Notice of Annual Meeting of Shareholders
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DATE AND TIME Wednesday, March 12, 2025 12:00 p.m. Eastern Time |
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WHO CAN VOTE Shareholders of record as of 5:00 p.m. Eastern Time on January 15, 2025, will be entitled to notice of, and to vote at, the Annual Meeting, or any adjournment thereof. |
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LOCATION Online via live audiocast on
www.proxypush.com/LESL |
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VOTING ITEMS
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| Proposals |
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Board Vote Recommendation |
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For Further Details |
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| 1. |
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Election of three Class I directors and one Class II director, as named in this Proxy Statement |
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“FOR” each director nominee listed in Proposal 1 |
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Page 20 |
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| 2. |
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Ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending October 4, 2025 |
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“FOR” |
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Page 29 |
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| 3. |
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Non-binding, advisory vote to approve named executive officer compensation |
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“FOR” |
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Page 31 |
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| 4. |
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Adoption of Seventh Amended and Restated Certificate of Incorporation of Leslie’s, Inc. |
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Page 54 |
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| 4(a). |
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Adoption of the Removal Amendment, permitting the removal of directors with or without cause as of the 2027 Annual Meeting |
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“FOR” |
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Page 55 |
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| 4(b). |
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Adoption of the Exculpation Amendment, limiting the liability of certain Company officers |
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“FOR” |
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Page 56 |
Shareholders will also transact any other business that may be properly presented at the Annual Meeting. This Proxy Statement is first being made available to our shareholders on or about January [ ], 2025.
The purpose of the Annual Meeting is to consider and take action on the proposals stated above and discussed more thoroughly in the proxy materials. We are holding the Annual Meeting in a virtual-only format this year. To attend the Annual Meeting online, vote or submit questions during the meeting, shareholders of record will need to go to the meeting website listed above and log in using their 16-digit control number included on their proxy card. Beneficial owners should review these proxy materials and their voting instruction form for how to vote in advance of and how to participate in the Annual Meeting or, otherwise, contact their bank, broker or other nominee (preferably at least 5 days before the Annual Meeting) and obtain a “legal proxy” in order to be able to attend, participate in or vote at the annual meeting.
In the event of a technical malfunction or other situation that the meeting chair determines may affect the ability of the Annual Meeting to satisfy the requirements for a meeting of shareholders to be held by means of remote communication under the Delaware General Corporation Law, or that otherwise makes it advisable to adjourn the Annual Meeting, the chair or secretary of the Annual Meeting will convene the meeting at 12:30 p.m. Eastern Time on the date specified above and at the Company’s address specified below solely for the purpose of adjourning the meeting to reconvene at a date, time and physical or virtual location announced by the meeting chair. Under either of the foregoing circumstances, we will post information regarding the announcement on the Company’s Investor Relations page at https://ir.lesliespool.com/.
We encourage you to review these proxy materials and vote your shares before the Annual Meeting, your vote is important.
By Order of the Board of Directors,
Benjamin Lindquist
Senior Vice President, General Counsel and Corporate Secretary
2005 East Indian School Road
Phoenix, Arizona 85016
January [ ], 2025
Whether or not you expect to participate in the virtual annual meeting, please vote as promptly as possible in order to ensure your representation at the annual meeting. You may vote online or, if you requested printed copies of the proxy materials, by telephone or by using the proxy card or voting instruction form provided with the printed proxy materials.
HOW TO VOTE
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| INTERNET www.proxypush.com/LESL |
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TELEPHONE 1-866-286-3497 |
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MAIL Mark, sign, date and promptly mail
the enclosed proxy card in the
postage-paid envelope |
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| IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MARCH 12, 2025 The notice, Proxy Statement, and 2024 Annual Report on Form 10-K are available at www.proxydocs.com/LESL. |
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| Proxy Statement and Annual Meeting Report 2025 |
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PROXY STATEMENT SUMMARY
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE
Leslie’s strives to make a positive difference for all of our stakeholders – our customers, associates, shareholders, and the communities we serve. Our business strategy integrates sustainability and efficiency at its core, and we are committed to monitoring our performance along the way. Our fundamental focus is on delivering total solutions for pool and spa owners and our professional customer base. In fact, we believe that supporting the interests of all of our stakeholders is the foundation upon which we can build improved performance and strong financial results.
The actions and accomplishments presented in our annual ESG Reports, available at https://ir.lesliespool.com/esg, demonstrate how we prioritize and manage key ESG risks and opportunities. We believe that by dedicating the necessary attention and resources to internal programs and processes, we can enhance Leslie’s operational and reporting performance in areas including, but not limited to, diversity, equity and inclusion, environmental sustainability, product safety matters, supply chain matters, community engagement, water safety, and human capital management. In 2024 we continued our efforts to provide greater depth around waste and Scope 3 category data within our environmental management program. The measurement and management of Leslie’s sustainability efforts continues to propel Leslie’s forward as a leader in our industry.
Sustainability and Social Responsibility
Sustainability and social responsibility oversight has been a top priority for us since we became a public company in October 2020. From the outset, our Board of Directors (“Board”) has made sustainability and social responsibility priorities across our business units and through our management team. The responsibilities of the Board’s Nominating and Corporate Governance Committee include reviewing and monitoring sustainability and social responsibility matters and is reflected in the Committee’s Charter. Our sustainability and social responsibility oversight structure includes:
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Board: Governs and supports our corporate strategy and decision-making to confirm alignment with our mission, values, and strategy. |
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Board Committees: Remain informed and advise the Board on matters within their specific areas of expertise, such as cybersecurity, human capital management and supply chain matters, among others. |
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Sub-Committee of the Nominating and Corporate Governance Committee: Oversees the establishment, review, and observation of our sustainability priorities and outreach. |
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Management Team: Monitors and implements our strategies, policies, programs, and procedures and reports to the Board and its committees. |
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Chief People Officer: Oversees sustainability initiatives and serves as Chair of the Philanthropy Council and executive lead of our Dive In Council and Sustainability Working Group. |
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Sustainability Working Group: Guides the operational execution, monitoring, and reporting of our sustainability initiatives. |
More information on Leslie’s sustainability efforts is available on our Investor Relations page at https://ir.lesliespool.com/esg.
Diversity and Inclusion
Leslie’s is proud to have a culture of inclusion that motivates us to celebrate and embrace the different backgrounds and perspectives that drive our success. Our associates bring their own unique talents, qualities, and contributions to Leslie’s. Our executive leadership team, Diversity and Inclusion Advisory Council (Dive In), and associates from across the Company work together to welcome everyone and inspire each other, each and every day. We are working to foster and maintain an engaged and inclusive workplace that learns from one another through workshops, insight surveys, and our employee resource groups.
Leslie’s DEI program is advanced by the Dive In Council, which includes the Chief People Officer as its executive lead, and is made up of field and corporate members. Progress and initiatives are periodically reported to the CEO and the Board’s Compensation Committee. Among other things, Leslie’s requires annual unconscious bias training for all associates and held an inclusive
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| Proxy Statement and Annual Meeting Report 2025 |
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PROXY STATEMENT SUMMARY
leadership training with the executive team in fiscal year 2024. As part of our commitment to transparency, we have disclosed our workforce diversity data by gender, race and ethnicity in our consolidated EEO-1 report in 2023. Leslie’s EEO-1 Report can be found on our Investor Relations page at https://ir.lesliespool.com/esg.
Environmental, health, and safety management
Our highest operational priority is to have Leslie’s products and services offer safe and enjoyable experiences for our customers and associates. We seek to take a preventative and systematic approach to health and safety matters and to instill a culture of safety across the Company. We strive to emphasize and demonstrate our collective responsibility as members of the communities we work in, play in, and serve.
We also recognize that our manufacturing and distribution centers, offices, and retail stores, and the logistical decisions we make, each uniquely contribute to our resource use. Over the years, we have endeavored to improve our operational efficiencies by considering ways to enhance our monitoring programs and implement practices that reduce our impact. Leslie’s environmental management approach supports and supplements our compliance efforts by setting and achieving goals to reduce our environmental footprint in a holistic way.
Measures we have undertaken to understand our environmental impact include expanding our environmental monitoring program to encompass waste and an enhanced list of Scope 3 greenhouse gas (“GHG”) emissions alongside our current water, energy, and Scope 1 and 2 GHG emissions reporting. We aim to continue to align our ESG reporting with leading frameworks including the Sustainable Accounting Standards Board (“SASB”) standards and the United Nations Sustainable Development Goals (“UN SDGs”).
Sustainable products and supply chain
We strive to create backyard moments that are safe and enjoyable for people and the planet through the products we offer, the awareness we raise, the partners we engage, and even the packaging practices we apply. By monitoring and setting expectations within our supply chain, we aim to maintain and expand responsible practices throughout our day-to-day operations. In collaboration with our vendor partners, we strive to provide new innovative products that improve energy and water conservation and reduce chemical consumption.
Community engagement and water safety
Each day, we are inspired to serve others through the products we offer and the services we provide. We help dedicated pool owners meet their needs and build lasting backyard memories. We raise awareness and educate the public on proper water safety, and we support and partner with our local and national communities to make a difference in peoples’ lives. Guided by our Philanthropic Council and Charitable Foundation, we give back both in and out of the water.
Leslie’s philanthropic pursuits are guided by four core pillars and their respective pillar partners: (i) water safety and community: YMCA and Boys & Girls Club; (ii) diversity, equity and inclusion: NAACP; (iii) health and wellness: St. Jude Children’s Research Hospital; and (iv) disaster relief: American Red Cross. Leslie’s Philanthropy Council oversees the philanthropic programs and Leslie’s Charitable Foundation. In fiscal years 2021 through 2024, Leslie’s donated more than $2.9 million to support its core pillars and pillar partners. Programs Leslie’s has supported include drowning education campaigns with the American Red Cross and Boys & Girls Club, an annual charity dinner with St. Jude, a sickle-cell awareness blood drive and disaster relief support for local communities. Additionally, in its fiscal year ended September 28, 2024, Leslie’s awarded grants to U.S. small businesses in partnership with the NAACP.
HUMAN CAPITAL MANAGEMENT
As of September 28, 2024, we employed approximately 3,850 employees. Of these employees, approximately 3,010 work in our physical network, approximately 250 work as in-field service technicians, approximately 340 work in our corporate office, and approximately 250 work in our distribution centers. We believe that we have good relations with our employees. None of our employees are currently covered under any collective bargaining agreements.
Corporate Governance
DIRECTOR INDEPENDENCE
Nasdaq listing rules require a majority of a listed company’s board of directors to be comprised of independent directors who, in the opinion of the board of directors, do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Subject to specified exceptions, each member of a listed company’s audit, compensation and nominating committees must be independent, and audit and compensation committee members must satisfy additional independence criteria under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Our Board has undertaken a review of its composition, the composition of its committees and the independence of each director. Based upon information provided by each director, our Board has affirmatively determined that no person who served as a director during any part of fiscal year 2024, with the exception of Messrs. Egeck, Kufel, McDonell and Ortega (in each case, during the portion of fiscal year 2024 he served on the Board) has or had a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and that each director (except for Messrs. Egeck, Kufel, McDonell and Ortega) is independent under applicable Nasdaq rules. In making these determinations, our Board considered the current and prior relationships that each non-employee director who served during any part of fiscal year 2024 has or had with the Company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director, and the transactions involving them described in the section titled “Certain Relationships and Related Party Transactions.” In reaching its determination regarding Mr. Strain’s independence, the Board also considered his service as interim Chief Executive Officer of Leslie’s from August 24, 2024, until September 9, 2024. In particular, the Board considered whether such service would interfere with Mr. Strain’s exercise of independent judgment in carrying out his responsibilities as a director and as Chairman of the Board, including as a result of the compensation paid to Mr. Strain for his service and his status as an affiliate of the Company during his service as interim Chief Executive Officer. Our Board also affirmatively determined that each of the directors currently serving on the Audit Committee and the Compensation Committee satisfy the additional independence criteria applicable to directors on such committee under Nasdaq listing rules and the rules and regulations established by the Securities and Exchange Commission (“SEC”).
BOARD LEADERSHIP STRUCTURE
The Board annually reviews its leadership structure to evaluate whether the structure remains appropriate for the Company. The Board selects its Chairman and the Chief Executive Officer (“CEO”) in a way it considers is in the best interests of the Company. The Board does not have a policy on whether the role of Chairman and CEO should be separate or combined. The Board has determined, however, that whenever the Chairman is not an independent director, the Board shall appoint an independent director to serve as lead independent director.
Currently, the Board believes that the roles of Chairman and CEO should be separate and that the Chairman should be an independent director as this structure enables our independent Chairman to oversee corporate governance matters and our CEO to focus on leading the Company’s business. Our Chairman is John Strain, an independent director.
The Board believes that its programs for overseeing risk, as described under “Risk Oversight,” would be effective under a variety of leadership frameworks. Accordingly, the Board’s risk oversight function did not significantly impact its selection of the current leadership structure.
LEAD INDEPENDENT DIRECTOR
Whenever the chairperson is not an independent director, the Board will designate an independent director to serve as lead independent director. The Lead Independent Director’s responsibilities will include the following:
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presiding at all meetings of the Board at which the chairperson of the Board is not present, including executive sessions of non-employee directors and independent directors; |
CORPORATE GOVERNANCE
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approving information sent to the Board and overseeing that the scope, quality, quantity and timeliness of the flow of information between management and the Board is adequate for the Board to effectively and responsibly perform its duties; |
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consulting with the chairperson of the Board regarding agendas for all meetings of the Board as well as contributing to and approving them; |
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approving Board meeting schedules to provide that there is sufficient time for discussion of all agenda items; |
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serving as a liaison between the chairperson of the Board and the independent directors; and |
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if requested by major shareholders, being available for consultation and direct communication. |
In addition, the Lead Independent Director also will have the authority to call meetings of the independent directors.
DIRECTOR NOMINATIONS
In accordance with its charter, the Nominating and Corporate Governance Committee determines the qualifications, qualities, skills, and other expertise required to be a director and recommends to the Board criteria to be considered in selecting nominees for directors. These inform the committee’s annual evaluation of the experience and characteristics appropriate for Board members and director candidates in light of the Board’s composition, and the skills and expertise needed for effective operation of the Board and its committees. The Board and the Nominating and Corporate Governance Committee also seek to include qualified director candidates with a diversity of gender, ethnicity, tenure, skills and experience in each pool of candidates from which Board nominees are chosen, and the Nominating and Corporate Governance Committee will include gender and other historically underrepresented groups in such pool of candidates (and instruct any director search firm it engages to do so).
When identifying potential director candidates, the Nominating and Corporate Governance Committee relies on any source available for the identification and recommendation of candidates, including current directors, officers and shareholders. In addition, the Nominating and Corporate Governance Committee from time to time may engage a third-party search firm to identify or evaluate or assist in identifying or evaluating potential candidates, for which the third-party search firm will be paid a fee. The Nominating and Corporate Governance Committee also may engage a third-party to conduct a background check of the candidate. If the Nominating and Corporate Governance Committee determines to further pursue the candidate, the committee then will evaluate the extent to which the candidate meets the Board membership qualifications described below. The Nominating and Corporate Governance Committee reviews the qualifications of director candidates and incumbent directors in light of such criteria approved by Board, and any shareholder recommendations for director are evaluated in the same manner as other candidates considered by the Nominating and Corporate Governance Committee. Shareholders that wish to recommend a director candidate should follow the procedures set forth below under “Communications with Directors,” and shareholders that wish to nominate a director for election to our Board should follow the procedures described under the “Submission of Shareholder Proposals for the 2026 Annual Meeting” heading.
We generally believe it is important for our directors to possess the following qualifications and attributes: educational background, knowledge of our business, integrity, professional reputation, independence, wisdom, and ability to represent the best interests of our shareholders. In addition, the Board believes that diversity, including gender, race and ethnicity, brings a diversity of viewpoints to the Board that is important to the effectiveness of the Board’s oversight of the Company, and the Board and the Nominating and Corporate Governance Committee also evaluate candidates’ ability to contribute to the Board’s diversity, including with respect to gender, ethnic diversity, and diversity of professional experience, such as whether the person is a current or was a former chief executive officer or chief financial officer of a public company or the head of a division of a prominent international organization. The Board assesses its effectiveness in this regard as part of the annual Board and Board Committee annual self-assessment process described below.
The Nominating and Corporate Governance Committee recommends policies regarding director qualification requirements and the process for identifying and evaluating director candidates for adoption by the Board. The above-mentioned attributes, along with the leadership skills and other experiences of our officers and Board members described above, are expected to provide the Board with a diverse range of perspectives and judgment necessary to facilitate our goals of shareholder value appreciation through organic and acquisition-related growth.
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| Proxy Statement and Annual Meeting Report 2025 |
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CORPORATE GOVERNANCE
GOVERNANCE DOCUMENTS
The Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee each operate pursuant to written charters adopted by the Board. These charters, along with the Corporate Governance Guidelines and the Code of Ethics, are available at the Company’s website and in print to any shareholder who requests a copy. To access these documents from the Company’s website, go to ir.lesliespool.com and select “Governance Documents” from the “Governance” drop-down menu. Requests for a printed copy should be addressed to Corporate Secretary, Leslie’s, Inc., 2005 East Indian School Road, Phoenix, Arizona 85016.
INSIDER TRADING POLICY AND POLICIES PROHIBITING HEDGING OR PLEDGING
We maintain an Insider Trading Policy governing the purchase, sale and other dispositions of our securities by directors, officers, employees and certain others, such as contractors or consultants who have access to material nonpublic information, as well as their family members and/or controlled entities (collectively, “Covered Persons”). The policy is designed to promote compliance with applicable securities laws that prohibit certain persons who are aware of material nonpublic information about Leslie’s or its business partners from (i) trading in securities of that company or (ii) providing material non-public information to other persons who may trade on the basis of that information.
Among other things, the Insider Trading Policy prohibits all Covered Persons, including executive officers and directors, from engaging in short sales of the Company’s securities or investing in put options, call options or other derivative securities, such as warrants, stock appreciation rights or similar rights whose value is derived from the value of the Company’s common stock. However, exercising and holding employee stock options, RSUs or other equity-based awards granted under the Company’s equity compensation plans is not prohibited.
Further, the policy prohibits all Covered Persons, including executive officers and directors, from engaging in any form of hedging transaction involving the securities of the Company. The policy also prohibits such individuals from holding our securities in margin accounts and from pledging our securities as collateral for loans. We believe that these policies further align our executives’ interests with those of our shareholders. A copy of our Insider Trading Policy was filed as Exhibit 19.1 to our Annual Report on Form 10-K for the fiscal year ended September 28, 2024.
DIRECTOR OVERBOARDING POLICY
Our Corporate Governance Guidelines require that ordinarily, directors may not serve on the boards of more than four public companies, including the Board, and directors who are executive officers of public companies may not serve on the boards of more than two public company boards, including the Board. In addition, no member of the Audit Committee may serve simultaneously on the audit committees of more than three public companies, including the Company. Throughout the year, we monitor our directors’ time commitments and in considering each director nominee for appointment or reappointment at the annual meeting of stockholders, the Nominating and Corporate Governance Committee took into account each director’s public company leadership positions and other outside commitments to assess the director nominees’ compliance with our overboarding policy. In applying our policy to our director nominees, we have determined that they are all in compliance with the Company’s policy and none of the director nominees are overboarded. Our Nominating and Corporate Governance Committee reviews our overboarding policy as part of its annual review of our Corporate Governance Guidelines. We also review the overboarding policies of our institutional investors on an ongoing basis, including with the Nominating and Corporate Governance Committee, as appropriate.
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| Proxy Statement and Annual Meeting Report 2025 |
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Compensation Discussion and Analysis
In this Compensation Discussion and Analysis (“CD&A”) we provide an overview and analysis of our compensation program and policies, the material compensation decisions we have made under those programs and policies for fiscal year 2024 with respect to our NEOs, and the material factors that we considered in making those decisions.
In fiscal year 2024 we continued our ongoing executive compensation program. Our NEOs received a mix of base salary, annual cash bonus opportunities, and long-term equity incentives comprised of an equal value-based mix of performance vesting restricted stock units (“PSUs”) and time-vesting RSUs.
Our NEOs for fiscal year 2024 were: Mr. Egeck, our former CEO; Mr. Strain, our former Interim CEO; Mr. McDonell, our current CEO; Mr. Bowman, our CFO; Mr. Caspers, our Chief Stores Officer; Ms. Cramer, our Chief People Officer; and Mr. LaBode, our Chief Merchandising & Supply Chain Officer. Mr. Egeck’s employment was terminated without cause during fiscal 2024 and he resigned from the Company’s Board of Directors, effective August 24, 2024. In connection with his termination of employment, Mr. Egeck became entitled to the payments and benefits applicable under the Amended and Restated Employment Agreement, dated as of October 19, 2020, between Mr. Egeck and the Company (the “Egeck Employment Agreement”), upon a termination of employment by the Company without cause, in accordance with and subject to the terms thereof, including the Company’s receipt of an effective release of claims against the Company from Mr. Egeck. The terms of Mr. Egeck’s separation are described in further detail under “Potential Payments upon Termination or Change in Control.” In connection with Mr. Egeck’s termination, Mr. Strain was appointed as our Interim CEO and served in such position until Mr. McDonell was appointed our CEO on September 9, 2024.
EXECUTIVE COMPENSATION PHILOSOPHY
We believe our compensation philosophy and design are well aligned with the interest of our shareholders, as well as our performance culture, growth strategy, and desire to attract and retain high-quality executives. Our executive compensation philosophy is to provide an attractive, flexible and market-based compensation program tied to company and individual performance and aligned with the interests of our shareholders. In establishing compensation levels and designing the elements of our executive compensation program, we aim to set overall compensation levels that are both internally equitable and commensurate with the companies with which we compete for talent. The principal objectives of our executive compensation program are to attract and retain highly talented executives to serve in leadership positions and advance our long-term growth strategy. Within our ongoing program, we motivate such executives to succeed by providing compensation that is based on both short- and long-term performance and aligns the interests of our officers with those of our shareholders by delivering a substantial portion of the officers’ compensation through incentives that drive long-term enterprise value creation. We regularly review our executive compensation program with the goal of motivating our executive team to achieve our strategic goals and aligning their interests with those of our shareholders.
Consistent with the foregoing philosophy:
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At-risk compensation: For fiscal year 2024, approximately 58% of our non-CEO NEOs’ (in place at the beginning of the fiscal year) target direct compensation, comprised of base salary, target cash bonus opportunities, and regular annual cycle target long-term equity incentives, was at-risk.* |
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Pay for performance: Our performance against our incentive plan metrics for fiscal year 2024 was below the thresholds set at the beginning of the year. Accordingly, our NEOs received no cash bonuses for the fiscal year and forfeited the |
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We omitted Messrs. Egeck, Strain and McDonell from this calculation due to (i) Mr. Egeck’s departure during fiscal year 2024; (ii) Mr. Strain’s service as interim CEO thereafter; and (iii) Mr. McDonell’s employment commencing shortly prior to the end of fiscal year 2024. More information on our current and former CEOs’ compensation can be found in the “2024 Summary Compensation Table” in this section. |
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| Proxy Statement and Annual Meeting Report 2025 |
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COMPENSATION DISCUSSION AND ANALYSIS
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second tranche of their fiscal year 2023 PSUs (covering 2023-2024 performance). Additionally, the balance of their fiscal year 2023 PSUs are not currently anticipated to be earned and the fiscal year 2024 PSUs (covering 2024-2025 performance) are tracking below target. |
The following features of our compensation program are designed to align the interests of our executive team with those of our shareholders and with market best practice:
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| What We Do |
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| ✓ Grant compensation that is primarily at-risk and variable |
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û Allow hedging or pledging of Company stock |
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| ✓ Subject short- and long-term incentive compensation to measurable and rigorous goals |
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û Reprice stock options without shareholder approval |
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| ✓ Use an independent compensation consultant |
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û Provide excessive perquisites |
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| ✓ Cap incentive payments |
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û Provide supplemental executive retirement plans |
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| ✓ Structure compensation to avoid excessive risk taking |
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û Provide tax gross-ups with respect to a change in control |
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| ✓ Provide competitive compensation that is compared against a size appropriate industry peer group |
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û Provide “single trigger” change in control payments |
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| ✓ Maintain rigorous stock ownership guidelines |
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û Provide excessive severance benefits |
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| ✓ Have a robust recoupment policy |
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PROCESS FOR SETTING EXECUTIVE COMPENSATION
Generally, our Compensation Committee reviews and, as appropriate, modifies compensation arrangements for executive officers during the first quarter of each fiscal year (with equity grants generally made during the first quarter or early in the second quarter). The CEO reviews the performance and compensation of our executive officers and makes recommendations as to their compensation to the Compensation Committee. In making its decisions regarding executive compensation, the Compensation Committee meets outside the presence of executive officers when making final decisions about each executive officer. The CEO is periodically present during portions of these deliberations that relate to the compensation for other executives, but does not participate in any discussions regarding his own pay.
During fiscal year 2024, we engaged FW Cook as a third-party consultant to provide services including review and analysis of our executive compensation levels and practices, peer group review and corresponding market study, and long-term incentive plan design and equity grant practices. As part of this review process, the Board and the Compensation Committee applied its values, philosophy and understanding of market trends and practices, while considering the compensation levels needed to ensure that our executive compensation program remains competitive and aligned with the interests of our shareholders.
PEER GROUP
To assist the Compensation Committee in its review of executive compensation for fiscal year 2024, the Compensation Committee developed, with FW Cook, a peer group of similarly-situated companies to use for compensation benchmarking purposes. The peer group used to inform compensation decisions for fiscal year 2024 was comprised of:
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| Boot Barn Holdings, Inc. |
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Johnson Outdoors Inc |
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The AZEK Company, Inc. |
| Container Store Group, Inc. |
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MarineMax, Inc. |
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Topgolf Callaway Brands Corp. |
| Crocs, Inc. |
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Monro, Inc. |
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Trex Company |
| Floor & Décor |
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National Vision Holdings, Inc. |
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YETI Holdings, Inc. |
| Haverty Furniture Companies, Inc |
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Ollie’s Bargain Outlet Holdings, Inc. |
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The peer group is the same as the peer group that was used to inform fiscal year 2023 decisions. At the time the peer group was approved (May 2023), our market capitalization and trailing four quarters revenues were just below the median of the peer group. The peer group will continue to be reviewed annually to ensure it best represents the Company’s size, industry and scope of operations.
Peer group data were supplemented with national retail and general industry survey data, scoped by each executive’s revenue responsibility, to provide an additional market reference point.
COMPENSATION DISCUSSION AND ANALYSIS
ELEMENTS OF COMPENSATION
The compensation of our NEOs generally consists of base salary, annual cash bonus opportunities, long-term equity incentives in the form of equity awards and other benefits, each as described below.
Base Salary
Base salary is a fixed compensation element intended to attract and retain the talent necessary to successfully manage our business and execute our business strategies. Base salaries for our NEOs, including consideration for increases, are established based on the scope of their responsibilities, taking into account relevant experience, internal pay equity, tenure, competitive market practice, and other factors deemed relevant. Base salaries for our NEOs in fiscal year 2024 and 2023 were as follows:
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FY2024 |
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| Jason McDonell |
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850,000 |
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N/A |
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| John Strain(1) |
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— |
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44,000 |
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N/A |
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| Michael R. Egeck |
|
|
$ |
1,025,000 |
|
|
|
$ |
1,025,000 |
|
|
|
|
0% |
|
|
|
|
|
| Scott Bowman |
|
|
$ |
550,000 |
|
|
|
$ |
550,000 |
|
|
|
|
0% |
|
|
|
|
|
| Dave Caspers(2) |
|
|
$ |
— |
|
|
|
$ |
425,000 |
|
|
|
|
N/A |
|
|
|
|
|
| Naomi Cramer(2) |
|
|
$ |
— |
|
|
|
$ |
400,000 |
|
|
|
|
N/A |
|
|
|
|
|
| Moyo LaBode |
|
|
$ |
425,000 |
|
|
|
$ |
425,000 |
|
|
|
|
0% |
|
| (1) |
Mr. Strain received this amount as his salary for serving as our Interim CEO. |
| (2) |
As Mr. Caspers and Ms. Cramer were new NEOs in fiscal 2024, their fiscal 2023 base salaries are not included. |
Annual Cash Bonus Opportunities
The target performance-based cash bonus opportunity for each of the NEOs is expressed as a percentage of his or her base salary and can be earned by meeting certain predetermined corporate performance objectives, subject to an individual/strategic performance modifier. Fiscal year 2024 annual cash bonuses for Mr. Egeck, was targeted at 100% of his base salary, for Mr. Bowman was 100% of his base salary, and for Mr. Caspers, Ms. Cramer, and Mr. LaBode were targeted at 50% of their base salaries. For the NEOs, the target percentages did not change from those in effect for fiscal year 2023. Mr. McDonell was not eligible for participation in the fiscal 2024 performance-based cash bonus due to the timing of his hire. His target annual cash bonus for the fiscal year 2025 was set at 100% of base salary. Mr. Strain was not eligible for participation in the fiscal 2024 performance-based cash bonus due to his role as Interim CEO.
The Board set corporate performance objectives based on the achievement of an annual Adjusted EBITDA target, which the Board believed to best align the interest of the NEOs and our shareholders. The Board established the following matrix to map Adjusted EBITDA performance to bonus earnouts, with pre-established threshold, target and maximum performance levels, with linear interpolation applying between such levels.
Adjusted EBITDA is defined as earnings before interest (including amortization of debt issuance costs), taxes, depreciation and amortization, management fees, equity-based compensation expense, loss on debt extinguishment, costs related to equity offerings, strategic project costs, executive transition costs, loss (gain) on disposition of assets, mark-to-market on interest rate cap and other non-recurring, non-cash or discrete items.
|
|
|
|
|
|
|
|
|
|
|
| |
|
Adjusted EBITDA(1) |
|
Payout as % of Target |
|
|
|
| Threshold |
|
|
$ |
160.0 M |
|
|
|
|
25% |
|
|
|
|
| Target |
|
|
$ |
180.0 M |
|
|
|
|
100% |
|
|
|
|
| Maximum |
|
|
$ |
200.0 M |
|
|
|
|
200% |
|
|
|
|
| Actual |
|
|
$ |
108.7 M |
|
|
|
|
0% |
|
| (1) |
Adjusted EBITDA is a non-GAAP metric and was as reported in the Company’s Annual Report on Form 10-K for fiscal year 2024. |
|
|
|
|
|
| Proxy Statement and Annual Meeting Report 2025 |
|
|
37 |
|
COMPENSATION DISCUSSION AND ANALYSIS
The amount earned relative to corporate performance was then subject to potential modification upwards by up to 20% or downwards by up to 100% (i.e. 0% to 120% of the amount earned relative to corporate performance) based on performance against individual and strategic objectives, on a zero-sum basis across all eligible employees of the Company, including our NEOs who were eligible to participate in the annual bonus plan. For fiscal year 2024 the individual and strategic objectives for the NEOs who were eligible to participate in the annual bonus plan were focused on diversity, equity and inclusion, where, in each case improvements were achieved.
Based on actual fiscal year 2024 Adjusted EBITDA performance of $108.7million, no bonuses were earned for 2024, as reflected in the “Summary Compensation Table” below.
New Hire Bonus and Equity Grant
In connection with his appointment as CEO during fiscal year 2024, Mr. McDonell received a cash sign-on bonus of $350,000 which was paid on his first payroll processing date following the effective date of his appointment and is subject to repayment in the event of resignation or termination for cause prior to completing twelve full months of employment. In addition, because Mr. McDonell did not participate in our fiscal 2024 annual equity program described below due to the commencement date of his employment, he also received an equity grant of RSUs with a target grant date value of $1,150,000 in September 2024, which will vest in equal annual installments over a four-year period, and was granted an equity grant of PSUs with a target grant date value of $1,150,000 in December 2024, at the time regular, annual cycle awards are made to the Company’s NEO’s, which will vest over a three-year period.
Long-Term Equity Incentives
In fiscal year 2023, we commenced an ongoing annual equity grant program which we continued for fiscal year 2024. As a part of the regular, annual grant cycle, each of the NEOs, other than Mr. McDonell and Mr. Strain, received equity grants comprised 50% of PSUs and 50% of RSUs. Mr. Egeck received such annual equity grants in fiscal year 2024, prior to his separation, which were forfeited upon his separation. Also, as discussed further below, certain additional RSU grants were made during fiscal year 2024.
Mr. Strain was not eligible for equity awards in his role as Interim CEO; he did receive RSUs for his service as a member of the Board of Directors. Refer to discussion under “Director Compensation” elsewhere in Corporate Governance for a description of the director compensation program.
Fiscal Year 2024 Restricted Stock Units
During fiscal year 2024, each of the NEOs, other than Mr. McDonell and Mr. Strain, received RSUs equal to 50% of target equity values as a part of the regular, annual grant cycle.
Additionally, during the fiscal year, Messrs. Bowman, Caspers and LaBode, and Ms. Cramer received an additional grant of RSUs as retention awards to support stability during the CEO succession period.
In each case, with the exception of the retention RSUs, the RSUs vest in equal, annual installments over four years, subject to continued employment. The retention RSUs vest in annual installments over two years, subject to continued employment.
Fiscal Year 2024 Performance Stock Units
In fiscal year 2024, we continued to grant PSUs to all NEOs, with the exception of Mr. McDonell due to his commencement of employment towards the end of our fiscal year and Mr. Strain, who was not eligible for equity awards in his role as Interim CEO.
COMPENSATION DISCUSSION AND ANALYSIS
The PSUs are subject to cumulative Adjusted Net Income and revenue goals, weighted 75% and 25%, respectively. For the 2024 PSU program, there is a two- year performance period, covering fiscal years 2024 and 2025; PSUs are eligible to vest at 0-200% of target. Payouts of earned PSUs occur 50% in the first quarter of fiscal year 2026 and 50% in the first quarter of fiscal year 2027, subject to continued employment.
“Adjusted Net Income” for purposes of the PSUs is defined as net income (loss) adjusted to exclude equity-based compensation expense; loss on debt extinguishment; costs related to debt or equity offerings; strategic project costs; executive transition or reorganization costs; gain or loss on disposition of assets; mark-to-market on interest rate hedging contracts; non-recurring transaction and transition costs related to a merger, acquisition, divestiture, or joint venture; the impact on net income from an acquisition or divesture that occurs during the applicable measurement period with a purchase or sale price that is greater than $150 million; material litigation charges or gains; goodwill impairment charges; items related to changes in accounting principles, applicable law or regulations; and other non-recurring, non-cash or discrete items as determined to be appropriate by the Compensation Committee (which may include adjustments taken into account in calculating Adjusted Net Income as reported by the Company in one or more of its earnings releases for the applicable Performance Period), in each case, as determined by the Compensation Committee to be appropriate taking into account all relevant objective information or financial data.
Fiscal Year 2023 Performance Stock Units
In fiscal year 2023, we granted PSUs for the first time to all NEOs serving at the time. The PSUs are subject to cumulative Adjusted Net Income and revenue goals, weighted 75% and 25%, respectively. For the 2023 PSU program, there are one-, two-, and three-year performance periods, after each of which one-third of the target number of PSUs is eligible to vest (at 0% - 200% of target) based on actual performance. As discussed in last year’s Proxy Statement, the first tranche was forfeited as a result of fiscal year 2023 performance.
One-third of the target number of PSUs were eligible to vest based on the following fiscal years 2023-2024 performance goals:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Performance Level |
|
Achievement
Percentage |
|
2023-2024 Cumulative
Adjusted
Net Income(1) |
|
2023-2024 Cumulative Revenue(1) |
|
|
|
|
| Threshold |
|
|
|
50 |
% |
|
|
$ |
480M |
|
|
|
$ |
4,810M |
|
|
|
|
|
| Target |
|
|
|
100 |
% |
|
|
$ |
540M |
|
|
|
$ |
5,130M |
|
|
|
|
|
| Maximum |
|
|
|
200 |
% |
|
|
$ |
605M |
|
|
|
$ |
5,470M |
|
|
|
|
|
| Actual |
|
|
|
0 |
% |
|
|
$ |
50.0M |
|
|
|
$ |
2,781.3M |
|
| (1) |
As reported in the Company’s Annual Report on Form 10-K for fiscal years 2023 and 2024. |
Based on performance over the two-year performance period, the second tranche of the PSUs did not vest.
Other benefits
We currently provide broad-based welfare benefits to our NEOs that are available to all of our employees, including health, dental, life, vision and disability insurance.
In addition, we maintain, and certain of the NEOs participate in, a 401(k) plan that provides eligible employees with an opportunity to save for retirement on a tax-advantaged basis and under which we are permitted to make discretionary employer contributions. Employees’ pre-tax contributions are allocated to their respective individual accounts and are then invested in selected investment alternatives according to their directions. The 401(k) plan is intended to be qualified under Section 401(a) of the Code. We currently match participant contributions to the 401(k) plan up to 4% of eligible earnings, up to IRS limits.
We do not maintain any defined benefit pension plans or non-qualified deferred compensation plans.
|
|
|
|
|
| Proxy Statement and Annual Meeting Report 2025 |
|
|
39 |
|
COMPENSATION DISCUSSION AND ANALYSIS
Post-Employment Compensation Arrangements
The NEOs are entitled to certain severance benefits, the terms of which are described below under “Potential Payments upon Termination or Change in Control.” The severance benefits are an essential element of the overall executive compensation package and assist the Company in recruiting and retaining talented individuals and aligning the executive’s interests with the best interests of the shareholders. The terms of Mr. Egeck’s separation are described in further details under “Potential Payments upon Termination or Change in Control.”
OTHER MATTERS
Risk Assessment
During fiscal year 2024, the Compensation Committee worked with FW Cook and management to assess our compensation policies and practices. Our Board and our Compensation Committee do not believe that our executive and non-executive compensation programs encourage excessive or unnecessary risk taking, and any risk inherent in our compensation programs is unlikely to have a material adverse effect on us.
Say-on-Pay
Our Compensation Committee considers feedback from our shareholders and the results of our Say-on-Pay vote in making compensation decisions for our NEOs. Our 2024 Say-on-Pay vote reflected approximately 97.6% support from our shareholders, based on the percentage of shares voted. The Compensation Committee believes this indicates that our shareholders support the philosophy, strategy, objectives, and administration of our executive compensation program.
Clawback/Forfeiture
Our Board has adopted a clawback policy that complies with the Nasdaq listing standards and provides for the recoupment of certain cash or equity-based compensation in the event the Company is required to restate its financial statements due to the Company’s material noncompliance with any financial reporting requirements under the securities laws.
In addition, pursuant to Leslie’s, Inc. Amended and Restated 2020 Omnibus Incentive Plan, if the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with any financial reporting requirement under the securities laws, then the Compensation Committee may require a participant to disgorge or forfeit to the Company that portion of time- and/or performance-based awards that were granted, earned or vested during the Company’s three completed fiscal years immediately preceding the date the Company is required to prepare the accounting restatement, that the Compensation Committee determines was in excess of the amount that would have been granted, earned or vested during such period based on the restated results. This recoupment policy applies to awards granted on or after the effective date of the Leslie’s, Inc. Amended and Restated 2020 Omnibus Incentive Plan. Further, the plan administrator has the full power to terminate or cause a participant to forfeit an award and require the participant to disgorge to the Company any gains attributable to the award, if the participant engages in any action constituting cause for termination, or a breach of a material Company policy, any award agreement, or any other agreement between the participant and the Company concerning noncompetition, nonsolicitation, confidentiality, trade secrets, intellectual property, nondisparagement, or similar obligations.
COMPENSATION DISCUSSION AND ANALYSIS
Share Ownership Guidelines
Our Board believes that, in order to more closely align the interests of our NEOs and other designated officers with the long-term interests of the Company’s shareholders, all NEOs and other designated officers should maintain a minimum level of equity interests in the Company’s common stock. Such stock ownership guidelines are based on the value of common stock owned as a multiple of base salary. The guidelines will be reviewed annually and revised as appropriate to keep pace with competitive and good governance practices. The multiples are set based upon each officer’s position, as set forth below:
|
|
|
|
|
| Position |
|
Stock
Ownership
Multiple |
|
|
|
| Chief Executive Officer |
|
|
6x base salary |
|
|
|
| Chief Financial Officer & Chief Operating Officer (if any) |
|
|
3x base salary |
|
|
|
| Other Designated Officers |
|
|
2x base salary |
|
For purposes of determining stock ownership levels, the following forms of equity interests in the Company are included: common stock of the Company; Company restricted stock or RSUs granted under the Company’s 2020 Omnibus Incentive Plan (or any predecessor or successor plan) which are to be settled in shares of common stock, except to the extent such restricted stock or RSUs are subject to vesting conditions other than conditions based solely on the passage of time and continued service; and common stock of the Company held for the individual’s account in the 401(k) Plan. Unearned performance-based restricted stock or PSUs, and shares underlying unexercised stock options (whether vested or unvested, whether time- or performance-based and whether in-the-money or not) do not count as stock owned for purposes of the guidelines. Under the guidelines, NEOs and other designated officers are required to hold 50% of the net shares resulting from stock option exercises or vesting of other stock-based awards until they reach the applicable level. In the case of time-vested RSUs in the categories above which are not yet fully vested, only a portion representing the net after-tax holdings at vesting will count as stock owned. For purposes of calculating these estimated net holdings, the tax withholding rate assumed to apply at vesting shall equal 40%.
As of the record date, all NEOs who were still serving as executive officers on such date were in compliance with the guidelines either by virtue of holding the required number of shares or by compliance with the 50% retention ratio.
Prohibition on Hedging or Pledging
We have a policy prohibiting all executive officers and directors from engaging in any form of hedging transaction involving the securities of the Company. The policy addresses short sales and transactions involving publicly traded options and also prohibits such individuals from holding our securities in margin accounts and from pledging our securities as collateral for loans. We believe that these policies further align our executives’ interests with those of our shareholders.
Tax Deductibility
In connection with its determination of the various elements of compensation for our executive officers, the Compensation Committee has taken into account the impact of Section 162(m) of the Internal Revenue Code on the deductibility of compensation for federal income tax purposes. Section 162(m) limits the deductibility of compensation paid to covered employees to $1 million annually. Notwithstanding Section 162(m), the Compensation Committee has the discretion to design and implement elements of executive compensation that may not be fully deductible for income tax purposes.
Equity Grant Timing
The Compensation Committee does not take material nonpublic information into account when determining the timing and terms of equity awards and has not timed the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.
|
|
|
|
|
| Proxy Statement and Annual Meeting Report 2025 |
|
|
41 |
|
COMPENSATION DISCUSSION AND ANALYSIS
| (2) |
Amounts shown assume an involuntary termination without cause or termination by the executive for good reason following a change of control and represent the value of unvested awards of RSUs, and PSUs that would have otherwise been earned had target performance been met and for which the attributable measurement period has not lapsed. |
| (3) |
Valued upon the closing price of our common stock on the NASDAQ as of September 27, 2024, the last trading day of our fiscal year, of $2.86 per share. |
NEO TERMINATION DURING THE FISCAL YEAR
Under the Egeck Employment Agreement, upon a termination by the Company without “cause” or by Mr. Egeck for “good reason” (each as defined in his employment agreement), Mr. Egeck was be entitled to severance pay equal to two times the sum of his base salary and target bonus, payable in equal monthly installments over the 24-month period following his termination. Mr. Egeck must execute a release of claims in favor of the Company as a condition to receipt of severance.
The Egeck Employment Agreement also contains restrictive covenants prohibiting him from: (i) competing against the Company for 24 months after termination of his employment, (ii) soliciting (or interfering with the Company’s relationships with) the Company’s employees, consumers or suppliers for 24 months after termination of his employment, and (iii) disclosing the Company’s proprietary information, developments and other intellectual property.
Mr. Egeck’s employment was terminated by the company without cause during fiscal 2024 and he resigned from the Company’s Board of Directors, effective August 24, 2024. In connection with his termination of employment, Mr. Egeck became entitled to the payments and benefits applicable under the Egeck Employment Agreement upon a termination of employment by the Company without cause, in accordance with and subject to the terms thereof, including the Company’s receipt of an effective release of claims against the Company from Mr. Egeck. Mr. Egeck was entitled to $4.1 million to be paid out in equal monthly installments over 24 months. Additionally, all of Mr. Egeck’s unvested RSUs and PSUs were forfeited and all remaining vested stock options will be forfeited, unless exercised within 90 days.
CEO PAY RATIO
Pursuant to the Exchange Act, we are required to disclose in this proxy statement the ratio of the total annual compensation of Mr. McDonell, our CEO on the date we identified our median employee, to the median of the total annual compensation of all of our employees (excluding our CEO). Based on SEC rules for this disclosure and applying the methodology described below, we have determined that our CEO’s total compensation for fiscal year 2024 was $2,384,735. Our CEO’s compensation was calculated based on what is reported in the Summary Compensation Table plus an additional amount that reflects the annualization of his compensation, consistent with SEC rules. The median of the total compensation of all of our employees (excluding our CEO) for fiscal year 2024 was $40,040. Accordingly, we estimate the ratio of our CEO’s total compensation for fiscal year 2024 to the median of the total compensation of all of our employees (excluding our CEO) for fiscal year 2024 to be 60 to 1.
We selected September 28, 2024, our 2024 fiscal year end, as the date we would use to identify our median employee. To identify the median-compensated employee (excluding our CEO), we used the amount of the employee’s base compensation and cash bonuses. In making this determination, we annualized compensation for those full-time and part-time employees who did not work for the Company for the entire fiscal year and did not make any cost-of-living adjustments in identifying the median employee.
This pay ratio is an estimate calculated in a manner consistent with SEC rules based on the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
|
|
|
|
|
| Proxy Statement and Annual Meeting Report 2025 |
|
|
49 |
|
PROPOSAL 4: ADOPTION OF SEVENTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF LESLIE’S, INC.
PROPOSAL 4(A) — ADOPTION OF THE REMOVAL AMENDMENT, PERMITTING THE REMOVAL OF DIRECTORS WITH OR WITHOUT CAUSE EFFECTIVE AS OF THE 2027 ANNUAL MEETING
The Certificate of Incorporation provides that directors may only be removed from office for cause. The Removal Amendment, if approved, would provide for the removal of directors either with or without cause, effective as of the 2027 Annual Meeting, when the Board will be fully declassified which is consistent with Section 141(k) of the DGCL. Even if this amendment is not approved by our shareholders, from and after the 2027 Annual Meeting, we will not enforce this provision of the Certificate of Incorporation and directors will be able to be removed by the shareholders, from and after the 2027 Annual meeting, with or without cause as provided for under Section 141(k) of the DGCL.
Purpose and Effect of the Amendment
Currently, Article VI, Section C of the Certificate of Incorporation permits removal of a director from the Board only for cause, by an affirmative vote of the holders of at least 66 2/3% of the voting power of all then-outstanding shares of stock of the Company entitled to vote thereon. The Removal Amendment, if approved, would instead allow for the removal of directors upon such vote either with or without cause, as provided for under Section 141(k) of the DGCL effective as of the 2027 Annual Meeting, when the Board will be fully declassified.
In addition, contingent upon the approval of either of Proposals 4(a) or 4(b), the Proposed Restated Certificate would make other technical and administrative amendments to the Certificate of Incorporation, discussed below under “—Technical and Administrative Amendments.”
Reasons for the Amendment
The DGCL permits any director or the entire board of directors of the Company to be removed by a corporation’s shareholders, with or without cause, upon such vote as may be specified in a corporation’s certificate of incorporation or the DGCL, as applicable. In the case of a corporation whose board is classified, however, shareholders may effect such removal only for cause, unless the certificate of incorporation provides otherwise.
While the Board currently remains classified, the Board will become fully declassified at the time of the 2027 Annual Meeting. The Board has proposed this amendment to be consistent with the requirements of the DGCL upon the declassification of the Board at the 2027 Annual Meeting.
Vote Required for this Amendment
Approval of this Proposal 4(a) will require the affirmative vote of the holders of at least 66 2/3% of the outstanding shares of the Company’s common stock entitled to vote on this matter at the Annual Meeting. Abstentions and broker non-votes will have the effect of votes “against” Proposal 4(a). Approval of the Removal Amendment pursuant to this proposal is not conditioned on the approval of Proposal 4(b). However, if Proposal 4(b) is also approved by shareholders, then the Proposed Restated Certificate that the Company files will provide for the Removal Amendment as well as the Exculpation Amendment, and the technical and administrative amendments discussed below under “—Technical and Administrative Amendments.” If shareholders do not approve this proposal by the requisite vote, then the Removal Amendment will not be included in the Proposed Restated Certificate (if any) filed with the Secretary of State of the State of Delaware.
|
|
|
|
|
|
|
|
Our Board recommends a vote “FOR” the adoption of the Removal Amendment. |
|
|
|
|
|
|
|
| Proxy Statement and Annual Meeting Report 2025 |
|
|
55 |
|
PROPOSAL 4: ADOPTION OF SEVENTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF LESLIE’S, INC.
PROPOSAL 4(B) — ADOPTION OF THE EXCULPATION AMENDMENT, LIMITING THE LIABILITY OF CERTAIN COMPANY OFFICERS
The State of Delaware, where the Company is incorporated, enacted legislation in 2022 that expands exculpation protection to officers, thereby enabling companies to eliminate the monetary liability of certain officers in certain circumstances, similar to, but more limited than, the protection already afforded to directors under the Certificate of Incorporation. In line with this update to the DGCL, the Exculpation Amendment would amend the Certificate of Incorporation to extend exculpation to certain of the Company’s officers to the fullest extent permitted by Delaware law.
Purpose and Effect of the Proposed Amendment
Effective August 1, 2022, Section 102(b)(7) of the DGCL was amended to permit Delaware corporations to include, in their certificates of incorporation, limitations of monetary liability for certain of their officers. Under Section 102(b)(7) as currently in effect, those officers consist of: (i) the president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer or chief accounting officer; (ii) individuals who are or were identified in the corporation’s public filings as its most highly compensated officers; and (iii) individuals who, by written agreement with the corporation, consented to be identified as officers for purposes of accepting service of process (such officers from time to time specified in Section 102(b)(7) of the DGCL, the “covered officers”).
The Exculpation Amendment would exculpate the covered officers only in connection with direct claims brought by shareholders, including class actions by adding a new Article XI to the Certificate of Incorporation. Consistent with Section 102(b)(7) of the DGCL as currently in effect, the Exculpation Amendment would not eliminate or limit liability with respect to any:
| |
• |
|
claims brought by the Company itself; |
| |
• |
|
claims brought by shareholders in the name of the Company, such as derivative claims; |
| |
• |
|
claims involving breach of the duty of loyalty to the Company or its shareholders; |
| |
• |
|
claims involving acts or omissions not made in good faith or which involve intentional misconduct or knowing violations of the law; or |
| |
• |
|
claims involving transactions from which the covered officer derived an improper personal benefit. |
For the avoidance of doubt, the current exculpation protections available to the Company’s directors would remain unchanged as a result of the Exculpation Amendment. Notwithstanding the foregoing, consistent with the language for exculpation of directors currently included in the Certificate of Incorporation, the Exculpation Amendment also provides that if, at any time following the effectiveness of the Exculpation Amendment, the DGCL is amended to authorize any further elimination or limitation of the personal liability of a corporation’s covered officers (including any change in the roles deemed to be covered officers for purposes of Section 102(b)(7) of the DGCL), then such liability shall be automatically eliminated or limited to the fullest extent permitted by the DGCL, as so amended, with respect to the Company’s covered officers (including with respect to any role newly deemed to be a covered officer for purposes of Section 102(b)(7) of the DGCL).
In addition, contingent upon the approval of either of Proposals 4(a) or 4(b), the Proposed Restated Certificate would make other technical and administrative amendments to the Certificate of Incorporation, discussed below under “—Technical and Administrative Amendments.”
Reasons for the Amendment
The Board believes that it is important to extend exculpation protection to the covered officers, to the fullest extent permitted by the DGCL, in order to better position the Company to attract and retain qualified and experienced officers. In the absence of such protection, such individuals might be deterred from serving as officers due to the exposure to personal monetary liability and the risk of incurring substantial expense in defending lawsuits, regardless of merit.
The nature of officers’ roles often requires them to make decisions on crucial matters, frequently in response to time-sensitive opportunities and challenges, which can create substantial risk of lawsuits that seek to impose liability with the benefit of hindsight. Aligning, in part, the protections available to the Company’s covered officers with those currently available to its directors would empower officers to exercise their business judgment in furtherance of shareholder interests, without the potential distractions posed by the risk of personal monetary liability.
Certain Relationships and Related Party Transactions
POLICIES AND PROCEDURES FOR THE COMPANY’S RELATED PERSON TRANSACTIONS
Our Audit Committee charter provides that our Audit Committee must review, approve and oversee any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K) on an ongoing basis, in accordance with Company policies and procedures.
Related person transaction policy
We have adopted a written Related Party Transaction Policy that sets forth our policy that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of any class of our common stock and any members of the immediate family of any of the foregoing persons are not permitted to enter into a related person transaction with us without the approval or ratification of our Audit Committee or other independent body of our Board. Any request for us to enter into a transaction with an executive officer, director, nominee for election as a director, beneficial owner of more than 5% of any class of our common stock, or any member of the immediate family of any of the foregoing persons, in which the amount involved exceeds $120,000 and such person would have a direct or indirect interest, must be presented to our Audit Committee or other independent body of our Board for review, consideration, and approval. In approving or rejecting any such proposed transaction, our Audit Committee or other independent body of our Board considers the relevant facts of the transaction, including the risks, costs, and benefits to us and whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances.
RELATED PARTY TRANSACTIONS
Other than compensation arrangements for our directors and executive officers, which are described elsewhere in this Proxy Statement, below we describe transactions since October 1, 2023 to which we were a party or will be a party, and in which:
| |
• |
|
the amounts exceeded or will exceed $120,000; and |
| |
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any of our directors, executive officers, or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest. |
Indemnification agreements
Our Certificate of Incorporation contains provisions limiting the liability of directors, and our amended and restated bylaws provide that we will indemnify each of our directors and officers to the fullest extent permitted under Delaware law. Our Certificate of Incorporation and amended and restated bylaws provide our Board with discretion to indemnify our employees and other agents when determined appropriate by the Board. In addition, we have entered into an indemnification agreement with each of our directors and executive officers, which requires us to indemnify them.
Director family relationship
There are no family relationships among any of our directors or executive officers. Stephen Ortega, an employee of the Company who serves as a Category Director, is the son of Steven Ortega, the former Chairman of the Board. During fiscal year 2024, Stephen Ortega earned approximately $134,000 in compensation. He was also granted restricted stock units with respect to 3,600 RSUs, vesting over a four-year period. His compensation is consistent with the total compensation provided to other employees of the same level with similar responsibilities.
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Questions and Answers About the Annual Meeting
This Proxy Statement is being provided to you in connection with the solicitation of proxies by the Board of the Company for use at the Annual Meeting to be held on Wednesday, March 12, 2025 at 12:00 p.m. Eastern Time, or at any adjournments or postponements thereof.
WHERE IS THE ANNUAL MEETING BEING HELD?
We are pleased to inform you that this year’s meeting will again be a virtual meeting, which will be conducted via live webcast. You will be able to attend the annual meeting online, vote your shares electronically, and submit your questions during the meeting by visiting www.proxypush.com/LESL.
Our Board considers the appropriate format for our annual meeting of shareholders on an annual basis. We are pleased to continue to embrace the latest technology to provide expanded access, improved communication, and cost savings for our shareholders and Leslie’s. Our virtual format allows shareholders to submit questions and comments and to vote during the meeting. We believe the virtual meeting format allows our shareholders to engage with us no matter where they live, and is accessible and available on any internet-connected device, be it a phone, a tablet, or a computer. We believe that a virtual meeting allows our shareholders to have robust engagement with Leslie’s, and is in the best interests of our shareholders at this time.
HOW CAN I PARTICIPATE IN AND VOTE AT THE ANNUAL MEETING ONLINE?
Shareholders of record as of 5:00 p.m. Eastern Time on January 15, 2025, the record date, are entitled to participate in and vote at the Annual Meeting. To participate in the Annual Meeting, including to vote and ask questions during the meeting, shareholders of record should go to the Annual Meeting website at www.proxypush.com/LESL, enter the 16-digit control number found on your accompanying proxy card and follow the instructions on the website.
If your shares are held in street name and your voting instruction form indicates that you may vote those shares through the www.proxypush.com/LESL website, then you may access, participate in, and vote at the Annual Meeting with the 16-digit access code indicated on that voting instruction form. Otherwise, shareholders who hold their shares in street name should contact their bank, broker or other nominee (preferably at least 5 days before the Annual Meeting) and obtain a “legal proxy” in order to be able to attend, participate in, or vote at the Annual Meeting.
The Annual Meeting will begin promptly at 12:00 p.m. Eastern Time on Wednesday, March 12, 2025. Online check-in will begin at approximately 11:45 a.m. Eastern Time, and we encourage you to provide sufficient time before the Annual Meeting begins to check-in. Technicians will be available to assist you with any difficulties you may have accessing the Annual Meeting. We will make a replay of the Annual Meeting available on our Investor Relations website until the next annual meeting.
Shareholders may submit questions before the Annual Meeting at www.proxypush.com/LESL and during the Annual Meeting through the meeting website. We plan to answer as many questions as possible during the time permitted. If a question is not answered due to time constraints, the Company encourages shareholders to contact the Company’s Investor Relations at investorrelations@lesl.com. To allow us to answer questions from as many shareholders as possible, we will limit each shareholder to one question. Questions from multiple shareholders on the same topic or that are otherwise related may be grouped, summarized and answered together. Shareholder questions that are not pertinent to the Company’s business or to Annual Meeting matters, or that contain derogatory references to individuals, further the shareholder’s personal or business interests, or are otherwise out of order or not suitable for the conduct of the Annual Meeting will not be addressed during the Annual Meeting. In addition, please note that unauthorized recording of the meeting is prohibited. More information regarding the question and answer process, including the number and types of questions permitted, and how questions will be recognized, answered, and disclosed, will be available in the meeting rules of conduct, which will be posted on the Annual Meeting website before and during the meeting.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
WHAT PROPOSALS WILL BE ADDRESSED AT THE ANNUAL MEETING?
Shareholders will be asked to consider the following proposals at the Annual Meeting:
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To elect the three directors named in this Proxy Statement to serve as Class I directors on the Board until the 2027 Annual Meeting or until their successors are duly elected and qualified, and to elect the one director named in this Proxy Statement to serve as a Class II director on the Board until the 2026 Annual Meeting or until her successor is duly elected and qualified; |
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To ratify the selection by our Audit Committee of EY to serve as our independent registered public accounting firm for the fiscal year ending October 4, 2025; |
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To approve, on a non-binding, advisory basis, the compensation of our NEOs; and |
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To approve the adoption of the Seventh Amended and Restated Certificate of Incorporation of Leslie’s, Inc.: |
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To approve the adoption of the Removal Amendment, permitting the removal of directors with or without cause as of the 2027 Annual Meeting. |
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To approve the adoption of the Exculpation Amendment, limiting the liability of certain Company officers. |
We will also consider any other business that properly comes before the Annual Meeting.
HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE?
Our Board unanimously recommends that shareholders vote “FOR” each nominee for director, “FOR” the ratification of the selection of EY as our independent registered public accounting firm, “FOR” the approval, on a non-binding, advisory basis, of the compensation of our NEOs, “FOR” the adoption of the Removal Amendment, permitting the removal of directors with or without cause as of the 2027 Annual Meeting, and “FOR” the adoption of the Exculpation Amendment, limiting the liability of certain Company officers.
WHO MAY VOTE AT THE ANNUAL MEETING OF SHAREHOLDERS?
Shareholders who owned shares of the Company’s common stock, par value $0.001 per share, as of 5:00 p.m. Eastern Time on January 15, 2025 are entitled to vote at the Annual Meeting. As of the record date, there were [*] shares of our common stock issued and outstanding.
HOW MANY VOTES MUST BE PRESENT TO HOLD THE ANNUAL MEETING?
In order for us to conduct the Annual Meeting, a quorum, consisting of a majority of the voting power of the stock outstanding and entitled to vote at the Annual Meeting, must be present in person or represented by proxy.
HOW MANY VOTES DO I HAVE?
Each share of common stock is entitled to one vote on each matter that comes before the Annual Meeting.
WHAT IS THE DIFFERENCE BETWEEN A SHAREHOLDER OF RECORD AND A BENEFICIAL OWNER OF SHARES HELD IN STREET NAME?
Shareholder of Record. If your shares are registered directly in your name with the Company’s transfer agent, Computershare Trust Company, N.A., you are considered the shareholder of record with respect to those shares, and the proxy materials were sent directly to you by the Company.
Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization, then you are the beneficial owner of shares held in “street name,” and the proxy materials were forwarded to you by that organization. The organization holding your account is considered the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to instruct that organization on how to vote the shares held in your account. Those instructions are contained in a “voting instruction form.”
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
WHAT IS THE PROXY CARD?
The proxy card enables you to appoint Jason McDonell, our CEO, Scott Bowman, our Chief Financial Officer and Treasurer, and Benjamin Lindquist, our SVP, General Counsel & Corporate Secretary, as your representatives at the Annual Meeting. By completing and returning the proxy card, you are authorizing Messrs. McDonell, Bowman, and Lindquist to vote your shares at the Annual Meeting in accordance with your instructions on the proxy card. This way, your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, it is strongly recommended that you complete and return your proxy card before the Annual Meeting date in case your plans change. If a proposal comes up for vote at the Annual Meeting that is not on the proxy card, the proxies will vote your shares, under your proxy, according to their best judgment.
WHY DID I RECEIVE A NOTICE OF INTERNET AVAILABILITY?
Pursuant to SEC rules, we are furnishing the proxy materials to our shareholders primarily via the internet instead of mailing printed copies. This process allows us to expedite our shareholders’ receipt of proxy materials, lower the costs of printing and mailing the proxy materials and reduce the environmental impact of our Annual Meeting. If you received a Notice of Internet Availability of Proxy Materials (the “Notice”), you will not receive a printed copy of the proxy materials unless you request one. The Notice provides instructions on how to access the proxy materials for the Annual Meeting via the internet, how to request a printed set of proxy materials and how to vote your shares.
IF I AM A SHAREHOLDER OF RECORD OF THE COMPANY’S SHARES, HOW DO I VOTE?
Before the Annual Meeting, you may vote:
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By mail, by completing, signing, and dating your proxy card. |
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Online at www.proxypush.com/LESL. |
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By telephone, at 1-866-286-3497. |
During the Annual Meeting, you may vote online at www.proxypush.com/LESL.
IF I AM A BENEFICIAL OWNER OF SHARES HELD IN STREET NAME, HOW DO I VOTE?
Beneficial owners should check their voting instruction form for how to vote in advance of and how to participate in the Annual Meeting. Otherwise, shareholders who hold their shares in street name should contact their bank, broker or other nominee (preferably at least 5 days before the Annual Meeting) and obtain a “legal proxy” in order to be able to attend, participate in, or vote at the Annual Meeting.
WILL MY SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY?
If you hold your shares directly in your own name, they will not be voted if you do not provide a proxy.
Your shares may be voted under certain circumstances if they are held in the name of a brokerage firm. Brokerage firms holding shares must vote according to specific instructions they receive from the beneficial owners of those shares. If a brokerage firm does not receive specific instructions, it may in some cases vote the shares in its discretion, but is not permitted to vote on certain proposals and may elect not vote on any of the proposals unless you provide voting instructions.
Voting your shares will help to ensure that your interests are represented at the meeting. If you do not provide voting instructions and your brokerage firm elects to vote your shares on some but not all matters, it will result in a “broker non-vote” for the matters on which the brokerage firm does not vote. In the case of broker non-votes, and in cases where you abstain from voting on a matter when present at the Annual Meeting and entitled to vote, your shares will still be counted for purposes of determining if a quorum is present, but they will not be considered as votes cast and will not be counted in determining the outcome of the vote on the election of directors or on any of the other proposals.
WHAT ARE BROKER NON-VOTES?
A broker non-vote occurs with respect to a proposal when a broker, bank or other nominee has discretionary authority to vote on one or more proposals to be voted on at a meeting of shareholders but is not permitted to vote on other proposals
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
without instructions from the beneficial owner. Under the rules of the New York Stock Exchange (“NYSE”), brokers, banks and other nominees may generally vote on routine matters without instructions from a beneficial owner but cannot vote on non-routine matters. In tabulating the voting results for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote on that proposal, but are considered “outstanding” for purposes of Proposals 4(a) and 4(b).
Note that whether a proposal is considered routine or non-routine is subject to NYSE rules and final determination by the stock exchange. Even with respect to routine matters, some brokers are choosing not to exercise discretionary voting authority. As a result, we urge you to direct your broker, bank or other nominee how to vote your shares on all proposals to ensure that your vote is counted.
If you provide specific instructions with regard to certain items, your shares will be voted as you instruct on such items. If you vote by proxy card and sign the proxy card without giving specific instructions, your shares will be voted in accordance with the recommendations of the Board (see “—How Does the Board of Directors Recommend that I Vote,” above).
WHAT VOTE IS REQUIRED TO ELECT DIRECTORS?
Directors are elected by a plurality of the votes cast at the Annual Meeting. As a result, assuming that a quorum is present, the nominees who receive the highest number of shares voted “FOR” his or her election are elected. A “WITHHOLD” vote against a director will have no direct effect on his or her election. Broker non-votes, if any, will have no effect on this proposal.
WHAT VOTE IS REQUIRED TO APPROVE EACH OF THE OTHER PROPOSALS?
Assuming that a quorum is present:
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Approval of Proposal 2, to ratify the selection of EY as our independent registered public accounting firm for the fiscal year ending October 4, 2025 requires the affirmative vote of at least a majority of the voting power of the shares present in person or represented by proxy and entitled to vote thereon. Abstentions will have the effect of a vote against this proposal. Broker non-votes, if any, will have no effect on this proposal. |
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Approval of Proposal 3, to approve on a non-binding, advisory basis, the compensation of our NEOs requires the affirmative vote of at least a majority of the voting power of the shares present in person or represented by proxy and entitled to vote thereon. Abstentions will have the effect of a vote “against” this proposal. Broker non-votes, if any, will have no effect on this proposal. |
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Approval of Proposal 4(a), to adopt the Removal Amendment, permitting the removal of directors with or without cause as of the 2027 Annual Meeting, requires the affirmative vote of at least 66 2/3% of the voting power of the shares outstanding as of the record date. Abstentions and broker non-votes will have the effect of votes “against” this proposal. |
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Approval of Proposal 4(b), to adopt the Exculpation Amendment, limiting the liability of certain Company officers, requires the affirmative vote of at least a majority of the voting power of the shares outstanding as of the record date. Abstentions and broker non-votes will have the effect of votes “against” this proposal. |
CAN I CHANGE MY VOTE AFTER I HAVE VOTED?
You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting. You may vote again by signing and returning a new proxy card or voting instruction form with a later date or by attending the Annual Meeting online and voting. Your attendance at the Annual Meeting online will not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request that your prior proxy be revoked by delivering to the Company’s Corporate Secretary at 2005 East Indian School Road, Phoenix, Arizona 85016 a written notice of revocation prior to the Annual Meeting.
Please note, however, that if your shares are held of record by a brokerage firm, bank or other nominee, you must instruct your broker, bank or other nominee that you wish to change your vote by following the procedures on the voting form provided to you by the broker, bank or other nominee.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
WHAT HAPPENS IF I DO NOT INDICATE HOW TO VOTE MY PROXY?
If you sign your proxy card without providing further instructions, your shares will be voted “FOR” each of the director nominees, “FOR” the ratification of EY to serve as our independent registered public accounting firm for the fiscal year ending October 4, 2025, “FOR” the approval on a non-binding, advisory basis, of the compensation of our NEOs, “FOR” the adoption of the Removal Amendment, permitting the removal of directors with or without cause as of the 2027 Annual Meeting, and “FOR” the adoption of the Exculpation Amendment, limiting the liability of certain Company officers.
IS MY VOTE KEPT CONFIDENTIAL?
Proxies, ballots and voting tabulations identifying shareholders are kept confidential and will not be disclosed except (1) as may be necessary to meet legal requirements; (2) to allow for the tabulation of votes and certification of the votes; and (3) to facilitate a successful proxy solicitation. Occasionally, shareholders provide on their proxy card written comments, which are then forwarded to management.
WHERE DO I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
We intend to announce preliminary voting results at the Annual Meeting. The final voting results will be tallied by the inspector of election and published in the Company’s Current Report on Form 8-K, which the Company will file with the SEC within four business days following the Annual Meeting.
WHO BEARS THE COST OF SOLICITING PROXIES?
The Company will bear the cost of soliciting proxies in the accompanying form and will reimburse brokerage firms and others for expenses involved in forwarding proxy materials to beneficial owners or soliciting their execution. In addition to solicitations by mail, the Company, through its directors and officers, may solicit proxies in person, by telephone or by electronic means. Such directors and officers will not receive any special remuneration for these efforts.
Other Matters
OTHER BUSINESS
We are not currently aware of any business to be acted upon at the Annual Meeting other than the matters discussed in this Proxy Statement. The form of proxy accompanying this Proxy Statement confers discretionary authority upon the named proxy holders with respect to amendments or variations to the matters identified in the accompanying Notice of Annual Meeting of Shareholders and with respect to any other matters which may properly come before the Annual Meeting or any adjournment or postponement thereof. If other matters do properly come before the Annual Meeting, or at any such adjournment or postponement of the Annual Meeting, we expect that shares of our common stock, represented by properly submitted proxies, will be voted by the proxy holders in accordance with the recommendations of our Board.
SUBMISSION OF SHAREHOLDER PROPOSALS FOR THE 2026 ANNUAL MEETING
Rule 14a-8 Proposals. For any proposal to be considered for inclusion in our Proxy Statement and form of proxy for submission to the shareholders at the 2026 Annual Meeting, it must be submitted in writing and comply with the requirements of Rule 14a-8 of the Exchange Act. Such proposals must be received by the Company at its offices at 2005 East Indian School Road, Phoenix, Arizona 85016 no later than September 26, 2025.
Advance Notice Proposals and Nominations. In addition, our bylaws provide notice procedures for shareholders to nominate a person as a director and to propose business to be considered by shareholders at a meeting (but not for inclusion in the Proxy Statement). Notice of a nomination or proposal must provide the information set forth in our bylaws (which includes the information required under Rule 14a-19 with respect to nominations) must be delivered to the Corporate Secretary at 2005 East Indian School Road, Phoenix, Arizona 85016 no later than the close of business on the 90th day, nor earlier than the close of business on the 120th day prior to, the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 70 days after such anniversary date, or if for any reason the Annual Meeting does not occur, notice by the shareholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of (i) the 90th day prior to such annual meeting or (ii) the 10th day following the day on which public announcement of the date of the annual meeting is first made by us. Accordingly, for the 2026 Annual Meeting, notice of a nomination or proposal must be delivered to us no later than 5:00 p.m. Mountain Time on December 12, 2025 and no earlier than 5:00 p.m. Mountain Time on November 12, 2025. Nominations and proposals also must satisfy the other requirements set forth in the bylaws.
HOUSEHOLDING INFORMATION
Unless we have received contrary instructions, we may send a single copy of our proxy materials, including this Proxy Statement, the Notice and our Annual Report on Form 10-K, to any household at which two or more shareholders reside. This process, known as “householding,” reduces the volume of duplicate information received at any one household, helps to reduce our expenses, and benefits the environment. However, if shareholders prefer to receive multiple sets of our proxy materials at the same address this year or in future years, shareholders should follow the instructions described below and they will promptly receive additional copies. Similarly, if an address is shared with another shareholder and together, both of the shareholders would like to receive only a single set of proxy materials, the shareholders should follow these instructions:
If the shares are registered in the name of the shareholder, the shareholder should contact our Corporate Secretary at our offices by sending a written request to 2005 East Indian School Road, Phoenix, Arizona 85016 or calling 602-366-3999, to inform us of his or her request; or if a bank, broker or other nominee holds the shares, the shareholder should contact the bank, broker or other nominee directly.
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SIXTH SEVENTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
LESLIE’S, INC.
Leslie’s, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), DOES HEREBY CERTIFY AS FOLLOWS:
1. The name of the Corporation is Leslie’s, Inc.
2. The original Certificate of Incorporation of the Corporation (“Original Certificate”) was filed under the Corporation’s former name, Leslie’s Holdings, Inc., with the Secretary of State of the State of Delaware on February 6, 2007, (i) a Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on February 20, 2007, (ii) a Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on September 27, 2010, (iii) a Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on February 7, 2017, (iv) a Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on February 7, 2017 and (v) a Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of Delaware on November 2, 2020.
3. This Sixth Seventh Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate”), which both restates and amends the provisions of the Original Certificate as heretofore amended, was duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware.
4. The text of the Original Certificate as heretofore amended is hereby amended and restated in its entirety to read as follows:
ARTICLE I
NAME
The name of the corporation is Leslie’s, Inc. (the “Company”).
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of the Company’s registered office in the State of Delaware is Corporation Service Company, 2711 Centerville Road, Suite 400251 Little Falls Drive, in the City of Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at such address is Corporation Service Company.
ARTICLE III
PURPOSE
The purpose of the Company is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (“DGCL”).
ARTICLE IV
CAPITAL STOCK
IA. Authorized Capital.
The total number of shares of all classes of capital stock which the Company shall have authority to issue is 1,001,000,000, which shall be divided into two classes as follows: 1,000,000,000 shares of common stock, par value $0.001 per share (“Common Stock”), and 1,000,000 shares of preferred stock, par value $0.001 per share (“Preferred Stock”).
The number of authorized shares of Preferred Stock or Common Stock may be increased or decreased (but not below the number of shares thereof then-outstanding) without a separate class vote of the holders of shares of Common Stock or Preferred Stock by the affirmative vote of the holders of a majority in voting power of the stock of the Company entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the DGCL (or any successor provision thereto), and no vote of the holders of either the Common Stock or the Preferred Stock voting separately as a class shall be required therefor, unless a vote of any such holder is required pursuant to this Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock).
IIB. Common Stock.
A(i). Voting Rights. Except as otherwise provided in this Certificate of Incorporation or otherwise required by applicable law, each holder of Common Stock shall be entitled to one vote for each share of Common Stock held as of the applicable record date on any matter that is submitted to a vote or for the consent of the stockholders of the Company.
B.(ii) Dividends. Subject to the preferences applicable to any series of Preferred Stock, if any, outstanding at any time, the holders of Common Stock shall be entitled to share equally, on a per share basis, in such dividends and other distributions of cash, property or shares of stock of the Company as may be declared by the Board of Directors of the Company (the “Board”) from time to time with respect to the Common Stock out of assets or funds of the Company legally available therefor.
C.(iii) Liquidation. Subject to the preferences applicable to any series of Preferred Stock, if any, outstanding at any time, in the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Company, all assets of the Company of whatever kind available for distribution to the holders of Common Stock shall be divided among and paid ratably to the holders of Common Stock.
IIIC. Preferred Stock.
A.(i) Preferred Stock may be issued from time to time by the Company for such consideration as may be fixed by the Board. The Board is hereby expressly authorized, by resolution or resolutions, to provide, out of the unissued shares of Preferred Stock, for one or more series of Preferred Stock and, with respect to each such series, to fix, without further stockholder approval, the designation of such series, the powers (including voting powers), preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, of such series of Preferred Stock and the number of shares of such series, and as may be permitted by the DGCL. The powers, preferences and relative, participating, optional and other special rights of, and the qualifications, limitations or restrictions thereof, of each series of Preferred Stock, if any, may differ from those of any and all other series at any time outstanding.
B.(ii) Except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock) or pursuant to the DGCL.
C.(iii) Except as otherwise required by law, holders of any series of Preferred Stock shall be entitled to only such voting rights, if any, as shall expressly be granted thereto by this Certificate of Incorporation (including any certificate of designation relating to such series of Preferred Stock).
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ARTICLE V
AMENDMENT OF THE CERTIFICATE OF INCORPORATION AND BYLAWS
A. Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the following provisions in this Certificate of Incorporation may be amended, altered, repealed or rescinded, in whole or in part, or any provision inconsistent therewith or herewith may be adopted, only by the affirmative vote of the holders of at least 662/3% in voting power of all the then-outstanding shares of Common Stock entitled to vote thereon: Article V, Article VI, Article VII, Article VIII, Article IX and Article X. For the purposes of this Certificate of Incorporation, beneficial ownership of shares shall be determined in accordance with Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For the purposes of this Certificate of Incorporation, except for Article IX, (i) “Person” shall mean any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, unincorporated organization or other entity, whether domestic or foreign and (ii) “control” (including the terms “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, by contract or otherwise.
B. The Board is expressly authorized to make, repeal, alter, amend and rescind, in whole or in part, the bylaws of the Company (as in effect from time to time, the “Bylaws”) without the assent or vote of the stockholders in any manner not inconsistent with the laws of the State of Delaware or this Certificate of Incorporation. Notwithstanding anything to the contrary contained in this Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote of the stockholders in addition to any vote of the holders of any class or series of capital stock of the Company required herein (including any certificate of designation relating to any series of Preferred Stock), the Bylaws or applicable law, the affirmative vote of the holders of at least 662/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, shall be required in order for the stockholders of the Company to alter, amend, repeal or rescind, in whole or in part, any provision of the Bylaws or to adopt any provision inconsistent therewith.
ARTICLE VI
BOARD OF DIRECTORS
A. Except as otherwise provided in this Certificate of Incorporation or the DGCL, the business and affairs of the Company shall be managed by or under the direction of the Board. Except as otherwise provided for or fixed pursuant to the provisions of Article IV hereof (including any certificate of designation with respect to any series of Preferred Stock) and this Article VI relating to the rights of the holders of any series of Preferred Stock to elect additional directors, the total number of directors shall be determined from time to time exclusively by resolution adopted by the Board. Prior to the annual meeting of stockholders to be held in 2027 (the “2027 Annual Meeting”), the directors (other than those directors elected by the holders of any series of Preferred Stock, voting separately as a series or together with one or more other such series, as the case may be) shall be divided into three classes designated Class I, Class II and Class III. Each class shall consist, as nearly as possible, of one-third of the total number of such directors. Directors with terms expiring at the annual meeting of stockholders to be held in 2024 shall serve out the remainder of their current terms, and they and any successors shall stand for re-election to a three-year term at the annual meeting of stockholders to be held in 2024; directors with terms expiring at the annual meeting of stockholders to be held in 2025 shall serve out the remainder of their current terms, and they and any successors shall stand for re-election to a two-year term at the annual meeting of stockholders to be held in 2025; and directors elected at the annual meeting of stockholders held in 2023 shall serve out their three-year terms, and they and any successors shall stand for re-election to a one-year term at the annual meeting of stockholders to be held in 2026. Until the 2027 Annual Meeting, if the number of such directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any such additional director of any class elected to fill a newly created directorship resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case shall a decrease in the number of directors remove or shorten the term of any incumbent director. Until the 2027 Annual Meeting, any such director shall hold office until the annual meeting at which his or her term expires and until his or her successor shall be elected and qualified, or his or her death, resignation, retirement, disqualification or removal from office. Prior to the 2027 Annual
Meeting, the Board is authorized to assign members of the Board to their respective class. All directors of the Company elected at or after the 2027 Annual Meeting shall be elected for a term expiring at the next annual meeting of stockholders, with each such director to hold office until his or her successor shall be elected and qualified, or his or her death, resignation, retirement, disqualification or removal from office. Notwithstanding the foregoing, any director whose term expires at any annual meeting of stockholders prior to the 2027 Annual Meeting shall continue to hold office until the end of the term for which such director was elected and until such director’s successor shall have been elected and qualified, or until his or her earlier death, retirement, resignation or removal.
B. Subject to the rights granted to the holders of any one or more series of Preferred Stock then outstanding, any newly-created directorship on the Board that results from an increase in the number of directors and any vacancy occurring on the Board shall be filled only by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director (and not by the stockholders). Any director elected to fill a vacancy or newly created directorship shall hold office (i) in the case of any vacancy so filled prior to the 2027 Annual Meeting, for the remainder of the term of the director being replaced or, in the case of an additional director, for the remainder of the term of the class to which the director has been assigned and until his or her successor shall be elected and qualified, or until his or her earlier death, resignation, retirement, disqualification or removal and (ii) in the case of any vacancy so filled at or after the 2027 Annual Meeting, until the next annual meeting of stockholders and until his or her successor shall be elected and qualified, or until his or her earlier death, resignation, retirement, disqualification or removal.
C. Any or all of the directors (other than the directors elected by the holders of any series of Preferred Stock of the Company, voting separately as a series or together with one or more other such series, as the case may be) may be removed at any time, but only for cause until the 2027 Annual Meeting and with or without cause thereafter,(1) and only by the affirmative vote of the holders of at least 662/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class.
D. Elections of directors need not be by written ballot unless the Bylaws shall so provide.
E. During any period when the holders of any series of Preferred Stock, voting separately as a series or together with one or more series, have the right to elect additional directors, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of directors of the Company shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to said provisions, and (ii) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, resignation, retirement, disqualification or removal. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate and the total authorized number of directors of the Company shall be reduced accordingly.
ARTICLE VII
LIMITATION OF DIRECTOR LIABILITY
A. To the fullest extent permitted by the DGCL as it now exists or may hereafter be amended, a director of the Company shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty owed to the Company or its stockholders.
B. Neither the amendment nor repeal of this Article VII, nor the adoption of any provision of this Certificate of Incorporation, nor, to the fullest extent permitted by the DGCL, any modification of law shall eliminate, reduce or otherwise adversely affect any right or protection of a current or former director of the Company existing at the time of such amendment, repeal, adoption or modification.
| (1) |
Article VI, Section C will be amended as set forth in this Appendix 1 only if Proposal 4(a) is approved by the stockholders. |
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| Proxy Statement and Annual Meeting Report 2025 |
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A-5 |
|
C. To the fullest extent permitted by applicable law, the Company shall indemnify (and provide advancement of expenses to) directors and officers of the Company from and against any and all liabilities, costs, expenses or damages that they may incur on account of, related to, or in connection with, directly or indirectly, their service to the Company. The Company may indemnify (and provide advancement of expenses to) employees and agents of the Company (and any other persons to which the DGCL permits the Company to provide indemnification). Indemnification may be made through Bylaw provisions, agreements with such persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the DGCL.
ARTICLE VIII
CONSENT OF STOCKHOLDERS IN LIEU OF MEETING;
ANNUAL AND SPECIAL MEETINGS OF STOCKHOLDERS
A. Any action required or permitted to be taken by the stockholders of the Company must be effected at a duly called annual or special meeting of such holders and may not be effected by any consent in writing by such holders; provided, however, that any action required or permitted to be taken by the holders of Preferred Stock, voting separately as a series or separately as a class with one or more other such series, may be taken without a meeting, without prior notice and without a vote, to the extent expressly so provided by the applicable certificate of designation relating to such series of Preferred Stock.
B. Except as otherwise required by law and subject to the rights of the holders of any series of Preferred Stock, special meetings of the stockholders of the Company for any purpose or purposes may only be called in the manner provided in the Bylaws.
C. An annual meeting of stockholders for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting shall be held at such place, if any, on such date, and at such time as shall be fixed in the manner provided in the Bylaws.
ARTICLE IX
COMPETITION AND CORPORATE OPPORTUNITIES
A. In recognition and anticipation that (i) certain directors, principals, members, officers, associated funds, employees and/or other representatives of one or more of the Sponsors and their respective Affiliates (as defined below) may serve as directors, officers or agents of the Company, (ii) one or more of the Sponsors and their respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Company, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Company, directly or indirectly, may engage, and (iii) members of the Board who are not employees of the Company (“Non-Employee Directors”) and their respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Company, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Company, directly or indirectly, may engage, the provisions of this Article IX are set forth to regulate and define the conduct of certain affairs of the Company with respect to certain classes or categories of business opportunities as they may involve any of the Sponsors, the Non-Employee Directors or their respective Affiliates and the powers, rights, duties and liabilities of the Company and its directors, officers and stockholders in connection therewith.
B. None of (i) the Sponsors or any of their respective Affiliates or (ii) any Non-Employee Director (including any Non-Employee Director who serves as an officer of the Company in both his or her director and officer capacities) or his or her Affiliates (the Persons (as defined below) identified in (i) and (ii) above being referred to, collectively, as “Identified Persons” and, individually, as an “Identified Person”) shall, to the fullest extent permitted by law, have any duty to refrain from directly or indirectly (1) engaging in the same or similar business activities or lines of business in which the Company or any of its Affiliates now engages or proposes to engage or (2) otherwise competing with the Company or any of its Affiliates, and, to the fullest extent permitted by law, no Identified Person shall be liable to the Company or its stockholders or to any Affiliate of the Company for breach of any
fiduciary duty solely by reason of the fact that such Identified Person engages in any such activities. To the fullest extent permitted by law, the Company hereby renounces any interest or expectancy in, or right to be offered an opportunity to participate in, any business opportunity which may be a corporate opportunity for an Identified Person and the Company or any of its Affiliates, except as provided in Section D of this Article IX. Subject to Section D of this Article IX, in the event that any Identified Person acquires knowledge of a potential transaction or other matter or business opportunity which may be a corporate opportunity for itself, herself or himself and the Company or any of its Affiliates, such Identified Person shall, to the fullest extent permitted by law, have no fiduciary duty or other duty (contractual or otherwise) to communicate, present or offer such transaction or other business opportunity to the Company or any of its Affiliates and, to the fullest extent permitted by law, shall not be liable to the Company or its stockholders or to any Affiliate of the Company for breach of any fiduciary duty or other duty (contractual or otherwise) as a stockholder, director or officer of the Company solely by reason of the fact that such Identified Person pursues or acquires such corporate opportunity for itself, herself or himself, offers or directs such corporate opportunity to another Person, or does not present such corporate opportunity to the Company or any of its Affiliates.
C. The Company and its Affiliates do not have any rights in and to the business ventures of any Identified Person, or the income or profits derived therefrom, and the Company agrees that each of the Identified Persons may do business with any potential or actual customer or supplier of the Company or may employ or otherwise engage any officer or employee of the Company.
D. The Company does not renounce its interest in any corporate opportunity offered to any Non-Employee Director (including any Non-Employee Director who serves as an officer of the Company) if such opportunity is expressly offered to such person in writing solely in his or her capacity as a director or officer of the Company, and the provisions of Section B of this Article IX shall not apply to any such corporate opportunity.
E. In addition to and notwithstanding the foregoing provisions of this Article IX, a corporate opportunity shall not be deemed to be a potential corporate opportunity for the Company if it is a business opportunity that (i) the Company is neither financially or legally able, nor contractually permitted to undertake, (ii) from its nature, is not in the line of the Company’s business or is of no practical advantage to the Company or (iii) is one in which the Company has no interest or reasonable expectancy.
F. For purposes of this Article IX, (i) “Affiliate” shall mean (a) in respect of any Sponsor, any Person that, directly or indirectly, is controlled by such Sponsor, controls such Sponsor or is under common control with such Sponsor and shall include any principal, member, director, partner, stockholder, officer, employee or other representative of any of the foregoing (other than the Company and any entity that is controlled by the Company), (b) in respect of a Non-Employee Director, any Person that, directly or indirectly, is controlled by such Non-Employee Director (other than the Company and any entity that is controlled by the Company) and (c) in respect of the Company, any Person that, directly or indirectly, is controlled by the Company; (ii) “Person” shall mean any individual, corporation, general or limited partnership, limited liability company, joint venture, trust, association or any other entity; (iii) “control” (including the terms “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, by contract or otherwise; and (iv) “Sponsor” shall mean any of L Catterton and GIC Pte. Ltd. and each of their respective Affiliates.
G. To the fullest extent permitted by law, any Person purchasing or otherwise acquiring any interest in any shares of capital stock of the Company shall be deemed to have notice of and to have consented to the provisions of this Article IX. Neither the alteration, amendment, addition to or repeal of this Article IX, nor the adoption of any provision of this Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock) inconsistent with this Article IX, shall eliminate or reduce the effect of this Article IX in respect of any business opportunity first identified or any other matter occurring, or any cause of action, suit or claim that, but for this Article IX, would accrue or arise, prior to such alteration, amendment, addition, repeal or adoption.
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| Proxy Statement and Annual Meeting Report 2025 |
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A-7 |
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ARTICLE X
MISCELLANEOUS
A. If any provision or provisions of this Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Company to protect its directors, officers, employees and agents from personal liability in respect of their good faith service or for the benefit of the Company to the fullest extent permitted by law.
B. Exclusive Forum.
(i) Unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery does not have subject matter jurisdiction, another state court sitting in the State of Delaware or, if and only if neither the Court of Chancery nor any state court sitting in the State of Delaware has subject matter jurisdiction, then the federal district court for the District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (1) any derivative action or proceeding brought on behalf of the Company, (2) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee or stockholder of the Company to the Company or the Company’s stockholders, creditors or other constituents, or a claim of aiding and abetting any such breach of fiduciary duty, (3) any action asserting a claim against the Company or any director or officer of the Company arising pursuant to any provision of the DGCL or this Certificate of Incorporation or the Bylaws (as either may be amended and/or restated from time to time) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, (4) any action to interpret, apply, enforce or determine the validity of this Certificate of Incorporation or the Bylaws, (5) any action asserting a claim against the Company or any director or officer of the Company governed by the internal affairs doctrine or (6) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL. The choice of forum provision set forth in this Section B(i) of Article X does not apply to any actions arising under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
(ii) Unless the Company consents in writing to the selection of an alternative forum, the federal district court for the District of Delaware shall be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act against the Company or any director or officer of the Company.
(iii) To the fullest extent permitted by law, any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Company shall be deemed to have notice of and consented to the provisions of this Section B of Article X and personal jurisdiction and venue in any state or federal court located in the State of Delaware for any action or proceeding set forth in above clauses 1 to 6 of Section B(i) of Article X and any complaint set forth in Section B(ii) of Article X.
ARTICLE XI
LIMITATION OF OFFICER LIABILITY
A. To the fullest extent permitted by the DGCL as it now exists or may hereafter be amended, an officer of the Company shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty owed to the Company or its stockholders.
B. Neither the amendment nor repeal of this Article XI, nor the adoption of any provision of this Certificate of Incorporation, nor, to the fullest extent permitted by the DGCL, any modification of law shall eliminate, reduce or otherwise adversely affect any right or protection of a current or former officer of the Company existing at the time of such amendment, repeal, adoption or modification.(2)
[Remainder of Page Intentionally Left Blank]
| (2) |
Article XI will be included as set forth in this Appendix 1 only if Proposal 4(b) is approved by the stockholders. |
Pay vs Performance Disclosure - USD ($)
|
12 Months Ended |
Sep. 28, 2024 |
Sep. 30, 2023 |
Oct. 01, 2022 |
Oct. 02, 2021 |
| Pay vs Performance Disclosure |
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| Pay vs Performance Disclosure, Table |
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and the financial performance of our Company. The following table sets forth the compensation for our CEO (referred to as “PEO”) and the average compensation for our other NEOs. For further information concerning our compensation philosophy and how we align executive compensation with our performance, refer to “Compensation Discussion and Analysis.”
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| |
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|
Table Total for PEO (McDonell) (1) |
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|
Table Total for PEO (Strain) (1) |
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|
Table Total for PEO (Egeck) (1) |
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|
Table Total for PEO (Ortega) (3) |
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Table Total for Non-PEO NEOs |
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,579,596 |
|
|
$ |
1,563,735 |
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|
$ |
318,028 |
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|
$ |
245,217 |
|
|
$ |
3,292,618 |
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|
$ |
(2,794,641 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
965,357 |
|
|
$ |
452,540 |
|
|
$ |
13.18 |
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|
$ |
71.20 |
|
|
$ |
(23,379 |
) |
|
$ |
108,744 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,041,971 |
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|
$ |
(3,796,598 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,162,345 |
|
|
$ |
55,905 |
|
|
$ |
26.08 |
|
|
$ |
59.20 |
|
|
$ |
27,242 |
|
|
$ |
168,149 |
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|
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|
$ |
3,339,438 |
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|
$ |
72,348 |
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|
$ |
- |
|
|
$ |
- |
|
|
$ |
988,153 |
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|
$ |
829,182 |
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|
$ |
67.79 |
|
|
$ |
65.26 |
|
|
$ |
159,029 |
|
|
$ |
292,276 |
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|
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|
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|
|
|
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|
$ |
7,911,515 |
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|
$ |
36,569,924 |
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|
$ |
3,989,352 |
|
|
$ |
4,283,910 |
|
|
$ |
1,536,295 |
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|
$ |
2,535,647 |
|
|
$ |
94.65 |
|
|
$ |
120.51 |
|
|
$ |
126,634 |
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|
$ |
270,613 |
|
(1) |
Reflects the total compensation of our current CEO, Jason McDonell, who is our PEO, Mike Egeck, our former PEO, and John Strain, who served as interim PEO until Mr. McDonell commenced employment and are therefore included in this table as an additional PEO’s in accordance with SEC rules. Amounts shown are as calculated in the Summary Compensation Table (SCT) for each of the years shown. |
(2) |
Steven Ortega served as PEO until Mr. Egeck’s appointment in 2021 and therefore is included in this table as an additional PEO in accordance with SEC rules. |
(3) |
Amounts shown for compensation actually paid (“CAP”) are computed in accordance with Item 402(v) of Regulation S-K under the Exchange Act and do not reflect the actual amount of compensation earned by or paid to the NEOs during the applicable year. These amounts reflect total compensation as reported in the SCT with certain adjustments as required by item 402(v) of Regulation S-K as described in footnote (3) below. The Non-PEO NEOs for each applicable year are as follows: (i) for fiscal year 2024, Messrs. Bowman, Caspers, and LaBode and Ms. Cramer, (ii) for fiscal year 2023, Messrs. Bowman, Weddell, Gazaway, and LaBode and Ms. Baker, and (iii) 2022, Messrs. Weddell, Gazaway and LaBode and Ms. Baker, and (iv) for fiscal year 2021, Mr. Weddell and Ms. Baker |
(4) |
CAP reflects the exclusions and inclusions of equity awards for the PEOs and the other NEOs as set forth below and calculated in accordance with FASB ASC Topic 718, Compensation—Stock Compensation. The valuation methodologies and assumptions used to calculate CAP are based on the grant date fair value of these awards as disclosed in the Company’s consolidated audited financial statements filed with the SEC on Form 10-K for the years reflected in the tables below: | Summary Compensation Table Total to Compensation Actually Paid Reconciliation for the PEOs and non-PEOs:
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| |
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Calculation (a) of Compensation Actually Paid |
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Summary Compensation Table Total |
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3,292,618 |
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|
318,028 |
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|
1,579,596 |
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|
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Less: Grant date fair value of stock and option awards granted during year |
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|
(1,800,046 |
) |
|
|
(125,000 |
) |
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|
(1,150,000 |
) |
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|
|
Add: Fair value of awards granted during year that remain unvested as of year-end |
|
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- |
|
|
|
52,189 |
|
|
|
1,134,139 |
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|
|
|
Add: Fair value of awards granted during year that vested during year |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Add: Change in fair value from prior year-end to current year-end of awards granted prior to the year that were outstanding and unvested as of year end |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Add: Change in fair value from prior year-end to vesting date for awards granted prior to the year that vested during year |
|
|
(2,781,651 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
Less: Fair value of awards granted prior to the year that were forfeited during year |
|
|
(1,505,562 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
Compensation Actually Paid |
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|
Calculation (a) of Compensation Actually Paid |
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|
Average Summary Compensation Table Total |
|
|
965,357 |
|
|
|
Less: Average grant date fair value of stock and option awards granted during this year |
|
|
(451,138 |
) |
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|
Add: Average Fair value of awards granted during the year that remain unvested as of year-end |
|
|
200,658 |
|
|
|
Add: Average Fair value of awards granted during the year that vested during the year |
|
|
- |
|
|
|
Add: Average Change in fair value from prior year-end to current year-end of awards granted prior to the year that were outstanding and unvested as of year end |
|
|
(180,794 |
) |
|
|
Add: Average Change in fair value from prior year-end to vesting date for awards granted prior to the year that vested during year |
|
|
(81,544 |
) |
|
|
Less: Average Fair value of awards granted prior to the year that were forfeited during the year |
|
|
- |
|
|
|
Compensation Actually Paid |
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|
|
| |
(a) |
As shown in these tables, the CAP totals represent the SCT totals for the applicable year, but adjusted as required by SEC rules. |
(5) |
TSR shown in this table utilizes the S&P Small-Cap 600 Index (“Index”) which we use in the stock performance graph required by Item 201(e) of Regulation S-K included in the Company’s consolidated audited financial statements filed with the SEC on Form 10-K for the years reflected in the table above. The comparison assumes $100 was invested for the period from October 29, 2020, our first trading day subsequent to our initial public offering, through the last day of the applicable fiscal year in each of the Company’s Common Stock and the Index. All dollar values assume reinvestment of the pre-tax value of dividends paid by companies included in the Index. The historical stock price performance of our Common Stock shown is not necessarily indicative of future stock price performance. |
(6) |
Pursuant to Item 402(v) of Regulation S-K, we determined Adjusted EBITDA to be the most important financial performance measure used to link company performance to CAP to our PEOs and other NEOs in 2024. This performance measure may not have been the most important financial performance measure for prior years and we may determine a different financial performance measure to be the most important such measure in future years. Adjusted EBITDA is defined on page 13 on our Annual Report on Form 10-K for fiscal year 2024 and is a non-GAAP financial measure. |
|
|
|
|
| Company Selected Measure Name |
Adjusted EBITDA
|
|
|
|
| Named Executive Officers, Footnote |
(3) |
Amounts shown for compensation actually paid (“CAP”) are computed in accordance with Item 402(v) of Regulation S-K under the Exchange Act and do not reflect the actual amount of compensation earned by or paid to the NEOs during the applicable year. These amounts reflect total compensation as reported in the SCT with certain adjustments as required by item 402(v) of Regulation S-K as described in footnote (3) below. The Non-PEO NEOs for each applicable year are as follows: (i) for fiscal year 2024, Messrs. Bowman, Caspers, and LaBode and Ms. Cramer, (ii) for fiscal year 2023, Messrs. Bowman, Weddell, Gazaway, and LaBode and Ms. Baker, and (iii) 2022, Messrs. Weddell, Gazaway and LaBode and Ms. Baker, and (iv) for fiscal year 2021, Mr. Weddell and Ms. Baker |
|
|
|
|
| Peer Group Issuers, Footnote |
(5) |
TSR shown in this table utilizes the S&P Small-Cap 600 Index (“Index”) which we use in the stock performance graph required by Item 201(e) of Regulation S-K included in the Company’s consolidated audited financial statements filed with the SEC on Form 10-K for the years reflected in the table above. The comparison assumes $100 was invested for the period from October 29, 2020, our first trading day subsequent to our initial public offering, through the last day of the applicable fiscal year in each of the Company’s Common Stock and the Index. All dollar values assume reinvestment of the pre-tax value of dividends paid by companies included in the Index. The historical stock price performance of our Common Stock shown is not necessarily indicative of future stock price performance. |
|
|
|
|
| Adjustment To PEO Compensation, Footnote |
Summary Compensation Table Total to Compensation Actually Paid Reconciliation for the PEOs and non-PEOs:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Calculation (a) of Compensation Actually Paid |
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary Compensation Table Total |
|
|
3,292,618 |
|
|
|
318,028 |
|
|
|
1,579,596 |
|
|
|
|
|
Less: Grant date fair value of stock and option awards granted during year |
|
|
(1,800,046 |
) |
|
|
(125,000 |
) |
|
|
(1,150,000 |
) |
|
|
|
|
Add: Fair value of awards granted during year that remain unvested as of year-end |
|
|
- |
|
|
|
52,189 |
|
|
|
1,134,139 |
|
|
|
|
|
Add: Fair value of awards granted during year that vested during year |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Add: Change in fair value from prior year-end to current year-end of awards granted prior to the year that were outstanding and unvested as of year end |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Add: Change in fair value from prior year-end to vesting date for awards granted prior to the year that vested during year |
|
|
(2,781,651 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
Less: Fair value of awards granted prior to the year that were forfeited during year |
|
|
(1,505,562 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
Compensation Actually Paid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-PEO NEO Average Total Compensation Amount |
$ 965,357
|
$ 1,162,345
|
$ 988,153
|
$ 1,536,295
|
| Non-PEO NEO Average Compensation Actually Paid Amount |
$ 452,540
|
55,905
|
829,182
|
2,535,647
|
| Adjustment to Non-PEO NEO Compensation Footnote |
Summary Compensation Table Total to Compensation Actually Paid Reconciliation for the PEOs and non-PEOs:
|
|
|
|
|
Calculation (a) of Compensation Actually Paid |
|
|
|
|
|
Average Summary Compensation Table Total |
|
|
965,357 |
|
|
|
Less: Average grant date fair value of stock and option awards granted during this year |
|
|
(451,138 |
) |
|
|
Add: Average Fair value of awards granted during the year that remain unvested as of year-end |
|
|
200,658 |
|
|
|
Add: Average Fair value of awards granted during the year that vested during the year |
|
|
- |
|
|
|
Add: Average Change in fair value from prior year-end to current year-end of awards granted prior to the year that were outstanding and unvested as of year end |
|
|
(180,794 |
) |
|
|
Add: Average Change in fair value from prior year-end to vesting date for awards granted prior to the year that vested during year |
|
|
(81,544 |
) |
|
|
Less: Average Fair value of awards granted prior to the year that were forfeited during the year |
|
|
- |
|
|
|
Compensation Actually Paid |
|
|
|
|
| |
(a) |
As shown in these tables, the CAP totals represent the SCT totals for the applicable year, but adjusted as required by SEC rules. |
|
|
|
|
| Compensation Actually Paid vs. Total Shareholder Return |
|
|
|
|
| Compensation Actually Paid vs. Net Income |
|
|
|
|
| Compensation Actually Paid vs. Company Selected Measure |
|
|
|
|
| Total Shareholder Return Vs Peer Group |
|
|
|
|
| Tabular List, Table |
Financial Performance Measures As required, we disclose below the most important measures used by the Company to link compensation actually paid to our NEOs for 2024 to Company performance. For further information regarding these performance metrics and their function in our executive compensation program, please see the discussion within CD&A beginning on page 35.
|
|
|
|
| Total Shareholder Return Amount |
$ 13.18
|
26.08
|
67.79
|
94.65
|
| Peer Group Total Shareholder Return Amount |
71.2
|
59.2
|
65.26
|
120.51
|
| Net Income (Loss) |
$ (23,379,000)
|
$ 27,242,000
|
$ 159,029,000
|
$ 126,634,000
|
| Company Selected Measure Amount |
108,744,000
|
168,149,000
|
292,276,000
|
270,613,000
|
| Measure:: 1 |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| Name |
Adjusted EBITDA
|
|
|
|
| Non-GAAP Measure Description |
This performance measure may not have been the most important financial performance measure for prior years and we may determine a different financial performance measure to be the most important such measure in future years. Adjusted EBITDA is defined on page 13 on our Annual Report on Form 10-K for fiscal year 2024 and is a non-GAAP financial measure.
|
|
|
|
| Measure:: 2 |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| Name |
Adjusted Net Income
|
|
|
|
| Measure:: 3 |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| Name |
Revenue
|
|
|
|
| Jason McDonell [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| PEO Total Compensation Amount |
$ 1,579,596
|
|
|
|
| PEO Actually Paid Compensation Amount |
$ 1,563,735
|
|
|
|
| PEO Name |
Jason McDonell
|
|
|
|
| John Strain [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| PEO Total Compensation Amount |
$ 318,028
|
|
|
|
| PEO Actually Paid Compensation Amount |
$ 245,217
|
|
|
|
| PEO Name |
John Strain
|
|
|
|
| Michael Egeck [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| PEO Total Compensation Amount |
$ 3,292,618
|
$ 4,041,971
|
$ 3,339,438
|
$ 7,911,515
|
| PEO Actually Paid Compensation Amount |
$ (2,794,641)
|
$ (3,796,598)
|
$ 72,348
|
36,569,924
|
| PEO Name |
Mike Egeck
|
|
|
|
| Steven Ortega [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| PEO Total Compensation Amount |
|
|
|
3,989,352
|
| PEO Actually Paid Compensation Amount |
|
|
|
$ 4,283,910
|
| PEO Name |
Steven Ortega
|
|
|
|
| PEO | Jason McDonell [Member] | Grant Date Fair Value of Stock and Option Awards Granted During Year [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| Adjustment to Compensation, Amount |
$ (1,150,000)
|
|
|
|
| PEO | Jason McDonell [Member] | Fair Value of Awards Granted During Year that Remain Unvested as of Year End [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| Adjustment to Compensation, Amount |
1,134,139
|
|
|
|
| PEO | John Strain [Member] | Grant Date Fair Value of Stock and Option Awards Granted During Year [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| Adjustment to Compensation, Amount |
(125,000)
|
|
|
|
| PEO | John Strain [Member] | Fair Value of Awards Granted During Year that Remain Unvested as of Year End [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| Adjustment to Compensation, Amount |
52,189
|
|
|
|
| PEO | Michael Egeck [Member] | Grant Date Fair Value of Stock and Option Awards Granted During Year [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| Adjustment to Compensation, Amount |
(1,800,046)
|
|
|
|
| PEO | Michael Egeck [Member] | Change in Fair Value from Prior Year End to Vesting Date for Awards Granted Prior to Year that Vested During Year [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| Adjustment to Compensation, Amount |
(2,781,651)
|
|
|
|
| PEO | Michael Egeck [Member] | Fair Value of Awards Granted Prior to Year that were Forfeited During Year [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| Adjustment to Compensation, Amount |
(1,505,562)
|
|
|
|
| Non-PEO NEO | Grant Date Fair Value of Stock and Option Awards Granted During Year [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| Adjustment to Compensation, Amount |
(451,138)
|
|
|
|
| Non-PEO NEO | Fair Value of Awards Granted During Year that Remain Unvested as of Year End [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| Adjustment to Compensation, Amount |
200,658
|
|
|
|
| Non-PEO NEO | Change in Fair Value from Prior Year End to Current Year End of Awards Granted Prior to Year that were Outstanding and Unvested as of Year End [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| Adjustment to Compensation, Amount |
(180,794)
|
|
|
|
| Non-PEO NEO | Change in Fair Value from Prior Year End to Vesting Date for Awards Granted Prior to Year that Vested During Year [Member] |
|
|
|
|
| Pay vs Performance Disclosure |
|
|
|
|
| Adjustment to Compensation, Amount |
$ (81,544)
|
|
|
|
