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UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
| (Mark One) |
| x |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 30, 2023
| |
| OR |
| ¨ |
TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period
from __________ to __________.
|
Commission File Number: 001-40837
Sovos
Brands, Inc.
(Exact name of registrant as specified in its charter)
| Delaware |
|
81-5119352 |
| (State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
168 Centennial Parkway, Suite 200
Louisville,
CO 80027
(Address of principal
executive offices) (zip code)
(720) 316-1225
(Registrant’s telephone
number, including area code)
Securities registered pursuant to Section 12(b) of
the Act:
| Title of each class |
|
Trading symbol |
|
Name of each exchange on which registered |
| Common Stock, $0.001 par value per share |
|
SOVO |
|
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market) |
Securities registered
pursuant to section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted
electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes x No ¨
Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer |
x |
Accelerated filer |
¨ |
| Non-accelerated filer |
¨ |
Smaller reporting company |
¨ |
| |
|
Emerging growth company |
¨ |
If an emerging growth
company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. x
If securities are registered
pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in
the filing reflect the correction of an error to previously issued financial statements. ¨
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
The aggregate
market value of the common stock held by non-affiliates of the registrant as of June 30, 2023, the last trading day of the
registrant’s most recently completed second fiscal quarter was approximately $1.07
billion based on the closing price of $19.56 for one share of common stock, as reported on the Nasdaq Global Select Market on that
date. For the purpose of the foregoing calculation only, all directors and executive officers of the registrant and owners of more
than 10% of the registrant’s common stock are assumed to be affiliates of the registrant. This determination of affiliate
status is not necessarily conclusive for any other purpose.
As of February 23,
2024, there were 101,856,379 shares of common stock, $0.001 par value per share outstanding.
| Auditor Name: Deloitte & Touche LLP | Auditor Location: Denver, Colorado | Auditor Firm ID: 34 |
EXPLANATORY
NOTE
This
Amendment No. 1 on Form 10-K/A (this “Amendment”) amends the Sovos Brands, Inc. Annual Report on Form 10-K
for the fiscal year ended December 30, 2023 filed with the Securities and Exchange Commission (the “SEC”) on February 28,
2024 (the “Original 10-K Filing”).
This
Amendment is being filed to update Part III to provide the information required by such items and not included in the Original 10-K
Filing. As a result of this Amendment, the Company is filing as exhibits to this Amendment the certifications required under Section 302
of the Sarbanes-Oxley Act of 2002. Because no financial statements are contained within this Amendment, the Company is not including certifications
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Except
for the changes to Part III and the filing of related certifications added to the list of Exhibits in Part IV, this Amendment
makes no changes to the Original 10-K Filing. This Amendment does not reflect events occurring after the filing of the Original 10-K Filing
or modify disclosures affected by subsequent events. Terms used but not otherwise defined in the Amendment have such meaning as ascribed
to them in the Original 10-K Filing.
Unless
the context otherwise requires, “we,” “us,” “our,” the “Company” and “Sovos Brands”
refer to Sovos Brands, Inc. and its subsidiaries.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Executive
Officers
Information
regarding executive officers of the Company is set forth under “Information About Our Executive Officers” in Part I of
the Original 10-K Filing.
Directors
Our
board of directors (the “Board”) currently consists of eight members. Our Board is currently divided into three classes of
approximately equal size with staggered, three-year terms. Our amended and restated certificate of incorporation provides that at any
annual meeting of stockholders following December 30, 2023, at which fiscal year end Advent International, L.P. (“Advent”)
and its affiliates beneficially owned less than 50% of our outstanding shares of common stock, our directors will be elected for a one-year
term expiring at the next annual meeting of stockholders and until the election and qualification of their respective successors in office
or until their earlier death, resignation or removal, beginning with our Class III directors who would be up for re-election at our
2024 annual meeting of stockholders with our Board being fully declassified following our 2026 annual meeting. As discussed in the “Business
Highlights” of our Compensation Discussion and Analysis in Item 11 below, the Company has entered into the Merger Agreement with
Campbell Soup Company. The Company does not expect to hold an annual meeting of stockholders prior to the closing of the Merger.
The
names, ages (as of February 28, 2024) and background information of our directors are included below:
Tamer
Abuaita, age 51, a Class III director, has served as a director since July 2022. Mr. Abuaita has served as the
Senior Vice President of Operations and Chief Supply Chain Officer of Stanley Black & Decker since January 2022. Previously,
Mr. Abuaita served as the Senior Vice President, Global Supply Chain at SC Johnson from March 2018 to January 2022, and
held multiple operational and supply leadership positions in a number of regions around the world at The Kraft Heinz Company from February 2008
to July 2017. Prior to February 2008, Mr. Abuaita held multiple positions at Nestle and Sonoco. Mr. Abuaita earned
his B.S. from California Polytechnic State University – San Luis Obispo and his M.B.A. from Vanderbilt University. We believe Mr. Abuaita’s
experience leading global supply chains and extensive CPG experience make him well qualified to serve as a director.
Jefferson
M. Case, age 46, a Class III director, has served as a director since January 2017. Mr. Case has been a managing
director at Advent since January 2014 and served in various positions at Advent since August 2001. Mr. Case also previously
served as a director of Party City Holdco Inc., a party goods and Halloween specialty retailer, and a director of Noosa Yoghurt and currently
serves as a director on the boards of various private companies. He earned his B.A. in economics from Davidson College and his M.B.A.
from Harvard Business School. We believe Mr. Case’s experience serving as a director of various companies and his affiliation
with Advent, our largest stockholder as of the filing of this Amendment, make him well qualified to serve as a director.
William
R. Johnson, age 75, a Class III director, has served as Chairman of the Board and a director since January 2017.
Mr. Johnson has served as an operating partner of Advent since June 2014. Prior to June 2014, Mr. Johnson held various
management and executive positions, including chairman, president and chief executive officer, for H.J. Heinz Company, a global packaged
foods manufacturer. Previously, Mr. Johnson also held various positions for Drackett Company, a manufacturer of household cleaning
products, Ralston Purina Company, an animal feed, food and pet food company, and Anderson-Clayton & Co., a food products company.
Mr. Johnson currently serves as chairman of the board of United Parcel Service, Inc. Mr. Johnson has also served as a director
on the boards of other publicly traded CPG companies, including The Clorox Company and PepsiCo, Inc. He earned his B.A. in political
science from the University of California, Los Angeles and his M.B.A. from the University of Texas. We believe Mr. Johnson’s
significant senior management experience gained through over 13 years of service as the chairman and over 15 years as chief executive
officer of the H.J. Heinz Company, a corporation with significant international operations and a large, labor intensive workforce, as
well as his deep experience in operations, marketing, brand development and logistics make him well qualified to serve as a director.
Todd
R. Lachman, age 60, a Class I director, has served as our Chief Executive Officer and as a director since January 2017
and served as our President from January 2017 to December 2023. Prior to joining Sovos Brands, Mr. Lachman served as operating
partner of Altamont Capital Partners, a private equity firm, from May 2015 to March 2016 and a senior advisor to Advent from
March 2016 to January 2017. For over 30 years, Mr. Lachman has delivered growth and value creation for some of the largest
CPG companies in the United States. Prior to May 2015, Mr. Lachman served as global president of Mars Petcare, served as president
of Mars Chocolate North America and Latin America and held various positions at Del Monte Foods Company, the H.J. Heinz Company and The
Procter & Gamble Company. Mr. Lachman currently serves on the board of a private company. He earned his B.A. in economics
and art history from Colby College and his M.B.A. from the Northwestern University Kellogg School of Management. We believe Mr. Lachman’s
experience and perspective as our founder and Chief Executive Officer as well as his extensive CPG experience make him well qualified
to serve as a director.
Neha
U. Mathur, age 32, a Class I director, has served as a director since September 2021. Ms. Mathur has been a
Vice President at Advent since June 2020. Previously, Ms. Mathur co-founded and served on the board of directors of Nom Pot
Company from January 2019 to May 2020. From June 2019 to August 2020, she was a summer vice president at Bain Capital,
LP and an associate at Advent from August 2016 to July 2018. Prior to August 2016, Ms. Mathur was a business analyst
at McKinsey & Company. She earned her B.S. in economics from The Wharton School of the University of Pennsylvania, her B.S.E.
in systems engineering from the University of Pennsylvania School of Engineering and Applied Science and her MBA from Harvard Business
School. We believe Ms. Mathur’s experience as a director of a food delivery service company and her affiliation with Advent,
our largest stockholder as of the filing of this Amendment, make her well qualified to serve as a director.
David
W. Roberts, age 40, a Class II director, has served as a director since January 2017. Mr. Roberts has served
as a Managing Director at Great Hill Partners since May 2023. Mr. Roberts was a principal at Advent from January 2017 through
March 2023 and served in various other positions at Advent from July 2012 through December 2016. Mr. Roberts has served
as a director on the board of various companies, including Noosa Yoghurt from 2014 to 2018. He earned his B.A. in economics from Princeton
University and his M.B.A. from The Wharton School of the University of Pennsylvania. We believe Mr. Roberts’s experience as
a director of various companies and long-standing experience with and understanding of the Company make him well qualified to serve as
a director.
Valarie
L. Sheppard, age 60, a Class I director, has served as a director since September 2021. Prior to retiring in March 2021,
Ms. Sheppard served as treasurer, controller and group vice president, company transition leader of The Procter & Gamble
Company, a multinational consumer goods company, and served as senior vice president, treasurer, comptroller of The Procter &
Gamble Company from October 2013 to April 2019. Prior to October 2013, Ms. Sheppard held various management positions
for The Procter & Gamble Company, where she had been employed since 1986. Ms. Sheppard previously served as compensation
committee chair on the board of directors of Anixter, Inc., a provider of business-to-business distribution logistics services and
supply chain solutions, until it was sold in 2020. She earned her B.S. in accounting from Purdue University and her M.S. in industrial
administration from the Purdue University Krannert School of Management. We believe Ms. Sheppard’s experience with The Procter &
Gamble Company, including as its treasurer and controller, as well as her substantial finance and accounting experience, which makes her
an “audit committee financial expert,” make her well qualified to serve as a director.
Vijayanthimala
(Mala) Singh, age 53, a Class II director, has served as a director since September 2021. Ms. Singh has served
as Chief People Officer of Electronic Arts, Inc., a video game company, since November 2016. Previously, Ms. Singh served
as Chief People Officer of minted, LLC, an online marketplace of independent artists and designers, from January 2014 to October 2016.
Prior to January 2014, Ms. Singh held various positions for Electronic Arts, Inc., Bristol-Myers Squibb Company and Cigna
Corporation. Ms. Singh currently serves on the executive advisory board of a private venture capital firm. She earned her B.A. in
organization psychology from Rutgers University and her M.H.R.M. from Rutgers University. We believe Ms. Singh’s experience
as a chief people officer of Electronic Arts Inc., including her experience developing compensation programs and talent for a growing
company, and her experience as an advisory board member of a venture capital firm make her well qualified to serve as a director.
Audit
Committee
The
members of our Audit Committee are Mr. Abuaita, Mr. Johnson and Ms. Sheppard. Each of Mr. Johnson and Ms. Sheppard
qualifies as an “audit committee financial expert” as such term has been defined by the SEC in Item 407(d) of Regulation
S-K. The Board has affirmatively determined that Ms. Sheppard, Mr. Johnson and Mr. Abuaita each meet the definition of
an “independent director” for the purposes of serving on the Audit Committee under applicable Nasdaq rules and Rule 10A-3
under the Exchange Act. The Audit Committee is governed by a charter that complies with the rules of Nasdaq and provides that the
primary purposes of the Audit Committee include overseeing:
| ● | audits of the financial statements of the Company; |
| ● | the integrity of the Company’s financial statements; |
| ● | the Company’s processes relating to risk management; |
| ● | management’s design and maintenance of the Company’s internal control over financial reporting
and disclosure controls and procedures including with respect to cybersecurity; |
| ● | the qualifications, engagement, compensation, independence and performance of the Company’s independent
auditor, and the auditor’s conduct of the annual audit of the Company’s financial statements and any other services provided
to the Company; |
| ● | the performance of the Company’s internal audit function (as applicable); |
| ● | compliance, code of business conduct and ethics, discussing our risk management and risk assessment policies,
including with respect to cybersecurity risk; |
| ● | production of the annual report of the Committee required by applicable SEC rules; and |
| ● | the review and approval or ratification of any related person transactions. |
Delinquent
Section 16(a) Reports
Under
U.S. securities laws, directors, certain officers and persons holding more than 10% of our common stock must report their initial ownership
of our common stock and any changes in their ownership to the SEC. The SEC has designated specific due dates for these reports and we
must identify in this Amendment those persons who did not file these reports when due. Based solely on our review of copies of the reports
filed with the SEC and the written representations of our directors and executive officers, we believe that all reporting requirements
for fiscal 2023 were satisfied by each person who at any time during fiscal 2023 was a director or an executive officer or held more than
10% of our common stock, except for one late filing reporting one transaction by Mr. Hermida relating to the automatic sale of common
stock to cover taxes upon the vesting of an equity award.
ITEM 11. EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (CD&A) discusses our
executive compensation philosophy and programs, decisions the Compensation Committee made under those programs, and the factors considered
in making those decisions. This CD&A focuses on the compensation paid in fiscal 2023 to our Chief Executive Officer (CEO), Chief Financial
Officer (CFO), and our other three most highly compensated executive officers serving at the end of fiscal 2023, whom we refer to collectively
as our “named executive officers” or “NEOs” and who are listed below:
| Name | |
Position |
| Todd R. Lachman | |
Founder and Chief Executive Officer |
| Christopher W. Hall | |
Chief Financial Officer |
| E. Yuri Hermida | |
President |
| Kirk A. Jensen | |
Chief Operating Officer |
| Risa Cretella | |
Chief Sales Officer |
Although the discussion in the CD&A is focused on our NEOs, many
of our executive compensation programs apply broadly to our executive officers.
2023 Business Highlights
2023 was a momentous year for Sovos Brands. The Company surpassed $1
billion in net sales and significantly over-delivered on its annual operating plan with respect to adjusted EBITDA and net working capital
(discussed in more detail below with respect to the Company’s Annual Incentive Plan), while meaningfully reducing its net leverage.
Notably, the Company’s net sales growth was driven primarily by volumes.
On August 7, 2023, the Company entered into an Agreement and Plan
of Merger (the “Merger Agreement”) with Campbell Soup Company (“Campbell’s”) and Premium Products Merger
Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Campbell’s (“Merger Sub”). The Merger Agreement
provides, among other things, that subject to the satisfaction or waiver of the conditions set forth therein, including the expiration
or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
Act”), Merger Sub will merge with and into the Company (the “Merger”) with the Company surviving as a wholly owned subsidiary
of Campbell’s. The Merger consideration of $23 per share reflects a 92% return for stockholders from the Company’s September 2021
IPO price.
Our Executive Compensation Philosophy
We have designed our executive compensation program to attract, motivate,
and retain high caliber talent who drive our success and industry leadership while considering Company performance measured over short-
and long-term periods. Each year the Compensation Committee reviews the incentive structure, taking into consideration market data, business
performance, and our strategic and human capital objectives. In order to attract and retain the talent required to fulfill our mission,
accelerate growth, and promote stockholder value, the Compensation Committee’s goal is to implement an executive compensation program
that is built upon the following objectives:
| ● | Attracting and Retaining the Right Talent. Executive compensation should be market-competitive to attract and retain highly
motivated talent with a performance-driven mindset. |
| ● | Pay for Performance. A material portion of an executive’s target compensation should be at-risk and directly aligned
with Company performance, with short-term (annual performance-based bonus) and long-term (equity awards) incentive programs that appropriately
balance business objectives. |
| ● | Alignment with Stockholder Interests. A substantial portion of the NEOs’ total compensation is in equity. Our incentive
compensation program focuses on a combination of short- and long-term metrics which motivate the achievement of our Company’s performance
targets. We further align the interests of our executive officers and stockholders through our use of stock ownership guidelines and prohibitions
on hedging or pledging of common stock. |
How We Determine Executive Compensation
Oversight Responsibilities for Executive Compensation
The Compensation Committee is primarily responsible for assisting the
Board in overseeing the Company’s employee compensation policies and practices, including, among other things:
| ● | establishing and overseeing the overall compensation philosophy and compensation programs for the Company, CEO and other executive
officers; |
| ● | reviewing and approving the corporate goals and objectives relevant to the compensation of the CEO and other executive officers, including
annual and long-term performance goals and objectives; |
| ● | evaluating at least annually the performance of the CEO and other executive officers against the relevant corporate goals and objectives;
and |
| ● | reviewing and discussing with management the “Compensation Discussion and Analysis” disclosure required by SEC regulations. |
To fulfill these responsibilities, the Compensation Committee reviews
recommendations and materials and engages in extensive executive compensation discussions, including with Frederic W. Cook &
Co., Inc. (“FW Cook”), our independent compensation consultant, to review best practices and receive a competitive assessment
of executive compensation compared to our peers, as discussed further below. The Compensation Committee reviews total compensation and
approves each of the elements of executive compensation, and reviews whether compensation programs and practices carry undue risk. The
Compensation Committee also solicits the views of our CEO when making compensation decisions for the other executive officers, including
the other NEOs. None of our NEOs participate in their own compensation discussion.
Role of the Compensation Consultant
In 2023, the Compensation Committee continued to engage FW Cook as
its independent compensation consultant to consult on the design of the Company’s executive compensation program in support of our
business strategy. FW Cook also reviews the competitiveness of the compensation of the NEOs and certain other executive officers, evaluates
market pay data and competitive-positioning, provides analyses and inputs on program structure, performance measures and goals, provides
updates on market trends and the regulatory environment as it relates to executive compensation, reviews various management proposals
presented to the Compensation Committee related to executive compensation and provides objective analysis and recommendations relating
to such proposals. FW Cook also consults on the design and structure of our non-employee director compensation program. FW Cook does not
perform other services for the Company and will not do so without the prior consent of the Compensation Committee. FW Cook meets with
the Compensation Committee, outside the presence of management, in executive sessions. After taking into consideration the Nasdaq independence
standards and SEC rules as they relate to FW Cook, the Compensation Committee determined that FW Cook’s work does not raise
a conflict of interest.
Market Data
When setting executive compensation, the Compensation Committee considers
competitive comparison of executive pay levels, program design and related compensation governance practices at similarly sized consumer
packaged goods peers identified by FW Cook, with direction from the Compensation Committee. Each year the compensation peer group is reviewed
and modified as circumstances warrant. For 2023, our peer group used to inform decisions on executive pay opportunities was comprised
of the following 15 companies with which we may compete for business and/or talent:
| 2022-2023
Compensation Peer Group |
| B&G
Foods |
Hain Celestial |
Landec |
| |
|
|
| BellRing Brands |
Hostess Brands |
Seneca Foods |
| |
|
|
| Beyond Meat |
J&J Snack Foods |
Simply Good Foods |
| |
|
|
| Flowers Foods |
Lamb Weston |
Utz Brands |
| |
|
|
| FreshPet |
Lancaster Colony |
Vital Farms |
When establishing each NEO’s target total direct compensation
opportunity for 2023, the Compensation Committee considered the competitive market for the compensation peer group. Market comparison
information for the NEOs was sourced from publicly available peer group information as well as third-party survey data. Both data sources
served as important reference points in assessing the competitiveness of base salary, incentive targets, and total direct compensation,
as well as on overall market design practices.
2023
Named Executive Officer Compensation
The primary components of our NEO compensation
program include base salary, annual performance-based cash incentives and long-term equity compensation. The components of our fiscal
2023 compensation program are described in more detail below.
Base Salary
Base salary is paid to attract and retain qualified
talent and is set at a level that is commensurate with the executive’s duties and authorities, contributions, prior experience and
sustained performance. Base salary is reviewed annually and adjusted as appropriate. Our NEOs are not eligible for automatic annual base
salary increases. For 2023, the Compensation Committee approved an increase to Mr. Lachman’s base salary to $875,000 from $800,000
and Ms. Cretella’s base salary to $450,000 from $435,000, in recognition of their individual performance, role and responsibilities,
and after considering market data presented by FW Cook. See the “Summary Compensation Table” below for the fiscal 2023 base
salary of each of our NEOs.
Annual Cash Incentive Awards
We award annual cash incentive opportunities to
each of our NEOs under the Sovos Brands, Inc. Annual Cash Incentive Plan (the “Annual Incentive Plan” or “AIP”).
The Annual Incentive Plan is an important part of our total compensation as it encourages participants to work proficiently toward improving
operating performance at the Company by providing performance-based annual cash incentive awards to motivate and reward eligible employees
for the achievement of, meeting and/or exceeding pre-determined performance objectives. Performance objectives are established annually
by our Compensation Committee and aim to focus on achieving annually established financial targets that are key indicators of ongoing
operational performance and support our business strategy.
The Compensation Committee reviews our target
annual bonus opportunities each year to ensure they are competitive. For 2023, each NEO had an annual incentive opportunity expressed
as a percentage of the NEO’s base salary as of October 1. Earned cash incentives could range from 0% to 200% of target bonus
opportunity.
| Name |
|
2023 Target Bonus
Opportunity As Percent of
Base Salary |
|
| Todd R. Lachman |
|
|
135 |
% |
| Christopher W. Hall |
|
|
75 |
% |
| E. Yuri Hermida |
|
|
100 |
% |
| Kirk A. Jensen |
|
|
75 |
% |
| Risa Cretella |
|
|
75 |
% |
The AIP for 2023 was structured around the Company’s
performance against three financial metrics: net sales (weighted 40%), adjusted EBITDA (weighted 50%), and net working capital as a percentage
of net sales (weighted 10%). At the beginning of fiscal 2023, our Compensation Committee approved the performance targets under our AIP
for each metric, which targets were applicable to our NEOs. Performance targets were set to be challenging but attainable based on the
expectations for the business at the time that the goals were set. In each case, the AIP targets of $915.5 million for net sales, $131.0
million for adjusted EBITDA, and 8.0% for net working capital as a percentage of net sales were derived from the Company’s fiscal
year 2023 annual operating plan (AOP) financial objectives. These targets put the Company in the top quartile as compared to calendar
year 2023 Wall Street consensus growth expectations for 20 market-leading consumer packaged goods companies used by the Company for purposes
of setting AIP targets. Under the AIP for fiscal 2023, in order for the annual incentive pool to begin to be funded, the Company had to
achieve a minimum threshold of 92% of the established adjusted EBITDA performance target. If the minimum performance threshold for adjusted
EBITDA was not satisfied, the pool would not have been funded and no annual cash incentive payments would have been payable to participants
– even if the Company met or exceeded threshold performance for the other two performance metrics. Additionally, the maximum performance
goal for net sales and adjusted EBITDA was established at 120% of the target goal, compared to 2022 when the maximum goal corresponded
to 110% of the target goal.
Performance
Metric
(dollars in
millions) | |
Threshold
(50% payout) | | |
Target
(100%
payout) | | |
Maximum
(200% payout) | | |
Weighting | | |
Actual
Performance | | |
Payout
Percentage per
Metric Based
on Actual
Performance | | |
Overall
Payout
Percentage
Based on
Actual
Performance
(1) | |
| Net Sales | |
$ | 878.9 | | |
$ | 915.5 | | |
$ | 1,098 | | |
| 40% | | |
$ | 1,020.4 | | |
| 157.3% | | |
| | |
| | |
| (96%
of target) | | |
| | | |
| (120%
of target) | | |
| | | |
| | | |
| | | |
| | |
| Adjusted
EBITDA(2) | |
$ | 120.5 | | |
$ | 131.0 | | |
$ | 157.2 | | |
| 50% | | |
$ | 157.8 | | |
| 200.0% | | |
| 183% | |
| | |
| (92%
of target) | | |
| | | |
| (120%
of target) | | |
| | | |
| | | |
| | | |
| | |
| Net
Working Capital (3) | |
| 9.0% | | |
| 8.0% | | |
| 7.0% | | |
| 10% | | |
| 6.1% | | |
| 200.0% | | |
| | |
| (1) | The Compensation Committee approved the payment of the 2023 AIP at 200% in recognition of significant efforts as discussed below.
See table below for payouts to each NEO. |
| (2) | For purposes of the 2023 Annual Incentive Plan, the Company’s performance metric for adjusted EBITDA was based on the Company’s
calculation of adjusted EBITDA reported in the Original Form 10-K. Adjusted EBITDA is calculated as EBITDA with add-back adjustments
for: (i) non-cash equity-based compensation expense, (ii) non-recurring costs, (iii) unrealized loss (gain) on foreign
currency contracts, (iv) supply chain optimization, and (v) transaction and integration costs. See reconciliation of adjusted
EBITDA to net income on page 55 of the Original 10-K under section titled “Non-GAAP Financial Measures.” The Compensation
Committee’s decision to pay AIP at 200% reduced our reported adjusted EBITDA by $1.7 million to $156.1 million. |
| (3) | Our net working capital performance metric is calculated as the difference between short-term assets (accounts receivable, inventory
and prepaid expenses) and short-term liabilities (accounts payable and accrued expenses), divided by (or as a percent of) net sales. |
Based on the above, cash incentives were earned
at 183% of target against financial targets under the AIP. However, in light of numerous achievements in 2023, the Compensation Committee
exercised discretion to increase overall payouts under the AIP, including for each NEO, from 183% of target to 200% of target. The Compensation
Committee’s determination was made primarily to recognize the Company’s significant overachievement against targets in 2023,
particularly in light of the stretch nature of the original target and maximum goals. Such overachievement included the Company’s
over-delivery of adjusted EBITDA and net working capital, which in each case exceeded the amount necessary for a maximum 2023 AIP payout
with respect to such metric. Additionally, the Committee desired to recognize execution of the Merger Agreement; recognize and reward
employees’ continued execution despite the uncertainty created by the pending Merger; and provide additional retention until the
payments of the 2023 AIP. The Compensation Committee further considered that the Company had also driven an extremely healthy cash position
of $232 million in 2023, up almost $100 million from 2022.
The target bonus opportunities and resulting payout
approved by our Compensation Committee for each NEOs for fiscal 2023 were:
| Name |
|
2023 Target Bonus
Opportunity As
Percent of Base
Salary |
|
|
2023
Target
Bonus |
|
|
2023
AIP %
Earned |
|
|
2023 AIP
Amount
Earned |
|
|
Approved
Payout
Percentage |
|
|
2023 AIP
Payment |
|
| Todd R. Lachman |
|
|
135% |
|
|
$ |
1,181,250 |
|
|
|
183% |
|
|
$ |
2,161,688 |
|
|
|
200% |
|
|
$ |
2,362,500 |
|
| Christopher W. Hall |
|
|
75% |
|
|
$ |
348,750 |
|
|
|
183% |
|
|
$ |
638,213 |
|
|
|
200% |
|
|
$ |
697,500 |
|
| E. Yuri Hermida |
|
|
100% |
|
|
$ |
550,000 |
|
|
|
183% |
|
|
$ |
1,006,500 |
|
|
|
200% |
|
|
$ |
1,100,000 |
|
| Kirk A. Jensen |
|
|
75% |
|
|
$ |
337,500 |
|
|
|
183% |
|
|
$ |
617,625 |
|
|
|
200% |
|
|
$ |
675,000 |
|
| Risa Cretella |
|
|
75% |
|
|
$ |
337,500 |
|
|
|
183% |
|
|
$ |
617,625 |
|
|
|
200% |
|
|
$ |
675,000 |
|
Additionally,
Mr. Hermida was eligible for a sign-on, performance-based cash bonus of $1,100,000 in order to compensate him for potential payouts
forgone when he left his prior company. Such performance bonus became payable on June 1, 2023 if the Company was on-track to meet
or exceed the threshold net sales and adjusted EBITDA performance metrics in the Company’s 2023 AOP as established by the Compensation
Committee under the AIP for fiscal 2023. This performance-based cash bonus was paid on June 1, 2023, because the Company
was on-track to meet or exceed such thresholds.
Equity Compensation
Annual long-term incentive compensation is intended
to align the interests of our leadership, including our NEOs, with those of our stockholders, reward the achievement of long-term value
creation, and promote retention of key talent. We adopted the Sovos Brands, Inc. 2021 Equity Incentive Plan (the “2021
Plan”) in September 2021 in connection with our IPO, pursuant to which we have generally granted annual equity awards in the
form of time-based restricted stock units (RSUs) and performance-based restricted stock units (PSUs). The 2021 Plan is administered
by our Compensation Committee.
We also have a legacy incentive plan, the Sovos
Brands Limited Partnership 2017 Equity Incentive Plan (the “2017 Plan”), under which Sovos Brands Limited Partnership (the
Company’s sole stockholder prior to the Company’s IPO) issued incentive unit awards. In connection with the Company’s
IPO, Sovos Brands Limited Partnership distributed its shares of Sovos Brands, Inc. common stock to its limited partners, including
holders of such incentive unit awards, in accordance with the applicable terms of its partnership agreement. Holders of unvested incentive
unit awards received shares of restricted common stock of Sovos Brands, Inc. in respect of their incentive unit awards. Such unvested
restricted stock is described below. We have not granted any awards under the 2017 Plan since the IPO.
2023 Annual Equity Awards
Our 2023 LTI program consists of RSUs and PSUs
granted under the 2021 Plan with the following weighting and vesting terms:
Award
Type |
Weighting |
Description / Objective |
| RSUs |
40% |
·
Vest one-half on each of the first two anniversaries of the grant date, other than for Mr. Lachman, whose Annual RSUs vest one-third
on each of the first three anniversaries of the grant date.
· Realized value linked to TSR while promoting retention of talent. |
| PSUs |
60% |
· Vest based on the Company’s TSR relative to the TSRs of the companies
in the compensation peer group, over a three-year performance period: |
| |
|
|
|
|
|
|
|
| |
|
|
Performance
Level (payout
% of target
PSUs) |
Threshold (50% of
target payout) |
Target (100% of
target payout) |
Maximum (200%
of target payout) |
|
| |
|
|
Relative TSR Percentile Rank |
30th percentile vs compensation peers |
60th percentile vs compensation peers |
90th percentile vs compensation peers |
|
| |
|
|
|
|
|
|
|
| |
|
- Straight-line interpolation applies between achievement levels.
- Regardless of the relative TSR achieved, if the Company’s TSR over the
performance period is negative, the maximum vesting shall be 100% of the target Annual PSUs.
· Realized
value linked to both absolute and relative TSR while promoting retention of key talent
|
| |
|
|
|
|
|
|
|
The table below summarizes intended target value of equity awards made
to our named executive officers in 2023:
| | |
2023 Equity Awards | |
| | |
Annual RSUs | | |
Annual Target PSUs | | |
Total | |
| Name | |
Intended Target
Value | | |
Intended Target
Value(1) | | |
Intended Target
Value | |
| Todd R. Lachman | |
$ | 1,320,000 | | |
$ | 1,980,000 | | |
$ | 3,300,000 | |
| Christopher W. Hall | |
$ | 400,000 | | |
$ | 600,000 | | |
$ | 1,000,000 | |
| E. Yuri Hermida | |
$ | 440,000 | | |
$ | 660,000 | | |
$ | 1,100,000 | |
| Kirk A. Jensen | |
$ | 200,000 | | |
$ | 300,000 | | |
$ | 500,000 | |
| Risa Cretella | |
$ | 300,000 | | |
$ | 450,000 | | |
$ | 750,000 | |
| (1) | Grant-date fair value of PSUs as reported in the Grants of Plan Based Awards Table and Summary Compensation Table differs from the
target values in this table because the grant date fair value is calculated using a Monte-Carlo model for each award on the date of grant,
as determined under FASB ASC 718 based on the probable outcome of the relative TSR vesting hurdles as of the grant date. |
The number of RSUs and the target number of PSUs
granted to each executive was determined by taking the intended target value divided by the closing price of our common stock on the date
prior to the grant date.
Additionally, $100,000 in RSUs were awarded to
Mr. Hermida upon his promotion to President in December 2023.
IPO Equity Grants
In connection with the IPO on September 23,
2021, our Board granted RSUs (the “IPO RSUs”) under the 2021 Plan to our salaried employees, including our NEOs who were then
employees. The IPO RSUs cliff vest in full upon the third anniversary of the date of grant subject to continued service on such date,
except as otherwise provided below in “Potential Payments upon Termination of Employment or Change in Control.”
In connection with the IPO, the Board also granted
PSUs (the “IPO PSUs”) under the 2021 Plan to our vice presidents, senior vice presidents and senior executive team members,
including our NEOs who were then employees. The Compensation Committee also granted IPO PSUs to Mr. Hermida when he joined the Company
in October 2022 to compensate him for equity awards forgone when he left his prior company.
The IPO PSUs vest based on the highest 20-day
volume weighted average price of our stock during the three-year period following the grant date as compared to the 20-day volume weighted
average price of our stock immediately following the IPO (the “baseline stock price”), with 25% vesting upon achievement of
a stock price increase of 25% over the baseline stock price and 100% vesting upon achievement of a stock price increase of 100% over the
baseline stock price, with linear interpolation between achievement levels, generally subject to continued service on such date, except
as otherwise provided below in “Potential Payments upon Termination of Employment or Change in Control.” Upon a change in
control (as defined in the 2021 Plan), the performance condition is deemed satisfied at 100% and the IPO PSUs remain subject solely to
time-based vesting over the remainder of the three-year period, subject to continued service on such date except as otherwise provided
below in “Potential Payments upon Termination of Employment or Change in Control.”
In February 2023, to improve executive retention,
the Compensation Committee determined to modify the IPO PSUs, including for each of our NEOs, to provide that the IPO PSUs instead vest
(i) 50% on September 23, 2024 and 50% on September 23, 2025, subject to continued service on such date except as otherwise
provided below in “Potential Payments upon Termination of Employment or Change in Control,” or (ii) upon achievement
of the original vesting criteria, if earlier. The incremental expense associated with this modification is reflected in the Summary Compensation
Table below for fiscal 2023.
Restricted Stock
Prior to our IPO, awards were issued to Mr. Lachman,
Mr. Hall, Mr. Jensen, and Ms. Cretella under the 2017 Plan, which provided for grants of incentive units (the “Time-Based
Incentive Units” and the “Performance-Based Incentive Units”) in Sovos Brands Limited Partnership, our parent entity
prior to our IPO, to our employees, independent directors and other service providers, as well as to directors, employees and other service
providers of our subsidiaries or affiliates.
In connection with our IPO, Mr. Lachman,
Mr. Hall, Mr. Jensen, and Ms. Cretella received shares of common stock in respect of their vested Time-Based Incentive
Units. Additionally, pursuant to a restricted stock award agreement with us and Sovos Brands Limited Partnership, these NEOs received
shares of restricted common stock in respect of their unvested Time-Based Incentive Units (such shares, the “Time-Based Restricted
Stock”) and their unvested Performance-Based Incentive Units (such shares, the “Performance-Based Restricted Stock”).
Under their applicable restricted stock agreements, the Time-Based Restricted Stock continued to vest on the same schedule as the Time-Based
Incentive Units with respect to which such Time-Based Restricted Stock was distributed. As of the end of fiscal 2023, all of Mr. Lachman’s,
Mr. Hall’s, Mr. Jensen’s, and Ms. Cretella’s Time-Based Restricted Stock was vested. Following the IPO,
we have not granted and will not grant any further awards under the 2017 Plan.
The Performance-Based Restricted Stock vests based
on Advent’s receipt of aggregate cash amounts (including marketable securities as such term is defined in the Incentive Unit award
agreements) representing at least a multiple of invested capital (“MOIC”) of 2.0 MOIC, 2.5 MOIC, 3.0 MOIC, and 4.0 MOIC, as
applicable, with linear interpolation between MOIC achievement levels. Performance will be measured on a change in control or as Advent
sells shares of our common stock following our IPO. Performance will also be measured on the earlier of (i) the 30 month anniversary
of our IPO and (ii) the point in time when Advent owns 25% or less of the shares it held before our IPO, with, in each case, all
shares still held by Advent at such time valued at the average trading price over a period of 30 consecutive days. Pursuant to their respective
restricted stock award agreements, certain holders of Performance-Based Restricted Stock awards, including Mr. Lachman, Mr. Hall,
Mr. Jensen, and Ms. Cretella, have the opportunity to elect to have performance measured at the point in time when Advent owns
25% or less of the shares it held before the IPO rather than upon the 30-month anniversary of the IPO. The Performance-Based Restricted
Stock awards eligible for vesting on the achievement of 2.0 MOIC were also eligible to vest if Advent’s receipt of aggregate cash
amounts, including the value of our shares held by Advent following the IPO (valued for such purposes at the average trading price over
the first 30 consecutive days after the IPO) would result in Advent’s achievement of 2.0 MOIC. Based on the foregoing, such 2.0
MOIC Performance-Based Restricted Stock awards vested effective November 3, 2021. Vesting of Performance-Based Restricted Stock awards
is subject to continued employment on the applicable measurement date, except as described in the section titled “Potential Payments
upon Termination of Employment or Change in Control” below. See the “Outstanding Equity Awards as of December 30, 2023”
below.
The foregoing description reflects modifications
to vesting terms of the Performance-Based Incentive Units that were made in connection with the IPO. The incremental expense associated
with these modifications is reflected in the Summary Compensation Table below for fiscal 2021. Following the IPO, in November 2021,
the Compensation Committee determined to further modify a portion of the Performance-Based Restricted Stock awards, including for Mr. Lachman,
Mr. Hall, Mr. Jensen, and Ms. Cretella, to provide that a portion of the shares that would have vested based upon a 4.0
MOIC (including any related linear interpolation) instead vest on the last day of fiscal 2022 or on the last day of fiscal 2023, generally
subject to continued service on such date except as otherwise provided below in “Potential Payments upon Termination of Employment
or Change in Control,” or upon achievement of the 4.0 MOIC vesting criteria, if earlier. The incremental expense associated with
these modifications is also reflected in the Summary Compensation Table for fiscal 2021. Such modified Performance-Based Restricted Stock
awards were vested in full as of the last day of fiscal 2023.
In February 2023, to improve executive retention,
the Compensation Committee determined to modify half of the Performance-Based Restricted Stock that would have vested solely based upon
a 3.0 MOIC or 4.0 MOIC (including any related linear interpolation) to provide that such Restricted Stock instead vests (i) 50% on
September 23, 2024 and 50% on September 23, 2025 or (ii) upon achievement of the applicable 3.0 MOIC or 4.0 MOIC vesting
criteria, if earlier, subject to continued service on such date except as otherwise provided below in “Potential Payments upon Termination
of Employment or Change in Control.” The incremental expense associated with this modification is reflected in the Summary Compensation
Table for fiscal 2023. The shares that vest upon achievement of the 2.5 MOIC vesting criteria are unaffected by this modification.
The terms of the applicable restricted stock agreements
provide that any such Restricted Stock that does not vest forfeits to Sovos Brands Limited Partnership.
Other Benefits
Our NEOs are also entitled to certain other benefits,
subject to their enrollment, including a 401(k) plan with matching contributions, life insurance and group health insurance. We cover
the tax payments for our NEOs with respect to their life and health insurance premiums.
Other
Compensation and Governance Matters
Employment Arrangements and Severance
Other than our CEO who has an employment agreement
with us, we provided offer letters to each of our NEOs that set forth the basic terms of at-will employment and establish the individual’s
base salary, eligibility to participate in the annual bonus plan and receive equity awards, and eligibility to participate in standard
employee benefits. Mr. Lachman’s employment agreement, in addition to setting forth the basic terms of employment as provided
under our offer letters, provides for certain benefits under qualifying terminations. See “NEO Employment Arrangements” below
for a description of the terms of such agreements.
We also maintain the Sovos Brands, Inc. 2023
Amended and Restated Executive Severance Plan (the “Executive Severance Plan”) that applies to our executive officers, other
than Mr. Lachman, who is entitled to severance under his employment agreement, and Mr. Jensen, who is entitled to severance
under the Executive Severance Plan as augmented by his letter agreement (as described below). The Executive Severance Plan, including
certain amendments approved during 2023 following benchmarking by FW Cook, is further described below under “Potential Payments
Upon Termination or Change in Control – Executive Severance Plan.”
The Compensation Committee believes that these
arrangements are important to attracting and retaining key talent and promoting focus on achievement of long-term strategic objectives
because they provide financial protection in the event of certain involuntary termination scenarios. In particular, our severance arrangements
are intended to align executive and stockholder interests by enabling executives to evaluate corporate transactions that may be in the
best interests of stockholders without undue concern over whether the transactions may jeopardize the executives’ own employment
and promoting retention during the pendency of any transaction (see “Potential Payments Upon Termination or Change in Control”
for further detail).
Stock Ownership Guidelines
Upon the recommendation of the Compensation Committee,
the Board adopted the following stock ownership guidelines applicable to our executive officers:
| | |
Ownership Requirement | |
| Position | |
(multiple of cash retainer/base
salary) | |
| Chief Executive Officer | |
| 6x | |
| All Other Executive Officers | |
| 3x | |
In addition to shares held outright (whether
directly or indirectly), unvested restricted stock and restricted stock units that vest based on time (including any that vest based
on time but may vest sooner based on performance) count towards the ownership threshold. Restricted stock and restricted stock units
that vest only based on performance do not count. Although we do not currently grant stock options, the stock ownership guidelines provide
that unexercised stock options (whether vested or unvested) also do not count.
Until the applicable multiple is achieved, an
executive officer is expected to retain 75% of the shares received under any Company equity plan, net of shares for taxes on such awards.
As of the date of this Amendment, all executive officers meet or exceed their ownership requirement or comply with the retention ratio.
Anti-Hedging and Anti-Pledging Policies
Under our Insider Trading Policy, our directors
and executive officers as well as our senior vice presidents, certain vice presidents, assistant controller, director of internal audit
and SEC reporting manager and others identified from time to time, are not permitted to purchase a financial instrument or enter into
any transaction that is designed to hedge, establish downside price protection or otherwise offset declines in the market value of our
common stock, including puts, calls, prepaid variable forward contracts, equity swaps, collars, exchange funds (excluding broad-based
index funds) and other financial instruments that are designed to or have the effect of hedging or offsetting any decrease in the market
value of our common stock. Additionally, such persons also may not pledge Company securities, including as collateral for a margin loan.
Clawback
In November 2023, the Board, upon the recommendation
of the Compensation Committee, approved the Sovos Brands, Inc. Clawback Policy pursuant to, and consistent with, the listing requirements
of Nasdaq. The policy applies to the Company’s current and former executive officers and provides for the mandatory recovery of
certain erroneously awarded incentive-based compensation in the event that the Company is required to prepare an accounting restatement
due to material noncompliance with any financial reporting requirement under the federal securities laws.
Compensation Risk Assessment
Pursuant to the Compensation Committee’s
charter, at least annually, the committee reviews the Company’s compensation policies and practices for executives, management employees
and employees generally to assess whether such policies and practices could lead to excessive risk taking behavior and the manner in which
any risks arising out of the Company’s compensation policies and practices are monitored and mitigated and adjustments necessary
to address changes in the Company’s risk profile. Based on such review, the Compensation Committee believes that our compensation
program does not create risks that are reasonably likely to have a materially adverse effect on the Company.
Compensation
Committee Report
Our Compensation Committee has reviewed and discussed
the section entitled “Compensation Discussion and Analysis” with management. Based upon this review and discussion, the Compensation
Committee recommended to the Board of Directors that the section entitled “Compensation Discussion and Analysis” be included
in this Amendment No. 1 on Form 10-K/A to the Company’s Annual Report on Form 10-K for the fiscal year ended December 30,
2023.
| Jefferson M. Case, Chair | David W.
Roberts | |
| William R. Johnson | Vijayanthimala (Mala) Singh | |
Summary compensation table
The following table sets forth summary information concerning the compensation
of our NEOs for each of the last three completed fiscal years.
| | |
| | |
| | |
| | |
| | |
Non-Equity | | |
| | |
| |
| | |
| | |
| | |
| | |
Stock | | |
Incentive Plan | | |
All Other | | |
| |
| Name and principal | |
| | |
Salary | | |
Bonus | | |
Awards | | |
Compensation | | |
Compensation | | |
Total | |
| position | |
Year | | |
($) | | |
($)(1) | | |
($)(2) | | |
($)(3) | | |
($)(4) | | |
($) | |
| Todd R. Lachman | |
| 2023 | | |
| 875,000 | | |
| 200,813 | | |
| 8,408,689 | | |
| 2,161,688 | | |
| 140,694 | | |
| 11,786,883 | |
| Chief Executive | |
| 2022 | | |
| 800,000 | | |
| — | | |
| 3,060,959 | | |
| 1,490,400 | | |
| 416,543 | | |
| 5,767,902 | |
| Officer | |
| 2021 | | |
| 725,000 | | |
| 294,230 | | |
| 11,762,837 | | |
| 643,413 | | |
| 157,841 | | |
| 13,583,321 | |
| Christopher W. Hall | |
| 2023 | | |
| 465,000 | | |
| 59,288 | | |
| 2,090,939 | | |
| 638,213 | | |
| 230,666 | | |
| 3,484,106 | |
| Chief Financial Officer | |
| 2022(5) | | |
| 465,000 | | |
| — | | |
| 1,138,733 | | |
| 481,275 | | |
| 130,018 | | |
| 2,215,026 | |
| | |
| 2021 | | |
| 440,000 | | |
| 79,363 | | |
| 2,234,321 | | |
| 173,549 | | |
| 28,629 | | |
| 2,955,862 | |
| E. Yuri Hermida(6) | |
| 2023 | | |
| 550,000 | | |
| 93,500 | | |
| 1,873,044 | | |
| 2,106,500 | | |
| 71,922 | | |
| 4,694,966 | |
| President | |
| 2022 | | |
| 102,291 | | |
| — | | |
| 3,928,226 | | |
| 141,403 | | |
| 4,626 | | |
| 4,176,546 | |
| Kirk A. Jensen(7) | |
| 2023 | | |
| 450,000 | | |
| 57,375 | | |
| 1,160,162 | | |
| 617,625 | | |
| 61,620 | | |
| 2,346,782 | |
| Chief Operating Officer | |
| 2022 | | |
| 450,000 | | |
| — | | |
| 1,569,362 | | |
| 434,700 | | |
| 99,047 | | |
| 2,553,109 | |
| Risa Cretella(8) | |
| 2023 | | |
| 450,000 | | |
| 57,375 | | |
| 1,355,225 | | |
| 617,625 | | |
| 57,154 | | |
| 2,537,379 | |
| Chief Sales Officer | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| (1) | For fiscal 2023, represents the amount under the 2023 Annual Incentive Plan that the Compensation Committee determined in its discretion
to be paid out above the 183% achievement level attained under the plan disclosed in this table under “Non-Equity Incentive Plan
Compensation.” See footnote 3 to this table and the discussion under “Annual Cash Incentive Awards” in CD&A above. |
| (2) | For fiscal 2023, represents (i) the aggregate grant date fair value of RSUs and PSUs that were granted in fiscal 2023, (ii) the
incremental value of the IPO PSUs that were modified in February 2023 as discussed under “Equity Compensation—IPO Equity
Grants” in CD&A above, and (iii) the incremental value of the Performance-Based Restricted Stock that was modified in February 2023
as discussed under “Equity Compensation – Restricted Stock” in CD&A above. The grant date fair value of the PSUs
is computed based on the probable outcome of the performance conditions as of the grant date at target. The aggregate grant date fair
value of the PSUs at maximum performance as computed in accordance with FASB ASC Topic 718 for each NEO is as follows: Mr. Lachman
– $4,962,819; Mr. Hall – $1,510,403; Mr. Hermida – $1,654,273; Mr. Jensen – $751,917; and Ms. Cretella
– $1,127,910. The foregoing amounts are consistent with the estimate of aggregate compensation cost to be recognized by the Company
over the performance period of the award determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures.
The assumptions used in calculating the valuations are set forth in Note 16 to the Original 10-K Filing. |
| (3) | For fiscal 2023, represents performance-based amounts earned at 183% of target under our 2023 Annual Incentive Plan as described in
CD&A under “Annual Cash Incentive Awards.” For Mr. Hermida, also includes $1,100,000 for his performance-based cash
bonus that was payable on June 1, 2023, which was intended to compensate him for amounts forgone when he left his prior company.
See discussion in CD&A above. |
| (4) | For fiscal 2023, payments to our NEOs included in the “All Other Compensation” column include the following: |
| | |
Long
term | | |
| | |
| | |
| | |
| | |
Dividend | | |
| | |
| |
| | |
| Disability | | |
| Life | | |
| | | |
| 401
(k) | | |
| Health | | |
| Holdback | | |
| Tax | | |
| | |
| | |
| Insurance | | |
| Insurance | | |
| Cell
Phone | | |
| Matching | | |
| Insurance | | |
| Payments | | |
| Reimbursements | | |
| | |
| Name | |
| Premiums | | |
| Premiums | | |
| Allowance | | |
| Contributions | | |
| Premiums | | |
| (a) | | |
| (b) | | |
| Total | |
| Todd
R. Lachman | |
$ | 11,231 | | |
$ | 38,746 | | |
$ | 1,200 | | |
$ | 7,673 | | |
$ | 36,661 | | |
$ | — | | |
$ | 45,183 | | |
$ | 140,694 | |
| Christopher
W. Hall | |
$ | 650 | | |
$ | 1,171 | | |
$ | 1,200 | | |
$ | — | | |
$ | 24,213 | | |
$ | 203,432 | | |
$ | — | | |
$ | 230,666 | |
| E.
Yuri Hermida | |
$ | 9,625 | | |
$ | 5,496 | | |
$ | 1,200 | | |
$ | 13,200 | | |
$ | 36,661 | | |
$ | — | | |
$ | 5,740 | | |
$ | 71,922 | |
| Kirk
A. Jensen | |
$ | 4,605 | | |
$ | 3,896 | | |
$ | 1,200 | | |
$ | 13,200 | | |
$ | 36,661 | | |
$ | — | | |
| 2,058 | | |
$ | 61,620 | |
| Risa
Cretella | |
$ | 2,926 | | |
$ | 2,496 | | |
$ | 1,200 | | |
$ | 13,200 | | |
$ | 36,661 | | |
$ | — | | |
$ | 671 | | |
$ | 57,154 | |
(a) In June 2021, the Company paid a one-time
cash dividend to Sovos Brands Limited Partnership, its ultimate parent at the time. The limited partnership distributed the dividend
to its limited partners; however, distribution amounts associated with time-based incentive units of the limited partnership that were
unvested as of June 30, 2022 were withheld until such limited partnership interests vested based on continued service with the Company.
Dividend Holdback Payments reflect the amounts distributed by the limited partnership to the executive in fiscal 2023.
(b) Represents reimbursements by the Company for taxes
relating to payments of insurance premiums on behalf of the executive.
| (5) | Mr. Hall was a NEO for fiscal 2021 and fiscal 2023, but not for fiscal 2022; however, compensation for fiscal 2022 is being provided
pursuant to applicable SEC Staff guidance. |
| (6) | Mr. Hermida joined the Company in October 2022 as its Chief Growth Officer and first became a NEO for fiscal 2022. IPO PSUs
were granted to Mr. Hermida when he joined the Company to compensate him for equity awards forgone when he left his prior company.
Mr. Hermida was promoted to President in December 2023. |
| (7) | Mr. Jensen first became a NEO for fiscal 2022. |
| (8) | Ms. Cretella first became a NEO for fiscal 2023. |
Grants of Plan Based Awards
The following
table specifies the grants of awards made under our cash bonus and equity incentive plans to the NEOs during and for fiscal 2023.
| |
|
Type
of |
|
|
|
|
Estimated
Future Payouts
Under Non-Equity Incentive
Plan Awards (1) |
|
|
Estimated
Future Payouts Under
Equity Incentive Plan Awards (2) |
|
|
All
Other
Stock Awards:
Number of
Shares of
Stock
Underlying
Units |
|
|
Grant
Date Fair
Value of Stock |
| Name |
|
Award |
|
Grant
Date |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
(3)(4)(5)(6) |
|
|
Awards (7) |
| |
|
|
|
|
|
|
|
|
($) |
|
|
|
($) |
|
|
|
($) |
|
|
|
(#) |
|
|
|
(#) |
|
|
|
(#) |
|
|
|
(#) |
|
|
($) |
| Todd R. Lachman |
|
AIP |
|
|
— |
|
|
|
295,313 |
|
|
|
1,181,250 |
|
|
|
2,362,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
— |
| |
|
Annual RSU(3) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94,964 |
|
|
1,320,000 |
| |
|
Annual PSU (2) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
71,223 |
|
|
|
142,446 |
|
|
|
284,892 |
|
|
|
— |
|
|
2,481,409 |
| |
|
IPO PSU Modification(4) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280,000 |
|
|
1,783,600 |
| |
|
MOIC Modification(5) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
259,224 |
|
|
3,489,155 |
| Christopher W. Hall |
|
AIP |
|
|
— |
|
|
|
87,188 |
|
|
|
348,750 |
|
|
|
697,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
— |
| |
|
IPO PSU Modification (4) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,333 |
|
|
530,831 |
| |
|
MOIC Modification (5) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,495 |
|
|
755,201 |
| |
|
Annual RSU(3) |
|
|
6/7/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,378 |
|
|
399,982 |
| |
|
Annual PSU(2) |
|
|
6/7/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
16,034 |
|
|
|
32,068 |
|
|
|
64,136 |
|
|
|
— |
|
|
755,201 |
| E. Yuri Hermida |
|
AIP |
|
|
— |
|
|
|
137,500 |
|
|
|
550,000 |
|
|
|
1,100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
— |
| |
|
Annual RSU(3) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,654 |
|
|
439,991 |
| |
|
Annual PSU(2) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
23,741 |
|
|
|
47,482 |
|
|
|
94,964 |
|
|
|
— |
|
|
827,136 |
| |
|
IPO PSU Modification(4) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,422 |
|
|
505,918 |
| |
|
One-Time Promotion Award(6) |
|
|
12/4/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,562 |
|
|
99,999 |
| Kirk A. Jensen |
|
AIP |
|
|
— |
|
|
|
84,375 |
|
|
|
337,500 |
|
|
|
675,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
— |
| |
|
Annual RSU(3) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,388 |
|
|
199,993 |
| |
|
Annual PSU(2) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,791 |
|
|
|
21,582 |
|
|
|
43,164 |
|
|
|
— |
|
|
375,958 |
| |
|
IPO PSU Modification(4) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,250 |
|
|
199,063 |
| |
|
MOIC Modification(5) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,544 |
|
|
478,422 |
| Risa Cretella |
|
AIP |
|
|
— |
|
|
|
84,375 |
|
|
|
337,500 |
|
|
|
675,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
— |
| |
|
Annual RSU(3) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,582 |
|
|
299,990 |
| |
|
Annual PSU(2) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
16,187 |
|
|
|
32,374 |
|
|
|
64,748 |
|
|
|
— |
|
|
563,955 |
| |
|
IPO PSU Modification(4) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,916 |
|
|
145,975 |
| |
|
MOIC Modification(5) |
|
|
2/10/2023 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,211 |
|
|
433,560 |
| (1) | Awards under the Annual Incentive Plan could meet, exceed or be less than target. Amounts are not
guaranteed and are based on targets established and scored by our Compensation Committee. The maximum represents the potential
payout if certain pre-established performance objectives are exceeded. Threshold represents the lowest amount payable if any amount
is paid under the AIP and reflects achievement of threshold for the adjusted EBITDA metric and failure to achieve threshold for the
net sales and working capital metrics. If the minimum performance threshold for adjusted EBITDA of 92% was not satisfied, the pool
would not have been funded and no annual cash incentive payments would have been payable irrespective of performance under the other
plan metrics. For additional information, please refer to the CD&A above. Actual Annual Incentive Plan payouts are reflected in
the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” and the “Bonus”
columns. |
| (2) | The columns under “Estimated Future Payouts Under Equity Incentive Plan Awards” represent the estimated future payouts
of Annual PSUs granted in fiscal 2023 that vest based on the Company’s performance over a three-year performance period. Earned
payments range from 0% to 200% of target based on performance. Annual PSU Awards vest based on the Company’s stockholder return
as compared to the total stockholder return of identified comparator companies (“RTSR”), as measured on the third anniversary
of the grant date, subject to continued service, except as otherwise provided below in “Potential Payments upon Termination of Employment
or Change in Control.” See “2023 Equity Awards” in CD&A above. |
| (3) | Annual RSUs vest one-third on each of the first three anniversaries of the grant for Mr. Lachman and vest one-half on each of
the first two anniversaries of the grant for Mr. Hall, Mr. Hermida, Mr. Jensen and Ms. Cretella. |
| (4) | The IPO PSUs originally granted on September 23, 2021 (or, in the case of Mr. Hermida, on October 24, 2022,) were modified
to vest (i) 50% on September 23, 2024 and 50% on September 23, 2025 or (ii) upon the original vesting criteria, if
earlier, subject to continued service on such date except as otherwise provided below in “Potential Payments upon Termination of
Employment or Change in Control.” |
| (5) | Half of the Performance-Based Restricted Stock originally granted on September 22, 2021 that would have vested based solely on
a 3.0 MOIC or 4.0 MOIC (including linear interpolation) were amended to provide that such restricted stock vests (i) 50% on September 23,
2024 and 50% on September 23, 2025 or (ii) upon achievement of the applicable 3.0 or 4.0 MOIC vesting criteria, if earlier,
subject to continued service on such date, except as otherwise provided below in “Potential Payments upon Termination of Employment
or Change in Control.” |
| (6) | The one-time promotion award RSU for Mr. Hermida vests one-third on each of the first three anniversaries of the grant, subject
to continued service on such date, except as otherwise provided below in “Potential Payments upon Termination of Employment or Change
in Control.” |
| (7) | The amounts included in this column reflect the aggregate grant date fair value of PSUs and RSUs granted to the NEOs in fiscal year
2023, computed in accordance with FASB ASC Topic 718, excluding the effect of any estimated forfeitures. Information about the assumptions
used to calculate the grant date fair value of such equity awards can be found in Note 16. Equity-Based Compensation to the consolidated
financial statements included in the Original Form 10-K. For the “IPO PSU Modification” described in note 4 to this table
and the “MOIC Modification” described in note 5 to this table, the amounts included in this column represent the incremental
value of the modified awards as of the modification date. |
NEO
Employment Arrangements
Other than our CEO who has an employment agreement
with us, we provided offer letters to each of our NEOs that set forth the basic terms of at-will employment and establish the individual’s
base salary, eligibility to participate in the annual bonus plan and receive equity awards, and eligibility to participate in standard
employee benefits. Mr. Lachman’s employment agreement, in addition to setting forth the basic terms of employment as provided
under our offer letters, provides for certain benefits under qualifying terminations.
Todd R. Lachman
We entered into an employment agreement with Mr. Lachman
in January 2017 (such agreement, as amended on September 1, 2021 and June 29, 2023, the “Lachman Employment Agreement”).
All capitalized terms not defined in this section have the meanings set forth in the Lachman Employment Agreement.
The Lachman Employment Agreement provides for
a four-year term beginning on January 31, 2017, with automatic one-year renewals thereafter. The Lachman Employment Agreement provides
that Mr. Lachman will receive a base salary, which will be reviewed annually by our Board and may be increased, but not decreased
without Mr. Lachman’s consent, by the Board. See the “Summary Compensation Table” above for Mr. Lachman’s
base salary for fiscal 2023. The Lachman Employment Agreement also provides that Mr. Lachman is eligible to receive an annual performance-based
cash bonus based on his performance, with a target annual bonus equal to 100% of his base salary. Mr. Lachman’s bonus target
has since been increased and was 135% of base salary for fiscal 2023. Additionally, the Lachman Employment Agreement provided for awards
to be issued to Mr. Lachman under the 2017 Plan and the terms of such awards, which awards were made pursuant to certain Incentive
Unit award agreements. See the “Outstanding Equity Awards” table above for a summary of Mr. Lachman’s outstanding
equity incentive awards as of December 30, 2023 and “Potential Payments upon Termination of Employment or Change in Control”
below for more information about the treatment of Mr. Lachman’s outstanding equity awards in connection with his termination
under certain circumstances.
In addition to the above, Mr. Lachman participates
in the employee benefits programs offered by us to our employees generally.
Mr. Lachman may terminate the Lachman Employment
Agreement at any time and for any reason with 60 days’ prior written notice, provided, however, that we may accelerate Mr. Lachman’s
last day of employment to any date within the 60-day notice period without converting the resignation into anything other than a voluntary
resignation. Mr. Lachman’s employment terminates automatically upon his death. We may terminate Mr. Lachman’s employment
for Disability upon 30 days’ prior written notice or immediately upon written notice for Cause. In the event that Mr. Lachman’s
employment is terminated due to his Death or Disability, we must provide Mr. Lachman’s beneficiaries with his Accrued Benefits
and Pro-Rata Bonus for the year in which his Death or Disability occurred.
Under the Lachman Employment Agreement, in the
event that his employment is terminated by the Company other than for Cause or Disability, or he resigns with Good Reason, or the Company
elects not to renew his employment agreement, in each case, within 24 months following a change in control, Mr. Lachman is eligible
to receive his Accrued Benefits and the following severance benefits, subject to his execution and non-revocation of a release of claims:
| - | an amount equal to the sum of two (2) times Mr. Lachman’s Base Salary plus two (2) times
Mr. Lachman’s Target Bonus, payable in substantially equal installments for 24 months following the termination date; |
| - | to the extent that Mr. Lachman timely elects continuation coverage under COBRA, reimbursement for
the applicable COBRA premiums, if any, under the Company’s or its subsidiaries’, as applicable medical, dental and vision
plans for him and his eligible dependents until the earlier of (x) 18 months following Mr. Lachman’s termination, or (y) Mr. Lachman
obtains new employment that provides substantially similar medical, dental and vision coverage is obtained (the “COBRA Benefit”). |
Under the Lachman Employment Agreement, in the
event that his employment is terminated by the Company other than for Cause or Disability or he resigns for Good Reason, or the Company
elects not to renew his employment agreement, in each case, prior to a change in control, Mr. Lachman is eligible to receive his
Accrued Benefits and the following severance benefits instead of the benefits provided above:
| - | an amount equal to the sum of two (2) times Mr. Lachman’s Base Salary plus one (1) times
Mr. Lachman’s Target Bonus, payable in substantially equal installments for 24 months following the termination date; |
The payments and benefits provided under Mr. Lachman’s
employment agreement are in lieu of any other termination or severance payments or benefits for which he may be eligible under any of
the plans, policies or programs of the Company or any of its subsidiaries or affiliates. In consideration of the payments and benefits
under Mr. Lachman’s employment agreement, such agreement includes a non-solicitation covenant as well as a confidentiality
covenant in the Company’s favor.
Christopher Hall
We have an offer letter with Mr. Hall dated
July 17, 2019 (the “Hall Offer Letter”) pursuant to which Mr. Hall serves as our Chief Financial Officer. The Hall
Offer Letter provides for a base salary that may be increased annually based on merit. See the “Summary Compensation Table”
above for Mr. Hall’s base salary for fiscal 2023. Pursuant to the Hall Offer Letter, Mr. Hall is entitled to participate
in the Annual Incentive Plan at a target rate of 60% of his annual eligible base salary, which has since been increased to 75%, and Mr. Hall
received a grant of 3,500 Incentive Units under the 2017 Plan pursuant to a separate Incentive Unit award agreement. See the “Outstanding
Equity Awards” table above for a summary of Mr. Hall’s outstanding equity incentive awards as of December 30, 2023,
and “Potential Payments upon Termination of Employment or Change in Control” below for more information about the treatment
of Mr. Hall’s outstanding equity awards in connection with his termination under certain circumstances.
Mr. Hall is also party to a confidentiality
agreement with the Company. Mr. Hall participates in the employee benefits programs offered by us to our employees generally and
participates in the Executive Severance Plan.
E. Yuri Hermida
We have an offer letter with Mr. Hermida
dated September 26, 2022 (the “Hermida Offer Letter”) pursuant to which Mr. Hermida originally served as our Chief
Growth Officer. Mr. Hermida has since been promoted to President. The Hermida Offer Letter provides for a base salary that may be
increased annually based on merit. See the “Summary Compensation Table” above for Mr. Hermida’s base salary for
fiscal 2023. Pursuant to the Hermida Offer Letter, Mr. Hermida is entitled to participate in the Annual Incentive Plan at a target
rate of 100% of his annual eligible base salary and in the Company’s 2023 long-term incentive program at 200% of his annual base
compensation, which awards were granted February 10, 2023. Additionally, the Hermida Offer letter provided for a sign-on, performance
based cash bonus of $1,100,000 payable on June 1, 2023, if the Company was on-track to meet or exceed the threshold net sales and
adjusted EBITDA performance metrics established by the Compensation Committee under the Annual Incentive Plan for fiscal 2023 and the
new-hire IPO PSU and Annual RSU awards described above under “Equity Compensation,” in each case, to compensate Mr. Hermida
for awards forgone when he left his prior company. The performance based cash bonus was paid on June 1, 2023 because the criteria
for payment had been met. See the “Outstanding Equity Awards” table above for a summary of Mr. Hermida’s outstanding
equity incentive awards as of December 30, 2023 and “Potential Payments upon Termination of Employment or Change in Control”
below for more information about the treatment of Mr. Hermida’s outstanding equity awards in connection with his termination
under certain circumstances.
Mr. Hermida participates in the employee
benefits programs offered by us to our employees generally and participates in the Executive Severance Plan.
Kirk A. Jensen
We have an offer letter with Mr. Jensen
dated April 29, 2018 (the “Jensen Offer Letter”) pursuant to which Mr. Jensen joined our Company as our Chief Supply
Chain Officer. Mr. Jensen now serves as our Chief Operating Officer. The Jensen Offer Letter provides for a base salary that may
be increased annually based on merit. See the “Summary Compensation Table” above for Mr. Jensen’s base salary
for fiscal 2023. Pursuant to the Jensen Offer Letter, Mr. Jensen is entitled to participate in the Annual Incentive Plan at a target
rate of 50% of his annual eligible base salary, which has since been increased to 75%. Mr. Jensen received a grant of 2,500 Incentive
Units under the 2017 Plan pursuant to a separate Incentive Unit award agreement. See the “Outstanding Equity Awards” table
above for a summary of Mr. Jensen’s outstanding equity incentive awards as of December 30, 2023 and “Potential
Payments upon Termination of Employment or Change in Control” below for more information about the treatment of Mr. Jensen’s
outstanding equity awards in connection with his termination under certain circumstances.
Mr. Jensen participates in the employee
benefits programs offered by us to our employees generally and participates in the Executive Severance Plan, as augmented by a letter
agreement with Mr. Jensen dated March 14, 2022. Pursuant to the Executive Severance Plan as augmented by the letter agreement,
if Mr. Jensen’s employment is involuntarily terminated by the Company at any time other than within 18 months following a
“change in control” (as defined in the Executive Severance Plan), Mr. Jensen is eligible to receive (i) the continued
payment of his base salary for a period of one year, (ii) an amount equal to 1.0 times his annual target bonus for the year of termination,
(iii) a pro-rata portion of his annual bonus based on Company performance in the fiscal year of his termination, (iv) payment
of the annual bonus earned for the completed fiscal year prior to the fiscal year of his termination (to the extent unpaid) and (v) up
to 1 year of continued health benefits. For more information about the severance amounts payable to Mr. Jensen, see “Executive
Severance Plan” below.
Risa Cretella
We have an offer letter with Ms. Cretella
dated March 7, 2018 (the “Cretella Offer Letter”) pursuant to which Ms. Cretella joined the Company as our General
Manager, Rao’s Specialty Foods. Ms. Cretella now serves as our Chief Sales Officer. The Cretella Offer Letter provides for
a base salary that may be increased annually based on merit. See the “Summary Compensation Table” above for Ms. Cretella’s
base salary for fiscal 2023. Pursuant to the Cretella Offer Letter, Ms. Cretella is entitled to participate in the Annual Incentive
Plan at a target rate of 50% of her annual eligible base salary, which has since been increased to 75%, and Ms. Cretella received
a grant of 2,000 Incentive Units under the 2017 Plan pursuant to a separate Incentive Unit award agreement. See the “Outstanding
Equity Awards” table above for a summary of Ms. Cretella’s outstanding equity incentive awards as of December 30,
2023, and “Potential Payments upon Termination of Employment or Change in Control” below for more information about the treatment
of Ms. Cretella’s outstanding equity awards in connection with her termination under certain circumstances.
Ms. Cretella participates in the employee
benefits programs offered by us to our employees generally and participates in the Executive Severance Plan.
Outstanding Equity Awards
at fiscal year end
The following table sets forth certain information with respect to
outstanding stock awards granted to our NEOs as of December 30, 2023, our 2023 fiscal year end. As of December 30, 2023, we
have not granted stock options.
| Stock
Awards |
| | |
| | | |
| | | |
| | | |
| | | |
| Equity
Incentive | |
| | |
| | | |
| | | |
| Market | | |
| Equity
Incentive | | |
| Plan
Awards: | |
| | |
| | | |
| Number
of | | |
| Value
of | | |
| Plan
Awards: | | |
| Market
or Payout | |
| | |
| | | |
| Shares
or | | |
| Shares
or | | |
| Number
of Unearned | | |
| Value
of Unearned | |
| | |
| | | |
| Units
of Stock | | |
| Units
of Stock | | |
| Shares,
Units or | | |
| Shares,
Units or | |
| | |
| | | |
| That
Have | | |
| That
Have | | |
| Other
Rights That | | |
| Other
Rights That | |
| | |
| Grant
Date | | |
| Not
Vested | | |
| Not
Vested | | |
| Have
Not Vested | | |
| Have
Not Vested | |
| Name | |
| | | |
| (#) | | |
| ($)(1) | | |
| (#) | | |
| ($)(1) | |
| Todd R. Lachman | |
| 9/22/2021(2) | | |
| 259,224(3) | | |
| 5,710,705 | | |
| 252,789(4) | | |
| 5,568,942 | |
| | |
| 9/23/2021 | | |
| 280,000(5) | | |
| 6,168,400 | | |
| | | |
| | |
| | |
| 9/23/2021 | | |
| 280,000(6) | | |
| 6,168,400 | | |
| | | |
| | |
| | |
| 1/13/2022 | | |
| 50,692(7) | | |
| 1,116,745 | | |
| 228,118(8) | | |
| 5,025,440 | |
| | |
| 2/10/2023 | | |
| 94,964(7) | | |
| 2,092,057 | | |
| 284,892(8) | | |
| 6,276,171 | |
| Christopher W. Hall | |
| 9/22/2021(2) | | |
| 36,495(3) | | |
| 803,985 | | |
| 30,431(4) | | |
| 670,395 | |
| | |
| 9/23/2021 | | |
| 83,333(5) | | |
| 1,835,826 | | |
| | | |
| | |
| | |
| 9/23/2021 | | |
| 83,333(6) | | |
| 1,835,826 | | |
| | | |
| | |
| | |
| 1/13/2022 | | |
| 14,144(7) | | |
| 311,592 | | |
| 84,864(8) | | |
| 1,869,554 | |
| | |
| 6/7/2023 | | |
| 21,378(7) | | |
| 470,957 | | |
| 64,126(8) | | |
| 1,412,916 | |
| E. Yuri Hermida | |
| 10/24/2022 | | |
| 238,267(9) | | |
| 5,249,022 | | |
| | | |
| | |
| | |
| 10/24/2022 | | |
| 79,422(10) | | |
| 1,749,667 | | |
| | | |
| | |
| | |
| 2/10/2023 | | |
| 31,654(7) | | |
| 697,338 | | |
| 94,964(8) | | |
| 2,092,057 | |
| | |
| 12/4/2023 | | |
| 4,562(11) | | |
| 100,501 | | |
| | | |
| | |
| Kirk A. Jensen | |
| 9/22/2021(2) | | |
| 35,544(3) | | |
| 783,034 | | |
| 36,076(4) | | |
| 794,754 | |
| | |
| 9/23/2021 | | |
| 31,250(5) | | |
| 688,438 | | |
| | | |
| | |
| | |
| 9/23/2021 | | |
| 31,250(5) | | |
| 688,438 | | |
| | | |
| | |
| | |
| 1/13/2022 | | |
| 42,432(7) | | |
| 934,777 | | |
| 42,432(8) | | |
| 934,777 | |
| | |
| 2/10/2023 | | |
| 14,388(7) | | |
| 316,968 | | |
| 43,164(8) | | |
| 950,903 | |
| Risa Cretella | |
| 9/22/2021(2) | | |
| 32,211(3) | | |
| 709,608 | | |
| 35,295(4) | | |
| 777,549 | |
| | |
| 9/23/2021 | | |
| 22,916(5) | | |
| 504,839 | | |
| | | |
| | |
| | |
| 9/23/2021 | | |
| 22,916(6) | | |
| 504,839 | | |
| | | |
| | |
| | |
| 1/13/2021 | | |
| 23,337(7) | | |
| 514,114 | | |
| 33,946(8) | | |
| 747,830 | |
| | |
| 2/10/2023 | | |
| 21,582(7) | | |
| 475,451 | | |
| 64,748(8) | | |
| 1,426,398 | |
| (1) | The market value was determined based on a price of $22.03 per share,
which was the closing price of our common stock on December 29, 2023, the last trading
day of fiscal 2023. |
| (2) | On September 22, 2021, pursuant to restricted stock agreements of
the same date, shares of restricted stock were distributed in connection with our IPO in
respect of the incentive units previously awarded under the 2017 Plan. |
| (3) | Represents Performance-Based Restricted Stock that was distributed in
connection with our IPO in respect of the Performance-Based Incentive Units previously awarded
under the 2017 Plan, which were modified in February 2023. Such restricted stock vests
on the earlier of (i) 50% on September 23, 2024 and 50% on September 23, 2025
and (ii) achievement of the applicable 3.0 or 4.0 MOIC vesting criteria, if earlier,
subject to continued service on such date, except as otherwise provided below in “Potential
Payments upon Termination of Employment or Change in Control.” The terms of such restricted
stock provide that any such shares of restricted stock that do not vest will be forfeited
to Sovos Brands Limited Partnership. For Mr. Lachman, includes 40,644 shares transferred
to the Todd Lachman 2021 Family Trust for estate planning purposes. |
| (4) | Represents Performance-Based Restricted Stock that was distributed in
connection with our IPO in respect of the Performance-Based Incentive Units previously awarded
under the 2017 Plan and that, as of December 30, 2023, vests solely on the achievement
of the 2.5, 3.0 or 4.0 MOIC vesting criteria, with linear interpolation between MOIC achievement
levels, as described under “Equity Compensation – Restricted Stock” above.
Based on our performance through December 30, 2023, which did not reach the 3.0 MOIC
level, the number of shares set forth in this column assumes a payout at the 2.5 MOIC level,
which we are treating as “threshold” under applicable SEC rules, and for Mr. Lachman
includes 50,558 shares transferred to the Todd Lachman 2021 Family Trust for estate planning
purposes. The actual payout may be zero or may be more than the amount reflected. |
| (5) | Represents IPO RSUs, which cliff vest on September 23, 2024, subject
to continued service on such date except as otherwise provided below in “Potential
Payments upon Termination of Employment or Change in Control.” |
| (6) | Represents
IPO PSUs as modified on February 10, 2023 to vest (i) 50% on September 23,
2024 and 50% on September 23, 2025, or (ii) upon achievement of the original vesting
criteria, if earlier. The IPO PSUs are subject to continued employment on the applicable
measurement date or vesting date, except as otherwise provided below in “Potential
Payments upon Termination of Employment or Change in Control.” |
| (7) | Represents Annual RSUs, which vest one-half on each of the first two
anniversaries of the grant date, other than for Mr. Lachman whose Annual RSUs vest one-third
on each of the first three anniversaries of the grant date, subject in each case to continued
service on such date except as otherwise provided below in “Potential Payments upon
Termination of Employment or Change in Control.” |
| (8) | Represents Annual PSUs that vest based on the Company’s total stockholder
return as compared to the RTSR as measured on the third anniversary of the grant date, subject
to continued service on such date except as otherwise provided below in “Potential
Payments upon Termination of Employment or Change in Control.” Based on our performance
through December 30, 2023, the number set forth in this column assumes a maximum payout
of 200% of the target Annual PSU awards. The actual payout may be less than the amount reflected
in the table. In the event the Company’s RTSR percentile ranking is 90th
percentile, maximum performance is achieved and 200% of the target Annual PSUs vest. |
| (9) | Mr. Hermida
received a new hire grant on October 24, 2022, consisting of 75% Annual RSUs. The Annual
RSUs vest one-third on each of the first three anniversaries of the grant date. The
Annual RSUs are subject to continued employment on the applicable measurement date or vesting
date, except as otherwise provided below in “Potential Payments upon Termination of
Employment or Change in Control.” |
| (10) | Mr. Hermida received a new hire grant on October 24, 2022,
consisting of 25% IPO PSUs. The IPO PSUs, as modified on February 10, 2023, vest (i) 50%
on September 23, 2024 and 50% on September 23, 2025, or (ii) upon achievement
of the original vesting criteria, if earlier. The IPO PSUs are subject to continued employment
on the applicable measurement date or vesting date, except as otherwise provided below in
“Potential Payments upon Termination of Employment or Change in Control.” |
| (11) | In connection with his promotion to President, Mr. Hermida received
a grant of RSUs, which vest one-third on each of the first three anniversaries of the grant,
subject to continued service on such date, except as otherwise provided below in “Potential
Payments upon Termination of Employment or Change in Control.” |
Option Exercises and Stock
Vested
| | |
Stock Awards | |
| Name | |
Number of Shares
Acquired on Vesting
(#) | | |
Value Realized in
Vesting ($) | |
| Todd R. Lachman | |
| 103,140 | | |
$ | 2,082,325 | |
| Christopher W. Hall | |
| 24,877 | | |
$ | 421,959 | |
| E. Yuri Hermida | |
| 79,422 | | |
$ | 1,722,663 | |
| Kirk A. Jensen | |
| 54,985 | | |
$ | 893,496 | |
| Risa Cretella | |
| 38,182 | | |
$ | 666,348 | |
POTENTIAL PAYMENTS UPON
TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL
As discussed above under “Employment Arrangements,” the
Lachman Employment Agreement provides for certain severance payments in connection with Mr. Lachman’s termination under certain
circumstances and the Executive Severance Plan (as augmented in the case of Mr. Jensen by his letter agreement) provides for certain
severance payments in connection with the termination of our NEOs other than the CEO under certain circumstances. Additionally, each
of the NEOs’ equity award agreements with the Company provide for the treatment of the outstanding Time-Based Restricted Stock,
Performance-Based Restricted Stock, RSUs and PSUs in connection with certain termination scenarios and a change in control, as described
below.
Executive Severance Plan
The Sovos Brands 2023 Amended and Restated Executive
Severance Plan (as amended, the “Executive Severance Plan”) applies to our executive officers, other than Mr. Lachman,
who is entitled to severance under his employment agreement, and Mr. Jensen, who is entitled to severance under the Executive Severance
Plan as augmented by his letter agreement. All capitalized terms not defined in this section have the meanings set forth in the Executive
Severance Plan.
Under the Executive Severance Plan, if an executive’s
employment is terminated by the Company without Cause or the executive resigns with Good Reason, in each case, within 18 months of a
change in control, the Company shall pay to the executive the following severance benefits:
| - | an
amount equal to the executive’s base salary, at the rate in effect on the date of termination,
for a period of 18 months, payable in substantially equal installments in accordance with
the Company’s regular payroll practices as in effect from time to time; |
| - | an
amount equal to the executive’s Annual Target Bonus multiplied by 1.5 payable in substantially
equal installments over a period of 18 months following such executive’s date of termination
in accordance with the Company’s regular payroll practices as in effect from time to
time; |
| - | the
Pro-Rata Bonus, payable when the annual bonus would have otherwise been payable to the executive
had his or her employment not terminated; and |
| - | to
the extent that the executive timely elects continuation coverage under COBRA, reimbursement
for the applicable COBRA premiums, if any, under the Company’s or its subsidiaries’,
as applicable, medical, dental and vision plans for such executive and his or her eligible
dependents until the earlier of (i) 18 months following such executive’s date
of termination or (ii) until the executive obtains new employment that provides substantially
similar medical, dental and vision coverage. |
If an executive
covered under the Executive Severance Plan is terminated by the Company without Cause before a change in control, the executive will
be eligible to receive the following benefits instead of the benefits provided above:
| - | an
amount equal to the executive’s base salary, at the rate in effect on the date of termination,
for a period of 12 months, payable in substantially equal installments in accordance with
the Company’s regular payroll practices as in effect from time to time; |
| - | the
Pro-Rata Bonus, payable when the annual bonus would have otherwise been payable to the executive
had his or her employment not terminated; and |
| - | to
the extent that the executive timely elects continuation coverage under COBRA, reimbursement
for the applicable COBRA premiums, if any, under the Company’s or its subsidiaries’,
as applicable, medical, dental and vision plans for such executive and his or her eligible
dependents until the earlier of (i) 12 months following such executive’s date
of termination or (ii) until the executive obtains new employment that provides substantially
similar medical, dental and vision coverage. |
As noted above with respect to Messrs. Lachman
and Jensen, if a participant is party to an employment agreement, offer letter or other contractual arrangement with us that contains
severance compensation that is more favorable than the severance compensation provided under the Executive Severance Plan, then the Executive
Severance Plan is not applicable to such participant. In addition, if any of the payments or benefits provided for under our Executive
Severance Plan together with any other payments or benefits would constitute “parachute payments” within the meaning of Section 280G
of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), and could be subject to the related excise tax, the participant
will receive either full payment of such payments and benefits or such lesser amount that would result in no portion of the payments
and benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to the participant.
Treatment of Outstanding Equity Awards as of December 30,
2023
The terms of the applicable award agreements
and, for the RSUs and PSUs, the 2021 Plan, as modified by any agreements with our NEOs as noted, provide for the following treatment
of vested and unvested equity awards in connection with qualifying terminations of employment or a change in control.
Restricted Stock
In
the event of a termination of Mr. Lachman’s employment without Cause, for Good Reason or due to his Death or Disability, Performance-Based
Restricted Stock held by Mr. Lachman will remain outstanding and eligible to vest upon achievement of the applicable performance
criteria; provided, however that the portion of the modified Performance-Based Restricted Stock that is eligible to time-vest as described
in “Equity Compensation—Restricted Stock” above will accelerate and vest in full as of the date of such termination.
In the event of a termination of Mr. Lachman’s employment for any reason other than a qualifying termination under the Lachman
Employment Agreement, the unvested portion of the Performance-Based Restricted Stock is forfeited to Sovos Brands Limited Partnership.
The vested portion of the Performance-Based Restricted Stock is forfeited in the event of (i) the termination of Mr. Lachman’s
employment for cause, (ii) Mr. Lachman’s resignation when grounds for cause exist or (iii) Mr. Lachman’s
breach of certain restrictive covenants following a termination of employment. The terms “Cause,” “Good Reason,”
“Death,” and “Disability” as used in this paragraph are defined in the Lachman Employment Agreement.
For
our other NEOs (other than Mr. Hermida who did not hold any restricted stock as of December 30, 2023), in the event of a termination
of employment without cause, for good reason or due to their death or disability, the portion of the modified Performance-Based Restricted
Stock that is eligible to time-vest as described in “Equity Compensation—Restricted Stock” above will (i) prior
to a change in control, accelerate and vest pro-rata (and for Mr. Hall, plus one year of additional service credit), and
(ii) upon or following a change in control, accelerate and vest in full as of the date of such termination. The term “cause”
is as defined in the 2021 Plan and the term “good reason” is as defined in such restricted stock agreement. Except as described
in the preceding sentence, in the event of a termination of employment for any reason, the unvested portion of the Performance-Based
Restricted Stock is forfeited to Sovos Brands Limited Partnership pursuant to the terms of such Restricted Stock. The vested portion
of the Performance-Based Restricted Stock is forfeited in the event of (i) the termination of employment for cause (as such term
is defined in the award agreements), (ii) resignation when grounds for cause exist or (iii) breach of restrictive covenants
following a termination of employment.
IPO Awards
In
the event of a termination of Mr. Lachman without Cause, for Good Reason or due to his Death or Disability, all unvested IPO RSUs
and all unvested IPO PSUs (as modified February 2023) granted to Mr. Lachman will accelerate and vest in full as of the date
of such termination. The terms “Cause,” “Good Reason,” “Death,” and “Disability”
as used in this paragraph are defined in the Lachman Employment Agreement.
For
our other NEOs, in the event of a termination of employment without Cause, for Good Reason or due to Death or Disability, all
unvested IPO RSUs and all unvested IPO PSUs (as modified February 2023) granted to such NEO will (i) prior to a change in control,
accelerate and vest pro-rata (and for Mr. Hall, plus one year of additional service credit) and (ii) upon or following a change
in control, accelerate and vest in full as of the date of such termination. “Cause,” “Good Reason,” “Death,”
and “Disability” as used in this paragraph are defined in the applicable award agreements.
Treatment of Annual RSU and PSU Awards
Pursuant
to the Company’s Annual RSU Award Agreement, upon termination for any reason or no reason, prior to a change in control (as defined
in the 2021 Plan), any then unvested Annual RSUs are forfeited immediately, automatically and without consideration. Upon termination
for Good Reason, by the Company without Cause or due to death or Disability, in each case, upon or following a change in control, all
Annual RSUs vest on the officer’s termination date. Capitalized terms in this paragraph are defined in the Annual RSU Award
Agreement.
Pursuant
to the Company’s Annual PSU Award Agreement, upon termination of service for Good Reason, by the Company without Cause or due to
death or Disability, in each case, following the first anniversary of the Date of Grant but before the consummation of a change in control,
a pro-rata portion of the Service Condition is deemed satisfied based on a fraction, the numerator of which is the number of days from
the Date of Grant until the officer’s termination date, and the denominator of which is the total number of days from the Date
of Grant until the third anniversary of the Date of Grant. Accordingly, such pro-rata portion of the Annual PSUs remains outstanding
and eligible to vest based on the Company’s performance (including 200% vesting if the Company’s RTSR percentile ranking
is 90th percentile or more). Upon termination of service for Good Reason, by the Company without Cause or due to death or
Disability, in each case, upon or following the consummation of a change in control, all of the Annual PSUs satisfy the Service Condition.
Further, upon the consummation of a change in control prior to the third anniversary of the Date of Grant, a number of Annual PSUs become
Earned PSUs (i.e. the Performance Condition is deemed met), equal to the greater of (i) the number of Annual PSUs that are Earned
PSUs calculated as if the effective date of the change in control was the last day of the Performance Period and the price per share
of Common Stock in connection with such change in control was the Company’s Ending Stock Price and (ii) the number of Target
PSUs. Annual PSUs vest to the extent both the Service Condition and the Performance Condition are met or deemed met. All capitalized
terms not defined in this section have the meanings set forth in the applicable award agreement. Capitalized terms in this paragraph
are defined in the Annual PSU Award Agreement.
Quantification of Payments upon Termination of Change in Control
The following table provides information regarding
certain potential payments that would have been made to the NEOs if the triggering event occurred on the last day of fiscal 2023, December 30,
2023, given compensation and service levels as of that date and, where applicable, based on the closing market price per share of the
Company’s common stock on the last trading day of the fiscal year ($22.03 on December 29, 2023). Amounts actually received
upon the occurrence of a triggering event will vary based on factors such as the timing during the year of such event, the market price
of the Company’s common stock, and the officer’s compensation level. In accordance with the rules of the SEC, the Change
in Control event reflected in the table below is a hypothetical Change in Control and is not necessarily indicative of the pending Merger
with Campbell’s.
| | |
Todd R.
Lachman | | |
Christopher
W. Hall | | |
E. Yuri
Hermida | | |
Kirk A.
Jensen | | |
Risa Cretella | |
| Termination without Cause, prior to a Change in Control |
| Cash | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cash Severance | |
$ | 2,931,250 | | |
$ | 465,000 | | |
$ | 550,000 | | |
$ | 450,000 | | |
$ | 450,000 | |
| Current year Pro-Rata AIP Payment(1) | |
$ | 2,362,500 | | |
$ | 697,500 | | |
$ | 1,100,000 | | |
$ | 675,000 | | |
$ | 675,000 | |
| COBRA Reimbursement | |
$ | 75,645 | | |
$ | 34,146 | | |
$ | 50,612 | | |
$ | 50,294 | | |
$ | 50,612 | |
| Equity | |
| | | |
| | | |
| | | |
| | | |
| | |
| Restricted Stock | |
$ | 5,710,705(2) | | |
$ | 765,859 | | |
$ | — | | |
$ | 518,074 | | |
$ | 469,494 | |
| Restricted Stock Units | |
$ | 6,168,400 | | |
$ | 1,835,826 | | |
$ | — | | |
$ | 520,250 | | |
$ | 381,506 | |
| Performance-Based Restricted Stock Units(3) | |
$ | 6,168,400 | | |
$ | 1,748,727 | | |
$ | 895,725 | | |
$ | 455,308 | | |
$ | 333,883 | |
| Total | |
$ | 23,416,900 | | |
$ | 5,547,058 | | |
$ | 2,596,337 | | |
$ | 2,668,926 | | |
$ | 2,360,495 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Termination for Good Reason, prior to a Change in Control |
| Cash | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cash Severance | |
$ | 2,931,250 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Current Year Pro-Rata AIP Payment(1) | |
$ | 2,362,500 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| COBRA Reimbursement | |
$ | 75,645 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Equity | |
| | | |
| | | |
| | | |
| | | |
| | |
| Restricted Stock | |
$ | 5,710,705(2) | | |
$ | 765,859 | | |
$ | — | | |
$ | 518,074 | | |
$ | 469,494 | |
| Restricted Stock Units | |
$ | 6,168,400 | | |
$ | 1,835,826 | | |
| | | |
$ | 520,250 | | |
$ | 381,506 | |
| Performance-Based Restricted Stock Units(3) | |
$ | 6,168,400 | | |
$ | 1,748,727 | | |
$ | 895,725 | | |
$ | 520,250 | | |
$ | 381,506 | |
| Total | |
$ | 23,416,900 | | |
$ | 4,350,412 | | |
$ | 895,725 | | |
$ | 1,558,574 | | |
$ | 1,232,506 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Termination due to Death or Disability, prior to a Change
in Control |
| Cash | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cash Severance | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Current year Pro-Rata AIP Payment(1) | |
$ | 2,362,500 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| COBRA Reimbursement | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Equity | |
| | | |
| | | |
| | | |
| | | |
| | |
| Restricted Stock | |
$ | 5,710,705(2) | | |
$ | 765,859 | | |
$ | — | | |
$ | 518,074 | | |
$ | 469,494 | |
| Restricted Stock Units | |
$ | 6,168,400 | | |
$ | 1,835,826 | | |
$ | — | | |
$ | 520,250 | | |
$ | 381,506 | |
| Performance-Based Restricted Stock Units(3) | |
$ | 6,168,400 | | |
$ | 1,748,727 | | |
$ | 895,725 | | |
$ | 520,250 | | |
$ | 381,506 | |
| Total | |
$ | 20,410,005 | | |
$ | 4,350,412 | | |
$ | 895,725 | | |
$ | 1,558,574 | | |
$ | 1,232,506 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Change in Control, without Termination of Employment |
| Cash | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cash Severance | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Current year Pro-Rata AIP Payment(1) | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| COBRA Reimbursement | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Equity | |
| | | |
| | | |
| | | |
| | | |
| | |
| Restricted Stock (4) | |
$ | 9,452,368 | | |
$ | 1,137,872 | | |
$ | — | | |
$ | 1,348,963 | | |
$ | 1,319,751 | |
| Restricted Stock Units | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Performance-Based Restricted Stock Units | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Total | |
$ | 9,452,368 | | |
$ | 1,137,872 | | |
$ | — | | |
$ | 1,348,963 | | |
$ | 1,319,751 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Termination without Cause or for Good Reason, following a
Change in Control (5) |
| Cash | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cash Severance | |
$ | 4,112,500 | | |
$ | 1,220,625 | | |
$ | 1,650,000 | | |
$ | 1,181,250 | | |
$ | 1,181,250 | |
| Current year Pro-Rata AIP Payment(1) | |
$ | 2,362,500 | | |
$ | 697,500 | | |
$ | 1,100,000 | | |
$ | 675,000 | | |
$ | 675,000 | |
| COBRA Reimbursement | |
$ | 75,645 | | |
$ | 51,218 | | |
$ | 75,919 | | |
$ | 75,441 | | |
$ | 75,919 | |
| Equity | |
| | | |
| | | |
| | | |
| | | |
| | |
| Restricted Stock | |
$ | 13,221,371 | | |
$ | 1,708,118 | | |
$ | — | | |
$ | 1,854,904 | | |
$ | 1,758,258 | |
| Restricted Stock Units | |
$ | 9,377,202 | | |
$ | 2,618,376 | | |
$ | 4,297,194 | | |
$ | 1,940,182 | | |
$ | 1,494,405 | |
| Performance-Based Restricted Stock Units | |
$ | 17,470,010 | | |
$ | 3,308,045 | | |
$ | 3,841,724 | | |
$ | 2,254,506 | | |
$ | 1,924,056 | |
| Total | |
$ | 46,619,228 | | |
$ | 9,603,882 | | |
$ | 10,964,837 | | |
$ | 7,981,283 | | |
$ | 7,108,888 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Termination due to Death or Disability, following a Change
in Control (5) |
| Cash | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cash Severance | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Current year Pro-Rata AIP Payment(1) | |
$ | 2,362,500 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| COBRA Reimbursement | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Equity | |
| | | |
| | | |
| | | |
| | | |
| | |
| Restricted Stock | |
$ | 13,221,371 | | |
$ | 1,708,118 | | |
$ | — | | |
$ | 1,854,904 | | |
$ | 1,758,258 | |
| Restricted Stock Units | |
$ | 9,377,202 | | |
$ | 2,618,376 | | |
$ | 4,297,194 | | |
$ | 1,940,182 | | |
$ | 1,494,405 | |
| Performance-Based Restricted Stock Units | |
$ | 11,193,840 | | |
$ | 3,308,045 | | |
$ | 3,841,724 | | |
$ | 2,254,506 | | |
$ | 1,924,056 | |
| Total | |
$ | 36,154,913 | | |
$ | 7,634,539 | | |
$ | 8,138,918 | | |
$ | 6,049,592 | | |
$ | 5,176,719 | |
| (1) | Pursuant to the terms of the Annual Incentive Plan, amounts included
in this table in respect of the Pro Rata AIP would be paid in lieu of the amounts reported
in the “Non-Equity Incentive Plan” and “Bonus” columns of the Summary
Compensation table for fiscal 2023. |
| (2) | Amounts do not include 512,016 shares of restricted stock that would
have remained outstanding upon termination on December 30, 2023. In the event of a termination
of Mr. Lachman’s employment for Good Reason, by the Company without Cause or due
to Mr. Lachman’s Death or Disability prior to a Change in Control, Restricted
Stock that vests solely on the achievement of the 2.5, 3.0 or 4.0 MOIC vesting criteria,
with linear interpolation between MOIC achievement levels, as described under “Equity
Compensation – Restricted Stock” in CD&A, will remain outstanding with performance
to be measured per the terms of the grant agreement. |
| (3) | Amounts do not include the following numbers of Annual PSUs that would
have remained outstanding for each applicable NEO upon termination on December 30, 2023:
Mr. Lachman – 149,098; Mr. Hall – 26,509; Mr. Jensen – 31,426;
Ms. Cretella – 30,745. Upon termination of an NEO’s service for Good Reason,
by the Company without Cause or due to the NEO’s death or Disability prior to a Change
in Control, a pro-rata portion of any Annual PSU award granted more than one year prior to
such event will remain outstanding with performance to be measured in accordance with terms
of the award. |
| (4) | Amounts included do not reflect the terms of the Merger Agreement. The
amounts included solely reflect the vesting of restricted stock based on the MOIC that would
have been achieved upon the occurrence of merger at $22.03 per share, the closing market
price per share of the Company’s common stock on the last trading day of fiscal 2023.
In accordance with the terms of the Merger Agreement, the performance condition of Performance-Based
Restricted Stock will be deemed met at the greater of actual performance and a 3.0 MOIC performance
level. Additionally, any modified restricted stock will accelerate and vest upon the Merger. |
| (5) | Amounts
are inclusive of, and not in addition to, amounts disclosed in connection with a Change in
Control, without termination of employment. |
COMPENSATION COMMITTEE
Interlocks and insider participation
During fiscal 2023, William R. Johnson, Jefferson
M. Case, David W. Roberts and Vijayanthimala (Mala) Singh each served on our Compensation Committee. During fiscal 2023, none of our
executive officers served (i) as a member of the compensation committee or board of directors of another entity, one of whose executive
officers served on our Compensation Committee, or (ii) as a member of the compensation committee of another entity, one of whose
executive officers served on our Board.
Director COMPENSATION
The Compensation Committee sets the compensation
of our Board members. Similar to our executive compensation program, our director compensation program is also designed to attract and
fairly compensate highly qualified, non-management directors to represent our stockholders on the Board and to act in the stockholders’
best interests. The Company believes that compensation for non-management directors should be competitive and should encourage ownership
of the Company’s Common Stock through the payment of a portion of director compensation in equity. FW Cook, our independent compensation
consultant, annually reviews and reports to the Compensation Committee how the Company’s director compensation practices compared
to our compensation peers. The Board makes changes to its director compensation practices only upon the recommendation of the Compensation
Committee.
In connection with our IPO, our Board approved
our compensation program for non-employee directors as follows: cash fees of $100,000 per year (the “cash retainer”) and,
if applicable, $25,000 per year for service as chair of a committee and $25,000 per year for service as chair of the Board, in each case,
prorated for any partial periods of service. Subject to approval by the Board, non-employee directors are granted Director RSUs under
the 2021 Equity Incentive Plan (or any successor plan) each year immediately following the annual meeting of our stockholders, with the
number of shares subject to such award determined by dividing $100,000 by the fair market value of our common stock on the date of grant.
Each annual equity grant will vest in full, subject to continued service on such date, upon the earlier of (x) one year from the
date of grant and (y) immediately prior to our next annual meeting of stockholders. Additionally, each annual equity grant will
accelerate and vest in full upon termination of the director’s service without cause (other than as a result of resignation as
a member of the Board) or upon the director’s death or disability. In addition, the Board may elect to grant restricted stock units
to newly appointed directors upon their appointment. Employees of Advent are not eligible to receive compensation under the program.
As the CEO, Mr. Lachman does not receive any additional compensation for his services on the Board. In May 2023, the Committee
re-weighted the overall compensation package to place a greater emphasis on equity compensation. The Committee decreased the annual board
cash retainer from $100,000 to $80,000 and increased the annual RSU award from $100,000 to $120,000. Additionally, the Committee added
a $75,000 additional equity retainer for the chair of the Board.
In March 2023, the Board established the
Special Committee in connection with the potential transaction with Campbell’s and approved a $2,500 fee per meeting for each member
of the Special Committee receiving compensation under the Non-Employee Director Compensation Program.
Mr. Graves received compensation from the
Company pursuant to his consulting agreement, dated April 2022. Mr. Graves retired from the Board following the 2023 annual
meeting of stockholders in June 2023.
The following table sets forth information concerning
the compensation of our directors, other than Mr. Lachman, for fiscal 2023. None of the directors who are employed by us or by Advent
received director compensation. Additionally, Mr. Roberts who was an employee of Advent through March 2023 has waived his compensation.
| | |
Fees Earned or | | |
Stock | | |
All Other | | |
| |
| | |
Paid in Cash | | |
Awards | | |
Compensation | | |
Total | |
| Position | |
($)(1) | | |
($)(2) | | |
($)(3) | | |
($) | |
| Tamer Abuaita | |
| 112,500 | | |
| 120,000 | | |
| — | | |
| 232,500 | |
| Jefferson M. Case | |
| — | | |
| — | | |
| — | | |
| — | |
| Robert L. Graves | |
| 92,422 | | |
| 100,000 | | |
| 91,667 | | |
| 284,089 | |
| William R. Johnson | |
| 137,500 | | |
| 195,000 | | |
| — | | |
| 332,500 | |
| Neha Mathur | |
| — | | |
| — | | |
| — | | |
| — | |
| David Roberts | |
| — | | |
| — | | |
| — | | |
| — | |
| Valarie Sheppard | |
| 137,500 | | |
| 120,000 | | |
| — | | |
| 257,500 | |
| Vijayanthimala (Mala) Singh | |
| 112,500 | | |
| 120,000 | | |
| — | | |
| 232,500 | |
| (1) | For all directors other than Mr. Graves, includes cash fees
of $27,500 relating to service on the Special Committee in connection with the proposed merger
with Campbell’s, as previously disclosed by the Company. For Mr. Graves, reflects
a prorated amount for his board service through the 2023 annual meeting of stockholders held
on June 7, 2023. |
| (2) | Represents the grant date fair value of time-based restricted stock
unit awards (“Director RSUs”) granted to our non-employee directors as computed
in accordance with FASB ASC Topic 718 excluding the effect of estimated forfeitures. The
Director RSUs vest in full upon the earlier of (x) one year from the date of grant and
(y) immediately prior to our 2024 annual meeting of stockholders, subject to continued
service on such date except as described below. |
Outstanding awards as of December 30, 2023,
included:
| • | For
each of Mr. Abuaita, Ms. Sheppard and Ms. Singh, 6,413 Director RSUs; |
| • | For
Mr. Graves, 5,344 RSUs granted pursuant to his consulting arrangement with the Company;
and |
| • | For
Mr. Johnson, 10,421 Director RSUs; 63,144 restricted shares of common stock subject
to time-based vesting (a portion of which will vest on September 23, 2024 or September 23,
2025, if performance goals are not earlier achieved), 132,109 restricted shares of common
stock subject to performance-based vesting, and 27,778 RSUs that vest on September 23,
2024. |
Mr. Case, Ms. Mathur and Mr. Roberts
held no outstanding awards on December 30, 2023.
(3) For Mr. Graves, includes
$91,667 for consultant services during fiscal 2023.
ITEM 12. SECURITY OWNERSIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
RELATED STOCKHOLDER MATTERS
The following table shows information as of February 28, 2024,
regarding the beneficial ownership of our common stock by: each person or group who is known by us to own beneficially more than 5% of
our common stock; each member of our Board and each of our named executive officers; and all members of our Board and our executive officers
as a group. Amounts reported do not reflect the treatment of outstanding equity upon the consummation
of the pending Merger with Campbell’s.
Beneficial ownership of shares is determined under rules of the
SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. Except as noted by footnote,
and subject to community property laws where applicable, we believe based on the information provided to us that the persons and entities
named in the table below have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned
by them
Percentage of beneficial ownership is based on 101,856,379 shares
of common stock outstanding as of February 28, 2024. Unvested restricted common stock subject to forfeiture is deemed to be beneficially
owned by the holders thereof. Unless otherwise indicated, the address for each holder listed below is 168 Centennial Parkway, Suite 200,
Louisville, Colorado 80027.
| | |
Number
of Shares Beneficially Owned | | |
Percentage of
Shares Beneficially Owned | |
| 5% Stockholders: | |
| | | |
| | |
| Advent International L.P. (1)(2) | |
| 42,612,154 | | |
| 41.8% | |
| Campbell’s (3) | |
| 34,448,203 | | |
| 33.8% | |
| The Vanguard Group (4) | |
| 5,202,956 | | |
| 5.1% | |
| Named Executive Officers and Directors | |
| | | |
| | |
| Todd R. Lachman (1)(5) | |
| 1,723,777 | | |
| 1.7% | |
| Christopher Hall (6) | |
| 119,463 | | |
| * | |
| Risa Cretella | |
| 201,491 | | |
| * | |
| E. Yuri Hermida | |
| 58,605 | | |
| * | |
| Kirk A. Jensen (6) | |
| 253,620 | | |
| * | |
| William R. Johnson (1)(7) | |
| 1,396,539 | | |
| 1.4% | |
| Tamer Abuaita (1) | |
| 7,122 | | |
| * | |
| Jefferson M. Case (8) | |
| — | | |
| * | |
| Neha U. Mathur (8) | |
| — | | |
| * | |
| David W. Roberts | |
| — | | |
| * | |
| Valarie L. Sheppard (1) | |
| 15,229 | | |
| * | |
| Vijayanthimala (Mala) Singh (1) | |
| 15,229 | | |
| * | |
| All executive officers and directors
as a group (15 persons) | |
| 4,007,151 | | |
| 3.9% | |
*Beneficial ownership of less than 1%.
| (1) | Advent and its affiliated funds (“Advent Funds”) and each
of the Company’s directors who hold shares of common stock each entered into separate
Voting Agreements with the Company, dated as of August 7, 2023, pursuant to which they
each agreed, among other things, to vote the shares of common stock over which they have
voting power to approve the Merger Agreement and the transactions contemplated thereby, including
the Merger, at the Company’s special meeting of stockholders held to approve the Merger,
which occurred on October 16, 2023, and not to transfer such shares of common stock.
The Voting Agreement terminates upon the earliest to occur of (i) the consummation of
the Merger, (ii) the termination of the Merger Agreement, (iii) mutual written
agreement of each party to the Voting Agreement, (iv) the effectiveness of any Adverse
Amendment (as defined in the agreement) or (v) the occurrence of any Adverse Recommendation
with respect to an Intervening Event (as such terms are defined in the agreement). For more
detail on the terms of the Voting Agreement, see the Company’s Definitive Merger Proxy
Statement relating to the Merger, filed with the SEC on September 13, 2023. |
| (2) | Reflects beneficial ownership by Advent International L.P. as of December 31,
2023, as reported on Schedule 13G filed with the SEC on February 14, 2024, reporting
sole voting and dispositive power over 42,612,154 shares. The business address of this entity
is Prudential Tower, 800 Boylston Street, Boston, Massachusetts 02199-8069. |
| (3) | Reflects beneficial ownership by Campbell’s as of August 8,
2023, as reported on Schedule 13D filed with the SEC on August 8, 2023, in connection
with the execution of voting agreements relating to the company’s pending merger with
Campbell’s, which reported shared voting power over 34,448,203 shares. The business
address of this entity is One Campbell Place, Camden NJ 08103. |
| (4) | Reflects beneficial ownership by the Vanguard Group as of December 31,
2023, as reported on Schedule 13G filed with the SEC on February 13, 2024, reporting
sole voting and dispositive power over 5,354,289 shares. The business address of this entity
is 100 Vanguard Blvd Malvern, PA 19355. |
| (5) | Includes 639,392 shares of restricted common stock. Also includes 202,980
shares of common stock and 131,848 shares of restricted common stock held by the Todd Lachman
2021 Family Trust. |
| (6) | Includes 107,166 shares of restricted common stock. |
| (7) | Includes 195,253 shares of restricted common stock. |
| (8) | Excludes shares held by Advent Funds. Mr. Case and Ms. Mathur
disclaim beneficial ownership of the shares held by the Advent Funds, except to the extent
of their respective pecuniary interest therein, if any. |
Securities Authorized for Issuance under Equity Compensation
Plans
The following table provides information regarding shares outstanding
and available for issuance under our existing equity incentive plans as of December 30, 2023, the end of our last fiscal year:
| | |
Number
of securities to
be issued upon
exercise of outstanding
options, warrants
and rights (a) | | |
Weighted-average exercise
price of outstanding
options, warrants
and rights (b) | | |
Number
of securities remaining
available for future
issuances under
equity compensation
plans (c) | |
| Equity compensation plans
approved by security holders | |
| 2,916,608(1) | | |
| N/A | | |
| 6,269,641(2) | |
| Equity compensation plans not approved
by security holders | |
| — | | |
| — | | |
| — | |
| Total | |
| 2,916,608 | | |
| N/A | | |
| 6,269,641 | |
| (1) | Includes 2,159,795 shares underlying RSUs and 756,813 shares underlying
PSUs (at target for PSUs that can vest greater than 100%), in each case, granted under the
2021 Plan. The Company has not since the IPO issued and will not in the future issue awards
under the 2017 Plan. See “Equity Compensation—Restricted Stock” above for
more information. |
| (2) | The maximum number of shares issuable under the 2021 Plan is 9,739,244. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Service and Vendor Related Agreements
Morning Fresh Dairy Farm, LLC (“Morning Fresh”) is an
entity owned and controlled by Robert L. Graves, who served on our Board of Directors in 2023 until our 2023 annual meeting.
Morning Fresh regularly purchases inventory from the Company for sale
to its customers. Sales of inventory to Morning Fresh totaled $0.5 million during fiscal 2023. On January 1, 2018, Morning Fresh
and the Company entered into a supply and water discharge agreement (the “Milk Supply and Water Discharge Agreement”) with
a base term ending December 31, 2027, with the option available for extension for a total of 15 additional two-year periods. Four
years’ advance written notice is required for either party to terminate the Milk Supply and Water Discharge Agreement. Pursuant
to the Milk Supply and Water Discharge Agreement, the Company regularly purchases milk from Morning Fresh for use in our manufacturing
processes and repays Morning Fresh for certain capital improvements undertaken at its facilities at our behest, and Morning Fresh accepts
treated water produced in connection with our yogurt production on a daily basis. The Company has agreed to accept up to 3,650,000 gallons
of milk, as determined by Morning Fresh, and to pay approximately $0.4 million ($33,000 monthly) for such capital improvements each year
for the duration of the Milk Supply and Water Discharge Agreement. Further, milk purchased pursuant to the Milk Supply and Water Discharge
Agreement is priced on a month-to-month basis based on the USDA’s Central Federal Order No. 32 for Class II milk, plus
surcharges and premiums, and the published Dairy Farmers of America bill for that month. As of December 30, 2023, the Company had
future commitments to purchase approximately $31.9 million of milk from Morning Fresh, approximated at current market price. The Company
paid entities affiliated with Robert L. Graves approximately $8.0 million under the Milk Supply and Water Discharge Agreement in fiscal
2023.
In addition, we apply the majority of our solid waste from our Colorado
facility to the adjoining farmland, which is owned by Mr. Graves, under a beneficial use determination.
Lease Agreements
On November 20, 2014, Morning Fresh and the Company entered into
a lease agreement, as amended and restated effective as of January 1, 2018, and further amended as of September 19, 2023 (the
“Facilities Lease Agreement”) and a ground lease agreement, as amended and restated effective as of January 1, 2018
(the “Ground Lease Agreement”). The Facilities Lease Agreement and the Ground Lease Agreement each expire on December 31,
2027, with the option available for extension for a total of 15 additional two-year extensions. Four years’ advance written notice
is required for the Company to terminate the Facilities Lease Agreement, and the Company may terminate the Ground Lease Agreement with
six months’ advance written notice or, if the Facilities Lease Agreement terminates, with delivery of written notice. The Facilities
Lease Agreement contains an ongoing right of first offer for the Company to purchase all or any portion of the property and an option
for the Company to purchase the manufacturing facility on or before December 31, 2029 for $4.6 million. The rent for both the Facilities
Lease Agreement and the Ground Lease Agreement is subject to annual increases. The Company paid a total of $0.9 million to Morning Fresh
under the Facilities Lease Agreement and the Ground Lease Agreement during fiscal 2023.
Other
The Company pays legal and tax compliance expenses on behalf of Sovos
Brands Limited Partnership, which was the Company’s ultimate parent prior to its IPO, and carries a balance within accounts receivables
that reflect the amount. In fiscal 2023 the Company incurred $0.2 million of such expenses and was paid $0.1 million by the Limited Partnership,
reducing its receivable balance to $0.1 million at December 30, 2023.
Policies for Approval of Related Person Transactions
Our Board has adopted a written related person transaction policy
setting forth the policies and procedures for the review and approval or ratification by the Audit Committee of related person transactions.
This policy covers, with certain exceptions consistent with Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement
or series of transactions or arrangements in which we participate (whether or not we are a party) and a related person has or will have
a direct or indirect material interest in such transaction. A related person includes (i) our directors, director nominees or executive
officers, (ii) any 5% record or beneficial owner of our common stock or (iii) any immediate family member of the foregoing.
In reviewing and approving any related person transaction, our Audit Committee considers all of the relevant facts and circumstances,
and consideration of various factors enumerated in the policy.
Director Independence
Our Board is currently composed entirely of independent
directors other than Mr. Lachman, our Founder, and CEO. Specifically, our Board has affirmatively determined, at the recommendation
of our Governance Committee, that each of Mr. Johnson, Mr. Abuaita, Mr. Case, Ms. Mathur, Mr. Roberts, Ms. Sheppard
and Ms. Singh qualifies as independent in accordance with the Nasdaq corporate governance rules for purposes of their service
on the Board and each of the committees on which they serve, as applicable. In making this determination, the following relationships
were considered: with respect to Mr. Case, his service as a managing director and various other positions at Advent; with respect
to Ms. Mathur, her service as a Vice President at Advent; with respect to Mr. Roberts, his employment at Advent through March 2023;
and with respect to Mr. Johnson, his service as an operating partner of Advent.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table summarizes the fees of Deloitte &
Touche LLP, our independent registered public accounting firm, incurred by us for each of the last two fiscal years for audit services,
and incurred by us in each of the last two fiscal years for other services:
| Fee Category | |
2023 | | |
2022 | |
| Audit Fees | |
$ | 1,798,000 | | |
$ | 1,079,347 | |
| Audit-Related Fees | |
| 273,081 | | |
| 201,003 | |
| Tax Fees | |
| 343,395 | | |
| 316,791 | |
| Total Fees | |
$ | 2,414,476 | | |
$ | 1,597,141 | |
Audit Fees
Audit fees consist of professional services rendered
for the annual audit of consolidated financial statements for the year ended December 30, 2023, and incremental unbilled expenses
from fiscal 2022; and professional services rendered for the quarterly reviews and annual audit of consolidated financial statements
for the year ended December 31, 2022.
Audit-Related Fees
Audit-related fees consist of review of our Registration
Statement on Form S-3 and related underwriter comfort letter procedures in connection with our follow-on offering and oversight
of the review of workpapers for the merger with Campbell’s for the year ended December 30, 2023; and review of our Registration
Statements on Forms S-1 and S-3 and related underwriter comfort letter procedures in connection with our follow-on offerings, and work
related to goodwill impairment testing and hedge accounting analysis for the year ended December 31, 2022.
Tax Fees
Tax fees consist of professional services rendered
for the years ended December 30, 2023, and December 3, 2022.
Audit Committee Pre-Approval Policy and
Procedures
The Audit Committee is exclusively authorized
and directed to consider and, in its discretion, approve in advance any services (including the fees and material terms thereof) proposed
to be carried out for the Company by the independent auditor or by any other firm proposed to be engaged by the Company as its independent
auditor. In connection with approval of any permissible tax services and services related to internal control over financial reporting,
the Audit Committee will discuss with the independent auditor the potential effects of such services on the independence of the auditor.
The Audit Committee has delegated authority to the Chair of the Committee to approve services by the independent auditor, provided that
the aggregate expected fees for such services does not exceed $250,000 between committee meetings (it being understood that the Chair
will report any such approval of services to the full Committee at its next meeting).
Part IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
1. Financial Statements and Schedules
No financial statement or supplemental data are
filed with this Amendment. See Index to Financial Statements and Supplemental Data of the Original Form 10-K.
2. Exhibits
The documents set forth below are filed herewith
or incorporated herein by reference to the location indicated.
| Exhibit |
|
|
| No. |
|
Document |
| 2.1 |
|
Agreement and Plan of
Merger, dated August 7, 2023, by and among Sovos Brands, Inc., Campbell Soup Company and Premium Products Merger Sub, Inc.
(incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on August 7, 2023). |
| 3.1 |
|
Amended and Restated
Certificate of Incorporation of Sovos Brands, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current
Report on Form 8-K filed on September 27, 2021). |
| 3.2 |
|
Amended and Restated
Bylaws of Sovos Brands, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K
filed on September 27, 2021). |
| 4.1 |
|
Form of Certificate
of Common Stock of Sovos Brands, Inc. (incorporated by reference to Exhibit 4.1 to the Company’s Form S-1 filed
on August 27, 2021). |
| 4.2 |
|
Registration Rights
Agreement dated as of September 23, 2021, by and among Sovos Brands, Inc. and the other parties thereto (incorporated by
reference to Exhibit 4.2 to the Company’s Form 10-Q filed on November 9, 2021). |
| 4.3 |
|
Description of Securities
(incorporated by reference to Exhibit 4.3 to the Company’s Amendment No. 1 on Form 10-K/A filed on March 21,
2022). |
| 10.1 |
|
First Lien Credit Agreement,
dated as of June 8, 2021, by and among Sovos Brands Intermediate, Inc., Sovos Brands Holdings, Inc., the financial
institutions party thereto and Credit Suisse AG, Cayman Islands Branch, as Administrative Agent (incorporated by reference to Exhibit 10.1
to the Company’s Form S-1 filed on August 27, 2021). |
| 10.2 |
|
Second Lien Credit Agreement,
dated as of June 8, 2021, by and among Sovos Brands Intermediate, Inc., Sovos Brands Holdings, Inc., the financial
institutions party thereto and Owl Rock Capital Corporation, as Administrative Agent (incorporated by reference to Exhibit 10.2
to the Company’s Form S-1 filed on August 27, 2021). |
| †10.3 |
|
Employment Agreement,
dated as of January 14, 2017, between Grand Prix Intermediate, Inc. and Todd R. Lachman (incorporated by reference to Exhibit 10.3
to the Company’s Form S-1 filed on August 27, 2021). |
| †10.4 |
|
Amendment
to the Employment Agreement, dated as of September 1, 2021, between Sovos Brands Intermediate, Inc. and Todd R. Lachman
(incorporated by reference to Exhibit 10.4 to the Company’s Form S-1/A filed on September 9, 2021). |
| †10.5 |
|
Sovos Brands Limited
Partnership 2017 Equity Incentive Plan (incorporated by reference to Exhibit 10.6 to the Company’s Form S-1 filed
on August 27, 2021). |
| †10.6 |
|
Amendment No. 1
to Sovos Brands Limited Partnership 2017 Equity Incentive Plan, dated as of February 10, 2021 (incorporated by reference to
Exhibit 10.7 to the Company’s Form S-1 filed on August 27, 2021). |
| †10.7 |
|
Sovos Brands, Inc.
2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.8 to the Company’s Form S-1/A filed on September 9,
2021). |
| †10.8 |
|
Sovos Brands, Inc.
2021 Annual Cash Incentive Plan (incorporated by reference to Exhibit 10.9 to the Company’s Form S-1 filed on August 27,
2021). |
| †10.9 |
|
Sovos Brands, Inc.
Annual Cash Incentive Plan (incorporated by reference to Exhibit 10.10 to the Company’s Form S-1 filed on August 27,
2021). |
| †10.10 |
|
Incentive Unit Grant
Agreement, dated as of June 7, 2017, between Sovos Brands Limited Partnership and Todd R. Lachman (incorporated by reference
to Exhibit 10.11 to the Company’s Form S-1 filed on August 27, 2021). |
| †10.11 |
|
Incentive Unit Grant
Agreement, dated as of August 29, 2017, between Sovos Brands Limited Partnership and Todd R. Lachman (incorporated by reference
to Exhibit 10.12 to the Company’s Form S-1 filed on August 27, 2021). |
| †10.12 |
|
Incentive Unit Grant
Agreement, dated as of May 1, 2019 between Sovos Brands Limited Partnership and Todd R. Lachman (incorporated by reference to
Exhibit 10.13 to the Company’s Form S-1 filed on August 27, 2021). |
| †10.13 |
|
Incentive Unit Grant
Agreement, dated as of November 14, 2019 between Sovos Brands Limited Partnership and Chris Hall (incorporated by reference
to Exhibit 10.17 to the Company’s Form S-1/A filed on September 9, 2021). |
| †10.14 |
|
Form of Amendment
to the Incentive Unit Grant Agreement between Sovos Brands Limited Partnership and certain of its officers and directors (incorporated
by reference to Exhibit 10.18 to the Company’s Form S-1/A filed on September 9, 2021). |
| †10.15 |
|
Form of Restricted
Stock Agreement between Sovos Brands, Inc. and certain of its officers and directors (incorporated by reference to Exhibit 10.19
to the Company’s Form S-1/A filed on September 9, 2021). |
| †10.16 |
|
Restricted Stock Agreement,
dated as of September 22, 2021 among Sovos Brands, Inc., Sovos Brands Limited Partnership, Todd R. Lachman, and Christine
R. Lachman and The St. Louis Trust Company, as trustees of the Todd Lachman 2021 Family Trust (incorporated by reference to Exhibit 10.20
to the Company’s Form 10-Q filed on November 9, 2021). |
| †10.17 |
|
Restricted Stock Agreement,
dated as of September 22, 2021 among Sovos Brands, Inc., Sovos Brands Limited Partnership and Christopher W. Hall (incorporated
by reference to Exhibit 10.22 to the Company’s Form 10-Q filed on November 9, 2021). |
| †10.18 |
|
Restricted
Stock Agreement, dated as of September 22, 2021 among Sovos Brands, Inc., Sovos Brands Limited Partnership and William
R. Johnson (incorporated by reference to Exhibit 10.23 to the Company’s Form 10-Q filed on November 9, 2021). |
| †10.19 |
|
Form of Notice
of Modification of Vesting Terms of Restricted Stock Agreement among Sovos Brands, Inc., Sovos Brands Limited Partnership and
certain of its officers and directors(incorporated by reference to Exhibit 10.25 to the Company’s Form 10-Q filed
on November 9, 2021). |
| †10.20 |
|
Notice of Modification
of Vesting Terms of Restricted Stock Agreement, dated as of September 22, 2021, among Sovos Brands, Inc., Sovos Brands
Limited Partnership, Todd R. Lachman, and Christine R. Lachman and The St. Louis Trust Company, as trustees of the Todd Lachman 2021
Family Trust (incorporated by reference to Exhibit 10.26 to the Company’s Form 10-Q filed on November 9, 2021). |
| †10.21 |
|
Notice of Modification
of Vesting Terms of Restricted Stock Agreement, dated as of September 22, 2021, among Sovos Brands, Inc., Sovos Brands
Limited Partnership and Christopher W. Hall (incorporated by reference to Exhibit 10.28 to the Company’s Form 10-Q
filed on November 9, 2021). |
| †10.22 |
|
Notice of Modification
of Vesting Terms of Restricted Stock Agreement, dated as of September 22, 2021, among Sovos Brands, Inc., Sovos Brands
Limited Partnership and William R. Johnson (incorporated by reference to Exhibit 10.29 to the Company’s Form 10-Q
filed on November 9, 2021). |
| †10.23 |
|
Form of Sovos Brands, Inc.
2021 Equity Incentive Plan Performance-Based Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.30
to the Company’s Form 10-Q filed on November 9, 2021). |
| †10.24 |
|
Form of Sovos Brands, Inc.
2021 Equity Incentive Plan Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.32 to the Company’s
Form 10-K filed on March 15, 2022). |
| †10.25 |
|
Form of Sovos Brands, Inc.
2021 Equity Incentive Plan Performance-Based Restricted Stock Unit Award Agreement (IPO Grants) (incorporated by reference to Exhibit 10.22
to the Company’s Form S-1/A filed on September 9, 2021). |
| †10.26 |
|
Form of Sovos Brands, Inc.
2021 Equity Incentive Plan Restricted Stock Unit Award Agreement (IPO Grants) (incorporated by reference to Exhibit 10.23 to
the Company’s Form S-1/A filed on September 9, 2021). |
| †10.27 |
|
Form of Executive
Officer and Director Indemnification Agreement for Sovos Brands, Inc. (incorporated by reference to Exhibit 10.22 to the
Company’s Form S-1 filed on August 27, 2021). |
| †10.28 |
|
Letter Agreement dated
March 14, 2022 between Sovos Brands Intermediate, Inc. and Kirk Jensen (incorporated by reference to Exhibit 10.36
to the Company’s Form 10-K filed on March 15, 2022). |
| †10.29 |
|
Form of Restricted
Stock Agreement between Sovos Brands, Inc. and certain of its directors (incorporated by reference to Exhibit 10.37 to
the Company’s Form 10-Q filed on August 3, 2022). |
| †10.30 |
|
Letter Agreement
dated June 15, 2022 between Sovos Brands, Inc. and Tamer Abuaita (incorporated by reference to Exhibit 10.38 to the
Company’s Form 10-Q filed on August 3, 2022). |
| †10.31 |
|
Incentive Unit Grant
Agreement, dated as of June 4, 2018, between Sovos Brands Limited Partnership and Kirk A. Jensen (incorporated by reference
to Exhibit 10.1 to the Company’s Form 10-Q filed on May 10, 2023). |
| †10.32 |
|
Incentive Unit Grant
Agreement, dated as of May 1, 2019, between Sovos Brands Limited Partnership and Kirk A. Jensen (incorporated by reference to
Exhibit 10.2 to the Company’s Form 10-Q filed on May 10, 2023). |
| †10.33 |
|
Restricted Stock Agreement,
dated as of September 22, 2021 among Sovos Brands, Inc., Sovos Brands Limited Partnership and Kirk A. Jensen (incorporated
by reference to Exhibit 10.3 to the Company’s Form 10-Q filed on May 10, 2023). |
| †10.34 |
|
Notice of Modification
of Vesting Terms of Restricted Stock Agreement, dated as of September 22, 2021, among Sovos Brands, Inc., Sovos Brands
Limited Partnership and Kirk A. Jensen (incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q filed
on May 10, 2023). |
| †10.35 |
|
February 2023 Form of
Notice of Modification of Vesting Terms of Restricted Stock Agreement among Sovos Brands, Inc., Sovos Brands Limited Partnership
and certain of its officers and a director (incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q
filed on May 10, 2023). |
| †10.36 |
|
February 2023 Notice
of Modification of Vesting Terms of Restricted Stock Agreement, dated as of September 22, 2021, among Sovos Brands, Inc.,
Sovos Brands Limited Partnership, Todd R. Lachman, and Christine R. Lachman and The St. Louis Trust Company, as trustees of the Todd
Lachman 2021 Family Trust (incorporated by reference to Exhibit 10.6 to the Company’s Form 10-Q filed on May 10,
2023). |
| †10.37 |
|
February 2023 Notice
of Modification of Vesting Terms of Restricted Stock Agreement, dated as of September 22, 2021, among Sovos Brands, Inc.,
Sovos Brands Limited Partnership and Kirk A. Jensen (incorporated by reference to Exhibit 10.7 to the Company’s Form 10-Q
filed on May 10, 2023). |
| †10.38 |
|
February 2023 Notice
of Modification of Vesting Terms of Restricted Stock Agreement, dated as of September 22, 2021, among Sovos Brands, Inc.,
Sovos Brands Limited Partnership and William R. Johnson (incorporated by reference to Exhibit 10.8 to the Company’s Form 10-Q
filed on May 10, 2023). |
| †10.39 |
|
February 2023 Form of
Notice of Modification of Vesting Eligibility re: Performance-Based Restricted Stock Units granted by Sovos Brands, Inc. to
its officers under the Sovos Brands, Inc. 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 to the
Company’s Form 10-Q filed on May 10, 2023). |
| †10.40 |
|
Offer Letter, dated
as of April 29, 2018, between Sovos Brands and Kirk A. Jensen (incorporated by reference to Exhibit 10.10 to the Company’s
Form 10-Q filed on May 10, 2023). |
| †10.41 |
|
Offer Letter,
dated as of September 26, 2022, between Sovos Brands, Inc. and E. Yuri Hermida (incorporated by reference to Exhibit 10.11
to the Company’s Form 10-Q filed on May 10, 2023). |
| †10.42 |
|
Sovos Brands, Inc.
Severance Plan for Executives (incorporated by reference to Exhibit 10.12 to the Company’s Form 10-Q filed on May 10,
2023). |
| 10.43 |
|
Amendment No. 1
to First Lien Credit Agreement, dated as of June 28, 2023, by and among Sovos Brands Intermediate, Inc. and Credit Suisse
AG, Cayman Island Branch, as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q
filed on August 9, 2023). |
| †10.44 |
|
Sovos Brands, Inc.
Non-Employee Director Annual Compensation Policy, as amended effective on June 7, 2023 (incorporated by reference to Exhibit 10.2
to the Company’s Form 10-Q filed on August 9, 2023). |
| †10.45 |
|
Second Amendment to
the Employment Agreement, dated June 29, 2023, between Sovos Brands Intermediate, Inc. and Todd R. Lachman (incorporated
by reference to Exhibit 10.3 to the Company’s Form 10-Q filed on August 9, 2023). |
| †10.46 |
|
Sovos Brands, Inc.
Amended and Restated 2023 Severance Plan for Executives (effective July 21, 2023) (incorporated by reference to Exhibit 10.4
to the Company’s Form 10-Q filed on August 9, 2023). |
| 10.47 |
|
Voting Agreement, dated
August 7, 2023, by and among certain funds associated with Advent International Corporation and Campbell Soup Company (incorporated
by reference to Exhibit 10.1 to the Company’s Form 8-K filed on August 7, 2023). |
| 10.48 |
|
Form of Voting
Agreement by and among certain directors of Sovos Brands, Inc. and Campbell Soup Company (incorporated by reference to Exhibit 10.2
to the Company’s Form 8-K filed on August 7, 2023). |
| **†10.49 |
|
Form of Sovos Brands, Inc.
2021 Equity Incentive Plan Restricted Stock Unit Award Agreement |
| **†10.50 |
|
Incentive Unit Grant
Agreement, dated as of June 4, 2018, between Sovos Brands Limited Partnership and Risa Cretella. |
| **†10.51 |
|
Incentive Unit Grant
Agreement, dated as of May 1, 2019, between Sovos Brands Limited Partnership and Risa Cretella. |
| **†10.52 |
|
Restricted Stock Agreement,
dated as of September 22, 2021 among Sovos Brands, Inc., Sovos Brands Limited Partnership and Risa Cretella. |
| **†10.53 |
|
Notice of Modification
of Vesting Terms of Restricted Stock Agreement, dated as of September 22, 2021, among Sovos Brands, Inc., Sovos Brands
Limited Partnership and Risa Cretella. |
| **21.1 |
|
List of subsidiaries. |
| **23.1 |
|
Consent of Deloitte &
Touche LLP. |
| **31.1 |
|
Certification
of Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002. |
| **31.2 |
|
Certification of Principal
Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted
pursuant to Section 302 of the Sarbanes Oxley Act of 2002. |
| *31.3 |
|
Certification of Principal
Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted
pursuant to Section 302 of the Sarbanes Oxley Act of 2002. |
| *31.4 |
|
Certification of Principal
Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted
pursuant to Section 302 of the Sarbanes Oxley Act of 2002. |
| **32.1 |
|
Certification of Principal
Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes Oxley Act. |
| **†97.1 |
|
Sovos Brands, Inc.
Clawback Policy. |
| 101.INS |
|
XBRL Instance Document |
| 101.SCH |
|
XBRL Taxonomy Extension Schema Document |
| 101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF |
|
XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB |
|
XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit
101). |
* Filed herewith.
** Previously filed or furnished with our Annual Report on Form 10-K filed on February 28, 2024.
† Management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
| Date: March 11, 2024 |
By: |
/s/ Christopher W. Hall |
| |
Name: Christopher W. Hall |
| |
Title: Chief Financial Officer |
Exhibit 31.3
CERTIFICATION
PURSUANT TO RULES 13a-14(a) AND 15d-14(a)
OF THE U.S. SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO
Section 302 of the Sarbanes-Oxley Act of
2002
I, Todd R. Lachman, certify that:
| 1. | I have reviewed this Amendment No. 1 on Form 10-K/A of Sovos Brands Inc. (the “registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
| b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles; |
| c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
and |
| d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions): |
| a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and |
| b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
| Date: March 11, 2024 |
By: |
/s/ Todd R. Lachman |
| |
Name: |
Todd R. Lachman |
| |
Title: |
Chief Executive Officer and Director |
| |
|
(Principal Executive Officer) |
Exhibit 31.4
CERTIFICATION
PURSUANT TO RULES 13a-14(a) AND 15d-14(a)
OF THE U.S. SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO
Section 302 of the Sarbanes-Oxley Act of
2002
I, Christopher W. Hall, certify that:
| 1. | I have reviewed this Amendment No. 1 on Form 10-K/A of Sovos Brands Inc. (the “registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
| b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles; |
| c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
and |
| d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions): |
| a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and |
| b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
| Date: March 11, 2024 |
By: |
/s/ Christopher W. Hall |
| |
Name: |
Christopher W. Hall |
| |
Title: |
Chief Financial Officer |
| |
|
(Principal Financial Officer) |
v3.24.0.1
Cover - USD ($)
$ in Millions |
12 Months Ended |
|
|
Dec. 30, 2023 |
Feb. 23, 2024 |
Jun. 30, 2023 |
| Cover [Abstract] |
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10-K/A
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Dec. 30, 2023
|
|
|
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FY
|
|
|
| Document Fiscal Year Focus |
2023
|
|
|
| Current Fiscal Year End Date |
--12-30
|
|
|
| Entity File Number |
001-40837
|
|
|
| Entity Registrant Name |
Sovos
Brands, Inc.
|
|
|
| Entity Central Index Key |
0001856608
|
|
|
| Entity Tax Identification Number |
81-5119352
|
|
|
| Entity Incorporation, State or Country Code |
DE
|
|
|
| Entity Address, Address Line One |
168 Centennial Parkway
|
|
|
| Entity Address, Address Line Two |
Suite 200
|
|
|
| Entity Address, City or Town |
Louisville
|
|
|
| Entity Address, State or Province |
CO
|
|
|
| Entity Address, Postal Zip Code |
80027
|
|
|
| City Area Code |
720
|
|
|
| Local Phone Number |
316-1225
|
|
|
| Title of 12(b) Security |
Common Stock, $0.001 par value per share
|
|
|
| Trading Symbol |
SOVO
|
|
|
| Security Exchange Name |
NASDAQ
|
|
|
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No
|
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No
|
|
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Yes
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Yes
|
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| Auditor Name |
Deloitte & Touche LLP
|
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| Auditor Location |
Denver, Colorado
|
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| Auditor Firm ID |
34
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dei_CurrentFiscalYearEndDate |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:gMonthDayItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true only for a form used as an annual report. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form 10-K
-Number 249
-Section 310
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form 20-F
-Number 249
-Section 220
-Subsection f
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form 40-F
-Number 249
-Section 240
-Subsection f
| Name: |
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| Namespace Prefix: |
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| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
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| Period Type: |
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|
| X |
- DefinitionIndicates whether any of the financial statement period in the filing include a restatement due to error correction. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-K
-Number 229
-Section 402
-Subsection w
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form 10-K
-Number 249
-Section 310
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form 20-F
-Number 249
-Section 220
-Subsection f
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form 40-F
-Number 249
-Section 240
-Subsection f
| Name: |
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| Namespace Prefix: |
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| Data Type: |
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| Balance Type: |
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| Period Type: |
duration |
|
| X |
- DefinitionFiscal period values are FY, Q1, Q2, and Q3. 1st, 2nd and 3rd quarter 10-Q or 10-QT statements have value Q1, Q2, and Q3 respectively, with 10-K, 10-KT or other fiscal year statements having FY.
| Name: |
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| Namespace Prefix: |
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| Data Type: |
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| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThis is focus fiscal year of the document report in YYYY format. For a 2006 annual report, which may also provide financial information from prior periods, fiscal 2006 should be given as the fiscal year focus. Example: 2006.
| Name: |
dei_DocumentFiscalYearFocus |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:gYearItemType |
| Balance Type: |
na |
| Period Type: |
duration |
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| X |
- DefinitionFor the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
| Name: |
dei_DocumentPeriodEndDate |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:dateItemType |
| Balance Type: |
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| Period Type: |
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| X |
- DefinitionBoolean flag that is true only for a form used as a transition report. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Forms 10-K, 10-Q, 20-F
-Number 240
-Section 13
-Subsection a-1
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| Namespace Prefix: |
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| Data Type: |
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| Balance Type: |
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| Period Type: |
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| X |
- DefinitionThe type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
| Name: |
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| Namespace Prefix: |
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| Data Type: |
dei:submissionTypeItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
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| Name: |
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| Namespace Prefix: |
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| Data Type: |
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| Balance Type: |
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| Period Type: |
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|
| X |
- DefinitionAddress Line 2 such as Street or Suite number
| Name: |
dei_EntityAddressAddressLine2 |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- Definition
+ References
+ Details
| Name: |
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| Namespace Prefix: |
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| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
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| Period Type: |
duration |
|
| X |
- DefinitionCode for the postal or zip code
| Name: |
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| Namespace Prefix: |
dei_ |
| Data Type: |
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| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionName of the state or province.
| Name: |
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| Namespace Prefix: |
dei_ |
| Data Type: |
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| Balance Type: |
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| Period Type: |
duration |
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| X |
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-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
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| Namespace Prefix: |
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| Data Type: |
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| Balance Type: |
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| Period Type: |
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|
| X |
- DefinitionIndicate number of shares or other units outstanding of each of registrant's classes of capital or common stock or other ownership interests, if and as stated on cover of related periodic report. Where multiple classes or units exist define each class/interest by adding class of stock items such as Common Class A [Member], Common Class B [Member] or Partnership Interest [Member] onto the Instrument [Domain] of the Entity Listings, Instrument.
| Name: |
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| Namespace Prefix: |
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| Data Type: |
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| Balance Type: |
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| Period Type: |
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| X |
- DefinitionIndicate 'Yes' or 'No' whether registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. This information should be based on the registrant's current or most recent filing containing the related disclosure.
| Name: |
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| Namespace Prefix: |
dei_ |
| Data Type: |
dei:yesNoItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionIndicate if registrant meets the emerging growth company criteria. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityEmergingGrowthCompany |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
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| Period Type: |
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|
| X |
- DefinitionCommission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
| Name: |
dei_EntityFileNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:fileNumberItemType |
| Balance Type: |
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| Period Type: |
duration |
|
| X |
- DefinitionIndicate whether the registrant is one of the following: Large Accelerated Filer, Accelerated Filer, Non-accelerated Filer. Definitions of these categories are stated in Rule 12b-2 of the Exchange Act. This information should be based on the registrant's current or most recent filing containing the related disclosure. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
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| Namespace Prefix: |
dei_ |
| Data Type: |
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| Balance Type: |
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| Period Type: |
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- DefinitionTwo-character EDGAR code representing the state or country of incorporation.
| Name: |
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| Namespace Prefix: |
dei_ |
| Data Type: |
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| Balance Type: |
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| Period Type: |
duration |
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| X |
- DefinitionBoolean flag that is true when the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-T
-Number 232
-Section 405
| Name: |
dei_EntityInteractiveDataCurrent |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:yesNoItemType |
| Balance Type: |
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| Period Type: |
duration |
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| X |
- DefinitionThe aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.
| Name: |
dei_EntityPublicFloat |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:monetaryItemType |
| Balance Type: |
credit |
| Period Type: |
instant |
|
| X |
- DefinitionThe exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
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| Namespace Prefix: |
dei_ |
| Data Type: |
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| Balance Type: |
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| Period Type: |
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|
| X |
- DefinitionBoolean flag that is true when the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityShellCompany |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
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| Period Type: |
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|
| X |
- DefinitionIndicates that the company is a Smaller Reporting Company (SRC). Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntitySmallBusiness |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
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| Period Type: |
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| X |
- DefinitionThe Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityTaxIdentificationNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:employerIdItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
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| Name: |
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| Namespace Prefix: |
dei_ |
| Data Type: |
dei:yesNoItemType |
| Balance Type: |
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| Period Type: |
duration |
|
| X |
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-Publisher SEC
-Name Securities Act
-Number 230
-Section 405
| Name: |
dei_EntityWellKnownSeasonedIssuer |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:yesNoItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- ReferencesReference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form 10-K
-Number 249
-Section 310
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form 20-F
-Number 249
-Section 220
-Subsection f
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Form 40-F
-Number 249
-Section 240
-Subsection f
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dei_IcfrAuditorAttestationFlag |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
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| X |
- DefinitionLocal phone number for entity.
| Name: |
dei_LocalPhoneNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
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| X |
- DefinitionTitle of a 12(b) registered security. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b
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dei_Security12bTitle |
| Namespace Prefix: |
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| Data Type: |
dei:securityTitleItemType |
| Balance Type: |
na |
| Period Type: |
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| X |
- DefinitionName of the Exchange on which a security is registered. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection d1-1
| Name: |
dei_SecurityExchangeName |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:edgarExchangeCodeItemType |
| Balance Type: |
na |
| Period Type: |
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| X |
- DefinitionTrading symbol of an instrument as listed on an exchange.
| Name: |
dei_TradingSymbol |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:tradingSymbolItemType |
| Balance Type: |
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| Period Type: |
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