|
17,613
|
*
|
|
Named Executive Officers:
|
|
|
|
D. Deverl Maserang II(6)
|
282,715
|
1.5%
|
|
Scott R. Drake(7)
|
156,210
|
*
|
|
Ruben E. Inofuentes(8)
|
88,225
|
*
|
|
Maurice S.J. Moragne(9)
|
58,544
|
*
|
|
Amber D. Jefferson(10)
|
2,345
|
*
|
|
All directors and executive officers as a group (13 individuals)(11)
|
939,401
|
4.9%
|
|
Greater than 5% Stockholders:
|
|
|
|
Mario J. Gabelli, GAMCO Investors, Inc. and Affiliated Parties(12)
|
1,523,457
|
7.9%
|
|
Kennedy Capital Management, Inc.(13)
|
1,030,211
|
5.3%
|
|
James C. Pappas, Aron R. English, Bradley L. Radoff and Affiliated Parties(14)
|
3,285,073
|
17.0%
|
|
Farmer Bros. Co. 401(k) Plan(15)
|
1,921,751
|
10.0%
|
* Less than 1%
(1) Percent of class is calculated based on 19,279,970
outstanding shares of Common Stock, plus securities deemed outstanding pursuant to Rule 13d-3(d)(1) under the Exchange Act, as of October 1, 2022 and may differ from the percent of class reported in statements of beneficial ownership filed with the
SEC.
(2) Includes 14,683 unvested shares of restricted stock which will vest in December 2022.
(3) Includes 14,683 unvested shares of restricted stock which will vest in December 2022, 2,000 shares held in a SEP IRA and
5,000 shares held in a revocable trust.
(4) Includes 14,683 unvested shares of restricted stock which will vest in December 2022 and 20,000 shares held by the Mottern
Family Trust.
(5) Includes 17,613 unvested shares of restricted stock which will vest in December 2022
(6) Includes 223,713 shares of Common Stock issuable upon exercise of options which are currently exercisable or
will become exercisable within 60 days and 6,099 shares of Common Stock beneficially owned by Mr. Maserang through the Company’s 401(k) Plan, rounded to the nearest whole share.
(7) Includes 58,406 shares of Common Stock issuable upon exercise of options which are currently exercisable or
will become exercisable within 60 days and 5,870 shares of Common Stock beneficially owned by Mr. Drake through the Company’s 401(k) Plan, rounded to the nearest whole share.
(8) Includes 9,260 shares of Common Stock issuable upon exercise of options which are currently exercisable or
will become exercisable within 60 days and 4,416 shares of Common Stock beneficially owned by Mr. Inofuentes through the 401(k) Plan, rounded to the nearest whole share.
(9) Includes 19,642 shares of Common Stock issuable upon exercise of options which are currently exercisable or
will become exercisable within 60 days and 5,110 shares of Common Stock beneficially owned by Mr. Moragne through the 401(k) Plan, rounded to the nearest whole share.
(10) Includes 2,345 shares of Common Stock beneficially owned by Ms. Jefferson through the 401(k) Plan, rounded to
the nearest whole share.
(11) Includes 328,994 shares of Common Stock issuable upon exercise of options which will become exercisable within
60 days and 23,840 shares of Common Stock beneficially owned through the 401(k) Plan, rounded to the nearest whole share.
(12) Based solely on an amendment to Schedule 13D filed March 31, 2022, according to which (i) Mario J. Gabelli may
be deemed to beneficially own 1,523,457 of these shares, (ii) Gabelli Funds, LLC may be deemed to beneficially own 297,167 of these shares, (iii) GAMCO Asset Management, Inc. may be deemed to beneficially own 767,000 of these shares, (iv) Teton
Advisors, Inc. may be deemed to beneficially own 459,000 of these shares, (v) and GAMCO Investors, Inc. may be deemed to beneficially own 290 of these shares. The principal address of each of the aforementioned parties is One Corporate Center, Rye,
New York 10580.
(13) Based solely on a Schedule 13G filed on February 14, 2022. The principal address of Kennedy Capital
Management, Inc. is 10829 Olive Blvd., St. Louis, Missouri 63141.
(14) Based solely on (1) a Schedule 13D filed October 7, 2022, according to which (i) Aron R. English may be deemed
to beneficially own 1,964,536 of these shares, (ii) 22NW Fund, LP, 22NW, LP, 22NW Fund GP, LLC, and 22NW GP, Inc. may each be deemed to beneficially own 1,955,526 of these shares, (iii) Cory J.
Mitchell may be deemed to beneficially own 1,300 of these shares, (iv) Bryson O. Hirai-Hadley may be deemed to beneficially own 1,261 of these shares, and (v) Ryan W. Broderick may be deemed to beneficially own 150 of these shares, and (2) an
amendment to Schedule 13D filed on October 3, 2022, according to which (i) James C. Pappas and JCP Investment Management, LLC may each be deemed to beneficially own 992,826 of these shares, (ii) JCP
Investment Partnership, LP, JCP Investment Partners, LP and JCP Investment Holdings, LLC may each be deemed to beneficially own 671,955 of these shares, (iii) Bradley L. Radoff may be deemed to beneficially own 275,000 of these shares, and (iv)
The Radoff Family Foundation may be deemed to beneficially own 75,000 of these shares. The principal address of each of Aron R. English, 22NW Fund, LP, 22NW, LP, 22NW Fund GP, LLC, 22NW
GP, Inc., Cory J. Mitchell, Bryson O. Hirai-Hadley, and Ryan W. Broderick is 1455 NW Leary Way, Suite 400, Seattle, Washington 98107. The principal address of James C. Pappas, JCP Investment Management, LLC, JCP Investment Partnership, LP, JCP Investment Partners, LP, and JCP Investment Holdings, LLC is 1177 West Loop South, Suite 1320, Houston, Texas 77027. The principal address of Bradley L. Radoff and The Radoff Family
Foundation is 2727 Kirby Drive, Unit 29L, Houston, Texas 77098.
(15) This information is based on the Company’s records and includes 1,921,751 shares of Common Stock that
are held in the 401(k) Plan and allocated to a participant’s account (“allocated shares”) as of October 1, 2022, and includes the 23,840 shares of Common Stock beneficially owned by the executive officers described above. The 401(k) Trustee votes
allocated shares as directed by such participant or beneficiary of the 401(k). The present member of the Administrative Committee of the Farmer Bros. Co. Qualified Employee Retirement Plans (the “Management Administrative Committee”), which
administers the 401(k) Plan, is Ms. Jefferson. Each member of the Management Administrative Committee disclaims beneficial ownership of the securities held by the 401(k) Plan except for those, if any, that have been allocated to the member as a
participant in the 401(k) Plan. The principal address of the 401(k) Plan is c/o Farmer Bros. Co., 1912 Farmer Brothers Drive, Northlake, Texas 76262.
| Item 13. |
Certain Relationships and Related Transactions, and Director Independence
|
Review and Approval of Related Person Transactions
Under the Company’s written Policies and Procedures for the Review, Approval or Ratification of Related Person Transactions, a related person
transaction may be consummated or may continue only if the Audit Committee approves or ratifies the transaction in accordance with the guidelines set forth in the policy. The policy applies to: (i) any person who is, or at any time since the
beginning of the Company’s last fiscal year was, a director, nominee for director or executive officer of the Company; (ii) any person who is known to be the beneficial owner of more than 5% of any class of the Company’s voting securities; and (iii)
any immediate family member, as defined in the policy, of, or sharing a household with, any of the foregoing persons. For purposes of the policy, a related person transaction includes, but is not limited to, any financial transaction, arrangement or
relationship or any series of similar transactions, arrangements or relationships, specifically including indebtedness and guarantees of indebtedness and transactions involving employment, consulting or similar arrangements, between the Company and
any of the foregoing persons since the beginning of the Company’s last fiscal year, or any currently proposed transaction in which the Company was or is to be a participant or a party, in which the amount involved exceeds $120,000, and in which any
of the foregoing persons had or will have a direct or indirect material interest.
The Company will maintain a related person master list to assist in identifying related person transactions, which will be distributed by the
Company’s General Counsel to the Company’s executive officers; the function or department managers responsible for purchasing goods or services for the Company and its subsidiaries; the director of accounts payable and the director of accounts
receivable for the Company and its subsidiaries; and any other persons whom the Audit Committee, the Chief Compliance Officer or the General Counsel may designate.
Upon referral by the Chief Compliance Officer, General Counsel or Secretary of the Company, any proposed related person transaction will be reviewed
by the Audit Committee for approval or disapproval based on the following:
| • |
The materiality of the related person’s interest, including the relationship of the related person to the Company, the nature and importance of the interest to the related person, the amount involved in the transaction, whether the
transaction has the potential to present a conflict of interest, whether there are business reasons for the Company to enter the transaction, and whether the transaction would impair the independence of any independent director;
|
| • |
Whether the terms of the transaction, in the aggregate, are comparable to those that would have been reached by unrelated parties in an arm’s length transaction;
|
| • |
The availability of alternative transactions, including whether there is another person or entity that could accomplish the same purposes as the transaction and, if alternative transactions are available, there must be a clear and
articulable reason for the transaction with the related person;
|
| • |
Whether the transaction is proposed to be undertaken in the ordinary course of the Company’s business, on the same terms that the Company offers generally in transactions with persons who are not related persons; and
|
| • |
Such additional factors as the Audit Committee determines relevant.
|
Following review, the Audit Committee will approve or ratify in writing any related person transaction determined by the Audit Committee to be in, or
not inconsistent with, the best interests of the Company and its stockholders.
The Audit Committee may impose conditions or guidelines on any related person transaction, including, but not limited to: (i) conditions relating to
on-going reporting to the Audit Committee and other internal reporting; (ii) limitations on the amount involved in the transaction; (iii) limitations on the duration of the transaction or the Audit Committee’s approval of the transaction; and (iv)
other conditions for the protection of the Company and to avoid conferring an improper benefit, or creating the appearance of a conflict of interest. Any member of the Audit Committee who has or whose immediate family member has an interest in the
transaction under discussion will abstain from voting on the approval of the related person transaction, but may, if so requested by the Chair of the Audit Committee, participate in some or all of the Audit Committee’s discussions of the related
person transaction.
The Audit Committee will direct the Company’s executive officers to disclose all related person transactions approved by the Audit Committee to the
extent required under applicable accounting rules, Federal securities laws, SEC rules and regulations, and Nasdaq rules.
Related Person Transactions
The Company did not have any related person transactions in fiscal 2022.
Director Independence
At least annually and in connection with any individuals being nominated to serve on the Board, the Board reviews the independence of each director or
nominee, including pursuant to Rule 5605 of the Nasdaq Stock Market, Inc. Marketplace Rules (“Nasdaq Listing Rules”), and affirmatively determines whether each director or nominee qualifies as independent.
The Board believes that stockholder interests are best served by having a number of objective, independent representatives on the Board. For this
purpose, a director or nominee will be considered to be “independent” only if the Board affirmatively determines that the director or nominee has no relationship with respect to the Company that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director. Additionally, pursuant to Rule 5605 of the Nasdaq Listing Rules, our Board must determine that an independent director has no material relationship with us other than as a director. The
standards specify the criteria by which the independence of our directors will be determined, including strict guidelines for directors and their immediate families with respect to past employment or affiliation with us or our independent registered
public accounting firm. The standards also prohibit Audit Committee members from having any direct or indirect financial relationship with us and restrict both commercial and not-for-profit relationships between us and each director. We may not give
personal loans or extensions of credit to our directors, and all directors are required to deal at arm’s length with us and our subsidiaries, and to disclose any circumstance that might be perceived as a conflict of interest.
In making its independence determinations, the Board reviewed transactions, relationships, behavior and arrangements between each director and
nominee, or any member of his or her immediate family, and us or our subsidiaries based on information provided by the director or nominee, our records and publicly available information. The Board made the following independence determinations (the
transactions, relationships and arrangements reviewed by the Board in making such determinations are set forth in the footnotes below):
|
Director
|
Status
|
|
|
Allison M. Boersma
|
Independent
|
|
|
Stacy Loretz-Congdon
|
Independent (1)
|
|
|
Charles F. Marcy
|
Independent
|
|
|
D. Deverl Maserang
|
Not Independent (2)
|
|
|
Christopher P. Mottern
|
Independent
|
|
|
Alfred Poe
|
Independent
|
|
|
John D. Robinson
|
Independent
|
|
|
Waheed Zaman
|
Independent
|
(1) CoreMark Holding Company, Inc. (“Core-Mark”) was a
customer of the Company in fiscal 2022 and continues to be a customer of the Company in fiscal 2023. Ms. Loretz-Congdon retired from Core-Mark at the end of 2016 after 26 years of service, including as Senior Vice President, Chief Financial Officer
and Assistant Secretary from December 2006 to May 2016 and Executive Advisor from May 2016 to December 2016. Ms. Loretz-Congdon also serves as a Board Director and Treasurer of the Core-Mark Families Foundation, an independent non-profit foundation
that provides scholarships to children of Core-Mark employees, since 2015. Ms. Loretz-Congdon owns less than 1% of the outstanding publicly traded stock of Performance Food Group Company which Core-Mark merged with in September 2021. The Board has
determined that these relationships do not create a conflict of interest under the Company’s Code of Conduct and Ethics, do not require disclosure under Item 404(a) of Regulation S-K, and do not interfere with Ms. Loretz-Congdon’s exercise of
independent judgment in carrying out the responsibilities of a director of the Company.
(2) Mr. Maserang is the Company’s President and Chief Executive Officer.
| Item 14. |
Principal Accountant Fees and Services
|
Audit Committee Report
The Audit Committee has reviewed and discussed with management the Company’s audited consolidated financial statements as of and for the fiscal year
ended June 30, 2022.
The Audit Committee has discussed with the Company’s independent registered public accounting firm, Grant Thornton LLP (“Grant Thornton”) (Dallas, Texas , PCAOB ID
Number ), the matters required to be discussed by the Statement on Auditing Standards No. 16, “Communications with Audit Committees,”
as adopted by the Public Company Accounting Oversight Board.
The Audit Committee has received the written disclosures and the letter from Grant Thornton required by applicable requirements of the Public Company
Accounting Oversight Board regarding Grant Thornton’s communications with the Audit Committee concerning independence, and has discussed with Grant Thornton that firm’s independence.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated
financial statements referred to above be included in the Company’s 2022 Form 10-K for filing with the SEC.
|
Audit Committee of the Board of Directors
|
|
Allison M. Boersma, Chair
|
|
Stacy Loretz-Congdon
|
|
John D. Robinson
|
|
Waheed Zaman
|
Change of Independent Public Accounting Firm
As previously reported on the Company’s Current Report on Form 8-K, filed with the SEC on December 22, 2021, on December 16, 2021, the
Company, upon the approval of the Audit Committee, dismissed Deloitte & Touche LLP (“Deloitte”) as its independent registered public accounting firm effective as of December 16, 2021, and engaged Grant Thornton as of such date. Deloitte served as
the Company’s independent registered public accounting firm since fiscal 2014.
The reports of Deloitte on the audited consolidated financial statements of the Company for fiscal 2021 and fiscal 2020 did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles. During the fiscal 2021 and fiscal 2020, and in the subsequent interim period through December 16, 2021, there were (a) no
disagreements (as that term is described in Item 304(a)(1)(iv) of Regulation S-K) with Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved
to the satisfaction of Deloitte, would have caused Deloitte to make reference to the subject matter of the disagreements in its reports on the consolidated financial statements for such years, and (b) no “reportable events” (as defined in Item
304(a)(1)(v) of Regulation S-K).
Pursuant to Item 304(a)(3) of Regulation S-K, the Company provided Deloitte with a copy of the foregoing disclosures and requested that Deloitte
furnish the Company with a letter addressed to the SEC stating whether or not it agrees with the statements made herein. A copy of Deloitte’s letter to the SEC, dated December 22, 2021, is filed as Exhibit 16.1 to the Current Report on Form 8-K filed
by the Company regarding the foregoing.
Independent Registered Public Accounting Firm Fees
The following table sets forth the aggregate fees billed by Deloitte and Grant Thornton for fiscal 2021 and 2022, respectively, for
audit and non-audit services (as well as all “out-of-pocket” costs incurred in connection with these services) and are categorized as Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees. The nature of the services provided in each such
category is described following the table. The Audit Committee approved all audit and permissible non-audit services provided by Deloitte and Grant Thornton in accordance with the pre-approval policies and procedures described below.
|
Fiscal 2022
|
Fiscal 2021
|
||||||||
|
Grant Thornton
|
Deloitte
|
||||||||
|
Audit fees(1)
|
$
|
626,031
|
$
|
1,098,523
|
|||||
|
Audit-related fees(2)
|
$
|
0
|
$
|
0
|
|||||
|
Tax fees(3)
|
$
|
0
|
$
|
0
|
|||||
|
All other fees(4)
|
$
|
0
|
$
|
0
|
|||||
|
Total fees
|
$
|
626,031
|
$
|
1,098,523
|
|||||
(1) “Audit Fees” are fees paid for the audit of the Company’s annual consolidated financial statements included in its Form 10-K and
review of financial statements included in the Form 10-Q’s, for the audit of the Company’s internal control over financial reporting, and for services that are normally provided by the auditor in connection with statutory and regulatory filings or
engagements. Audit fees for fiscal 2021 and fiscal 2022 consisted of fees associated with the audit of the Company’s annual financial statements, the audit of internal control over financial reporting, the review of the Company’s quarterly reports
on Form 10-Q, services associated with SEC registration statements, and accounting advisory services in connection with the impact of new accounting standards.
(2) “Audit-Related Fees” represent fees for assurance and related services that are traditionally performed by Deloitte or Grant
Thornton. No audit-related fees were paid to Deloitte or Grant Thornton for fiscal 2021 or fiscal 2022.
(3) “Tax Fees” are fees for tax compliance, planning, advice and consultation services, including state tax representation and
miscellaneous consulting on federal and state taxation matters. No tax fees were paid to Deloitte or Grant Thornton for fiscal 2021 or fiscal 2022.
(4) No other fees were paid to Deloitte or Grant Thornton for fiscal 2021 or fiscal 2022.
Pre-Approval of Audit and Non-Audit Services
Under the Farmer Bros. Co. Audit and Non-Audit Services Pre-Approval Policy, the Audit Committee must pre-approve all audit and non-audit services
provided by the independent auditor. The policy, as described below, sets forth the procedures and conditions for such pre-approval of services to be performed by the independent auditor. The policy utilizes both a framework of general pre-approval
for certain specified services and specific pre-approval for all other services. Unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee if it is to be provided by the independent
auditor. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by the Audit Committee.
In the first quarter of each year, the Audit Committee is asked to pre-approve the engagement of the independent auditor and the projected fees for
audit services for the current fiscal year. The Audit Committee is also asked to provide general pre-approval for certain audit-related services (assurance and related services that are reasonably related to the performance of the auditor’s review of
the financial statements or that are traditionally performed by the independent auditor) and tax services (such as tax compliance, tax planning and tax advice) for the current fiscal year consistent with the SEC’s rules on auditor independence. If
the Company wishes to engage the independent auditor for additional services that have not been generally pre-approved as described above, then such engagement will be presented to the Audit Committee for pre-approval at its next regularly scheduled
meeting. Pre-approval of any engagement by the Audit Committee is required before the independent auditor may commence any engagement.
In fiscal 2022, there were no fees paid to Deloitte or Grant Thornton under a de minimis exception to the
rules that waive pre-approval for certain non-audit services.
PART IV
| Item 15. |
Exhibits and Financial Statement Schedules
|
| (a) |
List of Financial Statements and Financial Statement Schedules:
|
The consolidated financial statements filed as part of this report are indexed in the table of contents of the Original Filing and incorporated by
reference to the Original Filing. Financial Statement Schedules have been omitted, since they are either not applicable, not required or the information is included elsewhere herein.
| (b) |
Exhibits:
|
|
Exhibit
No.
|
Description
|
|
|
3.1
|
||
|
3.2
|
||
|
3.3
|
||
|
3.4
|
||
|
3.5
|
||
|
3.6
|
||
|
3.7
|
||
|
4.1
|
||
|
4.2
|
||
|
4.3
|
||
|
10.1
|
||
|
10.2
|
||
|
10.3
|
||
|
10.4
|
||
|
10.5
|
|
Exhibit
No.
|
Description
|
|
|
10.6
|
||
|
10.7
|
||
|
10.8
|
||
|
10.9
|
||
|
10.10
|
||
|
10.11
|
||
|
10.12
|
||
|
10.13
|
||
|
10.14
|
||
|
10.15
|
||
|
10.16
|
||
|
10.17
|
||
|
10.18
|
||
|
10.19
|
||
|
10.20
|
||
|
10.21
|
||
|
10.22
|
||
|
Exhibit
No.
|
Description
|
|
|
10.23
|
||
|
10.24
|
||
|
10.25
|
||
|
10.26
|
||
|
10.27
|
||
|
10.28
|
||
|
10.29
|
||
|
10.30
|
||
|
10.31
|
||
|
10.32
|
||
|
10.33
|
||
|
10.34
|
||
|
10.35
|
||
|
10.36
|
||
|
10.37
|
||
|
10.38
|
||
|
10.39
|
||
|
10.40
|
|
Exhibit
No.
|
Description
|
|
|
10.41
|
||
|
10.42
|
||
|
10.43
|
||
|
10.44
|
||
|
10.45
|
||
|
10.46
|
||
|
10.47
|
||
|
10.48
|
||
|
10.49
|
||
|
14.1
|
||
|
16.1
|
||
|
21.1
|
||
|
23.1
|
||
|
23.2
|
||
|
31.1
|
||
|
31.2
|
||
|
32.1
|
||
|
32.2
|
||
|
101.INS
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (furnished herewith).
|
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document (furnished herewith).
|
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document (furnished herewith).
|
|
|
Exhibit
No.
|
Description
|
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document (furnished herewith).
|
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document (furnished herewith).
|
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document (furnished herewith).
|
|
|
104
|
Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
(furnished herewith).
|
|
**
|
Management contract or compensatory plan or arrangement.
|
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
FARMER BROS. CO.
|
By:
|
/s/ Deverl Maserang
|
|
|
Deverl Maserang
|
||
|
President and Chief Executive Officer
|
||
|
October 27, 2022
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
|
/s/ Deverl Maserang
|
President, Chief Executive Officer and Director (principal executive officer)
|
October 27, 2022
|
||
|
Deverl Maserang
|
||||
|
/s/ Scott R. Drake
|
Chief Financial Officer (principal financial officer)
|
October 27, 2022
|
||
|
Scott R. Drake
|
||||
|
/s/ Matthew Coffman
|
Vice President and Controller (principal accounting officer)
|
October 27, 2022
|
||
|
Matthew Coffman
|
||||
|
/s/ Christopher P. Mottern
|
Chairman of the Board and Director
|
October 27, 2022
|
||
|
Christopher P. Mottern
|
||||
|
/s/ Allison M. Boersma
|
Director
|
October 27, 2022
|
||
|
Allison M. Boersma
|
||||
|
/s/ Stacy Loretz-Congdon
|
Director
|
October 27, 2022
|
||
|
Stacy Loretz-Congdon
|
||||
|
/s/ Charles F. Marcy
|
Director
|
October 27, 2022
|
||
|
Charles F. Marcy
|
||||
|
/s/ Alfred Poe
|
Director
|
October 27, 2022
|
||
|
Alfred Poe
|
||||
|
/s/ John D. Robinson
|
Director
|
October 27, 2022
|
||
|
John D. Robinson
|
||||
|
/s/ Waheed Zaman
|
Director
|
October 27, 2022
|
||
|
Waheed Zaman
|
45
EXHIBIT 31.1
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Deverl Maserang, certify that:
| 1. |
I have reviewed this Amendment No. 1 on Form 10-K/A to Annual Report on Form 10-K of Farmer Bros. Co.;
|
| 2 |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
| 4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
| (a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| (b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
| (c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
| (d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
| 5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
| (a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
|
| (b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: October 27, 2022
|
/S/ DEVERL MASERANG
|
|
|
Deverl Maserang
President and Chief Executive Officer
(principal executive officer)
|
EXHIBIT 31.2
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Scott R. Drake, certify that:
| 1. |
I have reviewed this Amendment No. 1 on Form 10-K/A to Annual Report on Form 10-K of Farmer Bros. Co.;
|
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
| 4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
| (a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| (b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
| (c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
| (d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
| 5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
| (a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect
the registrant’s ability to record, process, summarize and report financial information; and
|
| (b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: October 27, 2022
|
/S/ SCOTT R. DRAKE
|
|
|
Scott R. Drake
Chief Financial Officer
(principal financial officer)
|
EXHIBIT 32.1
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with Amendment No. 1 on Form 10-K/A to the Annual Report on Form 10-K of Farmer Bros. Co. (the “Company”) for the
fiscal year ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Deverl Maserang, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
| 2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: October 27, 2022
|
/S/ DEVERL MASERANG
|
|
|
Deverl Maserang
President and Chief Executive Officer
(principal executive officer)
|
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the
Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with Amendment No. 1 on Form 10-K/A to the Annual Report on Form 10-K of Farmer Bros. Co. (the “Company”) for the
fiscal year ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott R. Drake, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
| 2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
|
Dated: October 27, 2022
|
/S/ SCOTT R. DRAKE
|
||
|
Scott R. Drake
Chief Financial Officer
(principal financial officer)
|
||
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the
Company and furnished to the Securities and Exchange Commission or its staff upon request.