Form DEF 14A SpartanNash Co For: May 26

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.       )

 

 

 

 

 

SpartanNash Company

 

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

 

  

 

 

 

 

 

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SpartanNash Company Notice of Annual Meeting and Proxy Statement

April 13, 2021

Dear SpartanNash Shareholder,

 

Looking back on 2020, I am proud of the way SpartanNash, specifically our team of frontline associates, worked tirelessly to ensure their communities had the food, household goods, and pharmaceuticals they needed. Their collective efforts ensured a safe environment in which we were able to meet the increased demand from our customers and significantly exceed our financial expectations for the year. Our 2020 results tell the story:

 

 

 

 

 

 

The dynamic environment we navigated in 2020 highlighted our need to make certain improvements. Our focus in 2021 is to make the right investments to attract and retain top performing employees and improve our systems and processes.

 

 

 

 

 

 

On behalf of the Board of Directors, our leadership team, and all of our associates, I thank you for your continued support and investment in SpartanNash Company.

 

Sincerely,

Tony B. Sarsam

President and Chief Executive Officer

 

 

 

Your vote is important. PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY OR VOTE BY PHONE OR ONLINE.

 

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SPARTANNASH COMPANY

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To our shareholders:

The 2021 Annual Meeting of Shareholders of SpartanNash Company will be held virtually on Wednesday, May 26, 2021, at 9:00 a.m., Eastern Daylight Time. At the meeting, we will consider and vote on:

Record date: You may vote if you were a shareholder of record on March 29, 2021.

If you plan to attend the meeting: We have adopted a virtual format for our Annual Meeting in order to provide all of our shareholders an opportunity to participate regardless of location.  You may participate in the virtual meeting by registering in advance at www.proxydocs.com/SPTN prior to the deadline of 5:00 p.m. Eastern Daylight Time on May 24, 2021. Participants will be required to enter the control number found on their proxy card, voting instruction form or Notice of Electronic Availability. Upon completing registration, participants will receive further instructions via email, including unique links that will allow them to access the meeting and will permit them to submit questions during the meeting.

Important Notice Regarding the Availability of Proxy Materials: SpartanNash’s Proxy Statement and annual report to shareholders for the fiscal year ended January 2, 2021 are currently available for viewing via online at www.proxydocs.com/SPTN.

The Notice of Annual Meeting and accompanying Proxy Statement, Proxy, and 2020 annual report to shareholders were first sent or made available to our shareholders on April 13, 2021.  

Securities and Exchange Commission rules allow us to furnish our proxy statement and annual report to our shareholders on the Internet. We are pleased to take advantage of these rules and believe that they enable us to provide our shareholders with the information that they need, while lowering the cost of delivery and reducing the environmental impact of the documents related to our Annual Meeting. You may obtain electronic copies of all of our filings with the U.S. Securities and Exchange Commission in the “Investor Relations” section of our website, www.spartannash.com, by clicking the “SEC Filings” link.

We will not report on our results of operations at the meeting. Please visit the Investor Relations section of our website, www.spartannash.com, for information about our business and results of operations.

It is important that your shares be represented at the Annual Meeting, regardless of how many shares you own. Please vote your shares using any of the means described in our proxy statement. Voting your shares prior to the meeting will not affect your right to vote virtually if you attend the virtual meeting.

BY ORDER OF THE BOARD OF DIRECTORS

Your vote is important. PLEASE VOTE PROMPTLY ONLINE, BY PHONE, OR BY MAIL. See the information in the “General Information About the Meeting” section regarding how to vote, revoke a proxy, and vote in person.

 

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TABLE OF CONTENTS

 

 

 

 

 

 

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SpartanNash Company

ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD May 26, 2021

PROXY STATEMENT

Dated April 13, 2021

 

 

PROXY SUMMARY

 

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider. You should carefully read the entire proxy statement and the Company’s annual report on Form 10-K before voting. We refer to the fiscal year ended January 2, 2021 as “2020”, the fiscal year ended December 28, 2019 as “2019,” and the fiscal year ended December 29, 2018 as “2018.” We refer to SpartanNash Company as “SpartanNash,” the “Company,” “we,” and “us.”

Annual Meeting of Shareholders

Meeting Agenda

Voting Matters and Vote Recommendations

The Board of Directors recommends that you vote FOR the election of each nominee, FOR approval of the Company’s executive compensation and FOR the ratification of the selection of Deloitte & Touche LLP.

 

 

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PROXY SUMMARY (cont’d)

 

Quorum and Vote Required

The presence in person or by properly executed proxy of the holders of a majority of all issued and outstanding shares of SpartanNash common stock entitled to vote at the meeting is necessary for a quorum. At the Annual Meeting we will count toward a quorum any shares that are present or represented by proxy, including abstentions and shares represented by a broker non-vote on any matter.

A plurality of the shares voting is required to elect directors. This means that, if there are more nominees than positions to be filled, the nominees who receive the most votes will be elected to the open director positions. Abstentions, broker non-votes and other shares that are not voted in person or by proxy will not be included in the vote count to determine if a plurality of shares voted in favor of each nominee. A director-nominee receiving a greater number of votes “withheld” than votes “for” election is required to offer promptly his or her resignation to the Nominating and Corporate Governance Committee upon certification of the shareholder vote.

The other proposals set forth in this proxy statement will be approved if a majority of the shares that are voted on the proposal at the meeting are voted in favor of approval. Abstentions, broker non-votes and other shares that are not voted on a proposal in person or by proxy will not be included in the vote count to determine if a majority of shares voted on the proposal voted in favor of approval. The outcome of the advisory vote to approve executive compensation will not be binding on the Company, but the Compensation Committee and the Board of Directors will consider the voting results when making future compensation decisions.

We do not know of any other matters to be presented at the meeting. Generally, any other proposal to be voted on at the meeting would be approved if a majority of the shares that are voted on the proposal at the meeting are voted in favor of the proposal. Abstentions, broker non-votes and other shares that are not voted on the proposal in person or by proxy would not be included in the vote count to determine if a majority of shares voted on the proposal voted in favor of each such proposal.

 

 

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PROXY SUMMARY (cont’d)

 

Board of Directors

The following table provides summary information about our directors during fiscal 2020. During fiscal 2020, each director attended at least 96% of the meetings of the Board and each committee on which he or she was a member.

 

 

 

 

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PROXY SUMMARY (cont’d)

 

Corporate Governance Highlights

The Board believes that effective corporate governance should reinforce a culture of corporate integrity, foster the Company’s pursuit of profitable growth and ensure quality and continuity of corporate leadership. Highlights of our governance practices include:

Executive Compensation Advisory Vote

We are asking our shareholders to approve on an advisory basis our named executive officer compensation for 2020 (the “say-on-pay” proposal). The Board recommends a FOR vote because it believes that our compensation policies and practices are effective in achieving the Company’s goal of attracting, motivating, rewarding and retaining the senior management talent required to achieve our corporate objectives and increase shareholder value through long-term profitable growth. The Board believes that executive compensation is appropriately tied to corporate performance.

Shareholder Outreach

During 2020 our executive leadership team actively sought out engagement with our investors to discuss our Company, our governance practices, and other topics of importance to investors. Our Board of Directors believes that Company management should proactively seek productive dialogue with our shareholders.

 

 

 

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ELECTION OF DIRECTORS

 

 

 

The Board of Directors proposes that the following individuals be elected as directors of SpartanNash for a one-year term expiring at the 2022 Annual Meeting:

M. Shân Atkins

Frank M. Gambino

Douglas A. Hacker

Yvonne R. Jackson

Matthew Mannelly

Elizabeth A. Nickels

Hawthorne L. Proctor

Tony B. Sarsam

William R. Voss

Biographical information concerning the nominees appears below under the heading “The Board of Directors.” The persons named as proxies on the proxy card intend to vote for the election of each of the nominees. The proposed nominees are willing to be elected and to serve as directors. If any nominee becomes unable to serve or is otherwise unavailable for election, which we do not anticipate, the incumbent Board of Directors may select a substitute nominee. If a substitute nominee is selected, the shares represented by your proxy card will be voted for the election of the substitute nominee, unless you give other instructions. If a substitute is not selected, all proxies will be voted for the election of the remaining nominees. Proxies will not be voted for more than nine nominees.

Your Board of Directors recommends that you vote FOR election of all nominees as directors

 

 

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ADVISORY (NON-BINDING) APPROVAL OF THE COMPENSATION OF NAMED EXECUTIVE OFFICERS

 

 

 

As required under Section 14A of the Securities Exchange Act of 1934, shareholders may cast an advisory vote on the compensation of the Company’s named executive officers as disclosed in this proxy statement pursuant to the SEC’s compensation disclosure rules. At the Company’s 2017 Annual Meeting, shareholders voted in favor of advisory approval of named executive officer compensation on an annual basis. The next shareholder vote regarding the frequency of advisory approval of named executive officer compensation will occur at the 2023 Annual Meeting.

As described in more detail in the “Executive Compensation” section of this proxy statement, the Company has designed its executive compensation programs to attract, motivate, reward and retain the senior management talent to manage the Company to achieve our corporate objectives and increase shareholder value through long-term profitable growth. We believe our compensation programs are focused on pay-for-performance principles and are strongly aligned with the long-term interests of our shareholders. For these reasons, and the reasons discussed in the “Compensation Discussion and Analysis” section of this proxy statement, we are asking our shareholders to vote “FOR” the adoption of the following resolution:

“RESOLVED, that the shareholders of SpartanNash Company (the “Company”) approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in the Company’s proxy statement for the 2021 annual meeting under the heading entitled “Executive Compensation.”

This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy and programs described in this proxy statement.

The vote is not binding on the Company, the Board of Directors or the Compensation Committee. However, the Board of Directors and Compensation Committee value the opinions of our shareholders and will take the results of the vote into consideration when making future decisions regarding executive compensation.

Your Board of Directors recommends that you vote FOR approval of the compensation of the Company’s named executive officers.

 

 

 

 

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RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

 

 

 

SpartanNash’s Audit Committee has approved the selection of Deloitte & Touche LLP (“Deloitte”) as the Company’s independent auditors to audit the financial statements and internal controls of SpartanNash and its subsidiaries for the fiscal year ending January 1, 2022, and to perform such other appropriate accounting services as may be approved by the Audit Committee. The Audit Committee and the Board of Directors propose and recommend that shareholders ratify the selection of Deloitte to serve as the Company’s independent auditors for 2021.

The Audit Committee evaluates the independence of the auditors at least annually. Deloitte has provided written affirmation that they are independent under all applicable standards, and the Audit Committee believes that Deloitte has effective internal monitoring of their independence. The Company and Deloitte have complied with SEC requirements on audit partner rotation. The lead audit partner was most recently rotated for the fiscal year ending December 29, 2018.

Independence is not the sole factor in the selection of the Company’s independent auditor. The Audit Committee also considers price, quality of service and knowledge of SpartanNash and the Company’s industry when selecting its auditor.

More information concerning the relationship of the Company with its independent auditors appears below under the headings “Audit Committee,” “Independent Auditors,” and “Audit Committee Report.”

The Audit Committee and the Board of Directors believe that the continued retention of Deloitte as the Company’s independent registered public accounting firm is in the best interest of the Company and its shareholders. Although shareholder ratification is not required by the Company’s organizational documents or applicable law, the Board of Directors values the shareholders’ views on the Company’s independent registered public accounting firm and as a matter of good corporate practice we ask you to ratify the selection of Deloitte. In the event that the shareholders fail to ratify the selection, it will be considered a recommendation to the Board of Directors and the Audit Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit Committee may in its discretion select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.

Representatives of Deloitte are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions from shareholders.

Your Audit Committee and Board of Directors recommend that you vote FOR ratification of the selection of Deloitte & Touche LLP as our independent auditors for the fiscal year ending January 1, 2022.

 

 

 

 

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CORPORATE GOVERNANCE PRINCIPLES

 

 

 

SpartanNash is committed to developing and implementing principles of corporate governance to help the Board fulfill its responsibilities to shareholders and to provide a framework for overseeing the management of the Company. The Board has adopted a written Corporate Governance Policy. The Policy is designed to communicate our fundamental governance principles and to provide management, associates, and shareholders with insight to the Board’s ethical standards, expectations for conducting business, and decision-making processes.

More information regarding the Company’s corporate governance, including a copy of our Corporate Governance Policy, is available in the “Investor Relations — Corporate Governance” section of our website, www.spartannash.com.

Director Independence

SpartanNash’s Corporate Governance Policy requires that at least two-thirds of the directors must be independent. Eight of our ten current directors are independent under Nasdaq Marketplace Rules.

Director Tenure

The Board of Directors considers the length of service of a director when determining whether he or she is “independent” under applicable rules.

Because the merger of Nash Finch and Spartan Stores in 2013 (the “Merger”) fundamentally transformed each constituent company and created a new, larger, and more complex organization, the Board believes it is appropriate to measure director tenure by reference to service to the combined company. The table below presents the approximate tenure of each non-management director and the average for the Board, measured with respect to the combined companies, and the “registrant.”

Director Tenure

* Since the merger of Spartan Stores and Nash Finch on November 19, 2013 through the date of this proxy statement.

** Service only to SpartanNash Company (f/k/a Spartan Stores, Inc.), which is the “registrant” for SEC reporting purposes.

The Board engages in self-evaluation annually, using two processes in alternate years. In one year, the Board evaluates and assesses Committee performance and overall Board performance. In the alternate year, the Board conducts a peer review process of individual directors. The Board believes that these processes help promote a culture of objective and robust discussion and deliberation.

The Board of Directors’ Role in Risk Oversight

Management of risk is the direct responsibility of the Company’s senior leadership team. The Board of Directors is responsible for overseeing the Company’s risk management and risk mitigation. In its oversight of the Company’s risk-management process, the Board seeks to ensure that the Company is informed and deliberate in its risk-taking. The Company’s primary mechanisms for risk management are the Company’s enterprise risk management program (“ERM”), its internal audit program, strategic review sessions held between the Board and management, and the Company’s external audit by an independent accounting firm.

The Board of Directors regularly analyzes the Company’s strategic plan and objectives with management. As part of this process, the Board and management identify and assess strategic risks attendant to initiatives such as acquisitions and divestitures, major investments, financings and capital commitments.

 

 

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CORPORATE GOVERNANCE PRINCIPLES (cont’d)

 

 

The Board implements its risk oversight function both as a whole and through Committees, which meet regularly and report back to the full Board. In particular:

Board Leadership Structure

The Nominating and Corporate Governance Committee and the Board of Directors periodically evaluate the leadership structure of the Board of Directors in light of a variety of factors that the Board considers important, including the Company’s current Board composition, the experience and skills of our management team, continuity of leadership, and other factors.

The Board of Directors determined that while Mr. Eidson served as Interim Chief Executive Officer it was in the best interests of the Company and its shareholders to combine the roles of Chief Executive Officer and Chairman of the Board. Following the retention of Mr. Sarsam as Chief Executive Officer, the Board separated the roles of Chairman of the Board and Chief Executive Officer.  

The Board has elected a Lead Independent Director from among the independent directors. Presently, the Lead Independent Director is Douglas A. Hacker. The role of the Lead Independent Director is to aid and assist the Chairman and the rest of the Board in assuring effective corporate governance in managing the affairs of the Board and the Company.

Committee Charters

The Board has appointed three chartered committees: the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. The Board has approved a written committee charter for each of these committees. The charters define basic principles regarding each committee’s organization, purpose, authority and responsibilities. The charters for the Audit, Compensation, and Nominating and Corporate Governance Committees are available in the “Investor Relations — Corporate Governance” section of our website, www.spartannash.com.

Director Attendance

Each director is expected to make every effort to attend every Board meeting and every meeting of each Committee on which he or she serves as a member.

SpartanNash’s Board of Directors held the following meetings during 2020: twelve Board meetings; seven Audit Committee meetings; seven Compensation Committee meetings; and four Nominating and Corporate Governance Committee meetings. In 2020, each director attended at least 96% of the meetings of the Board of Directors and the committees on which he or she served. The Board is scheduled to meet at least quarterly and may meet more frequently. Independent directors meet in executive sessions, without the presence of management, at each regularly scheduled Board meeting.

Directors are also expected to attend the Annual Meeting unless compelling personal circumstances prevent attendance. All of the Company’s directors then in office attended the 2020 Virtual Annual Meeting.

 

 

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CORPORATE GOVERNANCE PRINCIPLES (cont’d)

 

 

Hedging and Pledging Prohibited

The Board has adopted a policy that prohibits an executive officer or director of the Company from purchasing any financial instrument or entering into any transaction that is designed to hedge or offset any decrease in the market value of the Company’s common stock or other equity securities (including, but not limited to, prepaid variable forward contracts, equity swaps, collars, or exchange funds).

In addition, the Company’s executive officers and directors are not permitted to pledge, or otherwise encumber shares of the Company’s common stock or other equity securities as collateral for indebtedness. This prohibition includes, but is not limited to, holding such shares in a margin account. A copy of the Company’s Policy on Hedging and Pledging Company Stock is available in the “Investor Relations” section of our corporate website, www.spartannash.com.

Majority Voting Policy

Under the Company’s Corporate Governance Policy, it will be presumed that any director who receives a greater number of votes “withheld” than votes “for” such election in an uncontested election at an Annual Meeting (a “Majority Withheld Vote”) does not have the full confidence of the shareholders. A director receiving a Majority Withheld Vote is required to offer his or her resignation from the Board to the Nominating and Corporate Governance Committee upon certification of the shareholder vote. The resignation will be effective if and when accepted by the Nominating and Corporate Governance Committee, (excluding the affected director from consideration of and voting on acceptance of the resignation).

Change in Employment Status

A director who experiences a material change in his or her employment status is expected to promptly offer his or her resignation as a director to the Nominating and Corporate Governance Committee. The Committee will promptly consider and vote upon acceptance or rejection of the director’s offer to resign (excluding the affected director from consideration of and voting on acceptance of the resignation).

Other Board Memberships

Executive officers of the Company must notify the Nominating and Corporate Governance Committee before serving as a member of the board of directors of any other business organization. The Nominating and Corporate Governance Committee reviews the Chief Executive Officer’s membership on external boards of directors at least annually. The Chief Executive Officer may not serve on the board of directors of more than one business organization not affiliated with the Company without the prior review and approval of the Nominating and Corporate Governance Committee. The Committee may limit the directorships for any other executive officer if it believes that they will interfere with the executive officer’s responsibilities to the Company. Non-management directors may not serve on more than three other public company boards without the prior review and approval of the Nominating and Corporate Governance Committee.

Code of Conduct

The Audit Committee has approved a Code of Conduct (the “Code”) that articulates the Company’s standards regarding business ethics and expectations. The Code applies to all associates, officers, and members of the Board of Directors. The Code establishes guidelines to help the Company conduct our business with honesty and integrity and in compliance with applicable law. The Code requires all associates of the Company to report promptly any violations of the Code. Associates may report violations through reporting systems on a confidential and anonymous basis. The Code is available in the “Investor Relations — Corporate Governance” section of our website, www.spartannash.com. We intend to satisfy the disclosure requirements regarding any amendment to, or waiver from, a provision of the Code of Conduct by making disclosures concerning such matters available on the Investor Relations page of our website.

 

 

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CORPORATE GOVERNANCE PRINCIPLES (cont’d)

 

 

Cyber Security

The Audit Committee provides assistance to the Board of Directors in fulfilling its responsibilities with respect to the oversight of cybersecurity, data security, and the response to security breaches. Senior leadership reports to the Committee quarterly on the Company’s management of cybersecurity risk. The Company has adopted the NIST Cyber Security Framework and is independently audited on the Company’s implementation of the framework. The Company validates associate awareness of cyber security by periodically sending phishing emails to its associates. Any associate who fails the phishing test is required to re-take Cyber Security awareness training.

Succession Planning

Under our Corporate Governance Policy, the Board of Directors maintains and periodically reviews a succession plan for the Company’s Chief Executive Officer and such other executive officers as it deems appropriate to manage the continuity of leadership in the execution of the Company’s business strategies. The succession plans are based upon recommendations of the Compensation Committee.

Board and Management Communication

SpartanNash is committed to open and effective communication between the Board and management. Directors are encouraged to consult with any SpartanNash manager or associate and may visit Company facilities without the approval or presence of corporate management. The Board is required to dedicate a substantial portion of at least one meeting per year to discussions with management regarding the Company’s strategic plan.

Director Education

SpartanNash encourages all its directors to attend continuing education programs so that they may stay abreast of developments in corporate governance and best practices and further develop their expertise. The Board of Directors expects that each director will attend periodically an appropriate continuing director education program.

Nominee Qualifications and the Nominations Process

There are no specific or minimum qualifications or criteria for nomination for election or appointment to the Board of Directors. The Nominating and Corporate Governance Committee identifies and evaluates nominees for director on a case-by-case basis, regardless of who recommended the nominee, and has no written procedures for doing so. The Board has identified certain qualifications, attributes and skills that should be represented on the Board as a whole. These are discussed beginning on page 18.

The Nominating and Corporate Governance Committee may engage and pay fees to third party search firms to assist in identifying possible nominees for director and providing information to assist the Committee in the evaluation of possible nominees.

The Board of Directors expects that there would be no material difference in the manner in which the Nominating and Corporate Governance Committee would evaluate a nominee for director that was recommended by a shareholder.

Board Diversity

The Board believes that the Company and its shareholders are best served by having a Board of Directors that has a diversity of perspectives, education, experience, skills, gender, race, and ethnicity, and will endeavor to seek out such candidates when searching for new directors. Currently:

 

 

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CORPORATE GOVERNANCE PRINCIPLES (cont’d)

 

 

Shareholder Communications with Directors

Shareholders who wish to send communications to SpartanNash’s Board of Directors may do so by sending them in care of the Secretary at the address set forth on the Notice of Meeting included in this proxy statement. Communications may be addressed either to specified individual directors or the entire Board. The Secretary has the discretion to screen communications that are unrelated to the business or governance of SpartanNash, or otherwise inappropriate. The Secretary will, however, compile all shareholder communications which are not forwarded and such communications will be available to any director. A copy of our Shareholder Communication Policy can be found in the “Investor Relations–Corporate Governance” section of our website, www.spartannash.com.

 

 

 

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CORPORATE RESPONSIBILITY

 

 

 

Corporate Responsibility

SpartanNash understands that environmental, social and governance issues are of increasing importance to many investors. The Company’s business decisions, products and operations have a direct impact on the environment and on communities, customers and associates. The Company’s social responsibility and environmental sustainability programs together make up the broader SpartanNash Corporate Responsibility commitment.

The Company believes it has made progress in each of five focus areas — cultivating local relationships and product development, advancing diversity and inclusion, volunteering, minimizing waste and reducing energy consumption.

For more information, including a copy of the Company’s Corporate Responsibility Report, please visit www.spartannash.com/corp-responsibility/.

 

 

 

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BOARD OF DIRECTORS

 

 

 

General

All directors elected at this year’s Annual Meeting will serve a one-year term, expiring at the 2022 Annual Meeting.

The biographies of each of the nominees below contain information regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Nominating and Corporate Governance Committee and the Board to determine that the person should continue to serve as a director for the Company. Except as otherwise indicated, each of these persons has had the same principal position and employment for over five years.

Nominees for Directors

 

 

 

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THE BOARD OF DIRECTORS (cont’d)

 

 

 

 

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THE BOARD OF DIRECTORS (cont’d)

 

 

 

 

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THE BOARD OF DIRECTORS (cont’d)

 

 

Retiring Director

 

 

 

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THE BOARD OF DIRECTORS (cont’d)

 

 

 

Qualifications, Attributes, Skills and Experience to be Represented on the Board as a Whole

The Company’s core businesses include distributing grocery products to a diverse group of independent and chain retailers, its corporate owned retail stores, and military commissaries and exchanges. Grocery retailing and food distribution is a highly competitive and dynamic business. Accordingly, the Board of Directors believes that at least some of our directors should have experience or specific knowledge in retail or distribution industries at the executive level. The Board believes that directors with experience or in-depth knowledge of the grocery or food industries are uniquely qualified to inform the Board’s deliberations regarding business strategy. The Board has also found it valuable to have a member with specific knowledge and experience with distribution and logistics. Because merchandising and marketing is central to our business, the Board believes that merchandising and marketing experience should be represented on the Board. In addition, the Board believes that its membership should include directors who have:

Board Committees

SpartanNash’s Board has three standing committees:

 

Audit Committee. The Board of Directors has established the Audit Committee to assist the Board in fulfilling its fiduciary responsibilities with respect to accounting, auditing, financial reporting, internal controls and legal compliance. The Audit Committee oversees management and the independent auditors in the Company’s accounting and financial reporting processes and audits of the Company’s financial statements. The Audit Committee serves as a focal point for communication among the Board, the independent auditors, the internal auditors and management with regard to accounting, reporting, and internal controls.

The Audit Committee operates under a charter adopted by the Board of Directors. A copy of the Audit Committee Charter is available in the “Investor Relations — Corporate Governance” section of our website, www.spartannash.com.

The Board of Directors has determined that Audit Committee members M. Shân Atkins and Elizabeth A. Nickels are Audit Committee financial experts, as that term is defined in Item 401(h)(2) of Securities and Exchange Commission Regulation S-K. Under SEC regulations, a person who is determined to be an Audit Committee financial expert will not be deemed an expert for any other purpose, including without limitation for purposes of Section 11 of the Securities Act of 1933, as amended (the “Securities Act”) as a result of being designated or identified as an Audit Committee financial expert, and the designation or identification of a person as an Audit Committee financial expert does not impose on such person any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of the Audit Committee and Board of Directors in the absence of such designation or identification or affect the duties, obligations or liability of any other member of the Audit Committee or Board of Directors.

 

 

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THE BOARD OF DIRECTORS (cont’d)

 

 

Each member of the Audit Committee is independent, as that term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules and Rule 10A-3 under the Exchange Act.

Compensation Committee. The Board of Directors has established the Compensation Committee to assist the Board of Directors in fulfilling its responsibilities relating to compensation of the Company’s executive officers and the Company’s compensation and benefit programs and policies. The Compensation Committee operates under a charter adopted by the Board of Directors. A copy of the Compensation Committee Charter is available in the “Investor Relations — Corporate Governance” section of our website, www.spartannash.com.

Each member of the Compensation Committee is independent, as that term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules and Rule 10C-1 under the Exchange Act.

Processes and Procedures. The Compensation Committee reviews executive compensation on a continuous basis each year, with the most comprehensive reviews typically taking place following year-end. The Committee reviews executive performance, current compensation levels, and compensation benchmarking data and analysis (please see the Compensation Discussion and Analysis section of this Proxy Statement for information about benchmarking analysis). The Committee reviews this information in the context of the Company’s performance and financial results. At the conclusion of this review, the Compensation Committee grants share-based awards if appropriate, establishes goals and objectives for the then-current year, and may adjust executive salaries. The Compensation Committee’s decision-making process is explained in more detail in the Compensation Discussion and Analysis section of this proxy statement.

Consultants and Advisors. The Compensation Committee is authorized to engage consultants, advisors and legal counsel at the expense of the Company. The Compensation Committee Charter requires that any consultant engaged for the purpose of determining the compensation of executive officers must be engaged directly by the Committee and report to the Compensation Committee. The Compensation Committee has authority to approve contracts with and payment of fees and other compensation of consultants, advisors and legal counsel.

Prior to engaging or receiving advice from any compensation consultant or advisor, the Committee reviews the independence of the proposed consultant or advisor, taking into account the following factors:

Participation by Management. The Company’s compensation philosophy and the administration of its various compensation plans are determined by the independent directors of the Compensation Committee. Company policy and Nasdaq rules prohibit participation by the Chief Executive Officer in the process of determining his or her own compensation. The Company’s executive officers and Human Resources associates serve as resources to the Compensation Committee and provide advice, information, analysis and documentation to the Compensation Committee upon request. The Compensation Committee may delegate to the Chief Executive Officer authority to recommend the amount or form of compensation paid to other executive officers and associates subordinate to the Chief Executive Officer, subject to such limitations as the Compensation Committee may require. The Compensation Committee will not delegate to executive officers its authority to approve awards of stock options or other stock compensation.

 

 

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THE BOARD OF DIRECTORS (cont’d)

 

 

Share-based Award Policy. The Board of Directors has adopted a Policy Regarding Stock Option Grants and other share-based Awards which provides:

A copy of the Policy Regarding Stock Option Grants and other Share-based Awards is available in the “Investor Relations — Corporate Governance” section of our website, www.spartannash.com.

Nominating and Corporate Governance Committee. The Board of Directors has established the Nominating and Corporate Governance Committee to assist the Board of Directors in fulfilling its responsibilities by providing independent director oversight of nominations for election to the Board of Directors and leadership in the Company’s corporate governance.

The Nominating and Corporate Governance Committee has the powers, authority and responsibilities specified in its charter or delegated to the committee by the Board of Directors. A copy of the Nominating and Corporate Governance Committee Charter is available in the “Investor Relations — Corporate Governance” section of our website, www.spartannash.com.

Under the Corporate Governance Policy, if the chair of the Board is also the current or former Chief Executive Officer of SpartanNash, the Board will elect a Lead Independent Director from among the directors who are independent under Nasdaq Listing Rule 5605(a)(2). The responsibilities and authority of the Lead Independent Director are described in this proxy statement under the caption “Board Leadership Structure.”

Each member of the Nominating and Corporate Governance Committee is “independent” as that term is defined in Rule 5605(a)(2) of the Nasdaq rules.

 

 

 

 

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INDEPENDENT AUDITORS

 

 

 

Independent Auditors’ Fees

The aggregate fees billed by Deloitte & Touche LLP to SpartanNash and its subsidiaries for 2020 and 2019 are as follows:

 

Deloitte did not provide any services to SpartanNash or its subsidiaries related to financial information systems design and implementation during the past two years.

Audit Committee Approval Policies

The Audit Committee Charter sets forth the policy and procedures for the approval by the Audit Committee of all services provided by Deloitte. The charter requires that the Audit Committee pre-approve all services provided by the independent auditors, including audit-related services and non-audit services. The charter allows the Audit Committee to delegate to one or more members of the Audit Committee the authority to approve the independent auditors’ services. The decisions of any Audit Committee member to whom authority is delegated to pre-approve services are reported to the full Audit Committee. The charter also provides that the Audit Committee has authority and responsibility to approve and authorize payment of the independent auditors’ fees. Finally, the charter sets forth certain services that the independent auditors are prohibited from providing to SpartanNash or its subsidiaries. All of the services described above were approved by the Audit Committee. None of the audit-related fees or tax fees were approved by the Audit Committee pursuant to the de minimus exception set forth in Section 10A(i)(1)(B) of the Exchange Act, although the Audit Committee Charter allows such approval.

 

 

 

 

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AUDIT COMMITTEE REPORT

 

 

 

The Board of Directors has appointed the Audit Committee to assist the Board in fulfilling its fiduciary responsibilities with respect to accounting, auditing, financial reporting, internal controls, and legal compliance. The Committee oversees management and the independent public accounting firm in the Company’s accounting and financial reporting processes and audits of the Company’s financial statements. The Committee serves as a focal point for communication among the Board, the independent public accounting firm, the internal auditors and management with regard to accounting, reporting, and internal controls.

The Committee acts under a charter which has been adopted by the Board of Directors and is available on the Company’s website at www.spartannash.com. The Audit Committee reviews the adequacy of the charter at least annually. The Board of Directors annually reviews the standards for independence for audit committee members under the Nasdaq Listing Rules and has determined that each member of the Audit Committee is independent. The Board of Directors has also determined that two members of the Audit Committee are audit committee financial experts under Securities and Exchange Commission rules.

Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, the Company’s accounting and financial reporting, the Company’s disclosure controls and internal control over financial reporting, and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent public accountants are responsible for auditing the Company’s financial statements, expressing an opinion as to their conformity with generally accepted accounting principles, and providing an attestation report on the effectiveness of the Company’s internal control over financial reporting.

The Audit Committee has reviewed, and discussed with management and the independent accountants, the Company’s audited financial statements for the fiscal year ended January 2, 2021, management’s assessment of the effectiveness of the Company’s internal control over financial reporting, and the independent accountants’ attestation report on the Company’s internal control over financial reporting. The Audit Committee has discussed with the independent accountants the matters required to be discussed under applicable auditing standards. The Audit Committee has received the written disclosures and the letter from the independent accountants required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence and has discussed with the independent accountants their independence. This included consideration of the compatibility of non-audit services with the accountants’ independence.

Based on the reviews and discussions described above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in SpartanNash’s report on Form 10-K for the period ended January 2, 2021.

Respectfully submitted,

M. Shân Atkins, Chair

Dr. Frank M. Gambino

Elizabeth A. Nickels

Hawthorne L. Proctor

The information contained in the “Audit Committee Report” is not considered to be “soliciting material,” “filed” or incorporated by reference in any past or future filing by the Company under the Exchange Act or the Securities Act unless and only to the extent that the Company specifically incorporates it by reference.

 

 

 

 

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OWNERSHIP OF SPARTANNASH STOCK

 

 

 

The following table sets forth the number of shares of SpartanNash common stock reported to be beneficially owned by each person or group which is known to the Company to be a beneficial owner of 5% or more of SpartanNash’s outstanding shares of common stock as of January 2, 2021, and each of our directors and nominees for director, each executive officer named in the Summary Compensation Table below and all directors, nominees for director and executive officers of SpartanNash as a group are deemed to have beneficially owned as of January 2, 2021. Information reported with respect to beneficial owners other than SpartanNash nominees, directors, and officers is based entirely on the most recent Schedule 13G or amendment filed by the listed party as of March 29, 2021, and the Company assumes no responsibility for such reports. Ownership of less than 1% of the outstanding shares of common stock is indicated by asterisk.

 

 

 

 

 

 

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SPARTANNASH’S EXECUTIVE OFFICERS

 

 

 

SpartanNash’s executive officers are appointed annually by, and serve at the pleasure of, the Board or the Chief Executive Officer.

Biographical information for Messrs. Eidson and Sarsam and are included above in the “Board of Directors” section of this proxy statement. The following sets forth biographical information as of the date of this proxy statement concerning SpartanNash’s executive officers who are not directors:

Arif Dar (age 52) has served as Senior Vice President and Chief Information Officer since January 2019. Previously, he was the Chief Information Officer for S.C. Johnson and Son, Inc. (“SCJ”) from 2015 to 2018. Prior to that, he served as the Chief Technology Officer for SCJ from 2013 to 2015. He has also held executive Information Technology positions at Maple Leaf Foods, Bombardier Transportation, General Motors, Tyco International and General Electric.

Tammy R. Hurley (age 55) has served as Vice President, Finance and Chief Accounting Officer since August 2016. Prior to her promotion to that position, she served as SpartanNash’s Vice President Finance from February 2015 to August 2016, Director, Accounting from 2010 to 2015, and Corporate Controller from 2001 to 2010. Prior to joining SpartanNash she was an auditor with Deloitte & Touche. She is a Certified Public Accountant.

Kathleen M. Mahoney (age 66) has served as Chief Legal Officer since November 2015, and corporate Secretary since the Merger. She previously served as President MDV from May 2017 to February 2021 and Executive Vice President General Counsel from the Merger to November 2015. As Chief Legal Officer, Ms. Mahoney oversees the Company’s legal and aviation functions. Prior to the Merger, she served as Executive Vice President General Counsel and Secretary for Nash Finch, where she oversaw legal, aviation, risk management, asset protection, safety, environmental, and insurance procurement and claims management. Prior to working at Nash Finch, she was the Managing Partner of the St. Paul office of Larson King, LLP.

Jason P. Monaco (age 44) has served as Executive Vice President Chief Financial Officer since March 2021. Previously, Mr. Monaco served as the Chief Financial Officer of Cornerstone Chemical Company, a global producer of intermediate chemicals since August 2020, and previously served as Chief Financial Officer of Borden Dairy Co. from December 2018 until August 2020, where he led Borden Dairy through the completion of its financial restructuring in a bankruptcy reorganization. Mr. Monaco also served as Vice President and Group Chief Financial Officer of Celanese Corporation from September 2017 until December 2018. He was Vice President, Finance & Treasurer of Arrow Electronics from 2014 until 2016. He began his career with Kimberly Clark as a Financial Analyst in 1998 and advanced through the organization, holding finance positions of increasing responsibility, including as chief financial officer of its South Asia business and as a group chief financial officer for the healthcare and B2B divisions.

Lori Raya (age 54) has served as Executive Vice President Chief Merchandising and Marketing Officer since February 2019. Previously, Ms. Raya held the position as Division President of Albertsons from 2015 to 2018, where she led the post-merger transition with Safeway. Ms. Raya’s career extended over 30 years with Safeway, holding various titles such as Vice President of Retail Operations, Group Vice President of Strategic Initiatives, and multiple food category senior management positions before serving as the first female divisional president in Vons from 2012 to 2015.

David Sisk (age 60) has served as MDV President and a SpartanNash Senior Vice President since February 2021. Immediately prior to joining SpartanNash, he served as Executive Director of Gloo, LLC from September 2019 through January 2020. He served as the Director, Church Advancement at Christ Fellowship from July 2018 through July 2019. David also served as the President and Chief Operating Officer for OSC-WEBco from January 2016 to June 2018, where he was responsible for worldwide strategic plans, financial performance, personnel and global operations across all military divisions. Prior to that, he has held various responsibilities throughout his 30-year career with Procter & Gamble, culminating in serving as Customer Business Development Manager for the Global Military Division. Mr. Sisk has also previously served as Chair of the American Logistics Association (ALA) and is a recipient of the ALA’s Lifetime Achievement Award.

 

 

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SPARTANNASH’S EXECUTIVE OFFICERS (cont’d)

 

Tom Swanson (age 60) has served as Executive Vice President and General Manager, Corporate Retail since March 2021. He previously served as Senior Vice President and General Manger, Corporate Retail since October 2018 and Vice President, Retail Merchandising and Vice President of SpartanNash’s Retail-West operations prior to that. Mr. Swanson has held executive retail supermarket positions for over 30 years with Bashas' Markets and Nash Finch.

Yvonne Trupiano (age 42) has served as Executive Vice President and Chief Human Resources and Corporate Affairs and Communications Officer since March 2018. She joined the Company as Senior Vice President Chief Human Resources Officer in October 2016. Prior to joining SpartanNash, she served as Vice President Human Resources for Avis Budget Group, a global vehicle rental provider, from February 2013 to October 2016. She originally joined Avis Budget Group in 2004 and served in positions of increasing responsibility.

 

 

 

 

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EXECUTIVE COMPENSATION

 

 

COMPENSATION DISCUSSION AND ANALYSIS

The Board of Directors has appointed the Compensation Committee to assist the Board of Directors in fulfilling its responsibilities relating to compensation of the Company’s executive officers and the Company’s compensation and benefit programs and policies. The Compensation Committee determines and implements the Company’s executive compensation philosophy, structure, policies and programs, and administers and interprets the Company’s compensation and benefit plans.

Our compensation programs are designed to attract and retain leadership talent consistent with our performance goals. The following discussion provides information regarding the achievements that the compensation program is designed to reward, the elements of the compensation program, the reasons why we employ each element and how we determine amounts paid.

We are proud to report that our 2020 named executive officers (“NEOs” or “named executive officers”) include three women. Our NEOs for 2020 were:

 

 

 

(1) Mr. Sarsam has served as our President and Chief Executive Officer since September 21, 2020.

(2) Mr. Eidson served as our Interim President and Chief Executive Officer until September 20, 2020.

 

(3) Mr. Shamber ceased serving as our Executive Vice President and Chief Financial Officer on March 22, 2021.

(4) Ms. Mahoney ceased serving as our President MDV in February 2020.

(5) Mr. Lentz served as our Executive Vice President, President Food Distribution until December 2020 and is included because he would have been one of the Company’s three most highly compensated executive officers, other than an executive serving as principal executive officer or principal financial officer, if he were serving as an executive officer at the end of fiscal year 2020.

Objectives of SpartanNash’s Compensation Programs

The primary objectives of the Company’s compensation programs are to:

 

 

 

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EXECUTIVE COMPENSATION

 

 

 

Pay Practices

The Compensation Committee also reviews the Company’s compensation programs to use best practices and avoid poor pay practices. Below is a summary of certain practices we have implemented to support our compensation philosophies, and certain practices we reject because we believe they do not serve our shareholders’ long-term interests.

Clawback Policy

The Company maintains a clawback policy providing that under certain circumstances, the Company may recover incentive compensation paid to any current or former associate holding a position of Vice President or a more senior position. The compensation is recoverable if: (a) there is a restatement of all or a portion of the Company’s financial statements due to material non-compliance with financial reporting requirements, (b) the incentive compensation was based on materially inaccurate financial statements or performance metrics, or (c) the associate engaged in ethical misconduct, serious wrongdoing, or violation of applicable legal or regulatory requirements. The Company may recover any incentive compensation paid within the three years prior to the applicable event or conduct.

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

How the Compensation Committee Determines Compensation Levels

The processes the Compensation Committee follows when determining pay levels are discussed in more detail below.

Overview

The Compensation Committee’s overall decision-making process is summarized as follows:

Market Benchmarking

In general, the Compensation Committee seeks to provide target compensation opportunities that are competitive with the market levels for each major category of compensation and in total for executives in similar positions at companies of comparable size, financial performance, industry and complexity. As part of this overall analysis, the Committee reviews survey data provided by its compensation consultants, and engages in benchmarking of selected companies (referred to as “Peer Group Companies”).

The Compensation Committee reviews the constituents of the Peer Group Companies from time to time to help ensure that the group is comparable to the Company. Changing business models, mergers, growth, and other factors may necessitate adjustments. The Peer Group Companies for 2020 were as follows:

As of October 2019 (the approximate time at which the Committee reviewed the data), Peer Company revenue, expressed as a multiple of the Company’s revenue, ranged from 0.4 to 2.7, with a median multiple of 1.0. Median market capitalization was $1.47 billion for the Peer Group Companies compared to $430 million for SpartanNash, and ranged from $291 million to $4.8 billion.

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

In addition to determining the median level of an element of a compensation category among the Peer Group Companies, the Committee analyzes competitive compensation practices in the general industry for those positions that may be occupied by officers and executives recruited from outside of the wholesale and retail grocery business and performs regression analysis to adjust to SpartanNash’s revenue size in these cases.

Market levels serve only as a reference point; the Committee also considers:

Evaluating Individual Performance

Each year, the Compensation Committee reviews and evaluates individual executive performance as part of its decision-making process. The Chairperson of the Compensation Committee coordinates the review of the individual performance of the Chief Executive Officer by the Board of Directors. The Chairman of the Board of Directors, when not serving as Chief Executive Officer or Interim Chief Executive Officer, helps ensure that the Chief Executive Officer’s performance objectives are appropriate. The Chairman of the Board of Directors, Lead Independent Director, and the Chair of the Compensation Committee communicate the Board of Directors’ review to the Chief Executive Officer.

For the named executive officers other than the Chief Executive Officer, the Chief Executive Officer reviews with the Compensation Committee an evaluation of each executive officer’s performance.

As discussed above, individual performance is only one factor among several that the Compensation Committee considers in making these adjustments, and there is no prescribed formula or mechanism for translating individual performance into specific amounts of compensation. The Compensation Committee’s decision-making process necessarily involves the Committee’s informed judgment with respect to individual executive performance in the context of many considerations and criteria, none of which are individually controlling, including experience, potential of the executive, retention concerns, recent compensation of the executive, internal pay equity, Company performance, and general industry and economic conditions.

Use of Independent Compensation Consultants

FW Cook is a compensation consulting firm that has provided such services to the Compensation Committee since 2019. In 2020, the Company paid FW Cook $181,252 for its executive compensation services. The Compensation Committee considered each of the factors required by NASDAQ in determining that FW Cook is an independent advisor.

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

The Compensation Committee instructs its independent consultants to provide advice and guidance on executive compensation proposals, including changes to compensation levels, the design of incentive plans and other forms of compensation, and to provide information about market practices and trends. Typically, the independent consultant attends one or two Compensation Committee meetings per year, reviews existing compensation programs for consistency with our compensation philosophy and current market practices, and produces comparative information derived from our peer group and published survey data. With respect to 2020, the activities of the independent consultants engaged by the Compensation Committee included:

In addition to the elements of compensation discussed above, our executives participate in certain defined benefit and deferred compensation plans. These plans are discussed below under the captions “Pension Benefits,” “Qualified Defined Contribution Retirement Plan,” and “Non-Qualified Deferred Compensation.”

Mix of Compensation Elements

When determining the mix of awards, the Compensation Committee considers factors such as the short-term and long-term compensation expense to the Company, the economic value delivered to the executives, the overall level of share ownership by the executives, share availability under Company plans, annual share usage and dilution, and practices at the Peer Group Companies. The award mix (at target level) for 2020 for our new CEO, Mr. Sarsam, and average other NEO is presented below.  

Pay for Performance

Our executive compensation elements and programs reflect our “pay for performance” philosophy. The Compensation Committee and the Board of Directors have implemented and intend to maintain compensation plans that link a substantial portion of executive compensation to the achievement of goals that the Board of Directors considers important.

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

2020 Strategic Objectives and Business Context

SpartanNash is a leading consumer-centric distributor and food retailer. The Company’s strategic objective is to achieve sustained profitable growth by developing and leveraging a national, highly efficient, and versatile distribution platform that services a diversified customer base.

COVID-19 Pandemic

The COVID-19 pandemic and the ensuing lockdowns brought the economy to a halt and altered consumer behavior, resulting in supply chain constraints but also unprecedented sales growth rates for our industry. SpartanNash’s response to the pandemic has been quick and comprehensive, focused on the well-being and safety of associates, customers and communities as well as supporting health officials and government leaders to contain the virus.

During 2020, our communities needed us more than ever, and our family of nearly 19,000 associates answered the call – all while balancing schedules, concerns for their own health and wellbeing as well as that of their family and friends, adjusting to a new normal at home, and for many, the impact of schools closed, childcare changes, and the absence of social events to de-stress. SpartanNash’s unwavering commitment to our family of associates who served on the frontline has been both tangible and visible. We proactively took steps to ensure our neighbors, customers, military families, and those most at risk received the essential food, medicine and groceries they needed during the pandemic.

Since the onset of COVID-19, our company has had two top priorities: the well-being and safety of our family of associates, customers and communities; and supporting health officials and government leaders to contain the virus. We have not wavered on either front.

In addition to our following the Centers for Disease Control and Prevention (CDC) guidelines and protocols for safety and prevention and redoubling our sanitation and deep cleaning efforts, some of the additional measures we implemented are:

We are proud that through the vigilant efforts of our frontline heroes, and those working behind the scenes, we were able to deliver an uninterrupted supply of food and grocery products to all of our customers: store guests; independent retailers; national accounts; and military resale agencies.  

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

 

Interim Chief Executive Officer Compensation

Following the Board’s decisive action in August 2019 exiting the former President and Chief Executive Officer, the Board replaced him on an interim basis with the Company’s Chairman of the Board, and previous Chief Executive Officer, Mr. Dennis Eidson, while the Board searched for the future Chief Executive Officer. Prior to serving as Interim Chief Executive Officer, Mr. Eidson successfully led the Company as Chief Executive Officer for over eight years and has served continuously as Chairman of the Board of Directors since 2016. He has extensive knowledge of the Company’s operations, industry, customers, and the competitive context.

In 2019, the Compensation Committee received analysis from its compensation consultant regarding an appropriate compensation opportunity for Mr. Eidson as Interim Chief Executive Officer. The Committee considered Mr. Eidson’s experience and qualifications, the market analysis performed by the compensation consultant, and the Committee’s goal to deliver compensation at the median of our peer group. The Committee recommended and the Board approved an overall compensation opportunity for Mr. Eidson consisting of:

Mr. Eidson’s term as Interim President and Chief Executive Officer was set to last no longer than through August 2020. The pandemic, however, extended the timeline for the Company’s search for a future Chief Executive Officer. Mr. Eidson graciously agreed to continue to serve for an additional 90 days to allow the search process to successfully conclude. Mr. Eidson’s service as Interim President and Chief Executive Officer ended September 20, 2020; the role of President and Chief Executive Officer was assumed by Mr. Tony Sarsam on September 21, 2020.

The Board met, without Mr. Eidson in attendance, when determining whether to extend Mr. Eidson’s tenure as Interim President and Chief Executive Officer and when voting on the compensation to be paid to Mr. Eidson in that role. In August 2020 the Board approved an overall compensation opportunity for Mr. Eidson for the extension of his service as Interim President and Chief Executive Officer that is appropriate for a Chief Executive Officer with his experience and qualifications, designed to continue the same level of compensation as offered during the initial term of his service other than sign on bonuses. The compensation opportunity consisted of:

Because Mr. Eidson agreed to serve on an interim basis only, the Board of Directors previously did not authorize relocation assistance for Mr. Eidson and instead agreed to provide or reimburse necessary travel from his residence in Florida to Company locations as needed, and to provide him with temporary housing near the Company’s Grand Rapids Service Center. Those arrangements were continued during the extension period. Mr. Eidson was not provided with any arrangements for severance or change-in-control payments.  

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

 

Chief Executive Officer Search and Compensation

The Board formed a Transition Committee to lead the search for the new Chief Executive Officer in August 2019. The Transition Committee was comprised of Mr. Douglas A. Hacker, Lead Independent Director (Chair); Mr. Eidson; Ms. Yvonne R. Jackson, Chair of the Compensation Committee; and Mr. Matthew M. Mannelly. Mr. Eidson, Mr. Hacker and Ms. Jackson led the Board’s earlier processes which resulted in the exit of the former Chief Executive Officer.

In connection with his appointment as President and Chief Executive Officer, effective on September 21, 2020, Mr. Sarsam will receive the following:

The Company and Mr. Sarsam also entered into the Company’s standard form of Executive Severance Agreement, providing for the payment of severance in connection with a change in control and more fully described below under “Potential Payments Upon Termination or Change in Control—Executive Severance Agreements.”

Separation of Mr. Lentz

Mr. Lentz served as our Executive Vice President, President Food Distribution until December 2020, when he was terminated by the Company following elimination of his position. His employment was treated as a termination without cause under his employment agreement. Pursuant to his employment agreement, the Company paid him a severance payment of $620,000, which was equal to his annual base salary, will reimburse certain COBRA expenses for up to 52 weeks, and will provide up to six months of outplacement assistance.  

Incentive Compensation Results

The Compensation Committee is keenly focused on approving compensation plans that reward performance. The extraordinary results achieved in 2020 generated bonus payouts earned in 2020 under both the 2018 Long Term Incentive Plan (“LTIP”) and the 2020 Annual Incentive Plan (“AIP”).

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

2018 LTIP Performance Cash – 16% Payout

The 2018 LTIP included a three-year measurement period for the payout of performance cash. The plan included three metrics: Adjusted EPS; Return on Invested Capital; and Adjusted EBITDA. The measurement period ended in 2020, and performance was measured based on the fiscal year end 2020 results. Management achieved a payout of 16% on the Adjusted EPA metric.  

2020 AIP Payout – 146 - 200% Payout

The 2020 AIP components were principally based on financial performance; for the NEOs, 75% - 80% of the bonus opportunity was tied directly to financial goals. As a result of the Company’s performance during 2020, the bonus payout earned by the NEOs on the financial goals portion of the 2020 AIP opportunity ranged from 146 – 200%.  

The remainder of the AIP opportunity for the NEOs was based on performance against a strategic goal. The Company has publicly disclosed its focus on the Project One team initiative, which is the Company-wide program to drive growth, while increasing efficiency and reducing costs. The strategic goal for each NEO, other than Mr. Eidson (who was not an AIP plan participant), was to drive that initiative. The performance of the strategic component generated a 200% payout.

Analysis of Compensation Elements for 2020

Overview

The following is a discussion of key compensation programs and decisions for 2020.

1. Annual Base Salary

Base salary provides our executives with a fixed base annual income and helps us attract and retain high-performing executives. The Compensation Committee sets executive salaries each year in light of individual performance reviews, internal pay equity considerations, the scope and complexity of the executive’s role and an assessment of peer group and market survey data provided by our independent compensation consultant. The table below summarizes base salary decisions for our NEOs in 2020, except for Mr. Eidson, whose compensation was fixed under his employment agreement.

2. Annual Cash Incentive Awards.

Each named executive officer other than Mr. Eidson was granted an opportunity to earn an annual incentive award under the Company’s 2020 AIP. Mr. Sarsam’s annual incentive award was prorated based on time worked during the 2020 fiscal year.  

The value of the annual incentive award is dependent on the Company’s achievement of specified levels of adjusted consolidated net earnings and net sales, business unit operating results (for certain executives) and performance against strategic objectives.

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

The annual incentive plan includes three “gating” requirements that are intended to maintain a close link between pay and performance:  

The formula for determining payouts under the 2020 AIP is a simple one:  

The chart below lists the AIP annual base pay percentage opportunity, metric weightings and payout earned under the 2020 AIP:

ANNUAL CASH INCENTIVE AWARD PAYOUT DESIGN

 

 

3. Long-Term Incentive Awards

Each executive officer is provided a long-term incentive award opportunity that consists of a mix of 50% performance cash and 50% restricted stock.

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

Long-Term Performance Cash Incentive Awards. When designing the 2020 LTIP plan, the Committee first evaluated whether to continue the existing LTIP design in light of current business conditions. The Committee considered whether the metrics were appropriate to the current state of the business, especially considering that the food distribution and retail sectors have experienced significant disruption over the past few years. The Committee determined the metrics were appropriate, and next focused on the manner in which performance under the LTIP was measured.  

Prior LTIP plans utilized a three-year performance period, and performance was measured against the performance results on the last day of the three-year performance period, without regard to performance at intervals during the three-year performance period. Mindful that business responses to disruption often require unforeseen investment and realignment of priorities, and considering the impact disruptions have had on achievement of the LTIP cash incentive opportunities for prior periods, the Committee decided to include annual growth targets, in addition to measuring performance against the metrics on the last day of the three-year performance period. To avoid increasing the total compensation opportunity by adding the annual measurement points, the Committee capped the total LTIP opportunity at the payout available on achievement of the three-year metrics.  

In May 2020, each named executive officer other than Mr. Eidson and Mr. Sarsam was granted an opportunity to earn a long-term performance cash incentive award under the 2020 LTIP. Mr. Sarsam was granted a pro-rated 2020 LTIP award when he joined the Company in September 2020. Under the 2020 LTIP, each award is based on three metrics:

The cash portion of the May 2020 award opportunity is based on the following:

The maximum amount a participant can earn on the performance cash portion of the 2020 LTIP is determined by reference to the final-year performance target; there is the potential for an upside opportunity if the final year target performance is exceeded, with a maximum payout equal to 200% of the total target cash opportunity. The amount that can be earned for achieving an annual growth target is 25% of the target level for each year of the three-year performance periods, with no upside opportunity. The Committee capped the total 2020 LTIP opportunity at the payout available on achievement of the three-year metrics.

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

The amount of each component of the long-term cash incentive award earned for the three-year performance period will be determined according to the following matrices (the percentage of Target long-term cash incentive award paid is interpolated for actual achievement between the threshold and maximum performance levels identified in each table):

MAY 2020 LONG-TERM CASH AWARD

ADJUSTED EPS COMPONENT

 

MAY 2020 LONG-TERM CASH AWARD

ROIC COMPONENT

 

 MAY 2020 LONG-TERM CASH AWARD

ADJUSTED EBITDA COMPONENT

 

The potential values of the long-term cash incentive award are set forth below.

 

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

 

The following table shows the status of all outstanding long-term incentive cash awards as of January 2, 2021 under the long-term cash incentive program.

 

 

Restricted Stock Awards. In June 2020 grants of restricted stock were awarded to the named executive officers, other than Mr. Eidson, which vest in equal annual installments over four years beginning on the first anniversary of the date of grant. Mr. Eidson’s restricted stock grants are discussed under “Interim Chief Executive Officer Compensation” above and detailed in the Grants of Plan-Based Awards table below.

Stock Ownership Guidelines

SpartanNash’s Board of Directors has established stock ownership guidelines for corporate officers. These guidelines are designed to help ensure that officers share downside risk and upside potential with other shareholders. Our executive officers are expected to achieve and maintain a level of stock ownership having a value that is approximately equal to or greater than a percentage of the executive’s annual base salary. The percentages are as follows:

Until the specified level of ownership is achieved, in any calendar year an executive is permitted to sell no more than 50% of the shares that vest (net of taxes) under the Company’s stock incentive plans in that calendar year. As of January 2, 2021, all the Company’s named executive officers had achieved the target ownership level or were making satisfactory progress toward the target levels and in compliance with the Company’s stock ownership policy.

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

Personal Benefits and Perquisites

Perquisites play a minor role in the Company’s compensation program. The Company has retained a firm to provide tax and financial planning services for its named executive officers, and executives are provided with an annual physical examination. In 2020, the Board of Directors authorized the Company to provide or reimburse the Interim Chief Executive Officer’s travel to Company locations from his home in Florida and to provide him with necessary temporary housing and transportation in the Grand Rapids area. This arrangement was unique to the temporary nature of Mr. Eidson’s role as Interim Chief Executive Officer. Mr. Eidson had previously retired from SpartanNash and relocated permanently. Mr. Eidson did not wish to serve as Chief Executive Officer other than in an interim capacity. Because Mr. Eidson would not be relocating, the Company could not offer him the customary relocation benefit offered to executives. The Board of Directors does not expect to provide or reimburse such expenses in other circumstances. Mr. Sarsam was provided the Company’s customary relocation benefit offered to executives, as well as reimbursement for the legal fees associated with the preparation and negotiation of Mr. Sarsam’s employment agreement.

Risk Considerations

The Compensation Committee does not believe our compensation program encourages excessive or inappropriate risk taking for the following reasons:

Severance and Change in Control Payments

SpartanNash believes that severance payments upon certain terminations of employment benefit the Company and the shareholders by allowing executives to remain focused during uncertain times while also obtaining restrictive covenants for the benefit of the Company. SpartanNash also believes that benefits payable upon a “double-trigger” of both termination of employment and a change in control benefit the Company and the shareholders by motivating and encouraging each executive to be receptive to potential strategic transactions that are in the best interest of shareholders, even if the executive faces potential job loss, and by motivating the executives in the period leading up to a potential change in control. All equity awards are issued with a “double trigger” vesting provision. To accomplish these goals, SpartanNash has entered into an employment agreement and an executive severance agreement with each named executive officer other than the Interim Chief Executive Officer.

Under the terms of our equity based compensation plans and our executive employment and severance agreements, the non-interim named executive officers are entitled to payments and benefits upon the occurrence of specified events including termination of employment and upon a change in control of the Company. The specific terms of these arrangements and an estimate of the compensation that would have been payable had they been triggered as of year-end are described in detail in the section of this Proxy Statement entitled “Potential Payments Upon Termination or Change in Control.” The terms and conditions of these arrangements are the result of arms-length negotiations between the Compensation Committee and the Company’s executive officers.

The termination of employment provisions of the executive employment and severance agreements are intended, in part, to address retention concerns by providing these individuals with a certain amount of compensation that would offset the potential disincentive to support an effort that would result in a change in control of the Company that could threaten the executive’s job.

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

Shareholder Say-On-Pay Votes

The Company provides its shareholders with the opportunity to cast a say-on-pay vote annually, which is an advisory vote on executive compensation. At the Company’s Annual Meeting held in May 2020, over 91% of the votes cast on the say-on-pay proposal at that meeting were voted in favor of the proposal. The Compensation Committee believes this affirms shareholders’ support of the Company’s approach to executive compensation, and generally did not change its approach in 2020. The Compensation Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for the named executive officers.

Income Tax Deduction

Subject to the usual rules concerning reasonable compensation, including our obligation to withhold or otherwise collect certain income and payroll taxes, we generally will be entitled to a corresponding income tax deduction at the time a participant recognizes ordinary income. However, Section 162(m) of the Code generally prohibits publicly-held corporations from deducting more than $1 million per year in compensation paid to certain executive officers. The executive officers to whom Section 162(m) of the Code applies for 2020 include the Company’s Chief Executive Officer and Chief Financial Officer, the next three most highly compensated executive officers, and any such “covered employee” for a year after 2016. While the Compensation Committee considers tax consequences to the Company as a factor when it makes compensation determinations, the Compensation Committee reserves discretion to award compensation to the named executive officers that is not deductible under Section 162(m) of the Code, as the Compensation Committee deems appropriate.

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the information provided under the heading “Compensation Discussion and Analysis.” Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in SpartanNash’s annual report on Form 10- K and proxy statement.

Respectfully submitted,

Yvonne R. Jackson, Chair

Douglas A. Hacker

Matthew Mannelly

William R. Voss

The information contained in the “Compensation Committee Report” is not considered to be “soliciting material,” “filed” or incorporated by reference in any past or future filing by the Company under the Exchange Act or the Securities Act unless and only to the extent that the Company specifically incorporates it by reference.

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

 

SUMMARY COMPENSATION TABLE

The following table shows certain information concerning the compensation earned by each person who served in the capacity of the Chief Executive Officer and the Chief Financial Officer, each of the Company’s three most highly compensated executive officers other than the Chief Executive Officer or Chief Financial Officer who were serving as executive officers as of the end of 2020, and one individual for whom disclosure would have been required but his employment terminated prior to the end of the fiscal year (the officers identified in the table below are referenced in this Proxy Statement as the “named executive officers”). Compensation earned by Mr. Eidson related to his Board of Directors service is excluded.

 

 

⁽¹⁾ Mr. Eidson received bonuses in 2019 and 2020 under his interim employment agreement. Mr. Lentz received a pro-rated retention award payment upon the elimination of his position. In 2018 Ms. Mahoney earned a retention bonus. This bonus opportunity was granted in connection with her appointment as President, MDV in May 2017. Ms. Mahoney served as President, MDV until February 2020.

⁽²⁾ These amounts represent the grant date fair value of restricted stock awards determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”).

⁽³⁾ The following table provides details regarding the non-equity incentive compensation earned by each named executive officer in 2020:

 

 

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

 

 

 

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

 

GRANTS OF PLAN-BASED AWARDS

The following table provides information concerning each grant of an award made to the named executive officers in 2020.

 

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

Discussion of Summary Compensation and Plan-Based Awards Tables

Employment Agreements. Each current executive officer has an employment agreement with the Company providing for employment for an indefinite period of time until termination of employment. Employment terminates automatically in the event of death, and the Company may terminate the executive’s employment for cause or for disability if he or she is no longer able to perform the essential functions of the position.

Non-Equity Incentive Plan Awards. For 2020, each named executive officer other than Mr. Eidson was granted the opportunity to earn cash incentive compensation on an annual basis, and a long-term incentive award to be earned based on performance over three years under the Company’s shareholder-approved Executive Plan. Mr. Eidson’s incentive compensation arrangements are set forth in his employment agreement and described above in the section “Interim Chief Executive Officer Compensation”.

The Executive Plan is a non-equity incentive compensation plan that is designed to motivate executive officers and other participants who are positioned to make substantial contributions toward the achievement of goals established under the plan. The plan’s objectives include:

Restricted Stock. All shares of restricted stock were awarded to NEOs pursuant to the Stock Incentive Plan of 2020. Awards under SpartanNash’s equity compensation plans are designed to:

The shares of restricted stock granted in 2020 to the NEOs other than Mr. Eidson vest in four equal yearly increments. If the employment of an executive officer is terminated for any reason other than death, disability, or retirement, then all unvested shares of restricted stock are forfeited unless the Compensation Committee exercises its discretion to waive any remaining restrictions. If an executive officer dies or becomes disabled then all outstanding shares of restricted stock will vest automatically. In the event of retirement, the outstanding shares will continue to vest, provided that the executive continues to comply with the noncompetition covenants applicable to the award. For information regarding accelerated vesting of restricted stock upon termination or a change-in-control of the Company, please see the section entitled “Potential Payments Upon Termination or Change-in-Control.”

Phantom Units. Pursuant to his employment agreement with the Company, Mr. Eidson was awarded an instrument that delivered the same connectivity to shareholder interests as stock provides without the dilutive impact. Mr. Eidson was awarded an initial “phantom units” opportunity as well as the opportunity to earn additional phantom units every three months. The value of this opportunity was set as the economic equivalent of one share of SpartanNash common stock and may only be settled in cash. The maximum grant date fair value (determined in accordance with ASC 718) for the awards was $430,000 for each three month period. The phantom units vested and became payable in cash on August 6, 2020. The phantom units awarded to Mr. Eidson paid cash dividends to the same extent as a corresponding number of shares of SpartanNash common stock.

Dividends. Executives receive any dividends paid on unvested restricted shares at the rate dividends are paid on common stock for awards made under the 2015 Stock Incentive Plan. For awards made under the 2020 Stock Inventive Plan, cash dividends will not be paid on unvested equity awards, but participants earn dividend equivalents that vest at the same time as the underlying shares.

Holding Period. The shares of restricted stock awarded to the named executive officers are subject to forfeiture if not held until the restrictions applicable to the shares have elapsed. While the shares of restricted stock once vested are not subject to an express holding period, each named executive officer must comply with the Company’s stock ownership guidelines discussed on page 38.

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

Stock In Lieu of Cash Incentive Payment. Designated associates may elect to receive all or a portion of their earned annual cash incentive payment in the form of SpartanNash Common Stock. Associates who elected to participate received SpartanNash common stock having a value equal to the portion of the annual cash incentive award designated by the associate, plus an additional grant of shares having a value of 20% of the election amount. Shares are subject to a holding period of twelve months. Mr. Shamber elected to receive a portion of his 2020 AIP payment in stock.

Non-Qualified Deferred Compensation. For information on non-qualified deferred compensation, please see the tables and accompanying narrative below.

OUTSTANDING EQUITY AWARDS AT YEAR-END

The following table provides information concerning restricted stock awards that have not vested for each named executive officer outstanding as of January 2, 2021.

 

Vesting Schedule for Shares of Restricted Stock

 

OPTION EXERCISES AND STOCK VESTED

The following table provides information concerning vesting of restricted stock during the last completed fiscal year for each of the named executive officers on an aggregated basis. No stock options were exercised in 2020 or outstanding at fiscal year-end for any of the named executive officers.

 

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

QUALIFIED DEFINED CONTRIBUTION RETIREMENT PLAN

The Company maintains the Savings Plus Plan, a qualified 401(k) defined contribution retirement plan that is generally open to all of the Company’s non-union associates. Our named executive officers are eligible to participate in the Savings Plus Plan, subject to wage and contribution limits imposed by the Internal Revenue Code.

The Savings Plus Plan allows for 100% matching contributions by the Company on the first 3% of salary and 50% matching contributions on the next 2% of salary. Matching contributions made prior to 2019 are subject to a vesting schedule for associates with less than five years of service. The Savings Plus Plan also includes a discretionary profit-sharing contribution for eligible participants. The Company did not make any profit-sharing contribution for 2020.

NON-QUALIFIED DEFERRED COMPENSATION

SpartanNash maintains a non-qualified deferred compensation plan, the Supplemental Executive Savings Plan (“SESP”), which is a non-qualified deferred compensation plan for SpartanNash’s officers and certain other associates.

The purpose of the SESP is to provide officers with the benefits that they are otherwise denied under the Company’s qualified savings plan, the Savings Plus Plan, due to the annual dollar limit on compensation and other limitations of the Internal Revenue Code, which are referred to collectively as the “statutory limits.” Participants in the SESP may defer up to 50% of base salary and up to 100% of any bonuses under the plan. This opportunity is in addition to a participant’s savings opportunity under the Savings Plus Plan (subject to statutory limits). Participants in the SESP are entitled to a Company-matching contribution that mirrors the matching contribution by the Company up to 5% of salary under the Savings Plus Plan, except the statutory limits do not apply.

The SESP provides participants with various investment alternatives, consisting primarily of mutual funds. The investments are only hypothetical investments, also referred to as phantom investments. The investment results for a participant are determined as if the contributions had actually been invested in the selected investment fund during the relevant time period.

The following table provides certain information regarding participation of the named executive officers in our non-qualified deferred compensation plans.

NON-QUALIFIED DEFERRED COMPENSATION

 

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL

Executive Employment Agreements

Each of SpartanNash’s executive officers other than Mr. Eidson has an employment agreement with SpartanNash providing that if the officer’s employment is terminated by SpartanNash other than due to death, disability or cause (as defined in the employment agreement), or if the employment is terminated by the officer for good reason (as defined in the employment agreement), the officer will receive the payments and benefits described and quantified in the table below. Mr. Eidson’s employment agreement did not provide for any severance pay.

Officers who are eligible for severance pay must meet certain conditions to receive the payments, including execution of a release of certain employment-related claims and compliance with the post-employment confidentiality and non-competition provisions of the employment agreement.

Executives will not receive severance payments or benefits under the Executive Employment Agreements if they receive any payments or benefits under the Executive Severance Agreements, which are described below.

Executive Severance Agreements

Each executive officer other than Mr. Eidson has entered into an Executive Severance Agreement with the Company. The Executive Severance Agreements provide that if the officer’s employment with SpartanNash terminates for reasons other than a nonqualifying termination (as described below) during the two-year period following a change in control (as described below) of SpartanNash, then the officer will receive the payments and benefits described and quantified in the table below. The agreements with current executive officers include a “best net” provision, providing that severance benefits will be reduced to avoid any excise taxes, or paid in full subject to the executive paying the applicable excise taxes, whichever results in the higher payment to the executive on an after-tax basis.

SpartanNash will not provide benefits under the executive severance agreements in the event of a “nonqualifying termination.” A nonqualifying termination is defined in the agreements as any of the following: termination by SpartanNash for cause, termination by the officer (with notice to the Company) for any reason other than for good reason (as defined in the executive severance agreement), retirement of the officer, and death or disability of the officer.

The term “change in control” is defined in the executive severance agreements generally as (1) the acquisition by any person or group of 20% or more of the outstanding common stock or voting power of SpartanNash, (2) the majority of the Board of Directors being comprised of persons other than the current members of the Board of Directors or their successors whose nominations were approved by at least two-thirds of the Board of Directors, or (3) the effective time of certain mergers, reorganizations, plans of dissolution or sales of substantially all of SpartanNash’s assets.

The Company believes that the Executive Employment Agreements and Executive Severance Agreements help retain our executives and keep them focused on implementing our strategic plan during a time of increased competition, consolidation, and uncertainty in our industry. The agreements benefit the Company by enabling executives to remain focused on the business of the Company in uncertain times without the distraction of potential job loss.

The following table summarizes the potential payments and benefits payable to each named executive officer upon termination for the reasons set forth below. For executives other than Mr. Lentz, the disclosure assumes that the triggering event took place on January 2, 2021 (and that no change in control took place before the triggering event). Mr. Lentz’s employment terminated on December 31, 2020. The table below sets forth the payments actually made or expected to be made to him in connection with his separation.

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

Potential Payments Upon Termination Not in Connection

With a Change in Control

 

 

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

The following table summarizes the potential payments and benefits payable to each of SpartanNash’s named executive officers upon termination after a change of control of the Company, assuming that the change in control and termination took place on January 2, 2021.

Potential Payments Upon Termination in Connection

With a Change in Control

 

 

 

 

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EXECUTIVE COMPENSATION (cont’d)

 

PAY RATIO DISCLOSURE

Our Chief Executive Officer to median employee pay ratio is calculated in accordance with SEC rules. We identified our median employee, excluding the Chief Executive Officer, as of January 2, 2021 by using total cash compensation as our consistently applied cash compensation measure. The amount calculated in this manner was $21,012. Our Chief Executive Officer Tony Sarsam’s total compensation, as reported in the Summary Compensation Table was $1,228,547. Our 2020 Chief Executive Officer to median employee pay ratio is 58:1.

 

 

 

 

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COMPENSATION OF DIRECTORS

 

 

 

The Nominating and Corporate Governance Committee evaluates whether the Company’s non-employee directors are fairly compensated for their services to the Company. Employee directors do not receive compensation for service as a director. In making director compensation decisions, the Committee is guided by three basic principles:

The Committee conducts periodic reviews of non-employee director compensation with these guiding principles in mind.

The Company does not pay meeting fees. The director compensation structure for 2020 was as follows:

The chairs of the committees receive compensation from the chair cash retainer above, as well as compensation as members of the committees.  

In November 2020, with the assistance of its compensation consultant FW Cook, the Nominating and Governance Committee reviewed with compensation paid to directors to ensure it remained competitive.   FW Cook benchmarked the director compensation paid by the Company to the director compensation paid by the Company’s peer group and identified three areas where the Company’s director compensation structure was no longer competitive: cash retainer; equity retainer; and lead Director retainer. In accord with the recommendation made by the Committee compensation consultant, the Nominating and Corporate Governance Committee recommended, and the Board approved, a change to the structure for director compensation to be paid following the Board’s November 2020 meeting. That revised structure is as follows:

The chairs of the committees receive compensation from the chair cash retainer above, as well as compensation as members of the committees.

 

 

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COMPENSATION OF DIRECTORS (cont’d)

 

The Board established the Transition Committee in 2019, comprised of the three Board members who led the Board’s decision to effect a leadership change in 2019 (Mr. Eidson, Mr. Hacker and Ms. Jackson) and Mr. Mannelly. The Board decided that it was most appropriate to determine the compensation to be paid to the Transition Committee members for their work leading to the leadership change and in leading the search to secure the new President and Chief Executive Officer after those efforts were complete. By determining compensation after the work was complete, the Board would have better visibility to the extent of the efforts required over the course of the Committee’s work.  

After reviewing the extensive efforts of the Transition Committee members over the approximate 18 month period of service, the Nominating and Corporate Governance Committee recommended, and the Board agreed, that the non-executive members of the Transition Committee should be compensated as follows:  

Mr. Hacker, Chair: $130,000

Ms. Jackson: $100,000

Mr. Mannelly, $70,000.

The Company has established stock ownership guidelines for non-employee directors to help align the interests of directors with those of our shareholders. Under these guidelines, each director is expected to acquire and continue to hold shares of the Company’s common stock having an aggregate market value that equals or exceeds five times the rate of the regular annual retainer then in effect for non-employee directors who are not chairs. Each director is expected to achieve the target ownership level within five years of becoming a director. As of January 2, 2021, each of the Company’s non-employee directors had achieved the target ownership level or were making satisfactory progress toward the target levels and in compliance with the Company’s stock ownership policy. The following table provides information concerning the compensation of non-employee directors for SpartanNash’s last completed year.

 

 

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COMPENSATION OF DIRECTORS (cont’d)

 

DIRECTOR COMPENSATION

 

 

 

 

 

 

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

 

 

Mr. Hacker, Ms. Jackson, Mr. Voss and Mr. Mannelly served as members of the Compensation Committee for all of fiscal 2020. None of the above members of the Compensation Committee was an officer or associate of SpartanNash or formerly an officer of SpartanNash. None of SpartanNash’s executive officers served as a member of a compensation committee (or board committee performing a similar function) for another entity or served as a director of another entity with an executive officer that serves on the SpartanNash Board of Directors.

 

 

 

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TRANSACTIONS WITH RELATED PERSONS

 

 

 

SpartanNash recognizes that transactions with related persons can present potential or actual conflicts of interest. Accordingly, the Company has adopted written policies and procedures intended to ensure that potential conflicts of interests are identified, reviewed, approved, and disclosed as necessary. The Company has regular communications with related persons and relevant associates regarding these policies.

It is the responsibility of SpartanNash’s management to conduct an appropriate review of all transactions with “related persons” (as defined by Nasdaq and SEC rules) for potential conflicts of interest situations on an ongoing basis. Pursuant to Nasdaq Listing Rule 5630 and the Audit Committee Charter, the Audit Committee must evaluate and approve every proposed transaction with a related person. For any proposed transaction in which a director has an interest, SpartanNash’s general policy is that the director may proceed with the transaction only if the material facts of the transaction and the director’s interest in the transaction have been disclosed to the Audit Committee of the Board, the Audit Committee determines that the transaction is fair to SpartanNash, and the transaction is approved by the Audit Committee. There are no established criteria for evaluating such transactions, and the Audit Committee may consider any information or factors as it deems appropriate in making this determination. However, the Audit Committee may not determine that the proposed transaction is “fair” to the Company unless it determines that the transaction will be made on terms no less favorable than those offered generally to entities that are not affiliated with any director.

Directors and executive officers are required to complete an annual written questionnaire that solicits information regarding any direct or indirect interest that they or members of their family may have in any transaction or series of transactions involving the Company and having a value of $120,000 or more. Directors and executive officers are required to promptly update the Company of any change in the information provided by them in the questionnaire.

SpartanNash has adopted a written conflict of interest policy that requires all associates to report actual and potential conflicts of interest to the Company’s internal auditor.

There were no related person transactions requiring disclosure under SEC rules during 2020 or the current year to the date of this proxy statement.

 

 

 

 

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DELIQUENT SECTION 16(a) REPORTS

 

 

 

Section 16(a) of the Securities Exchange Act of 1934 requires SpartanNash’s directors and officers and persons who beneficially own more than 10% of the outstanding shares of SpartanNash common stock to file reports of ownership and changes in ownership of shares of common stock with the SEC. Directors, officers and greater than 10% beneficial owners are required by SEC regulations to furnish SpartanNash with copies of all Section 16(a) reports they file with the SEC. SpartanNash and its legal counsel file Forms 4 and other reports under Section 16(a) on behalf of directors and executive officers to report transactions with the Company under our compensation and benefit plans. Based solely on our review of the copies of such reports filed electronically with the SEC, and written representations from certain reporting persons that no reports on Form 5 were required for those persons for 2020, we believe that there have been no failures to timely file required reports by our directors and officers, except that due to an administrative error, the Company filed a late Form 4 on November 30, 2020 on behalf of Dennis Eidson, reporting one transaction.

 

 

 

 

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SHAREHOLDER PROPOSALS

 

 

 

Shareholder proposals intended to be presented at the 2022 Annual Meeting, whether or not intended to be included in the proxy statement and form of proxy relating to that meeting, must be received by the Company at its principal executive offices not later than December 9, 2021. Shareholder proposals intended for consideration for inclusion in our proxy statement and form of proxy relating to that meeting should be made in accordance with SEC Rule 14a-8.

All shareholder proposals must comply with the notice provisions set forth in SpartanNash’s bylaws which require that a written notice of a proposal to be considered at the Company’s 2022 Annual Meeting must be delivered to the Secretary of the Company at the principal executive offices of the Company not later than December 9, 2021, if the meeting is held within 30 days of the calendar date of the 2021 Annual Meeting. In the event that the date of the 2022 meeting changes by more than 30 days from the calendar date of the 2021 Annual Meeting, written notice of a proposal must be delivered not more than seven days after the date of the notice of the meeting. To be effective, such a notice must comply fully with the bylaws. You should address all shareholder proposals to the attention of our Secretary, Kathleen M. Mahoney, at 850 76th Street, S.W., P.O. Box 8700, Grand Rapids, Michigan 49518-8700.

Shareholder Nominations of Director Candidates

Under our restated articles of incorporation, a shareholder of record may nominate a person for election as a director at a meeting of shareholders at which directors will be elected if, and only if, the shareholder has delivered timely notice to the Secretary of SpartanNash setting forth:

The Nominating and Corporate Governance Committee will consider every nominee proposed by a shareholder that is received in a timely manner in accordance with these procedures and report each such nomination, along with the Nominating and Corporate Governance Committee’s recommendations, to the full Board of Directors.

To be timely, a shareholder’s notice must be delivered to or mailed and received at SpartanNash’s principal executive offices at least 120 days before the date corresponding to the date of the Company’s proxy statement or notice of the meeting released to shareholders in connection with the last preceding annual meeting of shareholders in the case of an annual meeting of shareholders, or if the date of the upcoming annual meeting changed by more than 30 days from the date of the last preceding meeting, then the notice must be delivered or mailed and received not more than seven days after the earlier of the date of the notice of the meeting or public disclosure of the date of the meeting, and not more than seven days after the earlier of the date of notice of the meeting or public disclosure of the date of the meeting or of notice of the meeting in the case of an annual meeting of shareholders, or not more than seven days following the date of notice of the meeting in the case of a special meeting of shareholders. Any nomination that does not comply with these procedures will be void.

The Nominating and Corporate Governance Committee may also, in its discretion, consider shareholders’ informal recommendations of possible nominees. Shareholders may send such informal recommendations to the Committee by directing them to SpartanNash in care of the Secretary, 850 76th Street, S.W., P.O. Box 8700, Grand Rapids, Michigan 49518.

 

 

 

 

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SOLICITATION OF PROXIES

 

 

 

We will initially solicit proxies by mail and by making our proxy materials available on the Internet. In addition, directors, officers and associates of SpartanNash and its subsidiaries may solicit proxies by telephone or facsimile or in person without additional compensation. Proxies may be solicited by nominees and other fiduciaries who may mail materials to or otherwise communicate with the beneficial owners of shares held by them. We will bear all costs of the preparation and solicitation of proxies, including the charges and expenses of brokerage firms, banks, trustees or other nominees for forwarding proxy material to beneficial owners. We have engaged Georgeson Inc. at an estimated cost of $8,000, plus expenses and disbursements, to assist in solicitation of proxies.

We may deliver a single set of proxy materials to one address shared by two or more of our shareholders. This delivery method is referred to as "householding" and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one Notice of Internet Availability of Proxy Materials and one set of proxy materials to multiple shareholders who share an address, unless we received contrary instructions from the impacted shareholders prior to the mailing date. We agree to deliver promptly, upon written or verbal request, a separate copy of the proxy materials to any shareholder at the shared address to which a single copy of these documents was delivered. If you prefer to receive separate copies of these materials, contact Kathleen Mahoney, Corporate Secretary, at 850 76^th Street S.W., P.O. Box 8700, Grand Rapids, Michigan, 49518-8700.

 

 

 

 

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GENERAL INFORMATION ABOUT THE MEETING

 

 

 

Who may attend the meeting

Only the Company’s shareholders, their duly-appointed proxies and invited guests may attend the virtual meeting.

Who may vote

You may vote at the virtual Annual Meeting if you were a shareholder of record of SpartanNash common stock at the close of business on March 29, 2021. Each shareholder is entitled to one vote per share of SpartanNash common stock on each matter presented for a shareholder vote at the meeting. As of March 29, 2021, there were 36,273,175 shares of SpartanNash common stock outstanding.

How to vote

Registered Holders: If you are a registered shareholder (i.e., you own your shares directly and not through a broker or bank), may vote online or by phone, 24 hours a day, seven days a week. You may also vote by mail.

Online Voting. You may vote online by visiting www.proxydocs.com/SPTN. You may navigate to the online voting site by clicking the “Cast Your Vote” button. Have the instructions attached to your proxy card ready when you access the site and follow the prompts to record your vote. This vote will be counted immediately and there is no need to send in your proxy card. Except for any votes cast during the virtual meeting, votes cast online must be received by 1:00 a.m. Eastern Daylight Time on May 26, 2021.

Phone Voting. To vote by phone, dial 1-866-390-6271 and listen for further directions. You must have a touch-tone phone. Telephonic votes will be counted immediately and there is no need to send in your proxy card. Votes cast by phone must be received by 1:00 a.m. Eastern Daylight Time on May 26, 2021.

Voting by Mail. You may request a printed copy of your proxy card. If you properly sign and return the proxy card to the designated address, the shares represented by that proxy card will be voted at the Annual Meeting and at any adjournment of the meeting. Votes cast by mail must be received no later than the start of the meeting.

If you specify a choice on the proxy card that you return for voting, your shares will be voted as specified. If you do not specify a choice, your shares will be voted for election of each of the nominees named in this proxy statement, and for each of the proposals described in this proxy statement. If any other matter comes before the meeting, your shares will be voted in the discretion of the persons named as proxies on the proxy card.

Street Name Holders: You hold your shares in “street name” if your shares are registered in the name of a bank, broker or other nominee (which we will collectively reference as your “broker”). If you hold your shares in street name, then your broker must vote your street name shares in the manner you direct if you provide your broker with proper and timely voting instructions. PLEASE USE THE VOTING FORMS AND INSTRUCTIONS PROVIDED BY YOUR BROKER OR ITS AGENT. These forms and instructions typically permit you to give voting instructions by phone or online, using a number or Internet address provided by the broker. You will NOT be able to vote street name shares using the internet address or phone numbers established for registered shareholders as described under “Registered Holders.” If you are a street name holder and later want to change your vote, you must contact your broker.

Please note that you may NOT vote shares held in street name at the virtual Annual Meeting unless you request and receive a valid proxy from your broker.

Failure to Vote

If you are a registered shareholder (i.e., you own your shares directly and not through a broker) and you do not cast your vote, no votes will be cast on your behalf on any of the items of business at the Annual Meeting.

 

 

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GENERAL INFORMATION ABOUT THE MEETING (cont’d)

 

 

If you hold your shares in street name and do not provide timely voting instructions to your broker, then your broker or bank may vote your shares only on “routine” matters. Under NYSE rules, the proposal to ratify the selection of the Company’s independent registered public accounting firm is considered a “routine matter.” NYSE rules applicable to its member firms provide that your broker may not vote uninstructed shares on a discretionary basis on non-routine matters, such as the election of directors or proposals relating to executive compensation. In such cases, the broker can register your shares as being present at the Annual Meeting for purposes of determining the presence of a quorum but will not be able to vote on non-routine matters. This is called a “broker non-vote.”

Revoking a Proxy

You may revoke your proxy at any time before it is voted at the meeting by taking any of the following four actions:

Merely attending the meeting will not, by itself, revoke your proxy; you must cast a subsequent vote at the meeting following the instructions on the website for the virtual Annual Meeting. Your last valid vote that we receive before or during the virtual Annual Meeting is the vote that will be counted.

Adjournment

The shareholders present at the meeting, in person or by proxy, may, by a majority vote, adjourn the meeting despite the absence of a quorum. Shares represented by proxy may be voted in the discretion of the proxy holder on a proposal to adjourn the meeting. If a quorum is not present at the meeting, we expect the Chairman of the Board to adjourn the meeting to solicit additional proxies, as is authorized under the Company’s Bylaws.

Multiple Proxies/Instruction Cards

If you receive more than one proxy statement and instruction card, your shares are registered differently or are in more than one account. Please provide voting instructions for all proxy and voting instruction cards you receive.

Meeting Results

We will announce preliminary voting results at the Annual Meeting and publish final results in a current report on Form 8-K within four business days after the Annual Meeting.

 

 

 

 

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P.O. BOX 8016, CARY, NC 27512-9903  INTERNET  Go To: www.proxypush.com/SPTN   •  Cast your vote online  •  Have your Proxy Card ready  •  Follow the simple instructions to record your vote  PHONE Call 1-866-390-6271   •  Use any touch-tone telephone  •  Have your Proxy Card ready  •  Follow the simple recorded instructions  MAIL   •  Mark, sign and date your Proxy Card  •  Fold and return your Proxy Card in the postage-paid  envelope provided  SpartanNash Company   Annual Meeting of Stockholders   For Stockholders as of record on March 29, 2021   TIME: Wednesday, May 26, 2021 09:00 AM, Local Time  PLACE: Annual Meeting to be held live via the Internet  Please visit www.proxydocs.com/SPTN for more details.   This proxy is being solicited on behalf of the Board of Directors   The undersigned hereby appoints Kathleen Mahoney and Jason Monaco, and each or either of them, as the true and lawful attorneys of the  undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of  SpartanNash Company which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon  such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys  to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given.   THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED  IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein.  In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or  postponement thereof.   You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in  accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return  this card.   PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE  

 

 

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FOR FOR  FOR  FOR  FOR  FOR  FOR  FOR  FOR  FOR   FOR  FOR   Signature (if held jointly)