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BALCHEM CORP filed this DEF 14A on April 26, 2024

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BALCHEM CORP - DEF 14A - 20240426 - DIRECTOR_COMPENSATION

CORPORATE GOVERNANCE

Director Compensation

The Compensation Committee periodically reviews, in consultation with their independent executive compensation advisory firm, to ensure alignment of Non-Executive Director compensation with current market and peer group practices.

The non-equity components of the non-executive director compensation structure remain unchanged for 2023 compared to the prior year. For 2023, these amounts are as follows:

(1)	Annual Cash Retainer – $65,000;

(2)	Annual Fee for Lead Director - $20,000

(3)	Annual Fee for Audit Committee Chair – $15,000;

(4)	Annual Fee for Compensation Committee Chair – $10,000; and

(5)	Annual Fee for the Governance Committee Chair – $10,000.

Directors also received equity awards composed of Time-Based Restricted Shares and Stock Options (in each case as defined below) as more fully discussed in the table below.

The following table sets forth the fees, equity awards, and other compensation earned, paid, or awarded to each of the Company’s Non-Executive Directors for the fiscal year ended December 31, 2023. Mr. Rigaud and Ms. Vicente were appointed to the Board effective September 6, 2023 so their fees reflect their dates of service during 2023.

Name	Retainer & Fees	Stock Awards⁽¹⁾	All Other Compensation ($)	Total ($)
David Fischer	$ 65,000	$146,259	$0	$211,259
Kathleen Fish	$ 72,500	$146,259	$0	$218,759
Daniel Knutson	$ 80,000	$146,259	$0	$ 226,259
Joyce Lee	$ 65,000	$146,259	$0	$211,259
Perry Premdas⁽²⁾	$ 32,500	$0	$0	$ 32,500
Olivier Rigaud	$21,667⁽³⁾	$0	$0	$21,667
John Televantos⁽²⁾	$ 45,000	$0	$0	$ 45,000
Monica Vicente	$21,667	$0	$0	$21,667
Matthew Wineinger	$ 85,000	$146,259	$0	$231,259

(1)

On February 8, 2023, each Non-Executive Director, was granted 530 Time-Based Restricted Shares and 1,790 Stock Options. The Time-Based Restricted Shares cliff vest after three years. The grant date fair value per share of each share of restricted stock was $138.09. The Stock Options have a strike price of $138.09 per share and expire on February 8, 2033.

(2)	Dr. John Televantos and Perry Premdas completed their terms on June 22, 2023. Accordingly, their respective cash retainer and fees were pro-rated based on their dates of service in 2022.

(3)	The retainer payment for Mr. Rigaud was processed in Q1 2024 due to administrative reasons.

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CORPORATE GOVERNANCE

The following table shows the aggregate number of Stock Options and stock awards outstanding for each outside director as of December 31, 2023:

Name	Aggregate Stock Options Outstanding as of 12/31/2023	Aggregate Stock Awards Outstanding as of 12/31/2023
David Fischer	15,577	1,629
Kathleen Fish	3,537	1,039
Daniel Knutson	15,577	1,629
Joyce Lee	8,607	1,629
Olivier Rigaud	0	0
Monica Vicente	0	0
Matthew Wineinger	15,577	1,629

Under the Time-Based Restricted Shares grant agreements, restricted shares vest in full, three years from grant, or upon an earlier change in control of the Company, provided the director is a director of the Company on that date. The Time-Based Restricted Shares will also vest in full upon the director’s death.

In the event of the director’s disability, retirement (in accordance with our Director Retirement Policy) or the director’s resignation due to a conflict of interest or serious health issue, the number of Time-Based Restricted Shares that vest equals the product of:

(A)	1/36 of the total number of Time-Based Restricted Shares subject to the applicable grant; and

(B)	the number of full months that the director has served on the Board from the date of the grant to the date of the director’s retirement or resignation, as applicable; and all Restricted Shares not so vested shall be immediately forfeited.

Under the Stock Option grant agreements, the Stock Options have a term of ten years from the grant date and become exercisable 20% after 1 year, 40% after 2 years and 40% after 3 years, beginning on the first anniversary of the grant date, or upon an earlier change in control of the Company, provided the director is a director of the Company on that date. The Stock Options will also become fully exercisable in full upon the director’s death.

In the event of the director’s disability, retirement (in accordance with our Director Retirement Policy) or the director’s resignation from the Board of Directors due to a conflict of interest or serious health issue, the options continue to vest and become exercisable in accordance with the applicable vesting schedule.

If a director voluntarily retires:

(1)	in accordance with the Director Retirement Policy discussed above and the combination of the Director’s age and years of service as a member of the Board is equal to or greater than 75; or

(2)

prior to the conclusion of his or her term in which he or she reaches the age of 70 and the combination of the Director’s age and years of service as a member of the Board is equal to or greater than 75 and he/she has given the Company one (1) year’s prior written notice to the Company of his/her intention to retire;

then:

(A)	all Stock Options shall continue to vest and become exercisable in accordance with their original vesting schedule; and

(B)	All Time-Based Restricted Shares shall continue to vest in accordance with their original vesting schedule.

The Company does not pay any other direct or indirect compensation to directors.

The Company has a Stock Ownership Policy that applies to directors. See “Stock Ownership Requirements; Trading Limitations” on page 42 of this Proxy Statement.

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”) provides a detailed description of our executive compensation philosophy and programs, the compensation decisions the Compensation Committee has made under those programs and the factors considered in making those decisions. This CD&A focuses on the compensation of our NEOs.

Named Executive Officers

Our NEOs for 2023 are the following individuals:

	Name			Position
	Theodore L. Harris			Chairman, President and Chief Executive Officer
	C. Martin Bengtsson			Executive Vice President and Chief Financial Officer
	Frederic Boned			Senior Vice President and General Manager, Human Nutrition and Health
	Hatsuki Miyata			Executive Vice President, General Counsel and Secretary
	Martin L. Reid			Senior Vice President and Chief Supply Chain Officer

Compensation Objectives and Philosophy

At Balchem, we strive to attract and retain key executives who will consistently deliver short- and long-term value to our shareholders through the realization of our specific business objectives. These include consistent, sustained growth in earnings, cash flow and return on investments. We seek to offer competitive salaries, cash incentives, equity awards and benefit plans consistent with peer entities, while also considering the Company’s financial performance. Rewarding key employees who contribute to the continued success of the Company through cash compensation and equity participation are key elements of the Company’s compensation policy.

The Company’s executive compensation policy is designed to establish a direct link between executive compensation and the performance of the Company by rewarding individual results and the achievement of annual corporate goals through salary and cash bonus awards, and to provide equity awards to incentivize executives to generate enhanced shareholder value.

Consistent with this philosophy, the Compensation Committee favors a “pay for performance” approach. As a result, our compensation program contains a mix of stable and at-risk compensation components, where a significant percentage of executive compensation is variable and tied to corporate performance.

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COMPENSATION DISCUSSION AND ANALYSIS

What We Do and Don’t Do

	We DO			We DON’T
	Target total direct compensation for our NEOs generally at the 50th percentile as part of our annual benchmarking process against a similarly sized peer group.			Allow hedging or pledging of Company securities for any employee (including our NEOs) or director.
	Pay for performance and, accordingly, a significant portion of each NEO’s total compensation opportunity is “at risk” and dependent upon achievement of specific corporate and individual performance goals, resulting in lesser emphasis on fixed base salary.			Encourage unnecessary or excessive risk-taking as a result of our compensation policies and practices.
	Base our short-term incentive plan on explicit and quantifiable Corporate and business segment financial performance metrics that are set at the beginning of each year.			Have employment agreements with any of our NEOs other than as described in the section of this proxy statement titled “Executive Compensation.”
	Complement our annual compensation to each NEO with time-based and performance-based multi-year vesting schedules and performance cycles for equity incentive awards.			Provide a defined benefit pension plan for our NEOs.
	Have annual base salary adjustments that are based, primarily, on prior-year individual performance.			Provide for “gross ups” for excise taxes imposed with respect to Section 280G (change-in-control payments) or Section 409A (nonqualified deferred compensation) of Internal Revenue Code of 1986, as amended (the “Code”).
	Maintain a clawback provision pursuant to which the Company can seek reimbursement of either cash or equity-based incentive compensation in the event of a financial restatement, to the extent set forth in any applicable compensation recovery policy contained in the Amended 2017 Plan or implemented by the Company.			Except as may be provided for from time-to-time under employment agreements, provide for single-trigger vesting acceleration upon a change in control of the Company. There are currently no outstanding awards that provide for single-trigger vesting.
	Maintain a Compensation Committee, which is comprised solely of independent directors.			Allow: (i) any repricing of options and Stock Appreciation Rights (“SARs”) without shareholder approval or (ii) for the unlimited transferability of awards.
	Have stock ownership guidelines for our executives and non-employee directors.
	Subject awards under the Amended 2017 Plan to minimum vesting periods and maximum annual per-person limits.
	Ensure that a significant portion of our non-employee director compensation consists of long-term equity awards.
	Consult with outside experts to determine the overall competitiveness of the Company’s executive compensation program.

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COMPENSATION DISCUSSION AND ANALYSIS