SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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☐ | Soliciting Material under §240.14a-12 |
HERBALIFE NUTRITION LTD.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Herbalife Nutrition Ltd.
2021 Proxy Statement
|
Annual General Meeting of Shareholders
Our 2021 Annual General Meeting of Shareholders
will be held on Wednesday, April 28, 2021 at 8:30 a.m., Pacific Daylight Time, at
800 W. Olympic Blvd., Suite 406
Los Angeles, CA 90015
Admission requirements
See Part 1 Information concerning solicitation and voting for details on admission requirements to attend the Annual General Meeting.
Herbalife Nutrition Ltd.
Notice of Annual General Meeting of Shareholders
Date: | Wednesday, April 28, 2021 | |
Time: | 8:30 a.m., Pacific Daylight Time | |
Place: | 800 W. Olympic Blvd., Suite 406 Los Angeles, CA 90015 | |
Record date: | March 2, 2021 | |
Proxy voting: | All shareholders are cordially invited to attend the Annual General Meeting. See Part 1 Information concerning solicitation and voting for details on admission requirements to attend the Annual General Meeting.
However, to assure your representation at the Annual General Meeting, you are urged to vote promptly. You may vote your shares via a toll-free telephone number, over the Internet or by completing, signing and mailing the proxy card or voting instruction form provided to you. Please follow the instructions on the proxy card or voting instruction form provided to you. | |
Items of business: | 1. Elect the 9 directors named in the Proxy Statement to the Board of Directors to serve until the 2022 annual general meeting of shareholders of the Company or until their successors are duly elected and qualified;
2. Approve, on an advisory basis, the compensation of the Companys named executive officers;
3. Approve an amendment and restatement of the Companys 2014 Stock Incentive Plan to increase the number of Common Shares available for issuance under such plan; and
4. Ratify the appointment of the Companys independent registered public accounting firm for fiscal year 2021.
Shareholders will also transact such other business as may properly come before the Annual General Meeting and at any adjournments or postponements of the Annual General Meeting. | |
The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. Only shareholders of record at the close of business on March 2, 2021 are entitled to notice of, and to vote at, the Annual General Meeting and any subsequent adjournment(s) or postponement(s) thereof. | ||
Availability of Materials: |
The Proxy Statement and Annual Report to Shareholders are available at http://www.edocumentview.com/HLF. |
NOTICE IS HEREBY GIVEN that the 2021 Annual General Meeting of Shareholders of Herbalife Nutrition Ltd., a Cayman Islands exempted company incorporated with limited liability, or the Company, will be held on Wednesday, April 28, 2021 at 8:30 a.m., Pacific Daylight Time, at 800 W. Olympic Blvd., Suite 406, Los Angeles, CA 90015.
Sincerely,
HENRY C. WANG
General Counsel and Corporate Secretary
Los Angeles, California
March 16, 2021
Proxy summary
This summary highlights information contained elsewhere in this Proxy Statement. You should carefully read this Proxy Statement in its entirety prior to voting on the proposals listed below and outlined herein. This Proxy Statement is dated March 16, 2021 and is first being made available to shareholders of Herbalife Nutrition Ltd., a Cayman Islands exempted company incorporated with limited liability, or the Company, on or about March 17, 2021. A Notice Regarding Internet Availability of Proxy Materials for the 2021 Annual General Meeting of Shareholders, or the Meeting, was mailed to shareholders of the Company on or about March 17, 2021.
Annual General Meeting of Shareholders
Date: | Wednesday, April 28, 2021 | |
Time: | 8:30 a.m., Pacific Daylight Time | |
Place: | 800 W. Olympic Blvd., Suite 406 Los Angeles, CA 90015 | |
Record date: | March 2, 2021 | |
Voting: | Shareholders as of the record date are entitled to vote. |
Admission to Meeting: Proof of share ownership will be required to enter the Meeting. See Part 1 Information concerning solicitation and voting for details on admission requirements to enter the Meeting.
Meeting agenda
1. | Elect the 9 directors named in the Proxy Statement to the Board of Directors to serve until the 2022 annual general meeting of shareholders of the Company or until their successors are duly elected and qualified; |
2. | Approve, on an advisory basis, the compensation of the Companys named executive officers; |
3. | Approve an amendment and restatement of the Companys 2014 Stock Incentive Plan to increase the number of Common Shares available for issuance under such plan; and |
4. | Ratify the appointment of the Companys independent registered public accounting firm for fiscal year 2021. |
Shareholders will also transact such other business as may properly come before the Meeting and at any adjournments or postponements of the Meeting.
This proxy statement includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current facts, including statements regarding our environmental and other sustainability plans and goals, made in this document are forward-looking. We use words such as anticipates, believes, expects, future, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect managements current expectations and are inherently uncertain. Actual results could differ materially for a variety of reasons. Risks and uncertainties that could cause our actual results to differ significantly from managements expectations are described in our 2020 Annual Report on Form 10-K. Website references throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this document.
Proxy summary |
ii | Table of Contents |
Proposal |
Voting Options | Board
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Vote Required
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Effect of
|
Effect of
| |||||
Item 1: Elect the 9 directors named in the Proxy Statement to the Board of Directors to serve until the 2022 annual general meeting of shareholders of the Company or until their successors are duly elected and qualified |
For, Against or Abstain on each nominee | FOR each nominee | Majority of votes cast FOR with respect to each such nominee |
No effect |
No effect | |||||
Item 2: Approve, on an advisory basis, the compensation of the Companys named executive officers |
For, Against or Abstain | FOR | Majority of shares represented in person or by proxy and entitled to vote |
Treated as votes Against |
No effect | |||||
Item 3: Approve an amendment and restatement of the Companys 2014 Stock Incentive Plan to increase the number of Common Shares available for issuance under such plan |
For, Against or Abstain | FOR | Majority of shares represented in person or by proxy and entitled to vote |
Treated as votes Against |
No effect | |||||
Item 4: Ratify the appointment of the Companys independent registered public accounting firm for fiscal year 2021 |
For, Against or Abstain | FOR | Majority of shares represented in person or by proxy and entitled to vote |
Treated as votes Against |
Brokers have discretion to vote |
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Meeting, please take the time to vote. You may vote your shares via a toll-free telephone number, over the Internet or by completing, signing and mailing the proxy card or voting instruction form provided to you. Please follow the instructions on the proxy card or voting instruction form.
2 | Our annual general meeting of shareholders |
Important Notice Regarding the Availability of Proxy Materials for the Annual General Meeting of Shareholders to Be Held on April 28, 2021. The Proxy Statement and Annual Report to Shareholders are available at http://www.edocumentview.com/HLF.
Our annual general meeting of shareholders | 3 |
Our top priority is the health and safety of our employees, distributors and customers. In response to COVID-19, we have implemented remote working for our employees who are able to do so, moved distributor and Member events online and enhanced safety procedures at each of our facilities.
Employees
Adherence to federal, state and local public health requirements in the U.S. At all facilities: ¡ Required temperature screening upon entry ¡ Required face coverings ¡ Social distancing protocols ¡ Further enhancements to robust cleaning and sanitation measures ¡ Response plan to suspected COVID-19 cases |
Distributors
Moved Herbalifes Annual Global Distributor Conference online Provided guidance on safety and business resilience in a COVID-19 environment Enhanced ability for distributors to have our products delivered to their customers homes |
6 | Corporate governance |
8 | Corporate governance |
The following table summarizes the compensation paid by the Company to non-management directors for the fiscal year ended December 31, 2020, which includes: (1) compensation paid to Directors for their services on the Board and the Boards committees, (2) payments made to Directors for any services provided at Company events, such as Extravaganzas, and (3) payments made to Herbalife Members in accordance with the Companys Marketing Plan.
2020 Director Compensation Table
Name |
Fees earned or paid in cash ($) |
Equity awards ($)(1) |
All other compensation |
Total ($) |
||||||||||||
Dr. Richard Carmona |
|
110,000 |
|
|
134,985 |
|
|
37,500 |
(3) |
|
282,485 |
| ||||
Jonathan Christodoro(2) |
|
108,468 |
|
|
134,985 |
|
|
|
243,453 |
| ||||||
Hunter C. Gary(2) |
|
120,000 |
|
|
134,985 |
|
|
|
254,985 |
| ||||||
Nicholas Graziano(2) |
|
110,000 |
|
|
134,985 |
|
|
|
|
|
244,985 |
| ||||
Alan LeFevre |
|
130,000 |
|
|
134,985 |
|
|
|
|
|
264,985 |
| ||||
Jesse A. Lynn(2) |
|
123,333 |
|
|
134,985 |
|
|
|
|
|
258,318 |
| ||||
Juan Miguel Mendoza(6) |
|
100,000 |
|
|
134,985 |
|
|
1,570,071 |
(4) |
|
1,805,056 |
| ||||
Michael Montelongo |
|
122,836 |
|
|
134,985 |
|
|
|
|
|
257,821 |
| ||||
James L. Nelson(2) |
|
145,000 |
|
|
159,946 |
|
|
|
|
|
304,946 |
| ||||
Maria Otero |
|
118,333 |
|
|
134,985 |
|
|
|
|
|
253,318 |
| ||||
Margarita Paláu-Hernández |
|
111,801 |
|
|
134,985 |
|
|
|
246,786 |
| ||||||
John Tartol(6) |
|
100,000 |
|
|
134,985 |
|
|
1,605,157 |
(5) |
|
1,840,142 |
|
(1) | Amounts represent the aggregate grant date fair value of the relevant award(s) presented in accordance with ASC Topic 718, CompensationStock Compensation. See note 9 of the notes to consolidated financial statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2020 regarding assumptions underlying the valuation of equity awards. |
(2) | Messrs. Christodoro, Gary, Graziano, Lynn and Nelson resigned from the Board effective January 3, 2021. |
(3) | Amount represents fees for speaking at Herbalife Nutrition events. |
(4) | Amount includes $7,500 in fees for speaking at Herbalife Nutrition events for Herbalife Nutrition Members. Additionally, unrelated to his service as a Board member, amount also includes $1,562,571 in income earned as a top distributor of Herbalife Nutrition products. See note 6 below. |
(5) | Amount includes $5,000 in fees for speaking at Herbalife Nutrition events for Herbalife Nutrition Members. Additionally, unrelated to his service as a Board member, amount also includes $1,600,157 in income earned as a top distributor of Herbalife Nutrition products. See note 6 below. |
(6) | All Herbalife Nutrition Members, including Messrs. Mendoza and Tartol, are eligible to receive income under the Companys Marketing Plan as a result of their activities as distributors of Herbalife Nutrition products. Under the Companys Marketing Plan, Herbalife Nutrition Members may earn profits by purchasing products at wholesale prices, discounted depending on the Members level within our Marketing Plan, and reselling those products at prices they establish for themselves to generate retail profit. Second, Herbalife Nutrition Members who sponsor other Members and establish, maintain, coach, and train their own sales organizations may earn commissions on the sales of their organization. Neither Mr. Mendoza nor Mr. Tartol receive any preferential treatment or payments under the Companys Marketing Plan. |
Corporate governance | 9 |
Each non-management director receives annual cash fees for service on the Board and committees as follows:
Board service |
$100,000 per year | |
Audit committee service |
Member - $10,000 per year Chair - $20,000 per year | |
Compensation committee service |
Member - $10,000 per year Chair - $15,000 per year | |
Nominating and corporate governance committee service |
Member - $10,000 per year Chair - $15,000 per year | |
ESG committee service |
Member - $10,000 per year Chair - $15,000 per year | |
Implementation oversight committee service |
Member - $10,000 per year Chair - $20,000 per year |
* | Chairpersons receive chair fees in addition to member fees. For example, the chair of the audit committee receives an aggregate fee of $30,000 for his or her services on the committee. The implementation oversight committee was dissolved on April 30, 2020, and the ESG committee was formed on April 30, 2020. |
The Lead Director receives an annual fee of $25,000 per year for additional services provided in that capacity.
10 | Corporate governance |
The table below summarizes the equity-based awards held by non-management directors who served on the Companys Board of Directors in 2020, as of December 31, 2020.
Name |
Stock Unit Awards |
|||||||
Number of Shares or units of stock that have not vested (#) |
Market value of Shares or units of stock that have not vested(1) ($) |
|||||||
Dr. Richard Carmona |
|
3,407 |
|
|
163,706 |
| ||
Jonathan Christodoro(2) |
|
3,407 |
|
|
163,706 |
| ||
Hunter C. Gary(2) |
|
3,407 |
|
|
163,706 |
| ||
Nicholas Graziano(2) |
|
3,407 |
|
|
163,706 |
| ||
Alan LeFevre |
|
3,407 |
|
|
163,706 |
| ||
Jesse Lynn(2) |
|
3,407 |
|
|
163,706 |
| ||
Juan Miguel Mendoza |
|
3,407 |
|
|
163,706 |
| ||
Michael Montelongo |
|
3,407 |
|
|
163,706 |
| ||
James L. Nelson(2)(3) |
|
4,037 |
|
|
193,978 |
| ||
Maria Otero |
|
3,407 |
|
|
163,706 |
| ||
Margarita Paláu-Hernández |
|
3,407 |
|
|
163,706 |
| ||
John Tartol |
|
3,407 |
|
|
163,706 |
|
(1) | Market value based on the closing price of a Common Share on the NYSE on December 31, 2020 of $48.05. |
(2) | Former member of the Board. The vesting of these 2020 RSU grants to Messrs. Christodoro, Gary, Graziano, Lynn and Nelson was accelerated with respect to 75% of the shares subject thereto on January 3, 2021 at the time of their resignation, and the remaining unvested portions of each were forfeited at that time. |
(3) | Amount includes Mr. Nelsons lead director equity grant in 2020. |
Corporate governance | 11 |
Shareholder communications with the board of directors
Current committee memberships
Directors |
Audit(1) | Compensation(2) |
Nominating and Corporate |
ESG(4) | ||||
Dr. Richard Carmona |
|
● | Chair |
| ||||
Alan LeFevre * | Chair |
|
● |
| ||||
Michael Montelongo | ● |
|
|
Chair | ||||
Maria Otero |
|
Chair | ● |
| ||||
Margarita Paláu-Hernández | ● | ● |
|
● | ||||
Dr. John Agwunobi |
|
|
|
● |
* Audit Committee financial expert Independent Member
(1) | Mr. Nelson served on the audit committee until January 3, 2021 when he resigned from the Board. Ms. Paláu-Hernández was appointed to the audit committee on January 3, 2021 to fill the vacancy created by Mr. Nelsons resignation. Each member who currently serves on the audit committee, or served on the committee during 2020, is or was financially literate and met the independence requirements of the NYSE and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the Exchange Act). The Board determined Mr. LeFevre as an Audit Committee financial expert. |
(2) | Mr. Montelongo served on the compensation committee and as its chair until May 1, 2020. Mr. Gary assumed responsibilities as chair of the compensation committee on May 1, 2020. Messrs. Gary and Graziano served on the compensation committee until January 3, 2021 when they resigned from the Board. Ms. Otero and Dr. Carmona were appointed to the compensation committee on January 3, 2021 to fill the vacancies created by Messrs. Gary and Grazianos resignations, with Ms. Otero serving as its chair starting from such date. Each member who currently serves on the compensation committee, or served on the compensation committee during 2020, is or was (a) independent under the listing standards of the NYSE, including the heightened standards applicable to members of a listed companys compensation committee, and (b) a nonemployee director under Rule 16b-3 of the Exchange Act. |
(3) | Mr. Christodoro served on the nominating and corporate governance committee until May 1, 2020. Ms. Otero additionally served as the chair of the nominating and corporate governance committee until May 1, 2020. Mr. Lynn assumed the responsibilities as chair of the nominating and corporate governance committee on May 1, 2020. Mr. Lynn served on the nominating and corporate governance committee until January 3, 2021 when he resigned from the Board. Dr. Carmona assumed responsibilities as chair of the nominating and corporate governance committee on January 3, 2021. Mr. LeFevre was appointed to the nominating and corporate governance committee on January 3, 2021. |
12 | Corporate governance |
(4) | The ESG committee was formed on April 30, 2020. Messrs. Montelongo and Christodoro and Ms. Paláu-Hernández were appointed to the ESG committee, with Mr. Montelongo serving as its chair. Mr. Christodoro served on the ESG committee until January 3, 2021 when he resigned from the Board. Dr. Agwunobi was appointed to the ESG committee on January 3, 2021 to fill the vacancy created by Mr. Christodoros resignation. ESG committee members are not required to be independent directors. |
Audit committee | ||
The audit committee represents and assists the Board in fulfilling its responsibilities for overseeing our financial reporting processes and the audit of our financial statements. | Meetings Held in 2020:
5 |
The principal duties of the audit committee include the following:
| monitoring the integrity of the Companys financial reporting process and systems of internal controls regarding finance, accounting and reporting; |
| monitoring the independence and performance of the Companys independent registered public accounting firm and internal audit function; |
| providing an avenue of communication among the Companys independent registered public accounting firm, management, the internal audit department and the Board of Directors; and |
| reviewing with management risks and practices related to cyber security, privacy and security matters. |
Compensation committee | ||
The compensation committee discharges the Boards responsibilities related to the compensation of our executives and Directors, and provides general oversight of our compensation structure, including our equity compensation plans and benefits programs. | Meetings Held in 2020:
6 |
The principal duties of the compensation committee include the following:
| to oversee and approve compensation policies and programs; |
| to review and approve corporate goals and objectives relevant to the compensation of the Companys CEO and other executive officers; |
| to evaluate the performance of the CEO and recommend the compensation level of the CEO for approval by the independent members of the Board of Directors; |
| to evaluate the performance of executive officers and, considering the CEOs recommendations, set the compensation level for such executive officers; |
| to administer existing incentive compensation plans and equity-based plans; |
| to oversee the Companys response to regulatory developments affecting executive compensation; and |
| to review the compensation of directors. |
Nominating and corporate governance committee | ||
The nominating and corporate governance committee oversees, and represents and assists the Board in fulfilling its responsibilities relating to, our corporate governance, and Director nominations and elections. | Meetings Held in 2020:
5 |
The principal duties of the nominating and corporate governance committee include the following:
| to recommend to the Board of Directors proposed nominees for election to the Board of Directors both at annual general meetings and to fill vacancies that occur between annual general meetings; and |
| to review and make recommendations to the Board of Directors regarding the Companys corporate governance matters and practices. |
Corporate governance | 13 |
ESG committee | ||
The ESG committee assists the Board in discharging its oversight responsibility and providing guidance to the Board related to environmental, social and governance (ESG) matters that are relevant and material to the Company, and perform an oversight role in shaping the Companys ESG strategy. |
Meetings Held in 2020:
1 |
The principal duties of the ESG committee include the following:
| to review, oversee, discuss with management and advise the Board on the Companys ESG strategy, initiatives, investments and policies that support the Companys core business strategy; |
| to review and evaluate ESG risks and opportunities that may arise in connection with the Companys activities and advise the Board on such risks and opportunities that may materially affect the Companys broad enterprise risk management (ERM) program; and |
| to review and discuss with management the Companys ESG disclosures and reports, and provide recommendations related thereto. |
Compensation committee interlocks and insider participation
14 | Corporate governance |
16 | Proposals to be voted on at the meeting |
Set forth below is biographical information about the 9 nominees standing for election at the Meeting, including each such persons specific experience, qualifications, attributes and skills that led our Board of Directors to conclude that such individual should serve on our Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE NOMINEES NAMED IN THIS PROXY STATEMENT TO THE BOARD OF DIRECTORS.
Nominees for Election as Directors
Proposals to be voted on at the meeting | 17 |
18 | Proposals to be voted on at the meeting |
Proposals to be voted on at the meeting | 19 |
20 | Proposals to be voted on at the meeting |
Proposals to be voted on at the meeting | 21 |
Proposal 3: Approve an amendment and restatement of the Companys 2014 Stock Incentive Plan to increase the number of Common Shares available for issuance under such plan
1 In connection with the Companys 2018 two-for-one stock split, this number was adjusted from 8,700,000 to 17,400,000 to reflect the stock split in accordance with Section 15 of the 2014 Plan.
Proposals to be voted on at the meeting | 23 |
Information on Outstanding Equity Awards. Information regarding awards outstanding as of December 31, 2020 under our equity compensation plans is summarized in the following table:
Award | Number Outstanding |
Weighted Average Exercise Price |
Weighted Average Remaining Term |
|||||||||
Stock Options & SARs | 3,737,304 | $27.23 | 4.6 years | |||||||||
Full Value Awards(1) | 3,590,607 | Not applicable | Not applicable |
(1) | Full-value awards are awards other than stock options and SARs. These include RSUs and PSUs. PSUs are included assuming the maximum level of performance. |
Burn Rate. One means of evaluating the long-term dilution from equity compensation plans is to monitor the number of equity awards granted annually, commonly referred to as burn rate. As shown in the following table, the Companys three-year average annual burn rate has been 0.93%.
Year |
SAR Options |
Full- Granted(1) |
Total Granted | Weighted Average Number of Common Shares Outstanding |
Burn Rates | ||||||||||||||||||||
2020 |
| 1,722,682 | 1,722,682 | 131,531,285 | 1.31% | ||||||||||||||||||||
2019 |
| 881,174 | 881,174 | 137,352,794 | 0.64% | ||||||||||||||||||||
2018 |
| 1,166,704 | 1,166,704 | 140,249,719 | 0.83% | ||||||||||||||||||||
Three-Year Average |
| | | | 0.93% |
(1) | Full Value awards are awards other than stock options and SARS. These include RSUs and PSUs. PSUs are included assuming the target level of performance. |
24 | Proposals to be voted on at the meeting |
Proposals to be voted on at the meeting | 25 |
26 | Proposals to be voted on at the meeting |
Proposals to be voted on at the meeting | 27 |
28 | Proposals to be voted on at the meeting |
Existing Plan Benefits
The following table sets forth information with respect to equity awards granted in 2020 under the 2014 Plan:
Name and Position |
Number of Common Shares Covered by Awards(1) | |
John Agwunobi, Chairman and Chief Executive Officer |
110,686 | |
John G. DeSimone, President |
67,403 | |
David Pezzullo, Chief Operating Officer |
31,704 | |
Alexander Amezquita, Chief Financial Officer |
12,158 | |
Alan L. Hoffman, Executive Vice President of Global Corporate Affairs |
26,420 | |
Michael O. Johnson, Former Chairman and Chief Executive Officer(2) |
0 | |
Shin-Shing Bosco Chiu, Chief Risk Officer(3) |
17,172 | |
All current executive officers as a group |
312,569 | |
All current non-employee directors as a group |
23,849 | |
All employees as a group (excluding current executive officers) |
1,388,646 |
(1) | The Company only granted RSUs and PSUs in 2020. PSUs are included assuming the target level of performance. |
(2) | Mr. Johnson stepped down as the Companys Chief Executive Officer effective March 30, 2020, and the Chairman of the Board effective April 29, 2020. |
(3) | Mr. Chiu served as the Companys Chief Financial Officer until November 9, 2020, when he transitioned to a newly created position as the Companys Chief Risk Officer. |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE COMPANYS 2014 STOCK INCENTIVE PLAN.
Proposals to be voted on at the meeting | 29 |
Fees to independent registered public accounting firm for fiscal years 2020 and 2019
The following fees were for services provided by PwC:
2020 |
2019 |
|||||||
Audit fees(1) |
|
$7,459,000 |
|
|
$7,007,000 |
| ||
Audit-related fees(2) |
|
$120,000 |
|
|
$266,000 |
| ||
Tax fees(3) |
|
$2,471,000 |
|
|
$1,124,000 |
| ||
Total |
|
$10,050,000 |
|
|
$8,397,000 |
|
(1) | Audit fees for 2020 and 2019 consist of fees for professional services rendered for the audit of the Companys consolidated financial statements included in the Companys Annual Report on Form 10-K for the years ended December 31, 2020 and December 31, 2019, including the audit of internal controls required by Section 404 of the Sarbanes-Oxley Act of 2002, and the review of financial statements included in the Companys Quarterly Reports on Form 10-Q, and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements and comfort letters. |
(2) | Audit-related fees consist of assurance and related services that were reasonably related to the performance of the audit or review of the Companys consolidated financial statements and which are not reported under Audit fees. |
(3) | Tax fees were for tax compliance and tax guidance. |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE APPOINTMENT OF PwC AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2021.
Proposals to be voted on at the meeting | 31 |
Part 4
|
Executive compensation |
Compensation discussion and analysis
This section explains the Companys 2020 executive compensation program as it relates to our named executive officers, or NEOs:
John Agwunobi | Chairman and Chief Executive Officer(1) | |
John G. DeSimone | President(2) | |
David Pezzullo | Chief Operating Officer | |
Alexander Amezquita | Chief Financial Officer(3) | |
Alan Hoffman | Executive Vice President, Global Corporate Affairs | |
Michael O. Johnson | Former Chairman and Chief Executive Officer(4) | |
Shin-Shing Bosco Chiu | Chief Risk Officer (Former Chief Financial Officer)(5) |
(1) | Dr. Agwunobi became the Companys Chief Executive Officer effective March 30, 2020, and the Chairman of the Board effective April 29, 2020. Prior to March 30, 2020, Dr. Agwunobi served as the Companys Co-President and Chief Health and Nutrition Officer. |
(2) | Effective March 30, 2020, Mr. DeSimone became the Companys President. Prior to March 30, 2020, Mr. DeSimone served as the Companys Co-President and Chief Strategic Officer. |
(3) | Effective November 9, 2020, Mr. Amezquita became the Companys Chief Financial Officer. Prior to November 9, 2020, Mr. Amezquita served as the Companys Senior Vice President, Finance, Strategy and Investor Relations. |
(4) | Mr. Johnson stepped down as the Companys Chief Executive Officer effective March 30, 2020, and the Chairman of the Board effective April 29, 2020. |
(5) | Mr. Chiu served as the Companys Chief Financial Officer until November 9, 2020, when he transitioned to a newly created position as the Companys Chief Risk Officer. |
Executive summary of our compensation program
Financial performance for purposes of our annual incentive program
The Companys financial performance is a material factor in determining the total compensation for our NEOs. As such, top-line growth stated in terms of Volume Points and profitability stated in terms of Operating Income are the performance metrics used for our annual incentive program with a weighting of 30% and 70%, respectively. These performance measures are more fully described in Annual incentive awards Targets and award determination below.
The payouts under our annual incentive award program were above target based on the Companys 2020 Volume Points and Operating Income.
COVID-19 Adjustments to Operating Income
Consistent with prior years, Operating Income was adjusted to exclude non-recurring expenses and revenues. Our 2020 Operating Income was adjusted to exclude the following non-recurring impacts: expenses relating to regulatory inquiries and legal accruals, China grant income, impact from changes in currency exchange rates, COVID-19 expenses that are not expected to recur once the effects have largely receded and our China growth program. Non-recurring COVID-19 expenses include temporary hazard pay to employees, personal protective equipment (PPE) provided to employees, penalties for non-performance of contracts, and lost deposits on event cancellations, the total of which adjustments to the 2020 Operating Income was approximately $21.2 million. Certain additional COVID-19 expenses incurred during 2020 were not excluded because the Company anticipates this will be a recurring expense, such as increased home delivery expenses.
32 | Executive compensation |
Results for Bonus Purposes |
||||||||||||||||||||
2017 | 2018 | 2019 | 2020 |
2020 Target |
||||||||||||||||
Volume Points (millions) |
|
5,379 |
|
|
5,861 |
|
|
6,069 |
|
|
6,926 |
|
|
6,330 |
| |||||
Operating Income ($, millions) |
575.3 | (1) | 703.2 | (2) | 660.8 | (3) | 797.9 | (4) | 656.3 |
(1) | Operating Income for 2017 is adjusted to exclude impact of the Tax Cuts and Jobs Act, or the Tax Act, expenses relating to FTC Consent Order implementation, expenses relating to regulatory inquiries, expenses relating to challenges to the Companys business model, China grant income, and impact from changes in currency exchange rates. |
(2) | Operating Income for 2018 is adjusted to exclude the impact of expenses relating to regulatory inquiries, China grant income, devaluation of the Venezuelan currency, impact from changes in currency exchange rates, and our China growth program. |
(3) | Operating Income for 2019 is adjusted to exclude expenses relating to regulatory inquiries and legal accruals, China grant income, Mexico VAT assessment, income related to finalization of insurance recoveries, impact from changes in currency exchange rates, and our China growth program. |
(4) | Operating Income for 2020 is adjusted to exclude expenses relating to regulatory inquiries and legal accruals, China grant income, impact from changes in currency exchange rates, COVID-19 expenses and our China growth program. Operating Income for 2020 without any COVID-19 adjustments would be approximately $776.7 million. |
The following table summarizes the 2020 annual incentive awards for the NEOs. All 2020 annual incentive awards to NEOs were based solely on the calculated results to target performance levels. For a more detailed discussion of our 2020 annual incentive awards for the NEOs, please refer to the discussion under Annual incentive awards & long-term incentive program Annual incentive awards.
NEO |
Title |
2020 Annual Incentive Award Amount | ||
John Agwunobi |
Chairman and Chief Executive Officer |
$1,792,422 | ||
John G. DeSimone |
President |
$1,067,378 | ||
David Pezzullo |
Chief Operating Officer |
$847,500 | ||
Alexander Amezquita |
Chief Financial Officer |
$320,678 | ||
Alan Hoffman |
Executive Vice President, Global Corporate Affairs |
$761,370 | ||
Michael O. Johnson |
Former Chairman and Chief Executive Officer |
$0(1) | ||
Shin-Shing Bosco Chiu |
Chief Risk Officer (Former Chief Financial Officer) |
$540,000 |
(1) | Mr. Johnson stepped down as Chief Executive Officer and his employment ceased with the Company effective March 30, 2020. |
Executive compensation | 33 |
* | Compensation for Mr. Johnson, who stepped down as the Companys Chief Executive Officer effective March 30, 2020, and Mr. Chiu, who was no longer the Companys Chief Financial Officer effective November 9, 2020, are not included. |
34 | Executive compensation |
Executive compensation | 35 |
Executive compensation program objectives
As a global nutrition business, we operate in an environment of challenging regulatory, economic and geopolitical uncertainty. We manufactured approximately 60% to 65% of our own inner nutrition products that were sold worldwide, and generated approximately 76% of our net sales outside the United States for the year ended December 31, 2020. Our continued success depends on the leadership of a highly-talented, adaptive and dedicated executive team. Our executive compensation program provides competitive rewards to our NEOs who contribute to our annual success in achieving growth in revenues and profitability, creating and growing a global network that provides customers with personalized nutrition solutions, as well as making strategic decisions that should lead to increasing returns to stakeholders over time.
The Committee believes that stakeholder interests are advanced when the Company assembles, motivates and rewards a high-performing management team. To promote this objective, the Committee developed its executive compensation program guided by a pay for performance organizing framework and the resulting underlying principles listed below:
Principle |
Implication on HLF Program |
Rationale | ||
Attract and Retain Talented Executives. The program must attract and encourage a long-term commitment from talented executives necessary to lead our global nutrition business and advance stakeholders interests in a manner consistent with our company value of operating with integrity and transparency.
|
Strong emphasis on long-term incentives and shareholder value creation.
Performance considerations reflect the Companys values and strategy and an appropriate balance of risk and reward reflective of stakeholder interests. |
Focus on long-term performance and shareholder value helps mitigate risk and encourages growth.
Operating with integrity and transparency is a key corporate value that is central to how we conduct our business and is reflective of our focus on all stakeholders.
| ||
Competitive Pay Opportunities. Compensation opportunities must be competitive with the pay practices of companies that operate in global markets and enable us to attract and retain high-performing, highly-employable executive talent with similar executive skills and capabilities. |
Peer group reflects the market in which we reasonably compete for executive talent.
We reference both proxy-sourced market data from our peer group as well as general industry survey data from nationally recognized compensation surveys.
The Committees independent advisor provides the Committee with the 25th, 50th and 75th percentiles of market data to understand the scope of the market, with target compensation for top executives positioned relative to market references based on a variety of factors, including individual performance, internal equity, succession planning and business strategy.
Overall, our executives are within a competitive range of market, with appropriate variance based on incumbent-specific characteristics.
|
The Company recruits high-performing executives with known track records in competitive, complex and global businesses.
To attract the talent the Company needs to lead its business, compensation opportunities must be attractive relative to similar opportunities at our peers. |
36 | Executive compensation |
Principle |
Implication on HLF Program |
Rationale | ||
Focus on Performance-Based Incentives. A majority of total compensation is at-risk and tied to achievement of annual financial and non-financial performance goals and improvement in long-term stakeholder value. |
The vast majority (approximately 75%) of long-term incentives awarded in 2020 to our executives were performance-based and approximately one quarter (25%) were time-vesting equity (other than Mr. Johnson, who was not eligible to receive any awards of equity-based compensation pursuant to the terms of his then existing employment agreement, and Mr. Amezquita, who transitioned to the Chief Financial Officer role in November 2020 and received only RSUs).
Value of PSUs align with sustained long-term shareholder value and vesting requires achievement of performance goals that support our business.
|
Annual and long-term incentive plans use growth objectives and profit objectives. These plans are forward-looking and backward-looking, to ensure a comprehensive set of metrics are used to consider overall performance of the Company and our executive team. | ||
Pay for Superior Performance. Incentive compensation must provide superior pay for superior performance that meets or exceeds the expectations of our shareholders. |
Superior performance expectations are built into performance targets and ranges of our incentive plans such that when incentive targets are met, the Company is exceeding peer financial performance and meeting shareholder expectations.
Our incentive plans are calibrated to deliver above-median compensation for meeting superior performance targets, and, in the case of PSUs, deriving value through increased shareholder value.
|
The only way for our executives to earn above-target compensation is by exceeding financial and non-financial goals. | ||
Balanced Incentives to Promote Sustainable Value-Creation. Incentive compensation should reflect a balanced time horizon between annual and long-term performance in order to promote sustainable growth in the value of the enterprise. |
Annual incentive is paid in cash, based on achievement of annual financial performance targets.
PSUs awarded in 2020 are earned based on achievement of the following two metrics over a performance period from January 1, 2020 to December 31, 2022: Local Currency Net Sales and Adjusted EBIT.
|
A mix of cash and equity compensation is a competitive practice.
Paying a mix of cash and equity based on a portfolio of equity vehicles and performance metrics also helps balance risk within the pay program. | ||
Alignment of Executives and Long-Term Shareholders Interests. Long-term incentives should be provided in Company equity, where allowed by local law, to encourage executives to plan and act with the perspective of shareholders and with the Companys vision, mission and values in mind, and be rewarded for the successful implementation of our growth strategies.
|
In 2020, long-term incentive awards granted to NEOs (other than Messrs. Johnson and Amezquita, as described above) consisted of 75% PSUs and 25% RSUs.
The Company has competitive stock ownership guidelines. |
PSUs and RSUs align executive rewards with the Companys sustained long-term performance and shareholder value creation.
Encouraging equity ownership further aligns executives with sustained performance and shareholder value.
|
Executive compensation | 37 |
Purpose of compensation elements
The compensation and benefits program for our NEOs consists of and is designed to achieve the following:
Direct pay component |
Purpose | |
Base salary |
Provide a competitive foundation for total compensation to each executive in consideration of job scope and responsibilities, demonstrated sustained performance, capabilities and experience.
| |
Annual cash incentives |
Reward NEOs for the achievement of challenging annual financial targets that drive growth in shareholder value.
| |
Long-term equity-based incentives (PSUs and RSUs) |
Provide incentives for NEOs to develop strategic plans, and make tactical decisions that will enhance stakeholder value, reward NEOs with participation in the creation of sustained long-term shareholder value and encourage successful NEOs to remain with the Company.
| |
Indirect pay (benefits) |
||
Retirement benefits |
Encourage NEOs to build retirement resources by providing a match on deferred compensation in the Companys 401(k) plan and Senior Executive Deferred Compensation Plan.
| |
Life insurance benefits |
Provide a competitive benefit in the event of death of an executive.
| |
Severance benefits |
Enable each NEO to focus his full time and attention on meeting the financial and operating objectives set by the Committee without fear of the financial consequences of an unexpected termination of employment.
| |
Change in control benefits |
Enable NEOs to focus on shareholder interests when considering strategic alternatives.
|
The Chair of the Committee, with input from the independent compensation advisor, recommends the CEOs compensation to the Committee in an executive session not attended by the CEO. Once a recommendation has been established by the Committee, the CEOs compensation is reviewed with, and approved by, the independent members of the Board in an executive session.
Role of executive officers in executive compensation decisions
The CEO reviews compensation data gathered from a group of peer companies approved by the Committee and described under the subsection Peer Group, or the Herbalife Nutrition Peer Group, and, along with general industry compensation surveys, considers each executive officers performance and scope of responsibility, and makes a recommendation to the Committee on changes to base salary, annual incentive awards and equity awards for each executive officer other than himself. The CEO participates in Committee meetings at the Committees request to provide relevant background information regarding the Companys strategic objectives and to evaluate the performance of and compensation recommendations for the other executive officers. The Committee utilizes the information provided by the CEO along with input from its independent compensation advisor and the knowledge and experience of Committee members in making compensation decisions.
38 | Executive compensation |
NEO | 2019 Salary(1) | 2020 Salary(1) | Rationale for 2020 Change | |||||||||
John Agwunobi |
$619,000 | $900,000 | (2) | Ø Promotion to Chief Executive Officer | ||||||||
John G. DeSimone |
$619,000 | $695,000 | (2) | Ø Promotion to President | ||||||||
David Pezzullo |
$565,000 | $565,000 | ||||||||||
Alexander Amezquita |
$375,000 | $400,000 | (3)(4) | Ø 3% merit increase, and subsequent promotion to Chief Financial Officer | ||||||||
Alan Hoffman |
$619,000 | $637,570 | (3) | Ø 3% merit increase | ||||||||
Shin-Shing Bosco Chiu |
$450,000 | $450,000 |
(1) | Base salaries as of December 31, 2019 and December 31, 2020, as applicable. |
(2) | As previously announced, effective March 30, 2020, Dr. Agwunobi received a base salary increase from $619,000 to $900,000, in connection with his promotion to the Companys Chief Executive Officer, and Mr. DeSimone received a base salary increase from $619,000 to $695,000, in connection with his promotion to the Companys President. |
(3) | The Committee approved a 3% increase in February 2020 for Messrs. Hoffman and Amezquita, neither of whom were NEOs at the time. Accordingly, Messrs. Hoffman and Amezquita received base salary increases from $619,000 to $637,570 and from $375,000 to $386,250, respectively. |
(4) | Effective November 9, 2020, Mr. Amezquitas base salary increased from $386,250 to $400,000 in connection with his promotion to Chief Financial Officer. |
Executive compensation | 39 |
The chart below summarizes the 2020 annual incentive plan performance measures and weightings for our NEOs.
Weight in determining annual incentive | ||
Volume Points |
Operating Income | |
30%
|
70%
|
40 | Executive compensation |
The following table shows the performance targets set by the Committee with respect to 2020 and the Companys performance relative to those targets.
2020 Annual incentive plan performance targets
Target |
2020 Target
|
2020 Results
|
2020 Results as a % of target
| |||||||||
Volume Points (millions) | 6,330 | 6,926 | 109.4% | |||||||||
Operating income (millions) | $656.3 | $797.9 | (1) | 121.6% |
(1) | Operating Income presented as adjusted, as discussed below. Operating Income without any COVID-19 expense adjustments would be approximately $776.7 million, which exceeds the maximum payout threshold at approximately $708.9 million. |
For 2020, bonuses were awarded for results at or above 95% of the applicable target (with payouts capped at performance levels at/above 108% of the applicable target). Should 95% of the applicable financial target not be achieved, there is no bonus funding or payouts to the NEOs for that metric. To align with our sales-oriented culture and our desire to continuously strive for incremental performance improvements throughout the year, beginning with performance of 95% of target, potential payouts increase in steps for each performance hurdle shown below (i.e., payouts are not interpolated for performance outcomes between two levels). The Committee determined the maximum percentage of 108% encourages the Companys high performance culture. This bonus scale is designed to encourage realistic target-setting and prudent risk-taking while simultaneously creating consequences for not meeting target and capping the potential payout in order to avoid excessive incentive awards as compared to performance. Our 2020 annual incentive performance (and corresponding payout) levels were established as follows:
2020 Annual incentive plan leverage
Performance Hurdles (% of Target) Volume Points and Operating Income | ||||||||||||||||||||
Threshold | Target | Maximum | ||||||||||||||||||
Below 95% |
95% | 96.25% | 97.5% | 98.75% | 100% | 102% | 104% | 106% | 108% | |||||||||||
Payout (% of Target) |
0% | 50% | 62.5% | 75% | 87.5% | 100% | 125% | 150% | 175% | 200% |
Executive compensation | 41 |
The following tables detail the Companys performance for each metric under the Annual Incentive Plan, as well as the resulting payout for each of our NEOs.
2020 Actual bonus payout detail
2020 Actual Results
Metric |
Weighting | Target Performance | Actual Performance | Actual Results (% of Target) |
||||||||||||
Volume Points (in millions) |
30% | 6,330 | 6,926 | 109.4% | ||||||||||||
Operating Income ($ in millions) |
70% | $656.3 | $797.9 | 121.6% | ||||||||||||
Aggregate |
100% |
2020 Payouts
Bonus Eligible Base Salary(1) |
Target Bonus | Actual Bonus | ||||||||||||||||||
NEO |
(% of Salary)(2) | $ | $ | (%
of Target)(1)(2) |
||||||||||||||||
John Agwunobi |
$831,669 | 107.76% | $896,207 | $1,792,422 | 200% | |||||||||||||||
John G. DeSimone |
$676,519 | 78.89% | $533,706 | $1,067,378 | 200% | |||||||||||||||
David Pezzullo |
$565,000 | 75% | $423,750 | $847,500 | 200% | |||||||||||||||
Alexander Amezquita |
$386,366 | 41.5% | $160,342 | $320,678 | 200% | |||||||||||||||
Alan Hoffman |
$634,475 | 60% | $380,685 | $761,370 | 200% | |||||||||||||||
Shin-Shing Bosco Chiu |
$450,000 | 60% | $270,000 | $540,000 | 200% |
(1) | Calculated using prorated salaries for Dr. Agwunobi and Messrs. DeSimone, Amezquita and Hoffman due to salary changes during the year, as further outlined under Base Salaries above. |
(2) | Calculated using prorated percentages for Dr. Agwunobi and Messrs. DeSimone and Amezquita. In 2020, prior to March 30, 2020, Dr. Agwunobis and Mr. DeSimones annual target bonus opportunities were each 75%. Effective March 30, 2020, Dr. Agwunobis and Mr. DeSimones annual target bonus opportunities were increased to 115% and 80%, respectively. Prior to November 9, 2020, Mr. Amezquitas annual target bonus opportunity was 40%, and effective November 9, 2020, increased to 50%. |
Each year, the Committee determines the form of equity grant. For 2020, the Committee maintained the equity mix and the performance measures applicable to long-term incentive awards to be comprised of 75% PSUs and 25% RSUs for our NEOs (other than Messrs. Johnson and Amezquita), as described above under Compensation program that aligns pay and performance.
Additional details of the 2020 equity awards made to our NEOs can be found below and in the tabular disclosure below under 2020 Grants of plan-based awards.
2020 Long-term incentive awards annual grant program
NEO |
PSU grant value(1) |
Total PSUs awarded(2) |
RSU grant value |
Total RSUs awarded |
||||||||||||
John Agwunobi |
|
$2,625,000 |
|
|
83,015 |
|
|
$875,000 |
|
|
27,761 |
| ||||
John G. DeSimone |
|
$1,687,500 |
|
|
50,553 |
|
|
$562,500 |
|
|
16,850 |
| ||||
David Pezzullo |
|
$900,000 |
|
|
23,778 |
|
|
$300,000 |
|
|
7,926 |
| ||||
Alexander Amezquita |
|
|
|
|
|
|
|
$500,000 |
|
|
12,158 |
| ||||
Alan Hoffman |
|
$750,000 |
|
|
19,815 |
|
|
$250,000 |
|
|
6,605 |
| ||||
Shin-Shing Bosco Chiu |
|
$487,500 |
|
|
12,879 |
|
|
$162,500 |
|
|
4,293 |
|
(1) | The Committee approved the awards in February 2020. At the time of grant, the performance targets were tied to the Companys Long-Range Forecast, which was not determined until June 2020 due to the uncertainties surrounding COVID-19. The amounts in this table reflect the fair value of the awards at the time the Committee approved the grants, and the amounts set forth in the 2020 Summary Compensation Table reflect the fair value at the time the Long-Range Forecast was determined. |
(2) | Total PSUs are listed at target level of performance. |
42 | Executive compensation |
Executive compensation | 43 |
44 | Executive compensation |
Executive compensation | 45 |
Our level of compensation for our NEOs was compared to compensation paid by the Herbalife Nutrition Peer Group. The criteria used to identify the Herbalife Nutrition Peer Group were: (1) principal operations in the U.S. with an international presence we operate in 95 markets around the world in a highly regulated business where approximately 76% of our net sales for the year ended December 31, 2020, were generated outside of the United States; (2) financial scope our management talent should be similar to that of companies of a similar size in terms of revenues and market capitalization; (3) industry we compete for talent with other companies in consumer product related industries; and (4) common peer of peers we examined companies that are most frequently considered peers by Herbalife Nutritions peers. Annually, the Committee reviews the peer group and updates the group as appropriate.
With respect to pay decisions regarding 2020 NEO compensation, the industry peer group was comprised of the sixteen (16) companies listed below. All of the peer companies were within the range of approximately 50% and 200% of Herbalifes trailing twelve-month revenues at the time the peer group was established in July 2019. The peer group median revenue of $5.4 billion and median market capitalization of $7.8 billion, in each case at the time the Herbalife Nutrition Peer Group was established, were comparable to those of Herbalife Nutrition. During this period, the Herbalife Nutrition Peer Group consisted of the following:
Company |
Industry | Revenue
|
Market capitalization* ($ millions) |
|||||||
Avon Products Inc.
|
Personal Products
|
|
$
|
(1)
|
|
$
|
(1)
| |||
Campbell Soup Co
|
Packaged Foods and Meats
|
|
$8,848
|
|
|
$14,647
|
| |||
Church & Dwight Inc.
|
Household Products
|
|
$4,896
|
|
|
$21,672
|
| |||
The Clorox Company
|
Household Products
|
|
$7,524
|
|
|
$25,452
|
| |||
Conagra Brands, Inc.
|
Packaged Foods and Meats
|
|
$11,517
|
|
|
$17,714
|
| |||
Coty Inc.
|
Personal Products
|
|
$4,163
|
|
|
$5,377
|
| |||
Edgewell Personal Care Co
|
Personal Products
|
|
$1,947
|
|
|
$1,885
|
| |||
Hain Celestial Group Inc.
|
Packaged Foods and Meats
|
|
$2,092
|
|
|
$4,041
|
| |||
International Flavors & Fragrances
|
Specialty Chemicals
|
|
$5,084
|
|
|
$11,639
|
| |||
The J.M. Smucker Company
|
Packaged Foods and Meats
|
|
$8,070
|
|
|
$13,189
|
| |||
McCormick & Co, Inc.
|
Packaged Foods and Meats
|
|
$5,601
|
|
|
$25,508
|
| |||
Nu Skin Enterprises Inc.
|
Personal Products
|
|
$2,582
|
|
|
$2,788
|
| |||
Post Holdings Inc.
|
Packaged Foods and Meats
|
|
$5,700
|
|
|
$6,655
|
| |||
Spectrum Brands Holdings, Inc.
|
Household Products
|
|
$3,964
|
|
|
$3,403
|
| |||
TreeHouse Foods, Inc.
|
Packaged Foods and Meats
|
|
$4,350
|
|
|
$2,401
|
| |||
Tupperware Brands Corp
|
Housewares and Specialties
|
|
$1,740
|
|
|
$1,593
|
| |||
Herbalife Nutrition Ltd.
|
Personal Products
|
|
$5,542
|
|
|
$5,844
|
| |||
Percentile Rank |
|
63 |
% |
|
45 |
% |
* | As of December 31, 2020. |
(1) | Avon Products was acquired by Natura & Co in January 2020. |
46 | Executive compensation |
After reviewing the peer group in July 2020, Avon Products Inc. was removed from the Herbalife Nutrition Peer Group due to acquisition. For 2021 pay decisions, the Herbalife Nutrition Peer Group will consist of the following:
Company |
Industry | Revenue (last twelve months)* ($ millions) |
Market capitalization* ($ millions) |
|||||||
Campbell Soup Co
|
Packaged Foods and Meats
|
|
$8,848
|
|
|
$14,647
|
| |||
Church & Dwight Inc.
|
Household Products
|
|
$4,896
|
|
|
$21,672
|
| |||
The Clorox Company
|
Household Products
|
|
$7,524
|
|
|
$25,452
|
| |||
Conagra Brands, Inc.
|
Packaged Foods and Meats
|
|
$11,517
|
|
|
$17,714
|
| |||
Coty Inc.
|
Personal Products
|
|
$4,163
|
|
|
$5,377
|
| |||
Edgewell Personal Care Co
|
Personal Products
|
|
$1,947
|
|
|
$1,885
|
| |||
Hain Celestial Group Inc.
|
Packaged Foods and Meats
|
|
$2,092
|
|
|
$4,041
|
| |||
International Flavors & Fragrances
|
Specialty Chemicals
|
|
$5,084
|
|
|
$11,639
|
| |||
The J.M. Smucker Company
|
Packaged Foods and Meats
|
|
$8,070
|
|
|
$13,189
|
| |||
McCormick & Co, Inc.
|
Packaged Foods and Meats
|
|
$5,601
|
|
|
$25,508
|
| |||
Nu Skin Enterprises Inc.
|
Personal Products
|
|
$2,582
|
|
|
$2,788
|
| |||
Post Holdings Inc.
|
Packaged Foods and Meats
|
|
$5,700
|
|
|
$6,655
|
| |||
Spectrum Brands Holdings, Inc.
|
Household Products
|
|
$3,964
|
|
|
$3,403
|
| |||
TreeHouse Foods, Inc.
|
Packaged Foods and Meats
|
|
$4,350
|
|
|
$2,401
|
| |||
Tupperware Brands Corp
|
Housewares and Specialties
|
|
$1,740
|
|
|
$1,593
|
| |||
Herbalife Nutrition Ltd.
|
Personal Products
|
|
$5,542
|
|
|
$5,844
|
| |||
Percentile Rank |
63 | % | 45 | % |
* | As of December 31, 2020. |
Executive compensation | 47 |
Executive officers of the registrant
NEO
|
Age
|
Position with the company
|
Officer since
| |||||
Dr. John Agwunobi
|
|
56
|
|
Chairman and Chief Executive Officer
|
2018
| |||
John DeSimone
|
|
54
|
|
President
|
2009
| |||
David Pezzullo
|
|
55
|
|
Chief Operating Officer
|
2014
| |||
Alexander Amezquita
|
|
47
|
|
Chief Financial Officer
|
2017
| |||
Alan Hoffman
|
|
54
|
|
Executive Vice President, Global Corporate Affairs
|
2014
| |||
Robert Levy
|
|
62
|
|
Executive Vice President, Worldwide Distributor Affairs and Latin America
|
2004
| |||
Henry Wang
|
|
51
|
|
Executive Vice President, General Counsel and Corporate Secretary
|
2018
| |||
Edi Hienrich
|
|
59
|
|
Senior Vice President and Managing Director, EMEA and India
|
2009
| |||
Thomas Harms
|
|
59
|
|
Senior Vice President and Managing Director, China and APAC
|
2017
|
48 | Executive compensation |
2020 Summary compensation table
The following table sets forth the total compensation for the fiscal years ended December 31, 2020, 2019 and 2018, of the Companys Chief Executive Officer, Chief Financial Officer, Former Chief Executive Officer, Former Chief Financial Officer, and each of the three other most highly compensated executive officers*:
Name and principal position |
Year | Salary ($) |
Stock ($)(1) |
Option awards ($)(1) |
Non-equity incentive plan compensation ($)(2) |
All other compensation ($) |
Total ($) |
|||||||||||||||||||
Dr. John Agwunobi |
2020 | 824,346 | 4,589,062 | | 1,792,422 | 29,512 | (3) | 7,235,342 | ||||||||||||||||||
Chairman and Chief |
2019 | 600,923 | 1,279,989 | | 322,246 | 21,662 | 2,224,820 | |||||||||||||||||||
Executive Officer |
2018 | 506,589 | 1,279,829 | | 576,841 | 18,537 | 2,381,796 | |||||||||||||||||||
John G. DeSimone |
2020 | 674,539 | 2,824,202 | | 1,067,378 | 24,269 | (4) | 4,590,388 | ||||||||||||||||||
President |
2019 | 619,000 | 1,279,989 | | 330,778 | 46,001 | 2,275,768 | |||||||||||||||||||
2018 | 619,000 | 1,279,829 | | 858,863 | 72,487 | 2,830,179 | ||||||||||||||||||||
David Pezzullo |
2020 | 565,000 | 1,363,827 | | 847,500 | 20,435 | (5) | 2,796,762 | ||||||||||||||||||
Chief Operating Officer |
2019 | 565,000 | 1,199,947 | | 301,922 | 44,063 | 2,110,932 | |||||||||||||||||||
2018 | 551,850 | 1,199,915 | | 765,691 | 45,161 | 2,562,617 | ||||||||||||||||||||
Alexander Amezquita* |
2020 | 385,673 | 499,957 | | 320,678 | 10,635 | (6) | 1,216,943 | ||||||||||||||||||
Chief Financial Officer |
| | | | | | | |||||||||||||||||||
| | | | | | | ||||||||||||||||||||
Alan Hoffman* |
2020 | 633,999 | 1,136,522 | | 761,370 | 22,850 | (7) | 2,554,741 | ||||||||||||||||||
Executive Vice President, |
| | | | | | | |||||||||||||||||||
Global Corporate Affairs |
| | | | | | | |||||||||||||||||||
Michael Johnson |
2020 | 337,523 | | | | 54,794 | (8) | 392,317 | ||||||||||||||||||
Former Chairman and |
2019 | 873,692 | 134,988 | | 844,795 | 229,483 | 2,082,958 | |||||||||||||||||||
Chief Executive Officer |
2018 | 436,346 | 134,987 | | 658,296 | 16,711 | 1,246,340 | |||||||||||||||||||
Shin-Shing Bosco Chiu |
2020 | 450,000 | 738,697 | | 540,000 | 16,410 | (9) | 1,745,107 | ||||||||||||||||||
Chief Risk Officer (Former |
2019 | 446,154 | 649,985 | | 190,923 | 16,245 | 1,303,307 | |||||||||||||||||||
Chief Financial Officer) |
2018 | 409,198 | 649,839 | | 409,599 | 15,123 | 1,483,759 |
* | Mr. Amezquita was an NEO for the first time in fiscal year 2020. Mr. Hoffman has previously been an NEO prior to 2018, but was not an NEO in 2018 nor 2019. Accordingly, only information relating to their fiscal year 2020 compensation is included in the compensation tables and related discussions of NEO compensation. |
Executive compensation | 49 |
(1) | Amounts represent the aggregate grant date fair value of the relevant award(s) presented in accordance with ASC Topic 718, Compensation Stock Compensation. See note 9 of the notes to consolidated financial statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2020 regarding assumptions underlying valuation of equity awards. For the 2020 PSU grants, the grant date fair values of such awards, assuming performance at the maximum level would be $7,428,182 for Dr. Agwunobi, $4,523,482 for Mr. DeSimone, $2,127,655 for Mr. Pezzullo, $1,773,046 for Mr. Hoffman and $1,152,413 for Mr. Chiu. Messrs. Amezquita and Johnson did not receive 2020 PSU grants. |
(2) | Incentive plan amounts determined as more specifically discussed under Compensation discussion and analysis Annual incentive awards & long-term incentive program Targets and award determination. |
(3) | Amounts disclosed in this column for Dr. Agwunobi include: (i) $18,877 in deferred compensation which represents the Companys matching contribution earned in 2020 but credited to Dr. Agwunobis account in 2021; (ii) $660 in Company-paid premiums for executive life insurance; and (iii) $9,975 in Company paid 401(k) matching contributions. |
(4) | Amounts disclosed in this column for Mr. DeSimone include: (i) $13,634 in deferred compensation which represents the Companys matching contribution earned in 2020 but credited to Mr. DeSimones account in 2021; (ii) $660 in Company-paid premiums for executive life insurance; and (iii) $9,975 in Company-paid 401(k) matching contributions. |
(5) | Amounts disclosed in this column for Mr. Pezzullo include: (i) $9,800 in deferred compensation which represents the Companys matching contribution earned in 2020 but credited to Mr. Pezzullos account in 2021; (ii) $660 in Company-paid premiums for executive life insurance; and (iii) $9,975 in Company-paid 401(k) matching contributions. |
(6) | Amounts disclosed in this column for Mr. Amezquita include: (i) $660 in Company-paid premiums for executive life insurance; and (ii) $9,975 in Company paid 401(k) matching contributions. |
(7) | Amounts disclosed in this column for Mr. Hoffman include: (i) $12,215 in deferred compensation which represents the Companys matching contribution earned in 2020 but credited to Mr. Hoffmans account in 2021; (ii) $660 in Company-paid premiums for executive life insurance; and (iii) $9,975 in Company paid 401(k) matching contributions. |
(8) | Amounts disclosed in this column for Mr. Johnson include: (i) $275 in Company-paid premiums for executive life insurance; (ii) $5,494 in Company-paid 401(k) matching contributions; and (iii) $49,025 attributable to personal use of private aircraft. |
(9) | Amounts disclosed in this column for Mr. Chiu include: (i) $5,775 in deferred compensation which represents the Companys matching contribution earned in 2020 but credited to Mr. Chius account in 2021; (ii) $660 in Company-paid premiums for executive life insurance; and (iii) $9,975 in Company paid 401(k) matching contributions. |
2020 Grants of plan-based awards
The following table sets forth all grants of plan-based awards made to the NEOs during the fiscal year ended December 31, 2020. For further discussion regarding the grants see Compensation discussion and analysis Annual incentive awards and long-term incentive awards Long-term incentive awards.
NEO |
Grant Date(1) | Estimated future payouts under non-equity incentive plan awards |
Estimated future payouts under equity incentive plan awards(1) |
All other stock awards: number of shares or |
Exercise of base price of SAR Awards ($/share) |
Grant date fair value of Stock ($) |
||||||||||||||||||||||||||||||
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
||||||||||||||||||||||||||||||||
John Agwunobi |
|
896,207 |
(3) |
|
1,792,422 |
(3) |
||||||||||||||||||||||||||||||
|
02/20/2020 |
|
|
21,135 |
|
|
33,817 |
|
|
59,180 |
|
|
|
|
|
|
|
|
1,454,724 |
| ||||||||||||||||
|
03/30/2020 |
|
|
48,043 |
|
|
76,869 |
|
|
134,521 |
|
|
|
|
|
|
|
|
3,134,337 |
| ||||||||||||||||
John G. DeSimone |
|
533,706 |
(4) |
|
1,067,378 |
(4) |
||||||||||||||||||||||||||||||
|
02/20/2020 |
|
|
21,135 |
|
|
33,817 |
|
|
59,180 |
|
|
|
|
|
|
|
|
1,454,724 |
| ||||||||||||||||
|
03/30/2020 |
|
|
20,991 |
|
|
33,586 |
|
|
58,776 |
|
|
|
|
|
|
|
|
1,369,477 |
| ||||||||||||||||
David Pezzullo |
|
423,750 |
|
|
847,500 |
|
||||||||||||||||||||||||||||||
|
02/20/2020 |
|
|
19,815 |
|
|
31,704 |
|
|
55,482 |
|
|
|
|
|
|
|
|
1,363,827 |
| ||||||||||||||||
Alexander Amezquita |
|
160,342 |
(5) |
|
320,678 |
(5) |
||||||||||||||||||||||||||||||
|
02/20/2020 |
|
|
6,076 |
|
|
6,076 |
|
|
6,076 |
|
|
|
|
|
|
|
|
229,977 |
| ||||||||||||||||
|
11/09/2020 |
|
|
6,082 |
|
|
6,082 |
|
|
6,082 |
|
|
|
|
|
|
|
|
269,980 |
| ||||||||||||||||
Alan Hoffman |
|
380,685 |
(6) |
|
761,370 |
(6) |
||||||||||||||||||||||||||||||
|
02/20/2020 |
|
|
16,512 |
|
|
26,420 |
|
|
46,235 |
|
|
|
|
|
|
|
|
1,136,522 |
| ||||||||||||||||
Michael Johnson(7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Shin-Shing Bosco Chiu |
|
270,000 |
|
|
540,000 |
|
||||||||||||||||||||||||||||||
|
02/20/2020 |
|
|
10,732 |
|
|
17,172 |
|
|
30,051 |
|
|
|
|
|
|
|
|
738,696 |
|
50 | Executive compensation |
(1) | All equity grants to NEOs made in February 2020 were approved by the Committee in February 2020. The equity grants to Messrs. Agwunobi and DeSimone in March 2020 were approved in February 2020, and made in accordance with the terms of their respective employment agreements that became effective March 30, 2020 as part of their promotion on such date to Chief Executive Officer and President, respectively. The equity grant to Mr. Amezquita in November 2020 was approved by the Committee in November 2020. All equity grants reflected in this table were made under the 2014 Plan. |
(2) | For the 2020 PSU grants, the grant date fair value above was calculated assuming performance at the target level. |
(3) | Estimated future payouts for Dr. Agwunobi are based upon a prorated bonus eligible salary of $831,669. |
(4) | Estimated future payouts for Mr. DeSimone are based upon a prorated bonus eligible salary of $676,519. |
(5) | Estimated future payouts for Mr. Amezquita are based upon a prorated bonus eligible salary of $386,366. |
(6) | Estimated future payouts for Mr. Hoffman are based upon a prorated bonus eligible salary of $634,475. |
(7) | Mr. Johnson stepped down as the Companys Chief Executive Officer effective March 30, 2020. |
Executive compensation | 51 |
Outstanding equity awards at 2020 fiscal year-end
The following table sets forth equity awards of the NEOs outstanding as of December 31, 2020.
NEO | Grant Date |
Option/Stock Appreciation Right Awards
|
Stock Unit Awards
|
|||||||||||||||||||||||||
Number of securities underlying unexercised options/SARs (#) exercisable |
Equity incentive plan awards: number of securities unexercised options/SARs (#)
|
Exercise Price ($) |
Expiration date |
Equity incentive plan awards: number of unearned stock units or other rights that have not vested (#) |
Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) |
|||||||||||||||||||||||
John Agwunobi | 02/29/2016 | 55,324 | 27.375 | 02/28/2026 | (1) | |||||||||||||||||||||||
02/27/2017 | 21,186 | 28.595 | 02/27/2027 | (1) | ||||||||||||||||||||||||
02/26/2018 | 38,018 | (2) | $1,826,765 | |||||||||||||||||||||||||
02/26/2018 | 4,449 | (3) | $213,774 | |||||||||||||||||||||||||
02/21/2019 | 17,103 | (4) | $821,799 | |||||||||||||||||||||||||
02/21/2019 | 4,561 | (3) | $219,156 | |||||||||||||||||||||||||
02/20/2020 | 25,363 | (5) | $1,218,692 | |||||||||||||||||||||||||
02/20/2020 | 8,454 | (3) | $406,215 | |||||||||||||||||||||||||
03/30/2020 | 57,652 | (5) | $2,770,179 | |||||||||||||||||||||||||
03/30/2020 | 19,217 | (3) | $923,377 | |||||||||||||||||||||||||
John G. DeSimone | 05/09/2016 | 116,560 | 31.255 | 05/09/2026 | (1) | |||||||||||||||||||||||
02/27/2017 | 122,528 | 28.595 | 02/27/2027 | (1) | ||||||||||||||||||||||||
02/26/2018 | 38,018 | (2) | $1,826,765 | |||||||||||||||||||||||||
02/26/2018 | 4,449 | (3) | $213,774 | |||||||||||||||||||||||||
02/21/2019 | 17,103 | (4) | $821,799 | |||||||||||||||||||||||||
02/21/2019 | 4,561 | (3) | $219,156 | |||||||||||||||||||||||||
02/20/2020 | 25,363 | (5) | $1,218,692 | |||||||||||||||||||||||||
02/20/2020 | 8,454 | (3) | $406,215 | |||||||||||||||||||||||||
03/30/2020 | 25,190 | (5) | $1,210,380 | |||||||||||||||||||||||||
03/30/2020 | 8,396 | (3) | $403,428 | |||||||||||||||||||||||||
David Pezzullo | 05/18/2011 | 20,764 | 26.645 | 05/18/2021 | (1) | |||||||||||||||||||||||
03/01/2012 | 6,816 | 33.85 | 03/01/2022 | (1) | ||||||||||||||||||||||||
12/19/2013 | 29,508 | 39.79 | 12/19/2023 | (1) | ||||||||||||||||||||||||
05/09/2016 | 43,668 | 31.255 | 05/09/2026 | (1) | ||||||||||||||||||||||||
02/27/2017 | 45,902 | 28.595 | 02/27/2027 | (1) | ||||||||||||||||||||||||
02/26/2018 | 35,642 | (2) | $1,712,598 | |||||||||||||||||||||||||
02/26/2018 | 4,172 | (3) | $200,465 | |||||||||||||||||||||||||
02/21/2019 | 16,034 | (4) | $770,434 | |||||||||||||||||||||||||
02/21/2019 | 4,276 | (3) | $205,462 | |||||||||||||||||||||||||
02/20/2020 | 23,778 | (5) | $1,142,533 | |||||||||||||||||||||||||
02/20/2020 | 7,926 | (3) | $ 380,844 | |||||||||||||||||||||||||
Alexander Amezquita | 02/26/2018 | 3,198 | (3) | $153,664 | ||||||||||||||||||||||||
02/21/2019 | 3,278 | (3) | $157,508 | |||||||||||||||||||||||||
02/20/2020 | 6,076 | (3) | $291,952 | |||||||||||||||||||||||||
11/09/2020 | 6,082 | (3) | $292,240 | |||||||||||||||||||||||||
Alan Hoffman | 03/02/2015 | 26,504 | 15.22 | 03/02/2025 | (1) | |||||||||||||||||||||||
05/09/2016 | 26,200 | 31.255 | 05/09/2026 | (1) | ||||||||||||||||||||||||
02/27/2017 | 36,722 | 28.595 | 02/27/2027 | (1) | ||||||||||||||||||||||||
02/26/2018 | 19,304 | (2) | $927,557 | |||||||||||||||||||||||||
02/26/2018 | 2,259 | (3) | $108,545 | |||||||||||||||||||||||||
02/21/2019 | 8,685 | (4) | $417,314 | |||||||||||||||||||||||||
02/21/2019 | 2,316 | (3) | $111,284 | |||||||||||||||||||||||||
02/20/2020 | 19,815 | (5) | $952,111 | |||||||||||||||||||||||||
02/20/2020 | 6,605 | (3) | $317,370 | |||||||||||||||||||||||||
Michael Johnson(6) | | | | | | | | |||||||||||||||||||||
Shin-Shing Bosco Chiu | 12/19/2013 | 24,212 | 39.79 | 12/19/2023 | (1) | |||||||||||||||||||||||
05/07/2015 | 42,500 | 23.90 | 05/07/2025 | (1) | ||||||||||||||||||||||||
05/09/2016 | 15,450 | 31.255 | 05/09/2026 | (1) | ||||||||||||||||||||||||
02/27/2017 | 16,242 | 28.595 | 02/27/2027 | (1) | ||||||||||||||||||||||||
02/26/2018 | 19,304 | (2) | $927,557 | |||||||||||||||||||||||||
02/26/2018 | 2,259 | (3) | $108,545 | |||||||||||||||||||||||||
02/21/2019 | 8,685 | (4) | $417,314 | |||||||||||||||||||||||||
02/21/2019 | 2,316 | (3) | $111,284 | |||||||||||||||||||||||||
02/20/2020 | 12,879 | (5) | $618,836 | |||||||||||||||||||||||||
02/20/2020 | 4,293 | (3) | $206,279 |
52 | Executive compensation |
(1) | These SARs were fully vested as of December 31, 2020. |
(2) | Subject to continued employment, these PSUs vest 100% on December 31, 2020 provided that the applicable performance criteria are met. Reflects the number of PSUs that were actually received or acquired in February 2021 following certification of the performance thresholds by the Compensation Committee once metrics results were available. |
(3) | Subject to continued employment, these RSUs vest annually, 20% on the first anniversary, 20% on the second anniversary and 60% on the third anniversary of the grant date. |
(4) | Subject to continued employment, these PSUs vest 100% on December 31, 2021 provided that the applicable performance criteria are met. The number of PSUs reflected assumes a target level of performance. |
(5) | Subject to continued employment, these PSUs vest 100% on December 31, 2022 provided that the applicable performance criteria are met. The number of PSUs reflected assumes a target level of performance. |
(6) | Mr. Johnson stepped down as the Companys Chief Executive Officer effective March 30, 2020, and as a member of the Board effective April 29, 2020. |
2020 Option exercises and stock vested
The following table sets forth information with respect to Common Shares acquired upon the exercise of stock options/SARs and the vesting of stock awards of the NEOs during the fiscal year ended December 31, 2020.
NEO | Option awards | Stock awards | ||||||||||||||
Number of shares acquired on exercise (#)
|
Value realized on exercise ($)
|
Number of shares |