FLOWERS FOODS INC filed this DEF 14A on Apr 11, 2023

TABLE OF CONTENTS

Proxy Summary

Annual Meeting and Voting Information

Directors and Corporate Governance

Share Ownership

Executive Compensation

Audit Committee Report

Items to be Voted on

Additional Information

Appendices

SHARE OWNERSHIP

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TABLE OF CONTENTS

Proxy Summary

Annual Meeting and Voting Information

Directors and Corporate Governance

Share Ownership

Executive Compensation

Audit Committee Report

Items to be Voted on

Additional Information

Appendices

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Delinquent Section 16(a) Reports

Based solely upon a review of our records and written representations by the persons required to file these reports, except as set forth below, all stock transaction reports required to be filed by Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), with the SEC were timely filed in fiscal 2022 by directors and executive officers.

Due to administrative errors, late Form 4s reporting shares surrendered in satisfaction of withholding taxes pursuant to the vesting of time-based restricted stock units granted to H. Mark Courtney, Stephanie B. Tillman and Heeth Varnedoe that were due on January 7, 2022 were filed on January 24, 2022; a late Form 4 reporting an award of deferred stock granted to Ms. Gass that was due on January 4, 2022 was filed on January 24, 2022; late Form 4s reporting the vesting of deferred stock awards to Ms. Gass that were due on February 17, 2022 and August 23, 2022 were filed on April 21, 2022 and August 24, 2022, respectively; late Form 5s reporting gifts that were due on February 14, 2023 were filed on February 15, 2023 for Mr. Courtney and Mr. Deese; and Mr. Kinsey’s Form 5 filed on February 13, 2023 for the fiscal year ended December 31, 2022 reported shares held by the Jackie S. Wooten Revocable Trust, for which his spouse acts as co-trustee, which should have been reported by August 3, 2018.

Additionally, due to administrative errors, Mr. Varnedoe filed two amendments to his Form 3, originally filed on January 7, 2021, on March 9, 2021 and January 21, 2022, to include shares held by trust for his minor children and time-based restricted stock units, respectively, that were omitted from his original Form 3.

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                      FLOWERS FOODS, INC. | 2023 PROXY STATEMENT

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

2022 Named Executive Officers

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TABLE OF CONTENTS

Proxy Summary

Annual Meeting and Voting Information

Directors and Corporate Governance

Share Ownership

Executive Compensation

Audit Committee Report

Items to be Voted on

Additional Information

Appendices

2022 In Brief

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Consideration of 2022 Say on Pay Vote

We currently hold our say on pay vote every year. At our 2022 annual meeting of shareholders, more than 99% of the shares voted were cast in support of our executive compensation program. As a result of the significant level of approval, we continued to apply similar principles to our executive compensation decisions during the remainder of 2022 and early 2023. Shareholders have an opportunity to cast an advisory vote on the frequency of future say on pay votes at the annual meeting.

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                      FLOWERS FOODS, INC. | 2023 PROXY STATEMENT

EXECUTIVE COMPENSATION GENERALLY

Objectives of Executive Compensation

The primary objective of our executive compensation program is to attract, retain and motivate qualified executives necessary for the future success of the company and the maximization of shareholder value. Our executive compensation program is designed to motivate our executives by rewarding them for the achievement of specific annual, long-term and strategic goals of the company. The program aligns our executives’ interests with those of our shareholders by rewarding performance above established goals, with the ultimate objective of improving shareholder value. We strive to foster a sense of ownership among our executives by establishing stock ownership guidelines that require them to maintain ownership of a specified amount of our common stock.

The compensation and human capital committee evaluates both performance and compensation to help ensure that (i) the company maintains its ability to attract, retain, and motivate the most qualified executives; (ii) each executive’s compensation remains competitive relative to the compensation paid to similarly situated executives in comparable companies; and (iii) each of the company’s primary objectives with respect to compensation is being fulfilled. To meet those goals, our executive compensation program has historically included three primary components:

Certain retirement and other post-employment benefits are also included in the executives’ compensation package. In addition, see the section entitled “Potential Payments Upon Termination or Change of Control” of this proxy statement for details on payments and benefits payable (or realizable) upon termination of employment and a change of control of the company. We do not offer perquisites as part of our executive compensation program.

Each element of our executive compensation program is described in greater detail below, including a discussion of why the company chooses to pay each element, how we determine the amount of each element to pay and how each element and the company’s decisions regarding that element fit into our overall compensation objectives.

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TABLE OF CONTENTS

Proxy Summary

Annual Meeting and Voting Information

Directors and Corporate Governance

Share Ownership

Executive Compensation

Audit Committee Report

Items to be Voted on

Additional Information

Appendices

Mix of Compensation Opportunity

The objectives of our executive compensation program are accomplished through a balance of pay components that are competitive with market practice and place considerable emphasis on performance-based compensation. Salary, target non-equity incentive compensation, and target equity compensation expressed as a percentage of primary compensation elements for the Named Executives for the fiscal year ended December 31, 2022 were as shown below. There is no prescribed mix of our compensation elements; the mix below is driven by individual role and responsibilities, in addition to Relevant Market Data (as defined below) for each element of pay.

How Compensation Decisions are Made

Role of the Compensation and Human Capital Committee

The compensation and human capital committee, which is comprised solely of independent directors, determines the compensation for each of our executives (including Named Executives) and oversees the review and determination of our executive compensation program. Each year, it reviews and performs a comprehensive assessment and analysis of the executive compensation program, including the elements of each Named Executive’s compensation, with input from the compensation and human capital committee’s independent compensation consultant. As part of the compensation review, a “tally sheet” for each Named Executive (and the other executive officers) is provided with the details of the Named Executive’s total compensation elements, stock ownership, benefits information, outstanding equity award values and obligations under various termination scenarios. The compensation and human capital committee believes that tally sheets are a useful tool in evaluating total compensation in relation to competitive market pay and internal pay equity. The independent directors review and ratify all decisions by the compensation and human capital committee relating to the compensation of our executives (including Named Executives).

The compensation and human capital committee annually conducts an independence assessment of its advisors including the compensation consultant, consistent with NYSE listing standards and SEC rules and regulations. As a result of its most recent assessment, the compensation and human capital committee determined that the work of the compensation consultant did not raise any conflicts of interest.

Role of Executive Officers

The compensation and human capital committee, which is comprised solely of independent directors, has responsibility for overseeing the review and determination of executive compensation.

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                      FLOWERS FOODS, INC. | 2023 PROXY STATEMENT

The president and chief executive officer, with the assistance of the chief human resources officer, consults with and advises the compensation and human capital committee with respect to the company’s compensation philosophy and makes recommendations regarding the compensation of other executive officers including the Named Executives, but not regarding his own compensation. All recommendations of the president and chief executive officer to the compensation and human capital committee regarding the compensation of other executive officers are independently evaluated by the committee.

The chief financial officer, or his designee, assists the compensation and human capital committee in understanding the key drivers of company performance, particularly those measures used in our annual cash incentive and long-term incentive plans and also provides the compensation and human capital committee with regular updates on company performance as it relates to certain performance measures used in our annual cash incentive and long-term incentive plans.

Role of Independent Compensation Consultants

For fiscal 2022, the compensation and human capital committee engaged Meridian Compensation Partners (“Meridian”) as its independent compensation consultant. At the compensation and human capital committee’s request, Meridian annually evaluates the competitiveness of the base salaries, annual cash incentives and long-term incentives awarded to the Named Executives, provides competitive market data on new compensation arrangements (as applicable) and evaluates the continued appropriateness of existing arrangements. Meridian attended compensation and human capital committee meetings at the committee’s request and was available to provide guidance to the compensation and human capital committee on compensation questions and issues as they arose.

Market Compensation Analysis

Because there are not many food companies similar in size to Flowers Foods, a specific set of peer companies is not used for market compensation comparisons. We use market pay data to evaluate base salary, target annual cash incentive and long-term incentive opportunity based on available food industry and general industry peers’ pay data from published surveys. We use an average of food industry and general industry (the “Relevant Market Sector”) survey data when making market comparisons, and the data is adjusted to reflect pay for companies with annual revenues comparable to the company (the “Relevant Market Data”). When establishing pay levels for fiscal 2022, data was collected from the Willis Towers Watson Executive Compensation Database using both general industry data (from 700+ companies, the identities of which were not material to the analysis) and data from the Food & Beverage industry cut comprised of the following companies:

The Relevant Market Data obtained from the companies above was used to evaluate target pay opportunity, not actual payout, and was regressed (size-adjusted) to reflect appropriate scope of revenue responsibility. Pay opportunities are generally established with reference to the size-adjusted 50th percentile for each component of pay opportunity (i.e., base salary, target annual cash incentive and long-term incentive opportunity). Individual positioning relative to Relevant Market

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TABLE OF CONTENTS

Proxy Summary

Annual Meeting and Voting Information

Directors and Corporate Governance

Share Ownership

Executive Compensation

Audit Committee Report

Items to be Voted on

Additional Information

Appendices

Data may vary based on tenure, years of experience in role, individual and company performance, future potential, or other factors. This approach sets executive pay opportunities at levels we believe are competitive and help attract, retain and motivate the most qualified executives.

The compensation and human capital committee concluded that the proposed 2022 compensation levels under the company’s incentive and equity compensation plans for each Named Executive, and their total compensation opportunities, were consistent with a pay-for-performance philosophy, as well as appropriate to meet the company’s goal to retain each Named Executive and to align interests with those of the company’s shareholders.

CASH COMPENSATION

Base Salary

Base salary represents the fixed and recurring part of each Named Executive’s annual compensation. Its objective is to reward experience and expertise, functional progression (i.e., the development of the executive through a series of work experiences and duties and accountabilities relevant to the current position held), career development, skills and competencies. It rewards core competence in the executive role. We choose to pay base salary because it is a standard element of pay for executive positions and is required to attract and retain talent.

We have established a system of tiered salary grades, and executives are assigned an appropriate salary grade considering the position’s internal value as well as external comparisons to the Relevant Market Data. With respect to the position’s “internal value,” we have developed salary grades on the basis that a given position is at least one salary grade below that of the supervising position, which is the only weight assigned to internal value in establishing the salary grades.

Named Executives’ base salaries are related to a salary grade and the base salaries for the grades are determined based on (i) external competitive market base salaries, as determined through comparative analysis of the Relevant Market Data and (ii) the internal relationships (i.e., value and progression) of these positions. We periodically make adjustments to the base salaries based on the factors discussed above as well as the performance of the respective Named Executive.

Individual salaries for Named Executives reporting directly to the president and chief executive officer are subject to approval by the compensation and human capital committee after consideration of the recommendations he submits. The president and chief executive officer’s salary is subject to review and approval by the compensation and human capital committee and the board of directors. Base salaries for all Named Executives are reviewed annually by the compensation and human capital committee and the board of directors.

The following table shows the fiscal 2022 and fiscal 2021 base salary rates for the Named Executives. The Named Executives’ base salaries were each increased slightly as reflected in the table below.

Annual Executive Cash Incentive Awards

For 2022, the annual cash incentive awards were granted to Named Executives under our Omnibus Plan. The awards were designed to provide an incentive to achieve critical annual goals that lead to our long-term success. We choose to provide annual cash incentive award opportunities in order to motivate achievement of annual performance metrics critical to continued company growth and shareholder value creation. Adjusted EBITDA, which is a holistic indicator of the company’s operating performance, is the performance measure used to determine annual cash incentive award payouts.

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                      FLOWERS FOODS, INC. | 2023 PROXY STATEMENT

For 2022, the compensation and human capital committee established target annual cash incentive levels under the Omnibus Plan, which are expressed as a percentage of each Named Executive’s base salary (the “Target Annual Incentive Percentage”). Target Annual Incentive Percentages for each Named Executive for fiscal 2022 were as follows:

2022 annual cash incentives are awarded to participating Named Executives based on the following formula:

The Actual Annual Incentive Percentage would have been 0% if actual adjusted EBITDA were less than 90% of the 2022 Adjusted EBITDA Goal. This mechanism provided motivation for each Named Executive to strive for improved company performance in 2022 even if the 2022 Adjusted EBITDA Goal itself was not attained.

The company does not pay annual cash incentive awards under the Omnibus Plan to any Named Executive until such time as the compensation and human capital committee has certified the Actual Annual Incentive Percentage and the annual report on Form 10-K for the applicable fiscal year has been filed with the SEC. For 2022, the company achieved adjusted EBITDA of $502,030,000 versus the target of $529,008,000 (the “2022 Adjusted EBITDA Goal”). Actual annual cash incentive amounts earned by each Named Executive for 2022 are shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.

LONG-TERM INCENTIVE COMPENSATION

The objective of providing long-term incentive compensation is to focus executives on metrics that lead to increased shareholder value over a longer period of time. It rewards achievement of the specific metrics described below. We choose to grant long-term incentive compensation opportunity because it aligns Named Executives’ interests with those of shareholders and helps to retain a stable management team.

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TABLE OF CONTENTS

Proxy Summary

Annual Meeting and Voting Information

Directors and Corporate Governance

Share Ownership

Executive Compensation

Audit Committee Report

Items to be Voted on

Additional Information

Appendices

Equity and Performance Compensation Awards

In keeping with the compensation and human capital committee’s pay-for-performance philosophy, stock-based incentives comprise our entire long-term incentive program and a significant portion of total compensation opportunity for Named Executives. We believe our stock-based incentives, as designed, are fundamental to the enhancement of shareholder value, by rewarding performance over the long term. The 2022 awards under the Omnibus Plan contain elements designed to focus the Named Executives’ attention on one of the company’s primary goals – the long-term success of the company, and ultimately, the enhancement of shareholder value. Individual long-term incentive grants are reviewed annually and approved by the compensation and human capital committee with reference to the Relevant Market Data it receives from its compensation consultant.

Similar to our 2021 grants, the compensation and human capital committee allocated equity-based awards for 2022 between two types of performance-contingent restricted stock, as described below. The use of performance-contingent restricted stock is intended to encourage Named Executives to focus on capital investments that produce returns in excess of the company’s weighted average cost of capital (“WACC”), based on the quarterly book value of the company’s debt obligations and equity capital, respectively, as adjusted to account for costs and market volatility in the manner set forth in the company’s 2022 Form of Performance Share Agreement, and to enhance the company’s total shareholder return (“TSR”) relative to food industry peers.

The determination of 2022 performance-contingent restricted stock award levels for the Named Executives was based on the Relevant Market Data, and the target dollar values of the grants are set forth below:

In order to determine the actual target number of performance-contingent restricted shares granted to each Named Executive, the total target dollar value shown above for each Named Executive was multiplied by the weight of each type of restricted share award (50% return on invested capital (“ROIC”) based and 50% TSR-based, as described in further detail below), and then divided by the average of (a) the closing price on the date of grant and (b) the closing price on the date of grant, multiplied by a Monte Carlo valuation, to deliver an equal number of target ROIC and TSR shares. The actual number of each type of performance-contingent restricted share granted (at the target level) is set forth below:

The 2022 performance-contingent restricted stock agreement (the “Performance Restricted Stock Agreement”) provides the terms and conditions under which the shares of restricted stock will vest. The vesting of the 2022 awards occurs approximately three years from the date of grant (after the filing of our Annual Report on Form 10-K and in any event no later than March 14, 2025) to the extent that the vesting conditions described below are satisfied. The performance will be measured from January 2, 2022 to December 28, 2024 (the “ROIC Performance Period”) for ROIC-based performance-contingent restricted stock and from January 1, 2022 to December 31, 2024 for TSR-based performance-contingent restricted stock (the “TSR Performance Period”).

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For performance between the levels described above, the degree of vesting is interpolated on a linear basis.

ROIC is based on the following formula:

GAAP amounts used in the calculation of ROIC will be adjusted for items that in the compensation and human capital committee’s judgment affect comparability during the ROIC Performance Period and/or between the numerator and denominator.

TSR-Based Performance-Contingent Restricted Stock Awards. The Performance Restricted Stock Agreement provides that, as to the remaining 50% of the restricted stock underlying each Named Executive’s performance-contingent restricted stock award (the “TSR-Based Award”), vesting will occur based on the company’s performance, measured by company TSR over the TSR Performance Period, as compared to the TSR of the companies in a specified peer group (the “TSR Peer Group”).

TSR is based on the following formula:

For 2022, the TSR Peer Group consisted of the following 17 U.S.-traded food and products companies:

The Performance Restricted Stock Agreement provides that the TSR for peer group members will be adjusted in certain instances, including in the event a peer group company files for bankruptcy during the TSR Performance Period or a peer group company is acquired or subsumed by merger during the TSR Performance Period, in each case as described in the Performance Restricted Stock Agreement.

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TABLE OF CONTENTS

Proxy Summary

Annual Meeting and Voting Information

Directors and Corporate Governance

Share Ownership

Executive Compensation

Audit Committee Report

Items to be Voted on

Additional Information

Appendices

Hypothetical payouts based on the TSR for the company and each member of the TSR Peer Group are calculated at the end of each of the final four quarters of the TSR Performance Period using the performance/payout schedule below and then averaged to determine the actual payout:

For performance between the percentiles described above, the degree of vesting is interpolated on a linear basis.

Vesting Upon Death, Disability, Retirement or Change of Control. For the 2022 grants, if the grantee dies or becomes disabled, the performance-contingent restricted stock awards generally vest at the target level immediately. If the grantee retires at age 65 (or age 55 with at least ten years of service with the company) or later, on the normal vesting date the grantee will receive a prorated number of shares based upon the retirement date and actual performance for the entire performance period. Similar to all equity awards granted under the Omnibus Plan, for the 2022 grants, “double-trigger” vesting applies if a change of control occurs. In addition to change of control, double-trigger vesting requires either that an award fail to be assumed by a successor employer or that the executive’s employment be terminated under specific circumstances within a specified period of time following the change of control before accelerated vesting can occur.

Dividends. Dividends accrue on the restricted stock and are paid in cash to the executive on the vesting date on all shares of restricted stock that vest.

Timing of Grants. Performance-contingent restricted stock awards were granted on January 2, 2022. It is expected that this approximate timing of granting awards will continue for consistency and planning purposes. Except in unusual circumstances, we typically do not grant equity awards to the Named Executives at other dates.

2020 Awards. In fiscal 2020, the company granted each Named Executive a performance-contingent restricted stock award, with 50% of the award vesting based on ROIC during the performance period beginning on December 29, 2019 and ending on December 31, 2022, and 50% of the award vesting based on TSR during the performance period beginning on January 1, 2020 and ending on December 31, 2022. As previously disclosed, the performance objectives applicable to the 2020 performance-contingent restricted stock awards were substantially similar to the design of the 2022 performance-contingent restricted stock awards, including the payout levels at various levels of performance against the applicable targets.

The ROIC-based performance-contingent restricted stock awards granted to the Named Executives in fiscal 2020 vested in early fiscal 2023 at 125% of target as a result of company ROIC during the three-fiscal year performance period exceeding company WACC by 611 basis points.

The TSR-based performance-contingent restricted stock awards granted to the Named Executives in fiscal 2020 vested at 148% of target as a result of the company’s TSR from January 1, 2020, through each of the last four quarters in calendar year 2022, placing it in the 59^th percentile, in the 65^th percentile, in the 76^th percentile, and in the 76^th percentile for the respective quarters of the companies in the applicable TSR peer group for an average of the 69^th percentile.

Recoupment (“Clawback”) Provision

The Omnibus Plan provides the compensation and human capital committee with the flexibility to determine whether to provide for the cancellation or forfeiture of an award or annual cash incentive or the forfeiture and repayment to the company of any gain related to an award if a participant has engaged in detrimental activity. Currently, the company’s performance share award agreements provide for such cancellation, forfeiture or repayment, as applicable.

The recoupment provision provides that if the board of directors has reliable evidence of knowing misconduct by a participant that results in an overstatement of the company’s earnings or other financial measurements that were taken into

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                      FLOWERS FOODS, INC. | 2023 PROXY STATEMENT

consideration in awarding grants or annual cash incentive awards and, as a result of such overstatement, the participant (i) received an annual cash incentive award and/or (ii) either received a grant or had a prior grant vest or become nonforfeitable, the participant shall be required to reimburse (or forfeit, as the case may be) the full amount of any grants or annual cash incentive awards that resulted from the overstatement.

On November 15, 2019, the board adopted a standalone clawback policy (the “Clawback Policy”), which was incorporated in long-term incentive awards beginning with the 2020 grants. The Clawback Policy applies to executive officers and provides for mandatory recoupment in the event of an accounting restatement due to material noncompliance with financial reporting requirements and discretionary recoupment in the event the recipient engages in detrimental activity.

In the wake of the SEC’s recent promulgation of final Dodd-Frank Act clawback rules, we expect to review and consider changes to our clawback provisions.

Anti-Hedging Policy

The company’s insider trading policy prohibits short-term, speculative trading practices and hedging by executive officers, including any Named Executives, and directors.

RETIREMENT & OTHER POST-EMPLOYMENT BENEFITS

We provide retirement benefits to our Named Executives and other executives as noted below. The objective is to provide a competitive array of benefits that is affordable to the company. Retirement benefits reward continued employment and indirectly reward achievement of the metrics in the Omnibus Plan. We choose to pay them to remain competitive in the marketplace and to provide compensation that extends into employees’ non-earning years.

The company provides a defined contribution benefit to executives through the 401(k) Plan and the Executive Deferred Compensation Plan (the “EDCP”).

In connection with his retirement, Mr. Alexander will receive a retirement payment of $70,000 for continued health care premiums under COBRA and equity award vesting in accordance with the terms of his outstanding equity awards, as further described in the section entitled “Potential Payments Upon Termination or Change of Control.”

Executive Deferred Compensation Plan

The EDCP provides additional deferred compensation opportunities to certain members of management. In particular, the EDCP allows these members of management to defer the receipt of a percentage of their salary and annual cash incentive award. The EDCP is not a tax-qualified plan.

The participants’ deferrals are credited to a bookkeeping account established for the participant that is deemed to be credited with interest until paid. Additionally, the company allocates matching contributions pursuant to the plan on behalf of the participant that are also deemed to be credited with interest until paid.

Interest credited on deemed participant deferrals and company contributions to the EDCP are based on the Merrill Lynch U.S. Corp., BBB-rated Fifteen-Year Bond Index plus 150 basis points. In general, interest is considered above-market for Summary Compensation Table reporting purposes if earned at a rate that exceeds 120% or more of the applicable federal long-term rate. Earnings in the EDCP are interest-based credits that exceed this threshold. The company credits interest at above market rates because participants’ EDCP accounts are unfunded and unsecured and therefore subject to substantial risk of loss should events ever befall the company causing it to reorganize or liquidate. Interest credited to the EDCP on behalf of the Named Executives amounted to $419,924 for fiscal 2022.

Generally, the deemed deferrals and company contributions plus interest are paid to the participant upon a specific date or termination of employment.

Distributions from the EDCP are made from the company’s general assets. During 2008, participants were given a one-time, irrevocable opportunity to convert their EDCP deemed cash account for some or all prior years’ deferrals to an account that tracks the performance of our common stock. Balances as of the end of the fiscal year for participants making such an election were converted, based on the closing price of our common stock on January 2, 2009. The EDCP tracking account will be distributed in shares of our common stock at the time elected by the participant for the deferral year(s) in question.

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TABLE OF CONTENTS

Proxy Summary

Annual Meeting and Voting Information

Directors and Corporate Governance

Share Ownership

Executive Compensation

Audit Committee Report

Items to be Voted on

Additional Information

Appendices

The EDCP tracking account will be credited with dividends paid on company common stock for the number of shares deemed held in such account, and such dividends will then be deemed to be invested in the cash account and will earn interest as described above.

Change of Control Severance

We maintain a change of control severance arrangement with our executives, including the Named Executives, as set forth in the Flowers Foods, Inc. Change of Control Plan (the “Change of Control Plan”). Such arrangements have several business objectives important to the company, including stability of the executive team in the event of a threatened or pending change of control, and post-employment restrictive covenants (non-competition, non-solicitation and trade secret protection, among others). The Change of Control Plan rewards executives for remaining employed with the company on a timetable convenient to the company rather than to the executive. We choose to make such payments to obtain the business objectives mentioned. The Change of Control Plan provides double-trigger severance at amounts that we believe are market-appropriate, has no excise tax gross-up provisions and is consistent with current corporate governance norms (see section entitled “Potential Payments upon Termination or Change of Control” in this proxy statement for additional details). In 2015, the compensation and human capital committee adopted a policy that, without shareholder approval, future cash severance arrangements may not exceed 2.99 times salary and target annual cash incentive.

Executive Share Ownership Guidelines

Based on the view of the compensation and human capital committee that the ownership of an equity interest in the company by executives, including Named Executives, is a component of good corporate governance and aligns executive and shareholder interests, share ownership guidelines were adopted that require key members of the company’s management team to directly own minimum amounts of the company’s common stock. All direct holdings of our common stock, certain indirect holdings, and all vested and unvested shares of deferred stock are included for purposes of determining compliance. The guidelines for the Named Executives are set forth in the table below.

The holdings of each of the Named Executives are currently either at the guideline or on track to meet it, and progress toward the guidelines is reviewed annually by the compensation and human capital committee.

Executives subject to the guidelines must hold at least 75% of all net shares received through vesting and distribution of performance shares or restricted stock until the applicable guidelines are achieved.