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Preliminary Proxy Statement | |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
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Definitive Proxy Statement | |
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Definitive Additional Materials | |
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Soliciting Material Pursuant to § 240.14a-12 |
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No fee required | |
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Fee paid previously with preliminary materials. | |
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
Church & Dwight Co., Inc.
2023 | NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
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Princeton South Corporate Park
500 Charles Ewing Boulevard
Ewing, New Jersey 08628
MEETING DATE: April 27, 2023
CHURCH & DWIGHT CO., INC.
Virtually via a live audio webcast at www.virtualshareholdermeeting.com/CHD2023 CHURCH & DWIGHT CO., INC. Princeton South Corporate Park 500 Charles Ewing Boulevard Ewing, New Jersey 08628 USA (609) 806-1200 www.churchdwight.com
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Notice of Annual Meeting of Stockholders to be held Thursday, April 27, 2023
The Annual Meeting of Stockholders of Church & Dwight Co., Inc. will be held on Thursday, April 27, 2023 at 12:00 p.m., Eastern Daylight Time. To support the health and well-being of our employees and stockholders, and to facilitate stockholder attendance and ability to participate fully and equally from any location around the world at no cost, this year’s meeting will be held virtually via a live audio webcast at www.virtualshareholdermeeting.com/CHD2023. At the meeting stockholders will be asked to consider and take action on the following:
1. | Election of ten nominees to serve as directors for a term of one year; |
2. | An advisory vote to approve the compensation of our named executive officers; |
3. | An advisory vote to approve the preferred frequency of the advisory vote on compensation of our named executive officers; |
4. | Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2023; |
5. | Approval of the Church & Dwight Co., Inc. Employee Stock Purchase Plan; |
6. | Consider a stockholder proposal, if properly presented at the meeting; and |
7. | Transaction of such other business as may properly be brought before the meeting or any adjournments thereof. |
All stockholders are cordially invited to attend, although only those stockholders of record as of the close of business on March 1, 2023 will be entitled to notice of, and to vote at, the meeting or any adjournments thereof.
Your vote is important. Whether or not you expect to attend the virtual meeting, we urge you to vote by submitting your proxy. You may vote four different ways: by mail, via the Internet, by telephone, or during the virtual meeting. Please refer to detailed instructions included herein or with the Notice Regarding the Availability of Proxy Materials.
By Order of the Board of Directors,
PATRICK D. DE MAYNADIER Corporate Secretary |
Ewing, New Jersey
March 17, 2023
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD VIRTUALLY ON APRIL 27, 2023: The Notice of Annual Meeting, Proxy Statement and 2022 Annual Report to Stockholders are available at: https://materials.proxyvote.com/171340.
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CORPORATE GOVERNANCE GUIDELINES AND OTHER CORPORATE GOVERNANCE DOCUMENTS |
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SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
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Church & Dwight Co. | 2023 Proxy Statement |
TABLE OF CONTENTS |
Church & Dwight Co. | 2023 Proxy Statement |
SUMMARY |
PROXY STATEMENT SUMMARY
This summary highlights important information you will find in this proxy statement. This summary does not contain all of the information you should consider. You should read the complete proxy statement and our 2022 Annual Report before voting.
In this proxy statement, the words “Church & Dwight,” “Company,” “we,” “our,” “ours,” and “us” and similar terms refer to Church & Dwight Co., Inc. and its consolidated subsidiaries.
2023 ANNUAL MEETING OF STOCKHOLDERS
Date and Time: | April 27, 2023 at 12:00 p.m., Eastern Daylight Time | |
Place: | Virtually via a live audio webcast at www.virtualshareholdermeeting.com/CHD2023 | |
Record Date: | March 1, 2023 |
VOTING MATTERS AND BOARD OF DIRECTORS RECOMMENDATIONS
Proposals | Board Recommendation |
Vote Required | ||||
1. |
Election of 10 nominees to serve as directors for a term of one year each |
FOR EACH NOMINEE | Majority of votes cast | |||
2. |
Advisory vote to approve the compensation of our named executive officers |
FOR | Majority of votes present and entitled to vote | |||
3. |
Advisory vote to approve the preferred frequency of the advisory vote on compensation of our named executive officers |
EVERY ONE YEAR | Majority of votes present and entitled to vote | |||
4. |
Ratification of the Appointment of Deloitte & Touche LLP as our Independent Registered Accounting Firm for 2023 |
FOR | Majority of votes present and entitled to vote | |||
5. |
Approve the Church & Dwight Co., Inc. Employee Stock Purchase Plan |
FOR | Majority of votes present and entitled to vote | |||
6. |
Consideration of a stockholder proposal, if properly presented at the meeting |
AGAINST | Majority of votes present and entitled to vote |
Church & Dwight Co. | 2023 Proxy Statement
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SUMMARY |
Bradlen S. Cashaw, Matthew T. Farrell, Bradley C. Irwin, Penry W. Price, Susan G. Saideman, Ravichandra K. Saligram, Robert K. Shearer, Janet S. Vergis, Arthur B. Winkleblack, and Laurie J. Yoler are the nominees to serve as all of the members of the Company’s Board of Directors (“Board” or “Board of Directors”) until our 2024 Annual Meeting of Stockholders. As previously disclosed, after more than 19 years, James R. Craigie has decided to retire from the Board and is not standing for re-election at the Annual Meeting. Upon the recommendation of the Governance, Nominating & Corporate Responsibility Committee, the Board has decided that it will decrease the size of the Board from 11 to 10 directors, effective as of the close of the Annual Meeting. Detailed information about all of our director nominees’ backgrounds and areas of expertise can be found under “Proposal 1: Election of Directors – Skills and Qualifications of our Board of Directors.”
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Committees | ||||||||||||
Name | Position | Director Since |
Independent | Audit | Compensation and Human |
Governance, Nominating and Corporate Responsibility |
Executive | |||||||||
Bradlen S. Cashaw | Chief Operating Officer, Agropur |
2021 | X | X |
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Matthew T. Farrell | Chairman of the Board, President and Chief Executive Officer, Church & Dwight Co., Inc. |
2016 |
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X | |||||||||
Bradley C. Irwin | Retired President and Chief Executive Officer, Welch Foods, Inc. |
2006 | X |
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X | X |
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Penry W. Price | Vice President, Marketing Solutions, LinkedIn Corporation |
2011 | X | X | Chair |
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X | |||||||||
Susan G. Saideman | Founder and Chief Executive Officer, Portage Bay Limited LLC and former Vice President, Amazon, Inc. |
2020 | X | X |
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X |
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Ravichandra K. Saligram | Chief Executive Officer, Newell Brands, Lead Director, Church & Dwight Co., Inc. |
2006 | X |
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X | X | |||||||||
Robert K. Shearer | Retired Senior Vice President and Chief Financial Officer, VF Corporation |
2008 | X | X |
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Janet S. Vergis | Former Executive Advisor for private equity firms and former CEO, OraPharma, Inc. |
2014 | X |
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X | Chair | X | |||||||||
Arthur B. Winkleblack | Retired Executive Vice President and Chief Financial Officer, HJ Heinz Company |
2008 | X | Chair | X |
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X | |||||||||
Laurie J. Yoler | General Partner, Playground Global |
2018 | X |
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X | X |
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Church & Dwight Co. | 2023 Proxy Statement
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SUMMARY |
CORPORATE GOVERNANCE
We strive to maintain effective corporate governance practices and policies. We believe that the following practices and policies contribute to our strong governance profile:
Director Independence |
◾ | 9 of 10 director nominees are independent under the NYSE listing standards | ||
◾ | 3 fully independent Board committees: Audit, Compensation & Human Capital, and Governance, Nominating & Corporate Responsibility | |||
◾ | Independent Lead Director presides over executive sessions of, and facilitates communication with, the independent directors | |||
Board Accountability |
◾ | Annual election of directors | ||
◾ | Our directors are subject to “majority voting,” and each incumbent director nominee submits, prior to the Annual Meeting, an irrevocable resignation in writing that our Board of Directors may accept if a majority of stockholders do not re-elect the director in an uncontested election | |||
Board Leadership |
◾ | Annual assessment and determination of Board leadership structure | ||
◾ | Annual appointment of independent Lead Director when Chairman/Chief Executive Officer (“CEO”) roles are combined or when the Chairman is not independent (or when the Board otherwise determines appropriate) | |||
◾ | Lead Director has strong role and significant governance duties, including approval of Board agendas and chairing executive sessions of all independent directors | |||
Board Evaluation and Effectiveness |
◾ | Annual Board, Committee, and individual director evaluations | ||
Board Refreshment |
◾ | Existing Board members are required to retire on the earlier of reaching age 72, or twenty years on the Board, and new Board members will be required to retire on the earlier of reaching age 72 or fifteen years on the Board | ||
◾ | Annual review of board succession plans | |||
Director Engagement |
◾ | Each director attended at least 75 percent of the aggregate number of meetings held by the Board and all committees of the Board on which such director served in 2022 | ||
◾ | Board policy limits director membership to four other public company boards for non-employee directors (without the approval of the Governance, Nominating & Corporate Responsibility Committee) | |||
◾ | Stockholder ability to contact directors (as described under “Communication with the Board of Directors”) | |||
Director Access and Resources |
◾ | Significant interaction with the Company’s senior business leaders through regular business reviews | ||
◾ | Directors have direct access to senior management and other employees | |||
◾ | Directors have authorization to hire outside experts and consultants and to conduct independent investigations | |||
Proxy Access |
◾ | Our Bylaws provide for proxy access by stockholders | ||
No Supermajority Voting Requirements |
◾ | No supermajority requirement for stockholders to amend Bylaws | ||
◾ | No supermajority requirement for stockholders to amend the Certificate of Incorporation | |||
Right of Stockholders to Request Special Meeting |
◾ | Stockholders with at least 25% of our outstanding stock have the right to request special meetings of the stockholders | ||
Clawback and Anti- Hedging Policies |
◾ | Clawback policy permits the Company to recoup certain compensation payments and grants made under the Company’s Annual Incentive Plan and Omnibus Equity Incentive Plan to the extent required by law, or pursuant to Company policy or if otherwise agreed upon with the participant. In addition, under the Annual Incentive Plan, the Compensation & Human Capital Committee has discretion to require repayment of awards in the event of the recipient’s fraud or willful misconduct | ||
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◾ | Insider trading policy prohibits non-employee directors and employees from engaging in any pledging, short sales, or hedging involving Company stock | ||
Share Ownership |
◾ | CEO is required to hold shares equivalent to 6x base salary | ||
◾ | CFO is required to hold shares equivalent to 3x base salary | |||
◾ | All other senior executives are required to hold shares equivalent to 2.5x base salary | |||
◾ | Board members are required to hold shares equivalent to 5x the standard annual retainer |
Church & Dwight Co. | 2023 Proxy Statement
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SUMMARY |
Director Compensation |
◾ | Implemented a maximum annual limit of $750,000, in the aggregate, for Director Compensation | ||
Compensation Practices |
◾ | Target compensation opportunities are competitive in markets in which we compete for management talent | ||
◾ | Use of short-term and long-term incentives ensure a strong connection between Company performance and actual compensation realized | |||
◾ | Our Annual Incentive Plan utilizes four diverse metrics to avoid over-emphasis on any one measure | |||
◾ | In the event of a change in control, our named executive officers will not receive cash severance, nor will equity granted after July 30, 2019 vest, unless accompanied by a qualifying termination of the named executive officer | |||
◾ | No excise tax gross-ups for change in control payments | |||
◾ | No defined pension benefit plan or similarly actuarially valued pension plan for executives | |||
◾ | Limited perquisites | |||
◾ | Repricing of stock options is prohibited without prior stockholder approval | |||
Board Diversity |
◾ | The Board has been committed to building a diverse and well-rounded Board comprising individuals from different backgrounds, ages, genders, and ethnic diversity, and with a range of experiences and viewpoints. To accomplish this, the Governance, Nominating & Corporate Responsibility Committee will continue to require that search firms it engages include a robust selection of women and racially/ethnically diverse candidates in all prospective director candidate pools | ||
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◾ | Of our 10 director nominees, three are women, one is African American and one is Asian | ||
Risk Management/ESG |
◾ | Risk assessment and risk management are the responsibility of the Company’s management, and the Board has oversight responsibility for those processes and findings | ||
◾ | The Board and its committees oversee the execution of the Company’s Sustainability strategy and its environmental, social and governance priorities and initiatives as part of their oversight of the Company’s overall strategy and risk management |
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Church & Dwight Co. | 2023 Proxy Statement
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PROXY STATEMENT |
CHURCH & DWIGHT CO., INC.
Princeton South Corporate Park, 500 Charles Ewing Boulevard, Ewing, New Jersey 08628
(609) 806-1200
PROXY STATEMENT
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
This proxy statement is furnished in connection with the solicitation of proxies by our Board for use at the 2023 Annual Meeting of Stockholders (the “Annual Meeting”) to be held virtually on April 27, 2023, and at any adjournments thereof.
Who Can Vote
Each holder of record of our common stock at the close of business on March 1, 2023, is entitled to vote at the Annual Meeting. At the close of business on March 1, 2023, there were 244,058,446 shares of our common stock outstanding.
Distribution of Proxy Solicitation and Other Required Annual Meeting Materials
The rules of the Securities and Exchange Commission (“SEC”) allow us to mail a notice to our stockholders advising that our proxy statement, annual report to stockholders, electronic proxy card, and related materials are available for viewing, free of charge, on the Internet. These rules give us the opportunity to serve you more efficiently by making the proxy materials available quickly online and reducing costs associated with printing and postage. Stockholders may access these materials and vote over the Internet or by telephone or request delivery of a full set of materials by mail or email. We have elected to utilize this process for the Annual Meeting. We began mailing the required notice, called a Notice Regarding Availability of Proxy Materials (“Notice”), to stockholders on or about March 17, 2023. The proxy materials have been posted on the Internet, at https://materials.proxyvote.com/171340. If you received a Notice by mail, you will not receive a paper or email copy of the proxy materials unless you request one in the manner set forth in the Notice.
How You Can Vote
You may vote by any of the following methods:
• | During the virtual Annual Meeting. Stockholders of record and beneficial stockholders with shares held in street name (held in the name of a broker or other nominee) may vote virtually during the Annual Meeting. If you hold shares in street name, you must obtain a legal proxy from your broker or other nominee to vote virtually during the Annual Meeting. |
• | By telephone or via the Internet. You may vote by proxy, either by telephone or via the Internet, by following the instructions provided in the Notice, proxy card, or voting instruction card. |
• | By mail. If you request printed copies of the proxy materials by mail, you may vote by proxy by signing and returning the proxy card or voting instruction card. |
If you vote by telephone or via the Internet, please have your Notice or proxy card available. The control number appearing on your Notice or proxy card is necessary to process your vote. A telephone or Internet vote authorizes the named proxies in the same manner as if you marked, signed, and returned a proxy card by mail.
How You May Revoke or Change Your Vote
You have the power to change or revoke your proxy at any time before it is voted at the Annual Meeting as follows:
• | Stockholders of record. You may change or revoke your vote by submitting a written notice of change or revocation to our Secretary at the address listed above or by submitting another timely vote |
Church & Dwight Co. | 2023 Proxy Statement
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PROXY STATEMENT |
(including a vote via the Internet or by telephone). For all methods of voting, the last vote validly cast will supersede all previous votes. |
• | Beneficial owners. You may change or revoke your voting instructions by following the specific directions provided to you by your bank or broker. |
• | Savings and Profit Sharing Plan participants. You may change or revoke your voting instructions by 10:00 a.m. Eastern Daylight Time on April 25, 2023, by either revising your instructions via the Internet, by telephone, or by submitting to the trustee of the Savings and Profit Sharing Plan either a written notice of revocation or a properly completed and signed proxy card bearing a later date. |
Required Vote
You are entitled to cast one vote for each share of common stock you own on March 1, 2023, the record date. The presence, in person or by proxy, of a majority of the votes entitled to be cast at the Annual Meeting constitutes a quorum. Abstentions and broker “non-votes” are counted as present and entitled to vote for purposes of determining a quorum. A broker “non-vote” occurs when a broker does not vote on a particular proposal because the broker does not have discretionary voting power with respect to the proposal and has not received voting instructions from the beneficial owner.
Our Bylaws provide for majority voting in uncontested director elections. As a result, at the Annual Meeting, directors will be elected by the affirmative vote of a majority of the votes cast (in person or by proxy) in an uncontested election. For this purpose, a majority of the votes cast means that the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee. Abstentions and broker “non-votes” are not counted as votes for or against a nominee. If you “abstain” from voting with respect to director nominees, your shares will be counted for purposes of a quorum but will have no effect on the election of the nominees. All of our director nominees are currently serving on our Board of Directors. If a nominee who is currently serving as a director is not re-elected, Delaware law provides that the director would continue to serve on our Board of Directors as a “holdover director.” Under our Corporate Governance Guidelines (“Corporate Governance Guidelines”), each incumbent director nominee submits, prior to the Annual Meeting, an irrevocable resignation that our Board of Directors may accept if stockholders do not re-elect the director. If a director is not re-elected by our stockholders, the Governance, Nominating & Corporate Responsibility Committee would make a recommendation to our Board of Directors on whether to accept or reject the resignation of that director, or whether to take other action. Our Board of Directors would act on the resignation, taking into account the Governance, Nominating & Corporate Responsibility Committee’s recommendation, and publicly disclose its decision and the rationale behind it within 90 days from the date that the election results are certified.
Our proposal to approve, on an advisory basis, the compensation of our named executive officers (Proposal 2), our proposal to approve, on an advisory basis, the preferred frequency of the vote on the compensation of our named executive officers (Proposal 3), our proposal to ratify the selection of our independent registered accounting firm for 2023 (Proposal 4), our proposal to approve the Church & Dwight Co., Inc. Employee Stock Purchase Plan (Proposal 5, the “ESPP Proposal”) and, if properly presented at the meeting, the consideration of a stockholder proposal (Proposal 6, the “Stockholder Proposal”), will be determined by the affirmative vote of the majority of votes represented at the meeting (in person or by proxy) and entitled to vote on the matter. An abstention will have the same effect as a vote against with respect to the advisory vote on the compensation of our named executive officers, the advisory vote on the preferred frequency of the vote on the compensation of our named executive officers, the ratification of our independent registered public accounting firm for 2023, the approval of the ESPP Proposal, and the consideration of the Stockholder Proposal. Brokers will not have discretionary authority to vote on the election of our directors, the advisory vote on the compensation of our named executive officers, the advisory vote on the preferred frequency of the vote on the compensation of our named executive officers, the approval of the ESPP Proposal, or the Stockholder Proposal, and a broker “non-vote” is not counted for purposes of voting on these matters.
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Church & Dwight Co. | 2023 Proxy Statement
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PROXY STATEMENT |
Proposal 3, known commonly as a “say on frequency” proposal, is advisory and will not be binding on us or the Board. However, the views expressed by our stockholders, whether through this vote or otherwise, are important to us and, accordingly, the Board and the Compensation & Human Capital Committee intend to consider the preference selected by our stockholders in making the determination in the future regarding the frequency of our “say on pay” votes.
How Shares Will be Voted
Stockholders of record. If you are a stockholder of record and you:
• | indicate when voting via the Internet or by telephone that you wish to vote as recommended by our Board of Directors; or |
• | sign and return a proxy card without giving specific voting instructions; |
then the proxy holders will vote your shares FOR the election of the nominees described in this proxy statement, FOR the advisory vote to approve the compensation of our named executive officers, FOR every “ONE YEAR” on the advisory vote on the preferred frequency of the vote on the compensation of our named executive officers, FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2023, FOR the approval of the ESPP Proposal, and AGAINST the Stockholder Proposal.
Beneficial owners. If you hold shares in street name (in the name of a broker or other nominee), you must give instructions to your bank or broker on how you would like your shares to be voted. Under applicable New York Stock Exchange (“NYSE”) rules, your bank or broker has discretion to vote on “routine” matters, such as the ratification of the appointment of an independent registered public accounting firm, but does not have discretion to vote on “non-routine” matters, such as the election of directors, the proposal to approve the compensation of our named executive officers, the proposal to approve the preferred frequency of the vote on the compensation of our named executive officers, the proposal to approve the ESPP Proposal, or the Stockholder Proposal. Thus, if a bank or broker holds your shares and you do not instruct the bank or broker how to vote on these matters, no votes will be cast on your behalf.
Savings and Profit Sharing Plan participants. If you participate in the Church & Dwight Co., Inc. Savings and Profit Sharing Plan for Salaried Employees or the Church & Dwight Co., Inc. Savings and Profit Sharing Plan for Hourly Employees (collectively, the “Plans”), you may have voting rights regarding shares of our common stock credited to your account in the Plans. In order to permit the trustee to tally and vote the shares held in the Plans (“Plan Shares”), your instructions, whether by Internet, by telephone, or by proxy card, must be submitted on or prior to 10:00 a.m. Eastern Daylight Time on April 25, 2023. If you do not instruct the trustee how to vote, your Plan Shares will be voted by the trustee in the same proportion that it votes Plan Shares for those accounts in the Plans for which it did receive timely voting instructions. The proportional voting policy is detailed under the terms of the Plans and the associated trust agreements.
Other matters. Our Board of Directors is not aware of any matters that will be brought before the Annual Meeting other than those described in this proxy statement. However, if any other matters properly come before the Annual Meeting, the persons named on the enclosed proxy card will vote in their discretion on such matters.
Who can attend the virtual Annual Meeting
Only stockholders as of the record date, March 1, 2023, or duly appointed proxies, may attend the virtual Annual Meeting. No guests will be allowed to attend the Annual Meeting.
In accordance with Delaware law, for the 10 days prior to our Annual Meeting, a list of registered holders entitled to vote at our Annual Meeting will be available for inspection in our offices at Princeton South Corporate Park, 500 Charles Ewing Boulevard, Ewing, New Jersey 08628.
Church & Dwight Co. | 2023 Proxy Statement
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PROXY STATEMENT |
Attending the virtual Annual Meeting
To support the health and well-being of our employees, directors and our stockholders and to facilitate stockholder attendance and ability to participate fully and equally from any location around the world at no cost, this year’s Annual Meeting will be held exclusively online, with no option to attend in person. If you plan to attend the virtual Annual Meeting, you will need to visit www.virtualshareholdermeeting.com/CHD2023 and use your 16-digit control number provided in the Notice or proxy card to log into the meeting. We encourage stockholders to log in to the website and access the webcast early, beginning approximately 15 minutes before the Annual Meeting’s 12:00 p.m. Eastern Daylight Time start time. If you experience technical difficulties, please contact the technical support telephone number posted on www.virtualshareholdermeeting.com/CHD2023.
Asking questions during the virtual Annual Meeting
Stockholders of record and proxy holders who provide their valid 16-digit control number will be able to participate in the virtual Annual Meeting by asking questions and voting their shares as outlined above.
To submit questions during the meeting, stockholders may:
• | log into the virtual meeting website with their 16-digit control number, first and last name, and email, then typing the question into the “Ask a Question” field and clicking “Submit”. |
Only stockholders with a valid control number will be allowed to ask questions. Questions pertinent to Annual Meeting matters will be answered during the Annual Meeting as time allows. If we receive substantially similar written questions, we may group such questions together and provide a single response to avoid repetition and allow time for additional question topics. If we are unable to respond to a stockholder’s properly submitted question due to time constraints, we will respond directly to that stockholder using the contact information provided. We may also provide written responses to certain stockholder questions that we were unable to answer during the meeting on our “Investors” page on our website following the Annual Meeting.
Additional information regarding the rules and procedures for participating in the virtual Annual Meeting will be provided in our Annual Meeting rules of conduct, which stockholders can view during the Annual Meeting at the Annual Meeting website.
Costs of Solicitation
Solicitation of proxies on our behalf may be made by our directors or employees by mail, in person, and by telephone. Directors and employees will not be paid any additional compensation for soliciting proxies. We have retained D.F. King & Co., Inc. (“D.F. King”) to aid in the solicitation of proxies for a fee estimated not to exceed $8,000 plus out-of-pocket expenses. We will pay all costs of the solicitation and will indemnify D.F. King against liabilities relating to or arising from their proxy solicitation services conducted on our behalf, other than those resulting from D.F. King’s willful misconduct or gross negligence. We also will reimburse banks, brokerage houses, and other custodians, nominees, and fiduciaries for forwarding Notices and proxy materials to beneficial owners.
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Church & Dwight Co. | 2023 Proxy Statement
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PROPOSAL 1 |
PROPOSAL 1: ELECTION OF DIRECTORS
Our Certificate of Incorporation provides for the annual election of our Board of Directors. At the 2023 Annual Meeting, all of our directors will stand for election for one-year terms on our Board of Directors. Our Board of Directors currently consists of 11 members. As previously disclosed, after more than 19 years, James R. Craigie has decided to retire from the Board and is not standing for re-election at the Annual Meeting. Upon the recommendation of the Governance, Nominating & Corporate Responsibility Committee, the Board has decided that it will decrease the size of the Board from 11 to 10 directors, effective as of the close of the Annual Meeting.
At the Annual Meeting, all directors will be elected to serve until the 2024 Annual Meeting, in each case, until their successors are elected and qualified. Our Board of Directors has nominated Bradlen S. Cashaw, Matthew T. Farrell, Bradley C. Irwin, Penry W. Price, Susan G. Saideman, Ravichandra K. Saligram, Robert K. Shearer, Janet S. Vergis, Arthur B. Winkleblack, and Laurie J. Yoler, all of whom currently serve as members of our Board of Directors. All nominees have agreed to be named in this proxy statement and to serve if elected.
We do not anticipate that any of the nominees will become unavailable to serve as a director for any reason. However, if any of them becomes unavailable, the persons named in the enclosed form of proxy will vote for any substitute nominee designated by our Board of Directors, unless our Board of Directors determines to reduce the number of directors on our Board.
SKILLS AND QUALIFICATIONS OF OUR BOARD OF DIRECTORS
Our Board of Directors, with support and recommendations from the Governance, Nominating & Corporate Responsibility Committee, oversees the composition and succession of its members. To this end, at least once a year, in connection with the Board’s annual evaluation, the Board evaluates itself, its committees, and each director, each director’s performance, skills, qualifications and future plans, including any retirement objectives. As part of that evaluation, our Governance, Nominating & Corporate Responsibility Committee identifies areas of overall strength and opportunities for improvement with respect to the Board’s and its committees’ composition, and the Board sets annual objectives and topics to be addressed at its meetings over the coming year.
Our director nominees possess relevant experience, skills and qualifications that contribute to a well-functioning board. Our Corporate Governance Guidelines provide that the Board should consider whether individual directors possess the following personal characteristics: integrity, education, commitment to the Board, business judgment, business experience, accounting and financial expertise, diversity (which may include differences of viewpoint, professional experience, education, skills, race, gender, national origin or other individual qualities and attributes that contribute to board heterogeneity), reputation, civic and community relationships, high performance standards and the ability to act on behalf of stockholders. In January 2023, the Governance, Nominating & Corporate Responsibility Committee reviewed the skills and experiences that they believe Board members should possess. The skills and experiences that the Board seeks in evaluating its composition, and which inform Board succession planning and director nomination processes, as well as the individual experiences, skills and characteristics of our Board members, are highlighted below. The rating for each skill presented below represents the average of self-ratings for all directors, expressed on a numeric basis on a scale of 1 to 10, with the score for each director corresponding to the following ratings:
RATING KEY | ||
1-2 | Has insufficient experience and understanding | |
3-4 | Has some knowledge and experience | |
5-6 | Can hold their own with proper briefing | |
7-8 | Has strong knowledge and experience | |
9-10 | This is a top personal strength and core competency |
Church & Dwight Co. | 2023 Proxy Statement
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The Governance, Nominating & Corporate Responsibility Committee and our Board of Directors believe that the nominees listed below collectively possess these attributes, which, together with their respective experience described in the biographical summaries below, make each nominee well qualified to continue to serve on our Board of Directors.
The rating for each skill presented below is intended as a summary and is not an exhaustive list of the qualifications or contributions to the Board. The following chart summarizes the self-ratings of our Board as a whole on a numeric basis for each skill under “Skills Numeric”, based on the 1 through 10 scale set forth above, while the “Number of Directors” column reflects the number of directors with ratings of at least 7 or greater for the specific skill:
Skills Numeric |
Number of Directors with Strong Knowledge and Experience | |||
Senior Executive Leadership and Strategic Planning: Experience serving in a Senior Leadership Position in a major organization (e.g., CEO, CMO, COO, Chief Financial Officer, Division President, etc.), with a practical understanding and oversight of organizations, processes, strategic planning, and risk management. |
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CPG Industry: Familiarity with the consumer-packaged goods (CPG) industry, and ability to provide guidance on the Company’s strategy and position in the CPG industry. |
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Marketing & Sales: Understanding Brand Management, Distribution, eCommerce, Logistics, Marketing, Packaging and Selling. Experience in understanding the use of Data Analytics to address Consumer Needs and identify Shopper Behaviors. Knowledge about the fundamental and emerging go-to-market strategies across Brick & Mortar, Direct to Consumer, Online only and Omni-Channel retail marketplaces. Awareness of new and emerging Digital Commerce trends including Social & Media Communication, Content Management, Last-mile Delivery, Technology and Data Science. |
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M&A/Business Development: Experience leading growth through acquisitions and other business combinations, with the ability to assess “build or buy” decisions, analyze the fit of a target with a company’s strategy and culture, value transactions, evaluate investment thesis, and evaluate operational integration plans. |
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Public Company Governance: Experience with and understanding of the responsibilities of a public company board, with an understanding of evolving corporate governance practices and the dynamics and operation of a corporate board, management accountability, transparency, and protecting stockholder, while balancing other constituencies’, interests and long-term value creation. |
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Skills Numeric |
Number of Directors with Strong Knowledge and Experience | |||
Human Capital Management, Inclusion and Diversity: Experience with executive compensation and management of human capital and succession planning, including the attraction, development and retention of top candidates, including individuals with diverse skills and backgrounds. |
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R&D/Innovation: Experience in innovation, product development and design, including disruptive product innovation with background in navigating regulatory environments both in the U.S. and globally, especially in health and wellness and other relevant regulated sectors. |
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Supply Chain: Experience in direct and indirect procurement, demand and supply planning, logistics, order to cash processing, manufacturing, and management of 3rd party manufacturers. Competence in supply chain IT systems, supply chain finance, lean manufacturing, manufacturing technology, organizational design, and negotiations. |
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Accounting & Finance: Experience in financial accounting and reporting to ensure the integrity of the Company’s financial reporting, compliance with legal and regulatory requirements and the effectiveness of internal controls, as well as evaluation of financial statements and capital structure. |
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Information Technology/Cybersecurity: Experience understanding the cybersecurity threat landscape, responsibilities in managing/mitigating cyber-risk and how to evaluate the organization’s preparedness to lead through a cyber crisis. |
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Global Business: Experience driving business success in markets around the world, with an understanding of diverse business environments, economic conditions, cultures, and regulatory frameworks, and a broad perspective on global market opportunities. |
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PROPOSAL 1 |
The Board also seeks to achieve diversity of age, gender, and race/ethnicity, and recognizes the importance of Board refreshment to ensure that it benefits from fresh ideas and perspectives. The following charts demonstrate the Board’s commitment to diversity of backgrounds and Board refreshment. See “Governance, Nominating & Corporate Responsibility Committee” for detailed information on board diversity and refreshment.
Diversity | Tenure | |
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Your Board of Directors unanimously recommends a vote FOR all of the following nominees.
Information regarding the nominees for our Board of Directors is provided below.
Director Nominees
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BRADLEN S. CASHAW
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Director since 2021 Independent Age: 60
◾ Audit Committee
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Professional Experience
Mr. Cashaw has been the Chief Operating Officer of Agropur, a top 20 global dairy processor, since December 2021. He also serves as a member of the Board of Directors of Agropur, USA. From September 2020 to November 2021, he was the Chief Supply Chain officer for Flowers Foods. Mr. Cashaw was Executive Vice President and Chief Supply Chain Officer for Dean Foods the nation’s largest fluid dairy producer from March 2016 to September 2019. From October 2013 to August 2015, Mr. Cashaw was Vice President, Integrated Supply Chain for the Cheese & Dairy division at Kraft Foods Group. From April 2012 to September 2013, he was Senior Vice President, Snacks Supply Chain at the Kellogg Company. From September 2008 to February 2012, he was the Vice President of Supply Chain for Quaker Foods & Snacks, and from November 2006 to September 2008 he was the Vice President, Operations, North America for Quaker Foods. Mr. Cashaw began his career at PepsiCo as a project engineer and held several operations and supply chain roles, including plant manager and director during his tenure of over 24 years with the company.
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Director Qualifications
Mr. Cashaw’s more than 35 years of progressive leadership experience within the consumer packaged goods industry at Fortune 300 companies and leadership over supply chain strategy and operations, that enables him to provide our Board of Directors with a valuable global perspective and insight into supply chain matters, such as sales, manufacturing, distribution, finance, business analytics and strategic planning.
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MATTHEW T. FARRELL
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Chairman since 2019 Director since 2016 Non-Independent Age: 66
◾ Executive Committee
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Professional Experience
Mr. Farrell has been our Chairman since May 2019 and President and Chief Executive Officer since January 2016. From November 2014 to December 2015, he was our Executive Vice President, Chief Operating Officer, and Chief Financial Officer, prior to which he served as our Executive Vice President, Finance and Chief Financial Officer since May 2007. From September 2006 through May 2007, he was our Vice President and Chief Financial Officer. Mr. Farrell was Executive Vice President and Chief Financial Officer of Alpharma Inc. from April 2002 through August 2006. From July 2000 through April 2002, he served as Vice President, Investor Relations & Communications at Ingersoll-Rand Ltd. From November 1994 through June 2000, he held various senior financial positions at AlliedSignal Inc.
Other Boards and Appointments
Mr. Farrell currently serves as a member of the board of directors of Trinseo PLC, a global materials supplier of latex binders, plastics, and specialty products. He previously served as a member of the Board of Directors of Lydall, Inc., a supplier of engineered thermal, acoustical, and filtration products, from 2003 to April 2021.
Director Qualifications
Mr. Farrell’s intimate knowledge of our Company, gained through over 16 years of executive service as our Chief Executive Officer, Chief Operating Officer or Chief Financial Officer, combined with his four years of experience as the Chief Financial Officer of a pharmaceutical company and many years of experience in other finance and investor relations roles at large multinational companies, enable him to provide important insights and leadership to us and our Board of Directors regarding our operations, including marketing, strategic planning, mergers and acquisitions, finance and capital structure, performance management, business analytics, compliance, risk management, public company reporting and governance, and investor relations.
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BRADLEY C. IRWIN
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Director since 2006 Independent Age: 64
◾ Compensation & Human Capital Committee ◾ Governance, Nominating & Corporate Responsibility Committee
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Professional Experience
Mr. Irwin retired in December 2018 as President and Chief Executive Officer of Welch Foods Inc., a global processor and marketer of juices and jams, where he served in that capacity since February 2009. Mr. Irwin was President of Cadbury Adams North America LLC, the North American confectionery business unit of Cadbury Schweppes plc. (“Cadbury Schweppes”), from June 2007 through November 2008. From April 2003 through June 2007, Mr. Irwin was President of Cadbury Adams USA LLC, the United States confectionery business unit of Cadbury Schweppes. Mr. Irwin served as President of Mott’s Inc., a business unit of Cadbury Schweppes, from May 2000 through April 2003. From 1980 through 1999, Mr. Irwin served in various capacities for The Procter & Gamble Company.
Other Boards and Appointments
Mr. Irwin currently serves on the boards of directors of Save the Children U.S. and Save the Children International, a large global non-profit delivering education, health and humanitarian support for disadvantaged children. He also serves on the board of directors of Bay State Milling Co, a private grain milling company. Mr. Irwin was a member of the board of directors of Welch Foods from February 2009 to December 2018.
Director Qualifications
Mr. Irwin’s more than 40 years of experience in the consumer products industry, including his service in executive capacities at large multinational public companies that market products in the same categories as some of our products, enables him to provide valuable insights into a wide variety of matters relating to our operations. These matters include, among others, strategic planning, risk assessment, and international operations.
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PENRY W. PRICE
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Director since 2011 Independent Age: 55
◾ Audit Committee ◾ Chair, Compensation & Human Capital Committee ◾ Executive Committee
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Professional Experience
Mr. Price has been the Vice President, Marketing Solutions of LinkedIn Corporation (a subsidiary of Microsoft Corporation) since October 2013. From June 2011 through October 2013, he was President of Dstillery,
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Inc., a marketing technology company formerly known as Media6Degrees, LLC. From June 2004 through June 2011, he served in various capacities at Google, Inc., a provider of Internet-related products and services, the last of which was Vice President, Agency Sales and Partnerships, Worldwide. From July 2000 through June 2004, Mr. Price served as Sales Director of Wenner Media, LLC, a company engaged in the publication of magazines and production of radio and television programs, where he was principally responsible for revenue generation and strategic partnerships.
Director Qualifications
Mr. Price’s extensive experience as a senior executive in companies specializing in digital marketing, advertising, and social networks enables him to provide valuable perspectives on our marketing initiatives and strategies, including the use of social media and digital technology to reach new consumers.
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SUSAN G. SAIDEMAN
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Director since 2020 Independent Age: 60
◾ Audit Committee ◾ Governance, Nominating &
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Professional Experience
Ms. Saideman is the founder of Portage Bay Limited LLC and has served as its CEO since September 2019. Ms. Saideman was Vice President, Amazon, Inc., the world’s largest online retailer, from January 2019 to August 2019, Vice President, Amazon Fashion EU from October 2016 to January 2019 and Vice President, Global Vendor Management at Amazon, Inc. from November 2013 to September 2016. From December 2007 to October 2013, Ms. Saideman was President Mars Retail Group, the group responsible for the Direct to Consumer businesses for Mars including M&M’s World, Ethel M and MyM&Ms, from January 2004 to June 2007, she was CEO Mikasa and Company/Arc International, a leader in tableware products, and from December 2002 to June 2003, President, Parker Division, Newell Rubbermaid, a leading global consumer goods company. From May 1998 to December 2002 and August 1991 to May 1998, Ms. Saideman held various positions with increasing responsibility at Campbell Soup Company, a multi-national food company and PepsiCo, one of the world’s largest food and beverage companies, respectively. Earlier in her career Ms. Saideman held positions at Mt. Trading Company, Bain & Company and Chase Manhattan Bank.
Other Boards and Appointments
Ms. Saideman is a member of the board of directors of MYTHERESA, an industry leader in the world of online luxury fashion and retail, MYT Holding LLC, Prepac Manufacturing Ltd., and FIRST Washington.
Director Qualifications
Ms. Saideman’s extensive experience in the “direct-to-consumer” businesses, building brands in the consumer packaged goods industries and leadership over global operational teams, enable her to provide our Board of Directors with a valuable global perspective on our digital transformation, ecommerce, marketing, innovation, international operations and technology.
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RAVICHANDRA K. SALIGRAM
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Lead Director since 2023 Director since 2006 Independent Age: 66
◾ Governance, ◾ Executive Committee
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Professional Experience
Mr. Saligram has been the Chief Executive Officer and a member of the Board of Directors of Newell Brands, a leading global consumer goods company, since May 2022 and the President and Chief Executive Officer and a member of the Board of Directors of Newell Brands, from October 2019 to May 2022. Mr. Saligram has announced his intention to retire from Newell Brands on May 16, 2023. Prior to Newell Brands, Mr. Saligram was the Chief Executive Officer and a member of the board of directors of Ritchie Bros. Auctioneers Incorporated, the world’s largest industrial equipment auctioneer, since July 2014. From November 2010 through November 2013, he served as the Chief Executive Officer, President, and a member of the board of directors of OfficeMax Incorporated, a company engaged in business-to-business and retail office products distribution. From 2003 through November 2010, he served in various executive management positions with ARAMARK Corporation, a global food services company, including Executive Vice President, President, ARAMARK International, and Chief Globalization Officer, and Senior Vice President of ARAMARK Corporation. From 1994 through 2002, Mr. Saligram served in various capacities for the InterContinental Hotels Group, a global hospitality company, including as President of Brands & Franchise, North America, Chief Marketing Officer & Managing Director, Global Strategy, President, International and President, Asia Pacific. Earlier in his career, Mr. Saligram held various general and brand management positions with S. C. Johnson & Son, Inc. in the United States and overseas.
Other Boards and Appointments
Mr. Saligram was a member of the board of directors of Ritchie Bros. Auctioneers Incorporated from July 2014 to October 2019.
Director Qualifications
Mr. Saligram’s extensive experience building businesses and brands in the industrial products, office products distribution, consumer packaged goods, hospitality, and consumer and managed services industries and leadership over operational teams in a large number of countries, enable him to provide our Board of Directors with a valuable global perspective on governance and control matters, as well as on strategic planning and risk assessment.
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ROBERT K. SHEARER
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Director since 2008 Independent Age: 71
◾ Audit Committee
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Professional Experience
Mr. Shearer retired in March 2015 as Senior Vice President and Chief Financial Officer of VF Corporation, a global lifestyle apparel company, where he served in that capacity since May 2005. He also served VF Corporation in several other capacities since 1986, including Vice President, Finance and Chief Financial Officer from July 1998 to May 2005. Earlier in his career, Mr. Shearer held a senior audit position with Ernst & Young LLP.
Other Boards and Appointments
Mr. Shearer currently serves on the board of directors of YETI Holdings, Inc., a designer, marketer, retailer, and distributor of a variety of innovative, branded, premium products to a wide-ranging customer base and Kontoor Brands, Inc. a global lifestyle apparel company.
Director Qualifications
Mr. Shearer’s role as Chief Financial Officer of VF Corporation, coupled with his 12 years of experience in public accounting, enables him to provide our Board of Directors and the Audit Committee with important insights on a range of financial and internal control matters, as well as on matters relating to capital structure, information systems, risk management, public reporting and investor relations. In addition, his participation in VF Corporation expansion initiatives, including a number of acquisitions and growth in international markets, enables him to provide important insights on international operations, business combination opportunities, and strategic planning.
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JANET S. VERGIS
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Director since 2014 Independent Age: 58
◾ Compensation & Human ◾ Chair, Governance, ◾ Executive Committee
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Professional Experience
Ms. Vergis served as an Executive Advisor for private equity firms from January 2013 to December 2019, where she identified and evaluated healthcare investment opportunities. From January 2011 to August 2012, she
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was the Chief Executive Officer of OraPharma, Inc., a specialty pharmaceutical company dedicated to oral health, where she led that company’s successful turnaround and its subsequent sale. From 2004 to 2009, Ms. Vergis served as President of Janssen Pharmaceuticals, McNeil Pediatrics and Ortho-McNeil Neurologics. From 1988 to 2004, she served in various positions of increasing responsibility in executive leadership, research and development, new product development, sales, and marketing with Johnson & Johnson and its subsidiaries.
Other Boards and Appointments
Ms. Vergis is currently a member of the board of directors of Teva Pharmaceutical Industries, a global leader in generics and biopharmaceuticals, Dentsply Sirona, the world’s largest manufacturer of professional dental solutions and SGS, a leading testing, inspection and certification company. She was also a member of the board of directors of Amneal Pharmaceuticals, Inc. and MedDay Pharmaceuticals from 2015 to 2019 and 2016 to 2021, respectively.
Director Qualifications
Ms. Vergis’ more than 35 years of healthcare leadership experience, together with her extensive background in research and development, new product development (including products regulated by the U.S. Food and Drug Administration), sales, and marketing, combined with her focus in the areas of oral health and women’s health, enable her to provide important perspectives to our Board of Directors on a range of matters relating to our operations.
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ARTHUR B. WINKLEBLACK
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Director since 2008 Independent Age: 65
◾ Chair, Audit Committee ◾ Compensation & Human Capital Committee ◾ Executive Committee
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Professional Experience
Mr. Winkleblack retired in June 2013 as Executive Vice President and Chief Financial Officer of the HJ Heinz Company, a global packaged food manufacturer, where he had served in such capacity since January 2002. Prior to his tenure with Heinz, Mr. Winkleblack held senior executive positions with various private equity owned businesses from 1996 to 2001, including Perform.com and Freeride.com as part of Indigo Capital, C. Dean Metropolous Group and Six Flags Entertainment Corporation. He was VP & CFO of Commercial Avionics Systems, a division of AlliedSignal, from 1994 to 1996. Previously, he held various finance, strategy and business planning roles at PepsiCo Inc. from 1982 to 1994. Mr. Winkleblack also provided financial and capital markets consulting services to Ritchie Brothers Auctioneers (“RBA”), an industrial auctioneer, from 2014 to 2019. He served as the Senior Advisor to the then RBA’s CEO, Ravichandra K. Saligram, who also serves on our Board of Directors.
Other Boards and Appointments
Mr. Winkleblack currently serves as a member of the board of directors of The Wendy’s Company, a global quick service restaurant company, and Aramark, a global provider of food, facility and uniform services. He was a member of the Board of Directors of Performance Food Group, a company specializing in the distribution of food and food-related products to customers throughout the United States, from 2015 to 2019.
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Director Qualifications
Mr. Winkleblack’s substantial executive experience across a broad range of industries enables him to provide our Board of Directors with knowledgeable perspectives on strategic planning, international operations, and mergers and acquisitions. In addition, his nearly 12 years of experience as the Chief Financial Officer of a large, multinational, consumer goods company enables him to bring important perspectives to our Board of Directors on performance management, business analytics, finance and capital structure, compliance, information technology, risk management, public company reporting, and investor relations.
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LAURIE J. YOLER
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Director since 2018 Independent Age: 58
◾ Governance, Nominating & ◾ Compensation & Human
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Professional Experience
Ms. Yoler is a General Partner at Playground Global, a technology and life sciences venture capital firm in Silicon Valley. She was the Senior Vice President, Business Development of Qualcomm, Inc. and President, Qualcomm Labs, a wholly-owned subsidiary of Qualcomm, Inc., from March 2013 to January 2016, driving internal innovation and exploring opportunities for new businesses, strategic partnerships, acquisitions, investments, and divestitures. From February 2006 to March 2013, Ms. Yoler was a partner and Managing Director at GrowthPoint Technology Partners, a Silicon Valley based investment bank. From September 2004 to July 2005, Ms. Yoler served as Chief Development Officer of Intellectual Ventures LLC, a private equity firm. From March 2001 to September 2004 Ms. Yoler was Vice President, Business Development and Marketing at Packet Design and Precision I/O, two early-stage technology firms. Prior to that, Ms. Yoler was an integral part of the development and launch of many new innovations and products in her roles at Visa Inc., Sun Microsystems, Accenture PLC and PricewaterhouseCoopers.
Other Boards and Appointments
Ms. Yoler serves on the Board of Directors of Bose Corporation, a company that designs, develops and sells audio equipment. From 2015 to 2020, Ms. Yoler served as a board member and strategic advisor to Zoox Inc. in the autonomous vehicle and AI software industry until its acquisition by Amazon. She currently serves as a member of the boards of directors of three privately held technology companies, Lacuna AI, Leaf Logistics and Saltbox. From 2003 to 2008, Ms. Yoler was a founding member of the Board of Directors of Tesla, Inc., a company that engages in the design, development, manufacture, and sale of fully electric vehicles, energy generation and storage systems. Ms. Yoler served on Tesla’s advisory board from 2008 until 2013.
Director Qualifications
Ms. Yoler’s extensive experience in the technology industry, spanning strategy, product, corporate development, global sales and marketing, mergers and acquisitions and business development, enables her to provide valuable insights into a wide variety of matters relating to technology, acquisitions, marketing, business development, and international operations.
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CORPORATE GOVERNANCE AND OTHER BOARD MATTERS
BOARD COMPOSITION
Our Board of Directors is currently comprised of Bradlen S. Cashaw, James R. Craigie, Matthew T. Farrell, Bradley C. Irwin, Penry W. Price, Susan G. Saideman, Ravichandra K. Saligram, Robert K. Shearer, Janet S. Vergis, Arthur B. Winkleblack, and Laurie J. Yoler. As previously disclosed, after more than 19 years, James R. Craigie has decided to retire from the Board and is not standing for re-election at the Annual Meeting. Upon the recommendation of the Governance, Nominating & Corporate Responsibility Committee, the Board has decided that it will decrease the size of the Board from 11 to 10 directors, effective as of the close of the Annual Meeting.
CORPORATE GOVERNANCE GUIDELINES AND OTHER CORPORATE GOVERNANCE DOCUMENTS
Our Corporate Governance Guidelines, including guidelines for the determination of director independence, the responsibilities and duties of our Board of Directors, director access to management and independent advisors, director compensation, the committees of our Board of Directors, and other matters relating to our corporate governance, are available on the “Investors” page of our website, www.churchdwight.com. Also available on the “Investors” page are other corporate governance documents, including our Code of Conduct (“Code of Conduct”) and the Charters of the Audit Committee, Compensation & Human Capital Committee, and Governance, Nominating & Corporate Responsibility Committee.
Our website is not part of this proxy statement; references to our website address in this proxy statement are intended to be inactive textual references only.
BOARD OF DIRECTORS INDEPENDENCE
Our Corporate Governance Guidelines provide that a majority of our Board of Directors shall consist of independent directors who meet the criteria for independence required by the NYSE listing standards. A director will be considered independent if our Board of Directors affirmatively determines that the director has no material relationship with us (directly, or as a partner, stockholder, or officer of an organization that has a relationship with us). In assessing the materiality of a relationship, our Board of Directors considers all relevant facts and circumstances. In addition to the independence standards established by the NYSE, we have adopted categorical standards under the Corporate Governance Guidelines designed to assist our Board of Directors in assessing independence. Under these standards, none of the following relationships necessarily disqualifies a director or nominee from being considered “independent”:
• | A director’s or a director’s immediate family member’s ownership of five percent or less of the equity of an organization that has a relationship with us; |
• | A director’s service as an executive officer of or employment by, or a director’s immediate family member’s service as an executive officer of, a company that makes payments to or receives payments from us for property or services in an amount which, in any of the last three fiscal years, is less than the greater of $1 million or two percent of such other company’s consolidated gross revenues; or |
• | A director’s service as an executive officer of a charitable organization that received annual contributions from the Company that have not exceeded the greater of $1 million or two percent of such charitable organization’s annual gross revenues in any of such charitable organization’s last three fiscal years. |
Our Board of Directors reviewed and analyzed the independence and each nominee for director in February 2023 to determine whether any particular relationship or transaction involving any director, or any director’s affiliates or immediate family members, was inconsistent with a determination that the director is independent for purposes of serving on our Board of Directors and its committees. During this review, our Board
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examined transactions and relationships between directors or their affiliates and family members and Church & Dwight. As a result of this review, in February 2023, our Board affirmatively determined that each of Bradlen S. Cashaw, Bradley C. Irwin, Penry W. Price, Susan G. Saideman, Ravichandra K. Saligram, Robert K. Shearer, Janet S. Vergis, Arthur B. Winkleblack and Laurie J. Yoler is independent within the meaning of the NYSE listing standards and under the categorical standards described in the Corporate Governance Guidelines. As previously announced, on February 1, 2023, James R. Craigie informed the Board that he will not be standing for re-election as a director at the Company’s 2023 Annual Meeting of Stockholders. In March of 2023, based on new information, the Board of Directors evaluated Mr. Craigie’s conduct, including his failure to disclose his close personal friendship with a member of our executive management team, who is not the CEO, and his unauthorized disclosure of information regarding certain confidential Board proceedings. The Board determined that because of such conduct Mr. Craigie violated his obligations of confidentiality and candor under the Company’s Code of Conduct applicable to members of the Company’s Board of Directors. In addition, the Board determined that Mr. Craigie is no longer considered independent within the meaning of the New York Stock Exchange listing standards and under the Company’s Corporate Governance Guidelines, and is no longer one of the Board’s independent directors. In connection with the foregoing, Mr. Craigie will not assume the role of Chairman Emeritus to which he was previously appointed upon the conclusion of his term as a director, and he will have no further role with the Board or Company following the 2023 Annual Meeting.
Our Board of Directors has further determined that each of the members of the Audit Committee, Compensation & Human Capital Committee, and Governance, Nominating & Corporate Responsibility Committee is independent within the meaning of the NYSE listing standards, and that the members of the Audit Committee and the Compensation & Human Capital Committee meet the additional independence requirements of the NYSE listing standards applicable to audit committee members and compensation committee members, respectively. In addition, the members of the Compensation & Human Capital Committee are “non-employee directors” as defined under applicable SEC rules.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the directors who served on the Compensation & Human Capital Committee in fiscal year 2022 has ever served as one of our officers or employees. In addition, none of the directors who served on the Compensation & Human Capital Committee had any relationship with us or any of our subsidiaries during fiscal year 2022 pursuant to which disclosure would be required under applicable rules and regulations of the SEC pertaining to the disclosure of transactions with related persons. During fiscal year 2022, none of our executive officers served as a member of the compensation committee (or other committee performing similar functions or, in the absence of any such committee, the entire board of directors), of any other entity of which an executive officer of such other entity served on our Board of Directors or the Compensation & Human Capital Committee.
EXECUTIVE SESSIONS OF INDEPENDENT DIRECTORS
Our Board of Directors meets in regularly scheduled executive sessions without any members of our management, including the CEO, present. The Lead Director, currently Mr. Saligram, is responsible for chairing the executive sessions of our Board of Directors. In addition, each of the Compensation & Human Capital, Governance, Nominating & Corporate Responsibility and Audit Committees regularly meet alone in scheduled executive sessions without any members of our management, including the CEO, present.
BOARD OF DIRECTORS RISK OVERSIGHT
Our Board of Directors, acting principally through the Audit Committee, is actively involved in the oversight of the significant risks affecting our business. Our Board of Directors’ and the Audit Committee’s risk oversight activities are focused on management’s risk assessment and management processes, as well as on our ethics and compliance program.
Our Internal Audit Department administers an annual detailed Enterprise Risk Management assessment with management to identify and rank the most significant risks that affect our Company, including consideration
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of a large number of risks associated with companies in the consumer products industry. Formal alignment of the most significant risks occurs between the Board and executive management every other year and as changes in the risk environment necessitate. The assessed risks encompass, among others, economic, industry, enterprise, operational, cybersecurity, data privacy, compliance, Sustainability and environmental, social and governance (“ESG”) (including climate change) and financial risks. Our President and Chief Executive Officer assigns an executive officer to lead the management of each of those risks identified as among the most significant. As part of the risk management process, our Internal Audit Department annually prepares an Internal Audit project plan under which it reviews activities directed to mitigate business and financial related risks. This plan is subject to Audit Committee approval.
Our Director, Internal Audit (“Internal Audit Director”) meets quarterly with our executive officers to assess any changes in the magnitude of identified risks, as well as the status of mitigation activities with regard to the most significant risks. Our Internal Audit Director reports directly to the Audit Committee and advises the Audit Committee on a quarterly basis regarding management’s risk assessment process and the progress of mitigation activities designed to facilitate the maintenance of risk within acceptable levels. The Audit Committee, in turn, reports to our Board of Directors with regard to these matters on a quarterly basis.
Our Board of Directors oversees the Company’s Information Security Program. In order to respond to the threat of security breaches and cyberattacks, we have developed a program, overseen by the Company’s Senior Vice President, Global Chief Information Officer, that is designed to protect and preserve the confidentiality, integrity and continued availability of all information owned by, or in the care of, the Company. This program also includes a cyber incident response plan that includes controls and procedures for timely and accurate reporting of any material cybersecurity incident. We have not had a material data security breach. The Audit Committee, which is tasked with oversight of certain risk issues, including cybersecurity, receives reports from the Senior Vice President, Global Chief Information Officer and the Vice President, Chief Information Security Officer each quarter. At least annually, the Board of Directors and the Audit Committee also receive updates about the results of exercises and response readiness assessments led by outside advisors who provide a third-party independent assessment of our technical program and our internal response preparedness. The Audit Committee regularly briefs the full Board of Directors on these matters, and the full Board also receives periodic briefings regarding our Information Security Program and cyber threats in order to enhance our directors’ literacy on cyber issues.
Our Executive Vice President and General Counsel leads our ethics and compliance risk oversight program through the Compliance Council, which is comprised of various functional representatives and compliance subject matter experts. The Compliance Council meets regularly to review the health of the program, opportunities for improvement, and the status of execution against agreed program priorities. Our Executive Vice President and General Counsel also meets regularly with the Audit Committee, either alone or together with subject matter experts from the Compliance Council, to review the health of our compliance and ethics program, its priorities, and the status of execution against those priorities. Annually, our Executive Vice President and General Counsel provides a comprehensive review of the compliance and ethics program to our Board of Directors, and supplements this review, from time to time, as requested by our Board of Directors or as appropriate with respect to specific compliance risk areas or issues.
Our Executive Vice President and General Counsel, Executive Vice President, Chief Technology Officer & Global New Product Innovation, Executive Vice President, Chief Supply Chain Officer and Executive Vice President, Chief Human Resources Officer lead our Sustainability program and ESG initiatives through the Corporate Issues Council (the “Council”) which is comprised of various functional representatives and subject matter experts. The Council meets regularly to review the health of the program, opportunities for improvement, and the status of execution against agreed program priorities. Our Executive Vice President and General Counsel also meets regularly with the Governance, Nominating & Corporate Responsibility Committee, together with subject matter experts from the Council, to review the health of our Sustainability program and ESG priorities, and the status of execution against them. The Chair of our Governance, Nominating & Corporate Responsibility Committee reviews the status of our Sustainability program and ESG priorities with our Board of Directors at each
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regularly scheduled Board meeting, and supplements this review, from time to time, as requested by our Board of Directors or as appropriate with respect to specific Sustainability program and ESG priorities, other than those related to human capital matters, including diversity, equity and inclusion (“DEI”), which are overseen by the Compensation & Human Capital Committee and reported on to the Board by the Chair of that Committee.
In addition to the efforts of our Board of Directors and the Audit Committee to address risk oversight, the Compensation & Human Capital Committee annually reviews our compensation policies and practices to confirm that such compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on our Company. As a result of its most recent review in 2022, the Compensation & Human Capital Committee concluded that our incentive compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us for the following reasons:
• | Awards are earned based on achievement of corporate performance objectives under the Annual Incentive Plan. |
• | The four 2022 performance metrics selected under our Annual Incentive Plan were counterbalanced so that, for example, an undue focus on net sales at the expense of gross margins would not result in a higher payout. |
• | We cap maximum awards under the Annual Incentive Plan. The Annual Incentive Plan uses a performance rating system which corresponds to a payout range from 0.0 (0 percent of target) to a maximum of 2.0 (200 percent of target), which limits the potential for excessive emphasis on short-term incentives. |
• | Stock options constitute a substantial portion of an executive’s total remuneration and vest as to all underlying shares on the third anniversary of the date of grant. This structure encourages a longer-term focus and rewards our executives only if the price of our common stock appreciates above the exercise price of the stock option. |
• | Annual stock option grants result in overlapping three-year vesting periods, which reduces the risk of an inappropriate focus on one vesting date and which encourages continued retention and incentives. |
• | Our stock ownership guidelines require that our executives hold a significant amount of our common stock to further align their interests to the interests of our stockholders on a long-term basis. |
Our Board of Directors believes that our compensation system, our division of risk oversight responsibilities, and our Board of Directors’ leadership structure comprise and support the most effective risk management approach.
BOARD OF DIRECTORS LEADERSHIP STRUCTURE
The Corporate Governance Guidelines provide that our Board of Directors may determine from time to time what leadership structure works best for our Company, including whether the same individual should serve both as Chairman of our Board of Directors and Chief Executive Officer. In addition, the guidelines provide that if the same individual serves as Chairman of our Board of Directors and CEO, or the Chairman is otherwise not independent, our Board of Directors shall have an independent Lead Director, as selected by the independent members of the Board.
The Board of Directors believes the most effective leadership structure for the Company at this time is one with a combined Chairman and CEO, coupled with an independent Lead Director. Having a combined Chairman and CEO promotes a cohesive vision and strategy for the Company and enhances our ability to execute effectively. We have found that this structure fosters leadership and communication advantages and efficiencies. Mr. Farrell, our current Chairman and CEO, is in an optimal position to identify, and to lead Board discussions on,
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important matters related to our business operations and related risk. Mr. Farrell’s in-depth knowledge of our strategic priorities and operations enables him to facilitate effective communication between management and our Board of Directors and ensure that key issues and recommendations are brought to the attention of our Board of Directors and management. We believe that Mr. Farrell is an effective spokesperson for management and our Board of Directors by serving in both positions. The Board created the Lead Director role as an integral part of a leadership structure that promotes strong, independent oversight of the Company’s management and affairs. Mr. Saligram has served as the Lead Director since February 2023, succeeding Mr. Irwin in that role. The Lead Director presides over executive sessions and has the authority to call executive sessions. The Lead Director also consults with the entire Board of Directors and with our Chairman, President and CEO and our Secretary on Board of Directors meeting agendas. In addition, the Lead Director acts as a contact person to facilitate communications between employees, stockholders, and others with the independent directors.
We believe that the presence of a Lead Director enhances the ability of our Board of Directors to provide additional independent oversight and supplements the following corporate governance practices, which also facilitate independent oversight:
• | All of our directors, other than our Chairman, President and CEO, are independent. |
• | All of the members of the Audit Committee, Compensation & Human Capital Committee, and Governance, Nominating & Corporate Responsibility Committee are independent. |
• | Our Board of Directors and each of its standing committees meet in regularly scheduled executive sessions without the presence of management. |
• | Our Board of Directors completes an annual assessment of the effectiveness of the full Board of Directors, each of its standing committees, and individual directors. |
COMMUNICATION WITH THE BOARD OF DIRECTORS
Our Lead Director acts as a contact person to facilitate communications between employees, stockholders and others with the independent directors. The Lead Director is responsible for ensuring that stockholder requests, recommendations, and proposals regarding governance-related matters are evaluated by the Governance, Nominating & Corporate Responsibility Committee, the Compensation & Human Capital Committee, or Audit Committee, as appropriate, and then by our Board of Directors based on the applicable Committee’s recommendation.
Any person who wishes to communicate with our Board of Directors, including the Lead Director or the independent directors as a group, may direct a written communication to our Board of Directors, the Lead Director, or the independent directors, at: Church & Dwight Co., Inc., Princeton South Corporate Park, 500 Charles Ewing Boulevard, Ewing, New Jersey 08628, Attention: Secretary. Such correspondence (other than solicitations) will be logged in and forwarded to the Lead Director.
STOCKHOLDER ENGAGEMENT
We recognize the value of and are committed to engaging with our stockholders and soliciting their views and input on various topics. We approach stockholder engagement through various avenues:
Annual Stockholders Meeting
Our annual stockholder meeting is conducted virtually through a live webcast and online stockholder tools, which we believe enhances rather than constrains stockholder access and participation. We initially adopted a virtual meeting format during the first year of the COVID-19 pandemic and continue to believe that this practice facilitates stockholder attendance and enables stockholders to participate fully, and equally, from any location around the world, at no cost. This format allows all stockholders to communicate with us both in advance of and
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during the meeting and provides a forum to ask questions of the members of our Board and management. We believe this is the right choice for a Company with a global stockholder base, not only saving costs for the Company and its stockholders, but also increasing the ability to engage with all stockholders, regardless of the amount of stock owned or physical location.
We do not place restrictions on the type or form of questions that may be asked but reserve the right to edit inappropriate questions. During the live Q&A session of the meeting, we endeavor to answer pertinent questions asked during the meeting as well as those asked in advance, as time permits. If we are unable to respond to a stockholder’s properly submitted question during the meeting, we may provide written responses on our corporate website shortly after the meeting, depending on the subject matter and relevance of the questions. Although the live webcast is available only to stockholders at the time of the meeting, a replay of the meeting is made publicly available on the Company’s investor relations website.
For more information about the virtual stockholder meeting, see “Information About The Annual Meeting And Voting.”
Investor Meeting
We hold our annual Investor Meeting (“Investor Meeting”) in January or February of each year. At the Investor Meeting, our CEO and CFO and other members of the executive leadership team discuss the previous quarter and year-end results and provide an update on our strategy and the financial outlook for our upcoming fiscal year. The Investor Meeting is an important opportunity for investors to have access to our management team and provides a deeper understanding of, and direct insight into, our business, strategy, and outlook, as well as any other important topics.
Year-Round Engagement
Our stockholder engagement practices and controls, which are designed to support our commitment to constructive communications between our stockholders and the independent directors, include the ability of our stockholders to cast an annual advisory vote on executive compensation (“say-on-pay”), the ability to submit stockholder proposals and recommend candidates for election to our Board, and the ability to communicate directly with our Board of Directors.
We also engage with our stockholders throughout the year. Our comprehensive stockholder engagement program includes, in addition to the Annual Stockholder Meeting and Investor Meeting, earnings calls and post-earnings communications, conference presentations and meetings, individual meetings and responses to investor inquiries. The multi-faceted nature of our program allows us to maintain meaningful engagement with our broad investor community, including advisory firms.
We value our stockholders’ feedback and are committed to engaging in constructive and meaningful dialogue with stockholders throughout the year, including with respect to our performance, governance practices, executive compensation, and the Board’s oversight of risk, strategy, talent and ESG matters. In 2022, we engaged with a number of stockholders, and topics discussed included, in addition to the proposal contained herein, our executive compensation program, governance practices, risks, DEI, Sustainability and ESG. Meetings regarding those matters were led by our CFO, with support from various subject matter experts within the Company, including our General Counsel. In addition, we hosted numerous investor meetings on our business performance, category performance, competitive actions and supply chain disruption. Those meetings were attended at times by both our CEO and CFO or with our CFO and an investor relations representative. Maintaining a disciplined approach to the discussions and allowing adequate meeting time ensures that matters important to stockholders are not neglected in favor of addressing only current salient issues. Summaries of all of these communications are provided to our Nominating, Governance & Corporate Responsibility Committee, as well as our Compensation & Human Capital Committee, as applicable, and the Board.
We remain committed to these ongoing discussions and welcome feedback from all stockholders, who can contact our directors or executive officers as described under “Communication with the Board of Directors.”
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BOARD OF DIRECTORS MEETINGS AND COMMITTEES
Committees of the Board of Directors
The Board has four standing committees as set forth in the table below, as well as a Finance Committee that meets on an ad hoc basis. During 2022, each incumbent director attended at least 75 percent of the aggregate number of meetings held by our Board and all Board committees on which such director served. The following table shows the current members of each of the four standing committees and the number of meetings held during fiscal 2022.
Director | Board |
Audit | Compensation & Human Capital |
Governance, Nominating & |
Executive | |||||
Bradlen S. Cashaw | ✓ |
✓ |
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James R. Craigie | ✓ |
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Matthew T. Farrell | Chair |
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Chair | |||||
Bradley C. Irwin | ✓ |
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✓ | ✓ |
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Penry W. Price | ✓ |
✓ | Chair |
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✓ | |||||
Susan G. Saideman | ✓ |
✓ |
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✓ |
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Ravichandra K. Saligram | Lead Director |
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✓ | ✓ | |||||
Robert K. Shearer | ✓ |
✓ |
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Janet S. Vergis | ✓ |
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✓ | Chair | ✓ | |||||
Arthur B. Winkleblack | ✓ |
Chair | ✓ |
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✓ | |||||
Laurie J. Yoler | ✓ |
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✓ | ✓ |
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Number of Meetings in 2022 | 6 |
5 | 4 | 4 | 0 |
Although we do not have a formal policy requiring attendance of directors at our Annual Meetings, we expect all directors to attend the Annual Meeting absent exceptional circumstances. All incumbent directors attended the 2022 Annual Meeting.
Audit Committee. Under its Charter, the Audit Committee, among other responsibilities, (i) has sole authority to retain, set compensation and retention terms for, terminate, and oversee and evaluate the activities of, our independent registered public accounting firm; (ii) reviews and approves in advance the performance of all audit and permitted non-audit services, subject to the pre-approval policy discussed below under “Pre-Approval of Audit and Permissible Non-Audit Services”; (iii) reviews and discusses with management and our independent registered public accounting firm the annual audited financial statements and quarterly financial statements and certain other disclosures included in our filings with the SEC; (iv) reviews and discusses with management earnings press releases prior to their release; (v) discusses with management, internal audit personnel, and our independent registered public accounting firm, our risk assessment and risk management policies, including our major financial risk exposures and the security of the Company’s computerized information systems, including cybersecurity; (vi) oversees the internal audit function; (vii) discusses with management, internal audit personnel, and our independent registered public accounting firm the adequacy and effectiveness of our financial reporting processes, internal control over financial reporting, and disclosure controls and procedures; (viii) keeps the independent auditors informed of the relationships and transactions with related parties that are significant to the Company; and (ix) oversees the adoption, periodic review, and oversight of policies and procedures regarding business conduct and oversees our compliance and ethics program.
Our Board of Directors has determined that each of Mr. Shearer and Mr. Winkleblack is an “audit committee financial expert” within the meaning of SEC regulations.
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The Audit Committee has established procedures for the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls and auditing matters and the receipt of confidential, anonymous submissions by our employees with respect to concerns regarding potential violations of our compliance and ethics program, including questionable accounting or auditing matters. Such complaints and submissions may be made by writing to the following address: Church & Dwight Co., Inc., Princeton South Corporate Park, 500 Charles Ewing Boulevard, Ewing, New Jersey 08628, Attention: Secretary. Complaints may also be made via the Internet at www.churchdwight.ethicspoint.com, or by calling our toll-free hotline. The Audit Committee regularly receives reports regarding potential violations of our compliance and ethics program and oversees certain investigations relating thereto. The number for calls placed within the United States and Canada is (855) 384-9879. The numbers for calls placed in other countries may be found on the Internet at www.churchdwight.ethicspoint.com. Such correspondence will be logged in and forwarded to the Chair of the Audit Committee or his/her designated delegates, who provide the Audit Committee with regular reports.
Compensation & Human Capital Committee. Under its Charter, the Compensation & Human Capital Committee is responsible for approving the specific salary, bonuses, stock awards, and other compensation for our elected officers, which includes our named executive officers identified in the Summary Compensation Table. The Compensation & Human Capital Committee also, among other responsibilities: (i) oversees the design of our executive compensation programs, policies, and practices; (ii) reviews and approves the adoption, termination, and amendment of, and administers, our incentive and equity compensation plans; (iii) review and approve the adoption, termination and amendment of the health, welfare, wealth accumulation, retirement and other benefit plans of the Company and, where appropriate, its affiliates; (iv) reviews and approves annually corporate goals and objectives as they relate to CEO and other executive officer compensation; (v) evaluates at least annually the performance of the CEO and the other executive officers and establishes their respective compensation; (vi) evaluates whether our compensation policies and practices for our executive officers and other employees create risks that are reasonably likely to have a material adverse effect on us; (vii) collaborates with the Governance, Nominating & Corporate Responsibility Committee, regarding recommendations to our Board of Directors concerning executive officer succession; (viii) collaborates with the Governance, Nominating & Corporate Responsibility Committee, regarding recommendations to our Board of Directors concerning non-employee director compensation; and (ix) recommends to the Board the development, selection, retention, and dismissal of elected officers. The Compensation & Human Capital Committee also reviews and discusses with management the development, implementation and effectiveness of the Company’s policies and strategies related to its human capital management function, including policies and strategies regarding the development, attraction, and retention of Company personnel, DEI, workplace environment and culture, and internal communications programs.
In considering executive compensation, the Compensation & Human Capital Committee considers the executive compensation recommendations as well as the comparative public company data provided by independent compensation consultants engaged directly by the Compensation & Human Capital Committee. Semler Brossy Consulting Group, LLC (“Semler Brossy”) serves as the Compensation & Human Capital Committee’s independent compensation consultant and does not provide any other services to us. See “Compensation Discussion and Analysis” for additional information regarding the services provided by Semler Brossy and information considered by the Compensation & Human Capital Committee. The Compensation & Human Capital Committee also takes into account statistical data and recommendations of our CEO. However, our CEO does not make recommendations and does not participate in any discussions or decisions regarding his own compensation.
Governance, Nominating & Corporate Responsibility Committee. Under its Charter, the Governance, Nominating & Corporate Responsibility Committee, among other responsibilities, (i) develops and periodically reviews, and recommends to our Board of Directors, criteria for the selection of new directors to serve on our Board of Directors; (ii) identifies individuals qualified to become members of our Board of Directors consistent with our Board of Directors’ criteria for selecting new directors set forth in the Corporate Governance Guidelines; (iii) recommends to our Board of Directors, director nominees to be elected at the next annual meeting of
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stockholders and, where applicable, to fill vacancies; (iv) considers and makes recommendations to our Board of Directors on questions of independence and possible conflicts of interest of members of our Board of Directors and executive officers in accordance with the Corporate Governance Guidelines; (v) in collaboration with the Compensation & Human Capital Committee, makes recommendations to our Board of Directors concerning executive officer succession; (vi) oversees Board of Directors and committee evaluations; (vii) makes recommendations to our Board of Directors regarding corporate governance matters; (viii) in consultation with the Compensation & Human Capital Committee, periodically reviews and makes recommendations to our Board of Directors regarding the compensation of our non-employee directors, and the principles upon which such compensation is determined; and (ix) oversees the Company’s Sustainability program and ESG priorities, including, but not limited to, the Company’s environmental, climate change, responsible packaging, responsible sourcing and product ingredients (other than those related to human capital matters, including DEI, which are overseen by the Compensation & Human Capital Committee).
The Governance, Nominating & Corporate Responsibility Committee recommends to our Board of Directors candidates for nomination to our Board of Directors. When considering individuals to recommend for nomination, the Governance, Nominating & Corporate Responsibility Committee seeks persons with diverse backgrounds who possess the following characteristics: integrity, education, commitment to our Board of Directors, business judgment, business experience, accounting and financial expertise, diversity, reputation, civic and community relationships, high performance standards, and the ability to act on behalf of stockholders.
The Governance, Nominating & Corporate Responsibility Committee will consider recommendations for director candidates from stockholders. Stockholder recommendations of candidates should be submitted in writing to: Church & Dwight Co., Inc., Princeton South Corporate Park, 500 Charles Ewing Boulevard, Ewing, New Jersey 08628, Attention: Secretary. In considering any candidate proposed by a stockholder, the Governance, Nominating & Corporate Responsibility Committee will reach a conclusion as to whether to recommend such candidate to our Board of Directors based on the criteria described above. The Governance, Nominating & Corporate Responsibility Committee may seek additional information regarding the candidate. After full consideration, the stockholder recommending the candidate will be notified of the decision of the Governance, Nominating & Corporate Responsibility Committee (and of our Board of Directors, if the candidate is recommended to our Board of Directors for consideration). The Governance, Nominating & Corporate Responsibility Committee will consider all potential candidates in the same manner regardless of the source of the recommendation.
As highlighted in our Corporate Governance Guidelines, the Board values diversity and recognizes the importance of having unique and complementary backgrounds and perspectives in the board room. The Board endeavors to include diverse skills, professional experience, perspectives, age, race, ethnicity, gender and cultural backgrounds that reflect our consumer and investor base, and to guide the Company in a way that reflects the best interests of all our stockholders. The Board’s overall diversity is a significant consideration in the director nomination process. The Governance, Nominating & Corporate Responsibility Committee reviews the director nominees (including any stockholder nominees) and ascertains whether, as a whole, they meet the Corporate Governance Guidelines in this regard. For this year’s election, the Board has nominated 10 individuals who bring valuable diversity to the Board. Their collective experience covers a wide range of roles, geographies, and industries. Of these 10 director nominees three are women, one is African American, and one is Asian. In 2022, the Board renewed its commitment to having a diverse board and is committed to using refreshment opportunities to strengthen the Board’s diversity. To accomplish this, the Governance, Nominating & Corporate Responsibility Committee will continue to require that search firms engaged by the Company include a robust selection of women and racially/ethnically diverse candidates for serious consideration in all prospective director candidate pools. In addition, the Governance, Nominating & Corporate Responsibility Committee is committed to considering the candidacy of women and racially/ethnically diverse candidates for all future vacancies on the Board. The Board has also modified its age and tenure restrictions to increase refreshment of the Board and opportunities to add new and diverse Board members. The new guidelines require that existing Board members retire on the earlier of reaching age 72, or twenty years on the Board and new Board members retire on the
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earlier of reaching age 72 or fifteen years on the Board. The Board also believes that tenure diversity should be considered in order to achieve an appropriate balance between the detailed Company-knowledge and wisdom that comes with many years of service, and the fresh perspective of newer Board members. We believe that our current Board has an appropriate balance of experienced and newer directors, with tenure of the current directors averaging 10 years. The Governance, Nominating & Corporate Responsibility Committee balances all of the above considerations when assessing the composition of our Board of Directors. The Governance, Nominating & Corporate Responsibility Committee may engage the services of third-party search firms to assist in identifying and assessing the qualifications of director candidates.
The Board continuously evaluates and, as appropriate, updates our corporate governance practices based on recommendations from the Governance, Nominating & Corporate Responsibility Committee. In recent years we have made significant governance changes designed to facilitate stockholder participation and engagement, including the following:
Executive Committee. The Executive Committee may exercise the authority of our Board of Directors, except as specifically reserved by Delaware law to our Board of Directors or as our Board of Directors otherwise provides.
Finance Committee. The Board also has a Finance Committee, which meets on an ad hoc basis. The Finance Committee reviews financing and capital markets issues but has no decision autonomy. Mr. Winkleblack is chair of the Finance Committee. Messrs. Cashaw, Irwin and Shearer also serve on the Finance Committee.
SUCCESSION PLANNING
Our Board of Directors recognizes that one of its most important duties is to ensure excellence and continuity in our senior leadership by overseeing the development of executive talent and planning for the effective succession of the Chairman of our Board of Directors and our CEO and other senior members of executive management. Our CEO and other senior executive succession planning process includes identifying external candidates, where appropriate, and identifying and developing potential internal candidates on an ongoing basis.
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The criteria used when assessing the qualifications of potential CEO successors are included on a position specification developed by our Board of Directors. Our Board of Directors is committed to being prepared for a planned or unplanned change in our leadership in order to ensure our stability.
In continuation of this process, the Governance, Nominating & Corporate Responsibility Committee, in collaboration with the Compensation & Human Capital Committee, agree upon and recommend to the Board a succession plan for our CEO and other senior members of executive management in the ordinary course of business and in emergency situations. Through this process, our Board of Directors receives from our CEO and the Executive Vice President, Chief Human Resources Officer qualitative evaluations of, and recommendations concerning, potential successors to our CEO and our other senior executives, along with a review of any development plans recommended for such individuals. At least once annually, our Board of Directors reviews our succession plans. Succession planning is also regularly discussed in executive sessions of our Board of Directors and in committee meetings, as applicable. Our directors become familiar with internal potential successors for key leadership positions through various means, including a comprehensive annual talent and succession review, Board of Directors and committee meeting presentations, and less formal interactions throughout the course of the year.
CODE OF CONDUCT
We have adopted a Code of Conduct that applies to all employees and directors of Church & Dwight and our global subsidiaries. Among other things, the Code of Conduct is designed to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, promote full, fair, accurate, timely and understandable disclosures in periodic reports we are required to file, promote compliance with applicable governmental laws, rules, and regulations and promote a harassment-free work environment. The Code of Conduct requires the prompt internal reporting of violations of the Code of Conduct and contains provisions regarding accountability for adherence to the Code of Conduct. The Code of Conduct is available on the “Investors” page of our website at www.churchdwight.com. We are committed to satisfying the disclosure requirements regarding any amendment to, or waiver from, a provision of the Code of Conduct, including the conduct of an executive officer or member of our Board, by making disclosures concerning such matters available on the “Investors” page of our website. See “Corporate Governance and Other Board Matters—Board of Directors Meetings and Committees—Audit Committee” for a summary of our procedures for the submission, receipt, retention, and treatment of complaints with respect to concerns regarding potential violations of our compliance and ethics program. Confidentiality terms in our settlement agreements with employees comply with all federal and state laws regarding limitations on confidentiality provisions and explicitly permit employees to report to government agencies and participate in government proceedings. Moreover, it is our practice not to use arbitration clauses in agreements with employees.
SUSTAINABILITY STRATEGY AND ESG PILLARS
Sustainability is how we refer to our Environmental, Social & Governance (“ESG”) efforts to deliver growth and profitability while making a meaningful and positive impact. We believe that Sustainability is critical to the health of the communities in which we operate, contributes to a better world, and benefits our business both financially and operationally. Each year we publish a Sustainability Report that discloses our business and corporate responsibility commitments and details our ESG performance metrics and targets and other components of our ESG efforts. Our 2021 Sustainability Report is available on our web site at https://churchdwight.com/pdf/Sustainability/2021-Sustainability-Report.pdf, and our 2022 Sustainability Report will be available in April 2023 (the “2022 Sustainability Report” and together with the 2021 Sustainability Report, the “Sustainability Reports”). References to our Sustainability Reports are for informational purposes only and neither the Sustainability Reports nor the other information on our website is incorporated by reference into this Proxy Statement.
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Our global Sustainability strategy is derived from our heritage and organizational values. The following six pillars are the core focus of our Environmental and Social efforts. Each is supported through our Governance practices, which are intended to maintain a system of rules and practices that determine how we operate and align the interests of our stakeholders in support of ethical business practices and financial success.
• | Our Brands: Delight consumers with our brands and contribute towards a more sustainable world. |
• | Products: Provide safe and effective products for consumers and the environment. |
• | Packaging: Utilize consumer friendly and environmentally responsible packaging. |
• | Employees and Communities: Embrace the principles of diversity, equity and inclusion, good corporate citizenship and social responsibility within the communities we can impact. |
• | Environment and Climate Change: Minimize environmental impact of our global operations, with a focus on increased renewable energy usage, reduced water consumption, greenhouse gas emissions and solid waste to landfills. |
• | Responsible Sourcing: Improve our suppliers’ environmental, labor, health & safety and ethical practices. |
Environmental
We strive to minimize the impact of our expanding global operations and to meet the challenge of managing our environmental footprint. Our environmental priorities include providing effective products that are safe for our consumers, the animals they care for and the environment, utilizing consumer friendly and environmentally responsible packaging, reducing greenhouse gas emissions (GHG), reducing water usage, recycling solid waste and improving our suppliers’ environmental practices.
We have a goal to achieve carbon neutral status for our owned and controlled global operations by 2025, and we have already offset greater than 90% of our targeted carbon dioxide emissions. We established new science-based targets that were approved by the Science-Based Targets Initiative (SBTi) in 2022. These new targets take into account the level of carbon reduction needed to meet the goals set forth in the Paris Agreement. In addition, we improved overall recyclability across our broad portfolio of products, with global recyclability increasing from 71% to 87% since 2018. Almost all (99.8%) of our paper and board packaging is sourced from recycled material and/or sustainably managed forests. We have a goal to increase Post-Consumer Recycled plastic to a minimum of 25% average across all global plastic packaging by end of 2025, and by the end of 2022 we had achieved over 17% against that goal.
Our operations are subject to federal, state, local and foreign laws, rules and regulations relating to environmental concerns, including air emissions, wastewater discharges, solid and hazardous waste management activities, and the safety our employees. We endeavor to take actions necessary to comply with such regulations. These steps include periodic environmental and health and safety audits of our facilities. The audits, conducted by independent firms with expertise in environmental, health and safety compliance, include site visits at each location, as well as a review of documentary information, to determine compliance with such federal, state, local and foreign laws, rules and regulations.
Social
Our Social focus includes our goals of delighting consumers with our brands through our contributions towards a more sustainable world, improving our suppliers’ labor, health & safety, environmental and ethical practices, and supporting our employees and communities—all to create a stronger, more resilient company while contributing to a better world. In their everyday work, our employees embody our commitments to integrity, quality, and innovation, and in doing so, directly contribute to our long-standing character and reputation.
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Employee safety and wellness remain two of our highest priorities. We developed and administer company-wide policies designed to ensure the safety of each team member and compliance with Occupational Safety and Health Administration (OSHA) and local standards. Recognizing that the mental health of our employees is as important as their physical well-being, we increased the reach of the Employee Assistance Program (EAP) to provide free professional support to our employees who may be dealing with a variety of issues, including relationship, emotional, substance abuse and others. In 2022, we approved the addition of paid parental leave, backup childcare and a mental health day to our U.S. benefits offerings for 2023 in support of our diverse workforce. We embrace the diversity of our employees and believe that a diverse and inclusive workforce fosters innovation and promotes an environment filled with unique perspectives, talents and experiences. We strive to cultivate a culture and processes that support and enhance our ability to recruit, develop and retain diverse talent at every level. As part of our enhanced diversity and inclusion initiatives and our commitment to transparency and accountability, in 2022, we began publishing workplace demographics of our employees in our Sustainability Reports and online, which we will continue in the future. We encourage our employees to become involved in their communities through our Employee Giving Fund and The Church & Dwight Philanthropic Foundation (the “Foundation”) which is focused on helping to create equitable and inclusive opportunities and advancing environmental preservation. The Foundation is administered by our employees.
Governance
Our governance focus includes the processes, rules, resources and systems in support of our operational, Sustainability and ESG efforts. The Council, comprised of senior executives representing all of our key functional areas, guides the integration of Sustainability with all parts of our business and drives continuous improvement in our Sustainability approach and performance. The Council takes the lead in defining and implementing our Sustainability strategy across the six ESG pillars. Its duties include allocating resources to appropriately address Sustainability issues; reporting on our progress to drive continuous improvement in our Sustainability approach and performance; and monitoring, prioritizing and addressing evolving standards and stakeholder requirements. Our Board of Directors, acting principally through its Governance, Nominating & Corporate Responsibility Committee, oversees our Sustainability program and ESG efforts, including our climate change policies and programs. The Governance, Nominating & Corporate Responsibility, the Compensation & Human Capital and Audit Committees each focuses on specified areas of Sustainability, including compliance and ethics, human capital and DEI. Our Independent Lead Director is responsible for ensuring that stockholder requests, recommendations and proposals are evaluated by the Governance, Nominating & Corporate Responsibility Committee, additional committees within the Board as appropriate, and then by the Board of Directors, if needed. Our Board also reviews the results of our periodic employee engagement surveys and has oversight over our planned response strategy.
As described in our Sustainability Reports, our continued progress in key areas of ESG has earned recognition from various third parties.
Human Capital
Overview
Much of our success comes from our culture. Our people share a collective energy and ambition towards making a difference supporting the greater good, by providing affordable, quality products for everyday life, as reflected in our ESG and sustainability commitments, and by giving back to their communities. Our culture generates a collective passion, strength and determination to make an outsized impact, every day.
Safety and Wellness
Employee safety remains one of our highest priorities. We developed and administer company-wide policies to ensure the safety of each team member and compliance with OSHA standards.
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Our Employees
As of December 31, 2022, we had approximately 5,250 global employees, an increase of approximately 125 compared to December 31, 2021. Approximately 87% of our workforce is located in the Americas, 10% in Europe, Middle East, and Africa, and 3% in the Asia-Pacific region. About 49% of our employees are salaried and about 51% are paid hourly wages. During fiscal 2022, our turnover rate was approximately 21.5%. Our revenue per employee in fiscal 2022 was approximately $1.02 million.
Diversity, Equity and Inclusion
We embrace the diversity of our employees and our DEI efforts aspire to help us achieve a more diverse workforce. We also strive to cultivate a culture and vision that supports and enhances our ability to recruit, develop and retain diverse talent at every level.
As a company we remain committed to fair treatment, access, opportunity, and advancement and strive to identify and eliminate any potential barriers that may have prevented the full participation of underrepresented groups.
In 2020, we established a Diversity & Inclusion Council (the “D&I Council”) that provides strategic direction, guidance and advocacy for our DEI initiatives. The D&I Council, led by our Chief Executive Officer and our Chief Human Resources Officer, includes diverse employees at every level from around the world. Our Board of Directors, acting principally through its Compensation & Human Capital Committee, oversees our DEI efforts. In 2022, our DEI initiatives continued to progress in supporting an inclusive environment at our facilities while exploring our diversity representation and talent policies to create goals and opportunities at our sites around the world.
We are committed to transparency and accountability that will drive continuous progress. As part of our enhanced diversity and inclusion initiatives and our commitment to transparency and accountability, in 2020, we began publishing workplace demographics of our employees in our Sustainability Reports. In 2022, we publicly disclosed consolidated data from our most recent Employer Information Report (EEO-1) submitted to the Equal Employment Opportunity Commission. The EEO-1 Report is a compliance survey mandated by U.S. federal statute and regulations.
Hiring, Development and Retention
Our talent strategy is focused on attracting the best talent and recognizing and rewarding performance, while continually developing, engaging and retaining our talented employees.
We invest resources in professional development and growth as a means of improving employee performance and improving retention. In 2022, we launched our high potential development program (IMPACT) where cross-functional leaders brought together the power of diversity to solve business challenges while developing leadership capabilities through formal learning. We continue to be committed to ensuring that all employees have the opportunities, tools and resources to develop and drive their careers.
Compensation and Benefits
Attracting and retaining talent is a priority at Church & Dwight. We offer competitive pay and a range of benefits that support the well-being of our increasingly diverse workforce. This includes offering competitive salaries and wages, as well as benefits such as health insurance, prescription drug benefits, dental, vision, hospital indemnity, accident, critical illness, and disability insurance, life insurance, health savings accounts, flexible spending accounts, reproductive rights coverage, participation in savings plans and identity theft insurance, in each case subject to the terms and conditions of the applicable plans and programs. In 2022, we approved the addition of paid parental leave, backup childcare and a mental health day to our U.S. benefits offerings for 2023 in support of our diverse workforce.
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Communities
We encourage our employees to become involved in their communities through our Employee Giving Fund by providing annual grants, disaster relief, and other monetary support. In 2022, the Employee Giving Fund supported our communities by providing $1.2 million to 209 deserving organizations. In addition, employees purchased back-to-school supplies online to support disadvantaged youth, donated clothes and non-perishable items for clothing and food drives and provided supplies for a summer camp and holiday dinner for families in need. Moreover, the Company established The Church & Dwight Philanthropic Foundation (the “Foundation”) in 2020 with the focus on helping to create equitable and inclusive opportunities and advancing environmental preservation. The Foundation is administered by our employees. In 2022, seven organizations were chosen and received grants in aggregate totaling $915,000. In the DEI space, the following organizations received grants: Junior Achievement, Bowie University and Virginia State University. In the Sustainability space, the following organizations received grants: The Recycling Partnership, the Ocean Conservancy, Northeast Wilderness Trust, and The Xerces Society for Invertebrate Conservation.
COMPENSATION OF DIRECTORS
In 2022, our directors’ fees, other than the CEO, consisted of the following:
Annual Retainer 2022 |
|
|||||
• | Lead Director | $142,000 | ||||
• | Chairperson of the Audit Committee | $140,000 | ||||
• | Chairperson of the Compensation & Human Capital Committee | $135,000 | ||||
• | Chairperson of the Governance, Nominating & Corporate Responsibility Committee | $132,500 | ||||
• | Other non-employee directors | $120,000 | ||||
Annual Equity 2022 |
|
|||||
• | Annual Equity Grant | $140,000 | ||||
Special Assignment 2022 |
|
|||||
• | Special Assignment (Per Meeting) | $ 2,000 |
The table above does not include a separate annual retainer for the Board Chair, as the Board Chair is currently our Chief Executive Officer and he receives no additional compensation for his service on the Board.
We pay fees to our directors in accordance with the Amended and Restated Compensation Plan for Directors (as amended, the “Compensation Plan for Directors”). Any fees payable to our directors under the Compensation Plan for Directors may be deferred in accordance with our Deferred Compensation Plan for Directors, provided that a timely election is made by the director seeking such deferral. We also provide annual stock option awards to our directors under the Church & Dwight Co., 2022 Omnibus Equity Compensation Plan (the “Omnibus Equity Compensation Plan”). All of these arrangements are described in further detail below.
Compensation Plan for Directors. Our Compensation Plan for Directors was originally effective as of January 1, 2015 and amended on November 1, 2017 and provides for the payment of fee-based compensation (i.e., an annual retainer and any special assignment meeting fees) and annual equity grants to our directors who are not full-time employees of the Company or its affiliates. Special assignment meeting fees are paid in consideration for attendance at meetings with respect to certain non-scheduled activities and projects requested by the Board. No special assignment meeting fees were paid in fiscal year 2022. The annual retainer amount is pro-rated for any director with less than a full year of service.
The Compensation Plan for Directors provides each director with the choice of receiving his or her fee-based compensation (i) 100 percent in cash if that director has fully satisfied the Company’s Stock Ownership
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Guidelines for Directors, (ii) 50 percent in cash and 50 percent in shares of our common stock if specifically elected by a director or (iii) 100 percent in shares of our common stock (the default method of payment). For 2022, all directors made their elections for how to receive their fee-based compensation in December 2022. To determine the number of shares a director is entitled to receive under the Compensation Plan for Directors, the annual retainer or special assignment meeting fee amount (as applicable) is divided by the closing price of a share of our common stock as reported on the NYSE on the applicable payment date.
Annual Equity Grants for Directors. The Compensation Plan for Directors provides that, unless otherwise established by our Board of Directors, equity grants to our non-employee directors will be made annually on the same date each year that we make annual equity grants to our employees (which date occurs on the Monday falling most closely to the midpoint between the dates of our first and second quarter earnings releases). A new director will receive his or her initial equity grant on the date such individual commences service with us as a director. In 2022, as in prior years, the annual equity grants were comprised of stock option awards granted under the Omnibus Equity Compensation Plan. All shares underlying the stock options granted to non-employee directors vest in full on the third anniversary of the grant date, subject to the director’s continued service on our Board of Directors and have a ten-year term. Upon any cessation of service due to death or disability, the stock options (to the extent unvested) continue to vest and all unexercised options remain outstanding until the third anniversary of such death or disability (or earlier until expiration of the option term). For any director who retires after serving on our Board of Directors for at least six years, the stock options (to the extent unvested) continue to vest and all unexercised options remain outstanding for the remainder of the option term. No non-employee director may receive more than one equity grant in any calendar year.
Deferred Compensation Plan for Directors. The Deferred Compensation Plan for Directors provides an opportunity for our directors to defer payment of all or a portion of their respective director fees into a notional account until after termination of service. A director electing to defer payment must decide whether to receive the deferred payment in a lump sum or in annual installments over a period of up to 10 years. A director must make any of the foregoing elections prior to the beginning of the calendar year for which the deferred fees are earned. Also, newly elected directors may make such election within 30 days of becoming a director. A director’s election is deemed to remain in effect with respect to the following year unless the director revokes or changes such election prior to the commencement of such following year. Following a termination of service, the director generally receives a number of shares of our common stock in accordance with his or her timely filed election, either in a lump sum or in annual installments over a period of up to 10 years, equal to the number of notional shares then outstanding in the director’s deferred compensation account under the plan. On a change in control, any and all deferred accounts (including any account being paid in installments) will be immediately distributed. The number of notional shares represented by amounts in a participating director’s account is set forth below in the table captioned “Securities Ownership of Certain Beneficial Owners and Management.”
2023 Director Compensation. On October 26, 2022, the Governance, Nominating & Corporate Responsibility Committee and the Compensation & Human Capital Committee, reviewed the compensation of our non-employee directors in consultation with Semler Brossy, the independent compensation consultant retained by the Compensation & Human Capital Committee. As part of its analysis of the compensation of our non-employee directors, Semler Brossy reviewed the total compensation and each element of our non-employee director compensation program compared to the director compensation programs of our Compensation Peer Group, as identified and discussed in more detail under “Compensation Discussion and Analysis - Peer Groups.” The Governance, Nominating & Corporate Responsibility Committee targets the total compensation paid to our non-employee directors at a level that approximates the 50th percentile of the compensation paid to non-employee directors of the Compensation Peer Group. Based on its analysis, Semler Brossy concluded that the total compensation paid to our non-employee directors was below the median of the director compensation of the Compensation Peer Group. Based upon its review, the Governance, Nominating & Corporate Responsibility
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Committee recommended to the Board, and the Board approved, the following increased director compensation, which became effective January 1, 2023:
Annual Retainer 2023 |
|
|||||
• | Lead Director | $150,000 | ||||
• | Chairperson of the Audit Committee | $145,000 | ||||
• | Chairperson of the Compensation & Human Capital Committee | $140,000 | ||||
• | Chairperson of the Governance, Nominating & Corporate Responsibility Committee | $140,000 | ||||
• | Other non-employee directors | $120,000 | ||||
• | Chairperson of the Finance Committee (per meeting) | $ 2,000 | ||||
Annual Equity 2023 |
|
|||||
• | Annual Equity Grant | $160,000 | ||||
Special Assignment 2023 |
|
|||||
• | Special Assignment (Per Meeting) | $ 2,000 |
The table above does not include a separate annual retainer for the Chairperson of the Board, as the Chairperson of the Board is currently our Chief Executive Officer.
2023 Annual Equity Grants for Directors. The Compensation Plan for Directors was amended and restated in February 2023 (the “2023 Compensation Plan for Directors”). Pursuant to the 2023 Compensation Plan for Directors, beginning in January 2023, non-employee directors will receive 50 percent of their Annual Equity Grant in the form of stock option awards and 50 percent in the form of restricted stock units (“RSUs”), in each case, granted under the Omnibus Equity Compensation Plan. These grants will be made on the first day of the first open trading window following the Company’s earnings release associated with the annual meeting of stockholders. The stock options will vest in full on the earlier of (i) the third anniversary of the date of grant, or (ii) the third annual meeting of the Company’s stockholders following the date of grant, provided that the director continues to serve on the Board until such date. Upon any cessation of service due to death or disability, all outstanding stock options, to the extent unvested, continue to vest and remain outstanding until the third anniversary of such death or disability (or earlier until expiration of the option term). Consistent with director stock option awards granted prior to 2023, directors who retire after service on our Board of Directors for at least six years (“Retirement”), the stock options (to the extent unvested) will continue to vest and all unexercised stock options remain outstanding for the remainder of the option term. The RSUs will vest in full on the first anniversary of the date of grant, provided that the director continues to serve on the Board until such date. Upon any cessation of service due to death or disability all unvested RSUs will vest in full and will be settled by the payment of underlying shares following vesting. Upon Retirement,100 percent of the RSUs will immediately vest.
2023 Annual Compensation Limit for Directors. Consistent with market practice, the 2023 Compensation Plan for Directors incorporates a maximum annual limit of $750,000 on the aggregate grant date value of equity awards plus the amount of cash-based compensation granted to any non-employee director (whether elected to be paid in cash or shares of common stock or on a current or deferred basis).
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The following table provides information regarding compensation paid to our non-employee directors in 2022.
2022 DIRECTOR COMPENSATION TABLE
Name | Fees Earned or Paid in Cash ($) |
Stock Awards ($)(1) |
Option Awards ($)(1)(2) |
All Other Compensation |
Total ($) | ||||||||||||||||||||
Bradlen S. Cashaw | — | 120,000 | 140,000 | — | 260,000 | ||||||||||||||||||||
James R. Craigie | 120,000 | — | 140,000 | — | 260,000 | ||||||||||||||||||||
Bradley C. Irwin | — | 142,000 | 140,000 | — | 282,000 | ||||||||||||||||||||
Penry W. Price | — | 120,000 | 140,000 | — | 260,000 | ||||||||||||||||||||
Susan G. Saideman | — | 120,000 | 140,000 | — | 260,000 | ||||||||||||||||||||
Ravichandra K. Saligram | — | 132,500 | 140,000 | — | 272,500 | ||||||||||||||||||||
Robert K. Shearer | 70,000 | 70,000 | 140,000 | — | 280,000 | ||||||||||||||||||||
Janet S. Vergis | 60,000 | 60,000 | 140,000 | — | 260,000 | ||||||||||||||||||||
Arthur B. Winkleblack | 135,000 | — | 140,000 | — | 275,000 | ||||||||||||||||||||
Laurie J. Yoler | — | 120,000 | 140,000 | — | 260,000 |
(1) | The amounts shown for stock awards relate to directors’ fees paid in shares of our common stock, including directors’ fees deferred by directors under the Deferred Compensation Plan for Directors into notional investments in our common stock. The amounts shown for option awards relate to stock options granted under the Omnibus Equity Compensation Plan. These amounts are based upon the grant date fair value of awards calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”). The assumptions used in determining these amounts are set forth in note 12 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 16, 2023. |
See “Compensation Plan for Directors” and “Deferred Compensation Plan for Directors” for information regarding the computation of the number of shares or notional shares provided to a director in payment of director fees. Three directors deferred payment of all or a portion of their 2022 fees under the Deferred Compensation Plan for Directors, as follows: Mr. Cashaw, $120,000; Mr. Saligram, $132,500; and Mr. Shearer, $70,000. As of December 31, 2022, none of our directors held any unvested stock awards. |
(2) | At December 31, 2022, the number of shares of our common stock underlying options held by each of the directors listed in the table was: Mr. Cashaw, 14,540; Mr. Craigie, 1,171,990 (including options granted to Mr. Craigie in his capacity as the Company’s former Chief Executive Officer); Mr. Irwin, 79,210; Mr. Price, 119,258; Ms. Saideman, 24,930; Mr. Saligram, 119,258; Mr. Shearer, 71,550; Ms. Vergis, 71,550; Mr. Winkleblack, 71,550; and Ms. Yoler, 47,550. |
STOCK OWNERSHIP GUIDELINES FOR DIRECTORS
In order to ensure that their interests are aligned with the interests of our stockholders, it is expected that each non-employee director will have, within five years from the date on which they join the Board, a number of shares having a value of at least five times the standard annual retainer (which is the annual retainer received by any director who is not a committee chair, the Lead Director or the Chairman). The annual retainer was $120,000
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for 2022 and the dollar value of shares required to be held by our directors who have served five or more years was $600,000 as of December 31, 2022. The calculation of ownership includes:
• | shares owned by the director (or members of his or her immediate family residing in the same household); |
• | notional shares held for the account of the director in the Deferred Compensation Plan for Directors; and |
• | shares held in a trust for which a director has shared voting or investment power. |
In 2022, the Compensation & Human Capital Committee reviewed the stock ownership guidelines for our directors and effective April 2022, approved removal of 60% of the in-the-money value of vested and unvested stock options, such that no portion of the value of stock options are taken into account towards the guidelines.
Until a non-employee director satisfies his or her stock ownership requirement, the director will be required to hold 50 percent of all shares of our common stock received upon the exercise of stock options, grants of stock, or upon lapse of the restrictions on restricted stock (in each case, net of any shares utilized to pay for the exercise price of an option and/or to satisfy tax withholding obligations). All of our non-employee directors are on track to meet their stock ownership guidelines within five years.
OUR EXECUTIVE OFFICERS
Listed below are the names, ages and positions held by each of our executive officers and our Vice President, Controller and Chief Accounting Officer.
Name | Age | Position | ||||
Barry A. Bruno |
|
51 |
Executive Vice President, Chief Marketing Officer and President – Consumer Domestic | |||
Brian Buchert |
|
49 |
|
Executive Vice President of Strategy, M&A and Business Partnerships | ||
Patrick D. de Maynadier |
|
62 |
Executive Vice President, General Counsel and Secretary | |||
Richard A. Dierker |
|
43 |
Executive Vice President, Chief Financial Officer and Head of Business Operations | |||
Matthew T. Farrell |
|
66 |
President and Chief Executive Officer | |||
Rene M. Hemsey |
|
55 |
Executive Vice President, Chief Human Resources Officer | |||
Carlos G. Linares |
|
59 |
|
Executive Vice President, Chief Technology Officer & Global New Product Innovation | ||
Joseph J. Longo |
|
52 |
Vice President, Controller and Chief Accounting Officer | |||
Michael G. Read |
|
48 |
Executive Vice President, International | |||
Rick Spann |
|
61 |
Executive Vice President, Chief Supply Chain Officer | |||
Paul R. Wood |
|
50 |
Executive Vice President, Chief Commercial Officer |
All executive officers serve at the discretion of our Board of Directors. Mr. Longo serves at the discretion of our CEO.
Biographical information for Mr. Farrell appears under “Director Nominees” under “Proposal 1: Election of Directors.”
Mr. Bruno has been our Executive Vice President, Chief Marketing Officer and President – Consumer Domestic since April 2022, our Executive Vice President and Chief Marketing Officer from October 2021 to April 2022 and our Executive Vice President, International from January 2021 to September 2021. From January 2016
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through January 2021, Mr. Bruno was the Company’s Vice President, International Marketing and Global Markets Group. From May 2015 through December 2015, Mr. Bruno was the Company’s General Manager, International Marketing and Global Markets Group. From July 2013 through April 2015, Mr. Bruno was the Company’s Director – Export. Prior to joining the Company, Mr. Bruno held various positions with increasing responsibility at Johnson & Johnson, in its consumer, pharmaceutical and diagnostics business units. Mr. Bruno currently serves as a member of the board of directors of International Flavors & Fragrances, Inc., an industry leader in food, beverage, scent, health and biosciences.
Mr. Buchert has been our Executive Vice President of Strategy, M&A and Business Partnerships since April 2022. From January 2016 to March 2022, Mr. Buchert was our Vice President, Corporate Strategy and M&A and prior to that, has held various positions in the Company focused on M&A and strategy since 2006. During his tenure, Mr. Buchert was instrumental in the acquisition by the Company of 18 brands with an aggregate transaction value over $5.3 billion. Prior to joining the Company, Mr. Buchert served in various capacities at Lafarge North America, Morgan Stanley and Columbia Capital where he held various positions of increasing responsibility. Mr. Buchert is a member of the board of directors of the Armand Products Company, a Church & Dwight joint venture.
Mr. de Maynadier has been our Executive Vice President, General Counsel and Secretary since December 2011. He served in a number of capacities for Hill-Rom Holdings, Inc. and its predecessor, Hillenbrand Industries, Inc., from January 2002 through December 2010, including Senior Vice President, General Counsel and Secretary and Vice President, General Counsel and Secretary. Previously, Mr. de Maynadier served as Executive Vice President, General Counsel and Secretary for CombiMatrix Corporation, as President and Chief Executive Officer of SDI Investments, LLC, a spin-off of Sterling Diagnostic Imaging, Inc., and as Senior Vice President, General Counsel and Secretary of Sterling Diagnostic Imaging, Inc. Earlier in his career, Mr. de Maynadier was a corporate and securities Partner at the law firm Bracewell & Patterson, L.L.P.
Mr. Dierker has been our Executive Vice President, Chief Financial Officer and Head of Business Operations since April 2022 and our Executive Vice President and Chief Financial Officer from January 2016 to April 2022. From 2012 to 2016 Mr. Dierker was our Vice President, Corporate Finance and from 2009 to 2012, Mr. Dierker led Supply Chain Finance as the Company’s Operations Controller. From 2008 to 2009, he held a senior financial management position at Alpharma, Inc., a leading international specialty pharmaceutical company. Prior to 2008, he held financial and business development management positions for Ingersoll-Rand Ltd, a major diversified industrial manufacturer.
Ms. Hemsey has been our Executive Vice President, Chief Human Resources Officer since April 2022 and our Executive Vice President, Global Human Resources from February 2020 to March 2022. From December 2017 to February 2020, Ms. Hemsey was Vice President, Human Resources and from October 2009 to December 2017 she was Director Human Resources. Ms. Hemsey has been employed by us since August 2001 in various positions. Prior to Church & Dwight, Ms. Hemsey served in several capacities within the human resources function at Symrise.
Mr. Linares has been our Executive Vice President, Chief Technology Officer & Global New Product Innovation since April 2022 and our Executive Vice President, Global Research & Development from June 2017 to April 2022. He currently serves on the board of trustees for TRI Princeton (Vice Chair) and the board of directors for The American Cleaning Institute. From 2012 to 2017, Mr. Linares was the Chief Technology Officer for Sun Products Corporation (“Sun Products”) and also served as the Corporate Innovation Captain for Sun Products’ innovation strategy. Prior to Sun Products, Mr. Linares was the Senior Vice President of Global R&D, Quality and Regulatory, at Alberto Culver. Earlier in his career Mr. Linares gained significant R&D product development and innovation experience at Johnson & Johnson and Procter & Gamble.
Mr. Longo has been our Vice President, Controller and Chief Accounting Officer since September 2020. Prior to joining the Company, Mr. Longo, served as Vice President and Corporate Controller of Dorman Products Inc., a leading supplier of aftermarket auto parts, from December 2019 to June 2020. From January 2017 to August
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2019, Mr. Longo served as Vice President and Corporate Controller of Pinnacle Foods Inc., a provider of branded consumer food products, and served at Tyco International Ltd. from October 2007 to January 2017 in roles across accounting, investor relations and business unit financial planning and analysis. He started his career at KPMG US LLP and has held senior accounting positions at Prudential Financial, Inc. and JP Morgan Chase & Co.
Mr. Read has been our Executive Vice President, International, since October 2021. Mr. Read has been with the Company since 2016 serving previously as the General Manager of the Canadian subsidiary. Mr. Read came to the Company from Aryzta AG where he served as Senior Vice President of Customer Development. Prior to that, Mr. Read held several leadership roles at Molson Coors including Global Vice President of Revenue Management, Senior Executive Vice President of Brands and Innovation for Molson Coors UK, and Vice President of Marketing for Coors Light and Portfolio Innovation at Molson Coors Canada. Mr. Read also held progressive brand and sales management roles at Reckitt Benckiser Canada.
Mr. Spann has been our Executive Vice President, Chief Supply Chain Officer since April 2022 and our Executive Vice President, Global Operations from May 2017 to April 2022. He served in a number of capacities for Colgate-Palmolive Company from 1984 through 2017. His career there included assignments in Australia and Europe. His last role at Colgate was Vice President, Global Engineering where he led significant improvements in product and process development. Prior to that he was Vice President, Global Supply Chain for three different Colgate businesses: Personal Care, Home Care, and Toothbrush, where he had responsibility for operations in North America, Europe, Latin America, Asia, Australia, Africa and the Middle East.
Mr. Wood has been our Executive Vice President, Chief Commercial Officer since April 2022 and our Executive Vice President, U.S. Sales from October 2018 to April 2022. From August 2016 to February 2018, Mr. Wood was an Executive Vice President at Acosta, a large private-equity owned sales and marketing agency, where he managed several thousand employees focused on growing Consumer Packaged Goods client businesses. From December 2010 to August 2016, Mr. Wood was General Manager at Samsung Electronics America, and from August 2006 to December 2010, Mr. Wood was Vice President, Sales-Walmart for WhiteWave Foods. Previously, Mr. Wood also held various positions with increasing responsibility at H.J. Heinz and Frito Lay.
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SECURITIES OWNERSHIP |
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning ownership of our common stock as of March 1, 2023 (unless otherwise noted), by (i) each stockholder that has indicated in public filings that the stockholder beneficially owns more than five percent of our common stock; (ii) each director and nominee for director; (iii) each current executive officer named in the “2022 Summary Compensation Table;” and (iv) all directors and executive officers as a group. Except as otherwise noted, each person listed below, either alone or together with members of such person’s family sharing the same household, had sole voting and investment power with respect to the shares listed next to such person’s name. None of the shares held by directors and executive officers included in the table are pledged as security.
Amount and Nature of |
Notional Shares in Deferred Compensation Plans(2) | |||||||||
Name | Shares(2)(3) | Percent of Class |
||||||||
BlackRock, Inc.(4) |
|
19,555,040 |
|
|
8.0 |
% |
0 | |||
State Street Corporation(5) |
|
13,070,515 |
|
|
5.4 |
% |
0 | |||
The Vanguard Group(6) |
|
29,634,053 |
|
|
12.1 |
% |
0 | |||
Bradlen S. Cashaw |
|
203 |
|
|
|
* |
1,307 | |||
James R. Craigie(7) |
|
1,192,292 |
|
|
|
* |
0 | |||
Matthew T. Farrell(8) |
|
2,243,522 |
|
|
|
* |
102,263 | |||
Bradley C. Irwin(9) |
|
97,179 |
|
|
|
* |
0 | |||
Penry W. Price |
|
118,369 |
|
|
|
* |
0 | |||
Susan G. Saideman |
|
3,611 |
|
|
|
* |
0 | |||
Ravichandra K. Saligram(10) |
|
170,393 |
|
|
|
* |
54,822 | |||
Robert K. Shearer(11) |
|
75,458 |
|
|
|
* |
24,216 | |||
Janet S. Vergis |
|
61,348 |
|
|
|
* |
0 | |||
Arthur B. Winkleblack(12) |
|
53,479 |
|
|
|
* |
0 | |||
Laurie J. Yoler(13) |
|
29,494 |
|
|
|
* |
0 | |||
Richard A. Dierker |
|
97,034 |
|
|
|
* |
11,603 | |||
Barry A. Bruno |
|
65,243 |
|
|
|
* |
4 | |||
Patrick D. de Maynadier(14) |
|
252,306 |
|
|
|
* |
9,724 | |||
Carlos G. Linares |
|
152,653 |
|
|
|
* |
18,657 | |||
All executive officers and directors as a group (21 persons) |
|
4,935,910 |
|
|
2.0 |
% |
237,025 |
* | Less than one percent. |
(1) | Applicable percentage of ownership is based on 244,058,446 shares of our common stock outstanding as of March 1, 2023. Beneficial ownership is determined in accordance with the rules of the SEC and means voting or investment power with respect to securities. Shares of our common stock issuable upon the exercise of stock options exercisable currently or within 60 days of March 1, 2023, are deemed outstanding and to be beneficially owned by the person holding such option for purposes of computing such person’s percentage ownership but are not deemed outstanding for the purpose of computing the percentage ownership of any other person. |
(2) | The shares listed in the “Shares” column do not include notional shares of our common stock credited to the account of directors under the Deferred Compensation Plan for Directors or credited to the account of |
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SECURITIES OWNERSHIP |
executive officers under the Executive Deferred Compensation Plan. Notional shares do not represent actual shares, but represent interests equivalent in value to the fair market value of shares of our common stock; gains or losses in the interests are based upon gains or losses in the fair market value of our common stock. These notional shares are reflected in the table in the column labeled “Notional Shares in Deferred Compensation Plans.” Because notional shares do not represent actual shares, holders of notional share accounts are not entitled to vote with respect to the notional shares. |
(3) | The numbers in this column include shares that are subject to stock options exercisable currently, or within 60 days of March 1, 2023, as follows: Mr. Cashaw, 0 shares; Mr. Craigie, 1,146,790 shares; Mr. Farrell, 2,097,080 shares; Mr. Irwin, 54,010 shares; Mr. Price, 94,058 shares; Ms. Saideman, 0 shares; Mr. Saligram, 94,058 shares; Mr. Shearer, 46,350 shares; Ms. Vergis, 46,350 shares; Mr. Winkleblack, 46,350 shares; Ms. Yoler, 22,350 shares; Mr. Dierker, 88,630 shares; Mr. Bruno, 60,820 shares; Mr. de Maynadier, 237,400 shares; Mr. Linares, 149,813 shares; and all executive officers and directors as a group, 4,487,051 shares. |
(4) | BlackRock, Inc. provided the following information in Amendment No. 13 to its Schedule 13G, filed with the SEC on February 7, 2023. As of December 31, 2022, BlackRock, Inc. and its affiliates named in such report (collectively, “BlackRock”) reported aggregate beneficial ownership of 19,555,040 shares of our common stock with sole voting power over 17,717,197 shares, shared voting power over no shares, sole dispositive power over 19,555,040 shares and shared dispositive power over no shares. The principal business address of BlackRock is 55 East 52nd Street, New York, NY 10055. |
(5) | State Street Corporation provided the following information in its Schedule 13G, filed with the SEC on February 6, 2023. As of December 31, 2022, State Street Corporation and its affiliates named in such report (collectively, “State Street”) reported aggregate beneficial ownership of 13,070,515 shares of our common stock with shared voting power over 11,569,615 shares, sole voting power over no shares, shared dispositive power over 12,939,551 shares and sole dispositive power over no shares. The principal business address of State Street is State Street Financial Center, One Lincoln Street, Boston, MA 02111. |
(6) | The Vanguard Group provided the following information in Amendment No. 11 to its Schedule 13G, filed with the SEC on February 9, 2023. As of December 31, 2022, The Vanguard Group and its affiliates named in such report (collectively, “TVG”) reported aggregate beneficial ownership of 29,634,053 shares of our common stock with sole voting power over no shares, shared voting power over 355,552 shares, sole dispositive power over 28,614,994 shares and shared dispositive power over 1,019,059 shares. The principal business address of TVG is 100 Vanguard Blvd., Malvern, PA 19355. |
(7) | Mr. Craigie’s ownership includes 18,604 shares of common stock held in three trusts for which Mr. Craigie holds either shared voting or shared investment power and 1840 shares of common stock held by Mr. Craigie’s spouse for which he disclaims beneficial ownership. |
(8) | Mr. Farrell’s ownership includes 32,770 shares of common stock held by Mr. Farrell’s spouse for which he disclaims beneficial ownership. |
(9) | Mr. Irwin’s ownership includes 43,167 shares of common stock held in a trust for which Mr. Irwin holds sole voting and sole investment power. |
(10) | Mr. Saligram’s ownership includes 76,335 shares of common stock held in two trusts for which Mr. Saligram holds sole voting and sole investment power. |
(11) | Mr. Shearer’s ownership includes 29,108 shares of common stock held in a trust for which Mr. Shearer holds sole voting and sole investment power. |
(12) | Mr. Winkleblack’s ownership includes 7,129 shares of common stock held in a trust for which Mr. Winkleblack holds sole voting and sole investment power. |
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(13) | Ms. Yoler’s ownership of 7,144 shares of common stock held in a trust for which she shares voting and investment power. |
(14) | 43,436 of the shares subject to the options included in this table are held in a trust pursuant to a marital settlement agreement for which Mr. de Maynadier disclaims beneficial ownership. Mr. de Maynadier’s ownership includes 9,137 shares of common stock held in a trust for which Mr. de Maynadier holds sole voting and investment power. |
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CERTAIN RELATIONSHIPS |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
REVIEW AND APPROVAL OF RELATED PERSON TRANSACTIONS
The Code of Conduct includes our policy regarding the review and approval of related person transactions. In accordance with the Code of Conduct, all related person transactions that meet the minimum threshold for disclosure in the proxy statement under the relevant SEC rules must be reported to and approved by the Audit Committee.
RELATED PERSON TRANSACTIONS
There were no disclosable related person transactions during 2022.
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AUDIT COMMITTEE REPORT |
AUDIT COMMITTEE REPORT
The Audit Committee assists the Board of Directors in its oversight of the integrity of Church & Dwight’s financial statements, compliance with legal and regulatory requirements, and the performance of the internal audit function. Management has primary responsibility for preparing the financial statements and for the financial reporting process. In addition, management has the responsibility to assess the effectiveness of Church & Dwight’s internal control over financial reporting. Deloitte & Touche LLP, Church & Dwight’s independent registered public accounting firm, is responsible for (i) expressing an opinion on the conformity of Church & Dwight’s audited financial statements to generally accepted accounting principles and on whether the financial statements present fairly in all material respects the financial position and results of operations and cash flows of Church & Dwight, and (ii) expressing an opinion on the effectiveness of Church & Dwight’s internal control over financial reporting.
In this context, the Audit Committee hereby reports as follows:
1. | The Audit Committee has reviewed and discussed with management and Deloitte & Touche LLP the audited financial statements and Deloitte & Touche LLP’s evaluation of Church & Dwight’s internal control over financial reporting. |
2. | The Audit Committee has discussed with Deloitte & Touche LLP the matters required to be discussed by the Public Company Accounting Oversight Board Standards and the Securities and Exchange Commission. |
3. | The Audit Committee has received the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte & Touche LLP’s communications with the Audit Committee concerning independence and has discussed with Deloitte & Touche LLP that firm’s independence. |
Based on the review and discussion referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Church & Dwight’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, for filing with the Securities and Exchange Commission.
Respectfully submitted,
Arthur B. Winkleblack, Chair
Bradlen S. Cashaw
Penry W. Price
Susan G. Saideman
Robert K. Shearer
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FEES PAID |
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fees related to the 2022 and 2021 fiscal years payable to our independent registered public accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu Ltd., and their respective affiliates are as follows:
2022 ($) |
2021 ($) |
|||||||
Audit Fees |
|
3,898,750 |
|
|
3,592,406 |
| ||
Audit-Related Fees(1) |
|
354,041 |
|
|
201,841 |
| ||
Tax Fees(2) |
|
425,075 |
|
|
373,876 |
| ||
All Other Fees |
|
0 |
|
|
0 |
| ||
Total |
|
4,677,866 |
|
|
4,168,123 |
|
(1) | Audit-related fees primarily include services related to issuing long-term debt in both 2022 and 2021. |
(2) | Tax fees include services for filing for tax incentives from government agencies, assistance for tax audits from taxing authorities, tax compliance, and planning. |
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PRE-APPROVAL OF AUDIT |
PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES
The Audit Committee pre-approved all audit and non-audit services provided by Deloitte & Touche LLP during 2022 in accordance with our policy described below.
The Audit Committee pre-approves all permitted non-audit services to be provided by our independent registered public accounting firm. However, the Audit Committee has delegated to the Chair of the Audit Committee, authority to pre-approve permitted non-audit services, provided that any such pre-approved non-audit services are reported to the full Audit Committee at its next scheduled meeting.
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COMPENSATION DISCUSSION AND ANALYSIS |
COMPENSATION DISCUSSION AND ANALYSIS
INTRODUCTION
This Compensation Discussion and Analysis addresses the compensation paid for 2022 to our named executive officers, which include our Chief Executive Officer (CEO), our Chief Financial Officer (CFO), and our three other most highly-compensated executive officers serving as of the end of the fiscal year. Our named executive officers for the year ended December 31, 2022 were as follows:
Matthew T. Farrell |
Chairman, President and Chief Executive Officer | |
Richard A. Dierker |
Executive Vice President, Chief Financial Officer and Head of Business Operations | |
Barry A. Bruno |
Executive Vice President, Chief Marketing Officer and President – Consumer Domestic | |
Patrick D. de Maynadier |
Executive Vice President, General Counsel and Secretary | |
Carlos G. Linares |
Executive Vice President, Chief Technology Officer & Global New Product Innovation |
Compensation Objectives
The Compensation & Human Capital Committee, or the “Committee,” reviews and analyzes the executive compensation program each year for alignment with our business strategy and evolving market and governance practices for executive compensation. We believe that our current programs are aligned with the Company’s business priorities and designed to encourage shareholder value creation.
As part of the foregoing analysis, the Committee evaluates the relationship between pay and performance of our named executive officers. The analysis includes a review of the relationship between the compensation paid to the CEO and the other named executive officers and Company performance relative to roles having generally corresponding responsibilities within other similarly sized companies. For 2022, the analysis shows a strong link between Company pay and Company performance as it relates to key operating measures.
We focus on the following objectives in making compensation determinations:
• | Provide compensation that is competitive in markets in which we compete for management talent. We refer to this objective as “competitive compensation.” |
• | Condition the majority of a named executive officer’s compensation on achievement of both short- and long-term performance. We refer to this objective as “performance incentives.” |
• | Encourage the aggregation and maintenance of meaningful equity ownership, and the alignment of executive officer and stockholder interests as an incentive to increase stockholder value. We refer to this objective as “alignment with stockholder interests.” |
• | Provide an incentive for long-term continued employment with us. We refer to this objective as “retention incentives.” |
2022 Key Business Highlights and Strong Pay for Performance Alignment
2022 and 2021 Financial Results
The 2022 compensation of our named executive officers appropriately reflects and rewards their significant contributions to the Company’s performance in another year that presented unique and unprecedented challenges for our executive leadership team to manage. Throughout 2022 our executive leadership team and
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global workforce collectively addressed adverse impacts to our business that were primarily related to supply chain challenges, including raw material and labor shortages and interruptions, as well as distribution and transportation challenges. These negative impacts, together with significant broad-based cost inflation, have also increased interest rates, input costs and reduced consumer spending which have required additional focus from our management team and global workforce. During 2022 and 2021 we delivered the following results for Net Sales, Gross Margin, Diluted EPS (as adjusted to exclude changes in the Flawless earn out liability in 2021 and the cost of restricted shares issued for the Hero acquisition and the discontinuation of business in Russia due to the Russia/Ukraine war in 2022), and Cash from Operations, which are used to measure performance (subject to additional adjustments) under our Annual Incentive Plan:
(In millions, except gross margin and per share data) | 2022 | 2021 | ||||||
Net Sales |
|
$5,376 |
|
|
$5,190 |
| ||
Gross Margin |
|
41.9% |
|
|
43.6% |
| ||
Diluted EPS, as adjusted |
|
$1.72 |
|
|
$3.04 |
| ||
Cash From Operations |
|
$885 |
|
|
$994 |
|
The effect of these financial results on payouts under our Annual Incentive Plan are discussed in further detail below under the heading “Annual Incentive Plan.” In addition, the Company delivered total shareholder return (“TSR”), assuming dividends are reinvested, of (20.4) percent, following an increase of 18.9 percent in TSR in 2021.
Pay for Performance Alignment
Church & Dwight’s fiscal year 2022 results continued to be aligned with pay in the following ways:
• | Annual Incentive Plan: The Annual Incentive Plan aligns the interests of our executives and stockholders by achieving goals that support long-term stockholder return. The Annual Incentive Plan rating was set at 1.20, a level 20 percent higher than a 1.0 target rating because our projected EPS growth on a percentage basis was significantly more challenging to achieve than the average projected EPS growth of the TSR Peer Group (as defined below). The Company achieved a plan rating of 0.32 based on 2022 actual performance. In recognition of the Company’s 2022 performance and the significant contributions of our employees to overcome the supply chain challenges, management recommended, and the Committee approved an increase in the annual bonus payouts to a plan rating of 0.50 only to our employees below the level of executive vice president. The CEO and executive vice presidents were excluded from receiving the additional payout under the Annual Incentive Plan. The Annual Incentive Plan payouts to our named executive officers for 2022 are discussed in further detail below under “2022 Compensation – Annual Incentive Plan.” |
• | Long-Term Incentive: The Committee utilizes stock options as the primary form of long-term compensation. The Committee believes that stock options provide a strong incentive to increase stockholder value, since the value of stock options is directly dependent on the market performance of our common stock. The Committee believes that options are an appropriate vehicle for long-term equity compensation because they directly reflect the stockholder experience, are straightforward to communicate, and provide value only if our stock price increases over time, which aligns our executives’ interests with those of our stockholders in delivering TSR. |
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2022 Executive Compensation Highlights
In consideration of the strong financial performance in 2021, the Committee made the following compensation decisions in the first quarter of 2022:
Element of Compensation |
2022 Compensation Decision | |
Base Salary |
The Committee approved base salary increases for Mr. Farrell, Mr. de Maynadier, and Mr. Linares of 3.6 percent, 5.0 percent, and 3.9 percent, respectively, to further align base salaries with the corresponding median levels of our Compensation Peer Group (as described below) and industry survey data. In connection with Mr. Dierker’s election as Executive Vice President, Chief Financial Officer and Head of Business Operations, effective April 1, 2022, his base salary was increased from $638,200 to $685,000. In connection with Mr. Bruno’s election as Executive Vice President, Chief Marketing Officer and President – Consumer Domestic on April 1, 2022, his base salary was increased from $475,000 to $490,000. | |
Annual Incentive Plan |
The Committee approved bonus target increases for Mr. Farrell and Mr. Linares from 115 percent to 125 percent and 50 percent to 55 percent, respectively and maintained Mr. de Maynadier’s bonus target at 60 percent. Mr. Dierker’s bonus target increased from 85 percent to 90 percent upon election as Executive Vice President, Chief Financial Officer and Head of Business Operations on April 1, 2022 and Mr. Bruno’s bonus target increased from 50 percent to 70 percent upon election as Executive Vice President, Chief Marketing Officer and President – Consumer Domestic on April 1, 2022. For more information, see the “Annual Incentive Plan.” | |
Option Grants |
The Committee maintained the level of stock option grant opportunities for Messrs. Farrell and de Maynadier at 565 percent and 150 percent of base salary, respectively. The Committee increased the level of stock option grant opportunity for Mr. Linares from 105 percent to 115 percent to further align his long-term incentive opportunity with the corresponding median levels of our Compensation Peer Group (as defined below) and industry survey data. Upon Mr. Dierker’s election as Executive Vice President, Chief Financial Officer and Head of Business Operations on April 1, 2022, his level of stock option grant opportunity was increased from 235 percent to 260 percent of base salary. Upon Mr. Bruno’s election as Executive Vice President, Chief Marketing Officer and President – Consumer Domestic on April 1, 2022, his level of stock option grant opportunity was increased from 115 percent to 135 percent of base salary. For more information, see “Long-Term Incentives—Stock Options.” |
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Peer Groups. The Committee utilizes two distinct peer groups for benchmarking compensation and measuring financial and plan performance.
• | The compensation peer group consists of 15 consumer-packaged goods companies that have similar distribution channels, a significant focus on brand recognition, and revenues in the range of approximately 50 – 200 percent of our revenues (the “Compensation Peer Group”). We believe there is a strong likelihood that the skills of our named executive officers are transferable among the companies in the Compensation Peer Group and, accordingly, we would expect to compete with these companies for executive officer talent. For 2022, the Compensation Peer Group consisted of: Coca-Cola Bottling Co. Consolidated, Coty Inc., Edgewell Personal Care Company, Energizer Holdings, Inc., Flowers Foods, Inc., Hasbro, Inc., McCormick & Company Incorporated, Monster Beverage Corporation, Newell Brands Inc., Perrigo Company, Post Holdings Inc., The Clorox Company, The Hershey Company, The J.M. Smucker Company, and The Scotts Miracle-Gro Company. |
• | The TSR peer group is a group of nine consumer-packaged goods companies more closely aligned with the Company’s business, without reference to the size of the companies (the “TSR Peer Group”). The Committee compared the Company’s projected 2022 results with respect to EPS growth against the average projected EPS growth of the TSR Peer Group. This comparison against the TSR Peer Group is the key component used when determining the Company’s Annual Incentive Plan payout levels with respect to targeted financial performance against the Company’s Annual Incentive Plan metrics. For 2022, the TSR Peer Group consisted of: The Clorox Company, Colgate-Palmolive Company, Edgewell Personal Care Company, Energizer Holdings Inc., Kimberly Clark Corporation, Newell Brands Inc, The Procter & Gamble Company, Reckitt Benckiser Group plc, and Unilever Plc. |
2022 COMPENSATION
The principal components of 2022 compensation that we paid to our named executive officers were designed to meet our compensation objectives as follows:
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The following table summarizes some highlights of our compensation practices that drive our compensation programs:
What We Do: |
|
What We Do Not Do: | ||||||
☑ |
Significant stock ownership and stock holding requirements are in place for senior executives. |
☒ |
No gross-up payments to cover personal income taxes or excise taxes that pertain to executive or severance benefits. | |||||
☑ | A majority of our executive compensation is performance-based. | ☒ | No hedging, pledging or short sales by our non-employee directors or employees with respect to Company securities. | |||||
☑ | Limited perquisites for executives. | ☒ | No repricing stock options without prior stockholder approval. | |||||
☑ | Appropriate balance between short-term and long-term compensation discourages short-term risk taking at the expense of long-term results. | |||||||
☑ | Our Annual Incentive Plan utilizes four diverse metrics to avoid over-emphasis on any one short-term measure. | |||||||
☑ | Change in control cash severance payments and vesting of stock options granted on or after July 30, 2019 require a “double trigger” before payment can be made or equity can vest (requiring a qualifying termination following a change in control). | |||||||
☑ | Our Compensation & Human Capital Committee engages an independent compensation consultant, who performs no other work for Church & Dwight, to advise on executive and non-employee director compensation matters. | |||||||
☑ | Clawback policy permits the Company to recoup certain compensation payments and grants made under the Company’s Annual Incentive Plan and Omnibus Incentive Plan to the extent required by law, or pursuant to Company policy or if otherwise agreed upon with the participant. In addition, under the Annual Incentive Plan, the Compensation & Human Capital Committee has discretion to require repayment of awards in the event of the recipient’s fraud or willful misconduct. The Company intends to adopt a clawback policy that complies with applicable law and NYSE listing standards.
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COMPENSATION DISCUSSION AND ANALYSIS |
DETERMINATION OF COMPETITIVE COMPENSATION
In making executive compensation decisions for 2022, the Committee reviewed data provided by Semler Brossy Consulting Group, LLC, the Committee’s independent compensation consultant (“Semler Brossy”), to compare the compensation of our named executive officers to the compensation of executives in the competitive market. The Committee relies on various sources of compensation information to ascertain the competitive market for our named executive officers such as data obtained from proxy materials of the Compensation Peer Group and survey data provided by national compensation consulting firms such as Willis Towers Watson and Equilar relating to companies in the consumer staples and consumer discretionary sectors within the Company’s revenue scope. The Committee utilizes these materials to assist in decisions regarding base pay, short-term incentive targets under our Annual Incentive Plan and long-term incentives.
The Compensation Peer Group is a group of 15 consumer-packaged goods companies that have revenues in the range of approximately 50 – 200 percent of our revenues. Within this classification, the Committee referenced companies with similar distribution channels and with a significant focus on brand recognition. We believe there is a strong likelihood that the skills of our named executive officers are transferable among the companies in the Compensation Peer Group and, accordingly, we would expect to compete with these companies for executive officer talent. Below is a chart that shows the process used to determine the 2022 Compensation Peer Group:
Process for Determining Compensation Peer Group
In 2019 the Committee reviewed the Compensation Peer Group to determine potential changes to use when evaluating 2020 compensation. This review focused on identifying the Company’s closest business comparators, including fast-growing companies, and adding similarly high valuation companies to ensure an appropriately sized analytical comparison within its disclosed peers. Based on this review the Compensation Peer Group was increased from 11 to 15 companies. In 2021, the Committee reviewed the Compensation Peer Group and determined that no changes be made to the Compensation Peer Group for fiscal year 2022.
In 2022 the Committee reviewed the Compensation Peer Group to determine potential changes to use when evaluating 2023 compensation. This review focused on identifying the Company’s closest business comparators, including fast-growing companies, and adding similarly high valuation companies to ensure an
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appropriately sized analytical comparison within its disclosed peers. Based on this review the Compensation Peer Group was increased from 15 to 16 companies with the addition of Keurig Dr. Pepper Inc. and Campbell Soup Company and removal of Coca-Cola Bottling Co. Consolidated.
The Committee primarily utilizes data from proxy materials with respect to the Compensation Peer Group for our CEO and CFO. With respect to our other named executive officers, the Committee primarily uses survey data in determining compensation due to the limited amount of comparable data available in the proxy materials from companies within the Compensation Peer Group, although the Committee does reference Compensation Peer Group data in determining our other named executive officers’ compensation when there is a meaningful level of relevant data for those positions.
In determining a 2022 competitive market guideline with respect to target total direct compensation, namely base salary, short-term incentive targets and long-term incentives, the Committee referenced a level that approximates the 50th percentile of the Compensation Peer Group, or the survey companies, as applicable. However, the Committee considers overall performance during the year, including TSR and other key financial performance metrics, when evaluating pay levels for our named executive officers. In addition, because a majority of our named executive officers’ compensation is performance-based, actual cash compensation paid to our named executive officers could further vary from that paid to executive officers in the Compensation Peer Group or the survey companies, based on achievement of performance targets.
MIX OF PAY
For 2022, approximately 87 percent of the CEO’s target compensation and, on average 68 percent of the other named executive officers’ target compensation was variable, based on Company and individual performance. Variable compensation consists of the target Annual Incentive Plan payout, target Profit Sharing amount and the target value of stock options granted. The percentages below are calculated by dividing each compensation element by target total compensation, which consists of base salary, target Annual Incentive Plan compensation, target Profit Sharing amount plus target long-term incentives.
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COMPENSATION DISCUSSION AND ANALYSIS |
SALARIES
For 2022, the Compensation Committee approved base salary increases for Mr. Farrell, Mr. de Maynadier, and Mr. Linares of 3.6 percent, 5.0 percent, and 3.9 percent, respectively, to further align base salaries with the corresponding median levels of our Compensation Peer Group and industry survey data. In connection with Mr. Dierker’s election as Executive Vice President, Chief Financial Officer and Head of Business Operations, effective April 1, 2022, his base salary was increased from $638,200 to $685,000. In connection with Mr. Bruno’s election as Executive Vice President, Chief Marketing Officer and President—Consumer Domestic on April 1, 2022, his base salary was increased from $475,000 to $490,000. The base salaries of our named executive officers as in effect as of December 31, 2022 are set forth in the table below:
Named Executive Officer |
2022 Base Salary ($) |
|||
Matthew T. Farrell |
1,166,500 | |||
Richard A. Dierker |
685,000 | |||
Barry A. Bruno |
490,000 | |||
Patrick D. de Maynadier |
500,500 | |||
Carlos G. Linares |
485,000 |
Compensation of each of our named executive officers is set forth on the “2022 Summary Compensation Table.”
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COMPENSATION DISCUSSION AND ANALYSIS |
ANNUAL INCENTIVE PLAN
Our Annual Incentive Plan utilizes four equally weighted metrics, namely: Net Sales, Gross Margin, Diluted EPS and Cash from Operations. The table below summarizes the reasons the Committee utilizes these metrics for our Annual Incentive Plan.
The principal objective of the Annual Incentive Plan is to align executive and stockholder interests by providing an incentive to our named executive officers to achieve annual performance goals that support long-term stockholder return. The performance goals are established each year to reflect specific objectives set in our annual budget. The Committee considers competitive factors, including competitive market data for total cash compensation, which includes salary and target annual incentive bonus opportunities, in determining the amount of annual incentive award opportunities for our named executive officers.
To more accurately reflect the operating performance of our business, the Committee has approved adjustment principles to our reported financial results for the Annual Incentive Plan. Generally, these adjustments are intended to exclude one-time or unusual items and may have either a favorable or unfavorable impact to the payout on the Annual Incentive Plan. Examples of common adjustments include the elimination of the effect of foreign exchange rates that differed from budgeted amounts and the impact of unplanned acquisitions and
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divestitures. The actual adjustments that apply can vary from year to year and depend on the one-time or unusual events occurring within the year. In 2022, the Annual Incentive Plan was adjusted to reflect the Hero acquisition, the discontinuation of business in Russia due to the Russia/Ukraine war, the positive cash flow from operations impact of the settlement of interest rate hedges and changes in foreign exchange rates. The cumulative effect of these adjustments had a (0.06) negative impact on the rating, as the reported rating was 0.38 and the adjusted rating was 0.32.
As noted above, in structuring total direct compensation for our named executive officers, we have referenced the 50th percentile of direct compensation of the Compensation Peer Group and survey data. This median has influenced our annual incentive compensation target award levels, although we have from time to time, including in 2022, set target payouts above the median level when we believed that our planned performance was well ahead of our TSR Peer Group targets.
The Committee uses a numerical performance rating system with a range from 0.0 to 2.0 to determine the payout amounts under the Annual Incentive Plan. In late January or early February of each year, the Committee determines the specific rating for each year by comparing the Company’s projected EPS growth for that year to the average projected EPS growth of the Company’s TSR Peer Group. A rating of 1.0 normally represents the target achievement level for plan performance with each participant’s target payout based on his or her target percentage of his or her annual base salary. For 2022, we set payout amounts for performance at plan levels that were 20 percent above the amounts that would be paid with respect to a 1.0 rating (or a 1.2 rating) because our projected EPS growth of 4 percent was significantly more challenging to achieve than the average projected EPS growth of the TSR Peer Group. As a result, if 2022 operating plan level performance (i.e., target performance) was achieved, the participant would receive an award payout representing a 1.2 rating, or 120% of target. In 2022, the Company delivered Diluted EPS of $1.72 after adjusting for the cost of restricted stock issued for the Hero acquisition ($0.03) and impact of the discontinuation of business in Russia due to the Russia/Ukraine war ($0.01). Diluted EPS, as adjusted, resulted in year-over-year decrease in EPS of 1.7 percent, better than the average of the TSR Peer Group, but below our target Diluted EPS growth, as adjusted. The Company missed its planned targets for Net Sales, Gross Margin, Earnings Per Share and Cash from Operations (as adjusted), resulting in an actual performance rating of 0.32. In addition to the absolute performance compared to the annual incentive targets, the Company delivered TSR, assuming dividends are reinvested, of (20.4) percent following a 18.9 percent increase in TSR during 2021. The bonus amounts payable to our named executive officers under our Annual Incentive Plan are included in the “Non-Equity Incentive Plan Compensation” column of the “2022 Summary Compensation Table.”
In recognition of the Company’s 2022 performance and the significant contributions of our employees to overcome the obstacles caused by supply chain challenges, management recommended, and the Committee approved an increase in the annual bonus payouts to 0.50 only to our employees below the level of executive vice president. The CEO and executive vice presidents were excluded from receiving the additional 0.18 payout under the Annual Incentive Plan.
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COMPENSATION DISCUSSION AND ANALYSIS |
The following table indicates the percentage of salary payable at a 1.0 target rating, the percentage of salary payable at a 1.2 plan rating and the award opportunity for 2022, based on a 1.2 plan rating for each of our named executive officers:
Named Executive Officers
Annual Incentive Plan Target Payouts
Name |
Percentage of Salary Payable at 1.0 Performance Rating |
Percentage of Salary Payable at 1.2 |
Award Opportunity (Based on a 1.2 Performance Rating) | |||
Matthew T. Farrell |
125% | 150% | $1,734,400 | |||
Richard A. Dierker(1) |
90% | 108% | $ 727,200 | |||
Barry A. Bruno(2) |
70% | 84% | $ 408,500 | |||
Patrick D. de Maynadier |
60% | 72% | $ 356,000 | |||
Carlos G. Linares |
55% | 66% | $ 317,100 |
(1) | In connection with Mr. Dierker’s election as Executive Vice President, Chief Financial Officer and Head of Business Operations effective April 1, 2022, Mr. Dierker’s base salary was increased to $685,000. |
(2) | In connection with Mr. Bruno’s election as Executive Vice President, Chief Marketing Officer and President—Consumer Domestic effective April 1, 2022, Mr. Bruno’s base salary was increased to $490,000. |
As described above, in 2022 the Committee referenced competitive compensation data provided by Semler Brossy in setting the percentage levels.
The following table indicates, with respect to each corporate performance measure, the threshold level of 2022 performance for which a payout could be made, the target performance level, the maximum performance level, and the actual performance and performance ratings.
2022 Annual Incentive Plan Performance Ranges, Actual Performance and Performance Ratings
(in millions, except gross margin percentage and per share data)
Performance Measure (25% weighting each) |
Threshold (0 rating) |
Target (1.2 rating) |
Maximum (2.0 rating) |
Actual (as adjusted) |
Rating | |||||
Net Sales |
$5,301 | $5,522 | $5,743 | $5,389 | 0.48 | |||||
Gross Margin |
40.8% | 43.3% | 45.8% | 41.7% | 0.46 | |||||
Diluted Earnings Per Share |
$ 3.01 | $ 3.14 | $ 3.27 | $ 1.72 | 0.00 | |||||
Cash From Operations |
$ 837 | $ 930 | $1,023 | $ 863 | 0.33 | |||||
Actual Performance Rating (Average) |
|
|
|
|
0.32 |
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The corporate performance rating for 2022 was equal to the weighted average number rating of these factors, or 0.32. Based on that performance rating, our named executive officers received award payments under the Annual Incentive Plan for 2022 as shown in the table below:
Named Executive Officers
2022 Annual Incentive Plan Payouts
Name |
Plan Rating | Performance Rating vs Plan Rating |
Actual Rating |
Actual Award Payment(1)(2) |
Actual Award as percentage of Award Opportunity | |||||
Matthew T. Farrell |
1.20 | 0.27 | 0.32 | $453,600 | 32% | |||||
Richard A. Dierker(3) |
1.20 | 0.27 | 0.32 | $191,400 | 32% | |||||
Barry A. Bruno(4) |
1.20 | 0.27 | 0.32 | $101,300 | 32% | |||||
Patrick D. de Maynadier |
1.20 | 0.27 | 0.32 | $ 94,900 | 32% | |||||
Carlos G. Linares |
1.20 | 0.27 | 0.32 | $ 82,700 | 32% |
(1) | Amounts rounded to nearest $100. |
(2) | The award payments are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. |
(3) | In connection with Mr. Dierker’s election as Executive Vice President, Chief Financial Officer and Head of Business Operations effective April 1, 2022, Mr. Dierker’s base salary was increased to $685,000. |
(4) | In connection with Mr. Bruno’s election as Executive Vice President, Chief Marketing Officer and President—Consumer Domestic effective April 1, 2022, Mr. Bruno’s base salary was increased to $490,000. |
PROFIT SHARING AMOUNT
Under our Savings and Profit Sharing Plan for Salaried Employees, in which our named executive officers and other salaried employees in the United States participate, we make an annual contribution to each salaried employee’s account based on Company performance during the prior year. The performance metrics used to determine the profit sharing amount are the same ones used for the Annual Incentive Plan. For 2022, the contribution was equal to 3.64 percent of each salaried employee’s base salary and Annual Incentive Plan payment. Additional information on the profit sharing amount for 2022 is under the heading “Saving and Profit Sharing Plan for Salaried Employees.” In recognition of the Company’s performance in 2022 and the significant contributions of our employees to overcome the supply chain challenges faced in 2022, management recommended, and the Committee approved, an additional 0.18 in the Annual Incentive Plan rating which increased the profit sharing contribution to 4.00 percent for 2022, which was made to the plan account of each employee, excluding our named executive officers and other employees at the level of executive vice president, under the profit sharing plan in which our employees in the United States participate. No additional contribution was made under the Savings and Profit Sharing Plan for our named executive officers or other employees at the level of executive vice president.
The profit sharing contributions made to each named executive officer in 2022 are included in the “All Other Compensation” column of the “2022 Summary Compensation Table.”
LONG-TERM INCENTIVES
Stock Options
In 2022, the Committee continued to utilize options on our common stock as our principal form of long-term compensation. The number of shares underlying options granted to our named executive officers is calculated by
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designating an amount equal to a percentage of the named executive officer’s salary and dividing that amount by the grant date fair value of the shares underlying the option, in accordance with U.S. generally accepted accounting principles, rounded to the nearest 10 shares. The grant date fair value of the stock options is calculated in accordance with ASC Topic 718. Stock options granted in 2022:
• | have a 10-year term; |
• | vest on the third anniversary of the date of grant; |
• | vesting is subject to continued service through such vesting date; and |
• | the exercise price is equal to the fair market value per share on the date of grant, based on the closing price as reported on the NYSE on that date. |
The Committee believes that stock options provide a strong incentive to increase stockholder value, because the value of the stock options is directly dependent on the market performance of our common stock following the date of grant. Stock options also directly reflect the stockholder experience, are straightforward to communicate, and provide value only if our stock price increases over time, which aligns our executives’ interests with those of our stockholders in delivering TSR.
Under our long-term incentive program, the Committee grants stock options to each of our named executive officers on an annual basis, based on a percentage of the executive officer’s salary. In connection with our 2022 grants, the Committee used the following percentages of salary based on market data for our named executive officers:
Named Executive Officers
Long-Term Incentive as Percent of Salary
Name |
Percentage of Salary | |
Matthew T. Farrell |
565% | |
Richard A. Dierker |
260% | |
Barry A. Bruno |
135% | |
Patrick D. de Maynadier |
150% | |
Carlos G. Linares |
115% |
The number of shares underlying stock options granted to our named executive officers are set forth below in the “2022 Grants of Plan-Based Awards” table under the column heading, “All Other Option Awards: Number of Securities Underlying Options.” For additional information regarding stock option terms, see the narrative accompanying the “2022 Grants of Plan-Based Awards” table.
The Committee has, from time to time, considered the structure of our long-term incentive compensation, which for 2022 and historically, consists entirely of stock options. The Committee believed that stock options were the most effective and appropriate form of long-term incentive compensation for the Company to use at that time. Stock options also directly reflect the stockholder experience, are straightforward to communicate, and provide value only if our stock price increases over time, which aligns our executives’ interests with those of our stockholders in delivering TSR. On an ongoing basis, the Committee reviews with management and our Board the advisability of adopting alternative forms of long-term incentive compensation that are tied to, and provide incentives for, the long-term increase in stockholder value.
In 2018, the Committee amended the Stock Option Grant Agreement for Employees to allow for the exercise of option grants up to the expiration of their full term, post-retirement (the “Post Retirement Option Provision”). Options granted to our named executive officers in 2018 included the Post Retirement Option
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Provision. Since 2007, our stock option grants included a three-year post-termination vesting and exercise period (the “Old Option Provision” and, together with the Post Retirement Option Provision, the “Option Provisions”). The Option Provisions apply if (i) the option holder’s employment terminates due to retirement, as defined in the grant agreement, or is terminated by us without cause; (ii) the option holder is at least 55 years old and has completed at least five years of service with us; (iii) the sum of the option holder’s age and years of service is at least 65; and (iv) pursuant to our request, the option holder has signed a waiver and release agreement. We believe that the Option Provisions enable us to attract and retain seasoned executives who have considerable experience. Moreover, we believe the Option Provisions offset the effect of the three-year cliff vesting provisions of our stock options, which are less favorable than vesting provisions used by many of the Compensation Peer Group. Many of those companies provide for incremental vesting of stock options during the vesting period, while our options do not vest until they have been held for three years. We believe the Option Provisions encourage our employees to maintain employment with us for an extended period of time and to align their interests with longer-term Company performance. In addition, in 2019, the Committee amended the Stock Option Grant Agreements for the CEO and the Executive Vice Presidents to provide for a “double trigger” vesting of Options, granted on or after July 30, 2019, in the event of a change in control.
PERQUISITES AND CHARITABLE CONTRIBUTIONS
We provide very limited perquisites to our named executive officers. Our named executive officers may receive a comprehensive physical examination through a provider selected by the executive from among three providers that we have approved. We believe it is in our best interest to ensure that our named executive officers’ health is monitored so that any health-related issues pertaining to an executive can be identified and addressed promptly. The average cost to us for providing this benefit in 2022 is approximately $2,500 per executive. We also offer a financial planning program to our named executive officers. The average cost to us for providing this benefit in 2022 is approximately $11,250 per executive.
Except as noted above, we do not have programs for providing personal benefit perquisites to executive officers. From time to time the Company makes donations to non-profit organizations or educational institutions as requested by our executive officers and directors. The aggregate amount of all such donations with respect to named executive officers was $40,000 in 2022.
2023 COMPENSATION AND BENEFITS DECISIONS
• | Total Direct Compensation. As shown in the table below, the Compensation & Human Capital Committee approved salary increases of 2.0% for 2023 for each named executive officer. |
2023 Base Salary
Named Executive Officer |
2022 Base Salary ($) |
2023 Base Salary ($) |
Base Salary % Increase | |||||||
Matthew T. Farrell |
1,166,500 | 1,189,800 | 2.0% | |||||||
Richard A. Dierker |
685,000 | 698,700 | 2.0% | |||||||
Barry A. Bruno |
490,000 | 499,800 | 2.0% | |||||||
Patrick D. de Maynadier |
500,500 | 510,500 | 2.0% | |||||||
Carlos G. Linares |
485,000 | 494,700 | 2.0% |
No changes were made to the target percentages for the Annual Incentive Plan for the named executive officers. The Committee approved the increase of the percent of salary measurement for equity grants under the Company’s long-term incentive program for Mr. Farrell from 565 percent to 620 percent, for Mr. Dierker from 260 percent to 290 percent, for Mr. Bruno from 135 percent to 170 percent, for Mr. de Maynadier from 150 percent to 165 percent, and for Mr. Linares from
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115 percent to 130 percent. The Committee, in consultation with its independent compensation consultant, Semler Brossy, decided to make these changes to base salaries and long-term incentives in order to align our compensation program with median levels of our Compensation Peer Group and industry survey data.
• | Annual Incentive Plan Metrics. In connection with the Committee’s review of market practices, it determined to make the following changes for 2023 Annual Incentive Plan metrics: The Gross Margin metric was replaced with Relative Gross Margin, which measures the relative year-over-year gross margin performance against the performance peer group. A Strategic Initiatives metric was also added, which focuses on Sustainability (i.e., environmental and DEI goals) and long-term growth (including developing international infrastructure, digital transformation and acquisitions/integrations). |
• | Approval of Equity Award Grant Policy. The Committee recommended to our Board of Directors the approval of an equity grant policy which sets forth certain practices for making equity grants, including: (i) an annual grant date for employees on the first trading day in March (in lieu of the pre-2023 practice of granting awards in June); and (ii) a monthly granting protocol for off-cycle grants to employees below the executive vice president level consistent with best practice. |
• | New Types of Long-Term Incentive Awards. In connection with the Committee’s review of market practices, the Committee approved the introduction of performance stock units (“PSUs”) (with three-year cliff vesting) and restricted stock units (“RSUs”) (with ratable vesting at one-third per year) for our executive leadership team, including our named executive officers. Consistent with our historic approach, non-qualified stock options will continue to be granted. |
LONG-TERM INCENTIVES—GRANT PRACTICES
The Compensation & Human Capital Committee makes annual long-term incentive grants to executive officers and other employees effective on the Monday falling most closely to the midpoint between the dates of the Company’s first and second quarter earnings releases. A grant to a new employee is effective on the date the employee commences employment with us, and special grants made to employees at times other than the time of the annual grant are effective on the first trading day of the month following approval of the grant. The per share exercise price of stock options is equal to the closing price of a share of our common stock on the date of grant. We believe that our stock option grant practices are appropriate and eliminate any questions regarding “timing” of grants in anticipation of material events, since grants become effective in accordance with a long-standing schedule.
The Compensation & Human Capital Committee delegates to our CEO and the Executive Vice President, Chief Human Resources Officer the ability to approve a specific number of stock option grants for employees who are not executive officers. The grants may be made at times other than the time of annual grant and are utilized for new hires and for performance recognition purposes. Such delegation is made on an annual basis, and in 2022 the Compensation & Human Capital Committee approved a pool of options to purchase up to 136,800 shares for such grants (which may be made between June 1, 2022 and May 31, 2023). The timing and pricing of the option grants in 2022 conformed to the Compensation & Human Capital Committee practices described in the preceding paragraph.
We do not permit repricing of options without prior stockholder approval.
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STOCK OWNERSHIP, TRADING GUIDELINES AND SHORT SALE, HEDGING AND PLEDGING POLICIES
Executive Stock Ownership Guidelines
In order to further align the interests of executive officers with the interests of our stockholders, we maintain stock ownership guidelines for our executive officers that require each executive officer to hold equity in the Company’s stock equal to a multiple of each executive’s salary.
In 2022, the Compensation & Human Capital Committee reviewed the stock ownership guidelines for our executive officers and approved removal of 60% of the in-the-money value of vested and unvested stock options.
The stock ownership guidelines applicable to each of our named executive officers at the end of 2022 are shown in the following table:
Title |
Multiple of Salary Subject to Guidelines | |
Chief Executive Officer |
6.0x | |
Chief Financial Officer |
3.0x | |
Executive Vice President |
2.5x |
The calculation of ownership includes:
• | shares acquired and held upon stock option exercises; |
• | the value of any vested or unvested stock or restricted stock; |
• | stock held in the Company’s Profit Sharing Plan; |
• | stock held in the Company’s Employee Stock Purchase Plan; |
• | share equivalents held in the Executive Deferred Compensation Plan; |
• | shares held in trust; and |
• | shares held outright. |
Executives are generally expected to achieve the guidelines within five years from the date on which they become subject to our stock ownership guidelines. On April 27, 2022, the Committee approved the removal of 60% of the in-the-money value of vested and unvested stock options, such that no portion of the value of options are taken into account towards the guidelines for executive officers. As a result of the amendment, effective April 27, 2022, executive officers have five years from the effective date of the adoption of the amendment to meet the new guidelines. If an executive is ever below their ownership requirements, our guidelines require the executive to hold 50 percent of the net, after-tax value of any equity received from the Company’s ongoing compensation programs. As of December 31, 2022, all our executive officers are on track to meet their stock ownership guidelines within five years of the effective date of the April 27, 2022 amendment.
Trading, Short Sale, Hedging and Pledging
Our insider trading policy prohibits our directors, executive officers, and other employees from (i) buying or selling the Company’s securities while in possession of material, non-public information relating to us, (ii) engaging in short sales of our securities, (iii) buying or selling puts or calls or other derivative securities on our securities, (iv) participating in equity swap transactions involving Company stock, (v) purchasing Company shares
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on margin, (vi) short-term trading, (vii) pledging Company shares, (viii) standing orders, and (ix) entering into hedging or monetizing transactions or similar arrangements with respect to our securities (including, without limitation, prepaid variable forward contracts, equity swaps, collars, and exchange funds).
ONGOING AND POST-EMPLOYMENT COMPENSATION
We have plans and agreements addressing compensation for our named executive officers that accrue value as the executive officers continue to work for us, provide special benefits upon certain types of termination events, or provide retirement benefits. These plans and agreements were designed to be part of a competitive compensation package, in some cases not only for executive officers, but for other employees as well.
SAVINGS AND PROFIT SHARING PLAN FOR SALARIED EMPLOYEES
This plan, which we sometimes refer to below as the “Savings and Profit Sharing Plan,” is a tax-qualified defined contribution plan available to all of our salaried employees in the United States. All of our named executive officers participate in the plan. Under the plan, an employee may contribute, subject to the limitations of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), up to a maximum of 70 percent of his or her eligible compensation (approximately 15 percent for highly compensated employees in 2022), which includes salary and payments under the Annual Incentive Plan, on a pre-tax basis or as Roth contributions. We provide a matching contribution equal to 100 percent of the first five percent of eligible compensation that an employee contributes in any year. In addition, the plan provides a profit sharing feature under which we make an annual contribution to the account of each employee based on our performance in the preceding year and can make additional contributions for all employees excluding at or above the executive vice president level, including our named executive officers. The performance measures and results used to calculate the annual contribution level are identical to the Company-wide measures described applicable to payouts under the Annual Incentive Plan described above under “2022 Compensation—Annual Incentive Plan.” Achievement of a performance rating of 1.0 would have resulted in a contribution of five percent of a participant’s base salary and Annual Incentive Plan payments made in 2022. Based on 2022 performance results, the Compensation & Human Capital Committee approved a contribution equal to 3.64 percent of a participant’s eligible compensation in 2022. Amounts credited to an employee’s account in the plan may be invested among a number of funds, including a Company stock fund. A participant’s account is adjusted to reflect the rate of return, positive or negative, on the investments. Employee contributions and compensation on which our profit sharing contributions may be based cannot exceed limits under the Internal Revenue Code (the eligible compensation limit was $305,000 in 2022). As noted above, management recommended, and the Committee approved, an additional 0.18 in the Annual Incentive Plan rating which increased the profit sharing contribution made to 4.00% for 2022, which was made to the plan account of each employee, excluding our named executive officers and other employees at the level of executive vice president, under the applicable profit sharing plan in which our employees in the United States participate. No additional contribution was made under the Savings and Profit Sharing Plan for our named executive officers or other employees at the level of executive vice president.
EXECUTIVE DEFERRED COMPENSATION PLAN
The Executive Deferred Compensation Plan (“EDCP”) and its predecessors collectively have been in effect for over 20 years. The EDCP is a nonqualified deferred compensation plan that provides potential tax benefits for certain employees in the United States, including our named executive officers. Under the EDCP as currently in effect, an executive officer can defer up to 85 percent of his or her salary and, in general, up to 85 percent of amounts paid to the executive officer under the Annual Incentive Plan. In addition, an executive can make a separate deferral, which we refer to below as the “Excess Compensation Deferral,” of up to five percent of compensation that exceeds Internal Revenue Code limits on eligible contributions under the Savings and Profit Sharing Plan. We provide a contribution equal to (i) 100 percent of the Excess Contribution Deferral; (ii) five percent of other salary and Annual Incentive Plan deferrals; and (iii) the profit sharing contributions we would have made to the participant’s account under the Savings and Profit Sharing Plan were it not for the Internal Revenue Code limit on the amount of eligible compensation under that plan and the participant’s deferrals into the EDCP.
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Amounts deferred under the EDCP generally are not subject to federal, and in many cases state, income taxes until they are distributed. An executive officer can choose to have his or her contributions allocated to one or more of several notional investments, including a notional investment in our common stock. A participant may not initially allocate more than 50 percent of his or her contributions to our common stock, although the participant can increase the notional common stock amount through intra-plan transfers of notional investments previously made. A participant’s account is adjusted to reflect the deemed rate of return, positive or negative, on the notional investments. An executive officer may choose to receive a payout following retirement, either in a lump sum or in
annual installments, in accordance with the terms of the EDCP. The EDCP also includes provisions for payment upon termination (pre-retirement) death or disability. See the “2022 Nonqualified Deferred Compensation” table and accompanying narrative for additional information.
CHANGE IN CONTROL AND SEVERANCE AGREEMENTS
We have adopted change in control and severance agreements for our executive officers because we believe that these agreements can create management stability during a period of potential uncertainty. Absent such agreements, there is an increased risk that executive officers may be encouraged to seek other employment opportunities if they became concerned about their employment security following a change in control. We also believe that the agreements provide financial security to an executive officer in the event of an involuntary termination of the executive officer without cause or for good reason following a change in control by providing a meaningful payment to the executive officer. The agreements also provide clear statements of the rights of the executive officers and protect against a change in employment and other terms by an acquirer that would be unfavorable to the executive officer. We also provide severance benefits to our executive officers, although at a lower level, for certain types of employment terminations that do not follow a change in control. We believe these arrangements provide a competitive benefit that enhances our ability to hire and retain capable executive officers.
The change in control and severance agreements provide for payments and other benefits if an executive officer’s employment is terminated without cause, or if an executive officer terminates employment for “good reason,” within two years following a change in control. These provisions require what is sometimes called a “double trigger,” namely both a change in control and a specified termination event, before payment is made. The agreements also provide for lesser payments if these types of terminations occur outside of the context of a change in control. The agreements do not contain an excise tax gross-up provision and, instead provide that, in the event that payments to be made to an executive under the agreements in connection with a change in control would result in the imposition of the excise tax under Section 4999 of the Internal Revenue Code, the payments will be reduced to the highest amount that could be paid without triggering the excise tax if, following the reduction, the executive would retain a greater amount of net after-tax payments than if no reduction were made. If no reduction is made, the executive officer will pay any applicable excise tax.
See “Potential Payments Upon Termination or Change in Control” for further information regarding benefits under the change in control and severance agreements.
ACCOUNTING AND TAX CONSIDERATIONS
The Committee may consider various accounting and tax implications of equity-based and other forms of compensation.
When determining the amounts of equity-based awards to be granted, the Committee examines the accounting cost associated with the grants. Under ASC 718, grants of stock options result in an accounting charge for the Company equal to the fair value of the award issued.
Section 162(m) of the Internal Revenue Code (“Section 162(m)”) generally disallows a federal income tax deduction for compensation paid by publicly held companies to certain of their executive officers that is in excess of $1,000,000 per year. Although the Committee is mindful of Section 162(m), the Committee grants compensation consistent with its stated objectives of providing competitive compensation, conditioning the
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majority of executive officer compensation on the achievement of performance goals, aligning executive officer and stockholder interests, and providing retention incentives. As a result, the Committee has approved, and expects to continue to approve, compensation to current and future executive officers that is not deductible for federal income tax purposes.
SAY-ON-PAY VOTE
At the 2022 Annual Meeting of Stockholders, we asked our stockholders to vote to approve, on an advisory basis, the compensation paid to our named executive officers, commonly referred to as a say-on-pay vote. Our stockholders approved compensation to our named executive officers, with over 85 percent of votes cast in favor of our say-on-pay resolution. We value this positive endorsement by our stockholders of our executive compensation program. After soliciting input from and engaging with various major stockholders regarding our executive compensation program, the Compensation & Human Capital Committee assessed our compensation programs and found our current mix of performance metrics to be balanced and supportive of our pay-for-performance philosophy, consistent with the solid support expressed by our stockholders. Accordingly, we continued our general approach to executive compensation for 2022. We believe our programs are effectively designed, are working well, and are aligned with the interests of our stockholders. The Compensation & Human Capital Committee will continue to seek and consider stockholder feedback in the future.
ROLE OF EXECUTIVE OFFICERS IN DETERMINING EXECUTIVE COMPENSATION FOR NAMED EXECUTIVE OFFICERS
In connection with 2022 compensation for executive officers, Mr. Farrell, aided by our Human Resources department, provided statistical data and recommendations to the Compensation & Human Capital Committee. Mr. Farrell did not make recommendations and does not participate in discussions or decisions regarding his own compensation. While the Compensation & Human Capital Committee utilized this information, and valued Mr. Farrell’s observations with regard to compensation for our other executive officers, the ultimate decisions regarding executive compensation and goal setting were made by the Compensation & Human Capital Committee.
ROLE OF THE COMPENSATION & HUMAN CAPITAL COMMITTEE IN EXECUTIVE COMPENSATION
As set forth in its written Charter, one of the Compensation & Human Capital Committee’s purposes is to administer our executive compensation program. It is the Compensation & Human Capital Committee’s responsibility to oversee the design of executive compensation programs, policies, and practices; to determine the types and amounts of compensation for executive officers; and to review and approve the adoption, termination, and amendment of, and to administer, our incentive compensation and stock option plans. All compensation for our executive officers ultimately must be approved by the Compensation & Human Capital Committee. Our human resources department supports the Compensation & Human Capital Committee’s work, and in some cases, acts under delegated authority to administer compensation programs. In addition, as described above, the Compensation & Human Capital Committee directly engages Semler Brossy, an outside independent compensation consulting firm, to assist in its review of compensation for executive officers.
ROLE OF THE INDEPENDENT COMPENSATION CONSULTANT
Representatives from Semler Brossy attend Compensation & Human Capital Committee meetings, participate in executive sessions, and communicate directly with the Committee. Semler Brossy also provides independent consulting services to the Nominating, Governance & Corporate Responsibility Committee regarding non-employee director compensation.
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COMPENSATION & HUMAN CAPITAL COMMITTEE REPORT |
COMPENSATION & HUMAN CAPITAL COMMITTEE REPORT
The Compensation & Human Capital Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Securities and Exchange Commission regulations. Based on its review and discussions, the Compensation & Human Capital Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and, through incorporation by reference, in Church & Dwight’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Respectfully submitted,
Penry W. Price, Chair
Bradley C. Irwin
Janet S. Vergis
Arthur B. Winkleblack
Laurie J. Yoler
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2022 SUMMARY COMPENSATION TABLE |
2022 SUMMARY COMPENSATION TABLE
The following table sets forth information regarding the compensation for 2022, 2021, and 2020 of our Chairman, President and CEO, our Executive Vice President, CFO and Head of Business Operations, and each of the persons who were the next three most highly paid executive officers in 2022, or our “named executive officers,” as defined in Item 402 of Regulation S-K.
Name and Principal Position |
Year | Salary ($)(1) |
Bonus ($) |
Stock Awards(2) |
Option Awards ($)(2) |
Non-Equity Incentive Plan Compensation ($)(1)(3) |
All Other Compensation ($)(10) |
Total ($) |
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