0000711377falseDEF 14A0000711377neog:ReportedValueOfEquityAwardsMemberecd:NonPeoNeoMember2022-06-012023-05-310000711377neog:EquityAwardAdjustmentsMemberecd:PeoMember2021-06-012022-05-31000071137742022-06-012023-05-310000711377neog:EquityAwardAdjustmentsMemberecd:PeoMember2020-06-012021-05-310000711377neog:EquityAwardAdjustmentsMemberecd:NonPeoNeoMember2022-06-012023-05-310000711377neog:AwardsGrantedDuringCurrentFiscalYearAndUnvestedAtEndOfYearMemberecd:NonPeoNeoMember2022-06-012023-05-310000711377neog:EquityAwardAdjustmentsMemberecd:NonPeoNeoMember2021-06-012022-05-3100007113772022-06-012023-05-310000711377ecd:PeoMemberneog:ReportedValueOfEquityAwardsMember2021-06-012022-05-310000711377neog:EquityAdjustmentIncludedInCAPMemberecd:NonPeoNeoMember2022-06-012023-05-310000711377ecd:PeoMemberneog:AwardsGrantedInPriorFiscalYearSAndVestedDuringCurrentFiscalYearMember2021-06-012022-05-310000711377neog:AwardsGrantedInPriorFiscalYearSAndVestedDuringCurrentFiscalYearMemberecd:NonPeoNeoMember2021-06-012022-05-310000711377neog:AwardsGrantedInPriorFiscalYearSAndUnvestedAtEndOfYearMemberecd:PeoMember2021-06-012022-05-310000711377ecd:NonPeoNeoMemberneog:EquityAdjustmentIncludedInCAPMember2021-06-012022-05-31000071137722022-06-012023-05-310000711377neog:EquityAwardAdjustmentsMemberecd:PeoMember2022-06-012023-05-310000711377neog:AwardsGrantedDuringCurrentFiscalYearAndUnvestedAtEndOfYearMemberecd:PeoMember2021-06-012022-05-310000711377neog:AwardsGrantedDuringCurrentFiscalYearAndUnvestedAtEndOfYearMemberecd:NonPeoNeoMember2021-06-012022-05-310000711377neog:AwardsGrantedDuringCurrentFiscalYearAndUnvestedAtEndOfYearMemberecd:PeoMember2020-06-012021-05-310000711377neog:EquityAwardAdjustmentsMemberecd:NonPeoNeoMember2020-06-012021-05-3100007113772020-06-012021-05-310000711377neog:AwardsGrantedInPriorFiscalYearSAndVestedDuringCurrentFiscalYearMemberecd:NonPeoNeoMember2020-06-012021-05-310000711377ecd:PeoMemberneog:EquityAdjustmentIncludedInCAPMember2021-06-012022-05-310000711377neog:AwardsGrantedInPriorFiscalYearSAndUnvestedAtEndOfYearMemberecd:PeoMember2020-06-012021-05-310000711377ecd:PeoMemberneog:ReportedValueOfEquityAwardsMember2022-06-012023-05-31000071137732022-06-012023-05-310000711377neog:AwardsGrantedInPriorFiscalYearSAndUnvestedAtEndOfYearMemberecd:NonPeoNeoMember2022-06-012023-05-310000711377neog:ReportedValueOfEquityAwardsMemberecd:NonPeoNeoMember2021-06-012022-05-310000711377neog:AwardsGrantedInPriorFiscalYearSAndUnvestedAtEndOfYearMemberecd:NonPeoNeoMember2020-06-012021-05-3100007113772021-06-012022-05-310000711377neog:AwardsGrantedDuringCurrentFiscalYearAndUnvestedAtEndOfYearMemberecd:NonPeoNeoMember2020-06-012021-05-310000711377ecd:PeoMemberneog:ReportedValueOfEquityAwardsMember2020-06-012021-05-310000711377ecd:PeoMemberneog:AwardsGrantedInPriorFiscalYearSAndVestedDuringCurrentFiscalYearMember2020-06-012021-05-310000711377ecd:PeoMemberneog:EquityAdjustmentIncludedInCAPMember2020-06-012021-05-310000711377neog:AwardsGrantedInPriorFiscalYearSAndVestedDuringCurrentFiscalYearMemberecd:NonPeoNeoMember2022-06-012023-05-310000711377neog:AwardsGrantedInPriorFiscalYearSAndUnvestedAtEndOfYearMemberecd:NonPeoNeoMember2021-06-012022-05-310000711377neog:AwardsGrantedInPriorFiscalYearSAndUnvestedAtEndOfYearMemberecd:PeoMember2022-06-012023-05-310000711377ecd:PeoMemberneog:EquityAdjustmentIncludedInCAPMember2022-06-012023-05-310000711377ecd:NonPeoNeoMemberneog:EquityAdjustmentIncludedInCAPMember2020-06-012021-05-31000071137712022-06-012023-05-310000711377ecd:PeoMemberneog:AwardsGrantedInPriorFiscalYearSAndVestedDuringCurrentFiscalYearMember2022-06-012023-05-310000711377neog:ReportedValueOfEquityAwardsMemberecd:NonPeoNeoMember2020-06-012021-05-310000711377neog:AwardsGrantedDuringCurrentFiscalYearAndUnvestedAtEndOfYearMemberecd:PeoMember2022-06-012023-05-31iso4217:USD

 

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. )

Filed by the Registrant

Filed by a Party other than the Registrant

Check the appropriate box:

 

 

Preliminary Proxy Statement

 

 

 

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e) (2))

 

 

 

 

Definitive Proxy Statement

 

 

 

 

Definitive Additional Materials

 

 

 

 

Soliciting Material Under Section240.14a-12

Neogen Corporation

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply)

 

 

No fee required.

 

 

 

 

Fee paid previously with preliminary materials

 

 

 

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 


img192814509_0.jpg 

September 18, 2023

To Our Shareholders:

You are cordially invited to attend the 2023 Annual Meeting of Shareholders of Neogen Corporation on Thursday, October 25, 2023, at 10:00 a.m. Eastern Time. The 2023 Annual Meeting of Shareholders will be a completely virtual meeting conducted via webcast. Our goal for the Annual Meeting is to enable the broadest number of

shareholders to participate in the meeting, while providing substantially the same access and exchange with the

Board and management as an in-person meeting. You will be able to participate in the meeting online, vote your shares electronically and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/NEOG2023.

The Annual Meeting will feature a report on Neogen’s business activities, voting on the election of directors and other important proposals. On the following pages you will find the Notice of the 2023 Annual Meeting of Shareholders and the Proxy Statement.

It is important that your shares are represented at the Annual Meeting, regardless of how many shares you own. Whether or not you plan to attend the Annual Meeting virtually, please vote your shares as soon as possible using one of the methods listed in the Notice of Proxy Statement.

We appreciate your continued confidence in Neogen and look forward to your participation in our virtual Annual Meeting.

Sincerely,

img192814509_1.jpg 

John E. Adent

President & Chief Executive Officer

 

Your vote is important. Even if you plan to attend the meeting virtually,

PLEASE VOTE YOUR SHARES PROMPTLY.

 


img192814509_2.jpg 

620 Lesher Place

Lansing, MI 48912

NOTICE OF 2023 ANNUAL MEETING OF SHAREHOLDERS OF NEOGEN CORPORATION

You are cordially invited to attend the Annual Meeting of Shareholders of Neogen Corporation on Thursday, October 25, 2023, at 10:00 a.m. Eastern Time. The 2023 Annual Meeting of Shareholders will be a completely virtual meeting conducted via webcast. You will be able to participate in the meeting online, vote your shares electronically and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/NEOG2023.

When:

Thursday October 25, 2023, at 10:00 Eastern Time

Where:

Webcast at www.virtualshareholdermeeting.com/NEOG2023

Items of Business:

1. The election of three Class III directors, each to serve for a three-year term or until his or her successor has been duly elected and qualified;

2. To approve, by non-binding vote, the compensation of our named executive officers;

 

 

 

3. To approve, on an advisory basis, the frequency of future advisory votes on executive compensation;

 

 

 

4. To approve the establishment of the Neogen Corporation 2023 Omnibus Incentive Plan;

5. To ratify the appointment of BDO USA P.A. as the Company’s independent registered public accounting firm for the fiscal year ending May 31, 2024; and

6. To act upon such other business as may properly come before the meeting or any adjournment or postponement thereof.

Who can vote:

Holders of shares of Neogen common stock at the close of business on the record date of August 28, 2023, are entitled to notice of, and to vote at, the meeting.

How to Vote:

Your vote is important! Please vote your shares in one of the following ways:

1.
Via the internet, by visiting www.proxyvote.com.

2.
By telephone, by calling the number on your proxy card, voting instruction form or notice.

3.
By mail, by marking, signing, dating and mailing your proxy card. No postage is required if mailed in the United States.

4.
By voting electronically during the virtual Annual Meeting at www.virtualshareholdermeeting.com/NEOG2023.

Please vote your shares promptly, even if you plan to attend the Annual Meeting. Any shareholder attending the Annual Meeting may vote virtually, even if he or she previously returned a proxy.

Attending the Meeting:

The Company has designed the format of the Annual Meeting to provide shareholders with similar

rights and opportunities to participate that they would have at an in-person meeting. Shareholders holding shares at the close of business on the record date may attend the Annual Meeting. You will be able to attend the Annual Meeting, vote and submit your questions during the meeting via a live audio webcast by visiting www.virtualshareholdermeeting.com/NEOG2023. To participate in the meeting, you must have the 16-digit control number that is shown on your proxy card. A list of shareholders of record will also be available during the annual meeting on the meeting website.

The foregoing items of business are more fully described in the Proxy Statement accompanying this notice. During the virtual Annual Meeting, we will present a report on the Company’s business. A copy of our 2023 Annual Report is enclosed.

img192814509_3.jpg 

Amy M. Rocklin

Corporate Secretary

September 18, 2023


Neogen Corporation

620 Lesher Place

Lansing, MI 48912

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

October 25, 2023

TABLE OF CONTENTS

Page

General Information

1

Proposal 1—Election of Directors

5

Proposal 2—To approve, by non-binding vote, the compensation of executives

10

Proposal 3—Advisory vote on the frequency of future shareholder advisory votes on executive compensation

11

Proposal 4—To approve the establishment of the Neogen Corporation 2023 Omnibus Incentive Plan

12

Proposal 5—Ratification of the appointment of the Company’s independent registered public accounting firm

18

Security Ownership of Certain Beneficial Owners, Directors and Management

19

Information about the Board and Corporate Governance Matters

21

Compensation Discussion and Analysis

24

Compensation Committee Report

33

Executive Compensation

34

Pay versus Performance

40

CEO Pay Ratio

44

Compensation of Directors

45

Audit Committee Report

46

Additional Information

47

Appendix

A-1

 


 

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

October 25, 2023

GENERAL INFORMATION

We are providing this proxy statement to the shareholders of Neogen Corporation (“Neogen”, the “Company”, “we”, “us”, “our”) in connection with the solicitation of proxies by the Board of Directors of Neogen (the “Board”) for use at the 2023 Annual Meeting of Shareholders (the “Annual Meeting”) of Neogen Corporation to be held on Thursday, October 25, 2023, at 10:00 a.m., Eastern Time, and at any adjournment of the meeting. The Annual Meeting will be held virtually and can be accessed online at www.virtualshareholdermeeting.com/NEOG2023.

Similar to recent years, our 2023 Annual Meeting is being held on a virtual-only basis with no physical location. Our goal for the Annual Meeting is to enable the broadest number of shareholders to participate in the meeting, while providing substantially the same access and exchange with the Board and management as an in-person meeting. We believe that we are observing best practices for virtual shareholder meetings, including providing a support line for technical assistance and addressing as many shareholder questions as time allows.

Our principal executive offices are located at 620 Lesher Place, Lansing, Michigan 48912. Our telephone number is 517-372-9200. These proxy materials were first furnished to shareholders on September 18, 2023.

There are five proposals scheduled to be voted on at the Annual Meeting:

Proposal to elect three Class III directors to the Board, each to serve for a three-year term or until his or her successor has been duly qualified and elected;
Proposal to approve, by non-binding vote, the compensation of our named executive officers; and
Proposal to approve, on an advisory basis, the frequency of future advisory votes on executive compensation.
Proposal to approve the establishment of the Neogen Corporation 2023 Omnibus Incentive Plan; and
Proposal to ratify the appointment of BDO USA P.A. as the Company’s independent registered public accounting firm for the fiscal year ending May 31, 2024.

Revocation of Proxies; Changing of Voting Instructions

Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its exercise by the filing of a written notice of revocation with our Secretary, by delivering to our Secretary a duly executed proxy bearing a later date, or by attending the Annual Meeting and voting virtually. If you are a beneficial owner of shares held in street name, you may submit new voting instructions by contacting your brokerage firm, bank or other holder of record.

Voting and Solicitation

All shares represented by a properly executed proxy will be voted unless the proxy is revoked. If a choice is specified, it will be voted in accordance with that specification. If no choice is specified, the proxy holders will vote the shares in accordance with the recommendations of the Board, stated below. With respect to any matter not set forth on the proxy card that properly comes before the Annual Meeting, the proxy holders named in the proxy card will vote as the Board recommends or, if the Board makes no recommendation, at the Board’s discretion.

1


 

In summary, the Board recommends that you vote:

FOR the election of each of the nominees for directors to the Board;
FOR the approval, by non-binding vote, of the compensation of our named executive officers;
FOR the approval, on an advisory basis, of a frequency of every one year for future advisory votes on executive compensation;
FOR the approval of the Neogen Corporation 2023 Omnibus Incentive Plan; and
FOR ratification of the appointment of BDO USA P.A. as the Company’s independent registered public accounting firm for the fiscal year ending May 31, 2024.

All shareholders at the close of business on August 28, 2023, the record date for the Annual Meeting, are entitled to vote at the Annual Meeting. On August 28, 2023, there were 216,310,582 shares of the Company’s common stock outstanding. For each proposal, each shareholder is entitled to one vote for each share of the Company’s common stock owned on the record date for the Annual Meeting.

If you are a shareholder of record, you may vote your shares in one of the following ways:

1.
Via the internet, by visiting www.proxyvote.com.
2.
By telephone, by calling the number on your proxy card, voting instruction form, or notice.
3.
By mail, by marking, signing, dating and mailing your proxy card. No postage is required if mailed in the United States.
4.
By voting electronically during the Virtual Annual Meeting at www.virtualshareholdermeeting.com/NEOG2023.

If your shares are registered in the name of your broker, bank or other agent, you are the “beneficial owner” of those shares and those shares are considered as held in “street name.” If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received a Notice or proxy card and voting instructions with these proxy materials from that organization rather than directly from the Company. Simply complete and mail the proxy card to ensure that your vote is counted. You may be eligible to vote your shares electronically over the Internet or by telephone. A large number of banks and brokerage firms offer Internet and telephone voting. If your bank or brokerage firm does not offer Internet or telephone voting information, please complete and return your proxy card in the self-addressed, postage-paid envelope provided.

A broker non-vote occurs when a shareholder holds his or her stock through a broker and the broker does not vote those shares. This usually occurs because the broker has not received timely voting instructions from the shareholder and the broker does not have discretionary voting power for the particular item upon which the vote is taken. Under applicable law and the listing rules of the Nasdaq Global Select Market (“Nasdaq”), brokers have the discretion to vote on routine matters, such as the ratification of the appointment of the Company’s independent auditors. We believe the other proposals may not be considered routine matters under applicable Nasdaq rules.

It is important that you instruct your broker how to vote shares held by you in street name using the voting instruction form provided by your broker. Your broker should vote your shares as you direct if you provide timely instructions on how to vote by following the instructions provided to you by your broker.

Participation in the Annual Meeting

To participate in the Annual Meeting, you will need to provide the 16-digit control number included on your proxy card or that you received from your broker, bank, or other agent. If you do wish to participate in the Annual Meeting, please log on to www.virtualshareholdermeeting.com/NEOG2023 at least 15 minutes prior to the start of the Annual Meeting to provide time to register, download the required software, if necessary, and test your Internet connectivity. The webcast replay will be available at www.virtualshareholdermeeting.com/NEOG2023 until the 2024 Annual Meeting of Shareholders. If you access the meeting but do not enter your control number, you will be able to listen to the proceedings, but you will not be able to vote or otherwise participate.

2


 

We are committed to ensuring that our shareholders have substantially the same opportunities to participate in the virtual Annual Meeting as they would at an in-person meeting. Each year at the Annual Meeting, we hold a question-and-answer session following the formal business portion of the meeting, during which shareholders may submit questions to us. We anticipate having such a question-and-answer session at the 2023 Annual Meeting. You can submit a question beginning 15 minutes prior to the start of the Annual Meeting and up until the time we indicate that the question-and-answer session is concluded. However, we encourage you to submit your questions before or during the formal business portion of the meeting and our prepared statements, in advance of the question-and-answer session, in order to ensure that there is adequate time to address questions in an orderly manner.

In order to submit a question at the Annual Meeting, you will need your 16-digit control number that is printed on the proxy card that you received in the mail or that you received from your broker, bank, or other agent. Once you have logged on to the webcast at www.virtualshareholdermeeting.com/NEOG2023, type your question in the “ask a question” box and click “submit.” You may log in 15 minutes before the start of the Annual Meeting and submit questions online. We encourage you to submit any question that is relevant to the business of the meeting. Questions will be read and addressed during the Annual Meeting, as time permits.

We have provided a toll-free technical support “help line” that can be accessed by any shareholder who is having challenges logging into or participating in the virtual Annual Meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support line number that will be posted on the virtual Annual Meeting login page.

Quorum; Required Vote

The vote required, including the effect of broker non-votes and abstentions for each of the matters presented for shareholder vote, is set forth below.

A majority of the outstanding shares entitled to vote, in attendance virtually or by proxy, will constitute a quorum at the Annual Meeting. A plurality of the votes cast is required to elect directors to the Board. This means that the nominees who receive the most votes will be elected to the open Board positions. In counting votes on the election of the Board, abstentions, broker non-votes and, to the extent applicable, a security holder’s withholding of authority to vote for a nominee in an election of directors, and other shares not voted will be counted as not cast.

The proposals to approve, by a non-binding vote, the compensation of our named executive officers, to approve the Neogen Corporation 2023 Omnibus Incentive Plan, and to ratify the appointment of BDO USA P.A. as the independent registered public accounting firm for the 2024 fiscal year will be approved if a majority of the votes cast at the meeting are voted in favor of such proposal. With respect to approval, on an advisory basis, of the frequency of future executive compensation votes, the Board will consider that the choice (annually, bi-annually or every three years) that receives the most votes expresses the preference of the shareholders. Abstentions, broker non-votes and other shares not voted will be counted as not cast.

As to the election of directors to the Board, the three Class III nominees who receive the greatest number of votes will be elected to a three-year term. In accordance with the Company’s Corporate Governance Guidelines, in an uncontested election (i.e., an election where the only nominees are those recommended by the Board), any nominee for the Board who receives a greater number of votes “withheld” from his or her election than votes “for” such election (a “Majority Withheld Vote”) will promptly tender his or her resignation to the Board for consideration in accordance with the procedures described below, following certification of the shareholder vote. The Governance Committee of the Board (the “Governance Committee”) will promptly consider the resignation offer and recommend to the Board action with respect to the tendered resignation, which may include accepting the resignation, rejecting the resignation but addressing the underlying cause of the “withheld” votes, determining not to re-nominate the director in the future, or any other action the Governance Committee deems to be appropriate and in the best interests of the Company.

In considering what action to recommend with respect to the tendered resignation, the Governance Committee will take into account all factors deemed relevant by members of the Governance Committee including, without limitation, any stated reasons why shareholders “withheld” votes for election from such director, the length of service and qualifications of the director whose resignation has been tendered, the overall composition of the Board, the director’s contributions to the Company, the mix of skills and backgrounds on the Board, whether accepting the tendered resignation would cause the Company to fail to meet any applicable requirements of the Securities and

3


 

Exchange Commission (the “SEC”) or Nasdaq, and the Company’s Corporate Governance Guidelines. The Board will act on the Governance Committee’s recommendation no later than 90 days following certification of the shareholder vote. In considering the Governance Committee’s recommendation, the Board will consider the factors and possible actions considered by the Governance Committee and such additional information, factors and possible actions as the Board believes to be relevant or appropriate. To the extent that one or more directors’ resignations are accepted by the Board, the Governance Committee will recommend to the Board whether to fill such vacancy or vacancies or to reduce the size of the Board.

Solicitation of Proxies

The Board is soliciting proxies for use at the Annual Meeting. All expenses associated with this solicitation will be borne by the Company. The Company will reimburse brokers, banks or other agents for reasonable expenses that they incur in sending the proxy materials to you if a broker, bank, or other agent holds shares of our common stock on your behalf. In addition, the Company’s directors and employees may also solicit proxies in person, online, by telephone, or by other means of communication. Such directors and employees will not be paid any additional compensation for soliciting proxies.

Information regarding the 3M Food Safety Combination

On September 1, 2022, Neogen, 3M Company (“3M”) and Neogen Food Safety Corporation (“Neogen Food Safety Corporation”), a newly formed, wholly-owned subsidiary of 3M created to carve out 3M’s Food Safety Division (“3M FSD”, “FSD”), closed on the transaction combining 3M’s FSD with Neogen in a Reverse Morris Trust transaction and Neogen Food Safety Corporation became a wholly owned subsidiary of Neogen (the “FSD Transaction”). Following the FSD Transaction, pre-merger Neogen Food Safety Corporation shareholders owned, in the aggregate, approximately 50.1% of the issued and outstanding shares of Neogen common stock, and pre-merger Neogen shareholders owned, in the aggregate, approximately 49.9% of the issued and outstanding shares of Neogen common stock.

4


 

PROPOSALS FOR SHAREHOLDER ACTION

PROPOSAL 1—ELECTION OF DIRECTORS

The Company’s current Bylaws, as amended at the special meeting of shareholders held on August 17, 2022, provide that the Company will have at least five and no more than eleven directors, with the exact number to be determined by the Board. The Board is currently comprised of ten directors. The directors are classified into three classes to serve for the terms set forth next to their names or until their successors have been duly qualified and elected. In September 2022, the Neogen Board increased the size of the Board from eight to ten directors and appointed Jeffrey D. Capello to the Board to serve as a Class I director and Aashima Gupta to the Board to serve as a Class III director. In April 2023, Darci Vetter tendered her resignation from the Board, effective the day after the 2023 annual meeting of Neogen shareholders. Ms. Vetter is resigning due to responsibilities associated with a new employment arrangement.

Unless otherwise instructed, proxy holders will vote the proxies received by them for the election of the nominees named below. Each of the three nominees for director this year is currently a director of the Company. If any nominee becomes unavailable for any reason, it is intended that the proxies will be voted for a substitute nominee designated by the Board. The Board has no reason to believe that the nominees named will be unable to serve if elected. Any vacancy occurring on the Board for any reason may be filled by vote of a majority of the directors then in office for the full term of the class in which the vacancy occurs.

 

Nominees

 

Expiration of
Proposed Term

Class III:

 

 

Aashima Gupta

 

2026

Raphael A. Rodriguez

 

2026

Catherine E. Woteki, Ph.D.

 

2026

 

Directors continuing in office

 

Expiration of
Term

Class I:

 

 

James C. Borel

 

2024

Jeffrey D. Capello

 

2024

Ronald D. Green, Ph.D.

 

2024

 

 

 

Class II:

 

 

John E. Adent

 

2025

William T. Boehm, Ph.D.

 

2025

James P. Tobin

 

2025

 

Ms. Vetter is resigning from the Board, effective October 26, 2023, due to responsibilities associated with a new employment arrangement. Ms. Vetter’s resignation is not due to any disagreements regarding the Company’s operations, policies or practices.

The following table sets forth the names, ages as of September 18, 2023, membership on Board committees and certain other information for each of the members of our Board with terms expiring at the Annual Meeting (who are

5


 

also nominees for election as a director at the Annual Meeting) and for each of the continuing members of our Board:

 

Name of Director

 

Age

 

Position

 

Director
Since

John. E Adent

 

55

 

CEO, Director

 

2018

William T. Boehm, Ph.D. (1) (3*)

 

76

 

Director

 

2011

James C. Borel (3) (4)

 

67

 

Board Chair

 

2016

Jeffrey D. Capello (1) (3)

 

58

 

Director

 

2022

Ronald D. Green, Ph.D. (2*) (4)

 

62

 

Director

 

2014

Aashima Gupta (2) (4)

 

52

 

Director

 

2022

Raphael A. Rodriguez (1) (2)

 

55

 

Director

 

2020

James P. Tobin (3) (4*)

 

67

 

Director

 

2016

Darci L. Vetter (*1) (4)

 

49

 

Director

 

2017

Catherine E. Woteki, Ph.D. (1) (2)

 

75

 

Director

 

2020

 

(1)
Member, Compensation Committee
(2)
Member, Science, Technology & Innovation Committee
(3)
Member, Audit Committee
(4)
Member, Governance Committee

* - Denotes Committee Chair

The table below provides information related to the composition of our Board members and nominees. Each of the categories listed in the below table has the meaning as it is used in Nasdaq Rule 5605(f).

Board Diversity Matrix (As of September 18, 2023)

 

 

 

 

 

 

 

 

 

 

Total Number of Directors

 

 

 

 

 

10

 

 

 

 

 

 

 

 

 

 

 

Part I:

 

 

 

 

 

 

 

 

Gender Identity

 

Female

 

Male

 

Non-Binary

 

Did Not Disclose Gender

Directors

 

3

 

7

 

 

 

 

 

 

 

 

 

 

 

Part II:

 

 

 

 

 

 

 

 

Demographic Background

 

 

 

 

 

 

 

 

African American or Black

 

 

 

 

Alaskan Native or Native American

 

 

 

 

Asian

 

1

 

 

 

Hispanic or Latinx

 

 

1

 

 

Native Hawaiian or Pacific Islander

 

 

 

 

White

 

2

 

6

 

 

Two or More races or Ethnicities

 

 

 

 

LGBTQ+

 

 

 

 

 

 

 

Did Not Disclose Demographic Background

 

 

 

 

 

 

 

 

6


 

 

The following is a brief summary of the business experience for at least the past five years of each of the nominees and for the other current members of the Board.

Nominees for the Board of Directors:

Aashima Gupta serves as the Global Director for Healthcare Provider Solutions at Google Cloud. She joined Google in 2017. Ms. Gupta is a strategic global leader with over 25 years of experience working at the intersection of health and technology, with extensive experience in complex, large-scale enterprise environments. Prior to joining Google, Ms. Gupta worked in technology development across a number of organizations, including NIIT, Fidelity Investments, J.P. Morgan Chase, Apigee and Kaiser Permanente. Ms. Gupta serves on the board of directors for Molnlycke and the Board of Advisors for GRAIL and HIMSS NA. In 2019, Ms. Gupta was recognized as one of the Most Influential Women in Healthcare by HIMSS and received the Top 100 FEMTech Award and Champion of Health Award. Ms. Gupta was selected by 3M to be appointed to the Board and to be a nominee for Class III director at the Annual Meeting in connection with, and pursuant to, the terms of the FSD Transaction. Ms. Gupta brings substantial business and technical acumen to the Board.

Raphael A. (Ralph) Rodriguez has been President & Chief Product Officer and a member of the board of directors of Daon, Inc., an international biometric and identity assurance software company, since June 2022. Prior to this role, he was executive-in-residence from October 2019 through June 2022 at Summit Partners, a global private equity firm based in Boston. Mr. Rodriguez worked with Summit’s technology team to identify new investment opportunities within growth-stage technology companies. Prior to that, he was a research scientist at Facebook from March 2018 through October 2019, where he led Applied Identity and Intelligence. He was the co-founder, in 2015, and CTO of Confirm.io, an ID authentication company, which Facebook acquired in March 2018. Prior to Confirm.io, Mr. Rodriguez was an executive with a number of notable technology companies, and is the founder of several technology companies. He is the longest-serving ASP Fellow at the Massachusetts Institute of Technology, and currently also serves on the board of Strategic Cyber Ventures. Mr. Rodriguez previously served on the board of Corvium. Mr. Rodriguez is a U.S. Army intelligence veteran of the Persian Gulf War, a life member of the Veterans of Foreign Wars, and a holder of 23 U.S. patents and international patent applications. His extensive technological knowledge and experience bring significant value to the Board.

Dr. Catherine Woteki, Ph.D. holds positions as Professor of Food Science and Human Nutrition at Iowa State University and Visiting Distinguished Institute Professor in the Biocomplexity Institute of the University of Virginia. She served as Chief Scientist and Under Secretary for USDA’s Research, Education, and Economics (REE) mission area from 2010 to 2016. Prior to joining USDA, Dr. Woteki served as Global Director of Scientific and Regulatory Affairs for Mars, Incorporated, where she managed the company’s regulatory policy on matters of health, nutrition, and food safety. From 2002 to 2005, she was Dean of Agriculture and also head of the Agricultural Experiment Station at Iowa State University. Dr. Woteki served as the first Under Secretary for Food Safety at the USDA from 1997 to 2001, where she oversaw the safety of meat, poultry and egg products. Dr. Woteki is a member of the National Academy of Medicine and a fellow of the American Association for the Advancement of Science and the American Society for Nutrition. Dr. Woteki brings experience in regulatory science and science policy to the Board.

Each nominee has consented to be listed in this proxy statement and agreed to serve as a director if elected by the shareholders. If any nominee becomes unable or unwilling to serve between the date of this proxy statement and the annual meeting, which we do not anticipate, then the Board may designate a new nominee. In that case, the persons named as proxies in the attached proxy card will vote for that substitute nominee (unless the proxies were previously instructed to withhold votes for the nominee who has become unable or unwilling to serve). Alternatively, the Board may reduce the size of the Board.

The Board of Directors recommends a vote “FOR” the above nominees.

Other current members of the Board:

James C. (Jim) Borel brings over 40 years of experience in the agriculture and food industry, with extensive international experience including three assignments abroad and responsibilities extending beyond the United States for over 25 years. He retired in 2016 from DuPont, where he was formerly Executive Vice President and a member of the company’s Office of the Chief Executive, with responsibility for the agriculture and food ingredients businesses of DuPont, as well as the corporate functions of Sustainability and Government Affairs. Mr. Borel is a member of multiple boards of directors and is a member of the board of trustees for University of the Delaware and the Alpha Gamma Rho Fraternity. Mr. Borel is a National Association of Corporate Directors Board Leadership

7


 

Fellow, demonstrating his commitment to the highest standards of boardroom excellence. His knowledge of the agricultural and food industries, and his international experience bring significant value to the Board.

Jeffrey D. Capello is a senior finance executive with over 30 years of experience helping companies create significant value for their shareholders. Mr. Capello has been the Managing Member at Monomoy Advisors, a financial advisory firm that provides counsel to senior leadership on shareholder value creation strategies. Prior to his role at Monomoy Advisors, Mr. Capello served as the Chief Financial Officer of publicly held and private equity-backed companies, including PerkinElmer, Boston Scientific, Ortho Clinical Diagnostic, Beacon Health Options and Biogen. Mr. Capello currently serves as a Board of Director and is the Audit Committee Chair at Agios Pharmaceuticals. Mr. Capello also served on the board of directors for several early-stage publicly held biotechnology companies as Audit Committee Chair, including Sirtris, OvaScience, and Flex Pharma. Mr. Capello was selected by 3M to be appointed to the Board in connection with and pursuant to the terms of the FSD Transaction. Mr. Capello’s business and financial experience provides significant value to the Board.

Dr. Ronald D. Green, Ph.D. was appointed Chancellor of the University of Nebraska-Lincoln since April 2016. Dr. Green served in that role until his retirement in June 2023. Prior to that appointment, he was the Harlan Vice Chancellor of the Institute of Agriculture and Natural Resources and Vice President for Agriculture and Natural Resources of the University of Nebraska system since 2010. Dr. Green served as senior global director of technical services at Pfizer Animal Health’s animal genomics business from 2008 to 2010. He was on faculty at Texas Tech University and Colorado State, and was the national program leader for animal production research for the USDA’s Agricultural Research Service and executive secretary of the White House’s interagency working group on animal genomics within the National Science and Technology Council. In that role, he was a leader in the international bovine, porcine and ovine genome sequencing projects. Dr. Green is a past president of the American Society of Animal Science (“ASAS”) and the National Block and Bridle Club, and has served in a number of leadership positions for the U.S. Beef Improvement Federation, National Cattlemen’s Beef Association, National Pork Board, Federated Animal Science Societies and the National Research Council. Dr. Green was named a fellow of ASAS in 2014. Dr. Green’s experience in genomics and animal production research brings great value and insight to the Board.

Darci L. Vetter is Senior Vice President and Head of Global Public Policy at PepsiCo, which she joined in April 2023. Ms. Vetter was Global Head, Policy and Government Relations, at The Nature Conservancy, a global environmental organization, since 2021. Prior to this role, she served as General Manager and Vice Chair for Food, Agriculture and Trade at Edelman, a global communications firm from 2019 to 2021. She served as an international trade consultant and diplomat in residence at the University of Nebraska-Lincoln from 2018 to 2019. In July 2014, she was appointed as the Chief Agricultural Negotiator for the U.S. Trade Representative; she held the position until January 2017. From 2010 to 2014, she served as Deputy Under Secretary of Agriculture for Farm and Foreign Agricultural Services and, from 2007 to 2010, she was an International Trade Advisor on the U.S. Senate Committee on Finance. Prior to working in the Senate, Ms. Vetter held numerous roles at the Office of the United States Trade Representative, including Director for Agricultural Affairs from 2005 to 2007. Her experience in international trade and agriculture and sustainability brought significant value to the Board. As noted above, Ms. Vetter is resigning from the Board effective as of October 26, 2023.

John E. Adent joined the Company as Chief Executive Officer ("CEO") in July 2017 and was named President on September 22, 2017. Mr. Adent brings extensive experience in international food and animal safety to the Board, previously serving as President and Chief Executive Officer of Animal Health International, Inc., formerly known as Lextron, Inc. Mr. Adent began his career with management responsibilities for Ralston Purina Company, developing animal feed manufacturing and sales operations in China and the Philippines, continuing his management role in the European division in Spain and Hungary when Ralston Purina spun off that business into an independent public company named Agribrands, Inc.

8


 

Dr. William T. Boehm, Ph.D. is a retired Senior Vice President of The Kroger Co. and former Senior Economist for the President’s Council of Economic Advisors under Presidents Carter and Reagan. Dr. Boehm joined The Kroger Co. in 1981 as Director of Economic Research and held positions of increasing responsibility until his retirement from the company in 2008. He has previously served on the board of Greatwide Logistics from 2009 to 2015 and Curious Plot, and currently serves on the boards of O'Snap Pickling Company and the Educational Foundation of AGR. He remains active in professional associations and academia. Dr. Boehm’s wealth of experience in agriculture and virtually all aspects of the food service industry make him well qualified to serve on the Board.

James P. Tobin began his career in 1983 and spent more than 31 years with Monsanto, holding various leadership roles across the company. Prior to his retirement in 2014, he held the role of Vice President, Industry Affairs. Mr. Tobin brings an extensive knowledge of the agricultural industry and business acumen to the Board, previously working to advance agriculture as Chairman of the American Seed Trade Organization and supporting youth in agriculture through his work with the Missouri and National 4-H Foundations. Mr. Tobin formerly sat on the board of the U.S. Grain Council and served as chairman of the FarmHouse Fraternity Foundation. Mr. Tobin is currently a member of the Farm Foundation Roundtable, Governor for Iowa State University Foundation and serves as a managing director of the Yield Lab II.

9


 

PROPOSAL 2: TO APPROVE, BY NON-BINDING VOTE, THE COMPENSATION OF NAMED EXECUTIVE OFFICERS

The “Compensation Discussion and Analysis” section of this Proxy Statement describes, among other things, the Company’s executive compensation policies and practices. Securities laws require that shareholders be given the opportunity to provide, on an advisory basis, approval of the compensation of Company executives, as disclosed in this Proxy Statement and, therefore, we are providing this advisory proposal as required by Section 14A of the Exchange Act. Under the legislation that requires this vote, the shareholder vote is neither binding on the Board nor the Company and may not be construed as overruling any decision made by the Board or the Company or as creating or implying any change in the fiduciary duties owed by the Board. However, the Board values the views of shareholders and intends to take the outcome of this annual shareholder advisory vote into consideration when making future executive compensation decisions.

Therefore, at the Annual Meeting, shareholders will be given the opportunity to vote, on an advisory (non-binding) basis, to approve the compensation of the named executive officers as disclosed in this Proxy Statement under “Compensation Discussion and Analysis” and “Summary Compensation Table.” This vote proposal is commonly known as a “say-on-pay” proposal and gives shareholders the opportunity to endorse or not endorse the executive pay program. This vote is not intended to address any specific item of executive compensation, but rather the overall compensation of the named executive officers and the policies and practices described in this Proxy Statement. Shareholders are encouraged to read the full details of the Company’s executive compensation program, including the primary objectives in setting executive pay, under “Compensation Objectives,” as described in this Proxy Statement.

In a non-binding advisory vote on the frequency of the say-on-pay proposal held at our 2017 Annual Meeting of Shareholders, shareholders voted in favor of holding say-on-pay votes annually. In light of this result and other factors considered by the Board, the Board determined that the Company would hold advisory say-on-pay votes on an annual basis until the next required advisory vote on such frequency, which is proposal 3 in this Proxy Statement, to be voted on at the Annual Meeting.

The Company evaluates the compensation of its executives at least once each year to assess whether compensation policies and programs are achieving their primary objectives. Based on its most recent evaluation, the Board believes the Company’s executive compensation programs achieve these objectives, including aligning the interests of management with those of shareholders, and are therefore worthy of shareholder support. In determining how to vote on this proposal, shareholders should consider the following:

Independent Compensation Committee. Nine of our ten current directors are deemed independent pursuant to applicable Nasdaq standards. Four of these independent directors serve on the Compensation Committee. Meetings of the Compensation Committee include executive sessions in which management is not present.
Performance-Based Incentives. Total compensation for executives is structured so that a significant portion of the total earning potential is derived from performance-based incentives.
Stock Options and Restricted Stock Units. A significant percentage of executives’ total compensation is paid in the form of stock options and restricted stock units that vest over a three-year period. These stock awards help align the executives’ interests with longer term shareholder returns and also serve to help retain the services of executives.
No Contractual Severance Payments. If employment is terminated without cause, executives are not contractually entitled to “golden parachute” upon termination.

For these reasons, the Board recommends that you vote “FOR” the adoption of the following resolution:

“RESOLVED, that the shareholders of the Company approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion set forth in the Company’s Proxy Statement for its 2023 Annual Meeting of Shareholders.”

Vote Required

The proposal to approve, on an advisory basis, the compensation of the Company’s named executive officers requires the affirmative vote of a majority of the votes cast on the proposal.

10


 

PROPOSAL 3—TO APPROVE, ON AN ADVISORY BASIS, THE FREQUENCY OF FUTURE SHAREHOLDER ADVISORY VOTES ON EXECUTIVE COMPENSATION

Securities laws require that at least once every six years, shareholders be given the opportunity to express their preference for whether the shareholder advisory vote on executive compensation should take place every year, every two years, or every three years and, therefore, we are providing this advisory proposal as required by Section 14A of the Exchange Act. Under applicable law, the shareholder vote is not binding on the Board or the Company and may not be construed as overruling any decision made by the Board or the Company or as creating or implying any change in the fiduciary duties owed by the Board. However, the Board values the views of shareholders and intends to take the outcome of this shareholder advisory vote into consideration when determining how often the shareholder advisory vote on executive compensation will take place.

The Company currently conducts advisory votes on the compensation of executives to shareholders every year, and, after careful consideration, the Board continues to believe that conducting the shareholder advisory vote on executive compensation every year is appropriate for the Company and its shareholders. In reaching its recommendation, the Board considered that an annual advisory vote allows the most frequent input from shareholders. However, you will be given the option to specify a preference that the advisory vote on executive compensation take place every one, two or three years. For purposes of determining the preference of shareholders on this matter, the Company will consider the choice (either every one, two or three years) that received the most votes as the preference of shareholders.

After the Annual Meeting, the Company will disclose both the results of this vote and the Board’s decision regarding how frequently the advisory vote on executive compensation will take place in the future. In making such decision, the Board is not required to abide by the outcome of this advisory vote. However, the Board intends to consider the decision made by shareholders on this matter when determining the frequency of future advisory votes on executive compensation.

Before voting on this issue, you are encouraged to read the full details of the Company’s executive compensation program, including the primary objectives in setting executive pay, under “Compensation Objectives,” as described in this Proxy Statement.

This shareholder advisory vote on the frequency of future advisory votes on executive compensation will be held at least once every six years.

The Board recommends that you vote for a frequency of “Every 1 Year” for future shareholder advisory votes on executive compensation.

11


 

PROPOSAL 4—TO APPROVE THE ESTABLISHMENT OF THE NEOGEN CORPORATION 2023 OMNIBUS INCENTIVE PLAN

The Company is asking shareholders to approve the Neogen Corporation 2023 Omnibus Incentive Plan (the “2023 Plan”). On July 19, 2023, the Board and Compensation Committee approved the 2023 Plan, subject to approval of the 2023 Plan by the Company's shareholders, and directed that the 2023 Plan be submitted to shareholders for approval at the Annual Meeting. For awards granted after fiscal 2023 year-end and prior to the date that the 2023 Plan is enacted on October 25, 2023, the shares will be subtracted from the 2023 Plan share reserve.

As discussed in this Proxy Statement, grants to employees of stock incentives are an important part of the Company’s compensation program, providing a basis for long-term incentive compensation and helping to align the interests of the Company’s shareholders with those of the Company’s directors and employees. Accordingly, the Board has adopted the 2023 Plan, and in accordance with the rules of the Nasdaq Global Select Market and the requirements of the Internal Revenue Code, the Company is seeking the approval of the shareholders for the adoption of the 2023 Plan. Shareholder approval of the 2023 Plan will permit the Company to continue to grant equity compensation awards to its officers, employees and consultants in furtherance of this philosophy.

The 2018 Plan authorized the issuance of 4,500,000 shares. As a result of the 2 for 1 stock split effected in June 2021, there were effectively 9,000,000 authorized shares for issuance under the 2018 Plan. As of May 31, 2023, 2,871,000 shares of common stock remain available under the 2018 Plan, which will be insufficient to make future equity awards in an amount sufficient to attract and retain our officers and employees.

Accordingly, the Board is seeking approval of the 2023 Plan to permit future equity awards to its employees, officers and consultants. If the 2023 Plan is approved by shareholders at the Annual Meeting, no further awards will be made under the 2018 Plan and all of the 20,000,000 shares will be available under the 2023 Plan, which we believe will be sufficient for annual equity awards to our officers, employees and consultants.

The Board believes there are a number of reasons to vote FOR the adoption of the 2023 Plan as summarized below.

Our success depends on providing competitive equity compensation to attract and retain employees, particularly in a challenging market. Our talented employee base and ability to attract and retain high caliber personnel will directly influence how well the Company carries out its strategic plan and creates shareholder value. To compete for talented people, we strive to provide employees with competitive compensation packages including equity compensation. Equity awards motivate high levels of performance, aligning the interests of our employees with shareholders by giving them perspective of an owner with an equity stake in the Company, and provide an effective means of recognizing their contributions to the success of the Company. If our shareholders do not approve the 2023 Plan, we will be unable to maintain our existing equity compensation programs under the 2018 Plan. Therefore, we would expect to have to utilize a significant portion of additional cash compensation to provide appropriate attraction, retention and motivation incentives, which would reduce our available cash for other business needs such as capital expenditures, acquisitions, investments and marketing, and adversely impact our growth strategy.
In recent years, the United States job market has been characterized by a historic challenge to attract and retain talent, referred to as the “Great Resignation,” with millions of Americans changing employers or leaving the workforce altogether. There also appears to be a country-wide shortage of skilled labor, which has impacted our industry and related industries. The 2023 Plan will give us flexibility as to the compensation packages we offer, which we believe is critical in this challenging labor market. If the 2023 Plan is not approved, we will be significantly limited in our ability to offer equity awards as a component of compensation. Therefore, we will be at a disadvantage relative to other companies that will be able to offer more attractive and broad-based compensation packages to their executive officers and employees. Our inability to attract, retain and motivate our key employees would adversely impact our ability to achieve our long-term plans.

12


 

We believe our "burn rate" and "overhang" are in line with industry norms. In addition to considering the "burn rate" and "overhang," the Board considered a number of other factors in determining to seek approval for issuance of 20,000,000 shares under the 2023 Plan, including proxy advisory firm guidelines and equity award usage.
Our 2023 Plan conforms to best practices. The 2023 Plan contains many features designed to address shareholder concerns related to equity plans, including:
o
Prohibitions on options and rights re-pricing and cash buy-outs;
o
No recycling of shares used to pay exercise price of options or SARs or withheld for payment of taxes;
o
No evergreen share reserve increases;
o
Minimum 100% fair market value exercise price for stock options and rights;
o
Minimum of one-year vesting for all awards, subject to a de minimis exception;
o
No automatic or discretionary acceleration of time- or performance-based awards upon a change in control; and
o
No tax gross-ups of any kind.

Our officers and directors have an interest in this proposal due to their participation in the 2023 Plan.

As of the Record Date, the total number of shares of common stock which may be issued upon the exercise of options and restricted stock units under the 2018 Plan is 4,988,000, none of which will be affected by the adoption of the 2023 Plan. If any stock options are forfeited under the 2018 Plan, those shares will not be available for issuance as new awards under the 2023 Plan.

As of the Record Date, the Company had 216,310,582 shares of common stock outstanding.

A description of the provisions of the 2023 Plan is set forth below. This summary is qualified in its entirety by the detailed provisions in the 2023 Plan, which is attached to this proxy statement as Appendix A.

General Description of the 2023 Plan

Overview. The purposes of the 2023 Plan are (a) to provide incentives for our employees, directors and consultants by encouraging their ownership of stock and (b) to aid us (and our affiliates) in retaining such employees, directors and consultants, upon whose efforts our success and future growth depends, and to attract other such individuals.

Administration. The 2023 Plan is administered by the Compensation Committee (the “Committee), although the entire Board can administer the 2023 Plan, in whole or in part, in certain circumstances. Subject to the terms of the 2023 Plan, the Committee can select participants to receive awards, determine the types of awards and terms and conditions of awards and interpret provisions of the 2023 Plan. The Committee can delegate to a subcommittee of directors and/or officers the authority to grant or administer awards to persons who are not then reporting persons under Section 16 of the Exchange Act.

Shares of Common Stock Reserved for Issuance Under the 2023 Plan. There are 20,000,000 shares of our common stock reserved for issuance under the 2023 Plan. The closing price of our common stock on the Nasdaq Global Select Market on the Record Date was $22.91. Any shares that are subject to an option or stock appreciation right will be counted against the share limit as one (1) share for every one (1) share granted. Any shares that are subject to awards other than options or stock appreciation rights will be counted against the share limit as two and five tenths (2.5) shares for every one (1) share granted.

13


 

Eligibility and Share Limitations. Awards can be made under the 2023 Plan to our employees, directors and consultants as determined by the Committee to be in our best interests, provided that only employees will be eligible to receive incentive stock options. The maximum number of common shares subject to options, stock appreciation rights or other share awards that can be awarded under the 2023 Plan to any person is 1,000,000 per the Company’s fiscal year. Further, the aggregate fair market value of all awards granted to a non-employee director during any fiscal year will not exceed $500,000.

Vesting. The 2023 Plan requires that all awards have a minimum vesting period of one year from the grant date, provided, that such awards with respect to 5% of the total shares authorized to be issued under the Plan can be granted under the 2023 Plan with a vesting period of less than one year.

Amendment or Termination of the Plan. Unless terminated earlier, the 2023 Plan will terminate on the tenth (10th) anniversary of the date the 2023 Plan is approved by the Company’s shareholders. The Board can terminate or amend the 2023 Plan at any time and for any reason, in its discretion. However, no amendment can adversely impair the rights of grantees with respect to outstanding awards. Amendments will be submitted for shareholder approval to the extent required by the Code or other applicable laws, rules or regulations.

Types of Awards Available for Grant under the 2023 Plan

Options. The 2023 Plan permits the granting of options to purchase shares of common stock intended to qualify as incentive stock options under the Code and also options to purchase common shares that do not qualify as incentive stock options (“non-qualified options”). The exercise price of each option cannot be less than 100% of the fair market value of the common shares on the date of grant. In the case of certain 10% shareholders who receive incentive options, the exercise price cannot be less than 110% of the fair market value of the common shares on the date of grant. Options granted under the 2023 Plan generally cannot be sold, transferred, pledged or assigned other than by will or under applicable laws of descent and distribution.

The term of each option is fixed by the Committee and cannot exceed ten (10) years from the date of grant. The Committee determines at what time or times each option may be exercised. Except as otherwise set forth in an award agreement, options generally are forfeited upon a termination of a participant’s employment or service for cause, and a participant generally will have up to (i) ninety (90) days to exercise any vested option for a termination for any reason other than cause, death or disability, and (ii) one (1) year to exercise any option for a termination due to death or disability.

Options can be made exercisable in installments. In general, an optionee can pay the exercise price of an option by cash or certified check, and the Committee is authorized to permit the exercise price to be paid by net share settlement, broker assisted cashless exercise, tendering common shares already owned or any other form permitted by the Committee and applicable laws, rules and regulations. The Committee can impose blackout periods on the exercise of any option to the extent required by applicable laws.

Restricted Stock. The 2023 Plan permits the granting of restricted stock. Restricted stock awards consist of shares of common stock granted subject to forfeiture if specified holding periods and/or performance targets are not met. The Committee determines the holding periods and/or performance targets. Prior to the end of the restricted period, restricted stock cannot be sold, assigned, pledged or otherwise disposed of or hypothecated by participants.

Performance Awards. Performance units and performance shares also can be granted under the 2023 Plan. Performance units and performance shares are awards that will result in a payment to a participant only if performance goals established by the Committee are achieved. The Committee can establish performance goals in its discretion, which, depending on the extent to which they are met, will determine the degree of granting, vesting and/or payout value of performance units and performance shares. While the performance units and performance shares remain unvested, a participant cannot sell, assign, transfer, pledge or otherwise dispose of the securities, subject to specified limitations.

14


 

Other Awards. The Committee also can award under the 2023 Plan:

stock appreciation rights (“SARs”), which are rights to receive a number of shares of common stock or, in the discretion of the Committee, an amount in cash or a combination of common shares and cash, based on the increase in the fair market value of the common shares underlying the right over the market value of such common shares on the date of grant (or over an amount greater than the grant date fair market value, if the Committee so determines) during a stated period specified by the Committee not to exceed 10 years from the date of grant;
restricted stock units, which are substantially similar to restricted shares but result in the issuance of shares of common stock upon meeting specified holding periods and/or performance targets, rather than the issuance of the common shares on the grant date; and
unrestricted stock, which are shares of common stock granted without restrictions.

Section 162(m) of the Code. Section 162(m) of the Code limits publicly-held companies to an annual deduction for U.S. federal income tax purposes of $1,000,000 for compensation paid to its chief executive officer and chief financial officer and the three highest compensated executive officers (other than the chief executive officer and chief financial officer) determined at the end of each year (the “covered employees”). Once an individual is designated as a covered employee, that individual will remain a covered employee for all future years.

Dividends or Dividend Equivalents for Performance Awards. Any dividends and/or dividend equivalents credited in connection with an award that is not yet vested will be subject to the same restrictions and risk of forfeiture as the underlying portion of the award to which such dividends and/or dividend equivalents relate and will not be paid until that underlying portion of the award vests.

Effect of Change in Control. The 2023 Plan generally provides for double-trigger vesting upon a “change in control,” as defined in the Plan. If the outstanding awards are assumed or substituted by the acquiring entity or successor, the vesting of such awards will be accelerated (and, as practicable, accelerated exercisability and continued or deemed determination regarding achievement of any performance criteria) upon involuntary termination of employment without “cause,” as defined in the 2023 Plan, or voluntary termination of employment by the optionee for good reason, within one (1) year after the Change in Control.

Forfeiture Provisions. The Committee will provide in each award agreement, the circumstances in which awards will be paid or forfeited in the event a participant ceases to be employed by us, or to provide services to us, prior to the end of a performance period, period of restriction or the exercise, vesting or settlement of such award.

Adjustments for Stock Dividends and Similar Events. The Company will make appropriate adjustments in outstanding awards and the number of shares of common stock available for issuance under the 2023 Plan, including the individual limitations on awards, to reflect dividends, splits, extraordinary cash dividends and other similar events.

Prohibition against Repricing. Neither the Compensation Committee nor the Board may effect the repricing of any outstanding options or SARs, including without limitation a repricing by (i) the cancellation of any outstanding options or SARs under the 2023 Plan and the grant in substitution therefor of new options, SARs or any other awards under the 2023 Plan covering the same or different amount of shares, or (ii) the cancellation of any outstanding options or SARs with respect to which the option price or exercise price of the SAR is above fair market value in exchange for a cash payment.

U.S. Federal Income Tax Consequences

The following summary is intended only as a general guide to the U.S. federal income tax consequences of participation in the 2023 Plan and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on particular circumstances.

15


 

Incentive Stock Options. The grant of an incentive stock option will not be a taxable event for the participant or for the employer. A participant will not recognize taxable income upon exercise of an incentive stock option (except that the alternative minimum tax may apply), and any gain realized upon a disposition of common shares received pursuant to the exercise of an incentive stock option will be taxed as long-term capital gain if the participant holds the common shares for at least two years after the date of grant and for one year after the date of exercise (the “holding period requirement”). The employer will not be entitled to any compensation expense deduction with respect to the exercise of an incentive stock option, except as discussed below.

For the exercise of an option to qualify for the foregoing tax treatment, the grant must be made by the employee’s employer or a parent or subsidiary of the employer. The employee must remain employed from the date the option is granted through a date within three months before the date of exercise of the option. If a participant sells or otherwise disposes of the common shares acquired without satisfying the holding period requirement (known as a “disqualifying disposition”), the participant will recognize ordinary income upon the disposition of the common shares in an amount generally equal to the excess of the fair market value of the common shares at the time the option was exercised over the option exercise price (but not in excess of the gain realized on the sale). The balance of the realized gain, if any, will be capital gain. The employer generally will be allowed a compensation expense deduction to the extent that the participant recognizes ordinary income.

Non-Qualified Options. The grant of an option will not be a taxable event for the participant or for the Company. Upon exercising a non-qualified option, a participant will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the common shares on the date of exercise. Upon a subsequent sale or exchange of common shares acquired pursuant to the exercise of a non-qualified option, the participant will have taxable capital gain or loss, measured by the difference between the amount realized on the disposition and the tax basis of the common shares (generally, the amount paid for the common shares plus the amount treated as ordinary income at the time the option was exercised). The employer generally will be entitled to a compensation expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.

Restricted Stock. A participant who is awarded restricted stock will not recognize any taxable income for U.S. federal income tax purposes in the year of the award, provided that the shares are subject to restrictions (that is, the restricted shares are nontransferable and subject to a substantial risk of forfeiture). However, the participant may elect under Section 83(b) of the Code to recognize compensation income (which is ordinary income) in the year of the award in an amount equal to the fair market value of the common shares on the date of the award (less the purchase price, if any), determined without regard to the restrictions. If the participant does not make such a Section 83(b) election, the fair market value of the common shares on the date the restrictions lapse (less the purchase price, if any) will be treated as compensation income to the participant and will be taxable in the year the restrictions lapse and dividends or distributions that are paid while the common shares are subject to restrictions will be subject to withholding taxes. The employer generally will be entitled to a compensation expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.

Restricted Stock Units. There are no immediate tax consequences of receiving or vesting in an award of restricted stock units under the 2023 Plan; however, restricted stock units are subject to the Federal Insurance Contribution Act tax upon vesting (based on the fair market value of the common shares on the vesting date). A participant who is awarded restricted stock units will recognize ordinary income upon receiving shares of common stock or cash under the award in an amount equal to the fair market value of the common shares at the time of delivery or the amount of cash. The employer generally will be entitled to a compensation expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.

Performance Shares, Performance Units and Other Stock Unit Awards. A participant generally will recognize no income upon the receipt of a performance share or performance unit. Upon the settlement of such awards, participants normally will recognize ordinary income in the year of settlement in an amount equal to the cash received and/or the fair market value of any substantially vested common shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. If the participant receives shares of restricted stock, the participant generally will be taxed in the same manner as described above under “Restricted Stock.” The employer generally should be entitled to a deduction equal to the

16


 

amount of ordinary income recognized by the participant on the determination date, except to the extent such deduction is limited by applicable provisions of the Code.

Stock Appreciation Rights. There are no immediate tax consequences of receiving an award of stock appreciation rights under the 2023 Plan. Upon exercising a stock appreciation right, a participant will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the common shares on the date of exercise. The employer generally will be entitled to a compensation expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.

Dividend or Dividend Equivalents. A participant will recognize taxable income, subject to withholding of employment tax, upon receipt of a dividend equivalent in cash or in shares of stock. Similarly, a participant who receives restricted stock, and does not make an election under Section 83(b) of the Code with respect to the stock, will recognize taxable ordinary income, subject to withholding of employment tax, upon receipt of dividends on the stock. If the participant made a Section 83(b) election, the dividends will be taxable to the participant as dividend income.

Unrestricted Stock. Participants who are awarded unrestricted stock will be required to recognize ordinary income in an amount equal to the fair market value of the common shares on the date of the award, reduced by the amount, if any, paid for such common shares. The employer generally will be entitled to a compensation expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.

Withholding. To the extent required by law, and except as provided otherwise by the Committee, we will utilize the net share method of settlement or withhold from any amount paid in settlement of an award, the amount of withholding and other taxes due or take other action as we deem advisable to enable ourselves to satisfy withholding and tax obligations related to any awards.

New Plan Benefits

Awards under the 2023 Plan will be made at the discretion of the Committee. Accordingly, we cannot currently determine the amount of awards that will be made under the 2023 Plan. We anticipate that the Committee will utilize the 2023 Plan to continue to grant long-term equity incentive compensation to employees similar to the awards described in this proxy statement.

Registration with SEC

The Company intends to file a registration statement with the SEC pursuant to the Securities Act of 1933, as amended, covering the offering of the stock under the 2023 Plan.

Equity Compensation Plan Information

The following table shows the number of shares of common stock issuable upon the exercise of outstanding stock options and RSUs, the weighted average exercise price of outstanding stock options and RSUs, and the number of shares of common stock remaining available for future issuance, excluding shares of common stock issuable upon exercise of outstanding stock options or RSUs, in each case as of May 31, 2023.

 

Number of Common Securities to be Issued upon Exercise of Outstanding Options and RSUs

 

 

Weighted Average Exercise Price of Outstanding Options and RSUs

 

 

Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans

 

Equity compensation plans approved by security holders

 

 

4,988,000

 

 

$

24.60

 

 

 

2,871,000

 

Equity compensation plans not approved by security holders

 

 

 

 

 

 

 

 

 

Total

 

 

4,988,000

 

 

$

24.60

 

 

 

2,871,000

 

 

The Board recommends that you vote “FOR” the approval of the establishment of the Neogen Corporation 2023 Omnibus Incentive Plan.

17


 

PROPOSAL 5—RATIFICATION OF THE APPOINTMENT OF THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Company’s Audit Committee (“Audit Committee”) has appointed BDO USA P.A. (“BDO”) to serve as the independent registered public accounting firm for the Company for the fiscal year ending May 31, 2024. While not required, the Company is submitting the appointment to the shareholders for their ratification as a matter of good corporate practice. The affirmative vote of a majority of the votes cast at the Annual Meeting on the proposal is required for ratification. The Board recommends that shareholders vote “FOR” ratification of the appointment of BDO as the Company’s independent registered public accounting firm for fiscal 2024. If the appointment is not ratified, it will be considered as a recommendation that the Audit Committee consider the appointment of a different firm to serve as independent registered public accounting firm for the 2024 fiscal year. Even if the appointment is ratified, the Audit Committee can select a different independent registered public accounting firm at any time.

Relationship with BDO

BDO has acted as the Company’s independent registered public accounting firm for nine years. BDO has advised that neither the firm nor any of its members or associates has any direct financial interest or any material indirect financial interest in the Company or any of its affiliates other than as auditors. Representatives of BDO are expected to attend and be available during the Annual Meeting, with the opportunity to make a statement, and will also be available to respond to appropriate questions.

The fees billed by BDO with respect to the fiscal years ended May 31, 2023 and 2022, are as follows:

 

2023

 

 

2022

 

Audit Fees

 

$

1,086,414

 

 

$

797,099

 

Audit-Related Fees

 

 

 

 

 

 

Tax Fees (1)

 

 

467,042

 

 

 

180,792

 

All Other Fees

 

 

 

 

 

 

Total

 

$

1,553,456

 

 

$

977,891

 

 

(1)
Includes tax compliance work and miscellaneous consulting.

Audit Fees include amounts billed for the annual audit of the Company’s fiscal year consolidated financial statements, the audit of internal control over financial reporting, the review of the consolidated financial statements included in the Form 10-Q, consultations concerning accounting matters associated with the annual audit, comfort letters or due diligence procedures in connection with registration statements, statutory audits and related expenses. Audit-Related Fees include due diligence in connection with acquisitions, amounts billed for general accounting consultations, audits in connection with proposed or consummated acquisitions and information systems audits and other services that are reasonably related to the annual audit. In connection with its review and evaluation of non-audit services, the Audit Committee is required to and does consider and conclude that the provision of non-audit services is compatible with maintaining the independence of BDO.

Under its charter, the Audit Committee must pre-approve all audit and non-audit services to be performed by BDO. In the event management wishes to engage BDO to perform non-audit services, a summary of the proposed engagement is prepared detailing the nature of the engagement, the reasons why BDO is the preferred provider of the services and the estimated duration and cost of the engagement. The Audit Committee reviews and evaluates recurring non-audit services and proposed fees as the need arises at their regularly scheduled committee meetings. At subsequent meetings, the Audit Committee receives updates regarding the services actually provided and management may present additional services for approval. The Audit Committee has delegated to the Chair or, in his absence, any other member of the Audit Committee, the authority to evaluate and approve projects and related fees of up to $10,000, if circumstances require approval between meetings of the Audit Committee. Any such approval is reported to the full Audit Committee at its next meeting.

18


 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT

Principal Shareholders

The following table sets forth certain information, as of August 28, 2023, with respect to beneficial ownership of the Company's common stock by the only persons known by the Company to be the beneficial owner of more than 5% of the Company’s common stock. On August 28, 2023, there were 216,310,582 shares of the Company’s stock outstanding.

 

Name and Address of Beneficial Owner

 

Number of Shares
Beneficially Owned

 

 

Percent of
Class%

 

BlackRock, Inc. (1)

 

 

24,460,988

 

 

 

11.3

%

55 East 52nd Street

 

 

 

 

 

 

New York, NY 10055

 

 

 

 

 

 

The Vanguard Group, Inc. (2)

 

 

19,057,576

 

 

 

8.8

%

100 Vanguard Boulevard

 

 

 

 

 

 

Malvern, PA 19355

 

 

 

 

 

 

Norges Bank (The Central Bank of Norway) (3)

 

 

18,422,570

 

 

 

8.5

%

Bankplassen 2 P.O. Box 1179 Sentrum

 

 

 

 

 

 

NO 0107 Oslo, Norway

 

 

 

 

 

 

Wasatch Advisors LP (4)

 

 

16,990,316

 

 

 

7.9

%

505 Wakara Way

 

 

 

 

 

 

Salt Lake City, UT 84108

 

 

 

 

 

 

 

1)
Based on a Schedule 13G/A filed with the SEC on January 23, 2023. This report includes holdings of various subsidiaries of BlackRock. Inc., and includes beneficial ownership of more than 5% of our common stock by BlackRock Fund Advisors. BlackRock, Inc. has sole power to vote 24,161,095 shares and dispose of 24,460,988 shares.
2)
Based on a Schedule 13G/A filed with the SEC on February 9, 2023. This report includes holdings of various subsidiaries of the holding company. The Vanguard Group, Inc. has shared power to vote 347,738 shares, sole power to dispose of 18,490,523 shares and shared power to dispose of 567,053 shares.
3)
Based on a Schedule 13G/A filed with the SEC on February 14, 2023. This report includes holdings of various subsidiaries of the holding company. Norges Bank has sole power to vote 18,400,920 shares, sole power to dispose of 18,400,920 shares and shared power to dispose of 21,650 shares.
4)
Based on a Schedule 13G/A filed with the SEC on February 8, 2023, Wasatch Advisors LP has sole power to vote and dispose of 16,990,316 shares.

19


 

Security Ownership of Directors and Executive Officers

The following table sets forth certain information about the ownership of the Company’s common stock as of August 28, 2023, held by the current directors, each nominee for director, the executive officers named in the Summary Compensation Table under “Executive Compensation” and all executive officers and directors as a group. Each of the persons listed below has sole voting and dispositive power with respect to such shares.

 

Name

 

Number of Shares Owned (1)

 

 

Right to Acquire (2)

 

 

Total

 

 

Percentage of
Outstanding
Shares

John E. Adent

 

 

93,390

 

 

 

593,903

 

 

 

687,293

 

 

*

William T. Boehm, Ph.D.

 

 

24,509

 

 

 

54,490

 

 

 

78,999

 

 

*

James C. Borel

 

 

11,301

 

 

 

47,824

 

 

 

59,125

 

 

*

Jeffrey D. Capello

 

 

 

 

 

8,210

 

 

 

8,210

 

 

*

Ronald D. Green, Ph.D.

 

 

7,769

 

 

 

52,270

 

 

 

60,039

 

 

*

Aashima Gupta

 

 

 

 

 

8,210

 

 

 

8,210

 

 

*

Douglas E. Jones

 

 

2,752

 

 

 

94,921

 

 

 

97,673

 

 

*

Jason W. Lilly, Ph.D.

 

 

21,968

 

(3)

 

113,831

 

 

 

135,799

 

 

*

David H. Naemura

 

 

 

 

 

 

 

 

 

 

*

Steven J. Quinlan

 

 

36,073

 

(4)

 

167,407

 

 

 

203,480

 

 

*

Amy M. Rocklin

 

 

856

 

 

 

56,160

 

 

 

57,016

 

 

*

Raphael A. Rodriguez

 

 

801

 

 

 

14,490

 

 

 

15,291

 

 

*

James P. Tobin

 

 

15,602

 

 

 

47,824

 

 

 

63,426

 

 

*

Darci L. Vetter

 

 

1,901

 

 

 

39,824

 

 

 

41,725

 

 

*

Catherine E. Woteki, Ph.D.

 

 

801

 

 

 

14,490

 

 

 

15,291

 

 

*

Executive officers and directors as a group (15 persons)

 

 

217,723

 

(5)

 

1,313,854

 

 

 

1,531,577

 

 

*

 

* Less than 1%

(1)
Excludes shares that may be acquired through stock option exercises or RSU vesting.
(2)
Includes shares that may be acquired within 60 days of August 28, 2023, upon exercise of options and vesting of restricted stock units pursuant to Rule 13d-3 of the Securities Exchange Act of 1934.
(3)
Includes 11,659 shares held in the Neogen Corporation 401(k) Retirement Savings Plan.
(4)
Includes 23,751 shares held in the Neogen Corporation 401(k) Retirement Savings Plan.
(5)
Includes 35,425 shares held in the Neogen Corporation 401(k) Retirement Savings Plan.

20


 

INFORMATION ABOUT THE BOARD AND CORPORATE GOVERNANCE MATTERS

The Company is managed under the direction of its Board. The Board conducts its business through meetings of the Board and its committees. The Board held 7 meetings, and there were a total of 22 committee meetings during fiscal 2023. Each director attended more than 90% of the total meetings of the Board and the committees on which he or she served in fiscal 2023. Directors of the Board are expected to attend the annual meeting of shareholders unless they have a schedule conflict or other valid reason. Each of the current Board members attended the virtual 2022 annual meeting of shareholders.

Independent Directors

A director is not considered independent unless the Board determines that he or she meets the Nasdaq independence rules and has no material relationship with the Company, either directly or indirectly, through any organization with which he or she is affiliated that has a relationship with the Company. Based on a review of the responses of the directors and nominees to questions about employment history, affiliations, family and other relationships, and on discussions with the directors and nominees, the Board has determined that each of the following currently serving directors and nominees is independent as defined in the Nasdaq independence rules: Dr. Boehm, Mr. Borel, Mr. Capello, Dr. Green, Ms. Gupta, Mr. Rodriguez, Mr. Tobin, Ms. Vetter and Dr. Woteki.

Board Committees

The Board has four committees. The current membership, number of meetings held during fiscal 2023 and the function performed by each of these committees are described below. None of the members of any of the committees is or ever has been an employee of the Company. The Board has determined that each committee member meets the independence standards for that committee within the meaning of applicable Nasdaq and SEC regulations.

Compensation Committee—Ms. Vetter (Chair), Dr. Boehm, Mr. Capello, Mr. Rodriguez and Dr. Woteki are current members of the Compensation Committee, which met six times during fiscal 2023. Following Ms. Vetter's resignation from the Board as of October 26, 2023, Dr. Woteki will serve as chair of the Compensation Committee. The purpose of the Compensation Committee is to assist the Board in discharging its overall responsibilities relating to executive compensation and the Company’s stock-based compensation plans. The Compensation Committee reviews and approves corporate goals and objectives relevant to the compensation of the CEO and other executive officers at the beginning of each year, evaluates current year performance in light of those goals and establishes compensation levels for the upcoming year, including salary and bonus targets. The Committee also evaluates option grants and any other equity awards under the terms of the 2018 Plan and, if approved, the 2023 Plan. The Committee recommends to the Board an appropriate compensation package for outside directors. In addition, the Compensation Committee will, from time to time, recommend to the Board appropriate changes in the Company's compensation policies and programs. The Compensation Committee also annually reviews the performance of the CEO in light of the goals and objectives that had been established for him or her, and makes compensation recommendations to the Board which reflect the outcome of that review. The Compensation Committee is responsible to approve the Company's short and long-term incentive plans and, as appropriate, recommend to the Board amendments to those plans or revised interpretations of plan provisions.

The Compensation Committee has a charter, which is available in the “Investor Relations” section on the Company’s website at www.neogen.com.

Governance Committee—Mr. Tobin (Chair), Mr. Borel, Dr. Green, Ms. Gupta and Ms. Vetter serve on the Governance Committee, which met four times during fiscal 2023. The Governance Committee provides a leadership role in shaping the governance of the Company, providing oversight and direction with respect to the function and operation of the Board. The Governance Committee also provides oversight on management succession, human capital practices, risk management and environmental, social and governance matters.

21


 

The Governance Committee recommends to the Board criteria for selecting new directors, identifies the qualifications that would be advantageous to the Board, recommends the size of the Board and the appropriate mix of inside and outside directors, and ensures director diversity. The Board considers factors such as a potential candidate’s experience, judgment, integrity, and independence. Other important criteria include a deep understanding of the Company's business and markets, technology, manufacturing or research and development experience, other expertise relevant to the Company’s global operations, and the ability and willingness to devote adequate time to Board duties.

The Governance Committee identifies persons qualified to become directors and, as appropriate, recommends candidates to the Board for its approval and nomination. Board composition is reviewed periodically to ensure that the Board possesses the knowledge, experience and skills necessary for the Board to fulfill its duties. The Governance Committee’s charter requires that the Governance Committee take diversity of directors into account in the candidate selection process. The Governance Committee seeks potential candidates who, under Nasdaq, the SEC or such other applicable regulatory requirements, are considered independent directors. At the direction of the Board, the Governance Committee manages the CEO selection process, and ultimately recommends one or more candidates for consideration by the Board. In addition, the Governance Committee provides oversight and policy direction on employee satisfaction, equal opportunity, and, as appropriate, other human capital matters. The Governance Committee also provides oversight and policy direction on risk management policies, programs and trends and issues. For further information, see the charter of the Governance Committee which is available in the “Investor Relations” section of the Company’s website at www.neogen.com.

The Governance Committee generally relies on multiple sources for identifying and evaluating Board nominees, including referrals from the Company’s current directors and management. The Governance Committee does not solicit director nominations, but will consider recommendations by shareholders with respect to elections to be held at an Annual Meeting, so long as such recommendations are sent on a timely basis to the Corporate Secretary of the Company and are in accordance with the Company’s Bylaws. The Committee will evaluate nominees recommended by shareholders against the same criteria.

Audit Committee—Dr. Boehm (Chair), Mr. Borel, Mr. Capello and Mr. Tobin are currently members of the Audit Committee, which assists the Board in overseeing: (1) the integrity of the Company’s financial statements, including its use and reporting of any non-GAAP measures, (2) the effectiveness of the Company's internal control over financial reporting, (3) the Company’s compliance with laws and regulations to which it is subject, (4) the independent registered accounting firm’s qualifications, independence and performance, and (5) the performance of the Company’s internal audit function. The Audit Committee meets with management and the Company’s independent registered public accounting firm throughout the year and reports the results of its activities to the Board. The Audit Committee met eleven times during fiscal 2023. In addition, the Audit Committee’s responsibilities include: (a) sole authority for the appointment, retention, evaluation, compensation and oversight of the work of the Company’s independent registered public accounting firm, subject to ratification by the Board and shareholders, as necessary; (b) providing general oversight of accounting, auditing and financial reporting processes, including reviewing the audit results and monitoring the effectiveness of internal control over financial reporting, disclosure controls and the internal audit function; (c) reviewing and discussing with management the Company’s reports filed with or furnished to the SEC that include financial statements or results; and (d) monitoring compliance with significant legal and regulatory requirements, and other risks related to financial reporting and internal control over financial reporting. In addition, the Audit Committee is required to review and approve, at least annually, all related party transactions and significant conflicts of interest. Further information regarding the role of the Audit Committee is contained in its charter which is available in the “Investor Relations” section of the Company’s website at www.neogen.com; also see “Audit Committee Report” in this Proxy Statement. The Board has determined that all current members of the Audit Committee are “audit committee financial experts” for purposes of applicable SEC rules and are each independent under Nasdaq listing rules.

Science, Technology and Innovation Committee— Dr. Green (Chair), Ms. Gupta, Mr. Rodriguez and Dr. Woteki serve on the Science, Technology and Innovation Committee, which met once during fiscal 2023, and assists the Board in overseeing the development of new products, services and business models. In discharging these responsibilities, the committee reviews and evaluates the strategic goals and objectives of the Company’s research and development programs, including the monitoring and evaluation of emerging technologies, and assists the Board with its oversight responsibility for enterprise risk management in areas affecting the Company’s research and

22


 

development, including scientific ethics and conduct. The Science, Technology and Innovation Committee charter is available in the “Investor Relations” section on the Company’s website at www.neogen.com.

Board Leadership

Mr. Borel serves as the Chair of the Company's Board and leads all meetings of the Board. Mr. Adent serves as the Company's President and Chief Executive Officer and does not attend independent director sessions of the Board except upon request. The Board has concluded that this leadership structure is appropriate for the Company at this time as it allows the Chair to focus on the effectiveness and independence of the Board while the CEO focuses on executing the Company's strategy and managing the Company's business. The independent directors meet in executive session at least quarterly.

Management’s Role in Determining Executive Compensation

The Compensation Committee makes all determinations regarding officer compensation other than with respect to the CEO, which final decision is made by the Board upon recommendation of the Compensation Committee. Management’s involvement in determining executive compensation is limited to the Chief Executive Officer making recommendations on compensation for members of the executive management team.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee has served as an officer or employee of the Company at any time. No executive officer serves as a member of the compensation committee or board of directors of any other company that has an executive officer serving as a member of the Company’s Compensation Committee or Board.

Corporate Governance Guidelines

The Board has adopted the Corporate Governance Guidelines, which provide a structure for the Company’s Board of Directors and management to effectively pursue the Company’s objectives for the benefit of its shareholders. The Corporate Governance Guidelines address, among other things, Board and committee structure, composition and procedures, Director responsibilities, Director board service limits, compensation and continuing education, and shareholder communications with the Board.

Employee, Officer and Director Hedging

The Company, pursuant to the terms of its Insider Trading Policy, prohibits all directors, officers and employees, engaging in certain hedging transactions related to, or, without approval from the Chief Financial Officer and Chair of the Board, from pledging or creating a security interest in, the Company’s securities they hold.

Board Role in Risk Management

The Board oversees the Company’s risk management. This oversight is administered primarily through the Board’s review and approval of the management business plan, including the projected opportunities and challenges facing the business, periodic review by the Board of business developments, strategic plans and implementation, liquidity and financial results, the Board’s oversight of succession planning, capital spending and financing, the Audit Committee’s oversight of the Company’s internal controls over financial reporting and its discussions with management and the independent accountants regarding the quality and adequacy of internal controls and financial reporting (and related reports to the full Board), the Governance Committee’s leadership in the evaluation of the Board and committees and its oversight of identified risk areas of the Company, and the Compensation Committee’s review and approvals regarding executive officer compensation and its relationship to the Company’s business plan, as well as its review of compensation plans generally and the related risks.

23


 

Contacting the Board

Shareholders and other interested persons can communicate directly with the Board or any individual director on a confidential basis by mail to Board of Directors, Neogen Corporation, 620 Lesher Place, Lansing, Michigan 48912, Attention: Corporate Secretary. All such communications will be received directly by the Corporate Secretary and forwarded to the Board or any individual director, as applicable, and will not be screened or reviewed by any other Company employee.

Code of Business Conduct and Ethics

The Company has adopted a Code of Business Conduct and Ethics applicable to all Company employees, officers and directors as well as the Company's partners and vendors. The Code of Business Conduct and Ethics is posted on the Company’s website at www.neogen.com in the “Investor Relations” section and will be mailed or emailed to any shareholder upon request to the Corporate Secretary at 620 Lesher Place, Lansing, Michigan 48912.

Certain Relationships and Related Party Transactions

The Audit Committee approves or ratifies transactions in which the Company was or is to be a participant that involve directors, executive officers or principal shareholders, or members of their immediate families or entities controlled by any of them, or in which they have a substantial ownership interest, in which the amount involved exceeds $120,000 and that are otherwise reportable under SEC disclosure rules. Such transactions include employment of immediate family members of any director or executive officer. Management advises the Audit Committee of any such transaction that is proposed to be entered into or continued and seeks Audit Committee approval. In the event any such transaction is proposed for which a decision is required prior to the next regularly scheduled meeting of the Audit Committee, it may be presented to the Audit Committee Chair for approval, in which event the decision will be reported to the full Audit Committee at its next meeting.

There were no transactions with related parties during fiscal year 2023 for the Audit Committee to review and approve in accordance with the written policy, as described above, which is included in the Audit Committee Charter.

Family Relationships and Other Arrangements

There are no family relationships among the members of the Board of Directors and executive officers. Except as described within their biographies with respect to Ms. Gupta and Mr. Capello, there are no arrangements or understandings between or among the Company’s executive officers and directors pursuant to which any director or executive officer was or is to be selected as a director or executive officer.

COMPENSATION DISCUSSION AND ANALYSIS

Named Executive Officers

Named executive officers (“NEOs”) for SEC reporting purposes are:

Name

 

Title

John E. Adent

 

President & Chief Executive Officer

Douglas E. Jones

 

Chief Operating Officer

Jason W. Lilly, Ph.D.

 

Vice President, Americas & Australia/New Zealand

David H. Naemura

 

Chief Financial Officer

Steven J. Quinlan

 

Vice President, Finance

Amy M. Rocklin

 

Chief Legal & Compliance Officer

 

Brief biographies of the NEOs, with the exception of Mr. Adent, follow. Mr. Adent’s biography is included in “Proposal 1-Election of Directors.”

24


 

Douglas E. Jones, age 53, joined Neogen as Chief Commercial Officer on August 17, 2020; in 2022, he was named Chief Operating Officer. Prior to joining Neogen, Mr. Jones served as the President of the Companion Animal Division at Patterson Companies from 2016 to August 2020. Prior to joining Patterson, Mr. Jones served as the Head of Business Operations for the North American Merial Animal Health Division of Sanofi. Mr. Jones began his career as a management consultant with the North Highland Company and PriceWaterhouseCoopers, focusing on commercial transformation and strategy projects in the pharmaceutical, healthcare distribution and high-tech industries.

Dr. Jason W. Lilly, age 49, joined Neogen in June 2005 as Market Development Manager for Food Safety. In June 2009, he moved to the Corporate Development group. He was named Vice President of Corporate Development in December 2011, responsible for the identification and acquisition of new business opportunities for the Company. In January 2019, Dr. Lilly was named Vice President, International Business, responsible for Neogen’s operations outside of the U.S. and Canada. In May 2023, Dr. Lilly was named Vice President, Americas & Australia/New Zealand, with responsibility for all commercial business. He also has strategic and operational oversight of our global genomics business. Prior to joining Neogen, he served in various technical sales and marketing roles at Invitrogen Corporation.

David H. Naemura, age 54, joined Neogen in November 2022 as Chief Financial Officer. Previously, Mr. Naemura served as the Senior Vice President and Chief Financial Officer of Vontier Corporation from February 2020 until November 2022. Mr. Naemura served as Chief Financial Officer of Gates Industrial Corporation from March 2015 to January 2020. Mr. Naemura led the financial reporting teams at each of Vontier Corporation and Gates Industrial Corporation. Prior to his time at Gates Industrial Corporation, Mr. Naemura served as Vice President of Finance and Group Chief Financial Officer at Danaher Corporation from April 2012 to March 2015, and previously served as Danaher Corporation’s Test & Measurement Communications Platform Chief Financial Officer from January 2009 to April 2012. Prior to 2009, Mr. Naemura was employed by Tektronix Corporation from August 2000 to January 2009, including during its acquisition by Danaher Corporation in 2007.

Steven J. Quinlan, age 60, joined Neogen in January 2011 as Vice President & Chief Financial Officer and was also Corporate Secretary until March 2021. Mr. Quinlan announced his retirement in September 2022 and Mr. Naemura was subsequently appointed as Chief Financial Officer, beginning in November 2022. For the remainder of fiscal year 2023, Mr. Quinlan continued to serve the Company as Vice President of Finance and is continuing to work on special projects through the end of the 2023 calendar year. Prior to his retirement announcement, Mr. Quinlan was responsible for all internal and external financial reporting for Neogen, and managed the accounting, information technology, corporate purchasing, treasury and investor relations functions. Mr. Quinlan came to Neogen following 19 years at Detrex Corporation (1992-2010), the last eight years serving as Vice President-Finance, CFO and Treasurer. He was on the audit staff at the public accounting firm Price Waterhouse (now PricewaterhouseCoopers) from 1985-1989.

Amy M. Rocklin, Ph.D., age 51, joined Neogen in March 2021 as Vice President, General Counsel & Corporate Secretary. In 2022, Dr. Rocklin was named Chief Legal & Compliance Officer. In this role, she is responsible for all legal and compliance matters and also leads the regulatory, quality and ESG functions. Dr. Rocklin also serves as the Corporate Secretary. Prior to joining Neogen, Dr. Rocklin was Division Vice President, Corporate Law at Corning Incorporated. In her nearly ten years at Corning, she held multiple leadership positions within Corning’s Law Department. Before Corning, Dr. Rocklin held leadership positions at Smiths Group plc and was in private practice at the law firm of Foley & Lardner LLP.

Compensation Objectives

The Company’s executive compensation programs are designed to be aligned with shareholder value creation and are structured to reward individual and organizational performance and to be simple, concise and understandable. A significant percentage of each NEO’s compensation consists of variable pay.

25


 

The primary objectives of the compensation programs covering NEOs are to:

Attract, retain and motivate highly talented executives who will drive the success of the business;
Align incentives with the achievement of measurable corporate, business unit and individual performance objectives based on financial and non-financial measures, as appropriate;
Provide overall compensation that is considered equitable to the employee and the Company; and
Ensure reasonable, affordable and appropriate compensation program costs.

Compensation Elements

The primary compensation elements provided to NEOs are:

Base salary;
Discretionary annual bonus based upon achievement of individual and corporate objectives; and
Equity-based long-term incentive compensation delivered in the form of stock options and restricted stock units.

Other compensation elements include health and welfare benefits plans, with the NEOs receiving similar benefits to those provided to all other eligible U.S.-based employees, such as medical, life insurance and disability coverage.

The Compensation Committee is provided materials by management regarding the various compensation elements of each NEO’s compensation package. The Compensation Committee makes decisions about each compensation element in the context of each NEO’s total compensation package. The compensation of senior level employees generally incorporates variable pay elements such as bonus and stock options, although no specific formula, schedule or tier is applied in establishing compensation “mix.” Each of the compensation elements and its purpose is further described below.

The Company, through the Board of Directors Compensation Committee, engaged Meridian Compensation Partners, LLC ("Meridian") to serve as its executive compensation consultant for fiscal year 2023. While Meridian may make recommendations on the form and amount of compensation, the Compensation Committee continues to make all decisions regarding the compensation of our CEO, NEOs and senior management. CEO compensation remains subject to the review and approval of the independent Directors of the Board. In 2023, Meridian served the Company in a variety of activities, including:

Reviewing and advising on evolving trends in executive compensation;
Providing the Company and its Compensation Committee with advice, pay-for-performance analytics and benchmarking norms related to the compensation of the CEO and the senior management, including the NEOs;
Reviewing our compensation peer group and recommending changes; and
Reviewing our annual incentive and long-term incentive plan design.

As a result of the 3M Food Safety transaction, which was completed on September 1, 2002, the revenues of the Company grew by 56% for fiscal 2023 while gross profit rose 67%. Over 400 employees conveyed to the Company in the transaction, increasing total worldwide headcount to over 2,600 employees, with a significant increase in geographic footprint. Increases in salary and overall compensation were made in fiscal 2023 to reflect the increased size and complexity of the organization and to ensure the competitiveness of the Company’s overall compensation structure. These increases in compensation are reflected in the base salary adjustments, target and actual bonus opportunities, and stock award tables below.

26


 

Consideration of Last Year’s Say-on-Pay Vote

At the Company's 2022 annual meeting of shareholders, shareholders were provided with an opportunity to cast an advisory vote on the compensation of the Company’s executive officers. The say-on-pay vote yielded approximately 96% approval of those votes cast. Notwithstanding this favorable vote, we continue to seek input from our shareholders to understand their views with respect to our approach to executive compensation, and in particular in connection with the Compensation Committee’s efforts to tie compensation to performance.

Consideration of Risk

The Company believes the design of the Company’s executive compensation program provides an appropriate balance of incentives for executives and avoids inappropriate risks. The compensation program is balanced and focused on the long-term so that the Company’s executive officers are incentivized to deliver superior performance over sustained periods. In an effort to promote a focus on the long-term, these compensation plans have elements that are only realizable upon completion of a five-year service requirement. The Company believes that these plans provide strong incentives to implement policies that promote long-term value creation while avoiding excessive risk-taking in the short-term.

Performance goals are established to align with the Company’s overall risk framework and reflect a balanced mix of financial measures designed to avoid placing excessive weight on a single measure. Compensation is also balanced among current cash payments, deferred cash, and equity awards.

Base Salary

Base salary is intended to compensate the executive for the basic market value of the position, time in the position and the relation of that position to other positions in the Company. Each NEO’s salary and performance is reviewed annually. Factors considered in determining the level of executive base pay include the role and responsibilities of the position, performance against expectations and an individual’s job experience or unique role responsibilities.

Actual earned salary for fiscal 2023 is shown in the “Salary” column of the Summary Compensation Table. Base salary rates and changes from 2022 to 2023, if applicable, are shown in the following table.

 

Name

 

2023 Salary Rate

 

 

2022 Salary Rate

 

 

Percent
Increase

 

John E. Adent

 

$

750,000

 

 

$

487,000

 

 

 

54.0

%

Douglas E. Jones

 

 

495,000

 

 

 

365,000

 

 

 

35.6

%

Jason W. Lilly, Ph.D.

 

 

310,000

 

 

 

280,000

 

 

 

10.7

%

David H. Naemura

 

 

500,000

 

 

 

 

 

N/A

 

Steven J. Quinlan (1)

 

 

317,000

 

 

 

317,000

 

 

 

0.0

%

Amy M. Rocklin(2)

 

 

430,000

 

 

 

265,000

 

 

 

62.3

%

(1)
Note that in fiscal year 2023, Mr. Quinlan announced his retirement and Mr. Naemura was subsequently appointed as Chief Financial Officer.
(2)
Note that in fiscal year 2023, Dr. Rocklin assumed leadership for the Regulatory and Quality functions in addition to her previous Legal, Compliance, and ESG responsibilities.

Discretionary Annual Bonus

Bonuses paid in fiscal 2024 related to fiscal 2023 performance are as follows:

 

Name

 

Target
Value

 

 

Actual
Payments

 

 

Percentage
of Target

 

 

Percentage of Base Salary

 

John E. Adent

 

$

750,000

 

 

$

637,500

 

 

 

85

%

 

 

85

%

Douglas E. Jones.

 

 

297,000

 

 

 

252,450

 

 

 

85

%

 

 

51

%

Jason W. Lilly, Ph.D.

 

 

124,000

 

 

 

132,500

 

 

 

107

%

 

 

43

%

David H. Naemura

 

 

500,000

 

 

 

250,000

 

 

 

50

%

 

 

50

%

Steven J. Quinlan

 

 

158,300

 

 

 

100,000

 

 

 

63

%

 

 

32

%

Amy M. Rocklin

 

 

215,000

 

 

 

182,750

 

 

 

85

%

 

 

43

%

 

27


 

Target values for bonuses are set by the Compensation Committee and communicated to the officers at the time that the prior year actual payments are approved. Bonus awards are determined by the Compensation Committee based on the Company’s performance, officers’ achievements of their objectives and the Committee’s perception of the efforts expended during the recently completed fiscal year. The Compensation Committee took into account the recommendations of Mr. Adent with respect to bonuses for Mr. Jones, Dr. Lilly, Mr. Quinlan and Dr. Rocklin. Mr. Naemura joined the Company in November 2022; per the terms of his offer letter, his bonus was guaranteed at $250,000 for fiscal 2023. This guaranteed bonus amount was intended to ensure that Mr. Naemura was offered a competitive pay package when joining the company, especially given the complexity of joining the Company as it was integrating the acquired 3M FSD business. It should also be noted that Mr. Naemura did not receive a sign-on bonus upon beginning his role as Chief Financial Officer in November 2022. His annual bonus opportunity for fiscal 2024 is $500,000 and is not guaranteed. Beginning fiscal year 2024, Mr. Naemura's target and actual bonuses are based on individual objectives and the Company's performance. Similarly, Mr. Naemura's fiscal year 2024 long-term incentive compensation has not been predetermined and will be awarded based on the Compensation Committee's review and discretion.

Overall, all target and actual bonuses are based on individual objectives and the Company’s performance, within the discretion of the Compensation Committee. The Compensation Committee’s assessment of the Company’s overall performance was influenced, in part, by the following:

The 3M Food Safety transaction closed on September 1, 2022, and significant management effort was expended in preparing the Company to absorb the conveying employees and in integrating the business. Integration activities, which include preparation for the transition of sample handling and pathogen detection manufacturing into Neogen facilities, progressed during the year. Additionally, the construction of the new production facility in Lansing and implementation of enterprise systems remain on track.
Revenues increased 56% to $822.4 million, largely the result of the acquired FSD business; core revenue growth, which removes the impact of acquisitions and foreign currency exchange, was 4.0%;
Gross margins, expressed as a percentage of sales, increased to 49.4% in fiscal year 2023 compared to 46.1% in fiscal 2022;
Adjusted EBITDA in fiscal year 2023 was $205.4 million, representing an increase of 78.0% and Adjusted EBITDA margin of 25.0%, compared to $115.4 million and a margin of 21.9% in fiscal year 2022;

While the Company reported a net loss of $22.9 million for fiscal year 2023 compared to net income of $48.3 million for fiscal year 2022, the change was primarily the result of $56.0 million of interest expense from the $1 billion in debt incurred in the 3M Food Safety transaction, $59.8 million of related transaction fees and integration expenses, and $60.9 million in incremental amortization expenses related to 3M acquired intangibles. Adjusted net income, which removes the impact of these and other nonrecurring items, was $105.7 million in fiscal year 2023, representing an increase of $26.4 million compared to adjusted net income of $79.3 million in fiscal year 2022.

Mr. Adent’s bonus opportunity for fiscal 2023 was primarily based on the successful closing of the 3M FSD transaction and the preparation for and initial integration of the 3M FSD business, as well as the achievement of the Company’s financial objectives. Mr. Adent had additional objectives related to continued improvements in product quality, progress on the implementation of the Company’s environmental, social and governance (ESG) strategy, phased implementation of the Company’s compliance program and reduction of voluntary employee turnover. In addition to the 3M FSD transaction, the Compensation Committee took into consideration the Company's core revenue growth and Adjusted EBITDA performance in determining Mr. Adent’s annual bonus for fiscal 2023. Additionally, manufacturing issues at 3M, which is supplying certain products to the Company for the 3M FSD business under a number of transition agreements, resulted in product backorders and hampered the attainment of financial objectives for the 3M FSD business in the first nine months of Company ownership. Mr. Adent and other Company executives addressed these issues with 3M and made significant progress mitigating them. In addition to his objectives related to the 3M FSD transaction and financial metrics, Mr. Adent largely achieved objectives in continuing the implementation of the Company’s ESG strategy, the improvement of product quality and the reduction of voluntary employee turnover. The Compensation Committee, after taking the above into account,

28


 

determined that Mr. Adent had continued to provide strong, effective and proactive leadership during the year, and awarded Mr. Adent 85% of his targeted bonus opportunity.

The fiscal 2023 bonus opportunity for Mr. Jones was primarily based on the successful closing of the 3M FSD transaction and the preparation for and initial integration of the 3M FSD business, as well as the achievement of the Company’s financial objectives. Additional objectives for Mr. Jones included improvements in manufacturing and supply chain, and shared objectives in improving product quality and compliance. Significant efforts were expended to ensure a successful closing of the 3M FSD transaction and Mr. Jones’ leadership was instrumental in driving the initial integration of the business. The Company had significant improvements in product quality and, based on his performance and the achievement of his objectives in fiscal 2023, the Committee awarded Mr. Jones 85% of his bonus opportunity.

Dr. Lilly's fiscal 2023 bonus opportunity was primarily based on the successful closing of the 3M FSD transaction and the preparation for and initial integration of the 3M FSD business. In his role leading the Company’s international and agrigenomics businesses, Dr. Lilly had additional objectives tied to the achievement of financial metrics, capacity enhancements, operational improvements and new product introductions. Significant efforts were expended in fiscal 2023 on the successful closing of the 3M FSD transaction and initial integration of the business internationally, including the creation of the proper legal entities, the successful absorption of the conveying employees, the hiring of additional international senior leadership roles, and the alignment of the legacy and newly acquired sales and marketing teams and strategies. Additional work was completed to prepare the organization to exit certain transition service agreements between 3M and the Company. Capacity improvements and automation, designed to increase efficiency, were also completed in the genomics business during the year. Based on his operations’ financial performance, and his efforts in the successful integration of both the 3M FSD international business and a recently acquired genomics business, Dr. Lilly was awarded 107% of his bonus opportunity.

Mr. Quinlan’s bonus opportunity for fiscal 2023 was tied primarily to the successful closing of and initial accounting for the 3M FSD transaction, including the opening balance sheet and purchase price allocation, as well as the achievement of financial objectives for the overall Company. In addition, Mr. Quinlan had shared objectives with the leadership team on continued progress on the Company’s ESG strategy. Mr. Quinlan announced his retirement from his role as Chief Financial Officer, effective at the end of the Company’s second quarter of fiscal 2023, and remained with the Company through the end of fiscal 2023 to ensure a smooth transition for his successor, Mr. Naemura, and to transition the Company’s investor relations function. Based on achievement of his goals while in his role in fiscal 2023, Mr. Quinlan was awarded 63% of his targeted bonus.

Dr. Rocklin’s bonus opportunity was primarily based on the successful closing of the 3M FSD transaction and initial integration of the 3M FSD business, as well as the achievement of the Company's financial objectives. Dr. Rocklin had additional objectives of aligning corporate governance policies, documents and processes with the Company’s structure, the implementation of a phased compliance program across the Company and the development of an intellectual property strategy and training curriculum for the organization. She also had shared objectives for the overall Company's financial metrics and the continued rollout of the Company’s ESG strategy. Significant progress was made on the revision of governance policies and processes, the creation of the corporate intellectual property strategy and the implementation of the Company’s compliance program. Based on the overall assessment of progress made on her objectives, Dr. Rocklin was awarded 85% of her bonus opportunity.

29


 

Long-Term Incentive Compensation

The objectives of the long-term incentive portion of the compensation package are to:

Align the personal and financial interests of management and other employees with shareholder interests;
Balance short-term decision-making with a focus on improving shareholder value over the long term;
Provide a means to attract, reward and retain a skilled management team; and
Provide the opportunity to increase ownership interest in the Company.

The primary long-term incentive mechanism at the Company has historically been stock option awards, the ultimate value of which is dependent on increases in the Company’s stock price. During fiscal 2021, the Company also began to award restricted stock units (“RSUs”) as an additional vehicle for long-term incentive compensation for Company employees. Stock options and RSUs are granted to provide employees with a personal financial interest in the Company’s long-term success, promote retention of employees and enable the Company to compete for the services of new employees in a competitive market. The Company believes that stock options and RSUs are appropriate means to incentivize the achievement of long-term objectives.

The stock option and RSU programs are designed to deliver competitive long-term awards while incurring reasonable levels of expense and shareholder dilution. It is the Company’s view that grants of stock options and RSUs represent appropriate uses of corporate resources and are effective methods for the Company to achieve its long-term compensation element objectives.

In general, stock options granted to employees are incentive options with seven year lives that vest 33% per year beginning with the year following the initial year of grant. Prior to fiscal year 2022, stock options granted had five year lives and vested 20% per year. Certain incentive options are converted to non-qualified options when IRS limitations for incentive options are exceeded. The non-qualified options retain the same vesting and life provisions as incentive options. Directors are granted non-qualified stock options, with seven year terms and vesting of 33% per year for each of the three years following the year of grant. In all cases, grant prices are equal to the closing price on the day of the grant. The Company does not reprice options and does not “reload”—which means the recipient is only able to exercise the number of shares in the original stock option grant. RSUs granted to employees have three -year vesting periods, with 33% of the units vesting each year beginning with the first anniversary date of the grant. The RSU is priced at the closing stock price on the date of the grant. Non-employee directors are also granted RSUs, with three year lives, which vest 33% per year for each of the three years beginning on the first anniversary date of the grant. The Company’s practice has been to make an annual award of option grants or RSUs to a select group of employees as well as occasional hire-on awards to select new hires.

Annual stock option and RSU grants are made at the discretion of the Compensation Committee, with the exception of non-employee Director awards that are granted annually on election or continuation of an existing term. Management makes recommendations to the Compensation Committee as to the stock option and RSU award levels. The determination with respect to the option or RSU award to be granted to any particular participant is ultimately subjective in nature. While no specific or absolute performance measures are applied, factors considered in determining the option or RSU award to an individual include his or her level of responsibility and position within the Company, demonstrated performance over time, value to the Company’s past and future success, historic grants, retention concerns and, in the aggregate, share availability under the plan, overall Company expense and shareholder dilution from awards. Management provides the Compensation Committee information on grants made in the past three years and the accumulated value of all stock option and RSU awards outstanding to each executive officer. During fiscal 2023, there was one grant of stock options and RSUs for NEOs; the annual recurring grant issued in October 2022.

The Company maintains two equity-based long-term incentive plans that have been previously approved by shareholders—the Neogen Corporation 2015 Omnibus Incentive Plan ( “2015 Plan”) and the 2018 Plan. Fiscal 2023 stock option and RSU grants were made under the 2018 Plan. If the 2023 Plan is approved at the 2023 Annual Meeting of Shareholders, future awards of equity or equity rights will be granted under the 2023 Plan and no further awards will be made under the 2018 Plan. In any event, no further awards can be made under the 2015 Plan.

30


 

The table below shows the amounts of the fiscal 2023 stock option grants to each of the NEOs.

 

Name

 

Number of
Options
Granted

 

 

Compensation Cost Recognized for Option Grants (1) (2)

 

John E. Adent

 

 

625,001

 

 

$

2,800,000

 

Douglas E. Jones

 

 

165,105

 

 

 

739,670

 

Jason W. Lilly, Ph.D.

 

 

41,965

 

 

 

188,004

 

David H. Naemura

 

 

172,413

 

 

 

900,000

 

Steven J. Quinlan (3)

 

 

 

 

 

 

Amy M. Rocklin

 

 

120,537

 

 

 

540,000

 

 

(1)
Represents the aggregate grant date fair value of each stock option granted in fiscal 2023, calculated in accordance with the provisions of the Compensation—Stock Compensation Topic of the FASB Codification. This amount will be recognized over the vesting period of the grants.
(2)
The stock option Codification Topic 718 values throughout this Proxy Statement have been calculated using the Black-Scholes option pricing model using the assumptions in the table below.
(3)
Note that in fiscal 2023, Mr. Quinlan announced his retirement, and was therefore not awarded any options.

 

Black-Scholes Model Assumptions (1)

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

Risk-free interest rate

 

 

3.3

%

 

 

0.4

%

 

 

0.2

%

 

 

1.9

%

 

 

2.6

%

Expected dividend yield

 

 

0

%

 

 

0

%

 

 

0

%

 

 

0

%

 

 

0

%

Expected stock price volatility

 

 

34.0

%

 

 

32.8

%

 

 

31.3

%

 

 

29.4

%

 

 

27.0

%

Expected option life

 

4.5 years

 

 

3.12 years

 

 

3.25 years

 

 

3.5 years

 

 

3.5 years

 

 

(1)
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Expected stock price volatility is based on historical volatility of the Company’s stock. The expected option life, representing the period of time that options are expected to be outstanding, is based on historical option exercise and employee termination data.

The table below shows the amounts of the fiscal 2023 RSU grants to each of the NEOs.

 

Name

 

Number of
RSUs
Granted

 

 

Compensation Cost Recognized for RSU Grants (1)

 

John E. Adent

 

 

90,361

 

 

$

1,200,000

 

Douglas E. Jones

 

 

37,133

 

 

 

493,126

 

Jason W. Lilly, Ph.D.

 

 

14,157

 

 

 

188,004

 

David H. Naemura

 

 

38,735

 

 

 

600,000

 

Steven J. Quinlan (2)

 

 

 

 

 

 

Amy M. Rocklin

 

 

27,108

 

 

 

360,000

 

 

(1)
Compensation cost is calculated as the closing market price on each of the grant dates ($13.28 on October 6, 2022, and $15.49 on November 29, 2022) multiplied by the number of restricted shares granted. For purpose of this disclosure, the calculations do not attribute the compensation cost to the requisite vesting period.
(2)
In fiscal 2023, Mr. Quinlan announced his retirement, and was therefore not awarded any RSUs.

Retirement Plans: A defined contribution plan, the Neogen Corporation 401(k) Retirement Savings Plan (“401(k) Plan”) is available to all eligible U.S. employees including all NEOs. Under the 401(k) Plan, the Company matches dollar per dollar of the first 3%, and fifty cents per dollar of the next 2%, of pay contributed by the employee up to the Internal Revenue Code limits. Matching contributions to the 401(k) Plan vest immediately.

Health and Welfare Benefits Plans: Benefits such as medical, dental, vision, life insurance and disability coverage are provided to each NEO under benefits plans that are provided to all eligible U.S.-based employees. The benefits plans are part of the overall total compensation offering and are intended to be competitive and provide health care coverage for employees and their families. The NEOs have no additional Company-paid health benefits. Similar to

31


 

all other employees, NEOs have the ability to purchase supplemental life, dependent life, long-term care insurance, and accidental death and dismemberment coverage through the Company. The value of these benefits is not included in the Summary Compensation Table since they are purchased by each NEO and are made available to all U.S. employees. No form of post-retirement health care benefits is provided to any employee.

Perquisites: The values of perquisites and other personal benefits are included in the “All Other Compensation” column of the Summary Compensation Table, and consist primarily of Company matching contributions to the 401(k) Plan and the value of Company paid group term life insurance.

Employee Stock Purchase Plan: Employees in the U.S. are permitted to voluntarily purchase Company stock at a 5% discount through after-tax payroll deductions under the Employee Stock Purchase Plan (“ESPP”) as a way to facilitate employees becoming shareholders of the Company. The ESPP purchases stock bi-annually for participants through a third party plan administrator. Each of the NEOs is currently eligible to purchase shares through the ESPP.

Executive and Non-Employee Director Stock Ownership Requirements

The Company has stock ownership requirements in place for all corporate officers, including the NEOs and Directors. This reflects the Company’s belief that all senior executives and Directors should have meaningful share ownership positions in the Company to reinforce the alignment of management and shareholder interests. The Compensation Committee periodically reviews the policy requirements to ensure they continue to be reasonable and competitive.

The ownership requirements are:

 

Position

 

Market Value of Stock Owned

Non-Employee Directors

 

5 times annual cash fees paid

Chief Executive Officer

 

5 times annual base salary

Corporate Officers

 

2 times annual base salary

 

For purposes of the ownership requirements, stock owned includes shares owned outright, including 401(k) Plan shares, but does not include unexercised stock options or unvested RSUs. Executives and non-employee directors that have not met the ownership requirements, are prohibited from selling more than 25% of their vested shares.

Chief Executive Officer Compensation

John Adent has been the President and Chief Executive Officer of the Company since 2017. His base salary in fiscal 2023 was adjusted on January 1, 2023, from $487,000 to $750,000, largely to reflect the increased size and complexity of the Company following the completion of the 3M FSD transaction. His target bonus opportunity was $750,000, based primarily on the successful closing of the 3M FSD transaction and initial integration of the business, as well as the achievement of certain financial objectives, and other strategic and operational goals. In addition to base salary and bonus opportunity, Mr. Adent was awarded 625,001 stock options and 90,361 RSUs in fiscal 2023, valued at $4,000,000 at the respective grant dates.

In determining the amount of Mr. Adent’s annual bonus for fiscal 2023, the Compensation Committee took into consideration the closing of the 3M FSD transaction and largely successful initial integration, the Company’s core revenue growth over fiscal 2022, improved gross margins, and the Board’s assessment of the level of attainment of Mr. Adent’s other fiscal 2023 goals, which included continued improvement in product quality, phased implementation of the Company’s compliance program, reduction in voluntary employee turnover and ongoing progress on the Company’s ESG strategy. Based on the above, the Committee awarded him 85% of his targeted bonus opportunity for the year.

32


 

Tax and Accounting Implications

Section 162(m) of the Code provides that annual compensation in excess of $1 million paid to a “covered employee” (which generally includes the chief executive officer, chief financial officer and certain other current or former named executive officers) is not deductible by the company for federal income tax purposes. To maintain flexibility in compensating the Company’s executive officers to meet a variety of objectives, the Compensation Committee reserves the right to compensate Company executives in amounts deemed appropriate and competitive, regardless of whether such compensation is deductible for federal income tax purposes. Section 162(m) of the Code is expected to prevent the Company from deducting a portion of the compensation paid to the Company’s NEOs in 2023.

Section 409A of the Code provides that amounts deferred under non-qualified deferred compensation arrangements will be included in an employee’s income when vested, as well as be subject to additional taxes, penalties and interest, unless certain requirements are complied with. The Company believes that its compensation arrangements satisfy, or are exempt from, the requirements of Section 409A.

If a company makes “parachute payments,” Section 280G of the Code prohibits the company from deducting the portion of the parachute payments constituting “excess parachute payments” and Section 4999 of the Code imposes on the payee a 20% excise tax on the excess parachute payments. For this purpose, parachute payments generally are defined as payments to specified persons that are contingent upon a change in control in an amount equal to or greater than three times the person’s base amount (i.e., the five-year average Form W-2 compensation). The excess parachute payments, which are nondeductible and subject to a 20% excise tax, equal the portion of the parachute payments that exceeds one times the payee’s base amount. If a covered employee receives excess parachute payments in any year, the $1 million deduction limitation applicable to the covered employee for such year under Section 162(m) of the Code is reduced (but not below zero) by the amount of the excess parachute payments.

The employment arrangements with the Company’s NEOs and the Company’s equity incentive plans may entitle participants to receive payments in connection with a change in control that may result in excess parachute payments. The Company is not obligated to pay any tax gross-ups with respect to the excise tax imposed on any person who receives excess parachute payments.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board has reviewed and discussed with management the Compensation Discussion and Analysis and, on the basis of such review and discussions, has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Submitted by:

Darci L. Vetter (Chair)

William T. Boehm

Jeffrey D. Capello

Raphael A Rodriguez

Catherine E. Woteki

Members of the Compensation Committee

33


 

EXECUTIVE COMPENSATION

The table sets forth information regarding all elements of compensation paid to the Company’s named executive officers (principal executive officer, principal financial officer and the three other most highly compensated executive officers) (the “NEOs”) for fiscal years 2023, 2022 and 2021.

Summary Compensation Table for Fiscal Years 2023, 2022, and 2021

 

Name and Principal Position

 

Year

 

Salary

 

 

Bonus

 

 

Stock Awards (1)

 

 

Option Awards (1)

 

 

All Other Compensation (2)

 

 

Total

 

John E. Adent

 

2023

 

$

671,100

 

 

$

637,500

 

 

$

1,200,000

 

 

$

2,800,000

 

 

$

16,574

 

 

 

5,325,174

 

President & Chief Executive Officer

 

2022

 

 

477,798

 

 

 

900,000

 

 

 

925,689

 

 

 

1,999,858

 

 

 

12,082

 

 

 

4,315,427

 

 

 

2021

 

 

459,173

 

 

 

378,000

 

 

 

480,832

 

 

 

1,181,786

 

 

 

7,255

 

 

 

2,507,046

 

Douglas E. Jones (3)

 

2023

 

 

456,000

 

 

 

252,450

 

 

 

493,126

 

 

 

739,670

 

 

 

966

 

 

 

1,942,212

 

Chief Operating Officer

 

2022

 

 

357,924

 

 

 

330,000

 

 

 

279,999

 

 

 

381,491

 

 

 

4,232

 

 

 

1,353,646

 

 

 

2021

 

 

277,531

 

 

 

120,000

 

 

 

95,962

 

 

 

151,941

 

 

 

3,266

 

 

 

648,700

 

Jason W. Lilly, Ph.D.

 

2023

 

 

301,000

 

 

 

132,500

 

 

 

188,004

 

 

 

188,004

 

 

 

13,298

 

 

 

822,806

 

Vice President, Americas

 

2022

 

 

274,685

 

 

 

191,388

 

 

 

385,019

 

 

 

352,225

 

 

 

10,919

 

 

 

1,214,236

 

& Australia/New Zealand

 

2021

 

 

234,734

 

 

 

99,932

 

 

 

200,461

 

 

 

211,033

 

 

 

5,586

 

 

 

751,746

 

David H. Naemura (4)

 

2023

 

 

228,846

 

 

 

250,000

 

 

 

600,000

 

 

 

900,000

 

 

 

297

 

 

 

1,979,143

 

Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steven J. Quinlan (5)

 

2023

 

 

317,000

 

 

 

100,000

 

 

 

 

 

 

 

 

 

14,385

 

 

 

431,385

 

Vice President, Finance

 

2022

 

 

310,971

 

 

 

280,000

 

 

 

385,988

 

 

 

527,276

 

 

 

11,880

 

 

 

1,516,115

 

 

 

2021

 

 

274,519

 

 

 

100,000

 

 

 

192,265

 

 

 

303,882

 

 

 

6,816

 

 

 

877,482

 

Amy M. Rocklin (6)

 

2023

 

 

380,500

 

 

 

182,750

 

 

 

360,000

 

 

 

540,000

 

 

 

966

 

 

 

1,464,216

 

Chief Legal &

 

2022

 

 

255,481

 

 

 

21,000

 

 

 

140,011

 

 

 

185,696

 

 

 

759

 

 

 

602,948

 

Compliance Officer

 

2021

 

 

43,269

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43,269