Laird Superfood Inc
For the period ended Dec 31, 2023. Filed Mar 13, 2024.
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FY2023 · Filed Mar 13, 2024
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Item 11. Executive Compensation
This section discusses the material components of the executive compensation program for our named executive officers (“NEOs”) who are named in the “Summary Compensation Table” below. As an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, we are not required to include a Compensation Discussion and Analysis section and have elected to comply with the scaled disclosure requirements applicable to emerging growth companies.
Introduction
The information that follows provides an overview of the compensation provided to our NEOs who are listed in the table below, for the period of January 1, 2022 through December 31, 2023 (referred to herein as “fiscal 2023” or “fiscal 2022”).
| Name | Title |
|---|---|
| Jason Vieth | Chief Executive Officer |
| Anya Hamill | Chief Financial Officer |
| Andy Judd | Chief Commercial Officer |
| Steve Richie | General Counsel |
Overall Philosophy and Objectives of Our Executive Compensation Programs
The overall philosophy of our compensation programs for the NEOs and other senior executives is to encourage and reward the creation of sustainable, long-term shareholder value. We identified the following objectives to help realize this goal:
Alignment with Shareholders
| • | Reward performance in a given year and achievements over a sustained period that are aligned with our shareholders’ interests. |
Remain**Competitive
| • | Attract, retain, and motivate the exceptional talent required to ensure our continued success. |
Motivate Performance
| • | Ensure that the compensation program reinforces execution of overall strategy and achievement of our business objectives. |
Reward Superior Performance
| • | Reinforce our pay-for-performance, entrepreneurial culture. |
Elements of Compensation
The compensation program for our NEOs consists of the following elements of compensation, each described in greater depth below:
| • | base salaries; |
| • | performance-based bonuses; and |
| • | equity-based incentive compensation. |
Base Salary
Base salaries are an annual fixed level of cash compensation that reflect each NEO’s role and responsibilities, and regional market considerations.
The base salaries for our NEOs for 2023 are listed in the below table:
| Name | Title | 2023 Salary |
|---|---|---|
| Jason Vieth | Chief Executive Officer | $400,000 |
| Anya Hamill | Chief Financial Officer | 275,000 |
| Andy Judd | Chief Commercial Officer | 350,000 |
| Steve Richie | General Counsel | 275,000 |
Equity-Based Incentive Compensation
We pay equity-based compensation to our NEOs to link the long-term results achieved for our shareholders and the rewards provided to NEOs, thereby ensuring that such NEOs have a continuing stake in our long-term success. For fiscal 2023, annual equity awards were delivered on April 4, 2023 in a combination of stock options and restricted stock units ("RSUs"). The stock options and RSUs provided to our NEOs vest ratably over four years.
Determining Executive Compensation
The Compensation Committee, guided by the principal objectives described in this section, approves the structure of the executive compensation program and administers the programs for our executive officers. The following describes the roles of key participants in the process.
Role of our Compensation Committee
The Compensation Committee has the responsibility to make and approve changes in the total compensation of our executive officers, including the mix of compensation elements and compensation values.
Role of our Compensation Consultant
The Company engages FW Cook & Co. ("FW Cook") to provide independent external advice regarding executive compensation and to provide a competitive market pay analysis for our NEOs. Neither FW Cook nor any of its affiliates maintain other direct or indirect business relationships with the Company or any of its affiliates other than the services provided to the Compensation Committee.
Peer Group
The Compensation Committee approved a peer group consisting of 17 companies that was used for benchmarking fiscal 2021 compensation. Given the Company’s size, product offerings, and unique market position, there are no direct competitors in the compensation peer group. Criteria used to identify the peer group companies include:
| • | Size – companies with revenue that generally range from 0.2x to 5x our total annual revenue. |
| • | Business Focus – companies that are publicly traded and primarily in the foods, beverage, and tobacco industry. |
The 17-company peer group consists of the companies listed below:
| 22nd Century | Alico | Bridgford Foods | Celsius |
|---|---|---|---|
| Coffee Holding | Craft Brew Alliance | Crimson Wine | Lifeway Foods |
| Limoneira | MamaMancini's | MGP Ingredients | NewAge |
| RiceBran Tech | Rocky Mtn Choc. Factory | S&W Seed | South Dakota Soybean |
| Willamette Val. Vineyards | |||
Other Programs and Policies
Anti-hedging and Anti-pledging Policy
Under our Insider Trading Policy, our directors, executive officers, and other employees are prohibited from engaging in short-term trading or short sales and are prohibited from participating in tractions in put options, call options or other derivative securities. The Company strongly discourages hedging transactions. Any person wishing to enter into such an arrangement must first submit the proposed transaction for approval by the designated compliance officer, who will have sole discretion to decide whether to approve the proposed transaction. In addition, our directors, executive officers, and other employees are prohibited from holding our securities in a margin account and from pledging our securities as collateral for a loan, except as may be pre-approved by the Audit Committee.
Summary Compensation Table
The following table sets forth information concerning the compensation of our NEOs for the year ended December 31, 2023 and 2022.
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($) (1) | Stock Awards ($) (2) | Total ($) |
|---|---|---|---|---|---|---|
| Jason Vieth, CEO | 2023 | 383,333 | 170,000 | 16,221 | 120,107 | 689,661 |
| 2022 | 368,182 | 287,833 | 676,115 | 996,250 | 2,328,380 | |
| Anya Hamill, CFO | 2023 | 263,542 | 116,875 | 27,665 | 40,500 | 448,582 |
| 2022 | 155,152 | 107,688 | 78,105 | 101,499 | 442,444 | |
| Andy Judd, CCO (3) | 2023 | 134,548 | — | — | — | 134,548 |
| 2022 | 261,174 | 206,253 | 197,260 | 374,000 | 1,038,687 | |
| Steve Richie, General Counsel and Secretary | 2023 | 263,542 | 116,875 | 27,665 | 40,500 | 448,582 |
| 2022 | 109,407 | 39,188 | 51,817 | 95,500 | 295,912 |
| (1) | The amounts show in this column represent the aggregate grant-date fair value of stock options granted under our 2020 Omnibus Incentive Plan ("2020 Plan") to our NEOs, as computed in accordance with FASB ASC Topic 718. The valuation assumptions used in calculating the fair value of the stock options are set forth in Note 11 to our audited consolidated financial statements appearing elsewhere in this report. |
| (2) | This column reflects the aggregate grant date fair value of restricted stock units granted under our 2020 Plan to our NEOs, as computed in accordance with FASB ASC Topic 718. The valuation assumptions used in calculating the fair value of the restricted stock units are set forth in Note 11 to our audited consolidated financial statements appearing elsewhere in this report. |
| (3) | Mr. Judd resigned effective August 4, 2023. |
Employment Arrangements
We have entered into employment agreements with each of our NEOs. The employment agreements do not provide for a fixed employment term and set forth the executive’s annual salary, target bonus, if any, eligibility for employee benefits, the terms of equity grants, customary proprietary information assignment provisions, and non-competition and non-solicitation restrictions. The key terms of employment with our named executive officers are further described below.
Jason Vieth
In connection with Mr. Vieth’s appointment as President and Chief Executive Officer, the Company entered into an employment agreement (the “Employment Agreement”) with Mr. Vieth that provides for the following benefits, among other provisions:
| • | an annual base salary of $400,000; |
| • | an annual bonus opportunity of up to 100% of base salary based on the achievement of performance goals, with a target payout of 50% of base salary; |
| • | a $114,000 signing bonus subject to repayment if Mr. Vieth voluntarily resigns without good reason (as defined in the Employment Agreement) or the Company terminates Mr. Vieth’s employment for cause (as defined in the Employment Agreement) prior to the first anniversary of the Employment Agreement; |
| • | restricted stock units relating to 125,000 shares of common stock, vesting over four years; |
| • | stock options to purchase 50,000 shares of common stock with an exercise price of $25.00 per share, and stock options to purchase 150,000 shares of common stock with an exercise price equal to the grant date fair value of the Company’s common stock, in each case vesting 25% on the first anniversary of the effective date of the Employment Agreement and ratably thereafter over the following 12 quarters (such stock options together with the restricted stock units in the preceding bullet, the “Inducement Grants”); and |
| • | a payment equal to 12 months base salary and COBRA coverage for up to 12 months if Mr. Vieth resigns for good reason or the Company terminates Mr. Vieth’s employment without cause, or, if such resignation or termination occurs within two years following a change in control (as defined in the Employment Agreement), a payment equal to 24 months base salary, COBRA coverage for up to 18 months, the vesting of all of Mr. Vieth’s equity awards, and a cash payment equal to $1,000,000 less the fair market value of the Inducement Grants at the time of the change in control. |
Mr. Vieth is also eligible to participate in the Company’s equity incentive plans and long-term incentive plans and other benefits available to the Company’s executive officers. In addition, the Company entered into an indemnification agreement with Mr. Vieth on terms substantially similar to the terms of the form of indemnification agreement filed as Exhibit 10.6 to the Company’s Registration Statement on Form S-1/A filed on September 10, 2020.
Anya Hamill
The Company entered into an employment agreement with Anya Hamill, who served as interim Chief Financial Officer since May 2022 and now serves as permanent Chief Financial Officer as of November 4, 2022. The Employment Agreement provides for the following benefits, among other provisions:
| • | an annual base salary of $275,000; |
| • | an annual bonus opportunity of up to 100% of base salary based on the achievement of performance goals, with a target payout of 50% of base salary; |
| • | restricted stock units relating to 50,000 shares of common stock, vesting over four years; |
| • | stock options to purchase 50,000 shares of common stock with an exercise price equal to the grant date fair value of the Company’s common stock, vesting over four years; and |
| • | a payment equal to 12 months base salary and COBRA coverage for up to 12 months if Ms. Hamill resigns for good reason or the Company terminates Ms. Hamill’s employment without cause, and, if such resignation or termination occurs within two years following a change in control (as defined in the Employment Agreement), the vesting of all of Ms. Hamill’s equity awards. |
Ms. Hamill is also eligible to participate in the Company’s equity incentive plans and long-term incentive plans and other benefits available to the Company’s executive officers. In addition, the Company entered into an indemnification agreement with Ms. Hamill on terms substantially similar to the terms of the form of indemnification agreement filed as Exhibit 10.6 to the Company’s Registration Statement on Form S-1/A filed on September 10, 2020.
Andy Judd
The Company entered into an employment agreement with Andy Judd, the Chief Commercial Officer. The Employment Agreement provided for the following benefits, among other provisions:
| • | an annual base salary of $350,000; |
| • | an annual bonus opportunity of up to 100% of base salary based on the achievement of performance goals, with a target payout of 50% of base salary; |
| • | a signing bonus of $100,000; |
| • | restricted stock units relating to 100,000 shares of common stock, vesting over four years; |
| • | stock options to purchase 100,000 shares of common stock with an exercise price equal to the grant date fair value of the Company’s common stock, vesting over four years; and |
| • | a payment equal to 12 months base salary and COBRA coverage for up to 12 months if Mr. Judd resigned for good reason or the Company terminated his employment without cause, and, if such resignation or termination occurred within two years following a change in control (as defined in the Employment Agreement), the vesting of all of Mr. Judd’s equity awards. In the case of a change in ownership, the severance payment would have been equal to 24 months of base salary and COBRA coverage. |
Mr. Judd was also eligible to participate in the Company’s equity incentive plans and long-term incentive plans and other benefits available to the Company’s executive officers. In addition, the Company entered into an indemnification agreement with Mr. Judd on terms substantially similar to the terms of the form of indemnification agreement filed as Exhibit 10.6 to the Company’s Registration Statement on Form S-1/A filed on September 10, 2020. Mr Judd resigned effective August 4, 2023.
Steve Richie
The Company entered into an employment agreement with Steve Richie, the General Counsel and Corporate Secretary. The Employment Agreement provides for the following benefits, among other provisions:
| • | an annual base salary of $275,000; |
| • | an annual bonus opportunity of up to 100% of base salary based on the achievement of performance goals, with a target payout of 50% of base salary; |
| • | restricted stock units relating to 50,000 shares of common stock, vesting over four years; |
| • | stock options to purchase 50,000 shares of common stock with an exercise price equal to the grant date fair value of the Company’s common stock, vesting over four years; and |
| • | a payment equal to 12 months base salary and COBRA coverage for up to 12 months if Mr. Richie resigns for good reason or the Company terminates Mr. Richie’s employment without cause, and, if such resignation or termination occurs within two years following a change in control (as defined in the Employment Agreement), the vesting of all of Mr. Richie’s equity awards. |
Mr. Richie is also eligible to participate in the Company’s equity incentive plans and long-term incentive plans and other benefits available to the Company’s executive officers. In addition, the Company entered into an indemnification agreement with Mr. Richie on terms substantially similar to the terms of the form of indemnification agreement filed as Exhibit 10.6 to the Company’s Registration Statement on Form S-1/A filed on September 10, 2020.
Retirement Plans
We have not maintained, and do not currently intend to maintain, a defined benefit pension plan or nonqualified deferred compensation plan.
Outstanding Equity Awards and Year-End
The following table provides information regarding equity awards held by our NEOs that were outstanding as of December 31, 2023:
| Option Awards · Stock Awards | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Equity incentive | ||||||||||
| Number of · plan awards: · Equity incentive plan | ||||||||||
| shares or units · Market value of · number of · awards: market or payout | ||||||||||
| of stock that · shares or units of · unearned shares, · value of unearned shares, | ||||||||||
| Number of securities underlying unexercised options · Option exercise · Option expiration · have not · stock that have not · units or other rights that · units or other rights that | ||||||||||
| Name · exercisable · unexercisable · price ($) · date · vested (#) · vested ($) (1) · have not vested (#) · have not vested ($) (1) | ||||||||||
| Jason Vieth | 32,812 | 42,188 | (2) | 7.64 | 1/31/2032 | — | — | — | — | |
| 21,875 | 28,125 | (2) | 25.00 | 1/31/2032 | — | — | — | — | ||
| 32,812 | 42,188 | (3) | 7.21 | 2/3/2032 | — | — | — | — | ||
| — | 100,000 | (7) | 0.81 | 4/3/2033 | — | — | — | — | ||
| — | — | — | 70,313 | (2) | 63,985 | — | — | |||
| — | — | — | 100,000 | (7) | 91,000 | — | — | |||
| Anya Hamill | 5,882 | — | (4) | 3.17 | 5/5/2032 | — | — | — | — | |
| 11,030 | 3,676 | (5) | 3.17 | 5/5/2032 | — | — | — | — | ||
| 12,500 | 37,500 | (6) | 1.53 | 11/4/2032 | — | — | — | — | ||
| — | 50,000 | (7) | 0.81 | 4/3/2033 | — | — | — | — | ||
| — | — | — | 5,915 | (5) | 5,383 | — | — | |||
| — | — | — | 37,500 | (6) | 34,125 | — | — | |||
| — | — | — | 50,000 | (7) | 45,500 | — | — | |||
| Steve Richie | 12,500 | 37,500 | (8) | 1.91 | 6/30/2023 | — | — | — | — | |
| — | 50,000 | (7) | 0.81 | 4/3/2033 | — | — | — | — | ||
| — | — | — | 37,500 | (8) | 34,125 | — | — | |||
| — | — | — | 50,000 | (7) | 45,500 | — | — | |||
| (1) | The market value of unvested awards is calculated by multiplying the number of unvested shares held by the applicable named executive officer by the closing sales price of our common stock on December 31, 2023, the last trading day of the year, which was $0.91. |
| (2) | These awards vest in four equal annual tranches ending January 31, 2026. |
| (3) | These awards vest in four equal annual tranches ending February 3, 2026. |
| (4) | These awards vested on May 5, 2023. |
| (5) | These awards vest in four equal annual tranches ending May 5, 2026. |
| (6) | These awards vest in four equal annual tranches ending November 4, 2026. |
| (7) | These awards vest in four equal annual tranches ending April 4, 2027. |
| (8) | These awards vest in four equal annual tranches ending June 30, 2026. |
Non-Employee Director Compensation Program
At the time of our IPO, we adopted a non-employee director compensation plan covering non-employee directors. Under the plan, each non-employee director covered by the plan will receive an annual cash retainer and an annual grant of stock options and/or RSUs for board service, and if such non-employee director serves as a committee chair or a lead independent director, an additional annual cash retainer for such committee chair or lead independent director service. The Board has currently fixed the cash retainer for board service for non-employee directors at $45,000 per year, and the additional cash retainer for service as chairman of the Board or as lead independent director at $25,000 per year. The cash retainer for service as a member on a committee is fixed at $4,000 per year for each of the Nominating and Corporate Governance Committee and Compensation Committee and $7,000 per year for the Audit Committee, with an extra $4,000 per year for the chairs of the Nominating and Corporate Governance Committee and Compensation Committee and $7,000 per year for the chair of the Audit Committee. Cash retainers are paid quarterly in arrears, and directors joining mid-year have their cash retainers prorated for actual service. Each non-employee director will receive an annual retainer equity award issued under the 2020 Omnibus Incentive Plan with the value of $55,000 on the grant date, which vests after one year. Each non-employee director may choose to have their equity awarded as stock options, RSUs, or a 50/50 split. Non-employee directors joining mid-year will be provided a prorated annual award for the number of full months of expected service until the next annual shareholder meeting. Such grant will have the other terms provided for in the 2020 Omnibus Incentive Plan and the award agreement providing for such grant. Directors who are also employees, such as Messrs. Vieth and Hamilton, did not and will not receive any compensation for their services as directors.
No per meeting fees are paid, except that we reimburse non-employee directors for reasonable expenses incurred in connection with attending board and committee meetings.
All stock awards granted pursuant to the Non-Employee Director Compensation Program are subject to the terms and provisions of the Laird Superfood, Inc. 2020 Omnibus Incentive Plan.
Director Compensation Table
The table below sets forth information on the compensation of all our non-employee directors for the year ended December 31, 2023. Jason Vieth, our Chief Executive Officer, and Laird Hamilton, our Chief Innovator, were also members of the Board in fiscal 2023 but did not receive any additional compensation for service as a director.
| Fees earned or paid in cash | Stock awards (1) | Total | |
|---|---|---|---|
| Name | $ | $ | $ |
| Geoffrey T. Barker | 77,000 | 36,000 | 113,000 |
| Greg Graves | 64,000 | 36,000 | 100,000 |
| Maile Naylor, nee Clark | 60,000 | 36,000 | 96,000 |
| Patrick Gaston | 59,000 | 36,000 | 95,000 |
| Grant LaMontagne | 54,000 | 36,000 | 90,000 |
| (1) | The amounts in this column represent the grant date fair value of the awards as calculated under FASB ASC Topic 718. The assumptions made in valuing awards reported in these columns are discussed in Note 8 to our audited consolidated financial statements appearing elsewhere in this report. |
Outstanding Equity Awards for Directors at Fiscal Year-End
The following table provides information regarding equity awards held by our non-employee directors that were outstanding as of December 31, 2023:
| Name | Options Outstanding | RSUs Outstanding |
|---|---|---|
| # | # | |
| Geoffrey T. Barker | — | 40,000 |
| Greg Graves | 4,647 | 40,000 |
| Maile Naylor, nee Clark | 4,000 | 40,000 |
| Patrick Gaston | — | 40,000 |
| Grant LaMontagne | — | 40,000 |
Role of the Board in Risk Oversight
The Board administers its role in the oversight of risk directly through the Board as a whole, as well as through various standing committees of the Board that address risks inherent in their respective areas. In particular, the Board monitors and assesses strategic risk exposure and our audit committee oversees our major financial risk exposures and the steps our management has taken to monitor and control these exposures. Our audit committee also monitors compliance with legal and regulatory requirements, including our food safety program, and considers and approves or disapproves any related person transactions. Our nominating and corporate governance committee monitors the effectiveness of our corporate governance practices and of the Board. Our compensation committee assesses and monitors whether any of our compensation policies and programs have the potential to encourage excessive risk-taking. While each committee evaluates certain risks and oversees the management of such risks, our entire Board of Directors is regularly informed about the risks overseen by the committees through committee reports.
Risk assessment and oversight are an integral part of our governance and management processes. The Board encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews these risks with the Board of Directors at regular board meetings as part of management presentations that focus on particular business functions, operations or strategies and presents the steps taken by management to mitigate or eliminate such risks.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.