SCHEDULE 14A
INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by
the Registrant ☒
Filed by a
Party other than the Registrant ☐
Check the
appropriate box:
|
☐ |
Preliminary Proxy
Statement |
|
☐ |
Confidential, for Use
of the Commission Only (as permitted by Rule
14a-6(e)(2)) |
|
☒ |
Definitive Proxy
Statement |
|
☐ |
Definitive Additional
Materials |
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☐ |
Soliciting Material
under § 240.14a-12 |
ALTO INGREDIENTS, INC.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of
Filing Fee (Check all boxes that apply):
|
☐ |
Fee paid previously
with preliminary materials |
|
☐ |
Fee computed on table
in exhibit required by Item 25(b) per Exchange Act Rules
14a-6(i)(1) and 0-11 |
ALTO
INGREDIENTS, INC.
1300 South Second Street
Pekin, Illinois 61554
May 9,
2022
Dear
Fellow Stockholder:
We
cordially invite you to attend the 2022 annual meeting (“Annual
Meeting”) of stockholders of Alto Ingredients, Inc., which will be
held at 9:00 a.m., local time, on Thursday, June 23, 2022 at our
offices at 400 Capitol Mall, Suite 2060, Sacramento, California
95814. All stockholders of record at the close of business on April
27, 2022 are entitled to vote at the Annual Meeting. The formal
meeting notice and Proxy Statement are attached.
At this
year’s Annual Meeting, stockholders will be asked to (i) elect
seven directors; (ii) cast an advisory vote to approve our
executive compensation; (iii) approve an amendment to our 2016
Stock Incentive Plan to increase the number of shares of common
stock authorized for issuance under the plan from 7,400,000 shares
to 8,900,000 shares; and (iv) ratify the appointment of RSM US
LLP to serve as our independent registered public accounting firm
for the year ending December 31, 2022.
In
addition, stockholders will transact any other business that may
properly come before the Annual Meeting. A report on the business
operations of Alto Ingredients will also be presented at the
meeting and stockholders will have an opportunity to ask
questions.
We use the
Internet as our primary means of furnishing proxy materials to our
stockholders. Accordingly, most stockholders will not receive paper
copies of our proxy materials. We will instead send each
stockholder a notice with instructions for accessing the proxy
materials and voting electronically over the Internet or by
telephone. The notice also provides information on how stockholders
may request paper copies of our proxy materials. We believe
electronic delivery of our proxy materials and annual report will
help us reduce the environmental impact and costs of printing and
distributing paper copies and improve the speed and efficiency by
which our stockholders can access these materials.
Whether or
not you plan to attend the Annual Meeting, it is important that
your shares be represented and voted at the meeting and we urge you
to vote as soon as possible. As an alternative to voting in person
at the Annual Meeting, you may vote electronically over the
Internet or by telephone, or if you receive a proxy card or voting
instruction form in the mail, by mailing the completed proxy card
or voting instruction form. Timely voting by any of these methods
will ensure your representation at the Annual Meeting.
For
admission to the Annual Meeting, each stockholder may be asked to
present valid picture identification, such as a driver’s license or
passport, and proof of ownership of our capital stock as of the
record date, such as the enclosed proxy card or a brokerage
statement reflecting stock ownership.
Please
note that we are actively monitoring developments with respect to
the coronavirus (COVID-19) and the advice and guidance of public
health officials, including guidelines on limits to the number of
people permitted to congregate in one location. We are sensitive to
the public health and travel concerns our stockholders may have and
the protocols that federal, state, and local governments may
impose. In the event it is not possible or advisable to hold the
Annual Meeting in person, we will announce any change in date, time
or location of the meeting as promptly as practicable, which may
include postponing or adjourning the Annual Meeting or holding the
Annual Meeting by means of remote communication. We will make any
announcement regarding a change to the date, location or format of
the Annual Meeting by issuing a press release, by filing definitive
additional materials with the Securities and Exchange Commission
and by taking all other steps necessary to inform our stockholders
of the change. Please monitor our website at
www.altoingredients.com, news releases and our filings with the
Securities and Exchange Commission for updated information. If you
are planning to attend the Annual Meeting, please check the website
one week prior to the meeting date. As always, we encourage you to
vote your shares prior to the Annual Meeting.
We look
forward to seeing you June 23rd.
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Sincerely, |
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 |
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William L. Jones, |
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Chairman of the Board |
ALTO
INGREDIENTS, INC.
NOTICE
OF THE 2022 ANNUAL MEETING OF STOCKHOLDERS
TO BE
HELD JUNE 23, 2022
NOTICE IS
HEREBY GIVEN that the 2022 annual meeting (“Annual Meeting”) of
stockholders of Alto Ingredients, Inc., a Delaware corporation,
will be held at 9:00 a.m., local time, on Thursday, June 23, 2022
at our offices at 400 Capitol Mall, Suite 2060, Sacramento,
California 95814, for the following purposes, as more fully
described in the Proxy Statement accompanying this
notice:
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1. |
To
elect seven directors to serve on our Board of Directors until the
next annual meeting of stockholders and/or until their successors
are duly elected and qualified. The nominees for election are
William L. Jones, Michael D. Kandris, Terry L. Stone, Maria G.
Gray, Douglas L. Kieta, Gilbert E. Nathan and Dianne S.
Nury. |
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2. |
To
cast a non-binding advisory vote to approve our executive
compensation (“say-on-pay”). |
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3. |
To
approve an amendment to our 2016 Stock Incentive Plan to increase
the number of shares of common stock authorized for issuance under
the plan from 7,400,000 shares to 8,900,000 shares. |
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4. |
To
ratify the appointment of RSM US LLP as our independent registered
public accounting firm for the year ending December 31,
2022. |
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5. |
To
transact such other business as may properly come before the Annual
Meeting or any adjournment(s) or postponement(s)
thereof. |
All
stockholders of record at the close of business on April 27, 2022
are entitled to notice of and to vote at the Annual Meeting and any
adjournment(s) or postponement(s) thereof.
We cordially invite all stockholders to attend the Annual Meeting
in person. Whether or not you plan to attend, it is important that
your shares be represented and voted at the meeting. As an
alternative to voting in person at the Annual Meeting, you can vote
your shares electronically over the Internet, or if you receive a
proxy card or voting instruction form in the mail, by mailing the
completed proxy card or voting instruction form. For detailed
information regarding voting instructions, please refer to the
section entitled “How do I vote?” on page 4 of the Proxy
Statement.
For
admission to the Annual Meeting, each stockholder may be asked to
present valid picture identification, such as a driver’s license or
passport, and proof of ownership of our capital stock as of the
record date, such as the enclosed proxy card or a brokerage
statement reflecting stock ownership.
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By
Order of the Board of Directors, |
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 |
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William
L. Jones, |
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Chairman
of the Board |
Pekin,
Illinois
May
9, 2022
INTERNET
AVAILABILITY OF PROXY MATERIALS
WE USE THE
INTERNET AS OUR PRIMARY MEANS OF FURNISHING PROXY MATERIALS TO OUR
STOCKHOLDERS. CONSEQUENTLY, MOST STOCKHOLDERS WILL NOT RECEIVE
PAPER COPIES OF OUR PROXY MATERIALS. WE WILL INSTEAD SEND EACH
STOCKHOLDER A NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
WITH INSTRUCTIONS FOR ACCESSING OVER THE INTERNET THE PROXY
MATERIALS, INCLUDING OUR PROXY STATEMENT AND ANNUAL REPORT, AND
VOTING ELECTRONICALLY OVER THE INTERNET. THE NOTICE OF INTERNET
AVAILABILITY OF PROXY MATERIALS ALSO PROVIDES INFORMATION ON HOW
STOCKHOLDERS MAY OBTAIN PAPER COPIES OF OUR PROXY MATERIALS IF THEY
SO CHOOSE. WE BELIEVE ELECTRONIC DELIVERY OF OUR PROXY MATERIALS
AND ANNUAL REPORT WILL HELP ALTO INGREDIENTS, INC. REDUCE THE
ENVIRONMENTAL IMPACT AND COSTS OF PRINTING AND DISTRIBUTING PAPER
COPIES AND IMPROVE THE SPEED AND EFFICIENCY BY WHICH YOU CAN ACCESS
THESE MATERIALS. IF YOU PREVIOUSLY ELECTED TO RECEIVE OUR PROXY
MATERIALS ELECTRONICALLY, THESE MATERIALS WILL CONTINUE TO BE SENT
VIA EMAIL UNLESS YOU CHANGE YOUR ELECTION.
ALTO
INGREDIENTS, INC.
PROXY
STATEMENT
FOR THE
2022 ANNUAL MEETING OF STOCKHOLDERS
JUNE
23, 2022
TABLE
OF CONTENTS
ALTO
INGREDIENTS, INC.
1300 South Second Street
Pekin, Illinois 61554
PROXY
STATEMENT
FOR THE
2022 ANNUAL MEETING OF STOCKHOLDERS
Voting and
Proxy
This Proxy
Statement is being furnished in connection with the solicitation of
proxies by our Board of Directors (“Board”) for use at the 2022
annual meeting (“Annual Meeting”) of stockholders to be held on
Thursday, June 23, 2022, at 9:00 a.m., local time, at our offices
at 400 Capitol Mall, Suite 2060, Sacramento, California 95814, and
at any adjournment(s) or postponement(s) of the Annual Meeting. We
are providing this Proxy Statement and the accompanying proxy card
to our stockholders on or about May 9, 2022. Our stockholders are
invited to attend the Annual Meeting and are requested to vote on
the proposals described in this Proxy Statement.
Please
note that we are continuing to monitor the public health and safety
concerns related to the coronavirus (COVID-19) and the various
measures being implemented to reduce its spread. If we determine it
is advisable not to hold the Annual Meeting in person, we may
decide to change the date, time or location of the meeting,
including to hold it “virtually.” If we do make such a change, we
will promptly provide public notice in a manner compliant with
applicable Securities and Exchange Commission guidance.
IMPORTANT NOTICE
REGARDING THE INTERNET AVAILABILITY
OF
PROXY MATERIALS FOR THE 2022 ANNUAL MEETING
OF
STOCKHOLDERS TO BE HELD JUNE 23, 2022
This Proxy
Statement and our Annual Report on Form 10-K for the year ended
December 31, 2021 are available at the website address at
http://proxyvote.com. You will need your control number located in
our Notice of Internet Availability of Proxy Materials sent to you
to access the proxy materials. Your control number is also located
in your proxy card and your voting instruction form. You are
encouraged to access and review all of the important information
contained in the proxy materials before voting. The Annual Report
is not to be regarded as proxy soliciting material or as a
communication through which any solicitation of proxies is
made.
What
items will be voted on at the Annual Meeting?
Stockholders will vote
on four items at the Annual Meeting:
Proposal 1 |
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Election to our Board of the seven nominees named in this Proxy
Statement; |
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Proposal
2 |
– |
A non-binding
advisory vote to approve our executive compensation
(“say-on-pay”); |
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Proposal
3 |
– |
A proposal to
amend our 2016 Stock Incentive Plan (the “2016 Plan”) to increase
the number of shares of common stock authorized for issuance under
the 2016 Plan; and |
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Proposal 4 |
– |
Ratification of
the appointment of RSM US LLP as our independent registered public
accounting firm for 2022. |
What
are the Board’s Voting Recommendations?
The Board
recommends that you vote your shares as follows:
Proposal 1 |
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“FOR” each of the nominees to our Board; |
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Proposal
2 |
– |
“FOR”
the approval of our executive compensation (“say-on-pay”); |
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Proposal
3 |
– |
“FOR”
the proposal to amend our 2016 Plan to increase the number of
shares of common stock authorized for issuance under the 2016 Plan;
and |
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Proposal
4 |
– |
“FOR”
the ratification of the appointment of RSM US LLP as our
independent registered public accounting firm for 2022. |
Who is
entitled to vote?
To be able
to vote, you must have been a stockholder on April 27, 2022, the
record date for determination of stockholders entitled to notice of
and to vote at the Annual Meeting. As of the record date,
74,075,166 shares of our voting common stock, par value $0.001 per
share (“common stock”), and 926,942 shares of our Series B
Cumulative Convertible Preferred Stock, par value $0.001 per share
(“Series B Preferred Stock”), were issued and
outstanding.
As of the
record date, 896 shares of our non-voting common stock, par value
$0.001 per share (“Non-Voting Common Stock”), were also issued and
outstanding. Holders of our Non-Voting Common Stock are entitled to
notice of and to attend the Annual Meeting but are not entitled to
vote on any matters in respect of their shares of Non-Voting Common
Stock.
How
many votes do I have?
Holders of
common stock and Series B Preferred Stock will vote at the Annual
Meeting as a single class on all matters. Each holder of common
stock is entitled to one vote per share held, and each holder of
Series B Preferred Stock is entitled to approximately 0.03 votes
per share held. As a result, a total of 74,101,647 votes may be
cast at the Annual Meeting, of which holders of common stock will
be entitled to cast 74,075,166 votes and holders of Series B
Preferred Stock will be entitled to cast 26,481 votes.
What is
a quorum?
For
business to be conducted at the Annual Meeting, a quorum must be
present. The presence at the Annual Meeting, either in person or by
proxy, of holders of shares of outstanding common stock and Series
B Preferred Stock entitled to vote and representing at least a
majority of our outstanding voting power will constitute a quorum
for the transaction of business. Accordingly, shares representing
37,050,824 votes must be present in person or by proxy at the
Annual Meeting to constitute a quorum.
Abstentions and broker
non-votes will be counted for the purpose of determining whether a
quorum is present for the transaction of business.
If a
quorum is not present, the Annual Meeting will be adjourned until a
quorum is obtained.
What
are abstentions and broker non-votes?
An
“abstention” is the voluntary act of not voting by a stockholder
who is present at a meeting in person or by proxy and entitled to
vote. “Broker non-votes” refers to shares held by a brokerage firm
or other nominee (for the benefit of its client) that are
represented at the meeting, but with respect to which such broker
or nominee is not instructed to vote on a particular proposal and
does not have discretionary authority to vote on that
proposal.
If you are
a beneficial owner whose shares are held in street name and you do
not submit voting instructions to your broker, your broker may
generally vote your shares in its discretion on routine matters. We
believe that Proposal Four is routine and may be voted on by your
broker if you do not submit voting instructions. However, pursuant
to the rules of The NASDAQ Stock Market (“NASDAQ”), brokers do not
have the discretion to vote their clients’ shares on non-routine
matters, unless the broker receives voting instructions from the
beneficial owner. Proposals One, Two and Three are considered
non-routine matters. Consequently, if your shares are held in
street name, you must provide your broker with instructions on how
to vote your shares in order for your shares to be voted on
Proposals One, Two and Three.
What
are the general effects of abstentions and broker
non-votes?
Brokers
who hold shares for the accounts of their clients may vote such
shares either as directed by their clients or in their own
discretion as permitted under NASDAQ’s listing rules. For purposes
of the Annual Meeting, brokers or nominees are permitted to vote
their clients’ proxies in their own discretion as to the
ratification of the appointment of our independent registered
public accounting firm if the clients have not furnished voting
instructions within 10 days of the meeting. Certain proposals other
than the ratification of the appointment of the independent
registered public accounting firm, such as the election of
directors, are “non-discretionary” and brokers or nominees who have
received no instructions from their clients do not have discretion
to vote on those items. Abstentions and broker non-votes will not
be counted as a vote “for” or “against” any matter, though in
certain cases abstentions will have the same effect as votes
against a matter as they will be counted toward the tabulation of
votes present or represented on the matter. Broker non-votes will
not be counted as shares entitled to vote and accordingly will not
affect the outcome with respect to any matter to be voted on at the
Annual Meeting.
Please
note that brokers may not vote your shares on the election of
directors or other non-routine matters in the absence of your
specific instructions as to how to vote, thus we strongly encourage
you to provide instructions to your broker regarding the voting of
your shares you hold in “street name” or through a broker or other
nominee.
What
vote is required to approve each proposal?
Proposal One
The seven
nominees receiving the highest number of affirmative votes of the
outstanding shares of common stock and Series B Preferred Stock,
voting together as a single class, present at the Annual Meeting in
person or represented by proxy and entitled to vote, will be
elected as directors to serve until the next annual meeting of
stockholders and/or until their successors are duly elected and
qualified. Abstentions will have no effect on the outcome of the
election of nominees for director. Should any nominee(s) become
unavailable to serve before the Annual Meeting, the proxies will be
voted by the proxy holders for such other person(s) as may be
designated by our Board or for such lesser number of nominees as
may be prescribed by the Board. Votes cast for the election of any
nominee who has become unavailable will be disregarded.
Proposal
Two
Under
Proposal Two, our stockholders will have an advisory vote on
executive compensation as described in this Proxy Statement
(commonly referred to as “say-on-pay”). The votes under Proposal
Two are, however, only advisory in nature, and the outcome of
stockholder votes on Proposal Two will not be binding upon us, or
our Compensation Committee or full Board. However, our Compensation
Committee and our full Board will consider the results of the votes
when making future decisions regarding our executive compensation
policies and practices and in determining the frequency of future
say-on-pay votes.
Proposals Three and
Four
The
affirmative vote of a majority of the votes of the shares of our
common stock and Series B Preferred Stock, voting together as a
single class, present at the Annual Meeting in person or
represented by proxy and entitled to vote, is required for approval
of Proposals Three and Four. Abstentions will be counted toward the
tabulation of votes present or represented on these proposals and
will have the same effect as votes against Proposals Three and
Four.
How do
I vote?
If you are
a “registered holder,” that is, your shares are registered in your
own name through our transfer agent, and you are viewing this proxy
over the Internet you may vote electronically over the Internet.
For those stockholders who receive a paper proxy in the mail, you
may also vote electronically over the Internet or by telephone, or
by completing and mailing the proxy card provided. The website
identified in our Notice of Internet Availability of Proxy
Materials provides specific instructions on how to vote
electronically over the Internet. Those stockholders who receive a
paper proxy by mail, and who elect to vote by mail, should complete
and return the mailed proxy card in the prepaid and addressed
envelope that was enclosed with the proxy materials.
If your
shares are held in “street name,” that is, your shares are held in
the name of a brokerage firm, bank or other nominee, you will
receive instructions from your record holder that must be followed
for your record holder to vote your shares per your instructions.
Your broker will send you a Notice of Internet Availability of
Proxy Materials which contains instructions on how to access the
website to vote your shares electronically over the Internet or by
telephone. If, however, you have elected to receive paper copies of
our proxy materials from your brokerage firm, bank or other
nominee, you will receive an enclosed voting instruction form.
Please complete and return the enclosed voting instruction form in
the addressed, postage paid envelope provided.
Stockholders who have
previously elected to access our proxy materials and annual report
electronically over the Internet will continue to receive an email,
referred to in this Proxy Statement as an email notice, with
information on how to access the proxy information and voting
instructions.
Only proxy
cards and voting instruction forms that have been signed, dated and
timely returned, and only shares that have been timely voted
electronically or by telephone will be counted in the quorum and
voted. The Internet and telephone voting facilities will close
at 11:59 p.m. Eastern Time, Wednesday, June 22, 2022 for
shares held directly and at 11:59 p.m. Eastern Time, Monday,
June 20, 2022 for shares held in a plan.
Stockholders who vote
over the Internet or by telephone need not return a proxy card or
voting instruction form by mail, but may incur costs, such as usage
charges, from telephone companies or Internet service providers.
You may also vote your shares in person at the Annual Meeting. If
you are a registered holder, you may request a ballot at the Annual
Meeting. If your shares are held in street name and you wish to
vote in person at the meeting, you must obtain a proxy issued in
your name from the record holder (e.g., your broker) and bring it
with you to the Annual Meeting. We recommend that you vote your
shares in advance as described above so that your vote will be
counted if you later decide not to attend the Annual
Meeting.
What if
I receive more than one Notice of Internet Availability of Proxy
Materials, email notice, proxy card or voting instruction
form?
If you
receive more than one Notice of Internet Availability of Proxy
Materials, email notice, proxy card or voting instruction form
because your shares are held in multiple accounts or registered in
different names or addresses, please vote your shares held in
each account to ensure that all of your shares will be
voted.
I share
an address with another stockholder and we received only one paper
copy of the proxy materials. How may I obtain an additional copy of
the proxy materials?
We have
adopted a Securities and Exchange Commission approved procedure
called “householding.” Under this procedure, we deliver a single
copy of the Notice of Internet Availability of Proxy Materials and,
if applicable, our proxy materials to multiple stockholders who
share the same address unless we have received contrary
instructions from one or more of such stockholders. This procedure
reduces our printing costs, mailing costs and fees. Stockholders
who participate in householding will continue to be able to access
and receive separate proxy cards. Upon written or oral request, we
will deliver promptly a separate copy of the Notice of Internet
Availability of Proxy Materials and, if applicable, our proxy
materials to any stockholder at a shared address to which we
delivered a single copy of any of these materials. To receive a
separate copy, or, if a stockholder is receiving multiple copies,
to request that we only send a single copy of the Notice of
Internet Availability of Proxy Materials and, if applicable, our
proxy materials, such stockholder may contact us as
follows:
Alto
Ingredients, Inc.
Attention:
Investor Relations
1300 South
Second Street
Pekin,
Illinois 61554
telephone
(916) 403-2123
Stockholders who hold
shares in street name may contact their brokerage firm, bank,
broker-dealer, or other similar organization to request information
about householding.
Who
will count the votes and how will my vote(s) be
counted?
All votes
will be tabulated by the inspector of elections appointed for the
Annual Meeting, who will separately tabulate affirmative and
negative votes, abstentions and broker non-votes.
If your
proxy is properly submitted, the shares represented thereby will be
voted at the Annual Meeting in accordance with your instructions.
If you are a registered holder and you do not specify how the
shares represented thereby are to be voted, your shares will be
voted “FOR” the election of each of the seven nominees to
our Board listed in the proxy, “FOR” the approval of each of
Proposals Two, Three and Four, and in the discretion of the proxy
holder(s) as to any other matters that may properly come before the
Annual Meeting or any adjournment(s) or postponement(s) of the
Annual Meeting, as well as any procedural matters. If your shares
are held in street name and you do not specify how the shares
represented thereby are to be voted, your broker may exercise its
discretionary authority to vote on Proposal Four.
Can I
change my vote after I have voted?
If your shares are registered in your name, you may revoke or
change your vote at any time before the Annual Meeting by voting
again electronically over the Internet or telephone, or by filing a
notice of revocation or another proxy card with a later date with
our Secretary at Alto Ingredients, Inc., 1300 South Second Street,
Pekin, Illinois 61554. If you are a registered stockholder and
attend the Annual Meeting and vote by ballot, any proxy that you
submitted previously to vote the same shares will be revoked
automatically and only your vote at the Annual Meeting will be
counted. If your shares are held in street name, you should contact
the record holder to obtain instructions if you wish to revoke or
change your vote before the Annual Meeting. Please note that if
your shares are held in street name, your vote in person at the
Annual Meeting will not be effective unless you have obtained and
present a proxy issued in your name from the record holder.
Who
will bear the cost of soliciting proxies?
We will
bear the entire cost of soliciting proxies for the Annual Meeting,
including the cost of preparing, assembling, printing and mailing
the Notice of Internet Availability of Proxy Materials, this Proxy
Statement, the proxy card and any additional solicitation materials
furnished to our stockholders. Copies of solicitation materials
will be furnished to brokerage firms, fiduciaries and custodians
holding shares in their names that are beneficially owned by others
so that they may forward the solicitation materials to the
beneficial owners. We may reimburse such persons for their
reasonable expenses in forwarding solicitation materials to
beneficial owners. The original solicitation of proxies may be
supplemented by solicitation by personal contact, telephone,
facsimile, email or any other means by our directors, officers or
employees, and we will reimburse any reasonable expenses incurred
for that purpose. No additional compensation will be paid to those
individuals for any such services.
The
matters to be considered and acted upon at the Annual Meeting are
referred to in the preceding notice and are discussed below more
fully.
Proposal One
Election of Directors
Our bylaws
provide for seven directors unless otherwise changed by resolution
of our Board. Directors are elected annually and hold office until
the next annual meeting of stockholders and/or until their
respective successors are duly elected and qualified. Stockholders
who desire to nominate any person for election to our Board must
comply with our bylaws, including our advance-notice bylaw
provisions relating to the nomination of persons for election to
our Board. See “Information about our Board of Directors, Board
Committees and Related Matters—Board Committees and Meetings,
Nominating and Corporate Governance Committee” below. It is
intended that the proxies solicited by our Board will be voted
“FOR” election of the following seven nominees unless a
contrary instruction is made on the proxy: William L. Jones,
Michael D. Kandris, Terry L. Stone, Maria G. Gray, Douglas L.
Kieta, Gilbert E. Nathan and Dianne S. Nury. If, for any reason,
one or more of the nominees is unavailable as a candidate for
director, an event that is not expected, the person named in the
proxy will vote for another candidate or candidates nominated by
our Nominating and Corporate Governance Committee. However, under
no circumstances may a proxy be voted in favor of a greater number
of persons than the number of nominees named above. Six of the
seven nominees for director are present directors of Alto
Ingredients. All of the nominees have been nominated by our
Nominating and Corporate Governance Committee and ratified by our
full Board.
Required Vote of
Stockholders
The seven
nominees receiving the highest number of affirmative votes of the
outstanding shares of our common stock and Series B Preferred
Stock, voting together as a single class, present at the Annual
Meeting in person or by proxy and entitled to vote, will be elected
as directors to serve until the next annual meeting of stockholders
and/or until their successors are duly elected and qualified. Votes
against a candidate, abstentions and broker non-votes will be
counted for purposes of determining whether a quorum is present for
this proposal, but will not be included in the vote totals for this
proposal and, therefore, will have no effect on the
vote.
Majority Voting
Guidelines
We have
adopted corporate governance guidelines that implement a majority
voting standard for uncontested elections of directors—that is, an
election where the only nominees are those recommended by the
Board. Notwithstanding that a nominee may be within the group of
seven nominees receiving the highest number of affirmative votes,
as determined above, if an incumbent nominee for director in an
uncontested election receives a greater number of votes against his
or her election than votes in favor of his or her election (a
“Majority Against Vote”), our corporate governance guidelines
require that the nominee promptly tender his or her resignation
following certification of the vote. Our Nominating and Corporate
Governance Committee will promptly consider the tendered
resignation and recommend to the full Board whether to accept the
tendered resignation or take other action, such as rejecting the
tendered resignation and addressing the apparent underlying causes
of the Majority Against Vote.
In making
this recommendation, our Nominating and Corporate Governance
Committee will consider all factors deemed relevant, including the
underlying ascertainable reasons why stockholders voted against the
director, the length of service and qualifications of the director,
the director’s contributions to Alto Ingredients, whether by
accepting the resignation we will no longer be in compliance with
any applicable law, rule, regulation or governing document, and
whether or not accepting the resignation is in the best interests
of Alto Ingredients and our stockholders. Any director who tenders
his or her resignation under these guidelines is not to participate
in the Nominating and Corporate Governance Committee recommendation
or Board consideration regarding whether or not to accept the
tendered resignation. We will promptly and publicly disclose the
Board’s decision and process in a report filed with or furnished to
the Securities and Exchange Commission.
Recommendation of
the Board of Directors
OUR BOARD unanimously recommends a vote “FOR” the election
of EACH OF the seven director nominees listed above.
Information About Our
Board of Directors,
Board Committees and Related Matters
Directors
and Director Nominees
The
following table sets forth certain information regarding our
directors and director nominees as of April 27, 2022:
Name |
|
Age |
|
Position(s) Held |
William L. Jones(1) |
|
72 |
|
Chairman of the Board, Director and Director Nominee |
Michael D. Kandris |
|
74 |
|
President, Chief Executive Officer, Chief Operating Officer,
Director and Director Nominee |
Terry L. Stone(2) |
|
72 |
|
Director and Director Nominee |
John L. Prince(3) |
|
79 |
|
Director |
Maria G. Gray |
|
45 |
|
Director Nominee |
Douglas L. Kieta(4) |
|
79 |
|
Director and Director Nominee |
Gilbert E. Nathan(5) |
|
42 |
|
Director and Director Nominee |
Dianne S. Nury(6) |
|
62 |
|
Director and Director Nominee |
|
(1) |
Member of the Audit
and Nominating and Corporate Governance Committees. |
|
(2) |
Member of the Audit
and Compensation Committees. |
|
(3) |
Member of the Audit,
Compensation and Nominating and Corporate Governance
Committees. |
|
(4) |
Member of the
Nominating and Corporate Governance Committee. |
|
(5) |
Member of the
Compensation and Nominating and Corporate Governance
Committees. |
|
(6) |
Member of the Audit
and Compensation Committees. |
Experience and
Background
The
biographies below describe the skills, qualities, attributes and
business experience of each of our directors, including the
capacities in which they served during the past five
years:
William L.
Jones has served as Chairman of the Board and as a director
since March 2005. Mr. Jones is a co-founder of Pacific Ethanol
California, Inc., or PEI California, which is one of our
predecessors, and served as Chairman of the Board of PEI California
since its formation in January 2003 through March 2004, when he
stepped off the board of directors of PEI California to focus on
his candidacy for one of California’s United States Senate seats.
Mr. Jones was California’s Secretary of State from 1995 to 2003.
Since May 2002, Mr. Jones has also been the owner of Tri-J Land
& Cattle, a diversified farming and cattle company in Fresno
County, California. Mr. Jones has a B.A. degree in Agribusiness and
Plant Sciences from California State University, Fresno.
Mr.
Jones’s qualifications to serve on our Board include:
|
● |
co-founder of PEI
California; |
|
● |
knowledge gained
through his extensive work as our Chairman since our inception in
2005; |
|
● |
extensive knowledge of
and experience in the agricultural and feed industries, as well as
a deep understanding of operations in political environments;
and |
|
● |
background as an owner
of a farming company in California, and his previous role in the
California state government. |
Michael D.
Kandris has served as a director since June 2008, as our
sole President and Chief Executive Officer since September 2020 and
as our Chief Operating Officer since January 6, 2013. Mr. Kandris
was appointed as our Co-President and Co-Chief Executive Officer in
May 2020. Mr. Kandris served as an independent contractor with
supervisory responsibility for plant operations, under the
direction of our Chief Executive Officer, from January 1, 2012 to
January 5, 2013. Mr. Kandris was President of the Western Division
of Ruan Transportation Management Systems from November 2008 until
his retirement in September 2009. From January 2000 to November
2008, Mr. Kandris served as President and Chief Operating Officer
of Ruan Transportation Management Systems, where he had overall
responsibility for all operations, finance and administrative
functions. Mr. Kandris has 30 years of experience in all modes of
transportation and logistics. Mr. Kandris served on the Executive
Committee of the American Trucking Association and as a board
member for the National Tank Truck Organization until his
retirement from Ruan Transportation Management Systems in September
2009. Mr. Kandris has a B.S. degree in Business from California
State University, Hayward.
Mr.
Kandris’s qualifications to serve on our Board include:
|
● |
extensive experience
in various executive leadership positions; |
|
● |
extensive experience
in rail and truck transportation and logistics; and |
|
● |
day-to-day leadership
experience affords a deep understanding of business operations,
challenges and opportunities. |
Terry L.
Stone has served as a director since March 2005. Mr. Stone
is a Certified Public Accountant with over forty years of
experience in accounting and taxation. He has been the owner of his
own accountancy firm since 1990 and has provided accounting and
taxation services to a wide range of industries, including
agriculture, manufacturing, retail, equipment leasing,
professionals and not-for-profit organizations. Mr. Stone has
served as a part-time instructor at California State University,
Fresno, teaching classes in taxation, auditing and financial and
management accounting. Mr. Stone is also a financial advisor and
franchisee of Ameriprise Financial Services, LLC. Mr. Stone has a
B.S. degree in Accounting from California State University,
Fresno.
Mr.
Stone’s qualifications to serve on our Board include:
|
● |
extensive experience
with financial accounting and tax matters; |
|
● |
recognized expertise
as an instructor of taxation, auditing and financial and management
accounting; |
|
● |
“audit
committee financial expert,” as defined by the Securities and
Exchange Commission; |
|
● |
satisfies the
“financial sophistication” requirements of NASDAQ’s listing
standards; and |
|
● |
ability to communicate
and encourage discussion, together with his experience as a senior
independent director of all Board committees on which he serves
make him an effective chairman of our Audit Committee. |
John
L. Prince has served as a director since July 2005. Mr.
Prince is retired but also works as a consultant. Mr. Prince was an
Executive Vice President with Land O’ Lakes, Inc. from July 1998
until his retirement in 2004. Prior to that time, Mr. Prince was
President and Chief Executive Officer of Dairyman’s Cooperative
Creamery Association located in Tulare, California, until its
merger with Land O’ Lakes, Inc. in July 1998. Land O’ Lakes, Inc.
is a farmer-owned, national branded organization based in Minnesota
with annual sales in excess of $6 billion and membership and
operations in over 30 states. Prior to joining the Dairyman’s
Cooperative Creamery Association, Mr. Prince was President and
Chief Executive Officer for nine years until 1994, and was
Operations Manager for the preceding ten years commencing in 1975,
of the Alto Dairy Cooperative in Waupun, Wisconsin. Mr. Prince has
a B.A. degree in Business Administration from the University of
Northern Iowa.
Mr.
Prince’s qualifications to serve on our Board include:
|
● |
extensive experience
in various executive leadership positions; |
|
● |
day-to-day leadership
experience affords a deep understanding of business operations,
challenges and opportunities; and |
|
● |
ability to communicate
and encourage discussion helps Mr. Prince discharge his duties
effectively as chairman of our Nominating and Corporate Governance
Committee. |
Maria G.
Gray has served as an advisor to our Board since June 2021.
Ms. Gray served as a Senior Refining Engineer at Marathon Petroleum
Company, an American petroleum refining, marketing, and
transportation company headquartered in Findlay, Ohio. From 2012 to
2021, Ms. Gray served in several capacities including as a Senior
Health, Safety, and Environmental Professional and as a Project
Process Engineering Lead, at Marathon Petroleum Company. Ms. Gray
also served in various engineering and supervisory capacities from
2001 to 2012 for Motiva Enterprises LLC, then a joint venture
between Shell Oil Company and Saudi Refining Inc, a subsidiary of
Saudi Aramco, that operates North America’s largest refinery in
Port Arthur, Texas, producing and distributing fuels and specialty
chemicals. Ms. Gray also served as a Process Engineer for Union
Carbide Corporation, a wholly-owned subsidiary of Dow Chemical
Company, that produces specialty chemicals and polymers. Ms. Gray
has a B.S. degree in Chemical Engineering, Minor in Business and
Minor in Architecture from Tulane University.
Ms. Gray’s
qualifications to serve on our Board include:
|
● |
experience in
energy-related roles pertaining to refining and chemical processes,
understanding economics and driving results; |
|
● |
day-to-day engineering
experience with a deep understanding of production processes,
including plant operations and optimization; |
|
● |
experience in major
capital project development and execution ranging from $120 million
to $400 million dollar investments; |
|
● |
experience in driving
Process Safety Management initiatives and developing management
systems to energize organizations around safety and regulatory
compliance; and |
|
● |
her
membership on our Board would further our goal of increasing Board
diversity. |
Douglas L.
Kieta has served as a director since April 2006. Mr. Kieta
is currently retired but also works as a consultant through Century
West Projects, Inc., of which he is the President and an owner,
providing project and construction management services. Prior to
his retirement in January 2009, Mr. Kieta was employed by BE&K,
Inc., a large engineering and construction company headquartered in
Birmingham, Alabama, where he served as the Vice President of Power
from May 2006 to January 2009. From April 1999 to April 2006, Mr.
Kieta was employed at Calpine Corporation where he was the Senior
Vice President of Construction and Engineering. Calpine Corporation
is a major North American power company which leases and operates
integrated systems of fuel-efficient natural gas-fired and
renewable geothermal power plants and delivers clean, reliable and
fuel-efficient electricity to customers and communities in 21
states and three Canadian provinces. Mr. Kieta has a B.S. degree in
Civil Engineering from Clarkson University and a Master’s degree in
Civil Engineering from Cornell University.
Mr.
Kieta’s qualifications to serve on our Board include:
|
● |
extensive experience
in various leadership positions; |
|
● |
day-to-day leadership
experience affords a deep understanding of business operations,
challenges and opportunities; and |
|
● |
service with Calpine
affords a deep understanding of large-scale construction and
engineering projects as well as plant operations, which is
particularly relevant to our alcohol production facility
operations. |
Gilbert E.
Nathan has served as a director since November 2019 and,
prior to formally joining our Board as a director, served as an
advisor to our Board since November 2015. Mr. Nathan is the
Managing Member of Jackson Square Advisors LLC, which he founded in
2015. He serves on the Board of Directors of Westmoreland Mining,
LLC, and Ready Capital Corporation, a public company, and also
serves as the Chief Executive Officer of Keycon Power Holdings LLC,
a position he has held since November 2018. He previously served on
the boards of directors of Owens Realty Mortgage, Inc. and Emergent
Capital, Inc., and as a liquidating trust board member of Hercules
Offshore Liquidating Trust. From 2013 to 2015, Mr. Nathan was a
Senior Analyst with Candlewood Investment Group, an investment firm
with significant debt and equity investments in the ethanol
industry. From 2002 to 2012, Mr. Nathan was a Principal at
Restoration Capital Management, an investment firm focused on
distressed investments, event driven situations, and high-yield
debt. Mr. Nathan has a B.S. degree in Management, Major in Finance
from the A. B. Freeman School of Business at Tulane
University.
Mr.
Nathan’s qualifications to serve on our Board include:
|
● |
experience in
research, financial analysis and trading in debt and equity
investments; |
|
● |
experience in
energy-related investments, including oil and gas exploration and
production; renewable energy; power; and oil field
services; |
|
● |
experience in
fiduciary roles, including service on boards of directors and
special committees of public companies, and as a
trustee; |
|
● |
would
qualify as an “audit committee financial expert,” as defined by the
Securities and Exchange Commission; and |
|
● |
satisfies the
“financial sophistication” requirements of NASDAQ’s listing
standards. |
Dianne S.
Nury has served as a director since November 2019 and,
prior to formally joining our Board as a director, served as an
advisor to our Board since August 2018. Ms. Nury has served since
1990 as President and Chief Executive Officer of Vie-Del Company, a
family-owned winery, distillery and fruit juice processor
manufacturing liquid ingredients for spirits, wine, food and
beverage companies. Ms. Nury serves on the Board of Directors and
is a former Chairman of the Board of the Wine Institute, the
largest advocacy and public policy association for California wine.
Ms. Nury is a member of the Juice Products Association, the
national trade association representing the fruit and juice
products industry, and formerly served as Chairman of its Board of
Directors. She is a member of the Board of Directors of the
Agricultural Foundation for California State University at Fresno,
where she serves as the Vice Chairman of the Viticulture and
Enology Industry Advisory Board. Ms. Nury previously served on the
USDA Fruit and Vegetable Industry Advisory Committee. Ms. Nury is a
Board Member of the Foundation for Clovis Schools, Clovis,
California, and previously served on the Board of Trustees of the
Saint Agnes Medical Center, Fresno, California. Ms. Nury has a B.S.
degree in Business from California State University at
Fresno.
Ms. Nury’s
qualifications to serve on our Board include:
|
● |
experience in an
executive management role as a chief executive officer; |
|
● |
experience in alcohol,
beverage and food ingredient industries; |
|
● |
experience on boards
of alcohol and food products industry associations; and |
|
● |
her
membership on our Board furthers our goal of increasing Board
diversity. |
Family
Relationships
There are
no family relationships among our directors or director
nominees.
Corporate
Governance
Corporate
Governance Guidelines
Our Board
believes that good corporate governance is paramount to ensure that
Alto Ingredients is managed for the long-term benefit of our
stockholders. Our Board has adopted corporate governance guidelines
that guide its actions with respect to, among other things, the
composition of the Board and its decision-making processes, Board
meetings and involvement of management, the Board’s standing
committees and procedures for appointing members of the committees,
and its performance evaluation of our Chief Executive
Officer.
Our Board
has adopted a Code of Ethics that applies to all of our directors,
officers, employees and consultants and an additional Code of
Ethics that applies to our Chief Executive Officer and senior
financial officers. The Codes of Ethics, as applied to our
principal executive officer, principal financial officer and
principal accounting officer constitutes our “code of ethics”
within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002
and is our “code of conduct” within the meaning of NASDAQ’s listing
standards. Our Codes of Ethics are available on our website at
http://www.altoingredients.com/governance.
Information on our website is not, and shall not be deemed to be, a
part of this Proxy Statement or incorporated into any other filings
we make with the Securities and Exchange Commission.
Board
Leadership Structure
Our
Chairman of the Board is William L. Jones, who is a non-employee
director. Our Chief Executive Officer is Michael D. Kandris. Mr.
Jones has served as our Chairman of the Board since our inception
in 2005. Mr. Kandris has served as our sole Chief Executive Officer
since September 2020 and prior to that time served as our Co-Chief
Executive Officer beginning in May 2020. Although we do not have a
policy mandating the separation of the roles of Chairman and Chief
Executive Officer, our Board, under our corporate governance
guidelines, reserves the right to determine the appropriate
leadership structure for our Board on a case-by-case basis. Our
Board believes this separation remains appropriate as it allows our
Chief Executive Officer to focus on the day-to-day business matters
while the Chairman focuses on leading the Board in its
responsibilities of acting in the best interests of Alto
Ingredients and our stockholders. Under our corporate governance
guidelines, our Board will appoint a lead independent director,
nominated by our independent directors, whenever the offices of
Chairman and Chief Executive Officer are held by the same
individual, and at other times if requested by our independent
directors.
Our
Chairman of the Board is responsible for managing the business of
the Board, including setting the Board agenda (with Board member
and management input), facilitating communication among directors,
presiding at meetings of the Board and stockholders, sitting as
chair at executive sessions at each regularly scheduled Board
meeting, and providing support and counsel to the Chief Executive
Officer. Our lead independent director, if separately appointed,
and who is currently John L. Prince, is responsible for
coordinating the activities of the independent directors and
performing such other duties as the Board may determine. We believe
that this Board leadership structure is appropriate in maximizing
the effectiveness of our Board oversight and in providing
perspective to our business that is independent from
management.
Risk
Oversight
Our Board
has an active role, as a whole and also at the committee level, in
overseeing the management, including the identification, assessment
and mitigation, of Alto Ingredients’ risks. Our Board regularly
reviews information regarding our credit, liquidity and operations,
as well as the risks associated with each of these areas, and
assesses options for risk mitigation. Certain Board committees
oversee various categories of risks based on the committee’s scope
of duties, but our entire Board stays informed such as with respect
to strategic, competitive, economic, operational, financial, legal,
compliance, regulatory and compensatory risks. Our Compensation
Committee is responsible for overseeing the management of risks
relating to our executive compensation plans and arrangements. Our
Audit Committee oversees management of financial risks, including
compliance matters, tax matters and internal controls. Our
Nominating and Corporate Governance Committee manages risks
associated with the independence of members of our Board, potential
conflicts of interest, the composition of our Board and other
corporate governance matters. While each committee is responsible
for evaluating certain risks and overseeing the management of those
risks, our entire Board is regularly informed through committee
reports about such risks.
Policy
on Hedging
Our
insider trading policy prohibits all employees, officers and
directors from engaging in any short sale of company securities, as
well as any transaction involving puts, calls, collars, forward
sales contracts, warrants or other options on company securities.
Additionally, our executive officers are restricted from pledging
company securities as collateral for a loan.
Environmental,
Social and Governance
We have
embraced environmental, social and governance (“ESG”) initiatives
as three core focus areas of our strategy and culture. In late
2021, we engaged NASDAQ as our third-party consultant to review our
ESG strategy and disclosures, with ultimate oversight maintained by
our Board. We have surveyed all company departments with
responsibility for activities that impact our ESG profile,
including operations, quality, commercial, legal, human resources,
and accounting. This internal review and refinement of our ESG
strategy, together with the careful consideration of her deep
experience and well-suited qualifications, has led to the internal
promotion of Stacy Swanson into the newly created position of Vice
President of Quality and Sustainability, and the creation of the
Board’s ESG committee in 2022. Identification and execution of
day-to-day ESG themes will be managed by our ESG Board committee,
in collaboration with our executive committee and other members of
management. Going forward, we plan to align with Sustainability
Accounting Standards Board (SASB) – Biofuels standards and the Task
Force on Climate-Related Financial Disclosures (TCFD), with
reference to standards included in the Global Reporting Initiative
(GRI). We are dedicated to maintaining a safe and healthy
workplace, reducing environmental impact, and ensuring compliance
with all laws and regulations.
Environmental
Fueling a
low-carbon economy was a founding value of our company and
continues to be a key pillar of our commitment to sustainability.
As a global producer of high-quality, bio-based alcohols, Alto
Ingredients is committed to moving our country towards a greener
environment. All production and office facilities are located in
regions categorized as Low to Low-Medium Baseline Water Stress as
classified by Aqueduct, the World Resources Institute’s (WRI) Water
Risk Atlas tool. Our specialty alcohol products are in high demand,
and we are capitalizing on ethanol’s beneficial low-carbon
characteristics integral to the ultimate de-carbonization of our
environment. We are optimistic about industry discussions around
carbon reduction. Our Pekin campus sits on top of the Mount Simon
Sandstone formation, considered to be one of the most significant
potential carbon storage resources in the United States. As a
member of the Carbon Capture Coalition, we are actively engaged in
discussions to develop a carbon capture and sequestration program
at our Pekin site and look forward to sharing more information
regarding this uniquely profitable opportunity as activities
progress. We believe Alto Ingredients will be an active player in
the carbon capture space.
Environmental,
Health and Safety. In 2022, we launched our environmental,
health and safety refresh initiative, setting baselines and
tracking resources with a focus on reducing risks to employee
health and safety, and further reducing environmental impacts. We
conduct our operations in compliance with applicable laws,
directives and regulations. Each facility operates under OSHA
requirement-based health and safety policies, and undergoes
twice-yearly safety audits. All operating facility employees
undergo annual safety training. Our robust process safety and risk
management program is assessed via third-party auditor, with our
most recent audit in 2020 resulting in an operating facility
average score over 90%.
Social
As of April 27, 2022, we had a total of approximately 420
employees, of whom approximately 45 are remote/hybrid and
approximately 375 are on-site. Of those personnel, 145 of our
employees at our Pekin operating facility are members of United
Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied
Industrial and Service Workers International Union (“USW Union”),
and 44 of our employees at our ICP distillery are members of United
Food & Commercial Workers Union (“UFC Union”). We consider our
employee relations to be good, and our recent transition to
twelve-hour operating facility shifts provides our union employees
with a better work-life balance through improved scheduling
practices. Our employees are among our most valuable assets, and
they have directly and significantly contributed to our success. We
continue to focus on employee safety and wellness; talent
acquisition, retention and promotion; employee engagement;
development and training; diversity and inclusion; and compensation
and pay equity. These efforts have resulted in strong employee
retention, resulting in an overall median employment tenure of 7
years for our employees, compared to a median employment tenure of
5.1 years for wage and salary workers in the United States
manufacturing industry. The average tenure of our USW Union
employees is 12 years and the average tenure of our UFC Union
employees is 13 years compared to an average tenure of 9 years for
non-union employees company-wide.
Human
Capital Management. The well-being of our employees is
paramount to our success. All full-time employees are offered a
comprehensive and competitive benefits package to benefit the
whole-person, including medical, dental and vision benefits;
flexible spending account; life and disability insurance; paid
parental and caregiver leave; a 401(k) plan with dollar-for-dollar
matching contribution on the first 6% contributed by the employee,
a program in which 98% of our employees participate; and access to
a complementary health and wellness program, participation in which
qualifies employees for additional insurance reimbursements and
contributions. To complement our community outreach programs, we
offer our employees a community service day. Since March 2020, in
response to the COVID-19 pandemic, we implemented significant
changes to our work policies, enabling our employees to work from
home wherever possible, and for employees who could not, or chose
not, to work from home, we implemented safety measures to help
prevent the spread of COVID-19 and protect our employees, such as
mandatory face-coverings, social distancing, hand hygiene, and
limited face-to-face meetings. We paid for pandemic-related leave
to ensure that our employees could stay home for periods of time
above and beyond applicable federal, state, and local regulatory
requirements, which we believe greatly reduced the spread of
infections.
Diversity, Equity
and Inclusion. We are committed to fostering a culture that
focuses on the importance of diversity, equity and inclusion. One
of our core tenets is the care for our employees regardless of
race, color, national origin, ancestry, religion, creed, physical
or mental disability, marital status, medical condition, gender,
sexual orientation, age, family care or medical leave status,
veteran status and any other basis protected by federal, state or
local law. We are analyzing employee demographic information
collected for years 2020 and 2021, and we are conducting an
analysis of that information to ensure we are reaching a diverse
employee pool. Our diversity initiatives in 2022 include, among
others, practices and policies of recruitment and selection,
ensuring that we evaluate and hire candidates that are the most
qualified and well-suited for the positions; continued measuring
and monitoring of employee demographics (gender and race) in
comparison to demographics of operating facility locations; and the
ongoing development of a work environment that encourages and
enforces respectful communication and teamwork that reflect the
significance of the principles of diversity to us.
Products. We are committed to producing ingredients for our
customers that embody the highest levels of integrity, purity and
quality for products that touch multiple areas of people’s lives.
Our sustainable alcohols are derived from a bio-based, renewable
raw material, rigorously tested, and evaluated twice for an optimal
organoleptic experience by qualified experts, and free from
artificial flavors, coloring, or chemical preservatives. We believe
in transparency that extends to our labels and we are committed to
making clean ingredients that are Kosher, gluten-free, vegan,
GMP/HACCP Certified, and SMETA 4-Pillar. In 2021, we obtained
multi-site ISO 9001 certification for our corporate facilities and
our Pekin campus. We are also evaluating the addition of our other
facilities into our ISO 9001 Quality Management System, as well as
evaluating other ISO systems including: ISO 45001 (Occupational
Health & Safety), ISO 14001 (Environmental Management), ISO
26000 (Social Responsibility), and ISO 37000 (Governance of
Organizations). With more than 150 years of distilling experience, our
190 and 200 proof alcohols are manufactured to meet the highest
standards for quality and reliability. We not only qualify,
monitor, and review performance of all material and service
vendors, but for those deemed critical to our product quality, we
also conduct on-site auditing to ensure commitment to quality and
ethical sources, and all operating facility employees and
contractors working on-site undergo annual safety
training.
Governance
Our Board is committed to
bringing a diversity of viewpoints among its members. In 2022, our
Board will undergo continued refreshment with the retirement of one
of its members to allow for the nomination of Maria G. Gray. With
her election, our Board will have continued to increase its
diversity, so that in June 2022, more than one-fourth of our Board
will be diverse.
ESG
Governance. Since our prior annual meeting, we have created an
ESG committee consisting of senior executives, subject matter
experts, and members of our Board. While our Board holds primary
oversight of ESG initiatives and strategy, our ESG committee works
with our executive team, our Vice President of Quality and
Sustainability, and others within our company on the day-to-day
identification and execution of our initiatives and to ensure
compliance with the Securities and Exchange Commission’s recent
proposals to require disclosure to investors of climate-related
matters.
Director
Independence
Our
corporate governance guidelines provide that a majority of the
Board and all members of our Audit, Compensation and Nominating and
Corporate Governance Committees shall be independent. On an annual
basis, each director and executive officer is obligated to complete
a Director and Officer Questionnaire that requires disclosure of
any transactions with Alto Ingredients in which a director or
executive officer, or any member of his or her immediate family,
have a direct or indirect material interest. Following completion
of these questionnaires, the Board, with the assistance of the
Nominating and Corporate Governance Committee, makes an annual
determination as to the independence of each director using the
current standards for “independence” established by the Securities
and Exchange Commission and NASDAQ, additional criteria contained
in our corporate governance guidelines and consideration of any
other material relationship a director may have with Alto
Ingredients.
The Board
has determined that all of its directors and director nominees are
independent under these standards, except for Michael D. Kandris,
who serves as our President, Chief Executive Officer and Chief
Operating Officer. Mr. Kandris is deemed not to be independent due
to his employment relationship with Alto Ingredients.
Stockholder
Communications with our Board of Directors
Our Board
has implemented a process by which stockholders may send written
communications directly to the attention of our Board or any
individual member of our Board. The Chairman of our Audit
Committee, Terry L. Stone, is responsible for monitoring
communications from stockholders and providing copies of such
communications to the other directors as he considers appropriate.
Communications will be forwarded to all directors if they relate to
substantive matters and include suggestions or comments that the
Chairman considers to be important for the directors to consider.
Stockholders who wish to communicate with our Board can write to
Chairman of the Audit Committee, The Board of Directors, Alto
Ingredients, Inc., 1300 South Second Street, Pekin, Illinois
61554.
Board
Committees and Meetings
Our
business, property and affairs are managed under the direction of
our Board. Our directors are kept informed of our business through
discussions with our executive officers, by reviewing materials
provided to them and by participating in meetings of our Board and
its committees. During 2021, our Board held eleven meetings. All
directors attended at least 75% of all meetings of our Board and of
the committees on which they served or that were held during the
period they were directors or committee members.
During
2021, members of our Board and its committees consulted informally
with management from time to time and also acted by written consent
without a meeting. Additionally, the independent members of our
Board met in executive session regularly without the presence of
management.
It is our
policy to invite and encourage our directors to attend our annual
meetings. At the date of our 2021 annual meeting, we had seven
members on our Board, all of whom attended the meeting.
Our Board
has established standing Audit, Compensation and Nominating and
Corporate Governance Committees. Each committee operates pursuant
to a written charter that has been approved by our Board and the
corresponding committee and that is reviewed annually and revised
as appropriate. Each charter is available on our website at
http://www.altoingredients.com/governance.
Information on our website is not, and shall not be deemed to be, a
part of this Proxy Statement or incorporated into any other filings
we make with the Securities and Exchange Commission.
Audit
Committee
Our Audit Committee’s general functions include monitoring the
integrity of our financial reporting process; overseeing processes
for monitoring auditor independence; overseeing the implementation
of new accounting standards; overseeing and participating in the
resolution of internal control issues, when and if identified;
communicating with our independent auditors on matters related to
the conduct of audits; and reviewing and understanding non-GAAP
measures, and related company policies and disclosure controls.
Moreover, our Audit Committee selects our independent auditors,
reviews the results and scope of the audit and other services
provided by our independent auditors, reviews our financial
statements for each interim period and for the full year and
implements and manages our enterprise risk management program. The
Audit Committee also has the authority to retain consultants, and
other advisors. Messrs. Stone, Jones and Prince and Ms. Nury served
on our Audit Committee for all of 2021. Our Board has determined
that each member of the Audit Committee is “independent” under the
current NASDAQ listing standards and satisfies the other
requirements under NASDAQ listing standards and Securities and
Exchange Commission rules regarding audit committee membership. Our
Board has determined that Mr. Stone qualifies as an “audit
committee financial expert” under applicable Securities and
Exchange Commission rules and regulations governing the composition
of the Audit Committee, and satisfies the “financial
sophistication” requirements of NASDAQ’s listing standards. During
2021, our Audit Committee held six meetings. The Audit Committee
Report for 2021 can be found on page 38 of this Proxy
Statement.
Compensation
Committee
Our
Compensation Committee is responsible for establishing, updating
and administering our compensation program for executive officers
including, among other things, annual salaries and bonuses, stock
options, stock grants, other stock-based awards, and other
incentive compensation arrangements. The Compensation Committee
establishes the elements and mix of total compensation, sets the
parameters and specific target metrics of our performance-based
incentive compensation plan, and determines the target compensation
of our executive officers. In addition, our Compensation Committee
establishes the compensation philosophy and objectives, and
oversees the administration of our compensation program for all
other employees. Our Compensation Committee also has the authority
to administer our equity incentive plans with respect to grants to
executive officers and directors, and has authority to make equity
awards under our equity incentive plans to all other eligible
individuals. However, our Board may retain, reassume or exercise
from time to time the power to administer our equity incentive
plans. Equity awards made to members of the Compensation Committee
must be authorized and approved by a disinterested majority of our
Board.
Our
Compensation Committee believes that our compensation program
offered to our executive officers should attract, retain, motivate
and reward key executive officers responsible for our success;
align and strengthen the mutuality of interests of our executive
officers, our company and our stockholders; deliver compensation
that reflects our financial and operational performance, while
providing the opportunity to earn above-targeted total compensation
for exceptional performance; and provide total compensation to each
executive officer that is internally equitable, competitive, and
influenced by company and individual performance.
Our
Compensation Committee has the authority to retain consultants and
other advisors, and in furtherance of the foregoing objectives, our
Compensation Committee in 2020 engaged Korn Ferry to conduct
reviews of our compensation program for our executive officers and
other employees. From those reviews, Korn Ferry provided our
Compensation Committee with relevant market data and alternatives
to consider when making compensation decisions as to our executive
officers and other employees.
Messrs.
Nathan, Stone and Prince and Ms. Nury served on our Compensation
Committee for all of 2021. Our Board has determined that each
member of the Compensation Committee is “independent” under the
current NASDAQ listing standards. During 2021, our Compensation
Committee held one meeting and took action by written consent on
two occasions.
Nominating and
Corporate Governance Committee
Our
Nominating and Corporate Governance Committee considers and reports
periodically to the Board on matters related to the identification,
selection and qualification of Board members and candidates
nominated to the Board. Our Nominating and Corporate Governance
Committee also advises and makes recommendations to the Board with
respect to corporate governance matters. The Nominating and
Corporate Governance Committee also has the authority to retain
consultants and other advisors. Messrs. Prince, Kieta, Jones and
Nathan served on our Nominating and Corporate Governance Committee
for all of 2021. Our Board has determined that each member of the
Nominating and Corporate Governance Committee is “independent”
under the current NASDAQ listing standards. During 2021, our
Nominating and Corporate Governance Committee held two
meetings.
The
Nominating and Corporate Governance Committee will consider
candidates for director recommended by any stockholder that is the
beneficial owner of shares representing more than 1.0% of the
then-outstanding shares of our common stock and who has
beneficially owned those shares for at least one year. The
Nominating and Corporate Governance Committee will evaluate those
recommendations by applying its regular nominee criteria and
considering the additional information described in the Nominating
and Corporate Governance Committee’s charter. Stockholders who
desire to recommend candidates for the Board for evaluation may do
so by contacting Alto Ingredients in writing, identifying the
potential candidate and providing background and other relevant
information. Stockholders must also comply with our bylaws,
including our advance notice bylaw provisions relating to the
nomination of persons for election to our Board that, among other
things, require that nominations of persons for election to our
Board at annual meetings be submitted to our Secretary at Alto
Ingredients, Inc., 1300 South Second Street, Pekin, Illinois 61554,
unless otherwise notified, by the close of business on the
45th day before the first anniversary of the date on
which we first mailed our proxy materials for the prior year’s
annual meeting. We first mailed our proxy materials for our 2021
annual meeting on or about May 4, 2021 and anticipate mailing our
proxy materials for our Annual Meeting on or about May 9, 2022. We
have received no stockholder nominations of persons for election to
our Board for our Annual Meeting.
Our
Nominating and Corporate Governance Committee utilizes a variety of
methods for identifying and evaluating nominees for director.
Candidates may also come to the attention of the Nominating and
Corporate Governance Committee through current Board members,
professional search firms and other persons. In evaluating
potential candidates, our Nominating and Corporate Governance
Committee will take into account a number of factors, including,
among others, the following:
|
● |
the
candidate’s independence from management; |
|
● |
whether the candidate
has relevant business experience; |
|
● |
judgment, skill,
integrity and reputation; |
|
● |
existing commitments
to other businesses; |
|
● |
corporate governance
background; |
|
● |
financial and
accounting background, to enable the committee to determine whether
the candidate would be suitable for Audit Committee membership;
and |
|
● |
the
size and composition of our Board. |
In
addition, our Board and our Nominating and Corporate Governance
Committee are committed to seeking out highly qualified women and
minority candidates as well as candidates with diverse backgrounds,
skills and experiences as part of each Board member candidate
search the Nominating and Corporate Governance Committee
undertakes. When searching for director nominees, our Nominating
and Corporate Governance Committee will include highly qualified
diverse candidates (including gender, race and ethnicity) in the
pool from which nominees are chosen.
Our
Nominating and Corporate Governance Committee has the authority to
retain and terminate any search firm to be used to identify
director nominees, including the authority to approve the firm’s
fees and other retention terms. Our Nominating and Corporate
Governance Committee will direct any search firm it retains to
include qualified women and minority candidates in the firm’s list
of potential director candidates. We will provide funding, as
determined by our Nominating and Corporate Governance Committee,
for the payment of compensation to any such search
firms.
We intend
to evaluate our diversity policy’s effectiveness by periodically
reviewing our ability to successfully include highly qualified
diverse candidates in the pool from which nominees are
chosen.
Compensation of
Directors
We use a
combination of cash and equity-based incentive compensation to
attract and retain qualified candidates to serve on our Board. In
setting the compensation of directors, we consider the significant
amount of time that Board members spend in fulfilling their duties
to Alto Ingredients as well as the experience level we require to
serve on our Board. The Board, through its Compensation Committee,
annually reviews the compensation and compensation policies for
Board members. In recommending director compensation, the
Compensation Committee is guided by the following three
goals:
|
● |
compensation should
pay directors fairly for work required in a company of our size and
scope; |
|
● |
compensation should
align directors’ interests with the long-term interests of our
stockholders; and |
|
● |
the
structure of the compensation should be clearly disclosed to our
stockholders. |
In making
compensation decisions for 2021 as to our directors, our
Compensation Committee compared our cash and equity compensation
payable to directors against market data obtained by Korn Ferry in
2020. The data included a blend of results from two published
surveys to identify companies with revenue and market
capitalization comparable to ours. Korn Ferry used a revenue range
in one survey that included companies with revenue of $0.5 billion
to $2.5 billion and used a market capitalization threshold in the
second survey that included companies with a market capitalization
of less than $1.0 billion. The surveys did not specifically
identify the companies surveyed. For 2021, our Compensation
Committee targeted compensation for our directors at approximately
the median of compensation paid to directors of the survey group
companies.
Cash
Compensation
Our annual
cash compensation program for directors includes the
following:
|
● |
annual
cash compensation provided to the Chairman of our Board is
$112,500; |
|
● |
base
annual cash compensation provided to our non-employee directors,
other than our Chairman, is $75,000; |
|
● |
additional annual cash
compensation provided to each of our Board committee chairs is
$25,000; and |
|
● |
additional annual cash
compensation provided to our lead independent director is
$12,000. |
These
amounts are paid in advance in bi-weekly installments. In addition,
directors are reimbursed for specified reasonable and documented
expenses in connection with attendance at meetings of our Board and
its committees. Employee directors do not receive director
compensation in connection with their service as directors. In lieu
of cash compensation, directors may elect to receive additional
equity compensation having the same cash value.
Equity
Compensation
Our
Compensation Committee or our full Board typically grants equity
compensation to our newly elected or reelected directors which
normally vests as to 100% of the grants at the earlier of our next
annual meeting or approximately one year after the date of grant.
Vesting is typically subject to continued service on our Board
during the full year.
In
determining the amount of equity compensation for 2021, the
Compensation Committee determined a target value of total
compensation of approximately the median of compensation paid to
directors of the comparable companies identified by Korn Ferry. The
Compensation Committee then determined the cash component based on
this market data. The balance of the total compensation target was
then allocated to equity awards, and the number of shares to be
granted to our directors was based on the estimated value of the
underlying shares on the expected grant date.
Our annual
equity compensation program for directors includes the
following:
|
● |
the
value of annual equity compensation provided to the Chairman of our
Board is $147,500; and |
|
● |
the
value of annual equity compensation provided to our non-employee
directors, other than our Chairman, is $110,000. |
In
addition, our Compensation Committee may grant, and has from time
to time granted, additional equity compensation to directors at its
discretion.
Compensation of
Employee Directors
Mr.
Kandris was compensated as a full-time employee and officer and
therefore received no additional compensation for service as a
Board member during 2021. Information regarding the compensation
awarded to Mr. Kandris is included in “Executive Compensation and
Related Information—Summary Compensation Table” below.
Director
Compensation Table – 2021
The
following table summarizes the compensation of our non-employee
directors for the year ended December 31, 2021:
Name |
|
Fees Earned
or Paid
in Cash
($)(1) |
|
|
Stock
Awards ($)
|
|
|
Total
($)(2) |
|
William L. Jones |
|
$ |
112,500 |
|
|
$ |
142,963 |
(3) |
|
$ |
255,463 |
|
Terry L. Stone |
|
$ |
100,000 |
|
|
$ |
106,616 |
(4) |
|
$ |
206,616 |
|
John L. Prince |
|
$ |
112,000 |
|
|
$ |
106,616 |
(5) |
|
$ |
218,616 |
|
Douglas L. Kieta |
|
$ |
100,000 |
|
|
$ |
106,616 |
(6) |
|
$ |
206,616 |
|
Gilbert E. Nathan |
|
$ |
3,846 |
|
|
$ |
196,089 |
(7) |
|
$ |
199,935 |
|
Dianne S. Nury |
|
$ |
75,000 |
|
|
$ |
106,616 |
(8) |
|
$ |
181,616 |
|
|
(1) |
For a description of
annual director fees and fees for chair and lead independent
director positions, see the disclosure above under “Compensation of
Directors—Cash Compensation.” |
|
(2) |
The
value of perquisites and other personal benefits was less than
$10,000 in aggregate for each director. |
|
(3) |
At
December 31, 2021, Mr. Jones held 183,388 vested shares from stock
awards. Mr. Jones was granted 23,867 shares of our common stock on
June 17, 2021 having an aggregate grant date fair value of
$142,963, calculated based on the fair market value of our common
stock on the grant date. The shares vest on June 23,
2022. |
|
(4) |
At
December 31, 2021, Mr. Stone held 159,849 vested shares from stock
awards. Mr. Stone was granted 17,799 shares of our common stock on
June 17, 2021 having an aggregate grant date fair value of
$106,616, calculated based on the fair market value of our common
stock on the grant date. The shares vest on June 23,
2022. |
|
(5) |
At
December 31, 2021, Mr. Prince held 142,103 vested shares from stock
awards. Mr. Prince was granted 17,799 shares of our common stock on
June 17, 2021 having an aggregate grant date fair value of
$106,616, calculated based on the fair market value of our common
stock on the grant date. The shares vest on June 23,
2022. |
|
(6) |
At
December 31, 2021, Mr. Kieta held 171,823 vested shares from stock
awards. Mr. Kieta was granted 17,799 shares of our common stock on
June 17, 2021 having an aggregate grant date fair value of
$106,616, calculated based on the fair market value of our common
stock on the grant date. The shares vest on June 23,
2022. |
|
(7) |
At
December 31, 2021, Mr. Nathan held 93,112 vested shares from stock
awards. Mr. Nathan was granted 32,736 shares of our common stock on
June 17, 2021 having an aggregate grant date fair value of
$196,089, calculated based on the fair market value of our common
stock on the grant date. The shares vest on June 23, 2022. In 2021,
in lieu of cash compensation for service on our Board and its
committees, Mr. Nathan elected to receive additional equity
compensation having the same cash value. |
|
(8) |
At
December 31, 2021, Ms. Nury held 68,969 vested shares from stock
awards. Ms. Nury was granted 17,799 shares of our common stock on
June 17, 2021 having an aggregate grant date fair value of
$106,616, calculated based on the fair market value of our common
stock on the grant date. The shares vest on June 23,
2022. |
Indemnification of
Directors and Officers
Section
145 of the Delaware General Corporation Law permits a corporation
to indemnify its directors and officers against expenses,
judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection with a pending or completed
action, suit or proceeding if the officer or director acted in good
faith and in a manner the officer or director reasonably believed
to be in the best interests of the corporation.
Our
certificate of incorporation provides that, except in certain
specified instances, our directors shall not be personally liable
to us or our stockholders for monetary damages for breach of their
fiduciary duty as directors, except liability for the
following:
|
● |
any breach of their
duty of loyalty to Alto Ingredients or our
stockholders; |
|
● |
acts or omissions not
in good faith or which involve intentional misconduct or a knowing
violation of law; |
|
● |
unlawful payments of
dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law;
and |
|
● |
any transaction from
which the director derived an improper personal
benefit. |
In
addition, our certificate of incorporation and bylaws obligate us
to indemnify our directors and officers against expenses and other
amounts reasonably incurred in connection with any proceeding
arising from the fact that such person is or was an agent of ours.
Our bylaws also authorize us to purchase and maintain insurance on
behalf of any of our directors or officers against any liability
asserted against that person in that capacity, whether or not we
would have the power to indemnify that person under the provisions
of the Delaware General Corporation Law. We have entered and expect
to continue to enter into agreements to indemnify our directors and
officers as determined by our Board. These agreements provide for
indemnification of related expenses including attorneys’ fees,
judgments, fines and settlement amounts incurred by any of these
individuals in any action or proceeding. We believe that these
bylaw provisions and indemnification agreements are necessary to
attract and retain qualified persons as directors and officers. We
also maintain directors’ and officers’ liability
insurance.
The
limitation of liability and indemnification provisions in our
certificate of incorporation and bylaws may discourage stockholders
from bringing a lawsuit against our directors for breach of their
fiduciary duty. They may also reduce the likelihood of derivative
litigation against our directors and officers, even though an
action, if successful, might benefit us and other stockholders.
Furthermore, a stockholder’s investment may be adversely affected
to the extent that we pay the costs of settlement and damage awards
against directors and officers as required by these indemnification
provisions.
Insofar as
indemnification for liabilities arising under the Securities Act of
1933, as amended (“Securities Act”), may be permitted to our
directors, officers and controlling persons under the foregoing
provisions of our certificate of incorporation or bylaws, or
otherwise, we have been informed that in the opinion of the
Securities and Exchange Commission, this indemnification is against
public policy as expressed in the Securities Act and is therefore
unenforceable.
PROPOSAL
TWO
ADVISORY VOTE ON
EXECUTIVE COMPENSATION
We are
providing our stockholders with the opportunity to vote on a
non-binding, advisory resolution to approve the compensation paid
to our named executive officers, as disclosed in this Proxy
Statement pursuant to the compensation disclosure rules of the
Securities and Exchange Commission under Section 14A of the
Securities Exchange Act of 1934, as amended (“Exchange Act”),
including the compensation tables and any narrative discussion of
our compensation arrangements. This proposal, commonly known as a
“say-on-pay” proposal, gives our stockholders the opportunity to
express their views on the compensation paid to our named executive
officers.
Our
compensation program for our executive officers utilizes elements
including base salary, annual performance-based cash incentive
compensation, long-term equity incentive compensation, and health
and other benefits to achieve the following goals:
|
● |
attract, retain,
motivate and reward key executive officers responsible for our
success; |
|
● |
align
and strengthen the mutuality of interests of our executive
officers, our company and our stockholders; |
|
● |
deliver compensation
that reflects our financial and operational performance, while
providing the opportunity to earn above-targeted total compensation
for exceptional performance; and |
|
● |
provide total
compensation to each executive officer that is internally
equitable, competitive, and influenced by company and individual
performance. |
We believe
that our success depends in large part on our ability to attract,
retain and motivate qualified executives through competitive
compensation arrangements. We also believe that the compensation
paid to our executive officers should be influenced by the value we
create for our stockholders. For these reasons, our Compensation
Committee believes that our compensation program should provide
incentives to attain both short- and long-term financial and other
business objectives and reward those executive officers who
contribute meaningfully to attaining those objectives. The
Compensation Committee supports a pay-for-performance philosophy
within a compensation structure that is competitive, internally
equitable and responsible.
Our
Compensation Committee’s process for determining overall target
compensation for each executive officer is based in part on an
analysis of compensation of similarly situated personnel at
third-party survey group companies derived from market data
provided by the Compensation Committee’s compensation
consultant.
This vote
is not intended to address any specific item of compensation, but
rather the overall compensation of our named executive officers and
the philosophy, policies and practices described in this Proxy
Statement. Accordingly, we will ask our stockholders to vote
“FOR” the following resolution at the Annual
Meeting:
“RESOLVED,
that the compensation paid to Alto Ingredients, Inc.’s named
executive officers, as disclosed in Alto Ingredients, Inc.’s proxy
statement for its 2022 annual meeting of stockholders pursuant to
the compensation disclosure rules of the Securities and Exchange
Commission, including the compensation tables and related
disclosure, is hereby APPROVED.”
Please
read the “Executive Compensation and Related Information” section
of this Proxy Statement for additional details about our executive
compensation program and the different components of the program,
including information about the total compensation of our named
executive officers in 2021. See also “Information About our Board
of Directors, Board Committees and Related Matters – Board
Committees and Meetings – Compensation Committee” of this Proxy
Statement.
The
say-on-pay vote is advisory, and therefore not binding on us, our
Compensation Committee or our Board. The vote will provide our
Compensation Committee and our Board with information relating to
the opinions of our stockholders which the Compensation Committee
will consider as it makes determinations with respect to future
action regarding executive compensation and our executive
compensation program.
Recommendation of
the Board of Directors
OUR BOARD
UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THE 2021
COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN
THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES
OF THE SECURITIES AND EXCHANGE COMMISSION.
Proposal THREE
Approval of Amendment to 2016 Stock Incentive Plan
In 2016,
our Board adopted and our stockholders ratified and approved the
adoption of our 2016 Plan. On March 29, 2018, our Board approved,
and on June 14, 2018 our stockholders approved, an increase in the
number of shares of common stock authorized for issuance under our
2016 Plan from 1,150,000 shares to 3,650,000 shares. On August 6,
2019, our Board approved, and on November 7, 2019 our stockholders
approved, a further increase in the number of shares of common
stock authorized for issuance under our 2016 Plan from 3,650,000
shares to 5,650,000 shares as well as other amendments to the Plan.
On September 2, 2020, our Board approved, and on November 18, 2020
our stockholders approved, a further increase in the number of
shares of common stock authorized for issuance under our 2016 Plan
from 5,650,000 to 7,400,000 shares. On March 30, 2022, our Board
approved, subject to stockholder approval, a further increase in
the number of shares of common stock authorized for issuance under
our 2016 Plan from 7,400,000 shares to 8,900,000 shares.
Our Board
recommends approval of the amendment to the 2016 Plan to enable the
continued use of the 2016 Plan for stock-based grants consistent
with the objectives of our compensation program. The 2016 Plan is
intended to promote our interests by providing eligible persons in
our service with the opportunity to acquire a proprietary or
economic interest, or otherwise increase their proprietary or
economic interest, in Alto Ingredients as an incentive for them to
remain in service and render superior performance during their
service. The 2016 Plan consists of two equity-based incentive
programs, the Discretionary Grant Program and the Stock Issuance
Program. Principal features of each program are summarized
below.
A total of
7,400,000 shares of common stock are authorized for issuance under
the 2016 Plan. A total of 8,900,000 shares of common stock will be
authorized for issuance under the 2016 Plan upon stockholder
approval of this proposal. Currently, equity awards totaling
6,543,067 shares of common stock have been issued under the 2016
Plan. We believe that the 2016 Plan will be exhausted of shares
available for issuance in 2023, leaving insufficient shares
available for equity grants in 2023 and future years. By increasing
the number of shares authorized for issuance under the 2016 Plan by
1,500,000, a total of 8,900,000 shares of common stock would be
available for issuance. This increase would, in essence, provide us
with the flexibility to continue to make stock-based grants in
amounts deemed appropriate by our Compensation Committee. We
believe that our equity incentive program and grants made under the
program are essential to retaining critical personnel and aligning
the incentives of our personnel with our stockholders.
The
proposed share increase amendment will not be implemented unless
approved by our stockholders, and no additional equity awards
beyond the existing 7,400,000 shares of common stock have been or
will be issued under the 2016 Plan unless and until stockholder
approval of the amended 2016 Plan is obtained. If the proposed
share increase amendment is not approved by our stockholders, the
2016 Plan will remain in effect in its present form.
Set forth below is information concerning awards of restricted
stock under our 2016 Plan for each of the years ended December 31,
2017, 2018, 2019, 2020 and 2021. No other equity incentive
compensation, whether under the 2016 Plan or otherwise, was awarded
in such years.
|
|
Year Ended December 31, |
|
|
Three-Year |
|
|
|
2017 |
|
|
2018 |
|
|
2019 |
|
|
2020 |
|
|
2021 |
|
|
Average |
|
Shares granted |
|
|
663,823 |
|
|
|
1,175,477 |
|
|
|
1,433,771 |
|
|
|
1,663,372 |
|
|
|
750,451 |
|
|
|
1,282,531 |
|
Shares outstanding at year-end |
|
|
43,985,871 |
|
|
|
45,772,318 |
|
|
|
55,508,314 |
|
|
|
72,486,962 |
|
|
|
72,777,694 |
|
|
|
66,924,323 |
|
Annual
run rate(1) |
|
|
1.5 |
% |
|
|
2.6 |
% |
|
|
2.6 |
% |
|
|
2.3 |
% |
|
|
1.0 |
% |
|
|
1.9 |
% |
Unvested shares outstanding at year-end |
|
|
1,077,408 |
|
|
|
1,864,991 |
|
|
|
2,201,924 |
|
|
|
2,260,028 |
|
|
|
1,388,363 |
|
|
|
1,950,105 |
|
Overhang(2) |
|
|
2.4 |
% |
|
|
4.1 |
% |
|
|
4.0 |
% |
|
|
3.1 |
% |
|
|
1.9 |
% |
|
|
2.9 |
% |
|
(1) |
Annual
run rate is the number of shares of common stock and options
granted during the year, divided by the number of shares of common
stock outstanding at year-end. |
|
(2) |
Overhang is the number
of unvested shares of restricted common stock and options
outstanding at year-end, divided by the total number of shares of
common stock outstanding at year-end. |
The
following is a summary of the principal features of our 2016 Plan.
The summary does not purport to be a complete description of all
provisions of our 2016 Plan and is qualified in its entirety by the
text of the 2016 Plan, a copy of which (as amended to reflect the
proposed plan amendment) is attached to this Proxy Statement as
Appendix A.
Administration
The
Compensation Committee of our Board has the exclusive authority to
administer the Discretionary Grant and Stock Issuance Programs with
respect to option grants, restricted stock awards, restricted stock
units, stock appreciation rights, direct stock issuances and other
stock-based awards (“equity awards”) made to executive officers and
non-employee Board members, and also has the authority to make
equity awards under those programs to all other eligible
individuals. However, the Board may retain, reassume or exercise
from time to time the power to administer those programs. Equity
awards made to members of the Compensation Committee must be
authorized and approved by a disinterested majority of the
Board.
The term
“plan administrator,” as used in this summary, means the
Compensation Committee or the Board, to the extent either entity is
acting within the scope of its administrative jurisdiction under
the 2016 Plan.
Share
Reserve
An
aggregate of 7,400,000 shares of common stock are currently
authorized for issuance under the 2016 Plan. A total of 8,900,000
shares of common stock will be authorized for issuance under the
2016 Plan upon stockholder approval of this proposal. No additional
equity awards beyond the existing 7,400,000 shares of common stock
have been or will be issued under the 2016 Plan unless and until
stockholder approval is obtained.
No
participant in the 2016 Plan may be granted equity awards for
shares of common stock having a value in excess of $1,000,000 per
calendar year.
The shares
of common stock issuable under the 2016 Plan may be drawn from
shares of our authorized but unissued shares or from shares
reacquired by us, including shares repurchased on the open
market.
Shares of
common stock subject to outstanding awards under the 2016 Plan
shall in no event become eligible for reissuance under the 2016
Plan, whether as a result of expiration or termination of an award,
cancellation or repurchase of unvested shares, tender of shares in
connection with a net/cashless exercise program, withholding of
shares to cover withholding taxes, or otherwise.
We have
registered the issuance of all of the shares of common stock
currently authorized for issuance under our 2016 Plan on Form S-8
under the Securities Act. As soon as practicable following
stockholder approval to increase the number of shares of common
stock authorized for issuance under the 2016 Plan, we intend to
register the issuance of those securities under the 2016 Plan under
a registration statement on Form S-8 under the Securities
Act.
Eligibility
Officers,
employees, non-employee directors, and consultants and independent
advisors who are under written contract and whose securities issued
under the 2016 Plan could be registered under a registration
statement on Form S-8, all of whom are in our service or the
service of any parent or subsidiary of ours, whether now existing
or subsequently established, are eligible to participate in the
Discretionary Grant and Stock Issuance Programs.
As of
April 27, 2022, five executive officers, 415 other employees, six
non-executive officer members of our Board and an indeterminate
number of consultants and independent advisors were eligible to
participate in the 2016 Plan.
Valuation
The fair
market value per share of our common stock on any relevant date
under the 2016 Plan will be deemed to be equal to the closing price
per share of our common stock at the close of regular trading hours
on that date on The NASDAQ Capital Market (or any other primary
successor exchange or market on which our securities are listed or
traded). If there is no closing price for our common stock on the
date in question, the fair market value will be the closing price
on the last preceding date for which a quotation exists. On April
27, 2022, the fair market value determined on that basis was $5.75
per share.
Discretionary Grant
Program
The plan
administrator has complete discretion under the Discretionary Grant
Program to determine which eligible individuals are to receive
equity awards under that program, the time or times when those
equity awards are to be made, the number of shares subject to each
award, the time or times when each equity award is to vest and
become exercisable (subject to a minimum initial vesting period of
one (1) year), the maximum term for which the equity award is to
remain outstanding and the status of any granted option as either
an incentive stock option or a non-statutory option under the
federal tax laws.
Stock
Options. Each granted option will have an exercise price per
share determined by the plan administrator, provided that the
exercise price will not be less than 85% or 100% of the fair market
value of a share on the grant date in the case of non-statutory or
incentive options, respectively. No granted option will have a term
in excess of ten years. Incentive options granted to an employee
who beneficially owns more than 10% of our outstanding common stock
must have exercise prices not less than 110% of the fair market
value of a share on the grant date and a term of not more than five
years measured from the grant date. Options generally will become
exercisable in one or more installments over a specified period of
service measured from the grant date. Any unvested shares acquired
under options will be subject to repurchase, at the exercise price
paid per share, if the optionee ceases service with us prior to
vesting in those shares.
An
optionee who ceases service with us other than due to misconduct
will have a limited time within which to exercise outstanding
options for any shares for which those options are vested and
exercisable at the time of cessation of service. The plan
administrator has complete discretion to extend the period
following the optionee’s cessation of service during which
outstanding options may be exercised (but not beyond the expiration
date) and/or, solely in connection with the optionee’s retirement,
to accelerate the exercisability or vesting of options in whole or
in part. Discretion may be exercised at any time while the options
remain outstanding, whether before or after the optionee’s actual
cessation of service.
Stock
Appreciation Rights. The plan administrator has the authority
to issue the following three types of stock appreciation rights
under the Discretionary Grant Program:
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Tandem
stock appreciation rights, which provide the holders with the
right, upon approval of the plan administrator, to surrender their
options for an appreciation distribution in an amount equal to the
excess of the fair market value of the vested shares of common
stock subject to the surrendered option over the aggregate exercise
price payable for those shares. |
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Standalone stock
appreciation rights, which allow the holders to exercise those
rights as to a specific number of shares of common stock and
receive in exchange an appreciation distribution in an amount equal
to the excess of the fair market value on the exercise date of the
shares of common stock as to which those rights are exercised over
the aggregate base price in effect for those shares. The base price
per share may not be less than the fair market value per share of
the common stock on the date the standalone stock appreciation
right is granted, and the right may not have a term in excess of
ten years. |
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Limited stock
appreciation rights, which may be included in one or more option
grants made under the Discretionary Grant Program to executive
officers or directors who are subject to the short-swing profit
liability provisions of Section 16 of the Exchange Act. Upon the
successful completion of a hostile takeover for more than 50% of
our outstanding voting securities or a change in a majority of our
Board as a result of one or more contested elections for Board
membership over a period of up to 36 consecutive months, each
outstanding option with a limited stock appreciation right may be
surrendered in return for a cash distribution per surrendered
option share equal to the excess of the fair market value per share
at the time the option is surrendered or, if greater and the option
is a non-statutory option, the highest price paid per share in the
transaction, over the exercise price payable per share under the
option. |
Payments
with respect to exercised tandem or standalone stock appreciation
rights may, at the discretion of the plan administrator, be made in
cash or in shares of common stock. All payments with respect to
exercised limited stock appreciation rights will be made in cash.
Upon cessation of service with us, the holder of one or more stock
appreciation rights will have a limited period within which to
exercise those rights as to any shares as to which those stock
appreciation rights are vested and exercisable at the time of
cessation of service. The plan administrator will have complete
discretion to extend the period following the holder’s cessation of
service during which his or her outstanding stock appreciation
rights may be exercised and/or, solely in connection with the
optionee’s retirement, to accelerate the exercisability or vesting
of the stock appreciation rights in whole or in part. Discretion
may be exercised at any time while the stock appreciation rights
remain outstanding, whether before or after the holder’s actual
cessation of service.
Stock
Issuance Program
Shares of
common stock may be issued under the Stock Issuance Program for
valid consideration under the Delaware General Corporation Law as
the plan administrator deems appropriate, including cash, past
services or other property. In addition, restricted shares of
common stock may be issued under restricted stock awards that vest
in one or more installments over the recipient’s period of service
or upon attainment of specified performance objectives. Shares of
common stock may also be issued under the program under restricted
stock units or other stock-based awards that entitle the recipients
to receive the shares underlying those awards upon the attainment
of designated performance goals, the satisfaction of specified
service requirements and/or upon the expiration of a designated
time period following the vesting of those awards or units,
including a deferred distribution date following the termination of
the recipient’s service with us.
The plan
administrator will have complete discretion under the Stock
Issuance Program to determine which eligible individuals are to
receive equity awards under the program, the time or times when
those equity awards are to be made, the number of shares subject to
each equity award, the vesting schedule to be in effect for the
equity award (subject to a minimum initial vesting period of one
(1) year), and the consideration, if any, payable per share. The
shares issued under an equity award may vest upon the completion of
a designated service period (subject to a minimum initial vesting
period of one (1) year), and/or the attainment of pre-established
performance goals.
The plan
administrator will also have the discretionary authority to
structure one or more equity awards under the Stock Issuance
Program so that the shares subject to those particular awards will
vest only upon the achievement of pre-established corporate
performance goals. Goals may be based on one or more of the
following criteria: (i) return on total stockholders’ equity; (ii)
net income per share; (iii) net income or operating income; (iv)
earnings before interest, taxes, depreciation, amortization and
stock-based compensation costs, or operating income before
depreciation and amortization; (v) sales or revenue targets; (vi)
return on assets, capital or investment; (vii) cash flow; (viii)
market share; (ix) cost reduction goals; (x) budget comparisons;
(xi) implementation or completion of projects or processes
strategic or critical to our business operations; (xii) measures of
customer satisfaction; (xiii) any combination of, or a specified
increase in, any of the foregoing; and (xiv) the formation of joint
ventures, research and development collaborations, marketing or
customer service collaborations, or the completion of other
corporate transactions intended to enhance our revenue or
profitability or expand our customer base; provided, however, that
for purposes of items (ii), (iii) and (vii) above, the plan
administrator may, at the time the equity awards are made, specify
adjustments to those items as reported in accordance with United
States generally accepted accounting principles (“GAAP”), which
will exclude from the calculation of those performance goals one or
more of the following: charges related to acquisitions, stock-based
compensation, employer payroll tax expense on stock option
exercises, settlement costs, restructuring costs, gains or losses
on strategic investments, non-operating gains, other non-cash
charges, valuation allowance on deferred tax assets, and the
related income tax effects, purchases of property and equipment,
and any extraordinary non-recurring items, provided that those
adjustments are in conformity with those reported by us on a
non-GAAP basis. In addition, performance goals may be based upon
the attainment of specified levels of our performance under one or
more of the measures described above relative to the performance of
other entities and may also be based on the performance of any of
our business groups or divisions thereof or any parent or
subsidiary. Performance goals may include a minimum threshold level
of performance below which no award will be earned, levels of
performance at which specified portions of an award will be earned,
and a maximum level of performance at which an award will be fully
earned. The plan administrator may provide that, if the actual
level of attainment for any performance objective is between two
specified levels, the amount of the award attributable to that
performance objective shall be interpolated on a straight-line
basis.
No vesting
requirements tied to the attainment of performance objectives may
be waived with respect to shares that were intended at the time of
issuance to qualify as performance-based compensation under Section
162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”), except in the event of specified involuntary terminations
or changes in control or ownership.
Outstanding restricted
stock units or other stock-based awards under the Stock Issuance
Program will automatically terminate, and no shares of common stock
will actually be issued in satisfaction of those awards, if the
performance goals or service requirements established for those
awards are not attained.
General
Provisions
Acceleration.
If a change in control occurs, each outstanding equity award under
the Discretionary Grant Program will automatically accelerate and
vest in full, unless (i) that award is assumed by the successor
corporation or otherwise continued in effect; (ii) the award is
replaced with a cash retention program that preserves the spread
existing on the unvested shares subject to that equity award (the
excess of the fair market value of those shares over the exercise
or base price in effect for the shares) and provides for subsequent
payout of that spread in accordance with the same vesting schedule
in effect for those shares; or (iii) the acceleration of the award
is subject to other limitations imposed by the plan administrator.
In addition, all unvested shares outstanding under the
Discretionary Grant and Stock Issuance Programs will immediately
vest upon the change in control, except to the extent our
repurchase rights with respect to those shares are to be assigned
to the successor corporation or otherwise continued in effect or
accelerated vesting is precluded by other limitations imposed by
the plan administrator. Each outstanding equity award under the
Stock Issuance Program will vest as to the number of shares of
common stock subject to that award immediately prior to the change
in control, unless that equity award is assumed by the successor
corporation or otherwise continued in effect or replaced with a
cash retention program similar to the program described in clause
(ii) above or unless vesting is precluded by its terms. Immediately
following a change in control, all outstanding awards under the
Discretionary Grant Program will terminate and cease to be
outstanding except to the extent assumed by the successor
corporation or its parent or otherwise expressly continued in full
force and effect under the terms of the change in control
transaction.
The plan
administrator will have the discretion to structure one or more
equity awards under the Discretionary Grant and Stock Issuance
Programs so that those equity awards will vest in full in the event
the individual’s service with us or the successor entity is
terminated (actually or constructively) within a designated period
following a change in control transaction, whether or not those
equity awards are to be assumed or otherwise continued in effect or
replaced with a cash retention program.
A change
in control will be deemed to have occurred if, in a single
transaction or series of related transactions:
(i) any person
(as that term is used in Section 13(d) and 14(d) of the Exchange
Act), or persons acting as a group, other than a trustee or
fiduciary holding securities under an employment benefit program,
is or becomes a beneficial owner (as defined in Rule 13-3 under the
Exchange Act), directly or indirectly of securities representing
51% or more of the combined voting power of our company;
(ii) there is a
merger, consolidation, or other business combination transaction of
us with or into another corporation, entity or person, other than a
transaction in which the holders of at least a majority of the
shares of our voting capital stock outstanding immediately prior to
the transaction continue to hold (either by the shares remaining
outstanding or by their being converted into shares of voting
capital stock of the surviving entity) a majority of the total
voting power represented by the shares of voting capital stock of
our company (or the surviving entity) outstanding immediately after
the transaction; or
(iii) all or
substantially all of our assets are sold.
Stockholder Rights
and Option Transferability. The holder of an option or stock
appreciation right will have no stockholder rights with respect to
the shares subject to that option or stock appreciation right
unless and until the holder exercises the option or stock
appreciation right and becomes a holder of record of shares of
common stock distributed upon exercise of the award. Incentive
options are not assignable or transferable other than by will or
the laws of inheritance following the optionee’s death, and during
the optionee’s lifetime, may only be exercised by the optionee.
However, non-statutory options and stock appreciation rights may be
transferred or assigned during the holder’s lifetime to one or more
members of the holder’s family or to a trust established for the
benefit of the holder and/or one or more family members or to the
holder’s former spouse, to the extent the transfer is in connection
with the holder’s estate plan or under a domestic relations
order.
A
participant will have a number of rights with respect to shares of
common stock issued to the participant under the Stock Issuance
Program, whether or not the participant’s interest in those shares
is vested. Accordingly, the participant will have the right to vote
the shares but will not have the right to receive any regular cash
dividends paid on unvested shares or the right to transfer the
shares prior to vesting; however, we will withhold and retain any
dividends on unvested shares until such time as the shares vest, if
at all, and will thereafter pay to the participant any such
dividends withheld and retained or, if the shares do not vest,
return any such dividends to the corporate treasury. A participant
will not have any stockholder rights with respect to the shares of
common stock subject to restricted stock units or other stock-based
awards until the awards vest and the shares of common stock are
actually issued. However, dividend-equivalent units may be paid or
credited, either in cash or in actual or phantom shares of common
stock, on outstanding restricted stock units or other stock-based
awards, subject to terms and conditions the plan administrator
deems appropriate and subject to the withholding and retention of
dividends with respect to any unvested awards on the same terms as
set forth above.
Changes
in Capitalization. If any change is made to the outstanding
shares of common stock by reason of any recapitalization, stock
dividend, stock split, combination of shares, exchange of shares or
other change in corporate structure effected without our receipt of
consideration, appropriate adjustments will be made to (i) the
maximum number and/or class of securities issuable under the 2016
Plan; (ii) the maximum number and/or class of securities for which
any one person may be granted equity awards under the 2016 Plan per
calendar year; (iii) the number and/or class of securities and the
exercise price or base price per share in effect under each
outstanding option or stock appreciation right; and (iv) the number
and/or class of securities subject to each outstanding restricted
stock unit or other stock-based award under the 2016 Plan and the
cash consideration, if any, payable per share. All adjustments will
be designed to preclude any dilution or enlargement of benefits
under the 2016 Plan and the outstanding equity awards
thereunder.
Special
Tax Election. Subject to applicable laws, rules and
regulations, the plan administrator may permit any or all holders
of equity awards to utilize any or all of the following methods to
satisfy all or part of the federal and state income and employment
withholding taxes to which they may become subject in connection
with the issuance, exercise or vesting of those equity
awards:
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Stock
Withholding. The election to have us withhold, from the shares
otherwise issuable upon the issuance, exercise or vesting of an
equity award, a portion of those shares with an aggregate fair
market value equal to the percentage of the withholding taxes (not
to exceed 100%) designated by the holder and make a cash payment
equal to the fair market value directly to the appropriate taxing
authorities on the individual’s behalf. |
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Stock Delivery.
The election to deliver to us shares of common stock previously
acquired by the holder (other than in connection with the issuance,
exercise or vesting that triggered the withholding taxes) with an
aggregate fair market value equal to the percentage of the
withholding taxes (not to exceed 100%) designated by the
holder. |
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Sale and
Remittance. The election to deliver to us, to the extent the
award is issued or exercised for vested shares, through a special
sale and remittance procedure under which the optionee or
participant will concurrently provide irrevocable instructions to a
brokerage firm to effect the immediate sale of the purchased or
issued shares and remit to us, out of the sale proceeds available
on the settlement date, sufficient funds to cover the withholding
taxes we are required to withhold by reason of the issuance,
exercise or vesting. |
Amendment,
Suspension and Termination
Our Board
may suspend or terminate the 2016 Plan at any time. Our Board may
amend or modify the 2016 Plan, subject to any required stockholder
approval. Stockholder approval will be required for any amendment
that materially increases the number of shares available for
issuance under the 2016 Plan, materially expands the class of
individuals eligible to receive equity awards under the 2016 Plan,
materially increases the benefits accruing to optionees and other
participants under the 2016 Plan or materially reduces the price at
which shares of common stock may be issued or purchased under the
2016 Plan, materially extends the term of the 2016 Plan, expands
the types of awards available for issuance under the 2016 Plan, or
as to which stockholder approval is required by applicable laws,
rules or regulations.
Unless
sooner terminated by our Board, the 2016 Plan will terminate on the
earliest to occur of: (i) March 25, 2026; (ii) the date
on which all shares available for issuance under the 2016 Plan have
been issued as fully-vested shares; (iii) and the termination
of all outstanding equity awards upon specified changes in control
or ownership. If the 2016 Plan terminates on March 25, 2026, then
all equity awards outstanding at that time will continue to have
force and effect in accordance with the provisions of the documents
evidencing those awards.
Federal
Income Tax Consequences
The
following discussion summarizes the principal income tax
consequences of equity awards granted under the 2016 Plan under
current federal income tax law, which is subject to change, and is
intended for general information only. In addition, the tax
consequences described below may be subject to the limitations of
Code Section 162(m), as discussed in further detail below. Other
federal taxes and foreign, state and local income taxes are not
discussed, and may vary depending upon individual circumstances and
from locality to locality. We will not summarize the special rules
that may apply if the recipient pays the exercise price of any
equity award or any associated tax withholdings by delivery of
shares the recipient already owns or will acquire with respect to
the equity award.
Option
Grants. Options granted under the 2016 Plan may be either
incentive stock options, which satisfy the requirements of Code
Section 422, or non-statutory stock options, which are not intended
to meet those requirements. The federal income tax treatment for
the two types of options differs as follows:
Incentive Stock
Options. No taxable income is recognized by the optionee at the
time of the option grant, and, if there is no disqualifying
disposition of the underlying shares at the time of exercise, no
taxable income is recognized for regular tax purposes at the time
the option is exercised, although taxable income may arise at that
time for alternative minimum tax purposes equal to the excess of
the fair market value of the purchased shares at the time over the
exercise price paid for those shares.
The
optionee will recognize taxable income in the year in which the
purchased shares are sold or otherwise made the subject of some
dispositions. For federal tax purposes, dispositions are divided
into two categories: qualifying and disqualifying. A qualifying
disposition occurs if the sale or other disposition is made more
than two years after the date the option for the shares involved in
the sale or disposition was granted and more than one year after
the date the option was exercised for those shares. If either of
these two requirements is not satisfied, a disqualifying
disposition will result.
Upon a
qualifying disposition, the optionee will recognize long-term
capital gain in an amount equal to the excess of the amount
realized upon the sale or other disposition of the purchased shares
over the exercise price paid for the shares or long-term capital
loss to the extent the amount realized is less than the exercise
price paid for the shares. If there is a disqualifying disposition
of the shares, the excess of the fair market value of those shares
on the exercise date over the exercise price paid for the shares
will be taxable as ordinary income to the optionee if the amount
realized exceeds the sum of that excess plus the exercise price
paid for the shares. Otherwise, only the excess of the amount
realized over the price paid for the shares will be treated as
ordinary income to the optionee. Any additional gain or any loss
recognized upon the disposition will be taxable as a capital gain
or capital loss (long-term if the shares were held for more than
one year and short-term otherwise).
If the
optionee makes a disqualifying disposition of the purchased shares,
we will generally be entitled to an income tax deduction, for our
taxable year in which the disposition occurs, equal to the amount
of ordinary income the optionee is to recognize. If the optionee
makes a qualifying disposition, we will not be entitled to any
income tax deduction.
Non-Statutory Stock
Options. No taxable income is generally recognized by an
optionee upon the grant of a non-statutory option (assuming the
option is exempt from Code Section 409A). The optionee will, in
general, recognize ordinary income, in the year in which the option
is exercised, equal to the excess of the fair market value of the
purchased shares on the exercise date over the exercise price paid
for the shares, and we will be required to collect withholding
taxes from the optionee on that amount of ordinary income. A
participant’s subsequent disposition of shares acquired upon the
exercise of an option generally will result in only capital gain or
loss.
We will
generally be entitled to an income tax deduction equal to the
amount of any ordinary income recognized by the optionee with
respect to an exercised non-statutory option. The deduction will in
general be allowed for our taxable year in which the ordinary
income is recognized by the optionee.
If the
shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase in the event of the optionee’s
cessation of service prior to vesting in those shares, however the
optionee will not recognize any taxable income at the time of
exercise but will have to report as ordinary income (and we will
have to withhold with respect thereto), as and when our repurchase
right lapses, an amount equal to the excess of the fair market
value of the shares on the date the repurchase right lapses over
the exercise price paid for the shares. The optionee may elect
under Code Section 83(b) to include as ordinary income in the year
of exercise of the option an amount equal to the excess of the fair
market value of the purchased shares on the exercise date over the
exercise price paid for the shares. If a timely Code Section 83(b)
election is made, the optionee will not recognize any additional
income as and when the repurchase right lapses.
Stock
Appreciation Rights. No taxable income is generally recognized
upon receipt of a stock appreciation right. The holder will
recognize ordinary income in the year in which the stock
appreciation right is settled in an amount equal to the cash and
the fair market value of the shares of common stock on the
settlement date received for the right, and we will be required to
collect withholding taxes from the holder on that ordinary income.
A participant’s subsequent disposition of shares acquired upon the
exercise of a stock appreciation right generally will result in
only capital gain or loss.
We will
generally be entitled to an income tax deduction equal to the
amount of any ordinary income recognized by the holder in
connection with the exercise of a stock appreciation right. The
deduction will in general be allowed for our taxable year in which
the ordinary income is recognized by the holder.
Direct
Stock Issuances. Stock granted under the 2016 Plan may include
issuances of unrestricted stock, restricted stock and restricted
stock units.
Unrestricted Stock
Grants. The holder will recognize ordinary income in the year
in which shares are actually issued to the holder. The amount of
that income will be equal to the fair market value of the shares on
the date of issuance (minus the amount, if any, paid by the
participant for the shares), and we will be required to collect
withholding taxes from the holder on that ordinary income. A
participant’s subsequent disposition of shares issued pursuant to
an unrestricted stock grant generally will result in only capital
gain or loss.
We
generally will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the holder at the time the
shares are issued. The deduction will in general be allowed for our
taxable year in which the ordinary income is recognized by the
holder.
Restricted Stock
Grants. No taxable income is recognized upon receipt of stock
that qualifies as restricted stock unless the recipient elects to
have the value of the stock (without consideration of any effect of
the vesting conditions) included in income on the date of receipt.
In that event, the recipient may elect under Code Section 83(b) to
include as ordinary income in the year the shares are actually
issued an amount equal to the fair market value of the shares at
the time of issuance (and we will be required to withhold on that
amount). If a timely Code Section 83(b) election is made, the
holder will not recognize any additional income when the vesting
conditions lapse and will not be entitled to a deduction in the
event the stock is forfeited as a result of failure to
vest.
If the
recipient does not file an election under Code Section 83(b), he
will not recognize income until the shares vest. At that time, the
holder will recognize ordinary income in an amount equal to the
fair market value of the shares on the date the shares vest. We
will be required to collect withholding taxes from the holder at
that time on that ordinary income. A participant’s subsequent
disposition of shares issued pursuant to a restricted stock grant
generally will result in only capital gain or loss.
The holder
also will recognize ordinary income and be subject to withholdings
with respect to any cash dividends that are paid in connection with
a restricted stock grant if they are paid prior to the time the
shares vest (and assuming the holder does not make the election
under Code Section 83(b)). If the holder makes the Code Section
83(b) election, all dividends received on a restricted stock award
will be taxed as an ordinary dividend.
We
generally will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the holder at the time the
shares are issued, if the holder elects to file an election under
Code Section 83(b), or we will be entitled to an income tax
deduction equal to the amount of ordinary income recognized by the
holder at the time the vesting conditions occur if the holder does
not elect to file an election under Code Section 83(b).
Restricted Stock
Units. No taxable income is generally recognized upon receipt
of a restricted stock unit award. The holder will recognize
ordinary income in the year in which the cash is paid and/or shares
subject to that unit are actually issued to the holder. The amount
of that income will be equal to the cash and the fair market value
of the shares received on the date of issuance, and we will be
required to collect withholding taxes from the holder on that
ordinary income. A participant’s subsequent disposition of shares
issued pursuant to a restricted stock unit grant generally will
result in only capital gain or loss.
We will
generally be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the holder at the time the
shares are issued. The deduction will in general be allowed for our
taxable year in which the ordinary income is recognized by the
holder.
Code
Section 409A. A number of awards, including non-statutory
stock options and stock appreciation rights granted with an
exercise price that is less than fair market value, and some
restricted stock units, might be considered “non-qualified deferred
compensation” and subject to Code Section 409A. Awards that are
subject to but do not meet the requirements of Code
Section 409A will result in an additional 20% tax obligation,
plus penalties and interest to the recipient, and may result in
accelerated imposition of income tax at the time of vesting (as
opposed to settlement) and the related withholding. The foregoing
tax discussion assumes that the applicable equity award is exempt
from Code Section 409A. Equity awards subject to Code Section 409A
may only be paid on certain trigger events and are subject to a
myriad number of other requirements.
Deductibility of
Executive Compensation
Any
compensation deemed paid by us in connection with awards under the
2016 Plan may be taken into account for purposes of the annual
$1,000,000 limitation per covered individual on the deductibility
of compensation paid to certain executive officers under Code
Section 162(m).
Accounting
Treatment
In
accordance with accounting standards established by the Financial
Accounting Standards Board’s Accounting Standards Codification
Topic 718, Stock Compensation, we are required to recognize
all share-based payments, including grants of stock options,
restricted stock and restricted stock units, in our financial
statements. Accordingly, stock options are valued at fair value as
of the grant date under an appropriate valuation formula, and that
value will be charged as stock-based compensation expense against
our reported earnings over the designated vesting period of the
award. For shares issuable upon the vesting of restricted stock
units that may be awarded under the 2016 Plan, we are required to
expense over the vesting period a compensation cost equal to the
fair market value of the underlying shares on the date of the
award. Restricted stock issued under the 2016 Plan results in a
direct charge to our reported earnings equal to the excess of the
fair market value of those shares on the issuance date over the
cash consideration (if any) paid for the shares. If the shares are
unvested at the time of issuance, then any charge to our reported
earnings is amortized over the vesting period. This accounting
treatment for restricted stock units and restricted stock issuances
is applicable whether vesting is tied to service periods or
performance criteria.
New Plan Benefits
No additional awards under the 2016 Plan are determinable at this
time because awards under the 2016 Plan are discretionary and no
specific additional awards have been approved by the plan
administrator beyond currently outstanding unvested restricted
stock grants in respect of 2,076,025 shares of common stock.
Other Arrangements Not Subject to Stockholder Action
Information regarding our equity compensation plan arrangements
that existed as of the end of 2019 is included in this Proxy
Statement under the heading “Equity Compensation Plan
Information.”
Interests of Related Parties
The 2016 Plan provides that our officers, employees, non-employee
directors, and some consultants and independent advisors will be
eligible to receive awards under the 2016 Plan. However, if this
proposal is not approved by our stockholders, then no awards in
excess of the existing 7,400,000 shares authorized for issuance
under the 2016 Plan will be made under the 2016 Plan unless
stockholder approval is otherwise obtained.
As discussed above, we may be eligible in some circumstances to
receive a tax deduction for some executive compensation resulting
from awards under the 2016 Plan that would otherwise be disallowed
under Section 162(m).
Possible Anti-Takeover Effects
Although not intended as an anti-takeover measure by our Board, one
of the possible effects of the 2016 Plan could be to place
additional shares, and to increase the percentage of the total
number of shares outstanding, or to place other incentive
compensation, in the hands of the directors and officers of Alto
Ingredients. Those persons may be viewed as part of, or friendly
to, incumbent management and may, therefore, under some
circumstances be expected to make investment and voting decisions
in response to a hostile takeover attempt that may serve to
discourage or render more difficult the accomplishment of the
attempt.
In addition, options or other incentive compensation may, in the
discretion of the plan administrator, contain provisions providing
for the acceleration of the exercisability or vesting of
outstanding options and other incentive compensation upon a hostile
takeover or other change in control, including a tender or exchange
offer, merger, consolidation, other business combination, sale of
all or substantially all of our assets, significant changes in the
composition of our Board, or other attempted changes in the control
of Alto Ingredients. In the opinion of our Board, this acceleration
provision merely ensures that optionees under the 2016 Plan will be
able to exercise their options or obtain their incentive
compensation as intended by our Board and stockholders prior to any
extraordinary corporate transaction which might serve to limit or
restrict that right. Our Board is, however, presently unaware of
any threat of hostile takeover involving Alto Ingredients.
Clawback Policy
The plan administrator has the power and authority, and is
required, to terminate any vested or unvested award or require
repayment to us of the proceeds received by our executive officers,
including any named executive officer, arising from any award, to
apply our Policy for Recoupment of Incentive Compensation dated
March 29, 2018. The plan administrator will also apply any amended
or successor “clawback” or similar policy adopted by us, including
any policy or policy changes mandated by or implemented pursuant to
the Dodd-Frank Wall Street Reform and Consumer Protection Act or
the applicable listing requirements or rules and regulations of The
NASDAQ Capital Market, if applicable, and any other stock exchange
or other market on which our common stock is then quoted or listed
for trading.
Required Vote of Stockholders
NASDAQ Listing Rule 5635(c) generally requires us to obtain
stockholder approval of compensation plans pursuant to which our
stock may be acquired by officers, directors, employees or
consultants. The approval of this Proposal Four requires the
affirmative vote of a majority of the votes of the shares of our
common stock and Series B Preferred Stock, voting together as a
single class, present at the Annual Meeting in person or by proxy
and entitled to vote.
Recommendation of the Board of Directors
OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF
PROPOSAL THREE.
Proposal Four
Ratification of Appointment of
Independent Registered Public Accounting Firm
Our Audit Committee has appointed the independent registered public
accounting firm RSM US LLP to audit and comment on our financial
statements for the year ending December 31, 2022, and to conduct
whatever audit functions are deemed necessary. RSM US LLP audited
our financial statements for the year ended December 31, 2021 that
were included in our most recent Annual Report on Form 10-K.
A representative of RSM US LLP will not be present at the Annual
Meeting.
Required Vote of Stockholders
Although a vote of stockholders is not required on this proposal,
our Board is asking our stockholders to ratify the appointment of
our independent registered public accounting firm. The ratification
of the appointment of our independent registered public accounting
firm requires the affirmative votes of a majority of the votes of
the shares of our common stock and Series B Preferred Stock, voting
together as a single class, present at the Annual Meeting in person
or by proxy and entitled to vote.
In the event that our stockholders do not ratify the appointment of
RSM US LLP as our independent registered public accounting firm,
the appointment will be reconsidered by our Audit Committee. Even
if the appointment is ratified, our Audit Committee, in its
discretion, may direct the appointment of a different independent
registered public accounting firm at any time during the year if
the Audit Committee believes that such a change would be in our and
our stockholders’ best interests.
Recommendation of the Board of Directors
OUR
BOARD unanimously recommends a vote “FOR”
RATIFICATION OF THE APPOINTMENT OF
RSM US LLP TO SERVE AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM FOR THE YEAR ENDING DECEMBER 31, 2022.
Other Matters
Our Board knows of no other
matters to be brought before the Annual Meeting. However, if other
matters should come before the Annual Meeting, it is the intention
of the person named in the proxy to vote such proxy in accordance
with his or her judgment on such matters.
Audit Matters
Principal Accountant Fees and Services
The following table presents fees for professional audit services
rendered by RSM US LLP for the years ended December 31, 2021 and
2020.
|
|
2021 |
|
|
2020 |
|
Audit Fees |
|
$ |
592,702 |
|
|
$ |
549,419 |
|
Audit-Related Fees |
|
|
22,680 |
|
|
|
21,945 |
|
Tax Fees |
|
|
— |
|
|
|
— |
|
All Other
Fees |
|
|
— |
|
|
|
— |
|
Total |
|
$ |
615,382 |
|
|
$ |
571,364 |
|
Audit Fees. Consist of amounts billed for professional
services rendered for the audit of our annual consolidated
financial statements included in our Annual Reports on
Form 10-K, reviews of our interim consolidated financial
statements included in our Quarterly Reports on Form 10-Q and
our Registration Statements on Forms S-1, S-3 and S-8.
Audit-Related Fees. Audit-Related Fees consist of fees
billed for professional services that are reasonably related to the
performance of the audit or review of our consolidated financial
statements but are not reported under “Audit Fees.” Such fees would
include amounts billed for professional services performed in
connection with mergers and acquisitions, audits of 401(k) plans,
pension plans and RIN audits.
Tax Fees. Tax Fees consist of fees for professional services
for tax compliance activities, including the preparation of federal
and state tax returns and related compliance matters.
All Other Fees. Consists of amounts billed for services
other than those noted above.
Our Audit Committee considered all non-audit services provided by
RSM US LLP and determined that the provision of such services was
compatible with maintaining such firm’s audit independence.
Audit Committee Pre-Approval Policy
Our Audit Committee is responsible for approving all audit,
audit-related, tax and other services. The Audit Committee
pre-approves all auditing services and permitted non-audit
services, including all fees and terms to be performed for us by
our independent auditor at the beginning of the fiscal year.
Non-audit services are reviewed and pre-approved by project at the
beginning of the fiscal year. Any additional non-audit services
contemplated by us after the beginning of the fiscal year are
submitted to the Chairman of our Audit Committee for pre-approval
prior to engaging our independent auditor for such services. These
interim pre-approvals are reviewed with the full Audit Committee at
its next meeting for ratification. During 2021 and 2020, all
services performed by RSM US LLP were pre-approved by our Audit
Committee in accordance with these policies and applicable
Securities and Exchange Commission regulations.
Audit Committee
Report
The Audit Committee is comprised entirely of independent directors
who meet the independence requirements of the Listing Rules of
NASDAQ and the Securities and Exchange Commission. The Audit
Committee operates under a written charter adopted by the Board
that is available on Alto Ingredients’ website at
http://www.altoingredients.com/audit-committee-charter. As
described more fully in its charter, the Audit Committee oversees
the financial reporting process, the internal control structure and
disclosure controls and procedures on behalf of the Board.
Management is responsible for the preparation, presentation and
integrity of Alto Ingredients’ financial statements; the
appropriateness of the accounting principles and reporting policies
that are used; and procedures designed to reasonably assure
compliance with accounting standards, and applicable laws and
regulations. Management is also responsible for the effectiveness
of Alto Ingredients’ internal control over financial reporting, and
reports to the Audit Committee on any deficiencies found.
Alto Ingredients’ independent registered public accounting firm,
RSM US LLP, is responsible for performing an independent audit of
Alto Ingredients’ consolidated financial statements in accordance
with standards of the Public Company Accounting Oversight Board
(United States) and, when required, expressing an opinion on the
effectiveness of Alto Ingredients’ internal control over financial
reporting. The Audit Committee is directly responsible for the
selection, compensation, evaluation and oversight, and retention of
Alto Ingredients’ independent registered public accounting firm,
and evaluates its independence.
Under its written charter, the Audit Committee has the authority to
conduct any investigation appropriate to fulfilling its
responsibilities, has direct access to Alto Ingredients’
independent registered public accounting firm as well as any of
Alto Ingredients’ employees, and has the ability to retain, at Alto
Ingredients’ expense, special legal, accounting, or other experts
or advisors it deems necessary in the performance of its duties,
apart from counsel or advisors hired by management.
Audit Committee members are not acting as professional accountants
or auditors, and their functions are not intended to duplicate or
to certify the activities of management or Alto Ingredients’
independent registered public accounting firm. The Audit Committee
serves a Board-level oversight role in which it provides advice,
counsel, and direction to management and to the auditors on the
basis of the information it receives, discussions with management
and the auditors, and the experience of the Audit Committee’s
members in business, financial, and accounting matters.
In accordance with Audit Committee policy and the requirements of
law, the Audit Committee pre-approves all services to be provided
by Alto Ingredients’ independent registered public accounting firm.
Pre-approval includes audit services, audit-related services, tax
services, and all other services.
The Audit Committee reviewed and discussed with management its
assessment of and report on the effectiveness of Alto Ingredients’
internal control over financial reporting as of December 31, 2021,
which it made based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework).
The Audit Committee reviewed and discussed the audited financial
statements in Alto Ingredients’ Annual Report on Form 10-K for the
fiscal year ended December 31, 2021 with management and RSM US LLP.
The Audit Committee also discussed with RSM US LLP the matters
required to be discussed by Auditing Standard No. 1301,
“Communications with Audit Committees” issued by the Public Company
Accounting Oversight Board. The Audit Committee has also discussed
with RSM US LLP all other matters required to be discussed by the
applicable requirements of the Public Company Accounting Oversight
Board and the Securities and Exchange Commission. In addition, the
Audit Committee obtained from RSM US LLP the written disclosures
and the letter required by applicable requirements of the Public
Company Accounting Oversight Board regarding the independent
accountants’ communications with the Audit Committee concerning
independence and discussed with RSM US LLP its independence from
Alto Ingredients, Inc. and management.
The Audit Committee considered all non-audit services provided by
RSM US LLP and determined that the provision of such services was
compatible with maintaining such firm’s audit independence.
Based on the reviews and discussions referred to above, as well as
such other matters deemed relevant and appropriate by the Audit
Committee, the Audit Committee recommended to the Board, and the
Board approved, the inclusion of the audited financial statements
referred to above in Alto Ingredients’ Annual Report on Form 10-K
for the fiscal year ended December 31, 2021 for filing with the
Securities and Exchange Commission.
|
Respectfully
submitted, |
|
Audit
Committee |
|
|
|
Terry
L. Stone, Chairman |
|
William
L. Jones |
|
John
L. Prince |
|
Dianne
S. Nury |
Security Ownership of
Certain Beneficial Owners and Management
The following table sets forth information with respect to the
beneficial ownership of our voting securities as of April 27, 2022,
the date of the table, by:
|
● |
each of our named executive
officers; |
|
● |
all of our executive officers and
directors as a group; and |
|
● |
each person known by us to
beneficially own more than 5% of the outstanding shares of any
class of our voting capital stock. |
Beneficial ownership is determined in accordance with the rules of
the Securities and Exchange Commission, and includes voting or
investment power with respect to the securities. To our knowledge,
except as indicated by footnote, and subject to community property
laws where applicable, the persons named in the table below have
sole voting and investment power with respect to all shares of
common stock shown as beneficially owned by them. Shares of common
stock underlying derivative securities, if any, that currently are
exercisable or convertible or are scheduled to become exercisable
or convertible for or into shares of common stock within 60 days
after the date of the table are deemed to be outstanding in
calculating the percentage ownership of each listed person or group
but are not deemed to be outstanding as to any other person or
group. Except as indicated by footnote, percentage of beneficial
ownership is based on 74,075,166 shares of common stock and 926,942
shares of Series B Preferred Stock outstanding as of the date of
the table.
Name and Address of Beneficial Owner(1)
|
|
Title of Class |
|
Amount and Nature
of Beneficial Ownership |
|
|
Percent
of Class |
|
William L. Jones |
|
Common |
|
|
196,723 |
(2) |
|
|
* |
|
|
|
Series B Preferred |
|
|
12,820 |
|
|
|
1.38 |
% |
Michael D. Kandris |
|
Common |
|
|
568,115 |
(3) |
|
|
* |
|
Bryon T. McGregor |
|
Common |
|
|
362,456 |
(4) |
|
|
* |
|
Christopher W. Wright |
|
Common |
|
|
82,155 |
|
|
|
* |
|
James R. Sneed |
|
Common |
|
|
212,431 |
(5) |
|
|
* |
|
Terry L. Stone |
|
Common |
|
|
159,849 |
|
|
|
* |
|
John L. Prince |
|
Common |
|
|
146,103 |
|
|
|
* |
|
Douglas L. Kieta |
|
Common |
|
|
172,803 |
|
|
|
* |
|
Gilbert E. Nathan |
|
Common |
|
|
490,000 |
(6) |
|
|
* |
|
Dianne S. Nury |
|
Common |
|
|
68,969 |
|
|
|
* |
|
Black Rock, Inc. |
|
Common |
|
|
5,287,599 |
(7) |
|
|
7.14 |
% |
State Street Corporation |
|
Common |
|
|
4,486,518 |
(8) |
|
|
6.06 |
% |
Cooper Creek Partners Management
LLC |
|
Common |
|
|
3,927,695 |
(9) |
|
|
5.30 |
% |
|
|
|
|
|
|
|
|
|
|
|
Lyles United, LLC |
|
Common |
|
|
536,937 |
(10) |
|
|
* |
|
|
|
Series B Preferred |
|
|
512,820 |
|
|
|
55.32 |
% |
Neil M. Koehler |
|
Common |
|
|
1,163,499 |
(11) |
|
|
1.57 |
% |
|
|
Series B Preferred |
|
|
256,410 |
|
|
|
27.66 |
% |
SCF Investments LLC |
|
Common |
|
|
88,606 |
(12) |
|
|
* |
|
|
|
Series B Preferred |
|
|
85,180 |
|
|
|
9.19 |
% |
All executive officers and directors
as a group (11 persons) |
|
Common |
|
|
2,520,313 |
(13) |
|
|
3.40 |
% |
|
|
Series B Preferred |
|
|
12,820 |
|
|
|
1.38 |
% |
|
(1) |
Messrs. Jones, Kandris, Stone, Prince, Kieta and Nathan, and
Ms. Nury, are directors of Alto Ingredients, Inc. Messrs. Kandris,
McGregor, Wright and Sneed are named executive officers of Alto
Ingredients, Inc. The address of each of these persons is c/o Alto
Ingredients, Inc., 1300 South Second Street, Pekin, Illinois
61554. |
|
(2) |
Amount represents 183,388 shares of common stock held by
William L. Jones and Maurine Jones, husband and wife, as community
property and 13,335 shares of common stock underlying our Series B
Preferred Stock held by Mr. Jones. |
|
(3) |
Includes 31,746 shares of common stock underlying options. |
|
(4) |
Includes 31,746 shares of common stock underlying options. |
|
(5) |
Includes 10,204 shares of common stock underlying options. |
|
(6) |
Includes 26,200 shares of common stock held by Mr. Nathan’s
spouse. |
|
(7) |
The information with respect to Black Rock, Inc., including the
information in this footnote, is based solely on the Schedule 13G
filed with the Securities and Exchange Commission on February 4,
2022 by Black Rock, Inc. as the reporting person. Black Rock, Inc.
beneficially owns 5,287,599 shares, holds sole voting power over
5,171,211 shares and holds sole dispositive power over 5,287,599
shares. The address of Black Rock, Inc. is 55 East 52nd
Street, New York, New York 10055. |
|
(8) |
The information with respect to State Street Corporation,
including the information in this footnote, is based solely on the
Schedule 13G/A filed with the Securities and Exchange Commission on
February 10, 2022 by State Street Corporation as the reporting
person. State Street Corporation beneficially owns 4,486,518
shares, holds shared voting power over 4,312,273 shares and holds
shared dispositive power over 4,486,518 shares. The address of
State Street Corporation is State Street Financial Center, 1
Lincoln Street, Boston, Massachusetts 02111. |
|
(9) |
The information with respect to Cooper Creek Partners
Management LLC, including the information in this footnote, is
based solely on the Schedule 13G filed with the Securities and
Exchange Commission on February 14, 2022 by Cooper Creek Partners
Management LLC as the reporting person. Cooper Creek Partners
Management LLC beneficially owns and holds sole voting and
dispositive power over 3,927,695 shares. The address of Cooper
Creek Management LLC is 501 Madison Avenue, Suite 302, New York,
New York 10022. |
|
(10) |
Amount includes 533,449 shares of common stock underlying our
Series B Preferred Stock. In addition, The Lyles Foundation holds
3,488 shares of common stock. The address of Lyles United, LLC is
P.O. Box 4376, Fresno, California 93744-4376. |
|
(11) |
Amount represents 896,775 shares of common stock held directly
and 266,724 shares of common stock underlying our Series B
Preferred Stock. The information with respect to Neil M. Koehler’s
shares of common stock held directly is based solely on our Proxy
Statement filed with the Securities and Exchange Commission on
April 27, 2021 as to which Mr. Koehler confirmed the number of
shares of common stock set forth therein as held directly by him at
that time. |
|
(12) |
Amount represents shares of common stock underlying our Series
B Preferred Stock. The address of SCF Investments LLC is c/o SC
Fuels, 1800 West Katella Ave., Suite 400, Orange, California
92867. |
|
(13) |
Amount represents 2,433,282 shares of common stock held
directly, 73,696 shares of common stock underlying options and
13,335 shares of common stock underlying our Series B Preferred
Stock. |
Equity Compensation Plan
Information
The following table provides information about our common stock
that may be issued upon the exercise of options, warrants and
rights under all of our existing equity compensation plans as of
December 31, 2021.
Plan Category |
|
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants
and Rights |
|
|
Weighted-
Average
Exercise
Price of
Outstanding
Options,
Warrants and
Rights
|
|
|
Number of
Securities
Remaining
Available
for Future
Issuance
Under Equity
Compensation
Plans(1)(2)
|
|
Equity Compensation Plans Approved by Security Holders: |
|
|
|
|
|
|
|
|
|
2006 Stock Incentive
Plan(1) |
|
|
73,696 |
|
|
$ |
3.74 |
|
|
|
— |
|
2016 Stock
Incentive Plan |
|
|
— |
|
|
$ |
— |
|
|
|
1,550,922 |
|
|
(1) |
Our 2006 Stock Incentive Plan
terminated on July 19, 2016 except to the extent of unvested shares
of our restricted common stock and options to purchase shares of
our common stock outstanding as of that date. |
|
(2) |
Excludes an additional 1,500,000
shares of common stock available for future issuance upon approval
by our stockholders of an amendment to the 2016 Plan. The amendment
is included as Proposal Three of this Proxy Statement. |
Executive Compensation
and Related Information
Executive Officers
The following table sets forth certain information regarding our
executive officers as of April 27, 2022:
Name
|
|
Age
|
|
Position(s) Held
|
Michael D. Kandris |
|
74 |
|
President, Chief Executive Officer, Chief Operating Officer and
Director |
Bryon T. McGregor |
|
58 |
|
Chief Financial Officer |
Auste M. Graham |
|
42 |
|
Vice President, General Counsel and Secretary |
Christopher W. Wright |
|
69 |
|
Senior Vice President |
James R. Sneed |
|
55 |
|
Vice President and Chief Commercial Officer |
Michael D. Kandris has served as a director since
June 2008, as our sole President and Chief Executive Officer since
September 2020 and as our Chief Operating Officer since January 6,
2013. Mr. Kandris was appointed as our Co-President and Co-Chief
Executive Officer in May 2020. Mr. Kandris served as an independent
contractor with supervisory responsibility for plant operations,
under the direction of our Chief Executive Officer, from January 1,
2012 to January 5, 2013. Mr. Kandris was President of the Western
Division of Ruan Transportation Management Systems from November
2008 until his retirement in September 2009. From January 2000 to
November 2008, Mr. Kandris served as President and Chief Operating
Officer of Ruan Transportation Management Systems, where he had
overall responsibility for all operations, finance and
administrative functions. Mr. Kandris has 30 years of experience in
all modes of transportation and logistics. Mr. Kandris served on
the Executive Committee of the American Trucking Association and as
a board member for the National Tank Truck Organization until his
retirement from Ruan Transportation Management Systems in September
2009. Mr. Kandris has a B.S. degree in Business from California
State University, Hayward.
Bryon T. McGregor has served as our Chief Financial
Officer since November 19, 2009. Mr. McGregor served as Vice
President, Finance at Alto Ingredients from September 2008 until he
became Interim Chief Financial Officer in April 2009. Prior to
joining Alto Ingredients, Mr. McGregor was employed as Senior
Director for E*TRADE Financial from February 2002 to August 2008,
serving in various capacities including International Treasurer
based in London, England from 2006 to 2008, Brokerage Treasurer and
Director from 2003 to 2006 and Assistant Treasurer and Director of
Finance and Investor Relations from 2002 to 2003. Prior to joining
E*TRADE, Mr. McGregor served as Manager of Finance and Head of
Project Finance for BP (formerly Atlantic Richfield Company – ARCO)
from 1998 to 2001. Mr. McGregor has extensive experience in banking
and served as a Director of International Project Finance for
Credit Suisse from 1992 to 1998, as Assistant Vice President for
Sumitomo Mitsubishi Banking Corp (formerly The Sumitomo Bank
Limited) from 1989 to 1992, and as Commercial Banking Officer for
Bank of America from 1987 to 1989. Mr. McGregor has a B.S. degree
in Business Management from Brigham Young University.
Auste M. Graham has served as Vice President, General
Counsel and Secretary since February 2022. Prior to joining Alto
Ingredients, Ms. Graham was employed as Vice President, Legal for
Essentra plc, a packaging, components and filters manufacturer
headquartered in the U.K., where she was responsible for all legal
affairs in the Americas from January 2018 to February 2022. Prior
to joining Essentra plc, Ms. Graham served as Senior Legal Counsel
in the U.S. for AkzoNobel, a global paints, coatings and special
chemicals company headquartered in the Netherlands, from 2015 to
2018. Ms. Graham began her career at Schiff Hardin LLP, where she
provided general corporate representation to public and private
companies, managing mergers and acquisitions, governance and
compliance matters, and corporate and securities transactions,
including corporate debt and equity offerings and private equity
investments. Ms. Graham has a B.A. degree in Latin American Studies
from Vassar College and a J.D. from Vanderbilt University Law
School.
Christopher W. Wright served as Vice President,
General Counsel and Secretary from June 2006 until stepping down
from his position as General Counsel and Secretary in February 2022
in anticipation of his retirement. Mr. Wright now serves as Senior
Vice President. From April 2004 until he joined Alto Ingredients in
June 2006, Mr. Wright operated an independent consulting practice,
advising companies on complex transactions, including acquisitions
and financings. Prior to that time, from January 2003 to April
2004, Mr. Wright was a partner with Orrick, Herrington &
Sutcliffe, LLP, and from July 1998 to December 2002, Mr. Wright was
a partner with Cooley Godward LLP, where he served as
Partner-in-Charge of the Pacific Northwest office. Mr. Wright has
extensive experience advising boards of directors on compliance,
securities matters and strategic transactions, with a particular
focus on guiding the development of rapidly growing companies. He
has acted as general counsel for numerous technology enterprises in
all aspects of corporate development, including fund-raising,
business and technology acquisitions, mergers and strategic
alliances. Mr. Wright has an A.B. degree in History from Yale
College and a J.D. from the University of Chicago Law School.
James R. Sneed has served as a Vice President since
September 2012. Mr. Sneed has worked for over 20 years in various
senior management and executive positions in the alcohol production
industry. Prior to joining Alto Ingredients in 2012, Mr. Sneed was
employed by Hawkeye Gold, LLC from April 2010 to September 2012,
ultimately serving as Vice President – Ethanol Marketing and
Trading. Prior to that time, from May 2003 to April 2010, Mr. Sneed
was employed by Aventine Renewable Energy, an ethanol production
and marketing company, where he helped build its operations from
two ethanol plants in two states to marketing for fifteen
production facilities in eight states, ultimately serving as Vice
President, Marketing and Logistics. Mr. Sneed is a Certified Public
Accountant, has a B.S. degree in Accounting from Olivet Nazarene
University, and has an MBA degree from Northwestern University,
Kellogg School of Management.
Family Relationships
Our officers are appointed by and serve at the discretion of our
Board. There are no family relationships among our executive
officers and directors.
Compensation Discussion
and Analysis
In this section, we explain the material elements of our executive
compensation program for our Chief Executive Officer and our other
named executive officers, or NEOs, identified below whose
compensation is in the executive compensation tables beginning with
the “Summary Compensation Table” below.
|
● |
Michael D. Kandris,
President, Chief Executive Officer and Chief Operating
Officer |
|
● |
Bryon T. McGregor, Chief
Financial Officer |
|
● |
Christopher W. Wright,
Senior Vice President and former General Counsel and
Secretary |
|
● |
James R. Sneed, Vice
President and Chief Commercial Officer |
|
● |
Paul P. Koehler, former Vice
President, Commodities and Corporate Development |
The executive compensation tables provide additional important
information regarding the compensation and benefits awarded to,
earned by or paid to our NEOs over our last three fiscal years, as
well as the compensation program in which our NEOs are eligible to
participate. You should read that section in conjunction with this
section.
The Compensation Committee of our Board administers our executive
compensation program. Each member of the Compensation Committee is
“independent” under applicable NASDAQ listing standards, is an
“outside director” within the meaning of Internal Revenue Code
(“Code”) Section 162(m), and is a non-employee director within the
meaning of Section 16 of the Exchange Act.
Executive Summary
Our executive compensation program is intended to achieve the
following objectives:
|
● |
attract, retain, motivate and reward
key executive officers responsible for our success; |
|
● |
align and strengthen the mutuality of interests of our
executive officers, our company and our stockholders; |
|
● |
deliver compensation that reflects our
financial and operational performance, while providing the
opportunity to earn above-targeted total compensation for
exceptional performance; and |
|
● |
provide total compensation to each
executive officer that is internally equitable, competitive, and
influenced by company and individual performance. |
We believe that our success depends in large part on our ability to
attract, retain and motivate qualified executives through
competitive compensation arrangements. We also believe that the
compensation paid to our executive officers should be influenced by
the value we create for our stockholders. For these reasons, our
Compensation Committee believes that our compensation program
should provide incentives to attain both short- and long-term
financial and other business objectives and reward those executive
officers who contribute meaningfully to attaining those objectives.
The Compensation Committee supports a pay-for-performance
philosophy within a compensation structure that is competitive,
internally equitable and responsible.
Our executive compensation program consists of three primary
elements:
|
● |
annual performance-based cash
incentive compensation; and |
|
● |
long-term equity incentive
compensation. |
2021 Pay Highlights
Our base salary, annual performance-based cash incentive
compensation and long-term equity incentive compensation decisions
for 2021 described in this Executive Compensation section were made
in March and May 2021. In 2021, we achieved progress towards our
strategic and other business objectives. Highlights of 2021
include:
|
● |
Completed our business realignment
and repaid significant debt. In May 2021 we sold our fuel-grade
ethanol production facility in Madera, California and in November
2021, we sold our fuel-grade ethanol production facility in
Stockton, California. The sale of these two facilities completed
our business realignment and contributed significantly to the
repayment of approximately $150,000,000 in debt, achieving our goal
of repaying our term debt by the end of 2021. Retiring this debt
has also eliminated over $16,000,000 in annual interest expense and
has removed the structural and financial impediments that
contributed to our prior financial challenges. |
|
● |
Completed company name change and
rebranding. In January 2021, we changed our name to Alto
Ingredients, Inc. and rebranded our company to better align with
our business focus of producing specialty alcohols, fuel-grade
ethanol and essential ingredients, for four key markets: Health,
Home & Beauty; Food & Beverage; Essential
Ingredients; and Renewable Fuels. |
|
● |
Completed the expansion of our
beverage & USP alcohol production capacity. Starting in the
fourth quarter of 2020 and finishing in the first quarter of 2021,
we refurbished the grain-neutral spirits, or GNS, system, located
at our Pekin wet mill, providing an additional 30 million gallons
of annual production capacity of our highest quality product, the
core ingredient used in the production of distilled spirits and USP
grade alcohol. The expansion brought our total annual specialty
alcohol production capacity to 140 million gallons and is available
to domestic and international customers requiring products that
meet stringent USP and GNS specifications. As a result, we became
the largest producer of specialty alcohols in the United States
based on annualized volumes. |
|
● |
Obtained important product
certifications. In February 2021, we obtained the
internationally recognized ICH Q7 certification for our alcohol for
use as an active pharmaceutical ingredient. In February 2021, we
also obtained an EXCiPACT certification. EXCiPACT is an
independent, globally recognized certification standard for the use
of excipients in the pharmaceutical industry. |
|
● |
Implemented plant improvement initiatives.
We continued our plant improvement projects to optimize our
production and generate meaningful returns. Among other projects,
we: |
|
o |
Launched a project to produce
enhanced protein. We launched a project at our Magic Valley,
Idaho dry-mill facility to produce enhanced protein. We plan to
roll out similar projects at our other dry-mill production
facilities and expect to achieve protein concentrations in excess
of 50% and an improvement in corn oil production by 50%. |
|
o |
Expanded yeast facility production
capacity. In 2021, we increased our yeast facility’s annual
production capacity by approximately 15%. We are also pursuing
opportunities to expand our yeast product offerings to include
higher quality, more versatile products marketable to the food
industry |
|
o |
Expanded corn oil production
capacity at our Pekin campus. We expanded our annual corn oil
production capacity at our Pekin campus by approximately 4,000
tons. |
|
o |
Implemented other equipment
upgrades. We implemented a variety of other equipment upgrades
to many of our plants, such as increased corn oil storage, feed
dryer upgrades and improved loading capabilities, electrical
upgrades, and integration of alcohol products across our Pekin
campus, which improved operating efficiencies, plant reliability,
and increased our essential ingredients returns. |
|
● |
Adjusted EBITDA. We achieved
$76,800,000 of unaudited net income/loss attributed to Alto
Ingredients, Inc. before interest expense, interest income,
provision/benefit for income taxes, asset impairments, loss on
extinguishment of debt, purchase accounting adjustments, fair value
adjustments and depreciation expense, or Adjusted EBITDA. Adjusted
EBITDA is the financial performance measure under our annual cash
incentive compensation plan. We believe this level of Adjusted
EBITDA is impressive in light of the challenging industry and
market conditions we faced throughout the pandemic. |
As a result of our financial performance and other factors
discussed under “Compensation Decisions for 2021” below and
elsewhere in this Executive Compensation and Related Information
section, total actual direct compensation for 2021—which includes
actual base salary, annual performance-based cash incentive
compensation and long-term equity incentive compensation—increased
by approximately 151% for Michael D. Kandris, our President, Chief
Executive Officer and Chief Operating Officer; increased by
approximately 89% for Bryon T. McGregor, our Chief Financial
Officer; increased by approximately 83% for Christopher W. Wright,
our Senior Vice President and former General Counsel and Secretary;
and increased by approximately 79% for James R. Sneed, our Vice
President and Chief Commercial Officer. Paul P. Koehler retired and
his employment relationship with us was terminated in February
2021.
These increases reflect our strong business performance in 2021, as
noted above, and the strong individual performances of our named
executive officers. Our NEOs received significant non-equity
incentive plan compensation in 2021 but no such compensation in
2020 due to our financial challenges during the year. Our NEOs did
receive discretionary bonuses for 2020, due to their excellent
performance during our strategic realignment, but in much smaller
amounts than non-equity incentive plan compensation paid for 2021.
In addition, our NEOs received more substantial stock awards in
2021 as compared to 2020. The value of the grants in 2020 was below
our ordinary targets because our Compensation Committee believed
that grants of stock at very low market prices at the time would
result in excessive dilution to our stockholders and was not
justified in light of our performance at the time of the grants in
first quarter of 2020. The increased value of awards in 2021
reflected a return to normal award levels.
The 2021 compensation information in this Proxy Statement includes
actual results for 2021 under our performance-based annual cash
incentive compensation plan. Our annual cash incentive compensation
plan payouts were made in March 2022. Plan payouts were made in
respect of the financial performance element of our annual cash
incentive compensation plan because our Adjusted EBITDA of
$76,800,000 fell above the payout threshold for 2021 of Adjusted
EBITDA of $18,046,000. Our NEOs performed well in their execution
of a number of strategic and other initiatives in 2021, as noted
above, and consequently, our NEOs each received maximum payouts
under the individual performance element of the plan.
Compensation Philosophy and Objectives
Our compensation philosophy and objectives are to align the
interests of our executive officers with those of our stockholders
and incent our executive officers to attain our short- and
long-term financial and other business goals. We also seek to
ensure that our executive compensation structure and total
compensation is fair, reasonable and competitive in the marketplace
so that we can attract and retain superior personnel in key
positions. In addition, we endeavor to provide an executive
compensation structure and total compensation that are internally
equitable based upon each executive officer’s role and
responsibilities. Our Compensation Committee seeks to make
executive compensation decisions that embody this philosophy and
that are directed towards attaining these objectives.
In implementing our compensation philosophy and objectives, our
Compensation Committee reviews and analyzes each executive
position, including the importance and scope of the role and how
the position compares to other Alto Ingredients executive officers
and personnel. Our Compensation Committee also compares these
positions to similar positions at organizations from across the
United States, including organizations engaged in the chemicals,
light and heavy manufacturing, and construction and materials
industries, as further described below under “Benchmarking.” In
addition, our Compensation Committee draws from other
compensation-related market data. This information helps provide
our Compensation Committee with an understanding of how total
compensation for each executive officer relates to the value of his
or her position.
We believe that structuring our executive officer compensation
program to align the interests of our executive officers with our
interests and those of our stockholders, and properly incenting our
executive officers to attain our short- and long-term business
goals, best serves the interests of our stockholders and creates
stockholder value. We believe this occurs through motivating our
executive officers to attain our short- and long-term business
goals and retaining these executive officers by providing
compensation opportunities that are competitive in the marketplace
and internally equitable. We also endeavor to design our executive
compensation program so that it is not reasonably likely to
materially and adversely affect us, as discussed in more detail in
“Compensation Risk Analysis” below. We intend that total
compensation paid or available to our executive officers, including
base salary, annual cash incentive compensation and any special
discretionary bonuses, long-term equity incentive compensation and
benefits, is consistent with our compensation philosophy and
objectives described above.
Compensation Governance Practices
Below we highlight various executive compensation governance
practices intended to align the interests of our executive officers
with those of our stockholders, incent the attainment of our short-
and long-term business objectives, and attract and retain superior
employees in key positions.
|
● |
Pay-for-performance. We tie a
substantial portion of pay to company and individual performance.
We structure total compensation with significant annual cash
incentives and a long-term equity component, thereby making a
substantial portion of each NEO’s targeted total compensation
dependent upon company and individual performance as well as the
performance of our stock price. |
|
● |
Retention through long-term equity
awards. We employ long-term equity awards through grants of
restricted stock that vest in the future. These equity awards are
designed to aid in our retention of key personnel in important
positions and align the interests of our executive officers with
those of our stockholders. |
|
● |
Long vesting periods. Our
equity awards to our NEOs generally vest in annual installments
over a three year period. |
|
● |
Linkage of annual cash incentive
compensation plan to company performance. Our annual cash
incentive compensation plan links a majority of targeted and
potential payouts to our financial performance. The 2021 financial
performance measure for the compensation pool for our annual
incentive compensation plan was Adjusted EBITDA, which we weighted
at 80% for our NEOs. The 2021 non-financial performance measure for
funding the compensation pool of this incentive compensation plan
was individual performance measured against pre-established goals,
which we weighted at 20% for our NEOs. |
|
● |
Perquisites. We do not
currently offer our NEOs any significant perquisites, other than
certain travel perquisites or those offered to our employees
generally. Our executive officers are not guaranteed any retirement
or pension benefits or any non-qualified deferred compensation
plans. Instead, we offer our NEOs the opportunity to accumulate
assets through their equity awards and the appreciation of their
equity awards, and offer the opportunity to participate in our
401(k) plan and a health savings account plan on the same basis as
our other employees. |
|
● |
Independent compensation
consultant. Our independent compensation consultant, Korn
Ferry, is retained directly by our Compensation Committee. |
|
● |
No short selling, pledging or
hedging. Our insider trading policy prohibits all employees,
officers and directors from engaging in any short sale of Alto
Ingredients securities, as well as any transaction involving puts,
calls, collars, forward sales contracts, warrants or other options
on Alto Ingredients securities. Additionally, our executive
officers are restricted from pledging Alto Ingredients securities
as collateral for a loan. |
|
● |
No option re-pricing. Our 2016
Plan does not permit options or stock appreciation rights to be
repriced to a lower exercise price without the approval of our
stockholders, except in connection with certain changes to our
capital structure. |
|
● |
Clawback policy. If we are
required to restate our financial statements, regardless of cause,
including, without limitation, due to: (i) material noncompliance
with any financial reporting requirements under the federal
securities laws; (ii) an error, miscalculation or omission; or
(iii) the commission of an act of fraud or other misconduct,
including dishonesty, unethical conduct or falsification of our
records, then our Compensation Committee is required to recoup
incentive compensation, including any cash or equity incentive
compensation, awarded or paid to any executive officer, including
any NEO, during at least a three-year recoupment period. See
“Summary Compensation Table—Clawback Policy” below. |
Executive Compensation Program and Processes
Participants
Compensation Committee
Our Compensation Committee, with input from our management and one
or more independent compensation consultants, establishes, updates
and administers our executive compensation program. Our
Compensation Committee establishes our compensation philosophy and
objectives; oversees the design and administration of our executive
compensation program; establishes the elements and mix of total
compensation; sets the parameters and specific target metrics of
our performance-based incentive compensation plan; and determines
the target compensation of our executive officers.
Our Compensation Committee has the authority to retain independent
counsel, advisors and other experts to assist it in the
compensation-setting process and receives adequate funding to
engage those service providers.
Independent Compensation Consultant
In October 2013, following a competitive request for proposal from
three different compensation consultants, our Compensation
Committee retained Korn Ferry as its independent advisor for its
compensation review. Korn Ferry was selected based on its expertise
and skilled team dedicated to meet the needs of our Compensation
Committee and its experience with alcohol production and other
companies closely tied to agriculture and commodity businesses. Our
Compensation Committee reengaged Korn Ferry as its independent
advisor in subsequent years, with the latest engagement occurring
in 2021.
Korn Ferry furnishes independent data, market analyses and advice
to our Compensation Committee concerning executive compensation,
including regarding the competitiveness of compensation plan design
and evolving executive compensation trends and practices. Korn
Ferry is available to attend and participate in Compensation
Committee meetings from time to time as and when requested by our
Compensation Committee. Korn Ferry also advises our Compensation
Committee on the principal aspects of our executive compensation
program, including the implementation of our compensation
philosophy and objectives, and specific elements of executive
compensation.
In evaluating Korn Ferry’s independence, our Compensation Committee
considered multiple factors. In particular, our Compensation
Committee reviewed all services Korn Ferry provided to Alto
Ingredients since 2013. These services included consulting services
to help us determine appropriate compensation each year for our
NEOs as well as certain non-NEO personnel, including our
non-employee directors. The fees for these consulting services were
not segregated between consulting services in respect of NEO
compensation and consulting services in respect of non-NEO
compensation. In total, fees paid to Korn Ferry for services
rendered to help us determine appropriate compensation for
2014-2017 were approximately $214,000. We had no such expenses for
2021. The Compensation Committee also considered Alto Ingredients’
purchase of survey data from Korn Ferry for purposes of
benchmarking NEO and non-NEO compensation, which amounted to
approximately $19,000 for 2014-2017. We had no such expenses for
2018-2021. We did not engage Korn Ferry, and no fees were paid to
Korn Ferry, in respect of any services other than Korn Ferry’s work
with our Compensation Committee and management to help us determine
appropriate compensation for 2014 through 2021 for our NEOs and
certain non-NEO personnel, including our non-employee directors. In
evaluating Korn Ferry’s independence, our Compensation Committee
also considered Korn Ferry’s internal mechanisms and policies to
ensure Korn Ferry’s ability to provide objective advice, including
that:
|
● |
Korn Ferry is hired by the
Compensation Committee and reports directly to the Compensation
Committee; and |
|
● |
Korn Ferry has a broad base of
clients, which reduces its reliance on any specific account for
achieving its business goals. |
Korn Ferry also represented to the Compensation Committee that
there are no personal or business relationships between the Korn
Ferry account manager and any member of the Compensation Committee
or any NEO beyond the Alto Ingredients relationship. Further, the
Korn Ferry account manager does not directly own any Alto
Ingredients shares (although some of the account manager’s
investments controlled solely by independent, third-party managers
may own Alto Ingredients shares by way of indexed funds). Based on
the above and other factors, including the factors set forth under
Rule 10C-1 of the Exchange Act, the Compensation Committee assessed
Korn Ferry’s independence and concluded that no conflict of
interest exists that would prevent Korn Ferry from independently
representing the Compensation Committee.
Management
Our Chief Executive Officer and other executive officers attend
Compensation Committee meetings as requested by the Compensation
Committee. These individuals are not present during executive
sessions of Compensation Committee meetings except at the
invitation of the Compensation Committee. Our Vice President of
Human Resources, under the direction of our Chief Executive
Officer, leads our management in preparing recommendations on
executive and employee compensation requested by the Compensation
Committee.
Benchmarking
Our Compensation Committee benchmarks the total compensation of our
NEOs using compensation market data as a reference to assist it in
understanding the competitive pay positioning of total compensation
and each element of compensation. Our Compensation Committee
reviews compensation for each executive officer in relation to the
25th, 50th and 75th percentiles of
the compensation market data that, along with other factors,
provides context for executive pay decisions. Korn Ferry provided,
for comparative purposes, compensation data from surveys of third
parties that includes information from United States industrial
companies, including organizations engaged in the chemicals, light
and heavy manufacturing, and construction and materials industries.
We have included in Appendix B to this Proxy Statement
the companies included in the survey data.
Other Factors Considered in Setting Compensation
In addition to a review of our competitive market position, our
Compensation Committee also took into account several other
important factors in setting executive compensation for 2021,
including company performance, such as progress towards our
strategic and other business objectives; internal pay equity
considerations; the experience and responsibilities of each NEO;
budget constraints; market conditions; and individual performance,
including individual contributions to company achievements.
As part of the 2021 compensation-setting process for our NEOs, our
Compensation Committee also reviewed “tally sheets” comprised of
spreadsheets and tabular information that indicated the dollar
amount of each component of compensation, including current and
proposed base salaries, the proposed actual cash incentives to be
paid for the prior year and the targeted cash incentives for the
current year, and current projected values for the proposed
equity-based awards based on stock price assumptions. The purpose
of those tally sheets was to provide our Compensation Committee
with a comprehensive snapshot of both the actual compensation
provided to our executive officers and the potential compensation
that could result from the various components of their proposed
2021 compensation packages. The Compensation Committee did not take
into account the potential payments under our severance and
change-in-control arrangements as the Compensation Committee sought
to maintain the appropriate incentives with regard to transactions
that might result in severance and change-in-control payments. See
“Other Policies and Factors Affecting Executive Officer
Compensation—Severance and Change-in-Control Arrangements”
below.
The Role of Stockholder Say-on-Pay Votes
We provide our stockholders with the opportunity to cast an
advisory vote on the compensation of our NEOs each year. At our
2021 annual meeting, approximately 69% of votes cast on our
“say-on-pay” proposal were voted in favor of the proposal.
Our Compensation Committee considered the outcome of this advisory
vote and believes it conveyed the support of our stockholders of
the Compensation Committee’s decisions and our executive
compensation program and practices for 2020.
In keeping with the approval of our proposal at our 2019 annual
meeting to submit “say-on-pay” advisory proposals to our
stockholders annually, we will continue to do so for the
foreseeable future and our Compensation Committee will continue to
consider the results of future “say-on-pay” advisory votes in its
ongoing evaluation of our compensation program and practices.
Risk Considerations
As discussed in “Compensation Risk Analysis” below, the
Compensation Committee reviews our compensation program annually
and for 2021 concluded that this program did not create risks that
are reasonably likely to have a material adverse effect on us.
Elements of Compensation
Our executive compensation program is comprised of three principal
elements designed to operate together as part of an integrated
compensation package to further our compensation objectives. The
three principal elements of our executive compensation program
are:
|
● |
cash compensation in the form of base
salary; |
|
● |
annual cash incentive compensation;
and |
|
● |
long-term equity incentive
compensation. |
In addition, our executive compensation program also includes
indirect compensation in the form of standard employee benefits,
limited perquisites and other executive benefits, and severance and
change-in-control benefits. Our executive compensation program also
allows for special discretionary cash or equity awards to address
specific individual or other circumstances not fully addressed by
the three principal elements of our executive compensation
program.
In making compensation decisions, our Compensation Committee
exercises its judgment on the overall level of compensation
provided by this total compensation package as well as the mix of
the three principal elements of compensation.
Base Salary
Our Compensation Committee reviews the base salary levels of our
executive officers annually and makes such adjustments as it deems
appropriate after taking into account the officer’s level and scope
of responsibility and experience, company and individual
performance, competitive market data, and internal pay equity
considerations.
Annual Cash Incentive Compensation
Annual cash incentive compensation for key employees, including our
NEOs, consists of cash awards under our short-term incentive plan.
We have an annual cash incentive compensation plan applicable to
all NEOs. Participants are eligible for annual cash incentive
compensation based upon the attainment of pre-established goals.
Awards under the plan are based on two elements: company financial
performance and the NEO’s individual performance. Our Compensation
Committee believes that these elements will best incent our NEOs to
attain our short- and long-term financial and other business goals.
The 2021 payout structure under our annual cash incentive
compensation plan for our NEOs is set forth below:
Target ($) |
|
x |
|
|
Performance Factor |
|
= |
|
|
Overall Payout |
|
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|
|
|
|
|
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|
●
Target $ = % of base salary
●
NEO Target %:
Ø CEO: 70%
Ø Other NEOs: 50%
|
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|
●
Financial performance:
Ø 80% weight
Ø Min/max payout for
Adjusted EBITDA: 0%/200% of target
●
Individual performance:
Ø 20% weight
Ø Min/max payout:
0%/100% of target
|
|
|
|
|
●
Minimum payout: 0% of target
●
Target Payout: 100% of target
●
Maximum payout: 180% of target
|
Our Compensation Committee selected our annual cash incentive
compensation plan as the vehicle for cash incentive compensation
for 2021 for our executive officers because the Compensation
Committee believes the plan properly incents our executive officers
by focusing primarily on our financial performance, as further
discussed below, while allowing awards to reflect other important
factors, including an executive officer’s individual performance
and accomplishments.
Financial Performance
We have an annual cash incentive compensation plan applicable to
all NEOs. Our annual cash incentive compensation plan uses our
Adjusted EBITDA as its sole financial performance element and is
based on an Adjusted EBITDA goal established by our Compensation
Committee. The Compensation Committee expects to change the
numerical Adjusted EBITDA goal from year to year and may include
financial performance measures other than Adjusted EBITDA in future
years.
The Compensation Committee selected the Adjusted EBITDA metric
because it believes that earnings before interest,
provision/benefit for income taxes, and depreciation and
amortization, or EBITDA, is an industry-accepted measure of overall
financial performance and demonstrates our financial performance
and ability to reinvest in our business. The Compensation Committee
departed from the standard EBITDA metric because it believes
Adjusted EBITDA better reflects Alto Ingredients’ financial
performance on a year-over-year basis by excluding non-recurring,
non-cash charges or gains from asset impairments, loss on
extinguishment of debt, purchase accounting adjustments, and fair
value adjustments. Use of the Adjusted EBITDA metric also allowed
the Compensation Committee to incent our executive officers to
focus on factors over which they can exert control, such as
attaining higher margins through managing production volumes
relative to both specialty alcohol and essential ingredient sales
prices and production input costs, increasing production
efficiencies, and controlling operating costs such as selling,
general and administrative expenses, all of which impact Adjusted
EBITDA. The Compensation Committee also desired to omit from the
financial performance metric factors over which the executive
officers have less control and which it viewed as less relevant to
measuring year-over-year financial performance, such as recurring
interest income/expense and taxes as well as non-cash charges or
gains from depreciation and amortization, asset impairments, loss
on extinguishment of debt, purchase accounting adjustments and fair
value adjustments.
The financial performance element for 2021 was weighted at 80% and
was the most heavily-weighted element. This element was assigned
the highest weighting because the principal purpose of our annual
cash incentive compensation plan is to motivate and reward
participants for achieving our financial goals, while allowing
significantly higher payouts for 2021 of up to 200% of the targeted
payout amount for financial outperformance, and to align
participant and stockholder interests.
Individual Performance
The individual performance element for 2021 was weighted at 20% and
is based on individual participant goals based on quantitative
criteria and subjective elements established by each participant’s
supervisor, in consultation with our executive committee. The
extent to which a participant is deemed to have achieved his or her
individual performance goals is determined by our executive
committee in consultation with the participant’s supervisor.
However, the extent to which a participant who is an executive
officer is deemed to have achieved his or her individual
performance goals is recommended by our Chief Executive Officer but
ultimately determined by our Compensation Committee. Payout under
the individual performance element is in the discretion of the
Compensation Committee and could range from 0% to 100% of the
participant’s targeted payout amount; provided, that the
Compensation Committee retained discretion to grant a payout in
excess of 100% of a participant’s targeted payout amount for his or
her individual performance if the total amount granted to all
participants for their individual performances did not exceed the
total targeted payout amount for all participants for their
individual performances.
Long-Term Equity Incentive Compensation
Long-term equity incentive compensation for key employees,
including our NEOs, generally consists of awards of restricted
stock under our equity incentive plans. Although we have granted
stock options in the past, awards under our equity incentive plans
have primarily been in the form of restricted stock grants as a
means of providing long-term equity incentive compensation. We
believe that shares of restricted stock are less subject to market
volatility than stock options and therefore offer a more balanced
and competitive equity compensation arrangement.
The Compensation Committee approves equity awards for our NEOs in
connection with the annual review of their individual performance
and overall compensation. The annual awards are typically made near
the end of the first quarter and represent the majority of the
shares granted for the year under our long-term equity incentive
compensation program. Each award is designed primarily as a
retention tool, typically requiring the executive to remain with
Alto Ingredients for at least one year to receive the benefit of
one-third of the award on partial vesting and at least three years
to receive the full benefit of the award on full vesting. We
believe our equity incentive compensation aligns the interests of
our NEOs with those of our stockholders and provides each NEO with
a significant incentive to manage our company from the perspective
of an owner with an equity stake in the business by tying
significant portions of the recipients’ compensation to the market
price of our common stock.
Awards of restricted stock typically vest annually over a
three-year period of continued service measured from the grant
date. Each award of restricted stock will provide a return to the
NEO only to the extent he or she remains employed with us during
the partial or full vesting period.
In making long-term equity incentive awards, our Compensation
Committee sets a target value for the award for each executive
officer based on its judgment about the factors used in setting
executive officer total compensation described under “Compensation
Philosophy and Objectives” above as well as our Compensation
Committee’s judgment regarding the desired mix of base salary,
annual cash incentives and long-term equity incentives. Our
Compensation Committee also considers outstanding vested and
unvested equity awards to executive officers, the stock ownership
levels of executive officers and the potential dilutive effect on
our stockholders.
For annual grants, once our Compensation Committee determines the
target value of a recipient’s long-term equity incentive award, we
establish the specific number of shares subject to the award by
dividing the target value of the equity grant by the closing price
of a share of our common stock on March 15th or a higher
price determined appropriate under the circumstances by our
Compensation Committee. We chose the date of March 15th
to avoid the appearance of market-timing and because it is a
consistent date year-to-year. However, the number of shares granted
multiplied by the closing price of a share of our common stock on
the date of grant is the valuation model we use for our financial
statements determined in accordance with the Financial Accounting
Standards Board’s Accounting Standards Codification Topic 718,
Stock Compensation.
Other Compensation and Benefits
We do not currently offer retirement or pension benefits or any
non-qualified deferred compensation plans. Instead, we provide our
NEOs with the opportunity to accumulate retirement income primarily
through a defined contribution plan and through the appreciation of
the value of their equity awards. Consistent with our
pay-for-performance compensation philosophy, we do not provide our
executive officers with any significant perquisites, other than
certain travel perquisites or those offered to our employees
generally. Except as noted below, our NEOs are eligible to
participate in the following employee benefit programs on the same
basis as all other regular employees:
401(k) Plan. Each of our NEOs and other salaried employees
are eligible to participate in a defined contribution plan
qualified under Code Section 401(k). In 2021, we contributed $1.00
for each $1.00 of employee contributions, up to a maximum
contribution of 6.0% of the participant’s eligible compensation,
and subject to a maximum matching contribution of $17,400. We have
included our contributions to the accounts of the NEOs for the
applicable years in the “All Other Compensation” column in the
Summary Compensation Table below to the extent “All Other
Compensation” exceeded $10,000 for a particular NEO.
Group Life, Health and Disability Plans. We have established
group life, health and disability plans for our employees. The NEOs
may participate in these plans on the same basis as other
employees.
Perquisites and Other Benefits. We furnish a limited number
of perquisites to our NEOs, of which only travel-related
perquisites, together with matching contributions under our 401(k)
plan, as discussed above, and contributions to health savings
accounts, meet the threshold for reporting in the “All Other
Compensation” column in the Summary Compensation Table under the
rules of the Securities and Exchange Commission. Our corporate
travel policy, applicable only to certain executive officers,
covers commuting expenses of our Senior Vice President, and former
General Counsel and Secretary for travel from his out-of-state
residence to our principal offices as well as expenses for local
lodging. Our travel policy does not provide for a “gross-up” for
taxes on amounts we reimburse under the policy that are taxable
compensation to the employee.
Other Policies and Factors Affecting Executive Officer
Compensation
Severance and Change-in-Control Arrangements
We have established executive employment agreements that include
severance and change-in-control arrangements with each of our NEOs.
These arrangements set forth the terms and conditions upon which
these NEOs would be entitled to receive certain benefits upon
termination of employment.
These agreements are intended to help us attract and retain
executive talent in a competitive marketplace; enhance the
prospects that the NEOs would remain with us and devote their
attention to our performance in the event of a potential change in
control; foster their objectivity in considering a
change-in-control proposal; and facilitate their attention to our
affairs without the distraction that could arise from the
uncertainty inherent in severance and change-in-control
situations.
The disclosure below under “—Summary Compensation Table—Executive
Employment Agreements” and “—Severance and Change in Control
Arrangements with Named Executive Officers” and “—Calculation of
Potential Payments upon Termination or Change in Control” explains
in detail the benefits under these arrangements and the
circumstances under which these NEOs would be entitled to them.
Trading Policy
Our insider trading policy prohibits all employees, officers and
directors from engaging in any short sale of Alto Ingredients
securities, as well as any transaction involving puts, calls,
collars, forward sales contracts, warrants or other options on Alto
Ingredients securities. Additionally, our executive officers are
restricted from pledging Alto Ingredients securities as collateral
for a loan.
Tax Considerations
Code Section 162(m) generally disallows a tax deduction to
publicly-held corporations for compensation paid to certain of
their executive officers to the extent such compensation exceeds
$1,000,000 per covered officer in any year.
Compensation Recovery Policies
Pursuant to Section 304 of the Sarbanes-Oxley Act of 2002, if we
are required as the result of misconduct to restate our financial
results due to our material noncompliance with any financial
reporting requirements under the federal securities laws, our Chief
Executive Officer and Chief Financial Officer may be legally
required to reimburse us for any bonus or incentive-based or
equity-based compensation they receive. In addition, on March 29,
2018, our Compensation Committee instituted a revised “clawback”
policy with respect to incentive compensation that requires
recoupment of incentive compensation, including any cash or equity
incentive compensation, awarded or paid to any of our executive
officers, including all of our NEOs, in the event we are required
to restate our financial statements, regardless of cause. See
“Summary Compensation Table—Clawback Policy” below.
We anticipate additional requirements once the Securities and
Exchange Commission completes its rulemaking in this regard under
the Dodd-Frank Wall Street Reform and Consumer Protection Act and
we intend to fully comply with the requirements.
Compensation Decisions for 2021
Our Compensation Committee established compensation for our NEOs in
2021 in a manner consistent with our executive compensation
philosophy and objectives. Our Compensation Committee made its
annual compensation decisions for 2021 in March and May 2021.
Our Compensation Committee’s decisions were based upon its judgment
about our financial and other business performance for 2020,
expected and actual financial and other business performance for
2021, and the positions, scope and importance of the roles of our
NEOs and how their positions compared to other Alto Ingredients
executive officers and personnel. Our Compensation Committee’s
decisions were also based on comparing and adjusting the
compensation of our NEOs in reference to the compensation of
similarly situated personnel at other organizations through a
benchmarking process. See “Benchmarking” above. The Compensation
Committee also considered certain other factors such as budget
constraints and executive officer recommendations. Through these
efforts, our Compensation Committee established a desired level and
mix of total compensation.
In setting the compensation of our executive officers, except as
noted below, our Compensation Committee did not adhere to any
specific formulas tied to market data, nor did it rely on market
data to determine the specific mix of compensation components.
Instead, our Compensation Committee used this data as a guide and a
resource for tracking executive compensation trends.
Total Compensation
Our Compensation Committee targeted total compensation for all of
our NEOs to be competitive with similarly situated personnel at the
50th percentile relative to our third-party survey group
companies based on the market data provided by Korn Ferry. Our
Compensation Committee, based on Korn Ferry’s advice, generally
considers target compensation as competitive if, as to base salary,
it falls within 10% of the 50th percentile of comparable
market data; as to total cash compensation, if it falls within 15%
of the 50th percentile of comparable market data; and as
to total direct compensation, if it falls within 20% of the
50th percentile of comparable market data. The
Compensation Committee determined that targeting total compensation
for our NEOs to be competitive with similarly situated personnel at
the 50th percentile was appropriate because that level
is consistent with the Compensation Committee’s intention for 2021
to target total compensation for our executive officers at the
median of total compensation of similarly situated personnel at
other organizations, subject to company-specific exigencies we
experienced in 2020 and earlier years due to an exceedingly
challenging market for fuel-grade ethanol. Although the
Compensation Committee set targeted compensation for 2021 at less
than the 50th percentile, we anticipate that
compensation will approach the 50th percentile as our
financial performance continues to improve over time.
Base Salary
Our Compensation Committee increased base salaries for our
executive officers by 3.0% over 2020 levels, representing a merit
adjustment, which we believe was in-line with average industry
increases.
Targeted base salaries for 2021 were at approximately the 25th
percentile relative to base salaries of comparable executives among
our third-party survey group companies based on the market data
provided by Korn Ferry.
Annual Cash Incentive Compensation
Our Compensation Committee targeted 2021 annual cash incentive
compensation at 70% of base salary for our President, Chief
Executive Officer and Chief Operating Officer, at 50% of base
salary for our Chief Financial Officer, at 50% of base salary for
our Senior Vice President, and former General Counsel and
Secretary, and at 50% of base salary for our Vice President and
Chief Commercial Officer. These levels were generally consistent
with the targeted percentage bonus amounts included in each
executive officer’s employment agreement.
Targeted annual cash incentive compensation for 2021 was between
the 25th and 50th percentiles relative to
annual cash incentive compensation of comparable executives among
our third-party survey group companies based on the market data
provided by Korn Ferry.
As discussed above, awards under our annual cash incentive
compensation plan are based on two elements: company financial
performance and the NEO’s individual performance. For 2021, our
Compensation Committee weighted for each of our NEOs, company
financial performance at 80% and individual NEO performance at 20%.
In doing so, our Compensation Committee desired to incent most
heavily activities that lead to strong overall financial
performance while still rewarding individual performance.
Our Compensation Committee established our 2021 financial
performance goal of Adjusted EBITDA at $41,365,000 based on our
financial projections established early in the year. Our Adjusted
EBITDA goal of $41,365,000 was viewed as attainable but
aspirational at the time the projections were finalized. Payout
under the financial performance element was non-discretionary and
was funded at a rate of 0% to 200% of the participants’ targeted
payout amount for the financial performance element based on our
actual Adjusted EBITDA for 2021 compared to our Adjusted EBITDA
goal of $41,365,000.
Our Compensation Committee approved a sliding scale of achievement
and payout opportunities under which lower actual Adjusted EBITDA
for 2021 corresponded to lower levels of goal achievement and lower
payouts, subject to a minimum Adjusted EBITDA threshold; and higher
actual Adjusted EBITDA for 2021 corresponded to higher levels of
goal achievement and higher payouts, subject to a maximum
payout.
The Compensation Committee established for 2021 a targeted payout
amount of $2,689,000 if all personnel covered by the plan attained
all of their individual performance goals and we achieved our
Adjusted EBITDA goal of $41,365,000. The targeted payout amount of
$2,689,000 was comprised of $1,173,000 attributable to individual
performance and $1,516,000 attributable to financial performance.
The Compensation Committee established for 2021 a maximum aggregate
plan pool of $4,290,000 comprised of $1,173,000 attributable to
individual performance and $3,117,000 attributable to financial
performance.
In setting the targeted and maximum plan payout amounts, the
Compensation Committee assumed that all eligible plan participants
would continue their eligibility through 2021 and until final
payment of amounts earned under the plan. In addition, in setting
the targeted and maximum plan payout amounts, the Compensation
Committee did not provide for an increase in the plan pool for any
new eligible plan participants.
The $1,601,000 difference between the maximum aggregate plan pool
of $4,290,000 and the targeted payout amount of $2,689,000 was
available if our actual Adjusted EBITDA for 2021 equaled or
exceeded approximately 160% of our Adjusted EBITDA goal of
$41,365,000.
The Compensation Committee set an Adjusted EBITDA floor of
approximately $18,046,000 for 2021, or approximately 44% of our
Adjusted EBITDA goal, above which a payout under the financial
performance element would be made at 6.5% of incremental Adjusted
EBITDA. This feature was intended to assure that we achieved an
acceptable minimum level of financial performance before annual
cash incentives would be paid to any participant, including our
executive officers, under the financial performance element of the
plan. The Compensation Committee set an Adjusted EBITDA ceiling of
$66,000,000 for 2021, above which there would be no additional
incremental payout under the financial performance element. At the
Adjusted EBITDA ceiling of $66,000,000, the aggregate payout for
the financial performance element would have been $3,117,000;
however, plan participants were capped at 200% of the participants’
targeted payout amount for the financial performance element.
The payout under the financial performance element would be
calculated on a straight-line prorated basis at 6.5% of actual
Adjusted EBITDA levels below our Adjusted EBITDA goal of
$41,365,000, subject to the Adjusted EBITDA floor of $18,046,00 for
2021. Likewise, the payout under the financial performance element
would be calculated on a straight-line prorated basis at 6.5% of
actual Adjusted EBITDA levels above our Adjusted EBITDA goal of
$41,365,000, subject to a maximum payout of $3,117,000
corresponding to our Adjusted EBITDA ceiling of $66,000,000 for
2021.
The targeted and maximum payout for the individual performance
element was $1,173,000 under all scenarios if all personnel covered
by the plan attained 100% of their individual performance
goals.
Long-Term Equity Incentive Compensation
Our Compensation Committee targeted 2021 long-term equity incentive
compensation for our NEOs at a level comparable to similarly
situated personnel at the 50th percentiles relative to
our third-party survey group companies based on the market data
provided by Korn Ferry. In making equity awards, our Compensation
Committee established the specific number of shares subject to the
award of long-term equity incentive compensation by dividing the
target value of the equity grant by the closing price of a share of
our common stock on March 15th or a higher price
determined appropriate under the circumstances by our Compensation
Committee.
Long-term equity incentive compensation decisions and grants were
made in March 2021 based on the closing price of a share of our
common stock on March 15th. As noted above, we chose the
date of March 15th to avoid the appearance of
market-timing and because it is a consistent date year-to-year.
Individual Executive Officer Compensation Targets
Target direct compensation for each of our NEOs for 2021, other
than Paul P. Koehler, who retired in February 2021, is set forth
below.
Specific results against performance objectives that influenced the
amount and mix of our NEOs’ total direct compensation for 2021
included our actual Adjusted EBITDA, which exceeded the Adjusted
EBITDA threshold of $18,046,000, and full attainment by our NEOs of
their respective individual performance goals under our annual cash
incentive compensation plan. We attained our Adjusted EBITDA goal
for 2021 due to our strong performance despite various challenging
industry conditions, including those arising from the pandemic,
resulting in maximum payout under the financial performance element
of our annual cash incentive compensation plan to our NEOs. Our
NEOs performed well under their individual performance elements,
resulting in maximum payouts under that measure.
Michael D. Kandris, President, Chief Executive Officer and Chief
Operating Officer
The following table shows Mr. Kandris’s direct target compensation
for 2021 and 2020. The graph below shows the positioning of Mr.
Kandris’s 2021 and 2020 direct target compensation relative to
similarly situated personnel at our third-party survey group
companies based on the market data provided by Korn Ferry:
|
|
|
|
|
|
|
|
Change |
|
Michael D. Kandris |
|
2021 |
|
|
2020 |
|
|
Dollars |
|
|
Percent |
|
Base Salary* |
|
$ |
515,515 |
|
|
$ |
500,500 |
|
|
$ |
15,015 |
|
|
|
3.0 |
% |
Annual Cash Incentive
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Percent
of Base Salary |
|
|
70.0 |
% |
|
|
70.0 |
% |
|
|
|
|
|
|
— |
|
Target
Dollars |
|
$ |
360,861 |
|
|
$ |
350,350 |
|
|
$ |
10,511 |
|
|
|
3.0 |
% |
Long-Term Equity Incentive
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Percent
of Base Salary |
|
|
135.8 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
35.8 |
% |
Target
Dollars |
|
$ |
700,000 |
|
|
$ |
500,000 |
|
|
$ |
200,000 |
|
|
|
40.0 |
% |
Target Total Direct Compensation |
|
$ |
1,576,376 |
|
|
$ |
1,350,850 |
|
|
$ |
225,526 |
|
|
|
16.7 |
% |
|
* |
The base salary amounts represent Mr.
Kandris’s final annual base salary rates for 2021 and 2020. In May
2021, we increased Mr. Kandris’s annual base salary rate to
$515,515, which remained in effect through December 31, 2021. On
December 6, 2020, we increased Mr. Kandris’s annual base salary to
$500,500. Prior to that time, Mr. Kandris’s annual base salary was
$498,000 since May 25, 2020 and $350,745 prior to that date since
the beginning of 2020. |

Our Compensation Committee increased Mr. Kandris’s target total
direct compensation by 16.7% for 2021 as compared to 2020. The
increase in target total direct compensation for 2021 resulted from
a merit increase in Mr. Kandris’s base salary of 3.0%, a
commensurate increase in his targeted annual cash incentive
compensation, and a 40% increase in his targeted long-term equity
incentive compensation.
Bryon T. McGregor, Chief Financial Officer
The following table shows Mr. McGregor’s direct target compensation
for 2021 and 2020. The graph below shows the positioning of Mr.
McGregor’s 2021 and 2020 direct target compensation relative to
similarly situated personnel at our third-party survey group
companies based on the market data provided by Korn Ferry:
|
|
|
|
|
|
|
|
Change |
|
Bryon T. McGregor |
|
2021 |
|
|
2020 |
|
|
Dollars |
|
|
Percent |
|
Base Salary* |
|
$ |
339,862 |
|
|
$ |
329,963 |
|
|
$ |
9,899 |
|
|
|
3.0 |
% |
Annual Cash Incentive
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Percent
of Base Salary |
|
|
50.0 |
% |
|
|
50.0 |
% |
|
|
|
|
|
|
— |
|
Target
Dollars |
|
$ |
169,931 |
|
|
$ |
164,982 |
|
|
$ |
4,949 |
|
|
|
3.0 |
% |
Long-Term Equity Incentive
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Percent
of Base Salary |
|
|
73.6 |
% |
|
|
51.8 |
% |
|
|
|
|
|
|
42.1 |
% |
Target
Dollars |
|
$ |
250,000 |
|
|
$ |
171,030 |
|
|
$ |
78,970 |
|
|
|
46.2 |
% |
Target Total Direct Compensation |
|
$ |
759,793 |
|
|
$ |
665,975 |
|
|
$ |
93,818 |
|
|
|
14.1 |
% |
|
* |
The base salary amounts represent Mr.
McGregor’s final annual base salary rates for 2021 and 2020. In May
2021, we increased Mr. McGregor’s annual base salary rate to
$339,862, which remained in effect through December 31, 2021. On
December 6, 2020, we increased Mr. McGregor’s annual base salary to
$329,963. Prior to that time, Mr. McGregor’s annual base salary was
$317,963 since the beginning of 2020. |

Our Compensation Committee increased Mr. McGregor’s target total
direct compensation by 14.1% for 2021 as compared to 2020. The
increase in target total direct compensation for 2021 resulted from
a merit increase in Mr. McGregor’s base salary of 3.0%, a
commensurate increase in his targeted annual cash incentive
compensation, and a 46.2% increase in his targeted long-term equity
incentive compensation.
Christopher W. Wright, Senior Vice President, and former General
Counsel and Secretary
The following table shows Mr. Wright’s direct target compensation
for 2021 and 2020. The graph below shows the positioning of Mr.
Wright’s 2021 and 2020 direct target compensation relative to
similarly situated personnel at our third-party survey group
companies based on the market data provided by Korn Ferry:
|
|
|
|
|
|
|
|
Change |
|
Christopher W. Wright |
|
2021 |
|
|
2020 |
|
|
Dollars |
|
|
Percent |
|
Base Salary* |
|
$ |
326,546 |
|
|
$ |
317,035 |
|
|
$ |
9,511 |
|
|
|
3.0 |
% |
Annual Cash Incentive
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Percent
of Base Salary |
|
|
50.0 |
% |
|
|
50.0 |
% |
|
|
|
|
|
|
— |
|
Target
Dollars |
|
$ |
163,273 |
|
|
$ |
158,518 |
|
|
$ |
4,755 |
|
|
|
3.0 |
% |
Long-Term Equity Incentive
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Percent
of Base Salary |
|
|
65.8 |
% |
|
|
53.9 |
% |
|
|
|
|
|
|
22.1 |
% |
Target
Dollars |
|
$ |
215,000 |
|
|
$ |
171,030 |
|
|
$ |
43,970 |
|
|
|
25.7 |
% |
Target Total Direct Compensation |
|
$ |
704,819 |
|
|
$ |
646,583 |
|
|
$ |
58,236 |
|
|
|
9.0 |
% |
|
* |
The base salary amounts represent Mr.
Wright’s final annual base salary rates for 2021 and 2020. In May
2021, we increased Mr. Wright’s annual base salary rate to
$326,546, which remained in effect through December 31, 2021. On
December 6, 2020, we increased Mr. Wright’s annual base salary to
$317,035. Prior to that time, Mr. Wright’s annual base salary was
$307,035 since the beginning of 2020. |

Our Compensation Committee increased Mr. Wright’s target
total direct compensation by 9.0% for 2021 as compared to 2020. The
increase in target total direct compensation for 2021 resulted from
a merit increase in Mr. Wright’s base salary of 3.0%, a
commensurate increase in his targeted annual cash incentive
compensation, and a 25.7% increase in his targeted long-term equity
incentive compensation.
James R. Sneed, Vice President and Chief Commercial
Officer
The following table shows Mr. Sneed’s direct target compensation
for 2021 and 2020. The graph below shows the positioning of Mr.
Sneed’s 2021 and 2020 direct target compensation relative to
similarly situated personnel at our third-party survey group
companies based on the market data provided by Korn Ferry:
|
|
|
|
|
|
|
|
Change |
|
James R. Sneed |
|
2021 |
|
|
2020 |
|
|
Dollars |
|
|
Percent |
|
Base Salary* |
|
$ |
318,270 |
|
|
$ |
309,000 |
|
|
$ |
9,270 |
|
|
|
3.0 |
% |
Annual Cash Incentive
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Percent
of Base Salary |
|
|
50.0 |
% |
|
|
50.0 |
% |
|
|
|
|
|
|
— |
|
Target
Dollars |
|
$ |
159,135 |
|
|
$ |
154,500 |
|
|
$ |
4,635 |
|
|
|
3.0 |
% |
Long-Term Equity Incentive
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Percent
of Base Salary |
|
|
59.7 |
% |
|
|
55.3 |
% |
|
|
|
|
|
|
8.5 |
% |
Target
Dollars |
|
$ |
190,000 |
|
|
$ |
171,030 |
|
|
$ |
18,970 |
|
|
|
11.1 |
% |
Target Total Direct Compensation |
|
$ |
667,405 |
|
|
$ |
634,530 |
|
|
$ |
32,875 |
|
|
|
5.2 |
% |
|
* |
The base salary amounts represent Mr.
Sneed’s final annual base salary rates for 2021 and 2020. In May
2021, we increased Mr. Sneed’s annual base salary rate to $318,270,
which remained in effect through December 31, 2021. On December 6,
2020, we increased Mr. Sneed’s annual base salary to $309,000.
Prior to that time, Mr. Sneed’s annual base salary was $300,000
since the beginning of 2020. |

Our Compensation Committee increased Mr. Sneed’s target total
direct compensation by 5.2% for 2021 as compared to 2020. The
increase in target total direct compensation for 2021 resulted from
a merit increase in Mr. Sneed’s base salary of 3.0%, a commensurate
increase in his targeted annual cash incentive compensation, and an
11.1% increase in his targeted long-term equity incentive
compensation.
Compensation Committee
Report
The following Compensation Committee Report is not deemed filed
with the Securities and Exchange Commission. Notwithstanding
anything to the contrary set forth in any of our previous filings
made under the Securities Act, or under the Exchange Act that might
incorporate future filings made by Alto Ingredients under those
statutes, the Compensation Committee Report will not be
incorporated by reference into any such prior filings or into any
future filings made by Alto Ingredients under those
statutes.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the foregoing
Compensation Discussion and Analysis with management, and based on
that review and discussion, the Compensation Committee recommended
to the Board of Directors that the Compensation Discussion and
Analysis be included in Alto Ingredients’ Annual Report on Form
10-K for the year ended December 31, 2021 (incorporated by
reference) and in this Proxy Statement.
|
Respectfully
submitted, |
|
Compensation
Committee |
|
|
|
Gilbert
E. Nathan, Chairman |
|
Terry
L. Stone |
|
John
L. Prince |
|
Dianne
S. Nury |
Compensation Risk
Analysis
Our Compensation Committee, with
the advice of its independent compensation consultant and input
from management, reviewed the design of our employee compensation
policies and practices and concluded that those policies and
practices do not create risks that are reasonably likely to have a
material adverse effect on us. Significant factors considered by
our Compensation Committee in reaching its conclusion
include:
|
● |
the mix and balance of base salary, annual cash incentive
compensation and long-term equity incentive compensation, with an
emphasis on long-term equity incentive compensation that increases
along with our executives’ respective levels of
responsibility; |
|
● |
a long-term equity incentive compensation program under which
grants of restricted stock are made, which is intended to mitigate
the risk of actions intended to capture short-term stock
appreciation gains at the expense of sustainable total stockholder
return over the longer-term; |
|
● |
vesting of long-term equity incentive awards over a number of
years; |
|
● |
caps on annual cash incentive compensation; |
|
● |
broad performance ranges for minimum, target and maximum
financial performance goals with small-tiered increments for annual
cash incentive compensation that reduce the risk of accelerating or
delaying revenue or expense recognition in order to satisfy the
threshold or next tier for larger incentive payouts; and |
|
● |
the financial performance measure we utilize under our annual
cash incentive compensation plan is Adjusted EBITDA, which accounts
for controllable factors such as attaining higher margins through
managing production volumes relative to both specialty alcohol and
essential ingredient sales prices and production input costs,
increasing production efficiencies, and controlling operating costs
such as selling, general and administrative expenses. |
Other features in our incentive programs are intended to mitigate
risks from our compensation program, particularly the risk of
short-term decision-making. These features include the potential
recoupment under our clawback policy of incentive awards from our
executive officers, including all named executive officers, in the
event of material noncompliance with any financial reporting
requirement under the federal securities laws, including as a
result of misconduct; and the ability of our Compensation Committee
to exercise discretion to reduce or eliminate payouts under the
discretionary components of our compensation program, such as the
individual performance element in our annual cash incentive
compensation plan, if it deems appropriate.
Summary Compensation
Table
The following table sets forth summary information concerning the
compensation of our NEOs for all services rendered in all
capacities to us for the years ended December 31, 2021, 2020 and
2019.
Name and Principal Position |
|
Year |
|
Salary
($) |
|
|
Bonus
($)(1)
|
|
|
Stock
Awards
($)(2)
|
|
|
Non-Equity
Incentive Plan
Compensation(3)
|
|
|
All Other
Compensation(4)
|
|
|
Total
($) |
|
Michael D. Kandris |
|
2021 |
|
$ |
509,856 |
|
|
$ |
— |
|
|
$ |
707,392 |
|
|
$ |
642,500 |
|
|
$ |
19,000 |
|
|
$ |
1,878,748 |
|
President, Chief Executive
Officer |
|
2020 |
|
$ |
450,200 |
|
|
$ |
100,000 |
|
|
$ |
181,025 |
|
|
$ |
— |
|
|
$ |
18,700 |
|
|
$ |
749,925 |
|
and Chief Operating
Officer(5) |
|
2019 |
|
$ |
350,745 |
|
|
$ |
— |
|
|
$ |
64,400 |
|
|
$ |
— |
|
|
$ |
18,400 |
|
|
$ |
433,545 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bryon T. McGregor |
|
2021 |
|
$ |
336,130 |
|
|
$ |
— |
|
|
$ |
252,640 |
|
|
$ |
302,600 |
|
|
$ |
19,000 |
|
|
$ |
910,370 |
|
Chief Financial
Officer |
|
2020 |
|
$ |
331,115 |
|
|
$ |
70,000 |
|
|
$ |
61,921 |
|
|
$ |
— |
|
|
$ |
18,700 |
|
|
$ |
481,736 |
|
|
|
2019 |
|
$ |
317,963 |
|
|
$ |
— |
|
|
$ |
64,400 |
|
|
$ |
— |
|
|
$ |
18,600 |
|
|
$ |
400,963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher W. Wright |
|
2021 |
|
$ |
322,962 |
|
|
$ |
— |
|
|
$ |
217,270 |
|
|
$ |
290,800 |
|
|
$ |
19,000 |
|
|
$ |
850,032 |
|
Senior Vice President |
|
2020 |
|
$ |
319,614 |
|
|
$ |
65,000 |
|
|
$ |
61,921 |
|
|
$ |
— |
|
|
$ |
18,700 |
|
|
$ |
465,235 |
|
and former General Counsel and
Secretary(6) |
|
2019 |
|
$ |
307,036 |
|
|
$ |
— |
|
|
$ |
64,400 |
|
|
$ |
— |
|
|
$ |
35,237 |
(7) |
|
$ |
406,673 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James R. Sneed |
|
2021 |
|
$ |
314,776 |
|
|
$ |
— |
|
|
$ |
192,003 |
|
|
$ |
283,400 |
|
|
$ |
19,000 |
|
|
$ |
809,179 |
|
Vice President |
|
2020 |
|
$ |
312,231 |
|
|
$ |
60,000 |
|
|
$ |
61,921 |
|
|
$ |
— |
|
|
$ |
18,700 |
|
|
$ |
452,852 |
|
and Chief Commercial Officer |
|
2019 |
|
$ |
280,252 |
|
|
$ |
— |
|
|
$ |
65,941 |
|
|
$ |
— |
|
|
$ |
18,600 |
|
|
$ |
364,793 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul P. Koehler |
|
2021 |
|
$ |
21,041 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
781,617 |
|
|
$ |
802,658 |
|
Former Vice President,
Commodities |
|
2020 |
|
$ |
270,524 |
|
|
$ |
— |
|
|
$ |
45,256 |
|
|
$ |
— |
|
|
$ |
19,225 |
(9) |
|
$ |
335,005 |
|
and Corporate
Development(8) |
|
2019 |
|
$ |
260,504 |
|
|
$ |
— |
|
|
$ |
47,040 |
|
|
$ |
— |
|
|
$ |
18,700 |
|
|
$ |
326,244 |
|
|
(1) |
Amounts represent discretionary cash bonuses. |
|
(2) |
The amounts shown are the fair value of stock awards on the
date of grant. The fair value of stock awards is calculated by
multiplying the number of shares of stock granted by the closing
price of our common stock on the date of grant. The shares of
common stock were issued under our 2016 Stock Incentive Plan.
Information regarding the grants of restricted stock and vesting
schedules for the named executive officers is included in the
“Grants of Plan-Based Awards – 2021” and “Outstanding Equity Awards
at Fiscal Year-End−2021” and “Option Exercises and Stock Vested”
tables below and the footnotes to those tables. |
|
(3) |
Amounts represent annual performance-based cash incentive
compensation. |
|
(4) |
Except as specifically noted, the amounts represent matching
contributions under our 401(k) plan and contributions to the
executive’s health savings account. In addition, except as
specifically noted, the value of perquisites and other personal
benefits was less than $10,000 in aggregate for each of the named
executive officers. |
|
(5) |
Mr. Kandris was appointed as our Co-President and Co-Chief
Executive Officer in May 2020 and became our sole President and
Chief Executive Officer in September 2020. |
|
(6) |
In anticipation of his retirement, Mr. Wright stepped down as
our General Counsel and Secretary in February 2022 upon the
appointment of Auste M. Graham, our Vice President, General Counsel
and Secretary. Mr. Wright now serves as Senior Vice President. |
|
(7) |
Includes $16,637 in perquisites or personal benefits relating
to payment or reimbursement of commuting expenses from Mr. Wright’s
home to our offices in Sacramento, California, and housing and
other living expenses. |
|
(8) |
Mr. Koehler retired and his employment relationship with us was
terminated in February 2021. In connection with Mr. Koehler’s
retirement, he received accelerated vesting of shares of restricted
stock held by him having a vesting date fair value of $494,512. See
the “Option Exercises and Stock Vested” table below. In addition,
Mr. Koehler received severance pay of $272,406 and continuation of
benefits valued at $12,361. Mr. Koehler also received matching
contributions under our 401(k) plan and contributions to his health
savings account totaling $2,338. |
|
(9) |
Includes $18,700 in matching contributions under our 401(k)
plan, contributions to Mr. Koehler’s health savings account and
$525 as a 15-year anniversary service bonus. |
Executive Employment Agreements
Michael D. Kandris
Our Second Amended and Restated Employment Agreement with Michael
D. Kandris provides for at-will employment as our President and
Chief Executive Officer. Mr. Kandris’s annual base salary is
$515,515 as of May 20, 2021, was $500,500 as of December 6, 2020,
was $498,000 as of May 25, 2020 and was $350,745 prior to that date
for the balance of 2020 and for all of 2019. Mr. Kandris is
eligible to participate in our short-term incentive plan with a
pay-out target of 70% of his base salary, to be paid based upon
performance criteria set by our Compensation Committee.
Upon termination by us without cause or resignation by Mr. Kandris
for good reason, Mr. Kandris is entitled to receive (i) severance
equal to eighteen months of his base salary, (ii) 150% of his total
target short-term incentive plan award, (iii) continued health
insurance coverage for eighteen months or until the earlier
effective date of coverage under a subsequent employer’s plan, and
(iv) accelerated vesting of 25% of all shares or options subject to
any equity awards granted to Mr. Kandris prior to Mr. Kandris’s
termination which are unvested as of the date of termination.
However, if Mr. Kandris is terminated without cause or resigns for
good reason in anticipation of or twenty-four months after a change
in control, Mr. Kandris is entitled to (i) severance equal to
thirty-six months of base salary, (ii) 300% of his total target
short-term incentive plan award, (iii) continued health insurance
coverage for thirty-six months or until the earlier effective date
of coverage under a subsequent employer’s plan, and (iv)
accelerated vesting of 100% of all shares or options subject to any
equity awards granted to Mr. Kandris prior to Mr. Kandris’s
termination that are unvested as of the date of termination.
If we terminate Mr. Kandris’s employment upon his disability, Mr.
Kandris is entitled to severance equal to twelve months of base
salary. In addition, in the event of Mr. Kandris’s disability and
if he or someone authorized to act on his behalf executes and
delivers an agreed release agreement and allows the release to
become effective, we have agreed to accelerate the vesting of any
equity awards granted to Mr. Kandris prior to the termination of
his employment such that 100% of all shares or options subject to
such awards which are unvested as of termination shall be
accelerated and deemed fully vested as of the effectiveness of the
release.
If Mr. Kandris dies, we have agreed to accelerate the vesting of
any equity awards granted to Mr. Kandris prior to his death such
that 100% of all shares or options subject to such awards which are
unvested as of his death will be accelerated and deemed fully
vested.
The term “cause” is defined in the Second Amended and Restated
Employment Agreement as (i) Mr. Kandris’s indictment or conviction
of any felony or of any crime involving dishonesty, (ii) Mr.
Kandris’s participation in any fraud or other act of willful
misconduct against us, (iii) Mr. Kandris’s refusal to comply with
any of our lawful directives, (iv) Mr. Kandris’s material breach of
his fiduciary, statutory, contractual, or common law duties to us,
or (v) conduct by Mr. Kandris which, in the good faith and
reasonable determination of our board of directors, demonstrates
gross unfitness to serve; provided, however, that in the event that
any of the foregoing events is reasonably capable of being cured,
we shall provide written notice to Mr. Kandris describing the
nature of the event and Mr. Kandris shall thereafter have three
business days to cure the event.
The term “for good reason” is defined in the Second Amended and
Restated Employment Agreement as (i) the assignment to Mr. Kandris
of any duties or responsibilities that result in the material
diminution of Mr. Kandris’s authority, duties or responsibility,
(ii) a material reduction by us in Mr. Kandris’s annual base
salary, except to the extent the base salaries of all of our other
executive officers are accordingly reduced, (iii) a relocation of
Mr. Kandris’s place of work, or our principal executive offices if
Mr. Kandris’s principal office is at these offices, to a location
that increases Mr. Kandris’s daily one-way commute by more than
thirty-five miles, or (iv) any material breach by us of any
material provision of Mr. Kandris’s employment agreement.
A “change in control” is deemed to have occurred if, in a single
transaction or series of related transactions (i) any person (as
the term is used in Section 13(d) and 14(d) of the Exchange Act),
or persons acting as a group, other than a trustee or fiduciary
holding securities under an employee benefit program, is or becomes
a “beneficial owner” (as defined in Rule 13-3 under the Exchange
Act), directly or indirectly of our securities representing a
majority of our combined voting power, (ii) we merge, consolidate
or otherwise engage in a business combination with or into another
corporation, entity or person, other than a transaction in which
the holders of at least a majority of our shares of voting capital
stock outstanding immediately prior to the transaction continue to
hold (either by the shares remaining outstanding or by their being
converted into shares of voting capital stock of the surviving
entity) a majority of the total voting power represented by our
shares of voting capital stock (or the surviving entity)
outstanding immediately after the transaction, or (iii) all or
substantially all of our assets are sold.
Bryon T. McGregor
Our Amended and Restated Employment Agreement with Bryon T.
McGregor, as amended, provides for at-will employment as our Chief
Financial Officer, Vice President and Assistant Secretary. Mr.
McGregor’s annual base salary is $339,862 as of May 20, 2021, was
$329,963 as of December 6, 2020 and was $317,963 prior to that date
for the balance of 2020 and for all of 2019. Mr. McGregor is
eligible to participate in our short-term incentive plan with a
pay-out target of 50% of his base salary, to be paid based upon
performance criteria set by our Compensation Committee.
Upon termination by us without cause or resignation by Mr. McGregor
for good reason, Mr. McGregor is entitled to receive (i) severance
equal to twelve months of his base salary, (ii) 100% of his total
target short-term incentive plan award, (iii) continued health
insurance coverage for twelve months or until the earlier effective
date of coverage under a subsequent employer’s plan, and (iv)
accelerated vesting of 25% of all shares or options subject to any
equity awards granted to Mr. McGregor prior to Mr. McGregor’s
termination which are unvested as of the date of termination.
However, if Mr. McGregor is terminated without cause or resigns for
good reason in anticipation of or twenty-four months after a change
in control, Mr. McGregor is entitled to (i) severance equal to
twenty-four months of base salary, (ii) 200% of his total target
short-term incentive plan award, (iii) continued health insurance
coverage for twenty-four months or until the earlier effective date
of coverage under a subsequent employer’s plan, and (iv)
accelerated vesting of 100% of all shares or options subject to any
equity awards granted to Mr. McGregor prior to Mr. McGregor’s
termination that are unvested as of the date of termination.
All other terms and conditions of Mr. McGregor’s employment
agreement are substantially the same as those contained in Mr.
Kandris’s employment agreement described above.
Christopher W. Wright
Our Amended and Restated Employment Agreement with Christopher W.
Wright provides for at-will employment as our Vice President of
Administration, General Counsel and Secretary. In February 2022,
Mr. Wright stepped down from his position as General Counsel and
Secretary in anticipation of his retirement. Mr. Wright’s annual
base salary is $326,546 as of May 20, 2021, was $317,035 as of
December 6, 2020 and was $307,035 prior to that date for the
balance of 2020 and for all of 2019. Mr. Wright is eligible to
participate in our short-term incentive plan with a pay-out target
of 50% of his base salary, to be paid based upon performance
criteria set by our Compensation Committee.
All other terms and conditions of Mr. Wright’s Amended and Restated
Employment Agreement are substantially the same as those contained
in Mr. McGregor’s Amended and Restated Employment Agreement
described above.
James R. Sneed
Our Amended and Restated Employment Agreement with James R. Sneed
provides for at-will employment as our Vice President of Supply
& Trading, now retitled to Mr. Sneed’s current position as Vice
President and Chief Commercial Officer. Mr. Sneed’s annual base
salary is $318,270 as of May 20, 2021, was $309,000 as of December
6, 2020, was $300,000 as of June 23, 2019 and was $260,504 prior to
that date for the balance of 2019. Mr. Sneed is eligible to
participate in our short-term incentive plan with a pay-out target
of 50% of his base salary, to be paid based upon performance
criteria set by our Compensation Committee.
All other terms and conditions of Mr. Sneed’s Amended and Restated
Employment Agreement are substantially the same as those contained
in Mr. McGregor’s Amended and Restated Employment Agreement
described above.
Paul P. Koehler
Our Amended and Restated Employment Agreement with Paul P. Koehler
provided for at-will employment as our Vice President, Commodities
and Corporate Development. Mr. Koehler’s annual base salary was
$260,514 for all of 2019 and through his retirement in February
2021. Mr. Koehler was eligible to participate in our short-term
incentive plan with a pay-out target of 50% of his base salary, to
be paid based upon performance criteria set by our Compensation
Committee.
All other terms and conditions of Mr. Koehler’s Amended and
Restated Employment Agreement were substantially the same as those
contained in Mr. McGregor’s Amended and Restated Employment
Agreement described above.
Clawback Policy
On March 29, 2018, our Compensation Committee instituted a new
“clawback” policy with respect to incentive compensation. Except as
otherwise required by applicable law and regulations, the clawback
policy applies to any incentive compensation, including any cash or
equity incentive compensation, awarded or paid after March 29,
2018. The clawback policy is intended to mitigate the risks
associated with our compensation policies because our executive
officers, including all of our named executive officers, will be
required to repay compensation as provided under the policy.
The clawback policy requires recoupment of all incentive
compensation, including any cash or equity incentive compensation,
awarded or paid to any of our executive officers, including all of
our named executive officers, in the event our financial statements
are required to be restated, regardless of cause, including,
without limitation, due to: (i) material noncompliance with any
financial reporting requirements under the federal securities laws,
(ii) an error, miscalculation or omission, or (iii) the commission
of an act of fraud or other misconduct, including dishonesty,
unethical conduct or falsification of our records. The recoupment
period is the three-year period commencing from the date of the
financial statement required to be restated; and if more than one
financial statement is required to be restated, the date of the
earliest dated financial statement. The amount of incentive
compensation subject to recoupment is the amount received that
exceeds the amount that otherwise would have been received had it
been determined based on the accounting restatement, and is
computed without regard to any taxes paid. We are prohibited under
the policy from indemnifying or agreeing to indemnify any executive
officer from the loss of any erroneously awarded incentive
compensation.
Our clawback policy is a “no-fault” policy and applies even if the
executive officer did not engage in any misconduct and even if the
executive officer had no responsibility for the financial statement
errors, miscalculations, omissions or other reasons requiring
restatement.
Our Compensation Committee will reevaluate and, if necessary,
revise our clawback policy to comply with the Dodd-Frank Wall
Street Reform and Consumer Protection Act once the rules
implementing the clawback requirements have been finalized by the
Securities and Exchange Commission.
Grants of Plan-Based
Awards – 2021
The following table sets forth summary information regarding all
grants of plan-based awards made to our NEOs during the year ended
December 31, 2021. The awards were made under our annual
performance-based cash incentive compensation plan and our
long-term equity incentive compensation plan and are described in
“Compensation Discussion and Analysis—Compensation Decisions for
2021” above.
|
|
|
|
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards(1)
|
|
|
All
Other Stock
Awards: Number of Shares |
|
|
Grant Date Fair Value of Stock |
|
Name |
|
Grant Date |
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
of Stock or Units (#)(2)
|
|
|
and Option Awards($)(3)
|
|
Michael D. Kandris |
|
3/23/2021 |
|
$ |
71,394 |
|
|
$ |
356,971 |
|
|
$ |
642,500 |
|
|
|
|
|
|
|
|
|
|
|
3/23/3021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123,239 |
|
|
$ |
707,392 |
|
Bryon T. McGregor |
|
3/23/2021 |
|
$ |
33,623 |
|
|
$ |
168,116 |
|
|
$ |
302,600 |
|
|
|
|
|
|
|
|
|
|
|
3/23/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,014 |
|
|
$ |
252,640 |
|
Christopher W. Wright |
|
3/23/2021 |
|
$ |
32,306 |
|
|
$ |
161,532 |
|
|
$ |
290,800 |
|
|
|
|
|
|
|
|
|
|
|
3/23/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,852 |
|
|
$ |
217,270 |
|
James R. Sneed |
|
3/23/2021 |
|
$ |
31,488 |
|
|
$ |
157,442 |
|
|
$ |
283,400 |
|
|
|
|
|
|
|
|
|
|
|
3/23/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,450 |
|
|
$ |
192,003 |
|
Paul P.
Koehler(4) |
|
N/A |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
(1) |
The amounts represent the threshold,
target and maximum annual incentive award payout for the January 1,
2021 to December 31, 2021 performance period under our annual
performance-based cash incentive compensation plan, and assume full
achievement of the NEO’s individual performance element. The actual
2021 payout is reported in the “Summary Compensation Table” above
under the “Non-Equity Incentive Plan Compensation” column. |
|
(2) |
The stock awards reported in the above
table represent shares of stock granted under our 2016 Plan. The
grant vested as to 33% of the shares on April 1, 2022 and vests as
to 33% and 34% of the shares on April 1, 2023 and 2024,
respectively. |
|
(3) |
The dollar value of grants of common
stock shown represents the grant date fair value calculated based
on the fair market value of our common stock on the grant date. The
actual value that an executive will realize on the award will
depend on the price per share of our common stock at the time
shares are sold. There is no assurance that the actual value
realized by an executive will be at or near the grant date fair
value of the shares awarded. |
|
(4) |
Mr. Koehler retired and his employment
relationship with us was terminated in February 2021. |
Outstanding Equity
Awards at Fiscal Year-End – 2021
The following table sets forth information about outstanding equity
awards held by our named executive officers as of December 31,
2021.
|
Option Awards |
|
Stock Awards |
|
Name |
|
Number of Securities Underlying
Unexercised Options (#) Exercisable(1) |
|
|
Option Exercise Price ($) |
|
|
Option Expiration Date |
|
Number of Shares or Units of Stock
That Have Not Vested (#)(2) |
|
|
Market Value of Shares
or Units of Stock That Have Not
Vested($)(3) |
|
Michael D. Kandris |
|
|
31,746 |
(4) |
|
$ |
3.74 |
|
|
6/24/2023 |
|
|
125,000 |
(5) |
|
$ |
601,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123,239 |
(6) |
|
$ |
592,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bryon T. McGregor |
|
|
31,746 |
(4) |
|
$ |
3.74 |
|
|
6/24/2023 |
|
|
42,758 |
(5) |
|
$ |
205,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,014 |
(6) |
|
$ |
211,707 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher W. Wright |
|
|
|
|
|
|
|
|
|
|
|
|
42,758 |
(5) |
|
$ |
205,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,852 |
(6) |
|
$ |
182,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James R. Sneed |
|
|
10,204 |
(7) |
|
$ |
3.74 |
|
|
6/24/2023 |
|
|
42,758 |
(5) |
|
$ |
205,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,450 |
(6) |
|
$ |
160,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul P.
Koehler(8) |
|
|
— |
|
|
$ |
— |
|
|
— |
|
|
— |
|
|
$ |
— |
|
|
(1) |
The
option awards reported in the above table represent stock options
granted under our 2006 Stock Incentive Plan. |
|
(2) |
The stock awards reported in the
above table represent shares of restricted stock granted under our
2016 Plan. |
|
(3) |
Represents the fair market value per share of our
common stock of $4.81 on December 31, 2021, the last business day
of the most recently completed fiscal year, multiplied by the
number of shares that had not vested as of that date. |
|
(4) |
Represents shares underlying a stock option
granted on June 24, 2013. The option vested as to 33%, 33% and 34%
of the 31,746 shares underlying the option on April 1, 2014, 2015
and 2016, respectively. |
|
(5) |
Represents shares granted on July 13, 2020. The
grant vested on April 1, 2022. |
|
(6) |
Represents shares granted on March 23, 2021. The
grant vested as to 33% of the shares on April 1, 2022 and vests as
to 33% and 34% of the shares on April 1, 2023 and 2024,
respectively. |
|
(7) |
Represents shares underlying a stock option
granted on June 24, 2013. The option vested as to 33%, 33% and 34%
of the 10,204 shares underlying the option on April 1, 2014, 2015
and 2016, respectively. |
|
(8) |
Mr. Koehler retired and his employment
relationship with us was terminated in February 2021. |
Option Exercises and
Stock Vested
The following table summarizes the exercise of option awards and
the vesting of stock awards for each of our NEOs for the year ended
December 31, 2021:
|
|
Option Awards |
|
|
Stock Awards |
|
Name |
|
Number of Shares
Acquired on Exercise
(#)
|
|
|
Value Realized
on Exercise
($)(1)
|
|
|
Number of Shares
Acquired on Vesting
(#)
|
|
|
Value Realized
on Vesting
($)(2)
|
|
Michael D. Kandris |
|
|
— |
|
|
$ |
— |
|
|
|
110,981 |
|
|
$ |
628,152 |
|
Bryon T. McGregor |
|
|
— |
|
|
$ |
— |
|
|
|
56,739 |
|
|
$ |
321,143 |
|
Christopher W. Wright |
|
|
— |
|
|
$ |
— |
|
|
|
65,532 |
|
|
$ |
370,911 |
|
James R. Sneed |
|
|
— |
|
|
$ |
— |
|
|
|
57,049 |
|
|
$ |
322,897 |
|
Paul P.
Koehler(3) |
|
|
10,204 |
|
|
$ |
35,683 |
|
|
|
64,056 |
|
|
$ |
494,512 |
|
|
(1) |
Represents the closing price of a
share of our common stock on the date of exercise, minus the option
exercise price, multiplied by the number of shares as to which the
option was exercised. |
|
(2) |
Represents the closing price of a
share of our common stock on the date of vesting multiplied by the
number of shares that vested on such date, including any shares
that were withheld by us to satisfy minimum employment withholding
taxes. |
|
(3) |
Mr. Koehler retired and his employment
relationship with us was terminated in February 2021. Upon his
retirement, Mr. Koehler’s unvested shares of restricted stock
vested in full. |
Severance and Change in
Control Arrangements with Named Executive Officers
Executive Employment Agreements. We have entered
into agreements with our NEOs that provide certain benefits upon
the termination of their employment under certain prescribed
circumstances. Those agreements are described under “Executive
Employment Agreements” above.
Stock Incentive Plans. Under our 2016 Plan, if a change
in control occurs, each outstanding equity award under the
discretionary grant program will automatically accelerate in full,
unless (i) that award is assumed by the successor corporation or
otherwise continued in effect, (ii) the award is replaced with a
cash retention program that preserves the spread existing on the
unvested shares subject to that equity award (the excess of the
fair market value of those shares over the exercise or base price
in effect for the shares) and provides for subsequent payout of
that spread in accordance with the same vesting schedule in effect
for those shares, or (iii) the acceleration of the award is subject
to other limitations imposed by the plan administrator. Each
outstanding equity award under the stock issuance program will vest
as to the number of shares of common stock subject to that award
immediately prior to the change in control, unless that equity
award is assumed by the successor corporation or otherwise
continued in effect or replaced with a cash retention program
similar to the program described in clause (ii) above or unless
vesting is precluded by its terms. Immediately following a change
in control, all outstanding awards under the discretionary grant
program will terminate and cease to be outstanding except to the
extent assumed by the successor corporation or its parent or
otherwise expressly continued in full force and effect pursuant to
the terms of the change in control transaction.
The plan administrator will have the discretion to structure one or
more equity awards under the discretionary grant and stock issuance
programs so that those equity awards will vest in full in the event
the individual’s service with us or the successor entity is
terminated (actually or constructively) within a designated period
following a change in control transaction, whether or not those
equity awards are to be assumed or otherwise continued in effect or
replaced with a cash retention program.
The definition of “change in control” under our 2016 Plan is
substantially the same as provided under “Executive Employment
Agreements” above.
Calculation of Potential
Payments upon Termination or Change in Control
In accordance with the rules of the Securities and Exchange
Commission, the following table presents our estimate of the
benefits payable to our NEOs under their executive employment
agreements and our 2016 Plan assuming that for each of the NEOs (i)
a “change in control” occurred on December 31, 2021, the last
business day of 2021, and (a) there was a termination by the
executive “for good reason,” or by us without “cause” within three
months before or twelve months after the change in control, or (b)
none of the executives’ equity awards were assumed by the successor
corporation or replaced with a cash retention program, (ii) a
qualifying termination occurred on December 31, 2021, which is a
termination by the executive “for good reason,” by us without
“cause” or upon the executive’s disability, or (iii) a
non-qualifying termination occurred on December 31, 2021, which is
a voluntary termination by the executive other than “for good
reason” or by us for “cause.” See “Executive Employment Agreements”
above for the definitions of “for good reason,” “cause” and “change
in control.”
Name |
|
Trigger |
|
Salary
and Bonus(1)
|
|
|
Continuation
of Benefits(2)
|
|
|
Value of
Stock Acceleration(3)
|
|
|
Total
Value(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael D. Kandris |
|
Change in Control |
|
$ |
2,629,128 |
|
|
$ |
39,127 |
|
|
$ |
1,194,034 |
|
|
$ |
3,862,289 |
|
|
|
Qualifying Termination |
|
$ |
1,314,564 |
|
|
$ |
19,563 |
|
|
$ |
298,509 |
|
|
$ |
1,632,636 |
|
|
|
Non-Qualifying Termination |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bryon T. McGregor |
|
Change in Control |
|
$ |
1,019,586 |
|
|
$ |
37,424 |
|
|
$ |
419,884 |
|
|
$ |
1,476,894 |
|
|
|
Qualifying Termination |
|
$ |
509,793 |
|
|
$ |
18,712 |
|
|
$ |
104,971 |
|
|
$ |
633,476 |
|
|
|
Non-Qualifying Termination |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher W. Wright |
|
Change in Control |
|
$ |
979,638 |
|
|
$ |
26,084 |
|
|
$ |
387,729 |
|
|
$ |
1,393,451 |
|
|
|
Qualifying Termination |
|
$ |
489,819 |
|
|
$ |
13,042 |
|
|
$ |
96,932 |
|
|
$ |
599,793 |
|
|
|
Non-Qualifying Termination |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James R. Sneed |
|
Change in Control |
|
$ |
954,810 |
|
|
$ |
26,084 |
|
|
$ |
454,800 |
|
|
$ |
1,435,694 |
|
|
|
Qualifying Termination |
|
$ |
477,405 |
|
|
$ |
13,042 |
|
|
$ |
113,700 |
|
|
$ |
604,147 |
|
|
|
Non-Qualifying Termination |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul P.
Koehler(5) |
|
Change in Control |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
Qualifying Termination |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
Non-Qualifying Termination |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
(1) |
Amount represents twenty-four months
additional salary plus 200% of the executive’s total target
short-term cash incentive compensation after the date of
termination in the event of a change in control and twelve months
additional salary plus 100% of the executive’s total target
short-term cash incentive compensation after the date of
termination in the event of a qualifying termination, in each case
based on the executive’s salary as of December 31, 2021; provided,
that Michael D. Kandris is entitled to thirty-six months additional
salary plus 300% of his total target short-term cash incentive
compensation after the date of termination in the event of a change
in control and eighteen months additional salary plus 150% of his
total target short-term cash incentive compensation after the date
of termination in the event of a qualifying termination, in each
case based on his salary as of December 31, 2021. |
|
(2) |
For those NEOs reported as eligible
for benefits, the amount represents the aggregate value of the
continuation of certain employee health benefits for up to
twenty-four months after the date of termination in the event of a
change in control and for up to twelve months after the date of
termination in the event of a qualifying termination; provided,
that Michael D. Kandris is entitled to thirty-six months of
additional benefits after the date of termination in the event of a
change in control and eighteen months of additional benefits after
the date of termination in the event of a qualifying
termination. |
|
(3) |
For those NEOs reported as eligible
for acceleration of vesting benefits, the amount represents the
aggregate value of the accelerated vesting of 100% of all of the
executive’s unvested restricted stock grants in the event of a
change in control and 25% of all of the executive’s unvested
restricted stock grants in the event of a qualifying termination.
The amounts shown as the value of the accelerated restricted stock
grants are based solely on the intrinsic value of the restricted
stock grants as of December 31, 2021, which was calculated by
multiplying (i) the fair market value of our common stock on
December 31, 2021, which was $4.81 per share, by (ii) the assumed
number of shares vesting on an accelerated basis on December 31,
2021. |
|
(4) |
Excludes the value to the executive of
the continuing right to indemnification and continuing coverage
under our directors’ and officers’ liability insurance, if
applicable. |
|
(5) |
Mr. Koehler retired and his employment
relationship with us was terminated in February 2021. |
Compensation Committee Interlocks and Insider Participation
Our Compensation Committee
consists of Gilbert E. Nathan, Terry L. Stone, John L. Prince and
Dianne S. Nury. None of these individuals were officers or
employees of Alto Ingredients at any time during 2021 or at any
other time. During 2021, none of our executive officers served as a
member of the board of directors or compensation committee of any
other entity whose executive officer(s) served on our Board or
Compensation Committee.
CEO Pay
Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, and Item 402(u) of Regulation S-K
under the Securities Act, we are providing the following
information about the relationship of the annual total compensation
of Michael D. Kandris, our Chief Executive Officer (our “CEO”), and
who is also our President and Chief Operating Officer, and the
annual total compensation of our employees. The pay ratio included
in this information is a reasonable estimate calculated in a manner
consistent with Item 402(u) of Regulation S-K under the Securities
Act. The Securities and Exchange Commission’s rules for identifying
our median employee and calculating the pay ratio allow companies
to use different methodologies, estimates and assumptions,
therefore the pay ratio disclosure below may not be comparable to
the pay ratio reported by other companies.
For
2021, our last completed fiscal year:
|
● |
the
annual total compensation of our CEO, as reported in the Summary
Compensation Table included above in this Proxy Statement, was
$1,878,748; and |
|
● |
the
median of the annual total compensation of all employees (other
than our CEO) was $80,677. |
Based
on this information, for 2021 the ratio of the annual total
compensation of Mr. Kandris, our CEO, to the median of the annual
total compensation of all employees was 23.3 to 1.
To
identify the median of the annual total compensation of all
employees, as well as to determine the annual total compensation of
our median employee and our CEO, we took the following
steps:
1. We
determined that as of October 7, 2021, our employee population
consisted of approximately 375 individuals with all of these
individuals located in the United States. This employee population
consisted of our full-time, part-time and temporary employees. We
did not employ any seasonal workers in 2021. We selected October 7,
2021, which is within the last three months of 2021, as the date
upon which we would identify the “median employee” because it
enabled us to make such identification in a reasonably efficient
and economical manner.
2. To
identify the “median employee” from our employee population, we
compared the amount of wages of our employees, as reflected in our
payroll records as of the determination date and ultimately
reported to the Internal Revenue Service on Forms W-2 for 2021. In
making this determination, we annualized the compensation of
employees who were hired in 2021 but did not work for us for the
entire year.
3. We
identified our median employee using this compensation measure,
which was consistently applied to all employees included in the
calculation. Since all employees are located in the United States,
as is our CEO, we did not make any cost-of-living adjustments in
identifying the “median employee.”
4.
Once we identified our median employee, who is a non-exempt,
full-time employee, we combined all of the elements of the
employee’s compensation for 2021 in accordance with the
requirements of Item 402(c)(2)(x) of Regulation S-K under the
Securities Act, resulting in annual total compensation of $80,677,
which includes base pay, overtime pay, equity incentive
compensation, any matching contributions to the employee’s 401(k)
plan and any employer contribution to the employee’s health savings
account.
5.
With respect to the annual total compensation of our CEO, we used
the amount reported for 2021 in the “Total” column of our Summary
Compensation Table included in this Proxy Statement and
incorporated by reference under Item 11 of Part III of our Annual
Report.
Certain Relationships
and Related Transactions
Policies
and Procedures for Approval of Related Party
Transactions
Our
Board has the responsibility to review and discuss with management
and approve, and has adopted written policies and procedures
relating to approval or ratification of, interested transactions
with related parties. During this process, the material facts as to
the related party’s interest in a transaction are disclosed to all
members of our Board or the members of an appropriate independent
committee of our Board. Under our written policies and procedures,
the Board, or an appropriate independent committee of our Board, is
to review each interested transaction with a related party that
requires approval and either approve or disapprove of the entry
into the interested transaction. An interested transaction is any
transaction in which we are a participant and in which any related
party has or will have a direct or indirect interest. Transactions
that are in the ordinary course of business and would not require
either disclosure required by Item 404(a) of Regulation S-K under
the Securities Act or approval of the Board or an independent
committee of the Board as required by applicable NASDAQ rules would
not be deemed interested transactions. No director may participate
in any approval of an interested transaction with respect to which
he or she is a related party. Our Board intends to approve only
those related party transactions that are in the best interests of
Alto Ingredients and our stockholders.
Other
than as described below or elsewhere in this Proxy Statement, since
January 1, 2021, there has not been a transaction or series of
related transactions to which Alto Ingredients was or is a party
involving an amount in excess of $120,000 and in which any
director, executive officer, holder of more than 5% of any class of
our voting securities, or any member of the immediate family of any
of the foregoing persons, had or will have a direct or indirect
material interest. All of the below transactions were separately
ratified and/or approved by our Board or an appropriate independent
committee of our Board.
Certain
Relationships and Related Transactions
Miscellaneous
We
are or have been a party to employment and compensation
arrangements with related parties, as more particularly described
above in “Executive Compensation and Related Information.” In
addition, we have entered into an indemnification agreement with
each of our directors and executive officers. The indemnification
agreements and our certificate of incorporation and bylaws require
us to indemnify our directors and officers to the fullest extent
permitted by Delaware law.
Executive Officers
On
March 30, 2022, we made the following grants of restricted common
stock to our executive officers in consideration of services to be
provided, which shares vest 33% on April 1, 2023, 33% on April 1,
2024 and 34% on April 1, 2025:
|
● |
Michael
D. Kandris was granted 127,970 shares having a value of
$874,035. |
|
● |
Bryon
T. McGregor was granted 45,703 shares having a value of
$312,151. |
|
● |
Auste
M. Graham was granted 39,305 shares having a value of
$268,453. |
|
● |
Christopher
W. Wright was granted 15,000 shares having a value of
$102,450. |
|
● |
James
T. Sneed was granted 37,734 shares having a value of
$257,723. |
William L. Jones
On
May 20, 2008, we sold to William L. Jones, who is our Chairman of
the Board and one of our directors, 12,820 shares of our Series B
Preferred Stock, all of which were initially convertible into an
aggregate of 366 shares of our common stock based on an initial
preferred-to-common conversion ratio of approximately 1-for-0.03,
and warrants to purchase an aggregate of 184 shares of our common
stock at a split-adjusted exercise price of $735 per share, for an
aggregate purchase price of $250,000. As a result of various
anti-dilution adjustments, the preferred-to-common conversion ratio
of the Series B Preferred Stock has increased to approximately
1-for-1.04.
On December 19, 2019, certain holders of our outstanding Series B
Preferred Stock, including Mr. Jones, agreed to waive any and all
of their respective rights and remedies against us with respect to
any unpaid quarterly cumulative dividends on our Series B Preferred
Stock until we paid in full all of our obligations under our senior
secured notes or upon certain events of default, whichever was
earlier.
For
the year ended December 31, 2021, we accrued and paid cash
dividends in the amount of $17,499 in respect of shares of Series B
Preferred Stock held by Mr. Jones. During 2021, we also paid to Mr.
Jones an aggregate of $21,958 of cash dividends that had accrued
and were unpaid for the period from December 19, 2019 to December
31, 2020 in respect of shares of Series B Preferred Stock held by
Mr. Jones.
Lyles United, LLC
On
March 27, 2008, we sold to Lyles United, LLC an aggregate of
2,051,282 shares of our Series B Preferred Stock, all of which were
initially convertible into an aggregate of 58,608 shares of our
common stock based on an initial preferred-to-common conversion
ratio of approximately 1-for-0.03, and warrants to purchase an
aggregate of 29,304 shares of our common stock at a split-adjusted
exercise price of $735 per share, for an aggregate purchase price
of $40,000,000. As a result of various anti-dilution adjustments,
the preferred-to-common conversion ratio of the Series B Preferred
Stock has increased to approximately 1-for-1.04
On December 19, 2019, Lyles United, LLC agreed to waive any and all
of its rights and remedies against us with respect to any unpaid
quarterly cumulative dividends on our Series B Preferred Stock
until we paid in full all of our obligations under our senior
secured notes, upon certain events of default, or December 19,
2021, whichever was earliest.
For
the year ended December 31, 2021, we accrued and paid cash
dividends in the amount of $700,000 in respect of shares of Series
B Preferred Stock held by Lyles United, LLC. During 2021, we also
paid to Lyles United, LLC an aggregate of $878,355 of cash
dividends that had accrued and were unpaid for the period from
December 19, 2019 to December 31, 2020 in respect of shares of
Series B Preferred Stock held by Lyles United, LLC.
SCF Investments LLC and the Greinke Trust
The
Greinke Personal Living Trust Dated April 20, 1999 (the “Greinke
Trust”) acquired shares of Series B Preferred Stock from Lyles
United, LLC in December 2009. SCF Investments LLC acquired shares
of Series B Preferred Stock from the Greinke Trust in January 2021.
The preferred-to-common conversion ratio of the Series B Preferred
Stock is approximately 1-for-1.04
On December 19, 2019, certain holders of our outstanding Series B
Preferred Stock, including the Greinke Trust, agreed to waive any
and all of their respective rights and remedies against us with
respect to any unpaid quarterly cumulative dividends on our Series
B Preferred Stock until we paid in full all of our obligations
under our senior secured notes or upon certain events of default,
whichever was earlier. SCF Investments LLC was bound by this
agreement.
For
the year ended December 31, 2021, we accrued and paid cash
dividends in the amount of $116,271 in respect of shares of Series
B Preferred Stock held by SCF Investments LLC. During 2021, we also
paid to SCF Investments LLC an aggregate of $145,896 of cash
dividends that had accrued and were unpaid for the period from
December 19, 2019 to December 31, 2020 in respect of shares of
Series B Preferred Stock held by SCF Investments LLC.
Auste M. Graham
Auste
M. Graham is employed by us as our Vice President, General Counsel
and Secretary. Ms. Graham’s annual base salary is $325,000. Ms.
Graham is eligible to participate in our short-term incentive plan
with a pay-out target of 50% of her base salary, to be paid based
upon performance criteria set by our Compensation Committee. All
other terms and conditions of Ms. Graham’s Employment Agreement are
substantially the same as those contained in Bryon T. McGregor’s
Amended and Restated Employment Agreement described under
“Executive Compensation and Related Information—Summary
Compensation Table—Executive Employment Agreements”
above.
On March 23, 2022, we granted 25,000 shares of our restricted
common stock to Ms. Graham in consideration of services to be
provided. The value of the common stock was determined to be
$155,500. The grant vested as to 50% of the shares on April 1, 2022
and vests as to 50% of the shares on April 1, 2023.
Maria G. Gray
On
June 1, 2021, we entered into a Board Advisor Agreement with Maria
G. Gray, one of our director nominees, for the provision of
strategic consulting services prior to becoming a director. Ms.
Gray has been compensated at a rate of $50,000 per year under this
arrangement during 2021 and through the filing of this Proxy
Statement. We also granted 2,183 shares of restricted stock to Ms.
Gray on June 17, 2021. The shares had a grant date fair value of
$13,076 and vest on the date of the Annual Meeting.
Neil M. Koehler
On
May 20, 2008, we sold to Neil M. Koehler, our former Chief
Executive Officer and President, and one of our former directors,
256,410 shares of our Series B Preferred Stock, all of which were
initially convertible into an aggregate of 7,326 shares of our
common stock based on an initial preferred-to-common stock
conversion ratio of approximately 1-for-0.03, and warrants to
purchase an aggregate of 3,663 shares of our common stock at a
split-adjusted exercise price of $735 per share, for an aggregate
purchase price of $5,000,000. As a result of various anti-dilution
adjustments, the preferred-to-common conversion ratio of the Series
B Preferred Stock has increased to approximately
1-for-1.04.
On December 19, 2019, certain holders of our outstanding Series B
Preferred Stock, including Mr. Koehler, agreed to waive any and all
of their respective rights and remedies against us with respect to
any unpaid quarterly cumulative dividends on our Series B Preferred
Stock until we paid in full all of our obligations under our senior
secured notes or upon certain events of default, whichever was
earlier.
For
the year ended December 31, 2021, we accrued and paid cash
dividends in the amount of $350,000 in respect of shares of Series
B Preferred Stock held by Mr. Koehler. During 2021, we also paid to
Mr. Koehler an aggregate of $439,178 of cash dividends that had
accrued and were unpaid for the period from December 19, 2019 to
December 31, 2020 in respect of shares of Series B Preferred Stock
held by Mr. Koehler.
Other
Information
Stockholder
Proposals
Pursuant
to Rule 14a–8 under the Exchange Act, proposals by stockholders
(other than a proposal for director nomination) that are intended
for inclusion in our Proxy Statement and proxy card and to be
presented at our next annual meeting must be received by us no
later than January 11, 2023 in order to be considered for inclusion
in our proxy materials relating to our next annual meeting. Such
proposals shall be addressed to our corporate Secretary at Alto
Ingredients, Inc., 1300 South Second Street, Pekin, Illinois 61554
and may be included in next year’s annual meeting proxy materials
if they comply with rules and regulations of the Securities and
Exchange Commission governing stockholder proposals.
Stockholder
nominations of persons for election to our Board, or proposals by
stockholders that are not intended for inclusion in our proxy
materials, may be made by any stockholder who timely and completely
complies with the notice procedures contained in our bylaws, was a
stockholder of record at the time of giving of notice and is
entitled to vote at the meeting, so long as the proposal is a
proper matter for stockholder action and the stockholder otherwise
complies with the provisions of our bylaws and applicable law.
However, stockholder nominations of persons for election to our
Board at a special meeting may only be made if our Board has
determined that directors are to be elected at the special
meeting.
To be
timely, stockholder nominations of persons for election to our
Board, or proposals not intended for inclusion in our proxy
materials, must be delivered to our Secretary at our Pekin,
Illinois corporate headquarters not later than:
|
● |
In
the case of an annual meeting, the close of business on March 27,
2023. However, if the date of the meeting has changed more than 30
days from the date of the prior year’s meeting, then in order for
the stockholder’s notice to be timely it must be delivered to our
corporate Secretary a reasonable time before we mail our proxy
materials for the current year’s meeting. For purposes of the
preceding sentence, a “reasonable time” coincides with any adjusted
deadline we publicly announce. |
|
● |
In
the case of a special meeting, the close of business on the 7th day
following the day on which we first publicly announce the date of
the special meeting. |
Except
as otherwise provided by law, if the chairperson of the meeting
determines that a nomination or any business proposed to be brought
before a meeting was not made or proposed in accordance with the
procedures set forth in our bylaws and summarized above, the
chairperson may prohibit the nomination or proposal from being
presented at the meeting.
Available
Information
We
are subject to the informational requirements of the Exchange Act.
In accordance with the Exchange Act, we file reports, proxy
statements and other information with the Securities and Exchange
Commission. These materials can be inspected and copied at the
Public Reference Room maintained by the Securities and Exchange
Commission at 100 F Street, N.E., Washington, D.C. 20549. The
public may obtain information on the operation of the Public
Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. Our common stock trades on The NASDAQ Capital
Market under the symbol “ALTO.”
Annual
Report
A
copy of our Annual Report on Form 10-K for the year ended December
31, 2021 has been provided or made available concurrently with this
Proxy Statement to all stockholders entitled to notice of and to
vote at the Annual Meeting. The Annual Report is not incorporated
into this Proxy Statement and is not deemed to be a part of our
proxy solicitation materials. Copies of our Annual Report on Form
10-K (without exhibits) for the year ended December 31, 2021 will
be furnished by first class mail, without charge, to any person
from whom the accompanying proxy is solicited upon written or oral
request to Alto Ingredients, Inc., 1300 South Second Street, Pekin,
Illinois 61554, Attention: Investor Relations, telephone
(916) 403-2123. If exhibit copies are requested, a copying
charge of $0.20 per page applies. In addition, all of our public
filings, including our Annual Report, can be found free of charge
on the website of the Securities and Exchange Commission at
http://www.sec.gov.
ALL
STOCKHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN PROMPTLY THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE.
Forward-Looking
Statements
All
statements included or incorporated by reference in this Proxy
Statement other than statements or characterizations of historical
fact, are forward-looking statements, within the meaning of the
federal securities laws, including the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
based on our current expectations, estimates and projections about
our business and industry, management’s beliefs, and certain
assumptions made by us, all of which are subject to change.
Forward-looking statements can often be identified by words such as
“anticipates,” “expects,” “intends,” “plans,” “predicts,”
“believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,”
“could,” “potential,” “continue,” “ongoing,” similar expressions,
and variations or negatives of these words. These forward-looking
statements are not guarantees of future results and are subject to
risks, uncertainties and assumptions that could cause our actual
results to differ materially and adversely from those expressed in
any forward-looking statement. Important risk factors that could
contribute to such differences are discussed in our Annual Report
on Form 10-K for the year ended December 31, 2021, subsequent
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and
other Securities and Exchange Commission filings. The
forward-looking statements in this Proxy Statement speak only as of
this date. We undertake no obligation to revise or update publicly
any forward-looking statement for any reason, except as required by
law.
APPENDIX
A
ALTO
INGREDIENTS, INC.
2016
STOCK INCENTIVE PLAN
(Adopted
March 25, 2016, and ratified by Stockholders June 16,
2016;
Amended
March 29, 2018, and ratified by Stockholders June 14,
2018;
Amended
August 6, 2019, and ratified by Stockholders November 7,
2019;
Amended
September 2, 2020, and ratified by Stockholders November 18,
2020;
Amended
March 30, 2022, and ratified by Stockholders June 23,
2022)
ARTICLE
ONE
GENERAL PROVISIONS
I.
Purpose of the Plan.
This
2016 Stock Incentive Plan is intended to promote the interests of
Alto Ingredients, Inc. by providing eligible persons in the
Corporation’s service with the opportunity to acquire a proprietary
or economic interest, or otherwise increase their proprietary or
economic interest, in the Corporation as an incentive for them to
remain in such service and render superior performance during such
service. Capitalized terms not otherwise defined herein shall have
the meanings assigned to such terms in the attached
Appendix.
II.
Structure of the Plan.
A.
The Plan is divided into two equity-based incentive
programs:
|
● |
the
Discretionary Grant Program, under which eligible persons may, at
the discretion of the Plan Administrator, be granted options to
purchase shares of common stock or stock appreciation rights tied
to the value of such common stock; and |
|
● |
the
Stock Issuance Program, under which eligible persons may be issued
shares of common stock pursuant to restricted stock or restricted
stock unit awards or other stock-based awards, made by and at the
discretion of the Plan Administrator, that vest upon the completion
of a designated service period and/or the attainment of
pre-established performance milestones, or under which shares of
common stock may be issued through direct purchase or as a bonus
for services rendered to the Corporation (or any Parent or
Subsidiary). |
B.
The provisions of Articles One and Four shall apply to all
equity programs under the Plan and shall govern the interests of
all persons under the Plan.
III.
Administration of the Plan.
A.
The Compensation Committee shall have sole and exclusive authority
to administer the Discretionary Grant and Stock Issuance Programs,
provided, however, that the Board may retain, reassume or exercise
from time to time the power to administer those programs with
respect to all persons. However, any discretionary Awards to
members of the Compensation Committee must be authorized and
approved by a disinterested majority of the Board.
B.
The Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and
authority (subject to the provisions of the Plan) to establish such
rules and regulations as it may deem appropriate for proper
administration of the Discretionary Grant and Stock Issuance
Programs and to make such determinations under, and issue such
interpretations of, the provisions of those programs and any
outstanding Awards thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator within the scope of
its administrative functions under the Plan shall be final and
binding on all parties who have an interest in the Discretionary
Grant and Stock Issuance Programs under its jurisdiction or any
Award thereunder.
C.
Service on the Compensation Committee shall constitute service as a
Board member, and members of each such committee shall accordingly
be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the
Compensation Committee shall be liable for any act or omission made
in good faith with respect to the Plan or any Award under the
Plan.
IV.
Eligibility.
A.
The persons eligible to participate in the Discretionary Grant and
Stock Issuance Programs are as follows:
|
(ii) |
non-employee
members of the Board or the board of directors of any Parent or
Subsidiary; and |
B.
The Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to
determine (i) with respect to Awards made under the Discretionary
Grant Program, which eligible persons are to receive such Awards,
the time or times when those Awards are to be made, the number of
shares to be covered by each such Award, the status of any awarded
option as either an Incentive Option or a Non-Statutory Option, the
exercise price per share in effect for each Award (subject to the
limitations set forth in Article Two), the time or
times when each Award is to vest and become exercisable, subject to
a minimum initial vesting period of one (1) year, and the maximum
term for which the Award is to remain outstanding, and (ii) with
respect to Awards under the Stock Issuance Program, which eligible
persons are to receive such Awards, the time or times when the
Awards are to be made, the number of shares subject to each such
Award, the vesting schedule (if any) applicable to the shares
subject to such Award, subject to a minimum initial vesting period
of one (1) year, and the cash consideration (if any) payable for
such shares.
C.
The Plan Administrator shall have the absolute discretion to grant
options or stock appreciation rights in accordance with the
Discretionary Grant Program and to effect stock issuances or other
stock-based awards in accordance with the Stock Issuance
Program.
V.
Stock Subject to the Plan.
A.
The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired common stock, including shares repurchased
by the Corporation on the open market. Subject to any additional
shares authorized by the vote of the Board and approved by the
stockholders, the number of shares of common stock reserved for
issuance over the term of the Plan shall not exceed 7,400,000
shares. Any or all of the shares of common stock reserved for
issuance under the Plan shall be authorized for issuance pursuant
to Incentive Options or other Awards.
B. No
one person participating in the Plan may be granted Awards of
common stock having a Fair Market Value on the applicable grant
date(s) of more than One Million Dollars ($1,000,000) in the
aggregate per calendar year.
C.
Shares of common stock subject to outstanding Awards under the Plan
shall in no event become eligible for reissuance under the Plan,
whether as a result of expiration or termination of an Award,
cancellation or repurchase of unvested shares, tender of shares in
connection with a net/cashless exercise program, withholding of
shares to cover withholding taxes, or otherwise.
D. If
any change is made to the common stock by reason of any stock
split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding common
stock as a class without the Corporation’s receipt of
consideration, appropriate adjustments shall be made by the Plan
Administrator to (i) the maximum number and/or class of securities
issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one person may be granted Awards under the
Plan per calendar year, (iii) the number and/or class of securities
and the exercise or base price per share (or any other cash
consideration payable per share) in effect under each outstanding
Award under the Discretionary Grant Program, and (iv) the number
and/or class of securities subject to each outstanding Award under
the Stock Issuance Program and the cash consideration (if any)
payable per share thereunder. To the extent such adjustments are to
be made to outstanding Awards, those adjustments shall be effected
in a manner that shall preclude the enlargement or dilution of
rights and benefits under those Awards. The adjustments determined
by the Plan Administrator shall be final, binding and
conclusive.
VI.
Clawback Policy.
The
Plan Administrator shall, notwithstanding anything to the contrary
contained in any Award document or in any employment or other
agreement, have full power and authority, and is required, to
terminate any vested or unvested Award or require repayment to the
Corporation of the proceeds received by a participant arising from
any Award, to apply the Corporation’s Policy for Recoupment of
Incentive Compensation dated March 29, 2018, as such policy may be
amended by the Corporation from time to time, or any successor
“clawback” or similar policy adopted by the Corporation, including
any such policy or policy changes mandated by or implemented
pursuant to the Dodd-Frank Wall Street Reform and Consumer
Protection Act or the applicable listing requirements or rules and
regulations of The NASDAQ Capital Market, if applicable, and any
other stock exchange or other market on which common stock is then
quoted or listed for trading.
ARTICLE
TWO
DISCRETIONARY GRANT PROGRAM
I.
Option Terms.
Each
option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each
such document shall comply with the terms specified below. Each
document evidencing an Incentive Option shall, in addition, be
subject to the provisions of the Plan applicable to such
options.
A.
Exercise Price.
1.
The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than 85% of the Fair Market
Value per share of common stock on the option grant
date.
2.
The exercise price shall become immediately due upon exercise of
the option and shall be payable in one or more of the following
forms that the Plan Administrator may deem appropriate in each
individual instance:
(i)
cash or check made payable to the Corporation;
(ii)shares
of common stock valued at Fair Market Value on the Exercise Date
and held for the period (if any) necessary to avoid any additional
charges to the Corporation’s earnings for financial reporting
purposes; or
(iii)
to the extent the option is exercised for vested shares, through a
special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable instructions to (a)
a brokerage firm to effect the immediate sale of the purchased
shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares plus all
applicable federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such
exercise and (b) the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm to complete
the sale.
Except
to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made
on the Exercise Date.
B.
Exercise and Term of Options. Each option shall be
exercisable at such time or times, during such period and for such
number of shares as shall be determined by the Plan Administrator
and set forth in the documents evidencing the option. However, no
option shall have a term in excess of ten years measured from the
option grant date.
C.
Effect of Termination of Service.
1.
The following provisions shall govern the exercise of any options
held by the Optionee at the time of cessation of Service or
death:
(i)
Any option outstanding at the time of the Optionee’s cessation of
Service for any reason shall remain exercisable for such period of
time thereafter as shall be determined by the Plan Administrator
and set forth in the documents evidencing the option or as
otherwise specifically authorized by the Plan Administrator in its
sole discretion pursuant to an express written agreement with
Optionee, but no such option shall be exercisable after the
expiration of the option term.
(ii)
Any option held by the Optionee at the time of death and
exercisable in whole or in part at that time may be subsequently
exercised by the personal representative of the Optionee’s estate
or by the person or persons to whom the option is transferred
pursuant to the Optionee’s will or the laws of inheritance or by
the Optionee’s designated beneficiary or beneficiaries of that
option.
(iii)
During the applicable post-Service exercise period, the option may
not be exercised in the aggregate for more than the number of
vested shares for which that option is at the time exercisable. No
additional shares shall vest under the option following the
Optionee’s cessation of Service, except to the extent (if any)
specifically authorized by the Plan Administrator in its sole
discretion pursuant to an express written agreement with Optionee.
Upon the expiration of the applicable exercise period or (if
earlier) upon the expiration of the option term, the option shall
terminate and cease to be outstanding for any shares for which the
option has not been exercised.
2.
The Plan Administrator shall have complete discretion, exercisable
either at the time an option is granted or at any time while the
option remains outstanding, to:
(i)
extend the period of time for which the option is to remain
exercisable following the Optionee’s cessation of Service from the
limited exercise period otherwise in effect for that option to such
greater period of time as the Plan Administrator shall deem
appropriate, but in no event beyond the expiration of the option
term, and/or
(ii)
permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number
of vested shares of common stock for which such option is
exercisable at the time of the Optionee’s cessation of Service but
also with respect to one or more additional installments in which
the Optionee would have vested had the Optionee continued in
Service.
D.
Stockholder Rights. The holder of an option shall
have no stockholder rights with respect to the shares subject to
the option until such person shall have exercised the option, paid
the exercise price and become a holder of record of the purchased
shares.
E.
Repurchase Rights. The Plan Administrator shall have
the discretion to grant options that are exercisable for unvested
shares of common stock. Should the Optionee cease Service while
holding such unvested shares, the Corporation shall have the right
to repurchase, at the exercise price paid per share, any or all of
those unvested shares. The terms upon which such repurchase right
shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased
shares) shall be established by the Plan Administrator and set
forth in the document evidencing such repurchase right.
F.
Transferability of Options. The transferability of
options granted under the Plan shall be governed by the following
provisions:
(i)
Incentive Options. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the
Optionee and shall not be assignable or transferable other than by
will or the laws of inheritance following the Optionee’s
death.
(ii)
Non-Statutory Options. Non-Statutory Options shall be
subject to the same limitation on transfer as Incentive Options,
except that the Plan Administrator may structure one or more
Non-Statutory Options so that the option may be assigned in whole
or in part during the Optionee’s lifetime to one or more Family
Members of the Optionee or to a trust established exclusively for
the Optionee and/or one or more such Family Members, to the extent
such assignment is in connection with the Optionee’s estate plan or
pursuant to a domestic relations order. The assigned portion may
only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The
terms applicable to the assigned portion shall be the same as those
in effect for the option immediately prior to such assignment and
shall be set forth in such documents issued to the assignee as the
Plan Administrator may deem appropriate.
(iii)
Beneficiary Designations. Notwithstanding the
foregoing, the Optionee may designate one or more persons as the
beneficiary or beneficiaries of his or her outstanding options
under this Article Two (whether Incentive Options or
Non-Statutory Options), and those options shall, in accordance with
such designation, automatically be transferred to such beneficiary
or beneficiaries upon the Optionee’s death while holding those
options. Such beneficiary or beneficiaries shall take the
transferred options subject to all the terms and conditions of the
applicable agreement evidencing each such transferred option,
including (without limitation) the limited time period during which
the option may be exercised following the Optionee’s
death.
II.
Incentive Options.
The
terms specified below, together with any additions, deletions or
changes thereto imposed from time to time pursuant to the
provisions of the Code governing Incentive Options, shall be
applicable to all Incentive Options. Except as modified by the
provisions of this Section II, all the provisions of
Articles One, Two and Four shall be applicable to Incentive
Options. Options that are specifically designated as Non-Statutory
Options when issued under the Plan shall not be subject to the
terms of this Section II.
A.
Eligibility. Incentive Options may only be granted to
Employees.
B.
Exercise Price. The exercise price per share shall
not be less than 100% of the Fair Market Value per share of common
stock on the option grant date.
C.
Dollar Limitation. The aggregate Fair Market Value of
the shares of common stock (determined as of the respective date or
dates of grant) for which one or more options granted to any
Employee under the Plan (or any other option plan of the
Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Options during any one calendar
year shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds two or more such
options which become exercisable for the first time in the same
calendar year, then for purposes of the foregoing limitation on the
exercisability of those options as Incentive Options, such options
shall be deemed to become first exercisable in that calendar year
on the basis of the chronological order in which they were granted,
except to the extent otherwise provided under applicable law or
regulation.
D.
10% Stockholder. If any Employee to whom an Incentive
Option is granted is a 10% Stockholder, then the exercise price per
share shall not be less than 110% of the Fair Market Value per
share of common stock on the option grant date, and the option term
shall not exceed five years measured from the option grant
date.
III.
Stock Appreciation Rights.
A.
Authority. The Plan Administrator shall have full
power and authority, exercisable in its sole discretion, to grant
stock appreciation rights in accordance with this
Section III to selected Optionees or other individuals
eligible to receive option grants under the Discretionary Grant
Program.
B.
Types. Three types of stock appreciation rights shall
be authorized for issuance under this Section III: (i)
tandem stock appreciation rights (“Tandem Rights”), (ii)
standalone stock appreciation rights (“Standalone Rights”)
and (iii) limited stock appreciation rights (“Limited
Rights”).
C.
Tandem Rights. The following terms and conditions
shall govern the grant and exercise of Tandem Rights.
1.
One or more Optionees may be granted a Tandem Right, exercisable
upon such terms and conditions as the Plan Administrator may
establish, to elect between the exercise of the underlying stock
option for shares of common stock or the surrender of that option
in exchange for a distribution from the Corporation in an amount
equal to the excess of (i) the Fair Market Value (on the option
surrender date) of the number of shares in which the Optionee is at
the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate exercise price payable for
such vested shares.
2. No
such option surrender shall be effective unless it is approved by
the Plan Administrator, either at the time of the actual option
surrender or at any earlier time. If the surrender is so approved,
then the distribution to which the Optionee shall accordingly
become entitled under this Section III may be made in
shares of common stock valued at Fair Market Value on the option
surrender date, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem
appropriate.
3. If
the surrender of an option is not approved by the Plan
Administrator, then the Optionee shall retain whatever rights the
Optionee had under the surrendered option (or surrendered portion
thereof) on the option surrender date and may exercise such rights
at any time prior to the later of (i) five business days after the
receipt of the rejection notice or (ii) the last day on which the
option is otherwise exercisable in accordance with the terms of the
instrument evidencing such option, but in no event may such rights
be exercised more than ten years after the date of the option
grant.
D.
Standalone Rights. The following terms and conditions
shall govern the grant and exercise of Standalone Rights under this
Article Two:
1.
One or more individuals eligible to participate in the
Discretionary Grant Program may be granted a Standalone Right not
tied to any underlying option under this Discretionary Grant
Program. The Standalone Right shall relate to a specified number of
shares of common stock and shall be exercisable upon such terms and
conditions as the Plan Administrator may establish. In no event,
however, may the Standalone Right have a maximum term in excess of
ten years measured from the grant date. Upon exercise of the
Standalone Right, the holder shall be entitled to receive a
distribution from the Corporation in an amount equal to the excess
of (i) the aggregate Fair Market Value (on the exercise date) of
the shares of common stock underlying the exercised right over (ii)
the aggregate base price in effect for those shares.
2.
The number of shares of common stock underlying each Standalone
Right and the base price in effect for those shares shall be
determined by the Plan Administrator in its sole discretion at the
time the Standalone Right is granted. In no event, however, may the
base price per share be less than the Fair Market Value per
underlying share of common stock on the grant date.
3.
Standalone Rights shall be subject to the same transferability
restrictions applicable to Non-Statutory Options and may not be
transferred during the holder’s lifetime, except to one or more
Family Members of the holder or to a trust established exclusively
for the holder and/or such Family Members, to the extent such
assignment is in connection with the holder’s estate plan or
pursuant to a domestic relations order covering the Standalone
Right as marital property. In addition, one or more beneficiaries
may be designated for an outstanding Standalone Right in accordance
with substantially the same terms and provisions as set forth in
Section I.F of this Article Two.
4.
The distribution with respect to an exercised Standalone Right may
be made in shares of common stock valued at Fair Market Value on
the exercise date, in cash, or partly in shares and partly in cash,
as the Plan Administrator shall in its sole discretion deem
appropriate.
5.
The holder of a Standalone Right shall have no stockholder rights
with respect to the shares subject to the Standalone Right unless
and until such person shall have exercised the Standalone Right and
become a holder of record of shares of common stock issued upon the
exercise of such Standalone Right.
E.
Limited Rights. The following terms and conditions
shall govern the grant and exercise of Limited Rights under this
Article Two:
1.
One or more Section 16 Insiders may, in the Plan
Administrator’s sole discretion, be granted Limited Rights with
respect to their outstanding options under this
Article Two.
2.
Upon the occurrence of a Hostile Take-Over, the Section 16
Insider shall have the unconditional right (exercisable for a
30-day period following such Hostile Take-Over) to surrender each
option with such a Limited Right to the Corporation. The
Section 16 Insider shall in return be entitled to a cash
distribution from the Corporation in an amount equal to the excess
of (i) the Take-Over Price of the number of shares in which the
Optionee is at the time vested under the surrendered option (or
surrendered portion thereof) over (ii) the aggregate exercise price
payable for those vested shares. Such cash distribution shall be
made within five days following the option surrender
date.
3.
The Plan Administrator shall pre-approve, at the time such Limited
Right is granted, the subsequent exercise of that right in
accordance with the terms of the grant and the provisions of this
Section III. No additional approval of the Plan
Administrator or the Board shall be required at the time of the
actual option surrender and cash distribution. Any unsurrendered
portion of the option shall continue to remain outstanding and
become exercisable in accordance with the terms of the instrument
evidencing such grant.
F.
Post-Service Exercise. The provisions governing the
exercise of Tandem, Standalone and Limited Stock Appreciation
Rights following the cessation of the recipient’s Service or the
recipient’s death shall be substantially the same as those set
forth in Section I.C of this Article Two
for the options granted under the Discretionary Grant
Program.
IV.
Change in Control/ Hostile Take-Over.
A. No
Award outstanding under the Discretionary Grant Program at the time
of a Change in Control shall vest and become exercisable on an
accelerated basis if and to the extent that: (i) such Award is, in
connection with the Change in Control, assumed by the successor
corporation (or parent thereof) or otherwise continued in full
force and effect pursuant to the terms of the Change in Control
transaction, (ii) such Award is replaced with a cash retention
program of the successor corporation that preserves the spread
existing at the time of the Change in Control on the shares of
common stock as to which the Award is not otherwise at that time
vested and exercisable and provides for subsequent payout of that
spread in accordance with the same exercise/vesting schedule
applicable to those shares, or (iii) the acceleration of such Award
is subject to other limitations imposed by the Plan Administrator.
However, if none of the foregoing conditions are satisfied, each
Award outstanding under the Discretionary Grant Program at the time
of the Change in Control but not otherwise vested and exercisable
as to all the shares at the time subject to that Award shall
automatically accelerate so that each such Award shall, immediately
prior to the effective date of the Change in Control, vest and
become exercisable as to all the shares of common stock at the time
subject to that Award and may be exercised as to any or all of
those shares as fully vested shares of common stock.
B.
All outstanding repurchase rights under the Discretionary Grant
Program shall also terminate automatically, and the shares of
common stock subject to those terminated rights shall immediately
vest in full, in the event of any Change in Control, except to the
extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) or otherwise continue in full force
and effect pursuant to the terms of the Change in Control
transaction or (ii) such accelerated vesting is precluded by other
limitations imposed by the Plan Administrator.
C.
Immediately following the consummation of the Change in Control,
all outstanding Awards under the Discretionary Grant Program shall
terminate and cease to be outstanding, except to the extent assumed
by the successor corporation (or parent thereof) or otherwise
expressly continued in full force and effect pursuant to the terms
of the Change in Control transaction.
D.
Each option that is assumed in connection with a Change in Control
or otherwise continued in effect shall be appropriately adjusted,
immediately after such Change in Control, to apply to the number
and class of securities that would have been issuable to the
Optionee in consummation of such Change in Control had the option
been exercised immediately prior to such Change in Control. In the
event outstanding Standalone Rights are to be assumed in connection
with a Change in Control transaction or otherwise continued in
effect, the shares of common stock underlying each such Standalone
Right shall be adjusted immediately after such Change in Control to
apply to the number and class of securities into which those shares
of common stock would have been converted in consummation of such
Change in Control had those shares actually been outstanding at
that time. Appropriate adjustments to reflect such Change in
Control shall also be made to (i) the exercise price payable per
share under each outstanding option, provided the aggregate
exercise price payable for such securities shall remain the same,
(ii) the base price per share in effect under each outstanding
Standalone Right, provided the aggregate base price shall remain
the same, (iii) the maximum number and/or class of securities
available for issuance over the remaining term of the Plan, and
(iv) the maximum number and/or class of securities for which any
one person may be granted Awards under the Plan per calendar year.
To the extent the actual holders of the Corporation’s outstanding
common stock receive cash consideration for their common stock in
consummation of the Change in Control, the successor corporation
may, in connection with the assumption or continuation of the
outstanding Awards under the Discretionary Grant Program,
substitute, for the securities underlying those assumed Awards, one
or more shares of its own common stock with a fair market value
equivalent to the cash consideration paid per share of common stock
in such Change in Control transaction.
E.
The Plan Administrator shall have full power and authority to
structure one or more outstanding Awards under the Discretionary
Grant Program so that those Awards shall immediately vest and
become exercisable as to all of the shares at the time subject to
those Awards in the event the Optionee’s Service is subsequently
terminated by reason of an Involuntary Termination within a
designated period (not to exceed 18 months) following the effective
date of any Change in Control or a Hostile Take-Over in which those
Awards do not otherwise vest on an accelerated basis. Any Awards so
accelerated shall remain exercisable as to fully vested shares
until the expiration or sooner termination of their
term.
F.
The portion of any Incentive Option accelerated in connection with
a Change in Control shall remain exercisable as an Incentive Option
only to the extent the applicable One Hundred Thousand Dollar
($100,000) limitation is not exceeded. To the extent such dollar
limitation is exceeded, the accelerated portion of such option
shall be exercisable as a Non-Statutory Option under the federal
tax laws.
G.
Awards outstanding under the Discretionary Grant Program shall in
no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
ARTICLE
THREE
STOCK ISSUANCE PROGRAM
I.
Stock Issuance Terms.
A.
Issuances. Shares of common stock may be issued under
the Stock Issuance Program through direct and immediate issuances
without any intervening option grants. Each such stock issuance
shall be evidenced by a Stock Issuance Agreement that complies with
the terms specified below. Shares of common stock may also be
issued under the Stock Issuance Program pursuant to restricted
stock awards or restricted stock units, awarded by and at the
discretion of the Plan Administrator, that entitle the recipients
to receive the shares underlying those awards or units upon the
attainment of designated performance goals and/or the satisfaction
of specified Service requirements or upon the expiration of a
designated time period following the vesting, subject to a minimum
initial vesting period of one (1) year, of those awards or
units.
B.
Issue Price.
1.
The price per share at which shares of common stock may be issued
under the Stock Issuance Program shall be fixed by the Plan
Administrator, but shall not be less than 100% of the Fair Market
Value per share of common stock on the issuance date.
2.
Shares of common stock may be issued under the Stock Issuance
Program for any of the following items of consideration that the
Plan Administrator may deem appropriate in each individual
instance:
(i)
cash or check made payable to the Corporation;
(ii)
past services rendered to the Corporation (or any Parent or
Subsidiary); or
(iii)
any other valid form of consideration permissible under the
Delaware Corporations Code at the time such shares are
issued.
C.
Vesting Provisions.
1.
Shares of common stock issued under the Stock Issuance Program may,
in the discretion of the Plan Administrator, vest in one or more
installments over the Participant’s period of Service, subject to a
minimum initial vesting period of one (1) year, and/or upon
attainment of specified performance objectives. The elements of the
vesting schedule applicable to any unvested shares of common stock
issued under the Stock Issuance Program shall be determined by the
Plan Administrator and incorporated into the Stock Issuance
Agreement. Shares of common stock may also be issued under the
Stock Issuance Program pursuant to restricted stock awards or
restricted stock units that entitle the recipients to receive the
shares underlying those awards and/or units upon the attainment of
designated performance goals or the satisfaction of specified
Service requirements or upon the expiration of a designated time
period, subject to a minimum initial vesting period of one (1)
year, following the vesting of those awards or units, including
(without limitation) a deferred distribution date following the
termination of the Participant’s Service.
2.
The Plan Administrator shall also have the discretionary authority,
consistent with Code Section 162(m), to structure one or more
Awards under the Stock Issuance Program so that the shares of
common stock subject to those Awards shall vest (or vest and become
issuable) upon the achievement of certain pre-established corporate
performance goals based on one or more of the following criteria:
(i) return on total stockholders’ equity; (ii) net income per share
of common stock; (iii) net income or operating income; (iv)
earnings before interest, taxes, depreciation, amortization and
stock-compensation costs, or operating income before depreciation
and amortization; (v) sales or revenue targets; (vi) return on
assets, capital or investment; (vii) cash flow; (viii) market
share; (ix) cost reduction goals; (x) budget comparisons; (xi)
implementation or completion of projects or processes strategic or
critical to the Corporation’s business operations; (xii) measures
of customer satisfaction; (xiii) any combination of, or a specified
increase in, any of the foregoing; and (xiv) the formation of joint
ventures, research and development collaborations, marketing or
customer service collaborations, or the completion of other
corporate transactions intended to enhance the Corporation’s
revenue or profitability or expand its customer base; provided,
however, that for purposes of items (ii), (iii) and (vii) above,
the Plan Administrator may, at the time the Awards are made,
specify certain adjustments to such items as reported in accordance
with generally accepted accounting principles in the U.S.
(“GAAP”), which will exclude from the calculation of those
performance goals one or more of the following: certain charges
related to acquisitions, stock-based compensation, employer payroll
tax expense on certain stock option exercises, settlement costs,
restructuring costs, gains or losses on strategic investments,
non-operating gains or losses, certain other non-cash charges,
valuation allowance on deferred tax assets, and the related income
tax effects, purchases of property and equipment, and any
extraordinary non-recurring items as described in Accounting
Principles Board Opinion No. 30 or its successor, provided that
such adjustments are in conformity with those reported by the
Corporation on a non-GAAP basis. In addition, such performance
goals may be based upon the attainment of specified levels of the
Corporation’s performance under one or more of the measures
described above relative to the performance of other entities and
may also be based on the performance of any of the Corporation’s
business groups or divisions thereof or any Parent or Subsidiary.
Performance goals may include a minimum threshold level of
performance below which no award will be earned, levels of
performance at which specified portions of an award will be earned,
and a maximum level of performance at which an award will be fully
earned. The Plan Administrator may provide that, if the actual
level of attainment for any performance objective is between two
specified levels, the amount of the award attributable to that
performance objective shall be interpolated on a straight-line
basis.
3.
Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) that
the Participant may have the right to receive with respect to the
Participant’s unvested shares of common stock by reason of any
stock dividend, stock split, recapitalization, combination of
shares, exchange of shares or other change affecting the
outstanding common stock as a class without the Corporation’s
receipt of consideration shall be issued subject to (i) the same
vesting requirements applicable to the Participant’s unvested
shares of common stock and (ii) such escrow arrangements as the
Plan Administrator shall deem appropriate.
4.
The Participant shall have full stockholder rights with respect to
any shares of common stock issued to the Participant under the
Stock Issuance Program, whether or not the Participant’s interest
in those shares is vested; provided, however, that the Corporation
shall withhold and retain any dividends on unvested shares until
such time as the shares vest, if at all, and shall thereafter
promptly pay to the Participant any such dividends withheld and
retained or, if the shares do not vest, return any such dividends
to the corporate treasury. Accordingly, the Participant shall have
the right to vote all such shares but shall not receive any cash
dividends paid on any unvested shares unless and until the shares
vest. The Participant shall not have any stockholder rights with
respect to the shares of common stock subject to a restricted stock
unit award until that award vests and the shares of common stock
are actually issued thereunder. However, dividend-equivalent units
may be paid or credited, either in cash or in actual or phantom
shares of common stock, on outstanding restricted stock unit or
restricted stock awards, subject to such terms and conditions as
the Plan Administrator may deem appropriate and subject to the
withholding and retention of dividends with respect to any unvested
awards on the same terms as set forth above.
5.
Should the Participant cease to remain in Service while holding one
or more unvested shares of common stock issued under the Stock
Issuance Program or should the performance objectives not be
attained with respect to one or more such unvested shares of common
stock, then except as set forth in Section I.C.6 of this
Article Three, those shares shall be immediately surrendered
to the Corporation for cancellation, and the Participant shall have
no further stockholder rights with respect to those shares. To the
extent the surrendered shares were previously issued to the
Participant for consideration paid in cash, cash equivalent or
otherwise, the Corporation shall repay to the Participant the same
amount and form of consideration as the Participant paid for the
surrendered shares.
6. In
the event of the Participant’s retirement, the Plan Administrator
may in its discretion waive the surrender and cancellation of one
or more unvested shares of common stock that would otherwise occur
upon the cessation of the Participant’s Service. Any such waiver
shall result in the immediate vesting of the Participant’s interest
in the shares of common stock as to which the waiver applies. Such
waiver may be effected at any time, whether before or after the
Participant’s cessation of Service as a result of the Participant’s
retirement. No vesting requirements tied to the attainment of
performance objectives may be waived with respect to shares that
were intended at the time of issuance to qualify as
performance-based compensation under Code Section 162(m),
except in the event of the Participant’s Involuntary Termination or
as otherwise provided in Section II.E of this
Article Three.
7.
Outstanding restricted stock awards or restricted stock units under
the Stock Issuance Program shall automatically terminate, and no
shares of common stock shall actually be issued in satisfaction of
those awards or units, if the performance goals or Service
requirements established for such awards or units are not attained
or satisfied.
II.
Change in Control/ Hostile Take-Over.
A.
All of the Corporation’s outstanding repurchase rights under the
Stock Issuance Program shall terminate automatically, and all the
shares of common stock subject to those terminated rights shall
immediately vest in full, in the event of any Change in Control,
except to the extent (i) those repurchase rights are to be assigned
to the successor corporation (or parent thereof) or otherwise
continued in full force and effect pursuant to the express terms of
the Change in Control transaction or (ii) such accelerated vesting
is precluded by other limitations imposed in the Stock Issuance
Agreement.
B.
Each outstanding Award under the Stock Issuance Program that is
assumed in connection with a Change in Control or otherwise
continued in effect shall be adjusted immediately after the
consummation of that Change in Control to apply to the number and
class of securities into which the shares of common stock subject
to the Award immediately prior to the Change in Control would have
been converted in consummation of such Change in Control had those
shares actually been outstanding at that time, and appropriate
adjustments shall also be made to the cash consideration (if any)
payable per share thereunder, provided the aggregate amount of such
consideration shall remain the same. If any such Award is not so
assumed or otherwise continued in effect or replaced with a cash
retention program which preserves the Fair Market Value of the
shares underlying the Award at the time of the Change in Control
and provides for the subsequent payout of that value in accordance
with the vesting schedule in effect for the Award at the time of
such Change in Control, such Award shall vest, and the shares of
common stock subject to that Award shall be issued as fully-vested
shares, immediately prior to the consummation of the Change in
Control.
C.
The Plan Administrator shall have full power and authority to
structure one or more outstanding Awards under the Stock Issuance
Program so that the shares of common stock subject to those Awards
shall immediately vest (or vest and become issuable) as to all of
the shares at the time subject to those Awards in the event the
Participant’s Service is subsequently terminated by reason of an
Involuntary Termination within a designated period (not to exceed
18 months) following the effective date of any Change in Control or
a Hostile Take-Over in which those Awards do not otherwise vest on
an accelerated basis.
D.
The Plan Administrator’s authority under Paragraph C of this
Section II shall also extend to any Award intended to
qualify as performance-based compensation under Code
Section 162(m), even though the automatic vesting of those
Awards pursuant to Paragraph C of this Section II may
result in their loss of performance-based status under Code
Section 162(m).
E.
Awards outstanding under the Stock Issuance Program shall in no way
affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
ARTICLE
FOUR
MISCELLANEOUS
I.
Tax Withholding.
A.
The Corporation’s obligation to deliver shares of common stock upon
the issuance, exercise or vesting of Awards under the Plan shall be
subject to the satisfaction of all applicable federal, state and
local income and employment tax withholding
requirements.
B.
Subject to applicable laws, rules and regulations and policies of
the Corporation, the Plan Administrator may, in its discretion,
provide any or all Optionees or Participants to whom Awards are
made under the Plan with the right to utilize any or all of the
following methods to satisfy all or part of the Withholding Taxes
to which those holders may become subject in connection with the
issuance, exercise or vesting of those Awards.
(i)
Stock Withholding: The election to have the
Corporation withhold, from the shares of common stock otherwise
issuable upon the issuance, exercise or vesting of those Awards a
portion of those shares with an aggregate Fair Market Value equal
to the percentage of the Withholding Taxes (not to exceed 100%)
designated by the Optionee or Participant and make a cash payment
equal to such Fair Market Value directly to the appropriate taxing
authorities on such individual’s behalf.
(ii)
Stock Delivery: The election to deliver to the
Corporation, at the time the Award is issued, exercised or vests,
one or more shares of common stock previously acquired by such the
Optionee or Participant (other than in connection with the
issuance, exercise or vesting triggering the Withholding Taxes)
with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed 100%) designated by such holder.
The shares of common stock so delivered shall not be added to the
shares of common stock authorized for issuance under the
Plan.
(iii)
Sale and Remittance: The election to deliver to the
Corporation, to the extent the Award is issued or exercised for
vested shares, through a special sale and remittance procedure
pursuant to which the Optionee or Participant shall concurrently
provide irrevocable instructions to a brokerage firm to effect the
immediate sale of the purchased or issued shares and remit to the
Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the Withholding Taxes required to
be withheld by the Corporation by reason of such issuance, exercise
or vesting.
II.
Share Escrow/Legends.
Unvested
shares issued under the Plan may, in the Plan Administrator’s
discretion, be held in escrow by the Corporation until the
Participant’s interest in such shares vests or may be issued
directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.
III.
Effective Date and Term of the Plan.
A.
The Plan was initially adopted by the Board on March 25, 2016 and
ratified and approved by the Corporation’s stockholders on June 16,
2016. The Plan was amended by the Board on March 29, 2018, which
was ratified and approved by the Corporation’s stockholders on June
14, 2018, to increase the number of shares authorized for issuance
under the Plan from 1,150,000 shares to 3,650,000 shares and to
implement other updates. The Plan was further amended by the Board
on August 6, 2019, which was ratified and approved by the
Corporation’s stockholders on November 7, 2019, to increase the
number of shares authorized for issuance under the Plan from
3,650,000 shares to 5,650,000 shares and to implement other
updates. The Plan was further amended by the Board on September 2,
2020, which was ratified and approved by the Corporation’s
stockholders on November 18, 2020, to increase the number of shares
authorized for issuance under the Plan from 5,650,000 shares to
7,400,000 shares. The Plan was further amended by the Board on
March 30, 2022, which was ratified and approved by the
Corporation’s stockholders on June 23, 2022, to increase the number
of shares authorized for issuance under the Plan from 7,400,000
shares to 8,900,000 shares.
B.
The Plan shall become effective on the Plan Effective Date. Awards
may be granted under the Discretionary Grant Program and the Stock
Issuance Program at any time on or after the Plan Effective
Date.
C.
The Plan shall terminate upon the earliest to occur of (i) March
25, 2026, (ii) the date on which all shares available for issuance
under the Plan shall have been issued as fully-vested shares, (iii)
the termination of all outstanding Awards in connection with a
Change in Control, or (iv) such other date as the Board in its sole
discretion terminates the Plan. If the Plan terminates on March 25,
2026 or on such other date as the Board terminates the Plan, then
all Awards outstanding at that time shall continue to have force
and effect in accordance with the provisions of the documents
evidencing such Awards.
IV.
Amendment, Suspension or Termination of the
Plan.
The
Board may suspend or terminate the Plan at any time, without
notice, and in its sole discretion. The Board shall have complete
and exclusive power and authority to amend or modify the Plan in
any or all respects. However, no such amendment or modification
shall materially impair the rights and obligations with respect to
Awards at the time outstanding under the Plan unless the Optionee
or the Participant consents to such amendment or modification. In
addition, stockholder approval will be required for any amendment
to the Plan that (i) materially increases the number of shares of
common stock available for issuance under the Plan, (ii) materially
expands the class of individuals eligible to receive option grants
or other awards under the Plan, (iii) materially increases the
benefits accruing to the Optionees and Participants under the Plan
or materially reduces the price at which shares of common stock may
be issued or purchased under the Plan, (iv) materially extends the
term of the Plan, (v) expands the types of awards available for
issuance under the Plan, or (vi) is required under applicable laws,
rules or regulations to be approved by stockholders.
V.
Use of Proceeds.
Any
cash proceeds received by the Corporation from the sale of shares
of common stock under the Plan shall be used for general corporate
purposes.
VI.
Regulatory Approvals.
A.
The implementation of the Plan, the grant of any Award and the
issuance of shares of common stock in connection with the issuance,
exercise or vesting of any Award made under the Plan shall be
subject to the Corporation’s procurement of all approvals and
permits required by regulatory authorities having jurisdiction over
the Plan, the Awards made under the Plan and the shares of common
stock issuable pursuant to those Awards.
B. No
shares of common stock or other assets shall be issued or delivered
under the Plan unless and until there shall have been compliance
with all applicable requirements of federal and state securities
laws, including the filing and effectiveness of the Form S-8
registration statement for the shares of common stock issuable
under the Plan, and all applicable listing requirements of The
NASDAQ Capital Market, if applicable, and any other stock exchange
or other market on which common stock is then quoted or listed for
trading.
VII.
No Employment/Service Rights.
Nothing
in the Plan shall confer upon the Optionee or the Participant any
right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the
Corporation (or any Parent or Subsidiary employing or retaining
such person) or of the Optionee or the Participant, which rights
are hereby expressly reserved by each, to terminate such person’s
Service at any time for any reason, with or without
cause.
VIII.
Non-Exclusivity of the Plan.
Nothing
contained in the Plan is intended to amend, modify, or rescind any
previously approved compensation plans, programs or options entered
into by the Corporation. This Plan shall be construed to be in
addition to and independent of any and all other arrangements.
Neither the adoption of the Plan by the Board nor the submission of
the Plan to the stockholders of the Corporation for approval shall
be construed as creating any limitations on the power or authority
of the Board to adopt, with or without stockholder approval, such
additional or other compensation arrangements as the Board may from
time to time deem desirable.
IX.
Governing Law.
All
questions and obligations under the Plan and agreements issued
pursuant to the Plan shall be construed and enforced in accordance
with the laws of the State of Delaware.
X.
Information to Optionees and Participants.
Optionees
and Participants under the Plan who do not otherwise have access to
financial statements of the Corporation will receive the
Corporation’s financial statements at least annually.
APPENDIX
The
following definitions shall be in effect under the Plan:
A.
“Award” means any of the following stock or stock-based
awards authorized for issuance or grant under the Plan: stock
option, stock appreciation right, direct stock issuance, restricted
stock or restricted stock unit award or other stock-based
award.
B.
“Board” means the Corporation’s board of
directors.
C.
“Change in Control” shall be deemed to have occurred if, in
a single transaction or series of related transactions:
(i)
any person (as such term is used in Section 13(d) and 14(d) of the
1934 Act, or persons acting as a group, other than a trustee or
fiduciary holding securities under an employment benefit program,
is or becomes a “beneficial owner” (as defined in Rule 13-3 under
the 1934 Act), directly or indirectly of securities of the
Corporation representing 51% or more of the combined voting power
of the Corporation, or
(ii)
there is a merger, consolidation, or other business combination
transaction of the Corporation with or into another corporation,
entity or person, other than a transaction in which the holders of
at least a majority of the shares of voting capital stock of the
Corporation outstanding immediately prior to such transaction
continue to hold (either by such shares remaining outstanding or by
their being converted into shares of voting capital stock of the
surviving entity) a majority of the total voting power represented
by the shares of voting capital stock of the Corporation (or
surviving entity) outstanding immediately after such transaction,
or
(iii)
all or substantially all of the Corporation’s assets are
sold.
D.
“Code” means the Internal Revenue Code of 1986, as
amended.
E.
“common stock” means the Corporation’s common stock, $0.001
par value per share.
F.
“Compensation Committee” means a committee of the Board
comprised solely of two or more Eligible Directors who are
appointed by the Board to administer the Discretionary Grant and
Stock Issuance Programs, who are “outside directors” within the
meaning of Section 162(m) of the Code and who are “non-employee
directors” within the meaning of Rule 16b-3(b)(3)(i).
G.
“Consultant” means a consultant or other independent advisor
who is under written contract with the Corporation (or any Parent
or Subsidiary) to provide consulting or advisory services to the
Corporation (or any Parent or Subsidiary) and whose securities
issued pursuant to the Plan could be registered on Form
S-8.
H.
“Corporation” means Alto Ingredients, Inc., a Delaware
corporation, and any corporate successor to all or substantially
all of the assets or voting stock of Alto Ingredients, Inc. that
shall by appropriate action adopt the Plan.
I.
“Discretionary Grant Program” means the discretionary grant
program in effect under Article Two of the Plan
pursuant to which stock options and stock appreciation rights may
be granted to one or more eligible individuals.
J.
“Eligible Director” means a Board member who is not, at the
time of such determination, an employee of the Corporation (or any
Parent or Subsidiary).
K.
“Employee” means an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control
and direction of the employer entity as to both the work to be
performed and the manner and method of performance.
L.
“Exercise Date” means the date on which the Corporation
shall have received written notice of the option
exercise.
M.
“Fair Market Value” per share of common stock on any
relevant date shall be determined in accordance with the following
provisions:
(i)
If the common stock is at the time traded on The NASDAQ Capital
Market, then the Fair Market Value shall be the closing selling
price per share of common stock at the close of regular hours
trading (i.e., before after- hours trading begins) on The NASDAQ
Capital Market on the date in question, as such price is reported
by the National Association of Securities Dealers. If there is no
closing selling price for the common stock on the date in question,
then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
(ii)
If the common stock is not traded on The NASDAQ Capital Market but
is at the time listed or quoted on any other market or exchange,
then the Fair Market Value shall be the closing selling price per
share of common stock at the close of regular hours trading (i.e.,
before after-hours trading begins) on the date in question on the
market or exchange determined by the Plan Administrator to be the
primary market for the common stock, as such price is officially
quoted in the composite tape of transactions on such exchange. If
there is no closing selling price for the common stock on the date
in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation
exists.
(iii)
In the absence of an established market for the common stock, the
Fair Market Value shall be determined in good faith by the Plan
Administrator.
In
addition, with respect to any Incentive Option, the Fair Market
Value shall be determined in a manner consistent with any
regulations issued by the Secretary of the Treasury for the purpose
of determining fair market value of securities subject to an
Incentive Option plan under the Code.
N.
“Family Member” means, with respect to a particular Optionee
or Participant, any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law, including adoptive
relationships.
O.
“Hostile Take-Over” means either of the following events
effecting a change in control or ownership of the
Corporation:
(i)
the acquisition, directly or indirectly, by any person or related
group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under
common control with, the Corporation) of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than 50% of the total combined voting power of the
Corporation’s outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation’s stockholders that
the Board does not recommend such stockholders to accept,
or
(ii)
a change in the composition of the Board over a period of 36
consecutive months or less such that a majority of the Board
members ceases, by reason of one or more contested elections for
Board membership, to be composed of individuals who either (A) have
been Board members continuously since the beginning of such period
or (B) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time the
Board approved such election or nomination.
P.
“Incentive
Option” means an option that satisfies the requirements of Code
Section 422.
Q.
“Involuntary Termination” means the termination of the
Service of any individual that occurs by reason of:
(i)
if such individual is providing services to the Corporation
pursuant to a written contract that defines “cause” or “misconduct”
or similar reasons such individual could be dismissed or discharged
by the Corporation, then such individual’s involuntary dismissal or
discharge by the Corporation other than for any of such reasons and
other than for Misconduct shall be an Involuntary
Termination;
(ii)
if such individual is not providing services to the Corporation
pursuant to a written contract that defines “cause” or “misconduct”
or similar reasons such individual could be dismissed or discharged
by the Corporation, then such individual’s involuntary dismissal or
discharge by the Corporation for reasons other than Misconduct
shall be an Involuntary Termination;
(iii)
if such individual is providing services to the Corporation
pursuant to a written contract that defines “good reason” or
similar reasons such individual could voluntarily resign, then such
individual’s voluntary resignation for any of such reasons shall be
an Involuntary Termination; or
(iv)
if such individual is providing services to the Corporation
pursuant to a written contract that does not define “good reason”
or similar reasons such individual could voluntarily resign, then
such individual’s voluntary resignation following (A) a change in
his or her position with the Corporation that materially reduces
his or her duties and responsibilities or the level of management
to which he or she reports, (B) a reduction in his or her level of
compensation (including base salary, fringe benefits and target
bonus under any corporate-performance based bonus or incentive
programs) by more than 15% or (C) a relocation of such individual’s
place of employment by more than 50 miles, provided and only if
such change, reduction or relocation is effected by the Corporation
without the individual’s consent, shall be an Involuntary
Termination.
R.
“Misconduct” means the commission of: any act of fraud,
embezzlement or dishonesty by the Optionee or Participant; any
unauthorized use or disclosure by such person of confidential
information or trade secrets of the Corporation (or any Parent or
Subsidiary); any illegal or improper conduct or intentional
misconduct, gross negligence or recklessness by such person that
has adversely affected or, in the determination of the Plan
Administrator, is likely to adversely affect, the business,
reputation, goodwill or affairs of the Corporation (or any Parent
or Subsidiary) in a material manner; any conduct that provides a
basis for the Corporation to terminate for “cause,” “misconduct” or
similar reasons the written contract pursuant to which the Optionee
or Participant is providing Services to the Corporation;
resignation by the Optionee or Participant on fewer than 30 days’
prior written notice and in violation of an agreement to remain in
Service of the Corporation, in anticipation of a termination for
“cause,” “misconduct” or similar reasons under the agreement, or in
lieu of a formal discharge for “cause,” “misconduct” or similar
reasons. The foregoing definition shall not in any way preclude or
restrict the right of the Corporation (or any Parent or Subsidiary)
to discharge or dismiss any Optionee, Participant or other person
in the Service of the Corporation (or any Parent or Subsidiary) for
any other acts or omissions, but such other acts or omissions shall
not be deemed, for purposes of the Plan, to constitute grounds for
termination for Misconduct.
S.
“1934 Act” means the Securities Exchange Act of 1934, as
amended.
T.
“Non-Statutory Option” means an option not intended to
satisfy the requirements of Code Section 422.
U.
“Optionee” means any person to whom an option is granted
under the Discretionary Grant Program.
V.
“Parent” means any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation,
provided each corporation in the unbroken chain (other than the
Corporation) owns, at the time of the determination, stock
possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such
chain.
W.
“Participant” means any person who is issued shares of
common stock or restricted stock units or other stock-based awards
under the Stock Issuance Program.
X.
“Permanent Disability” or “Permanently Disabled”
means the inability of the Optionee or the Participant to engage in
any substantial gainful activity by reason of any medically
determinable physical or mental impairment expected to result in
death or to be of continuous duration of twelve months or
more.
Y.
“Plan” means the Corporation’s 2016 Stock Incentive Plan, as
set forth in this document.
Z.
“Plan Administrator” means the particular entity, whether
the Compensation Committee or the Board, which is authorized to
administer the Discretionary Grant and Stock Issuance Programs with
respect to one or more classes of eligible persons, to the extent
such entity is carrying out its administrative functions under
those programs with respect to the persons then subject to its
jurisdiction.
AA.
“Plan Effective Date” means the date that stockholder
approval of the Plan is obtained in accordance with Section
III.A. of Article Four.
BB.
“Section 16 Insider” means an officer or director of
the Corporation subject to the short-swing profit liability
provisions of Section 16 of the 1934 Act.
CC.
“Service” means the performance of services for the
Corporation (or any Parent or Subsidiary) by a person in the
capacity of an Employee, an Eligible Director or a Consultant,
except to the extent otherwise specifically provided in the
documents evidencing the Award made to such person. For purposes of
the Plan, an Optionee or Participant shall be deemed to cease
Service immediately upon the occurrence of the either of the
following events: (i) the Optionee or Participant no longer
performs services in any of the foregoing capacities for the
Corporation or any Parent or Subsidiary or (ii) the entity for
which the Optionee or Participant is performing such services
ceases to remain a Parent or Subsidiary of the Corporation, even
though the Optionee or Participant may subsequently continue to
perform services for that entity.
DD.
“Stock Issuance Agreement” means the agreement entered into
by the Corporation and the Participant at the time of issuance of
shares of common stock under the Stock Issuance Program.
EE.
“Stock Issuance Program” means the stock issuance program in
effect under Article Three of the Plan.
FF.
“Subsidiary” means any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with
the Corporation, provided each corporation (other than the last
corporation) in the unbroken chain owns, at the time of the
determination, stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
GG.
“Take-Over Price” means the greater of (i) the Fair Market
Value per share of common stock on the date the option is
surrendered to the Corporation in connection with a Hostile
Take-Over or, if applicable, (ii) the highest reported price per
share of common stock paid by the tender offeror in effecting such
Hostile Take-Over through the acquisition of such common stock.
However, if the surrendered option is an Incentive Option, the
Take-Over Price shall not exceed the clause (i) price per
share.
HH.
“10% Stockholder” means the owner of stock (as determined
under Code Section 424(d)) possessing more than 10% of the
total combined voting power of all classes of stock of the
Corporation (or any Parent or Subsidiary).
II.
“Withholding Taxes” means the federal, state and local
income and employment taxes to which the Optionee or Participant
may become subject in connection with the issuance, exercise or
vesting of the Award made to him or her under the Plan.
APPENDIX
B
LIST
OF COMPANIES INCLUDED IN
THIRD-PARTY
SURVEY DATA
Korn
Ferry Benchmark Database Executive Compensation
Survey
Company
|
|
3M
Company |
ABBYY |
Acerinox
SA |
AdvanSix |
Agrana |
Air
Products & Chemicals |
Albaugh |
Albemarle
Corporation |
Amcor
Limited - Rigid Plastics |
Amsted
Industries, Inc. - Amsted Rail |
Amsted
Industries, Inc. - Baltimore Aircoil |
Amsted
Industries, Inc. - Burgess Norton |
Amsted
Industries, Inc. - Consolidated Metco Inc. |
Amsted
Industries, Inc. - Corporate |
Amsted
Industries, Inc. - Means Industries, Inc. |
AOC
Aliancys |
Apple,
Inc. |
Arcor |
Ardent
Mills LLC |
Arkema |
Armacell |
AutoZone
- ALLDATA |
AVX
Corporation |
Bacardi
Limited -- Bacardi USA |
Barilla
Pasta US |
BASF
SE |
Beam
Suntory |
Beneo |
BICS |
Bostik |
Boston
Beer Company, The |
Bourns,
Inc. |
Brake
Parts, Inc. |
Cabot |
Calgon Carbon |
Campari America |
Carus Chemical |
Caterpillar |
Clayton Homes |
Coca-Cola |
Colgate-Palmolive Company |
Comet |
Compass Mineral Group |
Constellation Brands |
Coty Inc. |
Covestro |
CSW Industrials |
Daikin America |
Danfoss US |
Dart Container |
Dawn Food Products, Inc. |
Deere & Company |
Delicato Family Vineyards |
Diageo North America |
Distell Ltd |
dorma+kaba Holding AG |
DSM Dyneema LLC |
DSM Inc -- Desotech |
DSM Nutritional Products, Inc. |
DuPont |
Dymax |
Dyno Nobel |
Eastman Chemical |
Eaton |
Edrington Group USA |
ELG Utica Alloys, Inc. |
Elkem Silicones USA Corporation |
Elliott Company |
Emerald Performance Materials |
EnerSys Inc. |
Evonik Degussa Corporation |
Fannie May Confections Brand |
Ferrara Candy |
Ferrero USA |
FICOSA INTERNATIONAL |
Fitesa Simpsonville |
Flint Hills Resources |
FN America, LLC |
Fortune Brands -- Future Brands |
Franklin International |
Fritz Egger GmbH & Co. OG |
Gentherm |
Gerdau AmeriSteel Corporation |
Ghirardelli Chocolate |
Gibraltar Industries, Inc. |
Gibraltar Industries, Inc. - AMICO |
Gibraltar Industries, Inc. - Rough Brothers Inc. |
Griffith Foods |
H.B. Fuller Company |
Hain Celestial Group, The |
Heaven Hill Distilleries |
Heineken International |
Hendrix Genetics |
Herr Foods Inc. |
Hilti - US |
Hormel Foods |
HP Hood |
Huhtamaki |
Huntsman -- Advanced Materials |
Huntsman -- Performance Products |
Huntsman -- Polyurethanes |
Huntsman -- Textile Effects |
Huntsman Corporation |
Illinois Tool Works Inc. |
Iluka Resources |
Imdex |
Ingevity Corporation |
Innophos, Inc. |
Inolex Chemicals |
itext software |
Japan Tobacco - JT International USA |
John I. Haas |
Johnson Matthey |
Kelvion Holding GmbH |
Kemin |
Kimberly-Clark |
Kloeckner Pentaplast GmbH |
Knorr-Bremse AG - Bendix |
Komatsu Mining Corp. Group |
Koninklijke Vopak |
L'Oreal USA -- SalonCentric |
Lafarge Corporation |
Lantmannen |
Lavazza Premium Coffees |
Lhoist North America |
Linde Plc |
Lindt and Sprungli |
LiquidPower Specialty Products Inc. |
Little Potato Company, The |
Louis Dreyfus Company LLC |
Lubrizol |
LVMH Moet Hennessy Louis Vuitton - Moet Hennessy USA |
LyondellBasell North America - Lyondell |
Mars, Incorporated |
Mast-Jagermeister US |
Maxim Integrated Products |
McCormick & Company |
Merisant |
Mitsubishi International |
Momentive Performance Materials |
MonoSol |
Moog |
Mosaic Company, The |
N.S. International, Ltd. |
Nature Works |
Neapco Holdings LLC |
Nevada Gold Mines |
NewMarket Corporation -- Afton Chemical |
Nitto Americas Inc |
NKT Photonics |
NOVA Chemicals |
Nutreco Holding -- Trouw Nutrition USA |
Occidental Petroleum -- Occidental Chemical |
OCI Alabama LLC |
OCI Enterprises Inc. |
Olin Corporation |
Ornua USA |
Outokumpu Stainless |
Packsize LLC |
Performance Contracting Group |
Pernod Ricard SA - Pernod Ricard USA |
Peroxychem LLC |
Peugeot Citroen |
Philip Morris United States of America |
Plastic Omnium |
Prayon, Inc. |
Procter & Gamble Company, The |
RÃoTGERS Holding Germany GmbH |
Recticel - Flexible Foams - US - Deer Park |
Recticel - Flexible Foams - US - Irvine |
Remy Cointreau USA |
RING Container Technologies |
Ring Container Technologies - Rapac |
Royal DSM N.V. |
Samuel, Son & Co., Limited |
Santen Pharmaceutical |
Saudi Basic Industries Corporation (SABIC) |
Sazerac Company |
Schweitzer Engineering Laboratories |
Shiseido Co., Ltd |
SHV Holdings -- Eriks |
Siegwerk |
Siemens Corporation |
Sierra Nevada Brewing Co. |
Sika AG |
Sojitz Corporation of America |
Solvay America |
Sonoco Products |
Spartan Light Metal Products |
Stepan Company |
Stork B.V. |
Stryker |
Subaru of Indiana Automotive Inc |
Sumitomo SHI FW |
T. Marzetti Company |
Tech Data Corporation |
Tekni-Plex |
Tessenderlo |
Toray Advanced Composites |
Toyota Motor Engineering & Manufacturing North
America |
Toyota Motor North America - TABC |
Toyota Motor North America - Toyota Logistics Service |
Toyota Motor North America --Toyota Manufacturing
Company |
Toyota Motor Sales North America |
Treasury Wine Estates |
Trinseo |
TSRC Corporation |
Tumalum Lumber |
Tyson Foods, Inc. |
Umicore |
Unifrax |
Vaisala |
Valvoline |
Venator Materials |
Verallia |
W R Grace & Co |
Wacker Chemie |
WD-40 Company |
Weber Metals, Inc. |
WEG Electric Corp |
WEG Group -- Bluffton Motor Works |
Westlake Chemical Corporation |
Wika Instrument Corporation |
William Grant & Sons |
YCI Methanol |
Zeon Chemicals |
Zoltek Companies, Inc. |


Alto Ingredients (NASDAQ:ALTO)
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Alto Ingredients (NASDAQ:ALTO)
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From Jan 2022 to Jan 2023