ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Identification
of Directors
The
following table and biographical summaries set forth, with respect to each director, his or her age, his or her principal occupation
and the year in which he or she first became a director of the Company. The directors of the Company are elected annually to serve
until the next annual meeting of the shareholders or until their respective successors are elected and duly qualified.
Name
|
|
Age
|
|
Principal
Occupation
|
|
Year
First
Became
Director
|
William
L. Bridgford
|
|
66
|
|
Chairman
of the Board and Member of the Executive Committee of the Company (1)(4)
|
|
2004
|
Allan
L. Bridgford, Sr.
|
|
85
|
|
Vice
President and Chairman of the Executive Committee of the Company (1)(4)
|
|
1952
|
Todd
C. Andrews
|
|
55
|
|
Vice
President and Controller of Public Storage (2)(3)(4)
|
|
2004
|
Raymond
F. Lancy
|
|
67
|
|
Chief
Financial Officer, Vice President, Treasurer and Member of the Executive Committee of the Company (4)
|
|
2013
|
Keith
A. Ross
|
|
58
|
|
President
of KR6, Inc. and Real Estate Consultant (4)
|
|
2016
|
Mary
Schott
|
|
59
|
|
Chief
Financial Officer of CSuite Financial Partners (2)(3)(4)
|
|
2019
|
D.
Gregory Scott
|
|
64
|
|
Managing
Director of Peak Holdings, LLC (2)(3)(4)
|
|
2006
|
John
V. Simmons
|
|
65
|
|
President
and Member of the Executive Committee of the Company (4)
|
|
2011
|
(1)
|
William
L. Bridgford is the nephew of Allan L. Bridgford, Sr.
|
(2)
|
Member
of the Compensation Committee.
|
(3)
|
Member
of the Audit Committee.
|
(4)
|
Member
of the Nominating Committee.
|
Directors
William
L. Bridgford
William
L. Bridgford has served as Chairman of the Board since March of 2006. He previously served as President of the Company from June
of 2004 until March of 2006, and Secretary of the Company for more than five years. Mr. Bridgford has been a full-time employee
of the Company since 1981. He has also served as a member of the Executive Committee since 2004. Mr. Bridgford is a graduate of
California State University, Fullerton with a degree in Business Management.
Mr.
Bridgford is one of the principal owners of Bridgford Industries Incorporated, the Company’s majority shareholder. He brings
to the Board extensive experience in the operations of the Company and provides strong leadership skills that provide strategic
business guidance to the Company. The Board believes his executive managerial experience and Company knowledge base combined with
his understanding of corporate values and culture qualify him to serve as a member of the Board.
Allan
L. Bridgford, Sr.
Allan
L. Bridgford, Sr. has served as Vice President and Chairman of the Executive Committee since 2011. Mr. Bridgford retired from
the Board in October 2011 and was reappointed to the Board in August 2019. He previously served as Senior Chairman of the Board
from March of 2006 to October of 2011. From March of 1995 through March of 2006, Mr. Bridgford served as Chairman of the Board.
He has been an employee of the Company since 1957, and reduced his work schedule to 80% in March of 2000, 60% in March of 2005
and 50% in November 2014. Mr. Bridgford’s base compensation was reduced by the same percentage as his regular work schedule
reduction. Mr. Bridgford has also served as a member of the Executive Committee since 1972. He is a graduate of Stanford University
with a degree in Economics.
Mr.
Bridgford is one of the principal owners of Bridgford Industries Inc., the Company’s majority shareholder. He has extensive
knowledge of the Company’s business and experience in the food industry developed during his long tenure with the Company.
The Board believes he is qualified to serve as a director based on these experiences as well as his other valuable attributes
and skills.
John
V. Simmons
John
V. Simmons has served as President of the Company and member of the Executive Committee since 2006. He previously served as Vice
President of the Company for more than five years. Mr. Simmons earned a B.A. degree in Psychology from the University of Wisconsin.
Mr.
Simmons has extensive knowledge and experience in the areas of marketing, product research and development, trade relations and
operations developed as an employee of the Company since 1979. The Board believes these skills and experiences qualify him to
serve as a member of the Board.
Todd
C. Andrews
Todd
C. Andrews is a Certified Public Accountant (inactive) and presently serves as Senior Vice President and Controller of Public
Storage, a member of the S&P 500, headquartered in Glendale, California. Mr. Andrews has been employed by Public Storage since
1997. Mr. Andrews graduated cum laude with a Bachelor of Science degree in Business Administration with an emphasis in accounting
and finance from California State University, Northridge, and received an Elijah Watt Sells award with high distinction on the
November 1988 CPA exam.
Mr.
Andrews has over 30 years of experience with responsibilities including financial reporting, strategic financial planning and
analysis, capital markets, treasury operations, SEC reporting, Sarbanes Oxley internal controls and procedures, operational analysis,
operational control design, real estate acquisition and development underwriting, and system design and implementation. In addition,
Mr. Andrews brings a diverse set of perspectives to the Board from serving in positions in multiple industries, including public
accounting, entertainment, retail, and real estate. The Board believes his skills and extensive experience qualify him to serve
as a member of the Board. Mr. Andrews also qualifies as an audit committee financial expert and is financially sophisticated within
the meaning of the NASDAQ Listing Rules.
Mary
Schott
Mary
Schott is currently working for CSuite Financial Partners, a professional services organization, as a contract Chief Financial
Officer in the Ecommerce consumer products industry. Previously, she was Chief Financial Officer and Corporate Secretary of California
Commerce Club, Inc., a privately held gaming and hospitality company, for which she had served from March 2014 through January
2020. Prior to California Commerce Club, Ms. Schott served as Chief Financial Officer of San Manuel Band of Mission Indians, a
sovereign tribal nation, and Chief Accounting Officer of First American Title Insurance Company, a publicly traded financial services
company. Ms. Schott holds an EMBA from Claremont Graduate University and a bachelor’s degree in Accounting from Cal Poly
Pomona University. She is also a Certified Public Accountant and a member of the California Society of Certified Public Accountants
and the American Institute of Certified Public Accountants.
Ms.
Schott possesses leadership skills and a vast knowledge base on finance, accounting, strategic planning, risk management as well
as decision support for portfolio development, acquisitions, divestures, and establishing governance protocols. The Board believes
that these skills and experiences qualify her to serve as a member of the Board. Ms. Schott also qualifies as an audit committee
financial expert and has financial sophistication as described in the NASDAQ Listing Rules.
D.
Gregory Scott
D.
Gregory Scott is a Certified Public Accountant (inactive) and currently serves as the Managing Director of Peak Holdings, LLC,
an investment management company based in Beverly Hills, California. Mr. Scott has been with Peak Holdings, LLC for more than
the past five years. Peak Holdings, LLC and its affiliates own and manage in excess of three million square feet of office, retail
and warehouse space throughout the United States.
Mr.
Scott has extensive financial and managerial experience, which the Board believes qualifies him to serve as a member of the Board.
Mr. Scott also qualifies as an audit committee financial expert and has financial sophistication as described in the NASDAQ Listing
Rules.
Raymond
F. Lancy
Raymond
F. Lancy has served as Treasurer of the Company for more than the past five years. He has also served as a member of the Executive
Committee since 2001, Vice President since 2001 and Chief Financial Officer since 2003. Mr. Lancy is a Certified Public Accountant
(inactive) and worked for ten years as an auditor at PricewaterhouseCoopers LLP. He earned a Bachelor of Science degree with a
major in Administration with high honors from California State University, San Bernardino.
Mr.
Lancy has extensive knowledge and experience in the areas of finance and management developed at PricewaterhouseCoopers LLP and
as an employee of the Company since July of 1992 and as Chief Financial Officer since 2003. The Board believes these skills and
experiences qualify him to serve as a member of the Board.
Keith
A. Ross
Keith
A. Ross is President of KR6, Inc., a commercial real estate consultant and continues as founder/principal of Centra Realty Corporation
(discussed below). From August 2013 to 2018, Mr. Ross served as Executive Vice President of CT Realty, or CTR, a real estate investment,
development and management company based in Newport Beach, California. At CTR, Mr. Ross oversaw all development and was responsible
for sourcing, evaluating, and closing on all commercial development opportunities. In addition, Mr. Ross served on CTR’s
Executive Committee and Investment Committee. CTR was founded in 1994 and together with its affiliates and principals have developed,
acquired and managed over $8 billion in industrial and office properties. Prior to joining CTR, from June 2009 to January 2014,
Mr. Ross was Founder, President and CEO of Peligroso Spirits which sold to Diageo in London (the world’s largest spirits
company). From 2001 to present, Mr. Ross acts as Founder and Principal of Centra Realty Corporation, ranked as one of the most
active real estate development companies in Orange County, California, where he oversaw the company’s land acquisitions,
capital raises of both equity and debt, architectural design, engineering, construction and sales/leasing efforts.
Mr.
Ross began his professional career at the Koll Company and was with Koll for over a decade and served in various roles from project
manager to marketing before leading the real estate development efforts of the company in Southern California. He currently serves
on the Board of Directors and is a Co-Founder of Miocean, a nonprofit foundation that applies proven business approaches to curb
the harmful effects of urban run-off pollution to the Ocean. Mr. Ross attended San Diego State University.
Mr.
Ross has extensive real estate acquisition and development experience as well as project management and marketing expertise, which
the Board believes qualifies him to serve as a member of the Bridgford Foods Board. In addition to his service on the Board, Mr.
Ross continues to provide real estate consulting services to the Company.
Public
Company Directorships
None
of the directors have been a director of any other public company in the past five years.
Involvement
in Certain Legal Proceedings
None
of the directors have been involved in any legal events reportable under Item 401(f) of Regulation S-K during the last ten years.
Arrangements
or Understandings with Directors
There
are no arrangements or understandings pursuant to which any of the directors was or is to be elected to serve as a director or
nominee.
Further,
none of our directors have arrangements or understandings with any person or entity, other than the Company, relating to compensation
or other payments in connection with such director’s service to the Company.
Identification
of Executive Officers
Our
executive officers are set forth in the table above and include Allan L. Bridgford, Sr., William L. Bridgford, Raymond F. Lancy
and John V. Simmons, each of whom also serves as a member of and collectively constitute the Company’s Executive Committee.
The Executive Committee acts in the capacity of “Chief Executive Officer” of the Company. For information relating
to the age, term of office, periods of service, family relationships and any arrangements or understandings for each executive
officer, see the section entitled “Executive Officers of the Registrant” in PART I, ITEM 1 of this Annual Report on
Form 10-K. A biographical summary regarding each of our executive officers is set forth above under the caption “Directors.”
None of the executive officers have been involved in any legal events reportable under Item 401(f) of Regulation S-K during the
last ten years.
Audit
Committee
The
Audit Committee currently consists of three members, including Ms. Schott (Chairman) and Messrs. Andrews and Scott. The Audit
Committee has been established in accordance with the rules and regulations of the SEC and each of the current members of the
Audit Committee is an “independent director” as defined in Rule 5605(c)(2) of the NASDAQ Listing Rules. In addition,
the Board has determined that each of Messrs. Andrews and Scott, and Ms. Schott qualify as “audit committee financial experts”
as such term is used in the rules and regulations of the SEC.
Code
of Ethics
The
Company adopted a code of ethics that is applicable to, among other individuals, its principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing similar functions, and posted the code of ethics on
its website at www.bridgford.com (and designated therein as the Code of Conduct). Any amendment or waiver to the Company’s
code of ethics that applies to its directors or executive officers will be posted on its website or in a report filed with the
SEC on Form 8-K.
ITEM
11.
|
EXECUTIVE
COMPENSATION
|
Compensation
Discussion and Analysis
Compensation
Overview
This
section provides information regarding the compensation paid to the Company’s “named executive officers” or
“NEOs,” all of whom are members of the Executive Committee. The Company has historically been and continues to be
principally managed by the Executive Committee. The Executive Committee, as a unit, serves as the Company’s “Chief
Executive Officer.” The Executive Committee currently consists of the following four members:
|
●
|
Allan
L. Bridgford, Sr., Vice President and Chairman of the Executive Committee
|
|
●
|
William
L. Bridgford, Chairman of the Board (Principal Executive Officer)
|
|
●
|
John
V. Simmons, President
|
|
●
|
Raymond
F. Lancy, Chief Financial Officer, Executive Vice President and Treasurer (Principal Financial Officer)
|
The
Company’s executive compensation program is overseen by the Compensation Committee, which is comprised of certain non-employee
members of the Board and, notwithstanding that the Company is a “controlled company” within the meaning of the NASDAQ
Listing Rules, each member is independent as defined in Rule 5605(a)(2) of the NASDAQ Listing Rules. The basic responsibility
of the Compensation Committee is to review the performance of the officers and key employees toward achieving the Company’s
strategic goals and to help ensure that the Company is able to attract and retain individuals who can lead the Company to achieve
those goals.
One
of the Company’s primary strategic goals is to increase shareholder value while meeting its objectives for customer satisfaction,
improved sales and financial performance, sound corporate governance, and competitive advantage. The Company’s current emphases
on controlling costs and improving profit margins on a consistent basis are also important factors which affect the Company’s
compensation decisions. The Compensation Committee’s goal is to work with management to balance the Company’s financial
goals and circumstances with the need to attract, motivate and retain the fully qualified and capable individuals the Company
needs to meet and surpass its customers’ and shareholders’ expectations in a highly-competitive industry.
Compensation
Philosophy and Objectives
The
core of the Company’s executive compensation philosophy is to pay for performance. To that end, incentive bonus targets
are set each year to reward excellent executive performance based upon the achievement of profit objectives by business units
and the Company’s overall profitability based on pretax income, thus stimulating all executives to assume broad responsibility
for the Company’s overall financial welfare and financial performance.
The
Compensation Committee’s guiding principles are as follows:
|
●
|
Work
with management to provide a compensation program that recognizes individual contributions as well as the Company’s
overall business results;
|
|
●
|
Provide
reasonable levels of total compensation which will enable the Company to attract and retain qualified and capable executive
talent within its industry, while also considering the Company’s current goals of controlling costs and effecting consistent
improvements in its overall financial condition;
|
|
●
|
Motivate
executive officers to deliver optimum individual and business unit performance;
|
|
●
|
Develop
and retain a leadership team that is capable of successfully operating and growing an increasingly competitive and complex
business in a rapidly changing industry; and
|
|
●
|
Ensure
that executive compensation-related disclosures are made to the public on a timely basis.
|
Role
of the Compensation Committee
The
compensation of all NEOs and other executive officers is determined by the Compensation Committee. The Compensation Committee
met one time during fiscal year 2020. The primary responsibilities of the Compensation Committee include, without limitation,
the following:
|
●
|
Determine
the compensation of the members of the Executive Committee, after taking into account the Board’s assessment of the
performance of the Executive Committee, as well as any other executive officers of the Company.
|
|
●
|
Determine
the compensation of the Chairman of the Board and the other directors of the Company.
|
|
●
|
Assess
the performance of the executive officers of the Company other than the members of the Executive Committee (whose performance
is assessed by the Board).
|
|
●
|
Review
and make recommendations to the Board regarding the Company’s compensation policies and philosophy.
|
|
●
|
Review
and make recommendations to the Board with respect to the employment agreements, severance agreements, change of control agreements
and other similar agreements between the Company and its executive officers.
|
|
●
|
Administer
the Company’s equity incentive plans, including the review and grant of stock option and other equity incentive
grants.
|
|
●
|
Review
and discuss the Compensation Discussion and Analysis (“CD&A”) section of the Company’s annual proxy
statement with management, and recommend to the Board that the CD&A be included in the Company’s proxy statement
as required.
|
|
●
|
Produce
an annual report on executive compensation for inclusion in the Company’s proxy statement.
|
|
●
|
As
requested by Company management, review, consult and make recommendations and/or determinations regarding employee compensation
and benefit plans and programs generally, including employee bonus and retirement plans and programs.
|
|
●
|
Assist
the Board and management in developing and evaluating potential candidates for executive officer positions.
|
|
●
|
Advise
the Board in its succession-planning initiatives for the Company’s executive officers and other senior officers.
|
Role
of Management in the Compensation Determination Process
The
Company’s senior management team, particularly the Chairman of the Board and the Chairman of the Executive Committee, support
the Compensation Committee in the executive compensation decision-making process. At the request of the Compensation Committee,
one or more members of the Executive Committee may present a performance assessment and recommendations to the Compensation Committee
regarding base salaries, bonus payments, incentive plan structure and other compensation-related matters for the Company’s
executive officers (other than with respect to their own compensation).
Role
of Compensation Consultant
The
Compensation Committee has decided not to utilize the services of a paid compensation consultant after concluding that such a
consultant would provide insufficient value compared to the cost.
Total
Compensation for Executive Officers
The
compensation packages offered to the Company’s executive officers are comprised of one or more of the following elements:
|
●
|
Base
salary;
|
|
●
|
Discretionary
cash bonuses; and
|
|
●
|
Post-retirement
healthcare and pension benefits.
|
The
Company does not have any formal policies which dictate the amount to be paid with respect to each element, nor does it have any
policies which dictate the relative proportion of the various elements. The Company also does not have any formal policies for
allocating between cash and non-cash compensation and short-term and long-term compensation. Instead, the Company relies on the
judgment of the Compensation Committee and input and feedback from the management team, including in particular members of the
Executive Committee. The Compensation Committee has no plans to adopt any such formulas, ratios or other such targets that might
artificially dilute the Company’s effectiveness in achieving its overall profit objectives. In fact, all of the Company’s
compensation policy decisions are made in the context of its current financial position and are subordinated to the Company’s
current goal of achieving overall profitability on an annual basis. Each of the compensation components is described in more detail
below.
Base
Salary
The
Company provides executive officers and other employees with base salary to compensate them for services rendered during the fiscal
year. The purpose of base salary is to reward effective fulfillment of an executive’s assigned job responsibilities, and
to reflect the position’s relative value to the Company and competitiveness of the executive job market. Base salaries for
executive officers are determined based on the nature and responsibility of the position, salary norms for comparable positions
at similar companies, the expertise and effectiveness of the individual executive, and the competitiveness of the market for the
executive officer’s services.
The
Company has successfully held most base salaries at the low end of the competitive range in order to reduce its overall cost structure
and to achieve systematic improvement in the financial performance of the business without incurring a large turnover in executive
talent and leadership.
Any
“merit increases” for the Company’s executive officers are subject to the same budgetary constraints that apply
to all other employees. Executive officer salaries are evaluated as part of the Company’s annual review process and may
be adjusted where justified in the context of the Company’s current focus on profitability and controlling expenses.
For
fiscal year 2020, the Compensation Committee set a base salary of $5,713 per week from $5,520 per week for each Executive Committee
member, reduced on a pro-rata basis for any member working less than a full-time schedule. This change represented a 3.3% increase
in the base salary compared to fiscal year 2019, which was derived from management’s assessment of the increase in cost
of living.
Discretionary
Cash Bonuses
The
Company’s policy is to make a significant portion of each NEO’s total compensation contingent upon the Company’s
financial performance. The Compensation Committee believes that the payment of cash bonuses based on the Company’s financial
success allows the Company to offer a competitive total compensation package despite relatively lower base salaries, while aligning
a significant portion of executive compensation with the achievement of positive Company financial results. However, while the
payment of these cash bonuses to the NEOs is generally correlated with the achievement of positive Company financial results,
there are no specific performance targets communicated to the NEOs in advance, and the bonuses are ultimately paid at the discretion
of the Compensation Committee after receiving input from the Chairman of the Board. For the fiscal year ended October 30, 2020,
discretionary bonuses were awarded to the members of the Company’s Executive Committee as disclosed in detail in the Summary
Compensation Table.
Long-Term
Equity-Based Incentive Compensation
The
Compensation Committee has concluded that long-term stock-related compensation has very limited value as an employee incentive
or retention tool because the Company’s equity-based incentive awards have historically provided little or no value to the
recipient. In addition, beginning in 2005, U.S. accounting rules required the Company to expense any stock option awards according
to a formula which could impose a costly charge on the Company’s income statements, thereby burdening or erasing its profit
margins. Because of these factors, the Company has not granted stock options or restricted stock awards for many years. Instead,
the Compensation Committee aims to align the interests of the NEOs with those of the Company’s shareholders by creating
a link between the payment of executive compensation and the achievement of Company financial goals as described above. The Company’s
1999 Stock Incentive Plan expired by its own terms on April 29, 2009 and no additional stock options or restricted stock may be
granted thereunder.
Pension
and Retirement Benefits
Retirement
Plan for Administrative and Sales Employees of Bridgford Foods Corporation. The Company has a defined benefit plan (the “Primary
Benefit Plan”) for certain of its employees not covered by collective bargaining agreements. The Primary Benefit Plan, administered
by a major life insurance company, presently provides that participants receive an annual benefit on retirement equal to 1.5%
of their total compensation from the Company during their period of participation from 1958. Benefits are not reduced by Social
Security payments or by payments from other sources and are payable in the form of a monthly lifetime annuity commencing at age
65 or the participant’s date of retirement, whichever is later. Effective May 12, 2006, future benefit accruals under the
Primary Benefit Plan were frozen.
Supplemental
Executive Retirement Plan. Retirement benefits otherwise available to certain key executives under the Primary Benefit Plan
have been limited by the effects of the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) and the Tax Reform
Act of 1986 (“TRA”). To offset the loss of retirement benefits associated with TEFRA and TRA, the Company has adopted
a non-qualified “makeup” benefit plan (the “Supplemental Executive Retirement Plan”). Benefits will be
provided under the Supplemental Executive Retirement Plan in an amount equal to 60% of each participant’s final average
earnings minus any pension benefits and primary insurance amounts available to them under Social Security. However, in all cases
the benefits are capped at $120,000 per year for Allan L. Bridgford. Benefits provided under this plan for William L. Bridgford
and Raymond F. Lancy are calculated at 50% of final average earnings, capped at $200,000 per year, without offsets for other pension
or Social Security benefits.
Bridgford
Foods Retirement Savings 401(k) Plan. The Company implemented a 401(k) plan effective May 13, 2006. The Company makes a matching
contribution to each employee’s account based on pretax contributions in an amount equal to 100% of the first 3% of compensation
and 50% of the next 2% of compensation contributed to the Plan. Certain limitations on optional pre-tax contributions to the plan
are imposed pursuant to the Internal Revenue Code of 1986, as amended. No amounts are contributed by the Company unless the employee
elects to make a pretax contribution to the Plan.
Non-Qualified
Deferred Compensation
Effective
January 1, 1991 the Company adopted a deferred compensation savings plan for certain key employees. Under this arrangement, selected
employees contributed a portion of their annual compensation to the plan. The Company contributed an amount to each participant’s
account by computing an investment return equal to Moody’s Average Seasoned Bond Rate plus 2%. The purpose of the plan was
to provide tax planning and supplemental funds upon retirement or death for certain selected employees and to aid in retaining
and attracting employees of exceptional ability. Separate accounts are maintained for each participant to properly reflect his
or her total vested account balance. No contributions or salary deferrals have been made in the past ten years.
Perquisites
and Other Benefits
The
Company provides its executive officers with various health and welfare programs and other employee benefits which are generally
available on the same cost-sharing basis to all of its employees. However, in keeping with the Company’s policy of controlling
costs in connection with its profitability objectives, it does not provide any significant perquisites or other special benefits
to its executive officers including, but not limited to, payment of club memberships, fees associated with financial planning,
executive dining rooms or special transportation rights. The Company does not own an airplane and does not provide aircraft for
executives for business or personal purposes.
The
Company provides post-retirement healthcare benefits for certain executives and their spouses (who are within fifteen years of
age of the employee) who have reached normal retirement age. This coverage is secondary to Medicare. Coverage for spouses continues
upon the death of the employee. The maximum benefit under the plan is $100,000 per year per retiree. The combined loss on this
plan during fiscal year 2020 was $19,000 for all active and retired participants.
The
Company paid life and disability insurance premiums on policies for the Company’s President under which he is the
named owner and beneficiary. No further premiums are due on these policies.
Employment
Agreements
The
Company currently does not have any employment agreements with any of its NEOs. However, on August 12, 2019, the Company entered
into a consulting agreement with Allan L. Bridgford, Sr., pursuant to which the Company will engage Mr. Bridgford to provide consulting
services to the Company, commencing after his retirement from employment with the Company (including, without limitation, his
position as Vice President and Chairman of the Executive Committee of the Company). Under the terms of the consulting agreement,
Mr. Bridgford will provide to the Company consulting services, including, but not limited to, business development and strategic
partnering, commencing on the date of his retirement and until such agreement is terminated by either party upon at least thirty
(30) days’ notice to the other party. Mr. Bridgford will be compensated at a rate of $20,833.33 per month and will be reimbursed
for all reasonable out of pocket expenses incurred in rendering such services.
Payments
Upon Termination of Employment or Change in Control
The
Company currently does not have any severance, change of control or similar agreements with any of its NEOs. Refer to the compensation
discussion below for information on pension, deferred compensation, and benefit-related payments payable in the event of a qualifying
event such as employment termination, disability, death, or sale/merger/acquisition.
Tax
and Accounting Implications
The
Compensation Committee is responsible for considering the deductibility of executive compensation under Section 162(m) of the
Internal Revenue Code, which in fiscal year 2020 provided that it could not deduct compensation of more than $1,000,000 that is
paid to its executive officers. The Company believes that the compensation paid under the current management incentive programs
is fully deductible for federal income tax purposes. In certain situations, the Compensation Committee may approve compensation
that will not meet the requirements for deductibility in order to ensure competitive levels of compensation for its executives
and to meet its obligations under the terms of various incentive programs. However, the issue of deductibility has not come before
the Compensation Committee in recent years and is not expected to be a concern for the foreseeable future.
Summary
Compensation Table
The
table below provides summary information concerning cash and certain other compensation paid to or accrued for the Company’s
NEOs during fiscal years 2020 and 2019, respectively. Each of the NEOs named below were also members of the Executive Committee
during the referenced periods, which Committee acts in the capacity of Chief Executive Officer of the Company. See “Compensation
Discussion and Analysis” for further discussion of compensation arrangements pursuant to which the amounts listed in the
table below were paid or awarded and the criteria for such payment or award.
Name
and Principal Position
|
|
Year
|
|
|
Base
Salary($)(1)
|
|
|
Bonus($)
|
|
|
Stock
Awards($)(2)
|
|
|
Option
Awards($)(3)
|
|
|
Non-Equity
Incentive
Plan
Compensation($)(4)
|
|
|
Change
in Pension
Value
and Non-
Qualified
Deferred Compensation
Earnings($)(5)
|
|
|
All
Other
Compensation($)(6)
|
|
|
Total($)
|
|
Allan
L. Bridgford, Sr.
|
|
2020
|
|
|
|
148,525
|
|
|
|
97,440
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0
|
|
|
|
8,000
|
|
|
|
253,965
|
|
Vice
President
|
|
2019
|
|
|
|
143,507
|
|
|
|
147,810
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
36,278
|
|
|
|
8,000
|
|
|
|
335,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
L. Bridgford
|
|
2020
|
|
|
|
297,050
|
|
|
|
194,877
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
156,829
|
|
|
|
19,600
|
|
|
|
668,356
|
|
Chairman
of the Board
|
|
2019
|
|
|
|
287,014
|
|
|
|
295,620
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
346,911
|
|
|
|
19,400
|
|
|
|
948,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
V. Simmons
|
|
2020
|
|
|
|
297,050
|
|
|
|
194,877
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
55,343
|
|
|
|
19,600
|
|
|
|
566,870
|
|
President
|
|
2019
|
|
|
|
287,014
|
|
|
|
295,620
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
127,392
|
|
|
|
43,776
|
|
|
|
753,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond
F. Lancy
|
|
2020
|
|
|
|
297,050
|
|
|
|
194,877
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
93,052
|
|
|
|
19,600
|
|
|
|
604,579
|
|
Chief
Financial Officer
|
|
2019
|
|
|
|
287,014
|
|
|
|
295,620
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
299,731
|
|
|
|
19,400
|
|
|
|
901,765
|
|
(1)
|
Fiscal
years 2020 and 2019 were each 52 weeks.
|
(2)
|
The
Company did not grant any stock awards to any of the NEOs during fiscal years 2020 or 2019.
|
(3)
|
The
Company did not grant any option awards to any of the NEOs during fiscal years 2020 or 2019.
|
(4)
|
The
Company did not utilize any non-equity incentive plans in order to pay compensation to its NEOs in fiscal years 2019 or 2020.
While it is the Company’s policy to provide each of the NEOs with an opportunity to earn cash bonuses that are correlated
with the Company’s financial performance, the payment of the bonuses are ultimately subject to the discretion of the
Compensation Committee. See “Compensation Discussion and Analysis – Total Compensation for Executive Officers
– Discretionary Cash Bonuses.”
|
(5)
|
This
column includes the aggregate positive change in actuarial present value of each NEO’s accumulated benefit under all
defined benefit and supplemental pension plans. In accordance with SEC rules, to the extent the aggregate change in present
value of all defined benefit and supplemental pension plans for a particular fiscal year would have been a negative amount,
the amount has instead been reported as $0 and the aggregate compensation for the NEO in the “Total” column has
not been adjusted to reflect the negative amount. In addition, to the extent that the change in present value of any particular
defined benefit or supplemental pension plan for a particular year was a negative amount, the negative amount has not been
used to offset the positive change in present value associated with the other applicable defined benefit or supplemental pension
plans. The aggregate change in the present value of the non-qualified deferred compensation plan and pension and retirement
benefits for the NEOs in fiscal years 2020 and 2019 was as follows: (i) for fiscal year 2020, Allan L. Bridgford, Sr. (-$54,499),
William L. Bridgford ($64,770), John V. Simmons ($55,343), and Raymond F. Lancy ($993), and (ii) for fiscal year 2019, Allan
L. Bridgford, Sr. ($36,278), William L. Bridgford ($148,846), John V. Simmons ($127,392), and Raymond F. Lancy ($101,666).
|
(6)
|
Consists
of matching contributions to the Bridgford Foods Retirement Savings 401(k) plan made by the Company on behalf of each of the
NEOs, except Allan L. Bridgford, Sr., and an $8,000 payment to offset the negative impacts arising from the cancellation of
supplemental executive health benefits. In addition in fiscal year 2019, the amount for Mr. Simmons includes premiums in the
amount of $24,376 for life and disability insurance policies issued for the benefit of Mr. Simmons and his designees. No
premiums were due or paid in fiscal year 2020.
|
Narrative
to Summary Compensation Table
See
“Compensation Discussion and Analysis” for further discussion of compensation arrangements pursuant to which amounts
listed under the Summary Compensation Table were paid or awarded and the criteria for such payment or award.
Grants
of Plan-Based Awards
There
were no stock options, restricted stock, restricted stock units or equity or non-equity-based performance awards granted to the
Company’s NEOs during fiscal years 2020 or 2019. The Company’s 1999 Stock Incentive Plan expired by its own terms
on April 29, 2009 and no additional stock options or restricted stock may be granted thereunder.
Outstanding
Equity Awards at Fiscal Year-End
There
were no outstanding options or stock awards held by any NEOs as of October 30, 2020.
Option
Exercises and Stock Vested
There
were no shares acquired upon the exercise of stock options or vesting of stock awards by any NEOs during fiscal years 2020 or
2019.
Pension
Benefits
The
tables below provide information concerning retirement plan benefits for each NEO and payments due upon certain termination scenarios.
Retirement
Plan for Administrative and Sales Employees of Bridgford Foods Corporation
Normal
Retirement: Benefits commence upon reaching the “Normal Retirement Date”, which is the first day of the month
on or after attainment of age 65. Pension benefit payments begin on the normal retirement date and continue until death.
Early
Retirement: A participant may choose to retire up to ten years before the normal retirement date. If a participant retires
early, the accrued pension will be reduced by a percentage to reflect the longer period over which pension benefits will be received.
If a participant is married for at least one year and dies before retirement, a pension benefit will be payable to the surviving
spouse for his or her life, provided certain eligibility requirements have been met.
Death
Benefits: Payments to a surviving spouse will begin on the first day of the month following a participant’s death but
not sooner than the earliest date a participant could have elected to retire.
Disability
Benefits: A disability benefit is the accrued pension credited to a participant as of the date of disability.
The
years of credited service, present value of accumulated plan benefits and payments made during the fiscal year were as follows:
For
the Fiscal Year ended October 30, 2020:
Name
|
|
Number of Years
Credited Service
|
|
|
Present Value
of Accumulated
Benefit (1)
|
|
|
Payments During
Fiscal Year
|
|
Allan L. Bridgford, Sr.
|
|
|
52
|
|
|
$
|
790,774
|
|
|
$
|
83,991
|
|
William L. Bridgford
|
|
|
47
|
|
|
$
|
943,829
|
|
|
$
|
—
|
|
John V. Simmons
|
|
|
41
|
|
|
$
|
768,068
|
|
|
$
|
—
|
|
Raymond F. Lancy
|
|
|
28
|
|
|
$
|
636,791
|
|
|
$
|
—
|
|
(1)
|
The
assumed discount rate used was 2.45% to compute the present value of the accumulated benefit. The Pri-2012 Total Dataset Mortality
Table with MP-2020 Scaling was used and an expected return on assets of 7.00% was assumed.
|
For
the Fiscal Year ended November 1, 2019:
Name
|
|
Number of Years
Credited Service
|
|
|
Present Value
of Accumulated
Benefit (1)
|
|
|
Payments During
Fiscal Year
|
|
Allan L. Bridgford, Sr.
|
|
|
52
|
|
|
$
|
845,273
|
|
|
$
|
82,750
|
|
William L. Bridgford
|
|
|
46
|
|
|
$
|
879,059
|
|
|
$
|
—
|
|
John V. Simmons
|
|
|
40
|
|
|
$
|
712,725
|
|
|
$
|
—
|
|
Raymond F. Lancy
|
|
|
27
|
|
|
$
|
635,798
|
|
|
$
|
—
|
|
(1)
|
The
assumed discount rate used was 3.00% to compute the present value of the accumulated benefit. The SOA RP-2014 Mortality Total
Dataset, adjusted to 2006 with Scale MP-2018 was used and an expected return on assets of 7.00% was assumed.
|
Supplemental
Executive Retirement Plan (SERP)
Payment
of Retirement Benefit: All retirement, disability and death benefits shall be paid in monthly installments beginning on the
commencement date following the participant’s retirement, disability or death and shall continue for a period of fifteen
years.
Normal
Retirement: Benefits commence upon reaching the “Normal Retirement Date”, which means the date on which the participant
has both attained age 65 and completed at least ten years of participation. SERP benefit payments begin at the normal retirement
date or later depending on the election of the participant.
Early
Retirement: A participant may choose to retire up to ten years before the normal retirement date if the participant has completed
at least five years of participation. If a participant retires early, the SERP benefit will be determined based on the vested
percentage attained as the time of retirement.
Death
Benefits: If a participant dies prior to having commenced receipt of benefits and is eligible for benefits hereunder, the
participant’s beneficiary shall be entitled to receive an annual death benefit equal to the Normal Retirement Benefit determined
as if the participant attained Normal Retirement Age on the date of his death, or, if after the Participant’s Normal Retirement
Date, equal to the Late Retirement Benefit. If a participant dies after having commenced receipt of benefits, benefits shall continue
to be paid but to the Participant’s Beneficiary at the same time and in the same form as the benefits would have been payable
to the participant. No benefit will be payable to a participant’s beneficiary if the participant terminates employment with
the Company before he is eligible for a retirement benefit and thereafter dies.
Disability
Benefits: A disability benefit is the vested percentage of SERP benefit credited to a participant as of the date of disability.
The
present value of accumulated plan benefits and payments made during the fiscal year were as follows:
For
the Fiscal Year ended October 30, 2020:
Name
|
|
Present
Value
of
Accumulated
Benefit (1)
|
|
|
Payments
During
Last Fiscal
Year
|
|
Allan L. Bridgford, Sr.
|
|
$
|
—
|
|
|
$
|
—
|
|
William L. Bridgford
|
|
$
|
2,518,270
|
|
|
$
|
—
|
|
John V. Simmons
|
|
$
|
—
|
|
|
$
|
—
|
|
Raymond F. Lancy
|
|
$
|
2,518,270
|
|
|
$
|
—
|
|
(1)
|
A
2.45% discount rate was used to compute the present values.
|
For
the Fiscal Year ended November 1, 2019:
Name
|
|
Present
Value
of
Accumulated
Benefit (1)
|
|
|
Payments
During
Last Fiscal
Year
|
|
Allan L. Bridgford, Sr.
|
|
$
|
—
|
|
|
$
|
—
|
|
William L. Bridgford
|
|
$
|
2,426,211
|
|
|
$
|
—
|
|
John V. Simmons
|
|
$
|
—
|
|
|
$
|
—
|
|
Raymond F. Lancy
|
|
$
|
2,426,211
|
|
|
$
|
—
|
|
(1)
|
A
3.00% discount rate was used to compute the present values.
|
The
following table estimates the present value of SERP benefits under different employment termination scenarios as of October 30,
2020:
Name
|
|
Present Value
of Benefit
Upon Voluntary
Termination
of Employment
(1)
|
|
|
Present Value
of Benefit
if Disabled
(1)
|
|
|
Present Value
of Benefit
Upon Death (1)
|
|
|
Present Value
of Benefit
Upon Involuntary
Termination of
Employment due to Sale/Merger/
Acquisition
(1)
|
|
Allan L. Bridgford, Sr.
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
William L. Bridgford (2)
|
|
$
|
2,518,270
|
|
|
$
|
2,518,270
|
|
|
$
|
2,518,270
|
|
|
$
|
2,518,270
|
|
John V. Simmons
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Raymond F. Lancy (2)
|
|
$
|
2,518,270
|
|
|
$
|
2,518,270
|
|
|
$
|
2,518,270
|
|
|
$
|
2,518,270
|
|
(1)
|
In
each scenario above, the benefit amount shown is calculated at October 30, 2020. A 2.45% discount rate was used to compute
the present values. In the case of a voluntary termination, the participant shall be entitled to the vested portion of any
such early retirement benefit but shall not commence receipt of such early retirement benefit until the commencement date
following the date the participant would have attained the early retirement date had the participant remained employed by
the Company. Upon a finding that the participant (or, after the participant’s death, a beneficiary) has suffered an
unforeseeable emergency, the Committee may at the request of the participant or beneficiary, and subject to compliance with
Internal Revenue Code Section 409A, accelerate distribution of benefits under the SERP in the amount reasonably necessary
to alleviate such unforeseeable emergency.
|
(2)
|
Death
benefits for William L. Bridgford and Raymond F. Lancy are paid in the form of a monthly annuity. The actual payment amount
for William L. Bridgford and Raymond F. Lancy would be determined using a discount rate similar to the rate required for qualified
plans. The rate assumed for these estimates is 2.45%.
|
The
following table estimates future SERP payments under different termination scenarios as of October 30, 2020:
Name
|
|
|
Payment Upon
Voluntary Termination
of Employment
|
|
|
|
Payment if
Disabled (1)
|
|
|
|
Death Benefit
from Plan (2)
|
|
|
|
Involuntary
Termination of
Employment Due
to Sale/Merger/
Acquisition
|
|
Allan L. Bridgford, Sr.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William L. Bridgford
|
|
|
$16,666.67 per month for 180 months beginning
on 10/30/20
|
|
|
|
$16,666.67 per month for
180 months commencing after disability
|
|
|
|
$16,666.67 per month for 180 months beginning
just after death
|
|
|
|
Lump Sum payment due at termination of $2,518,270
|
|
John V. Simmons
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond F. Lancy
|
|
|
$16,666.67 per month for 180 months beginning
on 10/30/20
|
|
|
|
$16,666.67 per
month for 180 months commencing after disability
|
|
|
|
$16,666.67 per month for 180 months beginning
just after death
|
|
|
|
Lump Sum payment due at termination of $2,518,270
|
|
(1)
|
Disability
amount is decreased by any Company paid disability insurance policies, Social Security disability benefits, or other Federal
or State disability programs. In the case of a voluntary termination, the participant shall be entitled to the vested portion
of any such early retirement benefit but shall not commence receipt of such early retirement benefit until the commencement
date following the date the participant would have attained the early retirement date had the participant remained employed
by the Company. Upon a finding that the participant (or, after the participant’s death, a beneficiary) has suffered
an unforeseeable emergency, the Committee may at the request of the participant or beneficiary, and subject to compliance
with Internal Revenue Code Section 409A, accelerate distribution of benefits under the SERP in the amount reasonably necessary
to alleviate such unforeseeable emergency.
|
|
|
(2)
|
Assumes
death on October 30, 2020. The discount rate used to calculate the lump sum amount is 2.45%.
|
See
“Compensation Discussion and Analysis – Total Compensation for Executive Officers — Pension and Retirement Benefits”
for further discussion of the pension benefits contained in the tables above.
Non-Qualified
Deferred Compensation
The
table below provides information concerning deferred compensation plan benefits for each NEO during the fiscal year ended October
30, 2020.
Name
|
|
|
Executive
Contributions
in
Fiscal Year
|
|
|
|
Company
Contributions
in
Fiscal Year
|
|
|
|
Aggregate
Earnings in
Fiscal Year
|
|
|
|
Aggregate
Withdrawals/
Distributions
|
|
|
|
Aggregate
Balance at
Fiscal Year
End
|
|
Allan L. Bridgford
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
William L. Bridgford
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
John V. Simmons
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Raymond F. Lancy
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The
table below provides information concerning deferred compensation plan benefits for each NEO during the fiscal year ended November
1, 2019.
Name
|
|
|
Executive
Contributions
in
Fiscal Year
|
|
|
|
Company
Contributions
in
Fiscal Year
|
|
|
|
Aggregate
Earnings in
Fiscal Year
|
|
|
|
Aggregate
Withdrawals/
Distributions
|
|
|
|
Aggregate
Balance at
Fiscal Year
End
|
|
Allan L. Bridgford
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
William L. Bridgford
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
John V. Simmons
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Raymond F. Lancy
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The
following table estimates the present value of non-qualified deferred compensation benefits under different employment termination
scenarios as of October 30, 2020:
Name
|
|
|
Present
Value
of Benefit at
Termination
of
Employment
|
|
|
|
Present
Value
of Benefit if
Disabled
|
|
|
|
Present
Value
of Benefit
Upon Death
|
|
|
|
Present Value
of Benefit Upon
Involuntary
Termination of
Employment Due to Sale/Merger/
Acquisition
|
|
Allan L. Bridgford
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
William L. Bridgford
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
John V. Simmons
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Raymond F. Lancy
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The
deferred compensation amounts are calculated using a crediting rate equal to Moody’s Average Seasoned Bond Rate, plus 2%.
This rate is subject to fluctuation. Upon death, the deferred compensation benefits are paid in a lump sum equal to the individual’s
remaining account balance.
See
“Compensation Discussion and Analysis – Total Compensation for Executive Officers – Non-Qualified Deferred Compensation”
for further discussion of the non-qualified deferred compensation benefits contained in the tables above.
Director
Compensation
The
table on the next page summarizes the total compensation paid by the Company to directors who were not employees during fiscal
year 2020. Directors who were employees did not receive any additional compensation for their services as directors.
Name
|
|
Fees Earned
or Paid in Cash
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
Non-Equity
Incentive Plan
Compensation
|
|
|
Non-Qualified
Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
|
|
|
Total
|
|
Todd C. Andrews
|
|
$
|
24,070
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,070
|
|
Allan L. Bridgford, Jr.
|
|
$
|
22,220
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
447,406
|
(1)
|
|
$
|
712,124
|
|
Keith A. Ross
|
|
$
|
24,600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
75,500
|
(2)
|
|
$
|
100,100
|
|
D. Gregory Scott
|
|
$
|
21,590
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,590
|
|
Mary Schott
|
|
$
|
27,100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,100
|
|
|
(1)
|
Effective
November 3, 2020, Allan L. Bridgford, Jr. resigned as a member of the Board of Directors. Consists of (i) $168,000 paid and
(ii) $279,406 to be paid over 3 years in equal annual installments to Allan L. Bridgford, Jr. for consulting services rendered
to the Company. See ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE for further details.
|
|
(2)
|
Consists
of $75,500 paid to Keith A. Ross for consulting services rendered to the Company. See ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE for further details.
|
Narrative
to Director Compensation Table
The
Company uses cash compensation to attract and retain qualified candidates to serve on its Board of Directors. In setting director
compensation, the Compensation Committee considers the demands that have been placed and will continue to be placed on the directors
and the skill-level required by its directors. In addition, as with the Company’s executive officers, compensation decisions
for directors are made in the context of the Company’s focus on controlling costs and increasing profitability.
The
directors are not paid an annual retainer for their service on the Board. Instead, each non-employee director was paid $2,380
for each of the first two Board meetings attended during fiscal year 2020 and $2,480 for each subsequent Board meeting attended
in fiscal year 2020. Members of the Audit Committee were paid $350 to $550 for each Audit Committee meeting attended in fiscal
year 2020 depending on the length of the meeting. Directors were not paid any additional compensation for their service on the
Nominating Committee in fiscal year 2020.
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Related
Transactions
The
Company’s general legal counsel is the son of Allan L. Bridgford, Sr. For his legal counsel, he currently is paid a fee
of $2,480 for each Board of Directors meeting attended. Total fees paid for attending Board of Directors meetings were $24,600
in fiscal year 2020 and $23,640 in fiscal year 2019. In addition, legal services are performed on behalf of the Company and billed
by a firm in which he is a partner. Total fees billed for legal services under this arrangement for each of fiscal years 2020
and 2019 were approximately $293,000 and $75,000, respectively.
Former
director Allan L. Bridgford, Jr., son of Allan L. Bridgford, Sr., is providing business consulting services to the Company. The
arrangement currently provides for business consulting services at $1,200 per day. Total fees billed under this arrangement were
approximately $168,000 in fiscal year 2020 and $207,000 in fiscal year 2019. In addition, under a separate consulting arrangement
for 2019, we accrued approximately $279,000 of profit sharing based on fiscal year 2020 profitability to be paid out in equal
installments over the next three years.
Director
Keith A. Ross provides real-estate consulting services to the Company. The arrangement currently provides for consulting services
at $250 per hour. Total fees paid for consulting services were $75,500 in fiscal year 2020 and zero during fiscal year 2019.
Other
than the relationships noted above, the Company is not aware of any related party transactions that would require disclosure as
a related party transaction under SEC rules.
Review,
Approval or Ratification of Transactions With Related Persons
The
Company’s executive officers, directors, nominees for directors and principal shareholders, including their immediate family
members and affiliates, are prohibited from entering into related party transactions with the Company that would be reportable
under Item 404 of Regulation S-K without the prior approval of its Audit Committee (or other independent committee of the Board
of Directors in cases where it is inappropriate for the Audit Committee to review such transaction due to a conflict of interest).
Any request for the Company to enter into a transaction with an executive officer, director, or nominee for director, principal
shareholder or any of such persons’ immediate family members or affiliates that would be reportable under Item 404 of Regulation
S-K must first be presented to the Audit Committee for review, consideration and approval. In approving or rejecting the proposed
agreement, the Audit Committee will consider the relevant facts and circumstances available and deemed relevant, including but
not limited to, the risks, costs, and benefits to the Company, the terms of the transactions, the availability of other sources
for comparable services or products, and, if applicable, the impact on director independence. The Audit Committee shall only approve
those agreements that, in light of known circumstances, are in or are not inconsistent with the Company’s best interests,
as determined in good faith by the Audit Committee (or other independent committee, as applicable). The requirement for the Audit
Committee to review related-party transactions (defined as those transactions required to be disclosed under Item 404 of Regulation
S-K) is set forth in the Amended and Restated Audit Committee Charter, which was approved on November 8, 2010.
Director
Independence
The
Company is considered a “controlled company” within the meaning of Rule 5615(c)(1) of the NASDAQ Listing Rules based
on the approximate 80% beneficial ownership of its outstanding common stock by Bridgford Industries Incorporated and are therefore
exempted from various NASDAQ Listing Rules pertaining to certain “independence” requirements of its directors. Nevertheless,
the Board of Directors has determined that Messrs. Andrews and Scott, and Ms. Schott who together comprise the Audit Committee
and the Compensation Committee, are all “independent directors” within the meaning of Rule 5605 of the NASDAQ Listing
Rules. Additionally, based on its status as a “controlled company,” the Company is not required to have a Nominating
Committee comprised solely of independent directors. Rather, the full Board fulfills the role of Nominating Committee and identifies
and screens new candidates for Board membership. Nevertheless, actions of the Board, in its role as Nominating Committee, can
be taken only with the affirmative vote of a majority of the independent directors on the Board, as defined by the NASDAQ Listing
Rules.