Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to Section
14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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Preliminary
Proxy Statement
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Confidential,
For Use of the
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Commission
Only (as permitted
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Definitive
Proxy Statement
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by Rule 14a-6(e)(2))
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Definitive
Additional Materials
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Soliciting
Material Pursuant to Rule 14a-11(c) or Rule
14a-12
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applies:
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number of securities to which transactions
applies:
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NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON OCTOBER 14, 2010
TO THE
STOCKHOLDERS OF LANDEC CORPORATION:
NOTICE IS
HEREBY GIVEN that the Annual Meeting of Stockholders of Landec Corporation (the
“Company”)
will be held on Thursday, October 14, 2010, at 1:30 p.m., local time, at Pacific
Athletic Club, 200 Redwood Shores Parkway, Redwood City, CA 94065 for the
following purposes:
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1.
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To
elect four directors to serve for a term expiring at the Annual Meeting of
Stockholders held in the second year following the year of their election
and until their successors are duly elected and
qualified;
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2.
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To
ratify the appointment of Ernst & Young LLP as the Company’s
independent registered public accounting firm for the fiscal year ending
May 29, 2011; and
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3.
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To
transact such other business as may properly come before the meeting or
any postponement or adjournment(s)
thereof.
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The
foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice.
Only
stockholders of record at the close of business on August 16, 2010, are entitled
to notice of and to vote at the meeting and any adjournment(s)
thereof.
All
stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, and date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose or vote your shares by
telephone or via the Internet.
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BY
ORDER OF THE BOARD OF DIRECTORS
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/s/
Geoffrey P. Leonard
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GEOFFREY
P. LEONARD
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Secretary
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Menlo
Park, California
August
25, 2010
IMPORTANT
WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE ENCLOSED
PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE OR VOTE YOUR SHARES BY TELEPHONE OR VIA THE INTERNET. IF A
QUORUM IS NOT REACHED, THE COMPANY MAY HAVE THE ADDED EXPENSE OF
RE-ISSUING THESE PROXY MATERIALS. IF YOU ATTEND THE MEETING AND SO
DESIRE, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON. THANK YOU
FOR ACTING
PROMPTLY.
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PROXY
STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON OCTOBER 14, 2010
INFORMATION
CONCERNING SOLICITATION AND VOTING
General
The
enclosed proxy is solicited on behalf of the Board of Directors of Landec
Corporation (“Landec”
or the “Company”),
a Delaware corporation, for use at the annual meeting of stockholders (the
“Annual
Meeting”) to be held on Thursday, October 14, 2010, at 1:30 p.m.,
local time, or at any postponement or adjournment(s) thereof, for the purposes
set forth herein and in the accompanying Notice of Annual Meeting of
Stockholders. The Annual Meeting will be held at Pacific Athletic Club,
200 Redwood Shores Parkway, Redwood City, CA 94065. The telephone number at that
location is (650) 593-1112.
The
Company’s principal executive offices are located at 3603 Haven Avenue, Menlo
Park, California 94025. The Company’s telephone number at that location is
(650) 306-1650.
Solicitation
These
proxy solicitation materials are to be mailed on or about September 15, 2010, to
all stockholders entitled to vote at the meeting. The costs of soliciting
these proxies will be borne by the Company. These costs will include the
expenses of preparing and mailing proxy materials for the Annual Meeting and the
reimbursement of brokerage firms and others for their expenses incurred in
forwarding solicitation material regarding the Annual Meeting to beneficial
owners of the Company’s Common Stock. The Company may conduct further
solicitation personally, telephonically or by facsimile through its officers,
directors and regular employees, none of whom will receive additional
compensation for assisting with the solicitation.
Important
Notice Regarding the Availability of Proxy Materials for the
Stockholder
Meeting To Be Held on October 14, 2010.
This
Proxy Statement and the Company’s Annual Report to stockholders are available at
http://phx.corporate-ir.net/phoenix.zhtml?c=65846&p=irol-reportsAnnual.
You may
also find a copy of this Proxy Statement and our Annual Report (with exhibits)
on the SEC website at http://www.sec.gov. We will, upon written request and
without charge, send you additional copies of our Annual Report (without
exhibits) and this Proxy Statement. To request additional copies, please send
your request by mail to Gregory S. Skinner, Chief Financial
Officer, Landec Corporation, 3603 Haven Avenue, Menlo Park, CA 94025 (telephone
number: (650) 306-1650). Exhibits to the Annual Report may be obtained
upon written request to Mr. Skinner and payment of the Company’s reasonable
expenses in furnishing such exhibits.
Voting
Procedure
You
may vote by mail.
To vote
by mail, please sign your proxy card and return it in the enclosed, prepaid and
addressed envelope. If you mark your voting instructions on the proxy
card, your shares will be voted as you instruct.
You
may vote in person at the Annual Meeting.
We will
pass out written ballots to anyone who wants to vote at the Annual
Meeting. Holding shares in “street name” means your shares of stock are
held in an account by your stockbroker, bank or other nominee, and the stock
certificates and record ownership are not in your name. If your shares are
held in “street name” and you wish to attend the Annual Meeting, you must notify
your broker, bank or other nominee and obtain proper documentation to vote your
shares at the Annual Meeting.
You
may vote by telephone or electronically.
You may
submit your proxy by following the Vote by Phone instructions accompanying the
proxy card. If you have Internet access, you may submit your proxy from
any location in the world by following the Vote by Internet instructions
accompanying the proxy card.
You
may change your mind after you have returned your proxy card.
If you
change your mind after you return your proxy card or submit your proxy by
telephone or Internet, you may revoke your proxy at any time before the polls
close at the Annual Meeting. You may do this by:
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signing
another proxy card with a later date,
or
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voting
in person at the Annual Meeting.
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Voting
Holders
of Common Stock are entitled to one vote per share.
Votes
cast in person or by proxy at the Annual Meeting will be tabulated by the
Inspector of Elections. The Inspector of Elections will also determine
whether or not a quorum is present. A majority of the shares entitled to
vote, represented either in person or by proxy, will constitute a quorum for the
transaction of business.
The
affirmative vote of a majority of shares represented and voting at a duly held
meeting at which a quorum is present is required for approval of proposals
presented to stockholders.
The
Inspector of Elections will treat abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum and in
determining the approval of any matter submitted to stockholders for a
vote. Accordingly, abstentions will have the same effect as a vote against
a proposal.
Any proxy
which is returned using the form of proxy enclosed and which is not marked as to
a particular item will be voted FOR election of the director nominees proposed
by the Board of Directors, FOR the ratification of the appointment of Ernst
& Young LLP to serve as the Company’s independent registered public
accounting firm for the fiscal year ending May 29, 2011, and as the proxy
holders deem advisable on other matters that may come before the meeting or any
adjournment(s) thereof, as the case may be, with respect to the item not
marked. If a broker indicates on the enclosed proxy or its substitute that
it does not have discretionary authority as to certain shares to vote on a
particular matter (“broker
non-votes”), those shares will be counted for purposes of determining the
presence of a quorum, but will not be considered as voting with respect to that
matter.
Record
Date and Share Ownership
Only
stockholders of record at the close of business on August 16, 2010, are entitled
to notice of, and to vote at, the Annual Meeting. As of August 16, 2010,
26,507,778 shares of the
Company’s Common Stock, par value $0.001 per share, were issued and
outstanding.
Deadline
for Receipt of Stockholder Proposals for the Company’s Annual Meeting of
Stockholders in 2011
If any
stockholder desires to present a stockholder proposal at the Company’s 2011
Annual Meeting of Stockholders, such proposal must be received by the Secretary
of the Company no later than May 18, 2011, in order that they may be considered
for inclusion in the proxy statement and form of proxy relating to that
meeting.
Also, if
a stockholder does not notify the Company on or before August 1, 2011, of a
proposal for the 2011 Annual Meeting of Stockholders, management intends to use
its discretionary voting authority to vote on such proposal, even if the matter
is not discussed in the proxy statement for the 2011 Annual Meeting of
Stockholders.
Householding
of Proxy Materials
Some
companies, brokers, banks, and other nominee record holders participate in a
practice commonly known as “householding,” where a single copy of our Proxy
Statement and Annual Report is sent to one address for the benefit of two or
more stockholders sharing that address. Householding is permitted under rules
adopted by the SEC as a means of satisfying the delivery requirements for proxy
statements and annual reports, potentially resulting in extra convenience for
stockholders and cost savings for companies. We will promptly deliver a separate
copy of either document to you if you contact our Chief Financial Officer at the
address listed above or call us at (650) 306-1650. If you are receiving multiple
copies of our Proxy Statement and Annual Report at your household and wish to
receive only one, please notify your bank, broker, or other nominee record
holder, or contact our Chief Financial Officer at the address listed
above.
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
Nominees
The
Company’s Bylaws currently provide for not less than five (5) nor more than nine
(9) directors, with the exact number fixed at nine (9), and the Company’s
Certificate of Incorporation provide for the classification of the Board of
Directors into two classes serving staggered terms. The Company’s Board of
Directors currently consists of nine persons, including four Class 1 directors
and five Class 2 directors. Each Class 1 and Class 2 director is elected
for a two year term, with Class 1 directors elected in even numbered years
(e.g., 2010) and the
Class 2 directors elected in odd numbered years (e.g., 2011).
Accordingly, at the Annual Meeting, four Class 1 directors will be
elected.
The Board
of Directors has nominated the persons named below to serve as Class 1 directors
until the next even numbered year annual meeting during which their successors
will be elected and qualified. Unless otherwise instructed, the proxy
holders will vote the proxies received by them for the Company’s four (4)
nominees named below, all of whom are presently directors of the Company.
In the event that any nominee of the Company is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the present Board of Directors to fill the
vacancy. In the event that additional persons are nominated for election
as directors, the proxy holders intend to vote all proxies received by them in
such a manner as will assure the election of as many of the nominees listed
below as possible, and, in such event, the specific nominees to be voted for
will be determined by the proxy holders. Assuming a quorum is present, the
four (4) nominees for director receiving at least a majority of votes cast at
the Annual Meeting will be elected.
Nominees
For Class 1 Directors
Name of Director
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Age
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Principal Occupation
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Director Since
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Frederick
Frank
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78
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Vice
Chairman, Peter J. Solomon Company
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1999
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Steven
Goldby
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70
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Partner,
Venrock
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2008
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Stephen
E. Halprin
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72
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Retired
General Partner of OSCCO Ventures
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1988
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Richard
S. Schneider, Ph.D.
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69
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Retired
General Partner, Domain Associates
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1991
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Except as
set forth below, each of the Class 1 directors has been engaged in the principal
occupation set forth next to his name above during the past five years.
There is no family relationship between any director or executive officer of the
Company.
Frederick
Frank has served as director since December 1999. Mr. Frank is Vice Chairman of
Peter J. Solomon Company (“Solomon”),
an investment banking and advisory firm. Before joining Solomon, Mr. Frank
was Vice Chairman of Lehman Brothers, Inc. (“Lehman”)
and Barclays Capital. Before joining Lehman as a Partner in October 1969, Mr.
Frank was co-director of research, as well as Vice President and Director of
Smith Barney & Co. Incorporated. During his 50 years on Wall Street, Mr.
Frank has been involved in numerous financings and merger and acquisition
transactions. He serves on the board of directors of Pharmaceutical Product
Development, Inc., PDL BioPharma, and was a director for the Institute for
Systems Biology. Mr. Frank is Chairman of the National Genetics Foundation and
he serves on the Advisory Boards for Yale School of Organization and Management,
Johns Hopkins Bloomberg School of Public Health, the Massachusetts Institute of
Technology Center of Biomedical Innovation and the Harvard School of Public
Health. He is a graduate of Yale University, received an M.B.A. from Stanford
University and is a Chartered Financial Analyst.
Mr. Frank
has over 50 years of capital markets experience and has been involved in
numerous financings, commercial transactions and mergers and acquisitions.
As such, Mr. Frank provides the Board with extensive experience and knowledge
with respect to transactions and financing in the public company context and
corporate governance experience based on his experience as a director of public
and non-public companies.
Steven
Goldby has served as a director since December 2008. Mr. Goldby has been a
Partner at Venrock, a venture capital firm, since 2007. Mr. Goldby was
Chairman and Chief Executive Officer of Symyx Technologies, Inc. (“Symyx”)
from 1998 to 2007; he became the Executive Chairman in 2008, and Chairman in
2009. Before joining Symyx, Mr. Goldby served as Chief Executive
Officer for more than ten years at MDL Information Systems, Inc., the enterprise
software company that pioneered scientific information management.
Earlier, Mr. Goldby held various management positions at ALZA Corporation,
including President of Alza Pharmaceuticals. Mr. Goldby received a B.S.
degree in chemistry from the University of North Carolina and a law degree from
Georgetown University Law Center.
Mr.
Goldby’s extensive experience with biotechnology companies provides the Board
with significant understanding of the technology issues facing the
Company.
Stephen
E. Halprin has served as a director since April 1988. From 1968 until his
retirement in 2005, Mr. Halprin was a General Partner of OSCCO Ventures, a
venture capital firm. Mr. Halprin received a B.S. from the Massachusetts
Institute of Technology and an M.B.A. from Stanford University.
Through
his work in the venture capital arena, Mr. Halprin has a great deal of
familiarity with the issues that arise in the context of growing and developing
a business. As such, he provides the Board with significant knowledge of
financing and development of strategies for growth.
Richard
S. Schneider, Ph.D. has served as a director since September 1991. From
October 1990 until his retirement in 1999, Dr. Schneider was a general
partner of Domain Associates L.L.C., a venture capital firm. Prior to
pursuing a career in venture capital, Dr. Schneider was Vice President of
Product Development at Syva/Syntex Corporation and President of Biomedical
Consulting Associates. He is a member of the board of directors of a
number of privately-held life science companies. Dr. Schneider
received a B.S. from the University of California at Berkeley and received a
Ph.D. in chemistry from the University of Wisconsin, Madison.
With over
25 years of product development experience in the fields of medical devices and
biotechnology, Dr. Schneider provides the Board with extensive
understanding of the scientific issues related to the Company’s
products.
Class 2
Directors
Directors
continuing in office until the 2011 Annual Meeting of Stockholders
are:
Name of Director
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Age
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Principal Occupation
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Director Since
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Gary
T. Steele
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61
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President,
Chief Executive Officer and Chairman of the Board of Directors of the
Company
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1991
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Duke
K. Bristow, Ph.D.
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53
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Economist,
University of Southern California
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2004
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Dean
Hollis
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50
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Retired
President and Chief Operating Officer, ConAgra Foods, Inc. Consumer Foods
and International Division
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2009
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Robert
Tobin
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72
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Retired
Chief Executive Officer, Ahold, USA
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2004
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Nicholas
Tompkins
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55
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Chairman
of the Board of Apio, Inc.
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2003
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Except as
set forth below, each of the Class 2 directors has been engaged in the principal
occupation set forth next to his name above during the past five
years.
Gary T.
Steele has served as President, Chief Executive Officer and a director since
September 1991 and as Chairman of the Board of Directors since January
1996. Mr. Steele has 30 years of experience in the biotechnology,
instrumentation and material science fields. From 1985 to 1991,
Mr. Steele was President and Chief Executive Officer of Molecular Devices
Corporation, a bioanalytical instrumentation company. From 1981 to 1985,
Mr. Steele was Vice President, Product Development and Business Development
at Genentech, Inc., a biomedical company focusing on pharmaceutical drug
development. Mr. Steele has also worked with McKinsey & Company
and Shell Oil Company. Mr. Steele received a B.S. from Georgia
Institute of Technology and an M.B.A. from Stanford University.
Mr.
Steele’s significant knowledge and understanding of the Company and its
businesses together with his extensive experience in the biotechnology field
provide the Board with significant insight into the Company’s businesses and
operations.
Duke K.
Bristow, Ph.D. has served as a director since September 2004. Dr. Bristow
has academic appointments with the Marshall School of Business at the University
of Southern California (“USC”)
and with the Henry Samueli School of Engineering at the University of
California, Los Angeles (“UCLA”).
He teaches engineering economics at UCLA where he has been an economist since
1995. In August 2006, he began teaching finance at USC. His research
focuses on corporate governance, corporate finance and entrepreneurship.
Dr. Bristow is an advisor to a number of private and public organizations.
Previously, he was with Eli Lilly & Company, a leading life science firm,
for ten years. He held management positions in the pharmaceutical, medical
device and diagnostics divisions and in corporate finance. He holds a B.S.
in Chemical Engineering from Purdue University, an M.B.A. from Indiana
University, and a Ph.D. in Financial Economics from UCLA.
With his
academic background and knowledge of corporate governance and finance, Dr.
Bristow provides the Board with a thoughtful perspective on economic issues
facing the Company. In addition, with his experience in the life sciences
industry, Dr. Bristow provides a deep understanding of the technology issues
facing the Company’s bio-technology business.
Dean
Hollis has served as a director since July 30, 2009. Mr. Hollis was most
recently President and Chief Operating Officer of the Consumer Foods and
International Division of ConAgra Foods, Inc. (“ConAgra”).
Mr. Hollis had management responsibility for ConAgra’s consumer and customer
branded businesses consisting of over 40 global brands in 110 countries.
During Mr. Hollis’ 21 years with ConAgra, he had a broad array of
responsibilities, including Executive Vice President, Retail Products;
President, Frozen Foods; President, Grocery Foods; President, Specialty Foods;
and President, Gilardi Foods. Currently, Mr. Hollis is a Senior Advisor
for Oaktree Capital Management, L.P. (“Oaktree”).
He also serves on the board for Pierre Foods, an Oaktree portfolio
company, and on the Executive Advisory Board for ICG Commerce. Mr. Hollis
is a graduate of Stetson University where he currently serves on its
board.
With over
20 years of experience in the food industry, Mr. Hollis provides the Board with
significant expertise in areas of great significance to the Company and its
subsidiary, Apio, Inc. (“Apio”).
Robert
Tobin has served as a director since December 2004. Mr. Tobin retired from
his position as Chief Executive Officer of Ahold USA in 2001. Mr. Tobin
has over 40 years of industry experience in the food retail and food service
sectors, having served as Chairman and CEO of Stop and Shop Supermarkets.
An industry leader, Mr. Tobin serves on the advisory boards of the College of
Agriculture and Life Sciences and the Undergraduate Business Program at Cornell
University where he received his B.S. in Agricultural Economics.
Mr.
Tobin’s experience as the chief executive officer of food retailers and his
knowledge of the food retail and food service sectors provide the Board with
significant expertise with respect to issues facing the Company’s food
business. In addition, Mr. Tobin’s service on advisory boards provides the
Board with knowledge of the scientific issues that face the Company’s food
business.
Nicholas
Tompkins has served as a director since October 2003. Mr. Tompkins has
been the Chairman of the Board of Apio, a wholly-owned subsidiary of Landec,
since January 2008. Prior to becoming the Chairman of the Board of Apio,
Mr. Tompkins was the Chief Executive Officer of Apio, a position he had held
since Apio’s inception in 1979. Landec acquired Apio in December
1999. Mr. Tompkins is also a current board member and past chairman
of the Ag Business Advisory Council for California Polytechnic State University
in San Luis Obispo, California. He was a member of the board of directors
of the United Fresh Fruit and Vegetable Association through 2008 and was
Chairman of that organization in 2005 and 2006. Mr. Tompkins received
a B.S. in Agricultural Business from California State University,
Fresno.
Mr.
Tompkins brings to the Board extensive experience in the area of
agriculture. In addition, Mr. Tompkin’s prior service as the Chief
Executive Officer of Apio and as its current Chairman provides the Board with
in-depth knowledge of the operations of Apio, a significant portion of the
Company’s business.
Board
of Directors Meetings and Committees
The Board
of Directors held a total of seven meetings during the fiscal year ended
May 30, 2010. Each director attended at least 75% of all Board and
applicable committee meetings during fiscal year 2010. The Board of
Directors has an Audit Committee, a Compensation Committee and a Nominating and
Corporate Governance Committee, each of which operates under a written charter
approved by the Board of Directors. The Company has also formed a Technology
Committee. It is our policy to encourage the members of the Board of
Directors to attend the Company’s annual meeting of stockholders. All
directors, except for Mr. Frank, attended our 2009 annual meeting of
stockholders.
The Audit
Committee currently consists of Mr. Halprin (Chairman), Dr. Bristow and Mr.
Goldby, each of whom the Board of Directors has determined meets the current
independence requirements of the Securities and Exchange Commission (the “SEC”)
and The Nasdaq Stock Market, Inc. (“Nasdaq”).
The Audit Committee assists the Board of Directors in its oversight of Company
affairs relating to the quality and integrity of the Company’s financial
statements, the independent auditor’s qualifications and independence, the
performance of the Company’s internal audit function and independent auditor,
and the Company’s compliance with legal and regulatory requirements. The
Audit Committee is responsible for appointing, compensating, retaining and
overseeing the Company’s independent auditor, approving the services performed
by the independent auditors and for reviewing and evaluating the Company’s
accounting principles and its system of internal accounting controls. The
Sarbanes-Oxley Act of 2002 and rules adopted by the SEC require us to disclose
whether the Audit Committee includes at least one member who is an “audit
committee financial expert” within the meaning of such Act and rules. The
Board of Directors has determined that Mr. Halprin, Dr. Bristow and Mr. Goldby
are “audit committee financial experts” within the meaning of applicable SEC
rules and regulations. The Audit Committee held five meetings during
fiscal year 2010. Please see the section entitled “Audit Committee Report”
for further matters related to the Audit Committee.
The
Compensation Committee currently consists of Dr. Schneider (Chairman),
Mr. Frank, Mr. Tobin and Mr. Hollis each of whom the Board of
Directors has determined meets the current independence requirements of the SEC
and Nasdaq. The function of the Compensation Committee is to review and
set the compensation of the Company’s Chief Executive Officer and certain of the
Company’s most highly compensated officers, including salary, bonuses and other
incentive plans, stock equity and other forms of compensation, to administer the
Company’s stock plans and approve stock equity awards and to oversee the career
development of senior management. The Compensation Committee held three
meetings during fiscal year 2010. Mr. Hollis joined the Compensation
Committee on May 28, 2010 and as a result did not participate in the
Compensation Committee's activities during fiscal year 2010. Please see
the section entitled “Executive Compensation and Related Information” for
further matters related to the Compensation Committee, including its report for
the fiscal year ended May 30, 2010.
The
Nominating and Corporate Governance Committee currently consists of Mr. Frank
(Chairman) and Mr. Tobin, each of whom the Board of Directors has
determined meets the current independence requirements of the SEC and
Nasdaq. The functions of the Nominating and Corporate Governance Committee
are to recommend qualified candidates for election as officers and directors of
the Company and oversee the Company’s corporate governance policies. The
Nominating and Corporate Governance Committee held two meetings during fiscal
year 2010.
The
Nominating and Corporate Governance Committee will consider director nominees
proposed by current directors, officers, employees and stockholders. Any
stockholder who wishes to recommend candidates for consideration by the
Nominating and Corporate Governance Committee may do so by writing to the
Secretary of the Company, Geoffrey P. Leonard of Ropes & Gray LLP, Three
Embarcadero Center, San Francisco, CA 94111, and providing the candidate’s name,
biographical data and qualifications. In selecting candidates for the
Board of Directors, the Nominating and Corporate Governance Committee strives
for a variety of experience and background that adds depth and breadth to the
overall character of the Board of Directors. The Nominating and Corporate
Governance Committee evaluates potential candidates using standards and
qualifications such as the candidates’ business experience, independence,
diversity, skills and expertise to collectively establish a number of areas of
core competency of the Board of Directors, including business judgment,
management and industry knowledge. Although the Nominating and Corporate
Governance Committee does not have a formal policy on diversity, it believes
that diversity is an important consideration in the composition of the Board,
and it seeks to include Board members with diverse backgrounds and
experiences. Further criteria include a candidate’s integrity and values,
as well as the willingness to devote sufficient time to attend meetings and
participate effectively on the Board of Directors and its
committees.
The
Technology Committee currently consists of Dr. Schneider (Chairman),
Dr. Bristow and Mr. Halprin, each of whom the Board of Directors has
determined meets the current independence requirements of the SEC and
Nasdaq. The function of the Technology Committee is to provide, as
necessary, advice and recommendations to the Board of Directors and to
management with regard to technology strategies aimed at addressing current and
future markets, product development and new product introductions and enhancing
the Company’s long-term growth. The Technology Committee did not hold a
meeting during fiscal year 2010.
Corporate
Governance
The
Company provides information about its corporate governance policies, including
the Company’s Code of Ethics, and charters for the Audit, Nominating and
Corporate Governance and Compensation Committees of the Board of Directors on
the Corporate Governance page of its website. The website can be found at
www.landec.com.
The
Company’s policies and practices reflect corporate governance initiatives that
are compliant with the listing requirements of Nasdaq and the corporate
governance requirements of the Sarbanes-Oxley Act of 2002,
including:
|
•
|
A
majority of the board members are
independent;
|
|
•
|
All
members of the Audit Committee, the Compensation Committee, the Nominating
and Corporate Governance Committee and the Technology Committee are
independent;
|
|
•
|
The
independent members of the Board of Directors meet at least twice per year
in executive sessions without the presence of management, and the Board of
Directors has designated a lead independent director who, among other
duties, is responsible for presiding over executive sessions of the
independent directors;
|
|
•
|
The
Company has an ethics hotline available to all employees, and the Audit
Committee has procedures in place for the anonymous submission of employee
complaints regarding accounting, internal controls, or auditing matters;
and
|
|
•
|
The
Company has adopted a Code of Ethics that applies to all of its employees,
including its principal executive officer and all members of its finance
department, including the principal financial officer and principal
accounting officer, as well as the Board of Directors. Any
substantive amendments to the Code of Ethics or grant of any waiver,
including any implicit waiver, from a provision of the Code of Ethics to
the Company’s principal executive officer, principal financial officer or
principal accounting officer, will be disclosed either on the Company’s
website or in a report on
Form 8-K.
|
The Board
has determined that each member of the Board, other than Mr. Steele and Mr.
Tompkins, is an independent director under applicable Nasdaq listing standards
and SEC rules. Mr. Steele does not meet the independence standards because
he was an employee of the Company during fiscal year 2010 and, in the case of
Mr. Tompkins, based on the information disclosed under “Certain Relationships
and Related Transactions” herein.
Mr.
Halprin currently serves as the Company’s lead independent
director.
Board
Leadership Structure
The Board
believes that it is important to retain its flexibility to allocate the
responsibilities of the positions of the Chairman of the Board (the "Chairman") and Chief Executive
Officer in the way that it believes is in the best interests of the Company.
After due consideration by the Board, the Board has concluded that combining the
roles of Chairman and Chief Executive Officer is in the best interests of the
Company. The Board believes that the combination of the roles of Chairman and
Chief Executive Officer promotes the Board's and executive management's pursuit
of the Company's business objectives by allowing the senior-most executive with
accountability for the Company's day-to-day operations, who also possesses
significant business and industry knowledge, to set Board meeting agendas (in
consultation with the lead independent director) and to lead the related
discussions.
The Board
does not believe that separating these roles would enhance either the
independence of the Board or its effectiveness in discharging its
responsibilities. The Board adheres to sound corporate governance practices, as
reflected in the Company's corporate governance policies, which the Board
believes has promoted, and continues to promote, the effective and independent
exercise of Board leadership for the Company and its stockholders. At each Board
Meeting, non-management directors convene an executive session without the
presence of management. Moreover, the non-management directors have elected one
independent director to be the lead director. The lead director is Mr. Halprin.
The lead director presides over executive sessions of the non-management
directors and at all meetings at which the Chairman is not present; calls
meetings of the non-management directors as he deems necessary; serves as
a liaison between the Chairman and the non-management directors; advises the
Chairman of the informational needs of the Board and approves information sent
to the Board; and is available for consultation and communication if requested
by major stockholders.
Stockholder
Communications
Our Board
of Directors welcomes communications from our stockholders. Stockholders
and other interested parties may send communications to the Board of Directors,
or the independent directors as a group, or to any director in particular or the
lead independent director, c/o Gregory S. Skinner, Chief Financial Officer,
Landec Corporation, 3603 Haven Avenue, Menlo Park, CA 94025. Any
correspondence addressed to the Board of Directors or to any one of our
directors in care of Mr. Skinner will be promptly forwarded to the
addressee. The independent directors of the Board of Directors review and
approve the stockholder communication process periodically to ensure effective
communication with stockholders.
Oversight
of Risk Management
The Board
of Directors' role in the Company's risk oversight process includes receiving
regular reports from members of senior management on areas of material risk to
the Company, including operational, financial, legal and regulatory, and
strategic and reputational risks. Our Audit Committee oversees management of
financial risk exposures, including the integrity of our accounting and
financial reporting processes and controls. As part of this responsibility, the
Audit Committee meets periodically with the independent auditors, our internal
auditors and our financial and accounting personnel to discuss significant
financial risk exposures and the steps management has taken to monitor, control
and report such exposures. Additionally, the Audit Committee reviews significant
findings prepared by the independent auditors and our internal auditors,
together with management's response. Our Nominating and Corporate
Governance Committee has responsibility for matters relating to corporate
governance. As such, the charter for our Nominating and Corporate
Governance Committee provides for the committee to periodically review and
discuss our corporate governance guidelines and policies.
Our
management also reviewed with our Compensation Committee the compensation
policies and practices of the Company that could have a material impact on the
Company. Our management review considered whether any of these policies and
practices may encourage inappropriate risk-taking, whether any policy or
practice may give rise to risks that are reasonably likely to have a material
adverse effect on us, and whether it would recommend any changes to the
Company's compensation policies and practices. Management also reviewed with the
Board of Directors risk-mitigating controls such as the degree of committee and
senior management oversight of each compensation program and the level and
design of internal controls over such programs. Based on these reviews,
the Company determined that risks arising from the Company’s compensation
policies and practices are not reasonably likely to have a material adverse
effect on the Company.
Compensation
of Directors
The
following table sets forth compensation information for the fiscal year ended
May 30, 2010, for each member of our Board of Directors who was not also an
executive officer during fiscal year 2010. An executive officer who serves on
our Board does not receive additional compensation for serving on the Board. See
“Summary Compensation Table” and “Grants of Plan-Based Awards” for disclosures
related to our Chairman of the Board, President and Chief Executive Officer,
Gary T. Steele.
|
|
Fees Earned or
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
Name
|
|
Paid in Cash
|
|
|
Awards(2)
|
|
|
Awards(2)
|
|
|
Total
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Duke
K. Bristow, Ph.D.
|
|
|
37,500 |
|
|
|
9,385 |
|
|
|
11,488 |
|
|
|
58,373 |
|
Frederick
Frank (1)
|
|
|
26,000 |
|
|
|
9,385 |
|
|
|
11,488 |
|
|
|
46,873 |
|
Steven
Goldby
|
|
|
40,167 |
|
|
|
9,385 |
|
|
|
11,488 |
|
|
|
61,040 |
|
Stephen
E. Halprin
|
|
|
51,333 |
|
|
|
9,385 |
|
|
|
11,488 |
|
|
|
72,206 |
|
Dean
Hollis (3)
|
|
|
22,667 |
|
|
|
30,550 |
|
|
|
39,595 |
|
|
|
92,812 |
|
Richard
S. Schneider, Ph.D.
|
|
|
33,500 |
|
|
|
9,385 |
|
|
|
11,488 |
|
|
|
54,373 |
|
Robert
Tobin
|
|
|
29,000 |
|
|
|
9,385 |
|
|
|
11,488 |
|
|
|
49,873 |
|
Nicholas
Tompkins
|
|
|
27,500 |
|
|
|
9,385 |
|
|
|
11,488 |
|
|
|
48,373 |
|
|
(1)
|
Pursuant
to an agreement with the Company, the fees earned by Mr. Frank have been
deferred.
|
|
(2)
|
The
amounts shown in the Stock Awards and Option Awards columns do not reflect
compensation actually received by a director. Instead the amounts shown
are the aggregate grant date value, computed in accordance with Financial
Accounting Standards Board Accounting Standards Codification Topic 718,
Compensation—Stock Options, of awards granted in fiscal year 2010.
The assumptions used to calculate the value of option awards are set forth
under Note 1 of the Notes to Consolidated Financial Statements included in
our Annual Report on Form 10-K for the fiscal year ended May 30,
2010.
|
|
(3)
|
The
amounts shown in the Stock Awards and Option Awards columns for Mr. Hollis
reflect that he received an initial grant of 3,333 RSUs and an option to
purchase 10,000 shares of common stock upon his election as a member of
the Board of Directors.
|
At May
30, 2010, the aggregate number of stock awards and option awards outstanding
was: Dr. Bristow – 56,667 shares; Mr. Frank – 86,667 shares; Mr. Goldby –
25,000 shares; Mr. Halprin – 86,667 shares; Mr. Hollis – 20,000 shares; Dr.
Schneider –86,667 shares; Mr. Tobin – 56,667 shares; and Mr. Tompkins – 16,667
shares.
For
fiscal year 2010, each non-employee director earned $20,000 per year for service
as a member of our Board of Directors. In addition, each director who
served as the Chairman of the Compensation Committee received an annual retainer
of $5,000, each director who served on the Audit Committee received an annual
retainer of $10,000, with the Chairman of the Audit Committee receiving an
annual retainer of $15,000, and each director who served as the lead independent
director received an annual retainer of $10,000.
Additionally, for fiscal year 2010, each non-employee
director received $1,000 for each meeting of the Board attended in person ($500
if attended by phone), $500 for each meeting of a Committee attended in person,
and $1,000 for each stockholder meeting attended by the director.
Reasonable out-of-pocket expenses incurred by a director to attend Board
meetings, Committee meetings or stockholder meetings in his or her capacity as a
director were reimbursed.
Required
Vote
The
election of the four (4) Class 1 director nominees requires the affirmative vote
of the holders of a majority of the shares of the Company’s Common Stock present
at the Annual Meeting in person or by proxy and entitled to vote. This
means that in order for a director to be elected, the number of shares voted
“FOR” a director must exceed the number of votes cast against that
director. As such, a “WITHHOLD” vote is effectively a vote against a
director.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES
LISTED ABOVE.
PROPOSAL
NO. 2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC
ACCOUNTING FIRM
The Audit
Committee has appointed the firm of Ernst & Young LLP as the Company’s
independent registered public accounting firm to audit the financial statements
of the Company for the fiscal year ending May 29, 2011, and recommends that the
stockholders vote for ratification of this appointment. In the event the
stockholders do not ratify such appointment, the Audit Committee may reconsider
its selection. Ernst & Young LLP has audited the Company’s financial
statements since the fiscal year ending October 31, 1994. Representatives
of Ernst & Young LLP are expected to be present at the Annual Meeting with
the opportunity to make a statement if they desire to do so, and are expected to
be available to respond to appropriate questions.
Fees
Paid to Independent Registered Public Accounting Firm
The
following table presents the aggregate fees billed to the Company for
professional services rendered by Ernst & Young LLP for the fiscal years
ended May 30, 2010 and May 31, 2009.
Fee Category
|
|
Fiscal 2010
|
|
|
Fiscal 2009
|
|
Audit
Fees
|
|
$ |
818,000 |
|
|
$ |
782,307 |
|
Audit-Related
Fees
|
|
$ |
0 |
|
|
$ |
0 |
|
Tax
Fees (1)
|
|
$ |
29,000 |
|
|
$ |
40,000 |
|
All
Other Fees
|
|
$ |
0 |
|
|
$ |
0 |
|
Total
|
|
$ |
847,000 |
|
|
$ |
822,307 |
|
|
(1)
|
Tax
fees for fiscal year 2010 were for the tax services provided in connection
with the Company’s acquisition of Lifecore Biomedical, Inc. Tax fees
for fiscal year 2009 were for the conversion of Landec Ag, Inc. to an LLC
owned by the Company.
|
Audit
Fees were for professional services rendered for the integrated audit of the
Company’s annual financial statements and internal controls over financial
reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002, for the
review of the Company’s interim financial statements included in the Company’s
Forms 10-Q, and for assistance with and review of documents filed by the Company
with the SEC.
Audit
Committee Pre-Approval Policies
The Audit
Committee pre-approves all audit and permissible non-audit services provided by
the Company’s independent registered public accounting firm. These services may
include audit services, audit-related services, tax services and other services.
Any pre-approval is detailed as to the particular service or category of
services and is generally subject to a specific budget. The Company’s
independent registered public accounting firm and management are required to
periodically report to the Audit Committee regarding the extent of services
provided by the independent registered public accounting firm in accordance with
such pre-approval, and the fees for the services performed to date. The Audit
Committee, or its designee, may also pre-approve particular services on a
case-by-case basis.
Changes
to the Independent Auditors
On June
5, 2008, the Audit Committee dismissed McGladrey & Pullen, LLP (“McGladrey”)
as the Company’s independent registered public accounting firm. McGladrey was
engaged to be the Company’s independent registered public accounting firm on
January 2, 2008 and did not issue a report for any fiscal year. McGladrey has
stated that during the period of its engagement from January 2, 2008 to June 5,
2008: (a) there were disagreements between McGladrey and the Company on certain
matters of accounting principles or practices and financial statement
disclosure, which, if not resolved to the satisfaction of McGladrey, would have
caused McGladrey to make reference to such matter in its report (the “Disagreements”),
and (b) information had come to McGladrey’s attention that if further
investigated may have materially impacted the fairness of the Company’s fiscal
year 2007 and 2008 financial statements, which would be a reportable event, as
that term is defined in Item 304(a)(1)(v)(C) and (D) of Regulation S-K (the
“Reportable
Events” and together with the Disagreements, the “Accounting
Issues”). The Audit Committee has discussed each of the Accounting Issues
below with McGladrey. In addition, the Company has authorized McGladrey to
respond fully to the inquiries of the Company’s successor independent registered
public accounting firm concerning the subject matter of each Accounting Issue.
The specific accounting questions raised by McGladrey relate to technical
interpretations of accounting pronouncements regarding:
|
(a)
|
whether the Company properly
recorded the gain on the sale of Fielder’s Choice Direct to Monsanto
Company and the revenue recognition from the licensing portion of the
agreement governing that
transaction;
|
|
(b)
|
whether the repurchase of the
Apio and Landec Ag, LLC. (“Landec
Ag”) subsidiary
options should have been accounted for as a purchase of minority interest
which would have resulted in the Company recording the amount of the
repurchase as an asset instead of as a reduction to equity as recorded by
the Company in accordance with accounting
guidance;
|
|
(c)
|
whether the Company is the
primary beneficiary of Landec Ag which is the key determinant as to
whether Landec Ag should be deconsolidated or not;
and
|
|
(d)
|
whether
the specifics of certain deferred tax assets and liabilities and the
corresponding valuation allowance should have been detailed in the
Company’s footnotes to its financial statements for the fiscal year ended
May 27, 2007.
|
On June
5, 2008, the Audit Committee appointed Ernst & Young LLP as its successor
independent registered public accounting firm to audit the Company’s financial
statements for fiscal year 2008. Ernst & Young LLP had previously audited
the Company’s financial statements for each of the two fiscal years in the
period ended May 27, 2007, and reviewed the Company’s financial statements for
the first two fiscal quarters of fiscal year 2008 and in the subsequent interim
period through January 2, 2008. Given that Ernst & Young LLP was the
Company’s independent registered public accounting firm at the time the Company
had to account for the transactions which are the subject of the Accounting
Issues, the Company did, at McGladrey’s request, consult with Ernst & Young
LLP on such matters. Ernst & Young LLP’s views and the Company’s views on
the Accounting Issues are that the Company’s financial statements, as previously
filed with the SEC, reflect appropriate and acceptable accounting treatment of
such transactions.
Required
Vote
The
ratification of the appointment of Ernst & Young LLP as the Company’s
independent registered public accounting firm requires the affirmative vote of
the holders of a majority of the shares of the Company’s Common Stock present at
the Annual Meeting in person or by proxy and entitled to vote.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING MAY 29,
2011.
Equity
Compensation Plan Information
The
following table summarizes information with respect to options and other equity
awards under Landec’s equity compensation plans as of May 30,
2010:
Plan Category
|
|
(a)
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights (1)
|
|
|
Weighted Average
Exercise Price of
Outstanding
Options,
Warrants and
Rights (2)
|
|
|
Number of Securities
Available for Future
Issuance Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (a))
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by security
holders
|
|
|
2,563,848 |
|
|
$ |
6.25 |
|
|
|
765,644 |
(3) |
Equity
compensation plans not approved by security holders
|
|
|
326,753 |
(4) |
|
$ |
5.51 |
|
|
|
0 |
|
Total
|
|
|
2,890,601 |
|
|
$ |
6.15 |
|
|
|
765,644 |
|
(1)
|
Includes
only options and restricted stock units outstanding under Landec’s equity
compensation plans, as no stock warrants or other rights were outstanding
as of May 30, 2010.
|
(2)
|
The
weighted average exercise price does not take restricted stock units into
account as restricted stock units have no purchase
price.
|
(3)
|
Represents
shares available for issuance pursuant to the 2009 Stock Incentive
Plan.
|
(4)
|
Represents
shares to be issued upon exercise of options that are outstanding under
the 1996 Non-Executive Stock Option Plan and the New Executive Stock
Option Plan, both of which have been terminated, and no future awards will
be made pursuant to such plans. A description of these plans is set
forth under Note 8 of the Notes to Consolidated Financial Statements
included in our Annual Report on Form 10-K for the fiscal year ended
May 30, 2010.
|
The
2009 Stock Incentive Plan
The 2009
Stock Incentive Plan authorizes the grant of equity awards, including stock
options, restricted stock and restricted stock units to employees, including
officers, outside consultants and non-employee directors of the Company.
The plan was approved by the Company’s stockholders in October 2009. The
exercise price of the stock options granted under the plan is the fair market
value of the Company’s Common Stock on the date the options were granted.
1,900,000 shares are authorized to be issued under this plan. Options
granted under the plan generally are exercisable upon vesting and
generally vest ratably over three years.
The
2005 Stock Incentive Plan
The 2005
Stock Incentive Plan authorized the grant of equity awards, including stock
options, restricted stock units and restricted stock to employees, including
officers, outside consultants and non-employee directors of the Company.
The plan was approved by the Company’s stockholders. The exercise price
of stock options granted under the plan was equal to the fair market
value of the Company’s Common Stock on the date the options were granted.
861,038 shares were authorized to be issued under this plan. Options
generally were exercisable upon vesting and generally vested ratably over three
years. The 2005 Stock Incentive Plan was terminated, and no future awards
will be made pursuant to such plan.
The
1996 Non-Executive Stock Option Plan
The 1996
Non-Executive Stock Option Plan authorized the grant of non-qualified stock
options to employees, including officers, and outside consultants of the
Company. The plan was not approved by the Company’s stockholders.
The exercise price of the options was equal to the fair market value of the
Company’s Common Stock on the date the options were granted. As amended in
1999, 1,500,000 shares were authorized to be issued under this plan.
Options generally were exercisable upon vesting and generally vested ratably
over four years. The 1996 Non-Executive Stock Option Plan was terminated,
and no future awards will be made pursuant to such plan.
The
New Executive Stock Option Plan
The New
Executive Stock Option Plan authorized the grant of non-statutory stock options
to officers of the Company or officers of Apio or Landec Ag LLC whose employment
with each of those companies began after October 24, 2000. The plan was
not approved by the Company’s stockholders. The exercise price of the
non-statutory stock options was no less than 100% and 85%, for named executive
officers and officers other than named executive officers, respectively, of the
fair market value of the Company’s Common Stock on the date the options were
granted. Options generally were exercisable upon vesting and generally
vested ratably over four years. 210,000 shares were authorized to be
issued under this plan. The New Executive Stock Option Plan was
terminated, and no future awards will be made pursuant to such
plan.
The
information contained in this report shall not be deemed to be “soliciting
material” or “filed” with the SEC or subject to the liabilities of Section 18 of
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), except to the extent that the Company specifically incorporates it
by reference into a document filed under the Securities Act of 1933, as amended
(the “Securities
Act”), or the Exchange Act.
Composition
The Audit
Committee of the Board of Directors consists of the three directors whose names
appear below and operates under a written charter adopted by the Board of
Directors. Each member of the Audit Committee meets the independence and
financial experience requirements of Nasdaq and the SEC currently in
effect. In addition, the Board of Directors has determined that each of
Mr. Halprin, Dr. Bristow and Mr. Goldby is an audit committee
financial expert within the meaning of the rules of the SEC.
Responsibilities
The
responsibilities of the Audit Committee include appointing an independent
registered public accounting firm and assisting the Board of
Director's oversight of the preparation of the Company's financial
statements. The independent registered public accounting firm is
responsible for performing an independent audit of the Company’s consolidated
financial statements in accordance with generally accepted auditing standards
and for issuing a report thereon. Management is responsible for the
Company’s internal controls and financial reporting process. The Audit
Committee’s responsibility is to oversee these processes and the Company’s
internal controls. The Audit Committee members are not acting as
professional accountants or auditors, and their functions are not to duplicate
or to certify the activities of management and the independent registered public
accounting firm.
Review
with Management and Independent Auditors
The Audit
Committee held five meetings during fiscal year 2010. The Audit Committee
met and held discussions with management and representatives of the Company’s
independent registered public accounting firm, Ernst & Young LLP.
Management represented to the Audit Committee that the Company’s consolidated
financial statements for the fiscal year ended May 30, 2010, were prepared
in accordance with generally accepted accounting principles, and the Audit
Committee has reviewed and discussed the consolidated financial statements for
the fiscal year ended May 30, 2010, with management and the Company’s
independent registered public accounting firm.
The Audit
Committee met with the Company’s independent registered public accounting firm,
with and without management present, to discuss the overall scope and plans for
their audit, the results of their examination, their evaluation of the Company’s
internal controls and the overall quality of the Company’s financial
reporting. The Audit Committee discussed with the independent registered
public accounting firm matters required to be discussed by Statement on Auditing
Standards (“SAS”)
No. 114, The Auditor’s
Communication with Those Charged with Governance, as adopted by the
Public Company Accounting Oversight Board (“PCAOB”)
in Rule 3200T, which supersedes SAS No. 61, as amended, including the judgment
of the independent registered public accounting firm as to the quality of the
Company’s accounting principles.
The Audit
Committee also received the written disclosures and the letter from
Ernst & Young LLP required by applicable requirements of the PCAOB
regarding the independent accountants’ communications with the Audit Committee
concerning independence, and the Audit Committee discussed the independence of
Ernst & Young LLP with that firm. The Audit Committee has
considered the compatibility of non-audit services with the auditors’
independence.
Charter
The Board
has adopted a written charter for the Audit Committee. The charter is
reviewed annually for changes, as appropriate, and was last amended in July
2006. A copy of the charter of the Audit Committee is available on the
Company’s website at www.landec.com.
Summary
Based
upon the Audit Committee’s discussions with management and the Company’s
independent registered public accounting firm, the Audit Committee’s review of
the representations of management and the report of the independent registered
public accounting firm to the Audit Committee, the Audit Committee recommended
to the Board of Directors that the audited consolidated financial statements be
included in the Company’s Annual Report on Form 10-K for the fiscal year ended
May 30, 2010, as filed with the SEC.
This
report is submitted by the Audit Committee.
Stephen E. Halprin
(Chairman)
Duke K. Bristow, Ph.D.
Steven Goldby
EXECUTIVE
OFFICERS OF THE COMPANY
The
following sets forth certain information with regard to executive officers of
the Company. Ages are as of August 16, 2010.
Gary T.
Steele (age 61) has been President, Chief Executive Officer and a director of
the Company since 1991 and Chairman of the Board of Directors since January
1996. Mr. Steele has 30 years of experience in the biotechnology,
instrumentation and material science fields. From 1985 to 1991,
Mr. Steele was President and Chief Executive Officer of Molecular Devices
Corporation, a bioanalytical instrumentation company. From 1981 to 1985,
Mr. Steele was Vice President, Product Development and Business Development
at Genentech, Inc., a biomedical company focusing on pharmaceutical drug
development. Mr. Steele has also worked with McKinsey & Company
and Shell Oil Company.
David D.
Taft, Ph.D. (age 72) has been Chief Operating Officer of the Company since 1993
and was Chief Operating Officer of Apio from October 2002 to May 2005.
Dr. Taft also served as a director of the Company from 1990 through
1995. From February 1986 to April 1993, Dr. Taft was Vice President
and Group Manager of the Manufacturing Group at Raychem Corporation. From
July 1983 to January 1986, Dr. Taft was Group Manager of the Telecom Group
at Raychem Corporation and was appointed to the position of Vice President in
October 1984. Dr. Taft has over 40 years of experience in the
specialty chemical industry in research and development, sales and marketing,
manufacturing and general management. Prior to joining Raychem
Corporation, Dr. Taft was Executive Vice President of the Chemical Products
Division and a Director of Henkel Corporation. Dr. Taft was also an
executive with General Mills Chemicals and Ashland Chemical.
Ronald
Midyett (age 44) has been President and Chief Executive Officer of Apio since
January 2008, and a Vice President of the Company since February 2008.
Mr. Midyett joined Apio in May 2005 as Chief Operating Officer.
Prior to joining Apio, Mr. Midyett was Senior Vice President of Operations for
Dole Fresh Vegetables. Mr. Midyett has over 20 years of technology and
operations experience in the produce industry. Mr. Midyett is currently a
member of the board of directors of the United Fresh Fruit and Vegetable
Association.
Dennis J.
Allingham (age 59) has been the President, Chief Executive Officer and a
director of Lifecore Biomedical since February 2004. He served as the Company's
General Manager and Chief Financial Officer for the eight years prior to his
appointment as CEO. Mr. Allingham has over 25 years of progressive business and
management experience in executive positions and as a director within the
pharmaceutical and health care distribution, manufacturing and retail
industries.
Gregory
S. Skinner (age 49) has been Chief Financial Officer and Vice President of
Finance of the Company since November 1999 and Vice President of Administration
since November 2000. From May 1996 to October 1999, Mr. Skinner
served as Controller of the Company. From 1994 to 1996, Mr. Skinner
was Controller of DNA Plant Technology and from 1988 to 1994 he was with Litton
Electron Devices. Prior to joining Litton Electron Devices,
Mr. Skinner was with Litton Industries, Inc. and Arthur Anderson &
Company.
Steven P.
Bitler, Ph.D. (age 52) has been Vice President, Corporate Technology of the
Company since March 2002. From 1988 until March 2002, Dr. Bitler held
various positions with the Company related to the Company’s polymer product
development and thermal switch products. Prior to joining the Company, Dr.
Bitler developed new high strength polymeric materials at SRI
International.
Damian
Hajduk, Ph. D. (age 41) has been Chief Scientific Officer of the Company since
April 2010. Prior to joining the Company Dr. Hajduk held a variety of
scientific and leadership positions from 1997 to 2010 at Symyx Technologies,
Inc., a scientific informatics software company.
Molly A.
Hemmeter (age 43) has been Vice President, Business Development and Global
Marketing of the Company since June 2009. From July 2006 until joining the
Company in June 2009, Ms. Hemmeter was Vice President of Global Marketing and
New Business Development for the Performance Materials division of Ashland,
Inc., a global specialty chemicals company. Prior to joining
Ashland, Inc., Ms. Hemmeter was Vice President of Strategy and Marketing for
Siterra Corporation in San Francisco, a privately held company delivering
on-demand software for managing real estate asset portfolios.
COMMON
STOCK OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The
following table sets forth the beneficial ownership of the Company’s Common
Stock as of August 16, 2010 as to (i) each person who is known by the
Company to beneficially own more than five percent of any class of the Company’s
voting stock, (ii) each of the Company’s directors, (iii) each of the
executive officers named in the Summary Compensation Table of this proxy
statement (the “Named
Executive Officers”), and (iv) all directors and executive officers
as a group. The business address of each director and executive officer
named below is c/o Landec Corporation, 3603 Haven Avenue, Menlo Park, CA
94025.
|
|
SHARES BENEFICIALLY OWNED (1)
|
|
NAME
|
|
NUMBER OF SHARES
OF COMMON STOCK
|
|
|
PERCENT OF TOTAL(2)
|
|
|
|
|
|
|
|
|
5% Stockholders
|
|
|
|
|
|
|
Security
Investors LLC
|
|
|
|
|
|
|
5801
SW Sixth Avenue
|
|
|
|
|
|
|
Topeka,
KS 66636
|
|
|
2,031,236 |
(3) |
|
|
7.66 |
% |
|
|
|
|
|
|
|
|
|
Riverbridge
Partners LLC
|
|
|
|
|
|
|
|
|
801
Nicollet Mall, #600
|
|
|
|
|
|
|
|
|
Minneapolis,
MN 55402
|
|
|
1,822,858 |
(4) |
|
|
6.88 |
% |
|
|
|
|
|
|
|
|
|
Tocqueville
Asset Management LP
|
|
|
|
|
|
|
|
|
40
W. 57th St., 19th Floor
|
|
|
|
|
|
|
|
|
New
York, NY 10019
|
|
|
1,751,078 |
(5) |
|
|
6.61 |
% |
|
|
|
|
|
|
|
|
|
Blackrock
Global Investors
|
|
|
|
|
|
|
|
|
400
Howard St.
|
|
|
|
|
|
|
|
|
San
Francisco, CA 94105
|
|
|
1,442,047 |
(6) |
|
|
5.44 |
% |
|
|
|
|
|
|
|
|
|
Thomson,
Horstmann & Bryant, Inc.
|
|
|
|
|
|
|
|
|
Plaza
One, 5th Floor
|
|
|
|
|
|
|
|
|
Park
80, W.
|
|
|
1,396,355 |
(7) |
|
|
5.27 |
% |
Saddle
Brook, NJ 07663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officers and
Directors
|
|
|
|
|
|
|
|
|
Gary
T. Steele
|
|
|
582,391 |
(8) |
|
|
2.17 |
% |
Chairman
of the Board of Directors, Chief Executive Officer and
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
D. Taft, Ph.D.
|
|
|
165,322 |
(9) |
|
|
* |
|
Chief
Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
Midyett
|
|
|
215,776 |
(10) |
|
|
* |
|
Chief
Executive Officer of Apio, Inc.
|
|
|
|
|
|
|
|
|
Vice
President of Landec
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory
S. Skinner
|
|
|
247,864 |
(11) |
|
|
* |
|
Chief
Financial Officer and Vice President of Finance &
Administration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Molly
A. Hemmeter
|
|
|
15,884 |
(12) |
|
|
* |
|
Vice
President, Business Development and Global Marketing
|
|
|
|
|
|
|
|
|
|
|
SHARES BENEFICIALLY OWNED (1)
|
|
NAME
|
|
NUMBER OF SHARES
OF COMMON STOCK
|
|
|
PERCENT OF TOTAL(2)
|
|
|
|
|
|
|
|
|
|
|
Duke
K. Bristow, Ph.D., Director
|
|
|
61,668 |
(13) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
Steven
Goldby, Director
|
|
|
15,625 |
(14) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
Dean
Hollis, Director
|
|
|
8,125 |
(15) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
Robert
Tobin, Director
|
|
|
61,668 |
(16) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
Frederick
Frank, Director
|
|
|
351,068 |
(17) |
|
|
1.32 |
% |
|
|
|
|
|
|
|
|
|
Stephen
E. Halprin, Director
|
|
|
124,785 |
(18) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
Richard
S. Schneider, Ph.D., Director
|
|
|
153,420 |
(19) |
|
|
*
|
|
|
|
|
|
|
|
|
|
|
Nicholas
Tompkins, Director
|
|
|
45,670 |
(20) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
All
directors and executive officers as a group (16
persons)
|
|
|
2,119,018 |
(21) |
|
|
7.66 |
% |
* Less
than 1%
(1)
|
Except
as indicated in the footnotes to this table and pursuant to applicable
community property laws, the persons named in the table have sole voting
and investment power with respect to all shares of capital
stock.
|
(2)
|
As
of August 16, 2010, 26,507,778 shares
of Common Stock were issued and outstanding. Percentages are
calculated with respect to a holder of options exercisable within 60 days
after August 16, 2010 as if such holder had exercised his options.
Option shares held by other holders are not included in the percentage
calculation with respect to any other
holder.
|
(3)
|
This
information is based on a Form 13F filed with the SEC showing such
beneficial owner's holdings as of June 30,
2010.
|
(4)
|
This
information is based on a Form 13F filed with the SEC showing such
beneficial owner's holdings as of June 30,
2010.
|
(5)
|
This
information is based on a Form 13F filed with the SEC showing such
beneficial owner's holdings as of June 30,
2010.
|
(6)
|
This
information is based on a Form 13F filed with the SEC showing such
beneficial owner's holdings as of June 30,
2010.
|
(7)
|
This
information is based on a Form 13F filed with the SEC showing such
beneficial owner's holdings as of June 30,
2010.
|
(8)
|
This
number includes 199,107 shares held in trust of which Mr. Steele is a
beneficial owner. This number also includes 383,284 shares subject
to outstanding stock options exercisable within 60 days after August 16,
2010.
|
(9)
|
This
number includes 30,110 shares subject to outstanding stock options
exercisable within 60 days after August 16,
2010.
|
(10)
|
This
number includes 212,443 shares subject to outstanding stock options
exercisable within 60 days after August 16,
2010.
|
(11)
|
This
number includes 9,250 shares subject to outstanding stock options
exercisable within 60 days after August 16, 2010, owned by Stacia Skinner,
Mr. Skinner’s wife, and 5,911 shares owned by Mrs. Skinner. This
number also includes 93,124 shares subject to outstanding stock options
exercisable within 60 days after August 16,
2010.
|
(12)
|
This
number includes 15,884 shares subject to outstanding stock options
exercisable within 60 days after August 16,
2010.
|
(13)
|
This
number includes 55,000 shares subject to outstanding stock options
exercisable within 60 days after August 16,
2010.
|
(14)
|
This
number includes 15,625 shares subject to outstanding stock options
exercisable within 60 days after August 16,
2010.
|
(15)
|
This
number includes 8,125 shares subject to outstanding stock options
exercisable within 60 days after August 16,
2010.
|
(16)
|
This
number includes 55,000 shares subject to outstanding stock options
exercisable within 60 days after August 16,
2010.
|
(17)
|
This
number includes 85,000 shares subject to outstanding stock options
exercisable within 60 days after August 16,
2010.
|
(18)
|
This
number includes 39,785 shares held in a trust of which Mr. Halprin is a
beneficial owner. This number also includes 85,000 shares subject to
outstanding stock options exercisable within 60 days after August 16,
2010.
|
(19)
|
This
number includes 68,420 shares held in a trust of which Dr. Schneider is a
beneficial owner. This number also includes 85,000 shares subject to
outstanding stock options exercisable within 60 days after August 16,
2010.
|
(20)
|
This
number includes 600 shares held by Mr. Tompkins’s minor children.
This number also includes 15,000 shares subject to outstanding stock
options exercisable within 60 days after August 16,
2010.
|
(21)
|
This
number includes an aggregate of 1,169,511 shares held by officers and
directors which are subject to outstanding stock options exercisable
within 60 days after August 16,
2010.
|
EXECUTIVE
COMPENSATION AND RELATED INFORMATION
Compensation
Discussion and Analysis
This
Compensation Discussion and Analysis section discusses the compensation programs
and policies for our named executive officers. The CD&A also provides an
overview of the Compensation Committee's role in the design and administration
of these programs and policies, and its role in making specific compensation
decisions for our named executive officers. Our named executive officers
for fiscal year 2010 are Gary T. Steele, President and Chief Executive Officer,
David D. Taft, Ph.D., Chief Operating Officer, Gregory S. Skinner, Vice
President of Finance and Chief Financial Officer, Molly Hemmeter, Vice
President, Business Development and Global Marketing and Ron Midyett, President
and Chief Executive Officer of Apio, Inc. These individuals are referred
to as the "Named Executive Officers."
Overview
of Compensation Program and Philosophy
Landec’s
compensation program is intended to meet three principal objectives:
(1) attract, reward and retain officers and other key employees;
(2) motivate these individuals to achieve the Company’s short-term and
long-term corporate goals; and (3) align the interests of our executives with
those of our stockholders.
The
compensation program is designed to balance an executive’s achievements in
managing the day-to-day business and addressing shorter-term challenges
facing the Company or its subsidiaries, such as the effects of weather-related
disruptions and competitive pressures, with incentives to achieve our long-term
vision to be the innovative leader in our food technology, hyaluronan-based
biomaterials and technology licensing businesses.
The above
policies guide the Compensation Committee (the “Committee”)
in assessing the proper allocation between long-term compensation, current cash
compensation and short-term bonus compensation. Other considerations
include Landec’s business objectives, its fiduciary and corporate
responsibilities (including internal equity considerations and affordability),
competitive practices and trends and regulatory requirements.
Establishing
Executive Compensation
Landec’s
executive compensation program is overseen and administered by the Committee,
which is comprised entirely of independent directors as determined in accordance
with various Nasdaq, SEC and Internal Revenue Code rules. The Committee
operates under a written charter adopted by our Board. A copy of the Committee’s
charter is available at www.landec.com.
In
determining the particular elements of compensation that are used to implement
Landec’s overall compensation policies, the Committee takes into consideration a
number of factors related to Landec’s performance, such as Landec’s earnings per
share, profitability, revenue growth and business-unit-specific operational and
financial performance, as well as competitive practices among our peer
group.
The
Committee reviews market compensation levels and practices annually to determine
whether any adjustments to an individual Named Executive Officer’s compensation are
warranted. The Committee obtains information on the competitive market from two
sources:
|
·
|
Publicly
disclosed compensation data from the peer group of materials science and
food industries described below;
and
|
|
·
|
Published
and proprietary compensation survey data from materials science and food
industries, as well as from a broader set of general industry surveys and
companies.
|
The
Committee considers both the peer group and survey data in determining the
competitive market for each Named Executive Officer position.
The
Committee on occasion meets with Landec’s President and Chief Executive Officer,
Mr. Steele, and/or other executives to obtain recommendations with respect to
Company compensation programs, practices and packages for executives, other
employees and directors. Management makes recommendations to the Committee
on the base salary, bonus targets and equity compensation for the executive team
and other employees.
Peer
Group
The
Company’s peer group typically includes a broad range of companies in the
materials science and food industries with whom Landec competes for executive
talent. For fiscal year 2010, the Committee considered major competitors
for executive talent and companies that operate in the same or similar
industries as Landec. For fiscal year 2010, the peer group consisted of
the following companies: Fresh Express, Del Monte, Dole, Air Products, Syngenta,
and Dupont. The Committee monitors the peer group to assess its appropriateness
as a source of competitive compensation data and reassesses the relevance of the
peer group as needed.
Data on
the compensation practices of the above-mentioned peer group generally is
gathered through searches of publicly available information, including publicly
available databases. Peer group data is gathered with respect to base
salary, bonus targets and all equity and non-equity awards (including stock
options, performance shares, restricted stock and long-term, cash-based
awards). Peer group data does not include generally available benefits,
such as 401(k) plans or health care coverage.
Landec’s
goal is to target base pay and total cash compensation at the market’s 50th
percentile based on market and industry data. In determining base salary,
the Committee considers other factors such as job performance, skill set, prior
experience, the executive’s time in his or her position and/or with Landec,
internal consistency regarding pay levels for similar positions or skill levels
within the Company, external pressures to attract and retain talent, and market
conditions generally. Targeting total compensation at the 50th percentile
and providing incentive compensation opportunity, rewards goal achievement
and allows total compensation to be competitive as a whole, while taking into
account business cyclicality. Base pay and target cash compensation are
analyzed by management to determine variances to the Company’s compensation
targets using the combination of publicly available information and survey data
as described above. Mr. Steele uses market data in making his
recommendations to the Committee for executives who report directly to
him.
Elements
of Compensation
There are
three major elements that comprise Landec’s compensation program: (i) base
salary; (ii) annual cash incentive opportunities, including bonuses; and
(iii) equity incentives in the form of stock options and/or restricted
stock unit awards.
Base
Salaries
The base
salaries of executive officers are set at levels intended to be competitive with
other companies engaged in similar activities and with other businesses of
comparable size, scope and location that compete for executive talent. To retain
and attract the level of talent necessary for Landec to succeed, the Committee
expects that the base salaries should be in the middle of the range of base
salaries for comparable positions.
Base
salaries are not necessarily adjusted annually but are generally adjusted when
the Committee judges that a change is warranted by a change in an executive
officer’s responsibilities, demonstrated performance or relevant market
data.
The
salaries paid to the Named Executive Officers in fiscal year 2010 are shown in
the Summary Compensation Table.
Annual
Cash Bonus Plan
Landec
maintains an annual cash bonus plan for senior executives to encourage and
reward achievement of Landec’s business goals and to assist Landec in attracting
and retaining executives by offering an opportunity to earn a competitive level
of compensation. Consistent with our overall compensation objective of
linking compensation to performance, aligning executive compensation with
stockholder interests and attracting and retaining top level executive officers
in the industry, annual cash bonus targets are set as a percentage of base
salary. For fiscal year 2010, the CEO had a target bonus of 80% of base salary
up to a maximum of 100% of his base salary, and the other Named Executive
Officers had target bonuses of 40% to 50% of base salary up to a maximum of 100%
to 104% of their base salary. Bonus targets and ranges are typically set in June
of each fiscal year. Specific criteria for corporate, business unit and
individual objectives are also set at this time. In the case of the
executive officers, including the Named Executive Officers, the bonus targets
and criteria are approved by the Committee.
The
overall corporate objectives are intended to be challenging but
achievable. Such objectives are based on actual performance compared to
predetermined financial performance targets, which are weighted depending upon
whether the employee is a member of a business unit or the corporate
staff. For the CEO, COO, CFO, and VP, Business Development and Global
Marketing (“Corporate
Executives”), the award calculation for fiscal year 2010 was based on the
Company’s annual consolidated financial results, specifically the Company’s
consolidated net income. For the CEO of Apio, a business unit of Landec,
the award calculation was based on Apio’s annual financial results, specifically
Apio’s controllable income.
The
financial objectives are set at the beginning of each fiscal year, on a
consolidated basis and for each business unit. The financial objectives
are based on the internally-developed financial plan for the fiscal year.
In fiscal year 2010, the Company’s financial performance was measured based on
established targets for income. To earn a bonus, the net income plan had
to be exceeded and then dollar for dollar would be paid proportionately to each
Corporate Executive up to their maximum target bonus. For the Corporate
Executives, the consolidated net income target for Landec was $12.8
million. For the CEO of Apio, the controllable net income target for Apio
was $17.9 million. For fiscal year 2010, the Corporate Executives and the
CEO of Apio did not earn a cash bonus because the income targets for Landec or
Apio were not exceeded.
Based on
the metrics described above, the Named Executive Officers target bonus, maximum
bonus and actual bonus earned for fiscal year 2010 are as follows:
Named Executive Officer
|
|
Target Bonus
|
|
|
Maximum Bonus
|
|
|
Bonus Earned
|
|
Gary
T. Steele
|
|
$ |
300,000 |
|
|
$ |
375,000 |
|
|
$ |
0 |
|
David
D. Taft, Ph.D.
|
|
$ |
150,000 |
|
|
$ |
300,000 |
|
|
$ |
0 |
|
Ronald
Midyett
|
|
$ |
137,500 |
|
|
$ |
286,000 |
|
|
$ |
0 |
|
Gregory
S. Skinner
|
|
$ |
132,500 |
|
|
$ |
265,000 |
|
|
$ |
0 |
|
Molly
Hemmeter
|
|
$ |
137,500 |
|
|
$ |
275,000 |
|
|
$ |
0 |
|
Long-Term
Incentive Compensation
Landec
provides long-term incentive compensation through awards of stock options and
restricted stock units (also referred to as “restricted
stock units”, “RSUs”
or “stock
awards”) that generally vest over multiple years. Landec’s equity
compensation program is intended to align the interests of officers with those
of the stockholders by creating an incentive for officers to maximize long-term
stockholder value. The equity compensation program also is designed to
encourage officers to remain employed with Landec despite a competitive labor
market in its industry.
Awards to
eligible employees, including Named Executive Officers, are generally made on an
annual basis. Awards must be approved by the Committee or the Board. In general,
the number of options/RSUs awarded to each executive officer is determined
subjectively based on a number of factors, including the officer’s degree of
responsibility, general level of performance, ability to affect future Company
performance, salary level and recent noteworthy achievements, as well as prior
years’ awards. All grants have been approved by the Board of Directors or
the Committee and have a per share exercise price equal to the fair market value
of Landec Common Stock on the grant date. The Committee has not granted,
nor does it intend in the future to grant, equity compensation awards to
executives in anticipation of the release of material nonpublic information that
is likely to result in changes to the price of Landec Common Stock, such as a
significant positive or negative earnings announcement. Similarly, the
Committee has not timed, nor does it intend in the future to time, the release
of material nonpublic information based on equity award grant dates. Also,
because equity compensation awards typically vest over a three or four year
period, the value to recipients of any immediate increase in the price of
Landec’s stock following a grant will be attenuated.
The
Committee regularly monitors the environment in which Landec operates and makes
changes to the Company’s equity compensation program to help the Company meet
its goals, including achieving long-term stockholder value. In order to
continue to attract and retain highly skilled employees, the Committee approved
changes to Landec’s equity compensation program that were designed to reward
Landec’s employees for their hard work and commitment to the long-term success
and growth of Landec. Specifically, in fiscal year 2007, the Company began
granting both stock options and RSUs. Landec grants stock options because
they can be an effective tool for meeting Landec’s compensation goal of
increasing long-term stockholder value because employees are able to profit from
stock options only if Landec’s stock price increases in value over the stock
option’s exercise price. Landec believes the options that it grants
provide effective incentives to option holders to achieve increases in the value
of Landec’s stock. Landec grants RSUs because they provide a more
predictable value to employees than stock options, and therefore are efficient
tools in retaining and motivating employees, while also serving as an incentive
to increase the value of Landec’s stock. RSUs also can be a more efficient
means of using equity plan share reserves because fewer RSUs are needed to
provide a retention and incentive value as compared to awards of stock
options.
In May
2010, the Company implemented a broad-based equity award program for certain of
its employees, including our Named Executive Officers. The purpose of the
program was to promote employee retention and maintain alignment between long
term employee incentives and the interests of our stockholders. In connection
with the program, our Named Executive Officers were granted stock options and
restricted stock units as set forth below under “Grants of Plan Based
Awards.” Consistent with standard employee equity awards and grants, each
stock option grant has a seven year term and vests ratably each month over three
years and restricted stock units vest on the three-year anniversary of the
award.
Retirement
Benefits under the 401(k) Plan, Executive Perquisites and Generally Available
Benefit Programs
Landec
maintains a tax-qualified 401(k) Plan, which provides for broad-based employee
participation. Under the 401(k) Plan, all Landec employees are eligible to
receive matching contributions from Landec that are subject to vesting over
time. The matching contribution for the 401(k) Plan in fiscal year 2010
was $0.67 for each dollar on the first 6% of each participant’s pretax
contributions and was calculated and paid on a payroll-by-payroll basis, subject
to applicable federal limits, and subject to vesting. Landec also makes an
annual “reconciling match” designed to more evenly determine the amount of
matching contributions that eligible employees receive. This reconciling
match works by recalculating the regular matching contribution as if it were
paid on an annualized, instead of payroll-by-payroll, basis. If the
annualized matching contribution would have been higher, Landec contributes a
matching contribution equal to the difference between the two. Other
than the 401(k) Plan, Landec does not provide defined benefit pension plans
or defined contribution retirement plans to its executives or other
employees.
Landec
also offers a number of other benefits to the Named Executive Officers pursuant
to benefit programs that provide for broad-based employee participation.
These benefits programs include medical, dental and vision insurance, long-term
and short-term disability insurance, life and accidental death and dismemberment
insurance, health and dependent care flexible spending accounts, wellness
programs, educational assistance and certain other benefits.
The
401(k) Plan and other generally available benefit programs allow Landec to
remain competitive with respect to employee talent, and Landec believes that the
availability of the benefit programs generally enhances employee productivity
and loyalty to Landec. The main objectives of Landec’s benefits programs
are to give our employees access to quality healthcare, financial protection
from unforeseen events, assistance in achieving retirement financial goals and
enhanced health and productivity. These generally available benefits typically
do not specifically factor into decisions regarding an individual executive’s
total compensation or equity award package.
Compensation
of Chief Executive Officer
During
fiscal year 2010, the Company entered into an amendment to the Executive
Employment Agreement between the Company and our Chief Executive Officer
pursuant to which his salary for the period commencing January 1, 2010, through
December 31, 2010, remained at $375,000 rather than increasing to $450,000 as
had been provided in his original Executive Employment Agreement. As a
result of this amendment, during fiscal year 2010, Mr. Steele received a
salary of $371,294. In setting Mr. Steele’s salary, target bonus and
equity compensation grant, the Committee relied on market-competitive pay data
and weighed heavily the consideration that the Chief Executive Officer
significantly and directly influences Landec’s overall performance. The
Committee also considered the overall compensation policies discussed
above. As indicated above under “Annual Cash Bonus Plan”, Landec’s actual
financial performance for fiscal year 2010 did not result in a bonus payment to
Mr. Steele under the Company’s annual cash bonus plan. On December
10, 2009, Mr. Steele was granted 12,019 restricted stock units, which will vest
and be payable in common stock on December 10, 2010. On May 26, 2010, Mr.
Steele was granted an option to purchase 75,000 shares of common stock that will
vest over three years and 25,000 restricted stock units, which will vest and be
payable in common stock on May 26, 2013.
Compensation
of Named Executive Officers
For
fiscal year 2010, the Compensation Committee decided not to make any adjustments
to base salary levels for our incumbent Named Executive Officers, Messrs.
Skinner and Midyett and Dr. Taft. Their respective salary rates have been
unchanged since fiscal year 2008. Our other Named Executive Officer, Ms.
Hemmeter, was hired in fiscal year 2010. Her cash compensation package was
established as part of our negotiations to secure her employment and reflects
then-current competitive market conditions. During fiscal year 2010, our
Named Executive Officers were granted options to purchase shares of common stock
and restricted stock units as set forth below under “Grants of Plan Based
Awards.”
Compliance
with Internal Revenue Code Section 162(m)
Section
162(m) of the Internal Revenue Code of 1986, as amended, generally disallows a
tax deduction to public companies for certain compensation in excess of $1
million paid to a company’s executive officers. Certain compensation,
including qualified performance-based compensation, will not be subject to the
deduction limit if specified requirements are met. The Committee reviews
the potential effect of Section 162(m) periodically and generally seeks to
structure the long-term incentive compensation granted to Named Executive
Officers in a manner that is intended to avoid disallowance of deductions under
Section 162(m). Nevertheless, there can be no assurance that compensation
attributable to long-term incentive awards will be treated as qualified
performance-based compensation under Section 162(m). In addition, the
Committee reserves the right to authorize compensation payments that may be in
excess of the limit when the Committee believes such payments are appropriate
and in the best interest of Landec and its stockholders, after taking into
consideration changing business conditions and the performance of its
employees.
Compensation
Committee Interlocks and Insider Participation
The
Committee is composed of Dr. Schneider (Chairman), Mr. Frank,
Mr. Tobin and Mr. Hollis. During fiscal year 2010, none of the
Company’s executive officers served on the board of directors of any entities
whose directors or officers serve on the Committee. None of the
Committee’s current or former members has at any time been an officer or
employee of Landec. None of Landec’s executive officers serve, or in the
past fiscal year have served, as members of the board of directors or
compensation committee of any entity that has one or more of its executive
officers serving on Landec’s Board of Directors or the Committee.
Compensation
Committee Report
The
information contained in this report shall not be deemed to be “soliciting
material” or “filed” with the SEC or subject to the liabilities of
Section 18 of the Exchange Act, except to the extent that Landec
specifically incorporates it by reference into a document filed under the
Securities Act or the Exchange Act.
The
Committee has reviewed and discussed with management the Compensation Discussion
and Analysis for fiscal year 2010. Based on the review and discussions, the
Committee recommended to the Board of Directors, and the Board of Directors has
approved, that the Compensation Discussion and Analysis be included in Landec’s
Proxy Statement for its 2010 Annual Meeting of Stockholders.
This
report is submitted by the Committee.
Richard S. Schneider, Ph.D.
(Chairman)
Frederick Frank
Robert Tobin
Summary
Compensation
The
following table shows compensation information for fiscal years 2010, 2009 and
2008 for the Named Executive Officers.
Summary
Compensation Table
Name and Principal
Position
|
|
Year
|
|
Salary ($)
|
|
|
Bonus ($)(5)
|
|
|
Stock
Awards
($) (1)
|
|
|
Option Awards ($) (2)
|
|
|
Non-Equity Incentive Plan Compensation
($) (3)
|
|
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings($)
|
|
|
All Other Compensation
($) (4)
|
|
|
Total ($)
|
|
Gary
T. Steele
|
|
2010
|
|
|
371,294 |
|
|
|
— |
|
|
|
58,312 |
|
|
|
34,149 |
|
|
|
— |
|
|
|
— |
|
|
|
12,501 |
|
|
|
476,256 |
|
President
and Chief Executive Officer
|
|
2009
|
|
|
375,000 |
|
|
|
— |
|
|
|
709 |
|
|
|
905 |
|
|
|
— |
|
|
|
— |
|
|
|
11,999 |
|
|
|
388,644 |
|
and
Chairman of the Board
|
|
2008
|
|
|
375,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,644 |
|
|
|
384,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
D. Taft, Ph.D.
|
|
2010
|
|
|
300,000 |
|
|
|
— |
|
|
|
17,545 |
|
|
|
21,122 |
|
|
|
— |
|
|
|
— |
|
|
|
10,760 |
|
|
|
349,427 |
|
Chief
Operating Officer
|
|
2009
|
|
|
300,000 |
|
|
|
— |
|
|
|
10,422 |
|
|
|
14,388 |
|
|
|
— |
|
|
|
— |
|
|
|
11,495 |
|
|
|
336,305 |
|
|
|
2008
|
|
|
300,000 |
|
|
|
— |
|
|
|
9,981 |
|
|
|
13,793 |
|
|
|
— |
|
|
|
— |
|
|
|
5,722 |
|
|
|
329,496 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
Midyett
|
|
2010
|
|
|
275,000 |
|
|
|
— |
|
|
|
63,432 |
|
|
|
78,294 |
|
|
|
— |
|
|
|
— |
|
|
|
25,796 |
|
|
|
442,522 |
|
President
and Chief Executive Officer of Apio, Inc.
|
|
2009
|
|
|
275,000 |
|
|
|
— |
|
|
|
34,471 |
|
|
|
153,666 |
|
|
|
— |
|
|
|
— |
|
|
|
25,855 |
|
|
|
488,992 |
|
Vice
President of Landec
|
|
2008
|
|
|
275,000 |
|
|
|
— |
|
|
|
9,981 |
|
|
|
147,041 |
|
|
|
137,500 |
|
|
|
— |
|
|
|
25,605 |
|
|
|
595,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory
S. Skinner
|
|
2010
|
|
|
265,000 |
|
|
|
— |
|
|
|
17,662 |
|
|
|
21,415 |
|
|
|
— |
|
|
|
— |
|
|
|
10,760 |
|
|
|
314,837 |
|
Chief
Financial Officer & V.P. of
|
|
2009
|
|
|
265,000 |
|
|
|
— |
|
|
|
10,422 |
|
|
|
14,339 |
|
|
|
— |
|
|
|
— |
|
|
|
7,463 |
|
|
|
297,224 |
|
Finance
and Administration
|
|
2008
|
|
|
265,000 |
|
|
|
— |
|
|
|
9,981 |
|
|
|
13,793 |
|
|
|
— |
|
|
|
— |
|
|
|
5,384 |
|
|
|
294,158 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Molly
Hemmeter.
Vice
President, Business Development and Global Marketing
|
|
2010
|
|
|
253,846 |
|
|
|
25,000 |
|
|
|
23,075 |
|
|
|
24,990 |
|
|
|
— |
|
|
—
|
|
|
|
10,044 |
|
|
|
336,955 |
|
(1)
|
Amounts
shown do not reflect compensation actually received by the Named Executive
Officer. Instead, the amounts
shown are the aggregate grant date value, computed in accordance with
Financial Accounting Standards Board ("FASB")
Accounting Standards Codification Topic 718, Compensation—Stock Options
("ASC
Topic 718"), of awards granted in fiscal year 2010 and in prior
years. The assumptions used to calculate the value of the RSU awards are
set forth under Note 1 of the Notes to Consolidated Financial Statements
included in our Annual Report on Form 10-K for the fiscal year ended May
30, 2010.
|
(2)
|
Amounts shown do not reflect
compensation actually received by the Named Executive Officer.
Instead, the amounts shown are the aggregate grant date
value, computed in accordance with
ASC Topic
718, of awards
granted in fiscal year 2010 and in prior years. The assumptions used to calculate
the value of stock option awards are set forth under Note 1 of the Notes
to Consolidated Financial Statements included in our Annual Report on Form
10-K for the fiscal year ended May 30,
2010.
|
(3)
|
Amounts
consist of bonuses earned for exceeding financial performance targets in
fiscal year 2008 under the Company’s annual cash bonus
plan.
|
(4)
|
Amounts
consist of Company paid life insurance and an employer 401(k) match for
all Named Executive Officers. For Mr. Steele, the amount shown also
includes Company-paid disability insurance for which Mr. Steele is the
beneficiary. During fiscal year 2009, Dr. Taft received a 15-year
service award in the amount of $1,480 and Dr. Bitler received a 20-year
service award in the amount of $7,402. For Mr. Midyett, the amount
includes an annual car allowance of
$15,000.
|
(5)
|
Amount
consists of a hiring bonus upon the start of employment with the
Company.
|
Grants
of Plan-Based Awards
The
following table shows all plan-based awards granted to the Named Executive
Officers during fiscal year 2010. The option awards and the unvested portion of
the stock awards identified in the table below are also reported in the
“Outstanding Equity Awards at Fiscal 2010 Year-End” table on the following
page.
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)
|
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards
|
|
|
All
Other
Stock
Awards:
Number
of Shares
of Stock
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
|
|
|
Exercise
or Base
Price of
Option
Awards
|
|
|
Grant
Date Fair
Value of
Stock and
Option
|
|
Name
|
|
Grant Date
|
|
Threshold ($)
|
|
|
Target ($)
|
|
|
Maximum ($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
or Units
(#)
|
|
|
Options
(#)
|
|
|
($/
share)
|
|
|
Awards
($)(2)
|
|
Gary
T. Steele
|
|
05/26/2010
05/26/2010 12/10/2009 N/A
|
|
|
— — — 0 |
|
|
|
—
— — 300,000
|
|
|
|
— — — 375,000 |
|
|
|
— — — —
|
|
|
|
— — — — |
|
|
|
— — —
—
|
|
|
|
— 25,000 12,019 —
|
|
|
|
75,000 — — —
|
|
|
|
5.63 — — — |
|
|
|
172,319 140,750 74,999 —
|
|
David
D. Taft, Ph.D.
|
|
05/26/2010 05/21/2009 N/A
|
|
|
— — 0 |
|
|
|
— — 150,000 |
|
|
|
— — 300,000 |
|
|
|
— — —
|
|
|
|
— — — |
|
|
|
— — —
|
|
|
|
— 20,000 —
|
|
|
|
60,000 — —
|
|
|
|
5.63 — —
|
|
|
|
137,855 112,600 —
|
|
Ronald
Midyett
|
|
05/28/2010 05/28/2010 N/A
|
|
|
— — 0 |
|
|
|
— — 137,500 |
|
|
|
— — 286,000 |
|
|
|
— — —
|
|
|
|
— — — |
|
|
|
— — —
|
|
|
|
— 22,333 —
|
|
|
|
67,000 — — |
|
|
|
6.19 — —
|
|
|
|
169,250 138,241 —
|
|
Gregory
S. Skinner
|
|
05/26/2010 05/26/2010 N/A
|
|
|
— — 0 |
|
|
|
— — 132,500 |
|
|
|
— — 265,000 |
|
|
|
— — —
|
|
|
|
— — — |
|
|
|
— — —
|
|
|
|
— 25,000 —
|
|
|
|
75,000 — —
|
|
|
|
5.63 — —
|
|
|
|
172,319 140,750 —
|
|
Molly
Hemmeter
|
|
05/26/2010 05/26/2010 06/22/2009 06/22/2009 N/A
|
|
|
— — — — 0 |
|
|
|
— — — — 137,500 |
|
|
|
— — — — 275,000 |
|
|
|
— — — — —
|
|
|
|
— — — — — |
|
|
|
— — — — —
|
|
|
|
— 12,500 — 12,500 —
|
|
|
|
37,500 — 37,500 — —
|
|
|
|
5.63 — 6.47 — —
|
|
|
|
86,159 70,375 111,206 80,875 —
|
|
(1)
|
Amounts
shown are estimated payouts for fiscal year 2010 to the Named Executive
Officers under Landec’s annual cash bonus plan. The target amount is based
on a percentage of the individual’s fiscal year 2010 base salary. The
maximum amount shown is equal to the individual’s base salary for
Corporate Executives and 104% of the base salary for Mr. Midyett.
No bonuses were received by these Named Executive Officers for
fiscal year 2010. For more information on these awards, see the
section entitled “Compensation Discussion and Analysis-Annual Bonus
Plan.”
|
(2)
|
This
column reflects the grant date fair values computed in accordance with ASC
Topic 718 of the stock options and restricted stock unit grants in this
table. The assumptions used to calculate the value of stock option
awards are set forth under Note 1 of the Notes to Consolidated Financial
Statements included in our Annual Report on Form 10-K for the fiscal year
ended May 30, 2010. Stock awards consist only of RSUs. The exercise
price for all options granted to the Named Executive Officers is 100% of
the fair market value of the shares of Landec Common Stock on the grant
date. The option exercise price has not been deducted from the amounts
indicated above. Regardless of the value placed on a stock option on the
grant date, the actual value of the option will depend on the market value
of Landec common stock at such date in the future when the option is
exercised. The value of the option following this exercise does not
include the option exercise price. The options vest 1/36th
per month and are fully vested three years after the date of grant.
RSUs cliff vest on the third anniversary of the date of grant, other than
the 12,019 RSUs granted to Mr. Steele, which vest on the first anniversary
of the date of grant.
|
Equity
Awards
The
following table shows all outstanding equity awards held by the Named Executive
Officers at the end of fiscal year 2010. The awards for fiscal year 2010
identified in the table below are also reported in the “Grants of Plan-Based
Awards” table on the previous page.
Outstanding
Equity Awards at Fiscal 2010 Year-End
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
|
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
|
Number of Shares or Units of Stock That Have Not Vested (#)
|
|
|
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($) (1)
|
|
Gary
T. Steele
|
|
|
121,785 |
|
|
|
0 |
|
|
|
— |
|
|
|
3.375 |
|
|
12/06/2010
|
|
|
|
— |
|
|
|
— |
|
|
|
|
100,000 |
|
|
|
0 |
|
|
|
— |
|
|
|
6.13 |
|
|
05/19/2012
|
|
|
|
— |
|
|
|
— |
|
|
|
|
36,500 |
|
|
|
0 |
|
|
|
— |
|
|
|
2.82 |
|
|
02/20/2013
|
|
|
|
— |
|
|
|
— |
|
|
|
|
100,000 |
|
|
|
0 |
|
|
|
— |
|
|
|
6.65 |
|
|
06/16/2014
|
|
|
|
— |
|
|
|
— |
|
|
|
|
12,500 |
|
|
|
25,000 |
|
|
|
— |
|
|
|
6.22 |
|
|
05/21/2016
|
|
|
|
— |
|
|
|
— |
|
|
|
|
0 |
|
|
|
75,000 |
|
|
|
— |
|
|
|
5.63 |
|
|
05/26/2017
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,500 |
(2) |
|
|
77,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
(2) |
|
|
154,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,019 |
(3) |
|
|
74,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
D. Taft, Ph.D.
|
|
|
3,444 |
|
|
|
0 |
|
|
|
— |
|
|
|
6.09 |
|
|
07/29/2012
|
|
|
|
— |
|
|
|
— |
|
|
|
|
10,000 |
|
|
|
0 |
|
|
|
— |
|
|
|
8.86 |
|
|
06/15/2013
|
|
|
|
— |
|
|
|
— |
|
|
|
|
75,000 |
|
|
|
15,000 |
|
|
|
— |
|
|
|
6.22 |
|
|
05/21/2016
|
|
|
|
— |
|
|
|
— |
|
|
|
|
0 |
|
|
|
60,000 |
|
|
|
— |
|
|
|
5.63 |
|
|
05/26/2017
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
20,000 |
(2) |
|
|
123,800 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,500 |
(2) |
|
|
46,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory
S. Skinner
|
|
|
19,791 |
|
|
|
0 |
|
|
|
— |
|
|
|
3.80 |
|
|
05/07/2012
|
|
|
|
— |
|
|
|
— |
|
|
|
|
10,000 |
|
|
|
0 |
|
|
|
— |
|
|
|
6.13 |
|
|
05/19/2012
|
|
|
|
— |
|
|
|
— |
|
|
|
|
10,000 |
|
|
|
0 |
|
|
|
— |
|
|
|
8.86 |
|
|
06/15/2013
|
|
|
|
— |
|
|
|
— |
|
|
|
|
35,000 |
|
|
|
0 |
|
|
|
— |
|
|
|
7.50 |
|
|
09/30/2014
|
|
|
|
— |
|
|
|
— |
|
|
|
|
7,500 |
|
|
|
15,000 |
|
|
|
— |
|
|
|
6.22 |
|
|
05/21/2016
|
|
|
|
— |
|
|
|
— |
|
|
|
|
0 |
|
|
|
75,000 |
|
|
|
— |
|
|
|
5.63 |
|
|
05/26/2017
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
25,000 |
(2) |
|
|
154,750 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,500 |
(2) |
|
|
46,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Molly
Hemmeter
|
|
|
0 |
|
|
|
37,500 |
|
|
|
— |
|
|
|
6.47 |
|
|
06/22/2016
|
|
|
|
— |
|
|
|
— |
|
|
|
|
0 |
|
|
|
37,500 |
|
|
|
— |
|
|
|
5.63 |
|
|
05/26/2017
|
|
|
|
— |
|
|
|
— |
|
|
|
|
0 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,500 |
(2) |
|
|
77,375 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,500 |
(2) |
|
|
77,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
Midyett
|
|
|
150,000 |
|
|
|
0 |
|
|
|
— |
|
|
|
6.13 |
|
|
5/19/2012
|
|
|
|
— |
|
|
|
— |
|
|
|
|
10,000 |
|
|
|
0 |
|
|
|
— |
|
|
|
8.86 |
|
|
6/15/2013
|
|
|
|
— |
|
|
|
— |
|
|
|
|
18,333 |
|
|
|
11,667 |
|
|
|
— |
|
|
|
8.19 |
|
|
7/22/2015
|
|
|
|
— |
|
|
|
— |
|
|
|
|
17,500 |
|
|
|
35,000 |
|
|
|
— |
|
|
|
6.22 |
|
|
5/21/2016
|
|
|
|
— |
|
|
|
— |
|
|
|
|
0 |
|
|
|
67,000 |
|
|
|
— |
|
|
|
6.19 |
|
|
05/28/2017
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
22,333 |
(2) |
|
|
138,241 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,000 |
(2) |
|
|
61,900 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
18,750 |
(2) |
|
|
116,063 |
|
(1)
|
Value
is based on the closing price of Landec Common Stock of $6.19 as of May
30, 2010 as reported on the Nasdaq Global Select
Market.
|
(2)
|
The
Restricted Stock Units vest on the third anniversary of the date of
grant.
|
(3)
|
The
Restricted Stock Units vest on the first anniversary of the date of
grant.
|
Option
Exercises and Stock Vested
The
following table shows all stock options exercised and the value realized upon
exercise and the number of stock awards vested and the value realized upon
vesting by the Named Executive Officers during fiscal year 2010.
Option
Exercises and Stock Vested For Fiscal 2010
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on
Exercise
(#)
|
|
|
Value Realized on
Exercise
($) (1)
|
|
|
Number of Shares
Acquired on
Vesting
(#)
|
|
|
Value Realized
on
Vesting
($)
|
|
Gary T.
Steele
|
|
|
138,462 |
|
|
|
375,048 |
|
|
|
— |
|
|
|
— |
|
David
D. Taft, Ph.D.
|
|
|
0 |
|
|
|
0 |
|
|
|
3,333 |
|
|
|
21,798 |
|
Gregory
S. Skinner
|
|
|
0 |
|
|
|
0 |
|
|
|
3,333 |
|
|
|
21,798 |
|
Molly
Hemmeter
|
|
|
0 |
|
|
|
0 |
|
|
|
— |
|
|
|
— |
|
Ronald
Midyett
|
|
|
0 |
|
|
|
0 |
|
|
|
3,333 |
|
|
|
21,798 |
|
(1)
|
The
value realized equals the difference between the option exercise price and
the fair market value of Landec Common Stock on the date of exercise,
multiplied by the number of shares for which the option was
exercised.
|
Employment
Contracts and Potential Payments upon Termination or Change in
Control
Employment
Contracts
The
Company entered into an employment agreement with Mr. Steele as of January 1,
2009, setting forth the terms of his employment. The employment agreement
expires on December 31, 2011, unless renewed or extended by both parties, and
provides that Mr. Steele shall be paid an annual base salary of $375,000 for
calendar year 2009 and $450,000 beginning January 1, 2010 plus an annual
incentive award under the Company’s annual cash bonus plan based upon the
attainment of pre-determined, mutually established goals. Mr. Steele will be
eligible for grants of equity interests under the Company’s 2009 Stock Incentive
Plan at times and in such amounts as determined by the Compensation
Committee. In fiscal year 2010, the Company and Mr. Steele entered into an
amendment of the employment agreement which provides that his salary for the
period commencing January 1, 2010, through December 31, 2010, will remain at
$375,000, and will increase to $450,000 beginning January 1,
2011.
Potential
Payments upon Termination or Change in Control
Mr.
Steele’s employment agreement provides that upon Mr. Steele’s death or
disability, the Company shall pay Mr. Steele or his estate his unpaid base
salary and the pro rata portion of his annual incentive award through the date
of termination. If Mr. Steele is terminated without cause or if he
terminates his employment for good reason (generally, any relocation of Mr.
Steele’s place of employment, reduction in salary, or material reduction of his
duties or authority), Mr. Steele will receive a severance payment equal to 100%
of his annual base salary and a one-year acceleration of his unvested stock
options and other equity awards, and the Company will pay the monthly premiums
for health insurance coverage for Mr. Steele (and his spouse) until Mr. Steele
attains age 65 or at such earlier time as Mr. Steele receives substantially
equivalent health insurance coverage in connection with new employment. In
addition, the employment agreement provides that if Mr. Steele is terminated
without cause or terminates his employment for good reason within two (2) years
following a “change of control,” Mr. Steele will receive a severance payment
equal to 150% of his annual base salary and the Company will pay the monthly
premiums for health insurance coverage for Mr. Steele (and his spouse) until Mr.
Steele attains age 65 or at such earlier time as Mr. Steele receives
substantially equivalent health insurance coverage in connection with new
employment. In the event of a “change in control,” all of Mr. Steele’s
unvested stock options or other equity awards shall immediately vest and become
exercisable. Mr. Steele agreed, as part of his employment agreement, not
to solicit, induce, recruit, encourage or take away employees or consultants of
the Company for a period of two years following his termination. In
addition, Mr. Steele agreed not to solicit any licensor to or employee or
customer of the Company for a period of two years following his
termination.
If Mr.
Steele’s employment with the Company had been terminated without cause or for
good reason in connection with a change of control of the Company on May 30,
2010, the last business day of Landec’s fiscal year 2010, Mr. Steele would have
received the following severance benefits under his employment
agreement:
|
1)
|
Approximately
$598,000 over the following 18-month period;
and
|
|
2)
|
Approximately
$41,000 in health insurance premiums, assuming no increases in premiums,
until he attains age 65, assuming he does not receive substantially
equivalent health coverage in connection with new
employment.
|
Policies
and Procedures with Respect to Related Party Transactions
The Audit
Committee Charter requires that members of the Audit Committee, all of whom are
independent directors, review and approve all related party transactions (other
than compensation transactions). In reviewing related party transactions,
the Audit Committee takes into account factors it deems appropriate, such as
whether the related party transaction is on terms no less favorable than terms
generally available to an unrelated third party under the same or similar
conditions and the extent of the related party’s interest in the
transaction. Additionally, under the Company’s Code of Ethics, directors,
officers and all other members of the workforce are expected to avoid any
relationship, influence or activity that would cause or even appear to cause a
conflict of interest.
Certain
Relationships and Related Transactions
Pursuant
to the terms of farmer agreements entered into between Apio and the Nick
Tompkins Ranch and Central Coast Produce, LLC (the “Tompkins
Farms”), Apio provides packing, cooling and distributing services for
produce planted and grown by the Tompkins Farms, and Apio purchases produce from
these farms. The terms of the agreements are the same as the terms offered
by Apio to other growers. During fiscal year 2010, Apio paid the Tompkins
Farms $614,000 for produce. Mr. Tompkins, the Chairman of Apio and a
director of the Company, wholly-owns the Nick Tompkins Ranch and has a greater
than ten percent (10%) ownership interest in Central Coast Produce.
On July
3, 2003, Apio entered into a Purchase Agreement (the “Purchase
Agreement”) with Beachside Produce, LLC, a California limited liability
company (“Beachside”),
and the Growers (as defined below) to sell its domestic commodity vegetable
business to Beachside. Beachside is owned and operated by a group of
persons and entities (the “Growers”)
that supply produce to Apio, including Mr. Tompkins, who owns 12.5% of
Beachside. In connection with the Purchase Agreement, Apio, Beachside and
the Growers entered into a supply agreement pursuant to which Beachside and the
Growers have agreed to supply produce to Apio for its value-added and export
trading businesses. During fiscal year 2010, the Company paid Beachside
$2,777,000 for produce and recognized revenues derived from services provided to
Beachside for cooling and storing produce of $3,699,000 and revenues of $853,000
from the sale of products to Beachside.
During
fiscal year 2010, Apio leased for approximately $150,000 land that is either
owned, controlled or leased by Mr. Tompkins, and subleased that land to growers
who deliver produce to Apio. The terms of the leases are substantially the
same as the terms offered by Apio to other growers.
During
fiscal year 2010, Stacia Skinner, wife of Mr. Greg Skinner, the Company’s Chief
Financial Officer, was employed at the Company and received approximately
$125,543 in compensation. Mrs. Skinner, the Company’s Information
Technology Director, does not report to the Company’s Chief Financial
Officer.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires the Company’s directors and executive
officers, and persons who own more than ten percent of a registered class of the
Company’s equity securities to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and holders of more than ten percent
of the Company’s Common Stock are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To the
Company’s knowledge, based solely upon review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended May 30, 2010 all Section 16(a) filing
requirements applicable to the Company’s officers, directors and holders of more
than ten percent of the Company’s Common Stock were satisfied, except that a
Form 4 filed on behalf of Mr. Midyett was filed four days after the filing
deadline.
OTHER
MATTERS
The Board
of Directors knows of no other matters to be submitted to the stockholders at
the annual meeting. If any other matters properly come before the meeting,
then the persons named in the enclosed form of proxy will vote the shares they
represent in such manner as the Board may recommend.
It is
important that the proxies be returned promptly and that your shares be
represented. Stockholders are urged to mark, date, execute and
promptly return the accompanying proxy card in the enclosed envelope or vote
their shares by telephone or via the Internet.
|
BY
ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
/s/
Geoffrey P. Leonard
|
|
|
|
GEOFFREY
P. LEONARD
|
|
SECRETARY
|
Menlo
Park, California
|
|
August
25, 2010
|
|