PRELIMINARY COPY – SUBJECT TO COMPLETION – DATED AUGUST 11, 2023

 

[•], 2023

Thank you for your support of Freshpet, Inc. On behalf of the entire Board of Directors of Freshpet (the “Board”), we invite you to attend Freshpet’s 2023 annual meeting of stockholders (including any adjournments, postponements or continuations thereof, the “Annual Meeting”) scheduled to be held on October [•], 2023 at [•] a./p.m. Eastern Time in a virtual meeting format, via a live webcast. The Annual Meeting will once again be conducted in a virtual format, which will provide stockholders the opportunity to participate irrespective of location. Stockholders of record as of the close of business on August 18, 2023 may vote their shares at the Annual Meeting, as further described in the accompanying Notice of Annual Meeting of Stockholders and proxy statement detailing the business to be conducted at the Annual Meeting (the “Proxy Statement”).

In 2023, Freshpet made significant progress executing its operational improvement plan to drive margin expansion, initiated in August 2022. Guided by the strategy set by Freshpet’s management team and world-class Board, we are steadily advancing the key drivers of cost and margins while delivering strong revenue growth in line with our long-term growth plan. With continued execution, we believe that the growth opportunity for Freshpet is enormous.

We are confident our progress will allow us to deliver continued momentum and future success. We are pleased to welcome Walter N. George III into his role as independent Chair of our Board, effective as of July 21, 2023. Walt, formerly Chair of the Nominating, Governance and Sustainability Committee of the Board, has over 30 years of manufacturing and supply chain leadership experience, including senior positions in the pet food industry and significant expertise in scaling multiple high-growth consumer product companies that position him well to lead our Board. We also want to thank former Chair of the Board Charles A. Norris for his many years of dedication to Freshpet and his leadership of the Board since our initial founding. Charlie’s insights have contributed significantly to Freshpet’s revolutionizing of the pet food industry and ongoing evolution, and he has helped put us in a strong position to build momentum and capture many opportunities ahead.

Our Board continues to evolve to ensure it has the right skills and expertise to oversee the continued execution of our strategy and business. Comprised of 9 independent directors and our CEO, our Board has extensive experience in areas critical to growing our business, including retail, supply chain management, consumer packaged goods, technology, marketing and branding, and of course, pet food experience. We are thrilled to have welcomed two new directors to our Board in recent months: David B. Biegger and David J. West. Mr. Biegger joined our Board in May, Mr. West joined in July, and both have been appointed to serve on our Audit Committee. Mr. Biegger is a seasoned supply chain and operations leader with deep domain knowledge and over 40 years of experience in the consumer packaged goods industry. Mr. West is an accomplished pet food and consumer products executive who brings over three decades of experience leading a range of blue-chip consumer companies and well-known brands. We expect Mr. Biegger’s and Mr. West’s guidance and perspectives will help advance our operational improvement plan to help us deliver margin expansion while we continue to drive top line growth. Our Board also continues to implement our governance transformation plan, as well as our Compensation Committee’s introduction of ESG-related metrics directly into executive compensation, as discussed in greater detail in our Proxy Statement.

Additionally, we recently announced the appointments of Todd Cunfer as Chief Financial Officer and Dirk Martin as VP of Customer Service and Logistics. These seasoned executives bring decades of operational and supply-chain experience to our team and will play a key role in driving our operational improvement plan. Together, we look forward to continuing to build the Freshpet franchise and deliver on our long-term growth and profitability goals, while staying true to our ethos of protecting “Pets. People. Planet.”

The accompanying Notice of Annual Meeting of Stockholders and Proxy Statement describe the business to be conducted at the 2023 Annual Meeting. Also included are a WHITE proxy card and postage-paid return envelope. These WHITE proxy cards are being solicited on behalf of your Board of Directors of Freshpet.

Your vote is especially important this year because an affiliate of JANA Partners LLC (together with its affiliates and associates, “JANA”) has notified us that it intends to nominate four candidates for election at the Annual Meeting. OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” EACH OF OUR COMPANY NOMINEES BY USING THE ENCLOSED WHITE PROXY CARD AND DISREGARD ANY MATERIALS, AND DO NOT SIGN, RETURN OR VOTE ON ANY GREEN PROXY CARD SENT TO YOU BY OR ON BEHALF OF JANA.

On behalf of everyone at Freshpet, we are grateful for your continued trust and support. Thank you for being a Freshpet stockholder.

Sincerely,

 

 

William B. Cyr

PRELIMINARY COPY – SUBJECT TO COMPLETION – DATED AUGUST 11, 2023

The 2023 annual meeting of stockholders (including any adjournments, postponements or continuations thereof, the “Annual Meeting”) of Freshpet, Inc. (the “Company”) will be held virtually on [•], October [•], 2023 at [•] a./p.m Eastern Time.

An affiliate of JANA Partners LLC (together with its affiliates and associates, “JANA”), an activist hedge fund, has provided notice to the Company of its intent to nominate four directors for election to the Board at the Annual Meeting. When determining the Board’s recommendations on the nominees and matters before the Annual Meeting, the Board has carefully considered the best interests of stockholders and the Company.

OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF OUR BOARD’S NOMINEES UNDER PROPOSAL 1 AND “FOR” PROPOSALS 2 AND 3 USING THE ENCLOSED WHITE PROXY CARD AND DISREGARD ANY MATERIALS, AND DO NOT SIGN, RETURN OR VOTE ON ANY GREEN PROXY CARD SENT TO YOU BY OR ON BEHALF OF JANA. If you have already completed and signed any green proxy card provided by or on behalf of JANA, you have every legal right to change your vote by completing, signing and dating the enclosed WHITE proxy card and promptly mailing it in the postage pre-paid envelope provided or following the instructions on the enclosed WHITE proxy card to vote via the Internet. Only your latest dated proxy will count.

PLEASE NOTE THAT THIS YEAR, YOUR PROXY CARD LOOKS DIFFERENT. IT HAS MORE NAMES ON IT THAN THERE ARE SEATS UP FOR ELECTION, UNDER NEW REGULATIONS REQUIRING A “UNIVERSAL PROXY CARD.” THIS MEANS THE COMPANY’S PROXY CARD IS REQUIRED TO LIST JANA’S NOMINEES IN ADDITION TO THE COMPANY’S NOMINEES. PLEASE MARK YOUR CARD CAREFULLY AND ONLY VOTE “FOR” THE COMPANY’S NOMINEES AND PROPOSALS AS RECOMMENDED BY YOUR BOARD.

If you have any questions or need any assistance in voting your shares, please contact our proxy solicitor:

 

We thank you for your continued support of Freshpet and look forward to your participation at our Annual Meeting.

By Order of the Board of Directors,

 

Walter N. George III

[•], 2023

 

The Company’s Notice of Annual Meeting, Proxy Statement and Annual Report to stockholders for the fiscal year ended December 31, 2022 are currently available online free of charge in the “Financial Information” subsection of Freshpet’s Investor Relations website at investors.freshpet.com or at [•].

This proxy statement (the “Proxy Statement”) and the accompanying form of proxy were first mailed to stockholders of record on or about [•], 2023. An annual report for the year ended December 31, 2022 (our “Annual Report”) is enclosed with this Proxy Statement. Electronic copies of this Proxy Statement and Annual Report are available at [•] and investors.freshpet.com.

In this Proxy Statement, we refer to Freshpet, Inc. as “Freshpet,” the “Company,” “we,” and “us” (as the context requires), the Company’s Board of Directors as the “Board,” the Company’s common stock, par value $0.001 per share, as the “Common Stock,” and the Company’s 2023 Annual Meeting of Stockholders, including any adjournments, postponements, or continuations thereof, as the “Annual Meeting.”

 

 

 

You are receiving this Proxy Statement and the enclosed WHITE proxy card because you were a holder of our Common Stock as of the Record Date, and the Board is soliciting your proxy to vote your shares of our Common Stock on all matters scheduled to come before the Annual Meeting, whether or not you attend the Annual Meeting.

Members of the Board and certain officers of the Company are “participants” with respect to the Company’s solicitation of proxies in connection with the Annual Meeting (each such person, a “Participant”). For more information on the Participants in the Board’s solicitation, please see “Additional Information Regarding Participants in the Solicitation” in Appendix A to this Proxy Statement.

On May 25, 2023, the Company received notice from JANA Partners, LLC (together with its affiliates and associates, “JANA”), an activist hedge fund, stating its intention to nominate three candidates for election to the Board at the Annual Meeting, as well as an alternate director nominee in the event the Board increased the size of the Board to elect more than three directors at the Annual Meeting or if more than three directors are to be elected at the Annual Meeting for any other reason (collectively, the “JANA Nominees”). On June 8, 2023, the Company announced that it would be postponing the Annual Meeting to a later date and that it would also open a fourth director seat for election at the Annual Meeting. You may receive proxy solicitation material from JANA, including a green proxy card. The Company is not responsible for the accuracy of any information contained in any proxy solicitation materials filed or disseminated by, or on behalf of, JANA or any other statements that JANA may otherwise make. For more information on the Company’s engagement with JANA, please see “Background to the Solicitation” on page [•] of this Proxy Statement.

OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” EACH OF OUR BOARD’S NOMINEES BY USING THE ENCLOSED WHITE PROXY CARD AND DISREGARD ANY MATERIALS, AND DO NOT SIGN, RETURN OR VOTE ON ANY GREEN PROXY CARD, SENT TO YOU BY OR ON BEHALF OF JANA.

While you may use JANA’s green proxy card to vote for the Company Nominees, we encourage you to instead vote “FOR” each of our four Company Nominees under Proposal 1 and “FOR” each of Proposals 2 and 3 on the universal WHITE proxy card by Internet or by completing, signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided or by voting virtually at the Annual Meeting. While we encourage stockholders to send only our WHITE proxy card, in the event a stockholder returns multiple proxy cards, only the latest-dated proxy card submitted will count.

The Board is asking stockholders to elect four Class III directors to the Board. Each of the director nominees is standing for election for a term ending at the 2025 Annual Meeting and until his or her successor has been duly elected and qualified, or until such director’s earlier death, resignation or removal.

The Board has nominated and unanimously recommends the election of four incumbent directors (the “Company Nominees”). For more information on the Company Nominees, please see “Directors, Executive Officers, and Corporate Governance – Director Nominees” on page [•] of the Proxy Statement. You may vote for each of these four director candidates on the enclosed universal WHITE proxy card.

The Board unanimously recommends that stockholders vote “FOR” each of the Company Nominees on the WHITE proxy card.

Stockholders are being asked to ratify the selection of KPMG LLP (“KPMG”) as our independent registered public accounting firm for the fiscal year ending December 31, 2023.

The Board unanimously recommends that stockholders vote “FOR” the ratification of KPMG as our independent registered public accounting firm for 2023.

The Board is asking stockholders to approve, on a non-binding advisory basis, the compensation of the named executive officers as disclosed in this Proxy Statement (also known as “Say-on-Pay”). As an advisory vote, the result will not be binding on the Board or the Compensation Committee. This “Say-on-Pay” vote will, however, provide us with important feedback from our stockholders about our executive compensation philosophy, objectives and program. The Board and the Compensation Committee value the opinions of our stockholders and expect to take into account the outcome of the vote when considering future executive compensation decisions and when evaluating the Company’s executive compensation program.

The Board unanimously recommends that stockholders vote “FOR” the approval of executive compensation on an advisory basis.

If you are a registered stockholder (that is, you hold shares in your name directly on the books of our transfer agent, Computershare Trust Company, N.A. (“Computershare”), and not through a bank, broker or other nominee) you may choose either of two methods to submit your proxy to have your shares voted in advance of the Annual Meeting:

If you are the beneficial owner of shares (that is, you held your shares in “street name” through an intermediary such as a broker, bank or other nominee) as of the Record Date, you will receive instructions from your broker, bank or other nominee as to how to vote your shares or submit a proxy to have your shares voted. PLEASE USE THE VOTING FORMS AND INSTRUCTIONS PROVIDED BY YOUR BROKER, BANK OR OTHER NOMINEE. In most cases, you will be able to do this by mail or via the Internet. As discussed herein, your broker, bank or other nominee may not be able to vote your shares on any matters at the Annual Meeting unless you provide instructions on how to vote your shares. You should instruct your broker, bank or other nominee how to vote your shares by following the directions provided by your broker, bank or other nominee.

PLEASE NOTE THAT THIS YEAR, YOUR PROXY CARD LOOKS DIFFERENT. IT HAS MORE NAMES ON IT THAN THERE ARE SEATS UP FOR ELECTION, UNDER NEW REGULATIONS REQUIRING A “UNIVERSAL PROXY CARD” WHICH ARE DESCRIBED IN MORE DETAIL BELOW. THIS MEANS THE COMPANY’S PROXY CARD IS REQUIRED TO LIST JANA’S NOMINEES IN ADDITION TO THE COMPANY’S NOMINEES. PLEASE MARK YOUR CARD CAREFULLY AND ONLY VOTE “FOR” EACH OF THE COMPANY’S NOMINEES AND PROPOSALS AS RECOMMENDED BY YOUR BOARD. WE ENCOURAGE YOU TO VOTE BY INTERNET TO AVOID POTENTIAL CONFUSION WITH THE UNIVERSAL PROXY CARD. YOU SHOULD ONLY VOTE FOR FOUR NOMINEES TOTAL.

Alternatively, you may vote at the virtual Annual Meeting. The Annual Meeting will be held online via a live webcast at [•]. You may only participate in the virtual meeting by registering in advance at [•] prior to the deadline of [•] Eastern Time on [•], 2023. Please have your voting instruction form, proxy card or other communication containing

your control number available and follow the instructions to complete your registration request. If you are a beneficial holder, you must obtain a “legal proxy” from your broker, bank or other nominee to participate in and vote during the Annual Meeting. Upon completing registration, participants will receive further instructions via email that will allow them to access the meeting.

Even if you plan to attend the virtual Annual Meeting, we encourage you to vote your shares on the WHITE proxy card TODAY by Internet or mail to ensure that your votes are counted at the Annual Meeting.

A proxy is your legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. Our Board has designated [•] and [•] as the Company’s proxies for the Annual Meeting.

Each proxy or voting instruction card represents the shares registered to you as of the close of business on the Record Date. You may receive more than one proxy or voting instruction card if you hold your shares in multiple accounts, some of your shares are registered directly in your name with the Company’s transfer agent, or some of your shares are held in street name through a broker, bank or other nominee. Please vote the shares on each WHITE proxy card or voting instruction card to ensure that all of your shares are counted at the Annual Meeting.

Yes. If your shares are registered directly in your name, you may change your vote or revoke your proxy by:

If your shares are held in street name, you should contact your broker, bank or other nominee directly to change your vote or revoke your proxy.

If you have previously submitted a green proxy card sent to you by JANA, you may change your vote by completing, signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided, or by voting via the Internet or by following the instructions on the WHITE proxy card. Please note that submitting a green proxy card sent to you by JANA will revoke votes you have previously made via the Company’s WHITE proxy card.

Only holders of record of our Common Stock at the close of business on August 18, 2023, which is the Record Date, will be entitled to receive notice of, to attend, and to vote at the Annual Meeting. At the close of business on the Record Date, [•] shares of our Common Stock were outstanding and eligible to be voted. Holders of the Company’s Common Stock are entitled to one vote for each share held as of the Record Date. Cumulative voting is not permitted in the election of directors.

The deadline for voting by Internet is 11:59 p.m. Eastern Time on October [•], 2023. Votes cast by mail must be received no later than the start of the Annual Meeting. If you attend the Annual Meeting, you may vote your shares electronically during the meeting.

We encourage stockholders to vote and submit their proxy in advance of the Annual Meeting by one of the methods described in the proxy materials, regardless of whether you think you will be able to attend the Annual Meeting. Any votes submitted after the closing of the polls at the Annual Meeting will not be counted.

Freshpet is incorporated in the State of Delaware. As a result, the Delaware General Corporation Law (the “DGCL”) and our Bylaws govern the voting standards applicable to actions taken by our stockholders. The holders of a majority in voting power of all issued and outstanding stock entitled to vote at the Annual Meeting, present at the Annual Meeting or represented by proxy, will constitute a quorum for the transaction of business at the Annual Meeting, and business may not be conducted at the Annual Meeting unless a quorum is present. If there are not sufficient shares present or represented by proxy at the Annual Meeting to constitute a quorum for approval of any matter to be voted upon, the Annual Meeting may be adjourned to permit further solicitation of proxies in order to achieve a quorum. Abstentions or withheld votes and “broker non-votes” (described below) are counted as shares present and entitled to vote for the purpose of determining whether a quorum is present.

Under our Bylaws, when a quorum is present at any meeting of stockholders, in all matters other than the election of directors, the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter is required to approve such matter, subject to certain exceptions governed by law or regulation, such as the DGCL.

Pursuant to our Bylaws, an election of directors is considered to be “contested” if, in connection with the Annual Meeting, the Secretary of the Company has received one or more notices that a stockholder has nominated or proposed to nominate a person or persons for election as a director, which notice(s) purport(s) to be in compliance with the advance notice requirements set forth in our Bylaws, and as of the date that is 14 days in advance of the date that the Company files its definitive proxy statement with the U.S. Securities and Exchange Commission (the “SEC”), such notice has not been formally and irrevocably withdrawn by such stockholder. Because an affiliate of

JANA has submitted such a notice of nomination and had not formally and irrevocably withdrawn its notice as of [•], 2023 (14 days in advance of the Company’s filing of its definitive proxy statement), the election of directors at this year’s Annual Meeting will be conducted by a plurality of the votes cast.

OUR BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF EACH OF OUR BOARD’S NOMINEES ON PROPOSAL 1 AND “FOR” PROPOSALS 2 AND 3 USING THE ENCLOSED WHITE PROXY CARD.

If your shares are held in “street name” (that is, held for your account by a broker, bank or other nominee), you will receive voting instructions from your broker, bank or other nominee. If you are a street name holder and your shares are registered in the name of a broker, the New York Stock Exchange rules applicable to brokers who have record ownership of listed company stock (including stock such as ours that is listed on The Nasdaq Global Market) determine whether your broker may vote your shares in its discretion even if it does not receive voting instructions from you. If you are a street name holder and a broker provides you with competing proxy materials from JANA (in addition to the Company’s proxy materials), none of the matters before the Annual Meeting will be considered discretionary, and therefore the broker may not vote your shares with respect to any of the proposals to be voted on at the Annual Meeting unless you provide the broker with voting instructions. These “broker non-votes” will be included in the calculation of the number of votes considered to be present at the meeting for the purpose of determining a quorum, but will not be counted in determining the number of shares necessary for the approval of the proposals.

The shares represented by any WHITE proxy card that is properly completed, executed and received by the Company prior to or at the Annual Meeting will be voted in accordance with the specifications made on the card, whether it is returned by mail or Internet.

If you return a validly executed and dated WHITE proxy card without indicating how your shares should be voted on a matter and you do not revoke your proxy, your proxy will be voted: “FOR” the election of all four director nominees recommended by our Board as set forth on the WHITE proxy card (Proposal 1); “FOR” the ratification of the appointment of KPMG as our independent registered public accounting firm for fiscal year 2023 (Proposal 2); and “FOR” the approval, on an advisory basis, of the compensation paid to our named executive officers, as disclosed in this Proxy Statement (commonly known as a “Say-on-Pay resolution”) (Proposal 3).

Our Board is not aware of any matters that are expected to come before the Annual Meeting other than those described in this Proxy Statement. If any other matter is presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all WHITE proxy cards received by the Company will be voted with respect thereto at the discretion of the persons named as proxies on the enclosed WHITE proxy card.

No. If you are a registered stockholder of record (i.e., you own your shares directly on the books of the Company’s transfer agent, Computershare, and not through a broker) and you do not cast your vote, no votes will be cast on your behalf on any of the items of business at the Annual Meeting.

If your shares are held in more than one account, you will receive more than one universal WHITE proxy card, and in that case, you can and are urged to vote all of your shares by completing, signing, dating and returning all universal WHITE proxy cards you receive from the Company in the postage-paid envelope provided. If you choose to vote via the Internet, please vote using each universal WHITE proxy card you receive to ensure that all of your shares are voted. Only your latest dated proxy for each account will count. Please sign each proxy card exactly as your name or names appear on the proxy card. For joint accounts, each owner should sign the proxy card. When signing as an executor, administrator, attorney, trustee, guardian or other representative, please print your full name and title on the proxy card.

If JANA proceeds with its previously announced proxy solicitation, the Company will likely conduct multiple mailings prior to the Annual Meeting to ensure stockholders have the Company’s latest proxy materials to vote.

The Company will send you a new universal WHITE proxy card with each mailing, regardless of whether you have previously voted. We encourage you to vote every WHITE proxy card you receive. The latest dated proxy you submit will be counted, and, if you wish to vote as recommended by our Board, then you should only submit WHITE proxy cards.

You may receive proxy solicitation materials from JANA. Our Board strongly urges you NOT to sign or return any green proxy card sent to you by JANA. While you may vote for the Company’s Nominees on either the Company’s proxy card or JANA’s proxy card, we still strongly encourage you to use the universal WHITE proxy card to vote your shares, regardless of how you intend to vote.

If you have previously submitted a proxy card sent to you by JANA, you can revoke it and vote “FOR” each of the director nominees recommended by our Board by completing, signing, dating, and returning the enclosed WHITE proxy card in the postage-paid envelope provided, or by following the instructions on the WHITE proxy card to vote via the Internet. Only the latest validly executed proxy that you submit will be counted, and any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described above. If you attend and validly vote at the Annual Meeting, your previously submitted proxy will not be used.

Our Board unanimously recommends using the enclosed universal WHITE proxy card to vote “FOR” each of our Board’s four nominees. Our Board recommends that you DISREGARD any green proxy cards that you may receive.

There are four seats on the Board up for election at the Annual Meeting.

The Board currently has 10 members divided into three classes with staggered terms. As part of the Company's previously announced governance reforms, which are discussed in more detail beginning on page [•] of this Proxy Statement, the Company is in the process of declassifying the Board, which will be complete by 2025. This year, the Class III directors of the Board are up for election, the Class having previously been elected to a three-year term at our 2020 annual meeting of stockholders (the “2020 Annual Meeting”). One of the Class III directors, David J. West, joined our Board on July 21, 2023, upon the retirement of former Class III director and Board Chair Charles A. Norris. For more information on the Board of Directors, please see “Board of Directors” on page [•] of this Proxy Statement.

Consistent with the requirements of the Company’s Sixth Amended and Restated Certificate of Incorporation (its “Certificate of Incorporation”) that the classes of directors be as nearly equal in size as is practicable, upon his appointment on May 17, 2023, David B. Biegger was added to Class I, which only had two directors prior to his appointment to the Board (whereas Class II and Class III each had four directors). Because only Class III directors are up for election this year, David B. Biegger is not up for election at the 2023 Annual Meeting, but will instead stand for election next year at the 2024 annual meeting of stockholders (the “2024 Annual Meeting”).

This approach to balancing our Board’s classes is consistent with the requirements of our Certificate of Incorporation. Once Freshpet finishes the process of declassifying its Board, all directors will be up for election at the 2025 Annual Meeting and each year thereafter.

The Company first became aware of JANA’s investment in Freshpet on September 22, 2022, when JANA publicly disclosed both its ownership interest and its agreement with three individuals to be nominated as directors at the 2023 Annual Meeting. In the interest of resolving JANA’s campaign and avoiding continued distraction, the Company had initially announced that the 2023 Annual Meeting would be held in July to allow stockholders to express their views on an expedited basis. However, JANA commenced litigation challenging the timing of the meeting and the placement of the directors, which made holding the Annual Meeting in July unfeasible. As a result, the Company announced that it would postpone the 2023 Annual Meeting to a date in October, a similar time period as last year.

While this postponement was not required, the Board decided that the postponement would be the most practical path forward in light of JANA’s actions. For more information, please see “Background to the Solicitation” on page [•] of this Proxy Statement.

Stockholders are encouraged to submit their votes on the universal WHITE proxy card. If JANA withdraws or abandons its solicitation or fails to comply with the universal proxy rules after a stockholder has already granted proxy authority, stockholders can still sign and date a later submitted universal WHITE proxy card. If JANA withdraws or abandons its solicitation or fails to comply with the universal proxy rules, then any votes cast in favor of JANA’s Nominees will be disregarded and not be counted, whether such vote is provided on the Company’s universal WHITE proxy card or on JANA’s green proxy card.

The SEC recently adopted Rule 14a-19 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), commonly referred to as the “universal proxy rules,” requiring the use of a universal proxy card in contested director elections that take place after August 31, 2022. This means that all of the Company’s nominees and any dissident nominees will be listed on each proxy card that is sent to stockholders in connection with a contested meeting. Stockholders may vote for nominees from either or both of the Company’s slate and the dissident slate, but in any event may not vote for more nominees than there are seats available to be filled. Even though we are required to include the JANA Nominees on our universal WHITE proxy card, it does not mean that we recommend voting for them. Your Board is ONLY recommending that stockholders vote for the four Company Nominees, Olu Beck, William B. Cyr, Leta D. Priest and David J. West.

Because an affiliate of JANA has provided notice of its intent to nominate candidates for election to the Board at the Annual Meeting, this year’s director elections are considered contested, and a universal proxy card will be used. While you may vote for the Company’s nominees on either the Company’s proxy card or JANA’s proxy card, we still strongly encourage you to use the universal WHITE proxy card to vote your shares, regardless of how you intend to vote.

An “over-vote” occurs when a stockholder submits more votes “FOR” director nominees than there are Board seats up for election. To the extent an over-vote (e.g., voting “FOR” with respect to more than four nominees on Proposal 1) occurs on a record holder’s universal proxy card and it is not corrected, all of such record holder’s votes on Proposal 1 regarding nominees will be invalid and will not be counted. In addition, depending on the broker, bank, or other nominee through which you hold your shares, your votes on all other proposals before the Annual Meeting may also be invalid and not counted. We encourage you to vote by Internet to avoid an “over-vote.”

An “under-vote” occurs when a stockholder submits fewer votes “FOR” director nominees than there are director seats up for election. To the extent an under-vote (i.e., voting “FOR” with respect to fewer than four nominees on Proposal 1) occurs on any stockholder’s universal proxy card, your shares will only be voted “FOR” those nominees you have so marked and “WITHHOLD” for the other nominees. We encourage you to vote by Internet to avoid an “under-vote.”

The Annual Meeting will be held in a virtual-only format. You are entitled to participate in the Annual Meeting only if you were a holder of Common Stock as of the close of business on the Record Date, or your authorized representative or you hold a valid proxy for the Annual Meeting. Stockholders must pre-register in order to attend and vote by ballot at the Annual Meeting. Please see the section below “How do I participate in the Annual Meeting?” for instructions about how to pre-register.

Even if you plan to attend the Annual Meeting, please vote using the procedures described on your WHITE universal proxy card as soon as possible so that your vote will be counted if you later are unable or decide not to attend the Annual Meeting.

The Annual Meeting will be held online via a live webcast at [•]. You may only participate in the virtual Annual Meeting by registering in advance at [•] prior to the deadline of [•] Eastern Time on [•], 2023. Please have your voting instruction form, proxy card or other communication containing your 8-digit control number available and follow the instructions to complete your registration request. If you are a beneficial holder, you must obtain a “legal proxy” from your broker, bank or other nominee to participate in and vote during in the Annual Meeting. Upon completing registration, participants will receive further instructions via email that will allow them to access the meeting.

Stockholders may log into the meeting platform beginning at [•] Eastern Time on October [•], 2023. We encourage you to log in prior to the meeting start time. We will have a support team ready to assist attendees with any technical difficulties they may have accessing or hearing the audio webcast of the meeting.

Additional information and our proxy materials can also be found at [•]. If you have any difficulty following the registration process, please email FRPT@investor.morrowsodali.com or call (800) 662-5200.

Yes. We expect that members of the Board and management, as well as representatives of our independent registered public accounting firm, KPMG, will attend the Annual Meeting and be available to answer stockholder questions. We will provide our stockholders the opportunity to ask questions. Questions submitted during the meeting pertinent to meeting matters will be answered during the meeting, subject to time constraints. Instructions for submitting questions and making statements will be posted on the virtual meeting website. This question and answer session will be conducted in accordance with certain Rules of Conduct. These Rules of Conduct will be posted on our investor relations website prior to the date of the Annual Meeting, and may include certain procedural requirements.

We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during check-in or during the Annual Meeting, please call the technical support number that will be posted in the virtual meeting reminder email sent the day prior to the Annual Meeting. We encourage you to access the virtual meeting prior to the start time.

A representative from [•] will count the votes and serve as the independent inspector of election for the Annual Meeting.

We will report the voting results of the Annual Meeting in a Current Report on Form 8-K filed with the SEC within four business days following our Annual Meeting, a copy of which will also be available on our website at investors.freshpet.com.

No. Delaware law does not provide stockholders any dissenters’ or appraisal rights with respect to the matters to be voted on at the Annual Meeting.

A copy of our proxy materials, as filed with the SEC, is available, without charge, by mailing a request to Investor Relations, Freshpet, Inc., 400 Plaza Drive, 1st Floor, Secaucus, NJ 07094, Attention: Corporate Secretary. The proxy materials are posted on our website at investors.freshpet.com and are available free of charge from the SEC at its website, www.sec.gov.

If you have any questions or need any assistance in voting your shares, please contact our proxy solicitor:

 

 

In 2020, the Board began implementing Freshpet’s “Commitment to Good Corporate Governance: 2020 to 2025 Roadmap” plan, which was developed in part based on feedback received from a broad range of stockholders. For more information on this plan, please see page [•] of this Proxy Statement.

In 2021, as part of the aforementioned plan, the Board adopted a director retirement policy, which provides that non-employee directors will not be nominated for re-election to the Board after reaching age 75. Also in 2021, then-director and Chair of the Board Charles A. Norris, who had been elected to the Board in 2020 for a term ending in 2023, turned 75. As a result, Mr. Norris would not be eligible for nomination to the Board at the Annual Meeting in accordance with the Company’s director retirement policy. During conversations with stockholders, Mr. Norris acknowledged that a consequence of the new policy would be his departure from the Board when his term expired.

In the spring of 2022, the Board began its most recent board refreshment cycle with the goal of enhancing the Board’s composition in early 2023. The Board engaged a nationally recognized, independent third-party search firm to assist in the identification and evaluation of potential director candidates.

On September 7, 2022, the Company announced several organizational changes designed to enhance its capabilities and support its long-term growth objectives. These leadership changes included:

On September 22, 2022, prior to the Company’s 2022 Annual Meeting and more than twelve months prior to the Annual Meeting, JANA, Diane Dietz, James Lillie, Timothy R. McLevish and other reporting persons filed a Schedule 13D (the “Schedule 13D”) with the SEC disclosing their beneficial ownership of 9.6% of the Company’s outstanding Common Stock and that JANA had identified three director candidates, Ms. Dietz, Mr. Lillie and Mr. McLevish, who had each agreed to become a JANA nominee for election to the Board at the Annual Meeting. JANA stated its intent to have discussions with Company management regarding a possible sale of the Company, Board composition and other governance matters and various other topics. The Company was not aware of JANA’s investment prior to JANA filing the Schedule 13D.

On September 30, 2022, Barron’s published a story detailing JANA’s interest in speaking with Company management. Citing “two people familiar with the situation,” the article asserted that the Company had hired bankers in response to JANA’s pressure on the Company to sell itself.

On October 3, 2022, the Company held its 2022 Annual Meeting.

On October 13, 2022, Craig D. Steeneck, a member of the Board, William B. Cyr, the Company’s CEO, Scott Morris, the Company’s President and COO, and Mr. Kassar had an initial conversation with Scott Ostfeld, Kevin Galligan, and other individuals from JANA. JANA’s overwhelming focus in the conversation was its demand that the Company initiate a strategic review with the goal of selling the entire Company, with JANA going so far as to identify potential buyers, with commentary on each of them. When asked what sale price would be acceptable, JANA stated that they would be pleased with a sale price in the high $70s per share and referenced what they believed were precedent situations at 7x sales, which would equate to a sales price for the Company in the high $70s per share. JANA indicated that it would permit the Company a few weeks to initiate such a process or else it would increase the pressure on the Company to do so.

On November 1, 2022, the Company announced the appointment of Todd Cunfer as Chief Financial Officer, effective December 1, 2022, and the appointment of Dirk Martin as Vice President of Customer Service & Logistics, effective December 7, 2022.

On November 3, 2022, Mr. Cyr and Mr. Kassar had a conversation with Mr. Ostfeld and other representatives of JANA after the Company’s earnings call for the third quarter of 2022. Mr. Cyr and Mr. Kassar discussed the Company’s recent earnings results and stated that the Board was in the process of considering JANA’s perspectives.

In December of 2022, with the assistance of the director search firm, the Board identified David B. Biegger and David J. West as two potential director candidates. Mr. Biegger indicated that he would be available to join the Board immediately. Mr. West indicated he would not be available until such time that he no longer served as CEO and chairman of the board of Conyers Park III Acquisition Corp. (“Conyers Park”), a special purpose acquisition company that was ultimately dissolved in July 2023.

On December 9, 2022, JANA filed an amendment to its Schedule 13D disclosing sales of the Company’s Common Stock resulting in a decrease in ownership to 8.6% of the Company’s Common Stock and that Kurt T. Schmidt had been added as a potential JANA nominee for election to the Board at the Annual Meeting.

On December 14, 2022, Mr. Cyr and Mr. Ostfeld had a discussion about JANA’s recent Schedule 13D filing. During this discussion, Mr. Cyr asked if JANA had identified its final candidates for election to the Board at the Annual Meeting. Mr. Ostfeld responded that JANA might include a JANA representative.

During the CAGNY 2023 Conference of the Consumer Analyst Group of New York, which took place between February 20, 2023 and February 24, 2023, Mr. Cyr and Mr. Cunfer had conversations with Mr. Ostfeld regarding the Company and its industry, including the recently announced launch of a new competitive product from General Mills.

On February 26, 2023, the Board decided that Mr. Biegger should be appointed to the Board as soon as possible and intended to appoint Mr. West later in the year if and when he became available. While the Board could appoint Mr. Biegger immediately, given ongoing discussions with JANA, the Board decided to delay Mr. Biegger’s appointment in order to potentially include his appointment as part of a comprehensive settlement with JANA.

On February 27, 2023, the Company released its financial results for the fourth quarter of and full year 2022. In conversations with stockholders, the Company revisited prior comments about the importance of raising funds as part of its capacity expansion plan, and stockholders asked how this would be executed. During these conversations, Mr. Cunfer emphasized that the Company was focused on finding a path to raise capital and strengthen its balance sheet in a cost-efficient way.

On March 2, 2023, Mr. Cyr and Mr. Cunfer had a discussion with Mr. Ostfeld and Mr. Galligan about the Company’s earnings results and guidance. Mr. Galligan inquired whether the Company was considering a convertible debt offering and stated that such an offering would not be acceptable to JANA. Mr. Cunfer emphasized that the Company was focused on finding a path to strengthen its balance sheet in a cost-efficient way and was not ruling anything out. Mr. Galligan responded, “That is what I was afraid you were going to say.” Mr. Ostfeld then reemphasized to Mr. Cunfer and Mr. Cyr that JANA was opposed to such a financing.

After the market closed on March 14, 2023, the Company announced a proposed convertible senior notes offering designed to raise capital to fund the Company’s capacity expansion plan. Based on input from numerous leading financial experts, the Company was confident that the offering would be successful and was the most cost-efficient and expeditious method to raise financing at that time. The Company believed that it was important to conduct the offering as planned and at that time due to the emerging volatility related to Silicon Valley Bank, since the convertible market remained strong and there was risk that the issues at Silicon Valley Bank could worsen or spread to other regional banks which, combined with increasing interest rates, could make a financing more difficult or more expensive for the foreseeable future.

Later on March 14, 2023, Mr. Cyr and Mr. Cunfer reached out to Mr. Ostfeld. During the call, Mr. Ostfeld expressed outrage in a highly unprofessional and combative manner at the Company’s decision to launch the convertible note offering and demanded that the Company downsize the offering. Mr. Ostfeld specifically stated that “The gloves are coming off” and “We are going to war.”

Before the market opened on March 15, 2023, JANA issued a press release in response to the convertible note offering, noting that JANA was “astonished,” characterizing the offering as “ill conceived,” and asserting that the Board “failed to anticipate the terrible market response to this announcement.” JANA went on to state its belief that the offering was evidence that “Freshpet requires either significant board change, or in the absence of such change, should be sold.”

Later on March 15, 2023, various members of management discussed with other investors the Company’s rationale for the convertible note offering versus other financing alternatives and the favorable terms that were available, including an effective conversion price of $120 per share. The offering was substantially oversubscribed by traditional convertible investors as well as long-only investors, including several large stockholders of the Company. At the end of trading on March 16, two days after the announcement of the convertible note offering, the Company’s Common Stock closed approximately 6.7% higher than the closing price immediately before the offering was announced.

On March 16, 2023, Mr. Ostfeld called Mr. Cyr and Mr. Cunfer separately to discuss the convertible note offering. Mr. Ostfeld acknowledged the success of the offering, congratulated Mr. Cyr and Mr. Cunfer on the execution of the offering and apologized for his prior behavior.

On March 22, 2023, Mr. Steeneck had a conversation with Mr. Ostfeld regarding the convertible note offering. Mr. Steeneck suggested that the Company and JANA could execute a non-disclosure agreement in order to allow the parties to share information that might facilitate a settlement. The parties agreed that their respective legal counsels should discuss next steps.

On March 23, 2023, a representative of Sidley Austin LLP (“Sidley”), the Company’s outside legal counsel, spoke with JANA’s chief legal officer, to begin a series of discussions regarding a potential non-disclosure agreement and paths to a settlement.

On March 31, 2023, Mr. Steeneck, Mr. Cyr and Walter N. George III, then Chair of the Nominating, Governance and Sustainability Committee of the Board, met with Mr. Ostfeld and other representatives of JANA to discuss possible paths toward a settlement agreement, stressing the need to move quickly. Mr. George indicated that as part of its regular refreshment efforts, and with the support of a nationally-recognized director search firm, the Board had identified two strong director candidates, and offered JANA the opportunity to speak with the candidates. The parties also discussed Mr. Norris’ expected departure from the Board in accordance with the previously disclosed age-limit policy and the naming of a new Chair upon his departure. The Company was aware that Mr. Ostfeld was familiar with the two candidates and their credentials and was confident that JANA would find them to be high quality additions to the Board.

On April 12, 2023, the Company hosted an investor event that included a tour of the Company’s new manufacturing facility in Ennis, Texas and discussions with management. A representative of JANA was invited and attended the event.

On April 14, 2023, the Company and JANA executed a non-disclosure agreement.

On April 17, 2023, Mr. George, Mr. Steeneck and Mr. Cyr spoke with Mr. Ostfeld and Mr. Galligan to continue discussions about a potential settlement.

During the week of May 1, 2023, JANA had one-on-one conversations with each of Mr. Biegger and Mr. West. JANA expressed enthusiasm and support for the appointment of both candidates to the Board, expressing that Mr. West in particular would unquestionably be an exceptional addition. JANA was made aware that Mr. West was unavailable to be appointed immediately, but that he would become available to be appointed to the Board upon the dissolution of Conyers Park.

On May 11, 2023, Mr. George, Mr. Steeneck, and Mr. Cyr had another call with Mr. Ostfeld and Mr. Galligan, where the Company representatives reiterated the Company’s interest in a settlement based on the appointment of the two aforementioned director candidates, among other things. The Company stressed again the need to determine promptly whether an amicable agreement could be achieved in the near term. JANA again expressed support for the Company’s two aforementioned director candidates, Mr. Biegger and Mr. West, being added to the Board.

However, JANA also demanded that the Board appoint two JANA-designated nominees, one of whom had to be Mr. Ostfeld (for a total of four new director appointments), and that two incumbent directors resign from the Board. Further, JANA wanted input into the identification of the new Chair of the Board following Mr. Norris’ retirement pursuant to the director retirement policy.

On May 12, 2023, Mr. Steeneck had a call with Mr. Ostfeld to state that JANA’s demands were not acceptable and not in the best interest of the Company and its stockholders. Mr. Ostfeld responded that, in his experience, companies typically need to feel increased pressure of an impending proxy contest before they concede to JANA’s demands and suggested that the parties resume discussions at a later time. JANA indicated that the Company should feel free to appoint Mr. Biegger and Mr. West on its own timeline.

After nine months of engagement with JANA, which had become a significant distraction for the Company, and no clear path toward settlement, the Board determined that the Annual Meeting would be held in late July, approximately two months earlier than the anniversary of last years’ annual meeting, which would provide stockholders an earlier opportunity to vote on the candidates up for election and express their perspectives on JANA’s demands.

On May 16, 2023, the Board took action to appoint Mr. Biegger to the Board. In light of the Company’s Certificate of Incorporation, which requires that director classes be as nearly equal in size as is practicable, the Board appointed Mr. Biegger to Class I of the Board, which had only two directors at that time.

On May 17, 2023, the Company announced the appointment of Mr. Biegger to the Board and the appointment of Mr. George as Chair of the Board (effective as of the Annual Meeting), and disclosed that the Annual Meeting would be held on July 25, 2023. The Company also formally confirmed that, pursuant to the Company’s director retirement policy adopted and disclosed two years prior, Mr. Norris would not be standing for re-election. Shortly after the announcement, Mr. Cyr called Mr. Galligan to ask if JANA had any questions about the announcement and to reiterate that the Company remained open to an amicable resolution with JANA. Mr. Cyr offered to send JANA a copy of the director questionnaire if JANA was still interested in making nominations.

Also on May 17, 2023, JANA’s outside legal counsel requested a copy of the director questionnaire and representation agreement required by the Company’s Bylaws for any director candidate nominated by a stockholder, which was provided the following day.

On May 24, 2023, the Company received inquiries from a media source regarding a potential letter that JANA planned to issue publicly. Later that day, JANA amended its Schedule 13D, disclosing purchases of the Company’s Common Stock resulting in an increase in ownership to 9.0% of the Company’s Common Stock, and issued a press release disclosing its letter and announcing its intent to nominate four directors to the Company’s Board.

Also on May 24, 2023, the Company issued a statement in response to JANA’s press release.

On May 25, 2023, JANA sent a letter to Sidley and issued a press release alleging that the actions taken by the Board and announced on May 17, 2023 breached the Board’s fiduciary duties. In particular, JANA objected to the fact that the Company had announced that there would only be three seats up for election at the Annual Meeting due to Mr. Norris not standing for re-election, despite this outcome being the natural consequence of the director resignation policy adopted in 2021, as acknowledged by Mr. Norris at the time of its adoption.

Also on May 25, 2023, JANA delivered notice to the Company of its intent to nominate three director candidates, Diane Dietz, Timothy R. McLevish and Scott Ostfeld, to the Board, and identified a fourth candidate, Kurt T. Schmidt, to serve as an alternate in the event that the Board were to increase the size of the Board to elect more than three directors at the Annual Meeting or if more than three directors were to be elected at the Annual Meeting for any other reason.

On May 30, 2023, JANA filed an amendment to its Schedule 13D to include details of the nominations.

Also on May 30, 2023, JANA issued a press release criticizing the Company for not broadly publicizing the Record Date of the Annual Meeting, despite the fact that the Company’s actions were customary practice and the Record Date would be disclosed in the preliminary Proxy Statement.

Also on May 30, 2023, the Company sent a letter to JANA’s counsel and issued a press release refuting the allegations set forth in JANA’s May 25, 2023 letter. The Company noted, among other things, that Mr. Norris’ retirement was a consequence of the Company’s director retirement policy announced in 2020 and adopted in 2021, and that Mr. Biegger’s appointment was supported by JANA and his placement into Class I was required by the Certificate of Incorporation.

On June 1, 2023, JANA filed a complaint (the “Complaint”) against the Company and the members of the Board in the Court of Chancery of the State of Delaware. The Complaint alleged that the Company’s directors violated their fiduciary duties by moving the date of the Annual Meeting to July and reducing the number of seats in Class III of the Board from four to three in connection with Mr. Norris’ retirement. JANA asked the court to compel the Company to open four seats for election at the Annual Meeting. JANA further demanded a trial to be conducted before the Annual Meeting, which would result in several members of the Board and management team spending most of their time in the weeks leading up to the Annual Meeting in depositions and preparing for this trial rather than communicating with stockholders.

On June 2, 2023, the Company filed a preliminary version of this Proxy Statement with the SEC, and JANA filed a preliminary proxy statement with the SEC.

Also on June 2, 2023, the Company announced that J. David Basto had resigned from the Board effective May 31, 2023 due to other professional obligations, and that the size of the Board had accordingly been decreased.

Also on June 2, 2023, Mr. George, Mr. Steeneck and Mr. Cyr had a call with Mr. Ostfeld regarding a possible settlement. During the conversation, Mr. Steeneck asked if the Company could interview JANA’s three independent director nominees with the goal of appointing one of them to the Board as part of a settlement agreement. Mr. George indicated that the Company was prepared to move expediently to do so. Mr. Ostfeld did not agree to do so and instead was apparently focused on his appointment to the Board. During the call, Mr. Ostfeld claimed, “Every company wants me on their board. The fact that you don’t makes me wonder why.”

On June 5, 2023, Mr. Steeneck, Mr. George and Mr. Cyr had a call with Mr. Ostfeld and Mr. Galligan regarding JANA’s response to the Company’s latest offer. JANA refused the Company’s offer to interview their independent director candidates and did not present any counteroffer.

On June 6, 2023, the Company announced that the Annual Meeting would be postponed to a date in October 2023 and that four Class III director seats would be up for election at the Annual Meeting, an increase from the previously announced three. The Company believed that JANA’s lawsuit rendered the earlier timing for the Annual Meeting unfeasible. In addition, the Company had already identified its fourth candidate (Mr. West), who was already interviewed by JANA and described by JANA as “an extremely strong candidate.”

Also on June 6, 2023, Mr. Ostfeld sent Mr. West an email making unfavorable allegations about the Company in an apparent attempt to discourage Mr. West from joining the Board.

On June 8, 2023, JANA filed a revised preliminary proxy statement with the SEC.

On June 16, 2023, the Company and JANA agreed to the dismissal of JANA’s lawsuit.

Hours after the dismissal, on June 16, 2023, JANA sent the Company a books and records demand letter pursuant to Section 220 of the Delaware General Corporation Law (the “Conflicts Demand”) demanding that JANA be provided a broad range of information, including information regarding purported conflicts of interest involving the Company’s personnel. Over the next several weeks, counsel for the Company and JANA corresponded several times regarding scope of the materials that the Company would provide, and the Company provided such materials.

On June 30, 2023, JANA’s legal counsel also contacted the Company’s counsel demanding that the Company reimburse JANA for its expenses of approximately four hundred thousand dollars in connection with bringing the lawsuit against the Company (the “Fee Demand”) due to the purported benefit that JANA’s lawsuit had provided to the Company and its stockholders.

On July 20, 2023, Mr. West became available for appointment as a director of the Company.

On July 21, 2023, the Company announced the appointment of Mr. West as a Class III director and the Company’s fourth director nominee for election at the Annual Meeting, effective immediately. The Company disclosed that Mr. West was replacing Mr. Norris (who was retiring immediately) as a Class III director, and that, accordingly, Mr. West would stand for election at the Annual Meeting. The Company also announced that Mr. George had assumed the role of Chair of the Board, effective immediately.

On July 27, 2023, Sidley sent JANA’s legal counsel an email regarding the Fee Demand, expressing disagreement with the proposition that the Complaint conferred any corporate benefit, as opposed to specifically benefitting JANA and its proxy contest. Over the next few weeks, legal counsel for both parties corresponded regarding the Fee Demand. The Company asserted that there was no benefit to the Company or its stockholders for the “opportunity” provided by JANA to stockholders to vote against the candidacy of Mr. West, a candidate for which JANA itself has expressed unreserved enthusiasm, due to Mr. West’s impeccable qualifications, experience and value he brings to the Company.

On August 7, 2023, the Company released its financial results for the second quarter of 2023.

Later on August 7, 2023, Mr. Cyr and Mr. Cunfer had a discussion with Mr. Ostfeld and Mr. Galligan about the Company’s earnings results and guidance.

On August 9, 2023, JANA filed an amendment to its Schedule 13D, disclosing sales of the Company’s Common Stock resulting in a decrease in ownership to approximately 7.5% of the Company’s Common Stock.

On August 11, 2023, the Company filed a revised preliminary version of this Proxy Statement with the SEC.

Our Board and management value and rely upon our stockholders’ perspectives. To help ensure we understand and focus on the priorities that matter most to our stockholders, our directors and senior management proactively conduct thorough and extensive investor outreach throughout the year. In addition to discussing business results and initiatives, strategy, and capital structure, we engage with investors on various other matters integral to our business and the Company, such as governance practices, executive compensation and sustainability.

Since last year’s annual meeting, we have met and engaged directly with stockholders holding approximately 84% of our outstanding Common Stock. We also met with analysts who cover our Company and leading proxy advisors who serve our investors. We presented at six industry conferences, held seven non-deal road shows, and hosted numerous investors on tours of the Freshpet Kitchens, where investors and analysts heard presentations from our senior management about all aspects of our business (which presentation materials were also made available to our stockholders generally through our filings with the SEC and on the “Investors” section of our website at investors.freshpet.com). Our Board and management carefully consider and evaluate feedback received during these meetings. Additionally, in response to the Say-on-Pay results (97.2% approval) at our 2022 annual meeting of stockholders (the “2022 Annual Meeting”), management and the Board have continued to focus their discussions with stockholders on executive compensation. In response to those discussions, the Compensation Committee has added an Environmental, Social, and Governance (“ESG”) goal as a key part of the executive officers’ annual bonus calculation to both further distinguish the annual incentives from the long-term incentives and to ensure commitment to the ESG goals.

Additionally, our independent directors continued to be closely and directly involved in our investor engagement efforts. Specifically, over the past eight months, our directors held outreach discussions with stockholders representing approximately 50% of our outstanding shares, and additional outreach is underway. The Compensation Committee met with many of our core stockholders and considered their feedback, as well as the commentary from Glass Lewis and ISS, and committed to not grant equity to the named executive officers in 2022 or 2023. Additionally, the Compensation Committee refocused the goals of the annual incentive plan to include an ESG metric.

The feedback we received in 2021, 2022 and early 2023 is described below and reflected in the governance changes we announced in 2020 and are continuing to implement.

Stockholders and other interested parties who would like to communicate with one or more members of the Board, a Board committee or the Chair of the Board may do so by writing to any such party at Freshpet, Inc., 400 Plaza Drive, 1st Floor, Secaucus, NJ 07094, Attention: Corporate Secretary. The Corporate Secretary will forward copies of all correspondence that, in the opinion of the Corporate Secretary, deals with the functions of the Board or its committees or that he or she otherwise determines requires the attention of any member, group or committee of the Board.

 

Freshpet was founded in 2006 with a single-minded mission to do right by pets, people and the planet, every step of the way from farm to fridge. In 2010, we welcomed a private equity investor who believed in our mission and the power of our platform, and subsequently went public in 2014. In addition to onboarding new directors with financial and industry expertise that we needed as a public company, we welcomed our current CEO, William B. Cyr, in 2016 to support the Board’s ambition to rapidly and strategically scale the business. Over the course of 2018 and 2019, our Board added three female directors, who brought deep expertise in retail, digital optimization and strategy to support our 2020 long-term plan. In May 2023, our Board added supply-chain expert David B. Biegger as a director, and in July 2023, our Board appointed pet food expert David J. West as a director concurrent with the retirement of longtime Chair Charles A. Norris. The Board’s commitment to regular refreshment and corporate governance best practices underlies our dynamic and thoughtful approach to oversight of our business and management.

The following graphic helps illustrate our history, progress and plans for the future.

 

Since our 2014 initial public offering (“IPO”), Freshpet’s market cap has grown from around $300 million to approximately $3.9 billion (as of August 7, 2023). As a young public company in pursuit of sizable long-term goals to disrupt the pet food industry, our IPO-related governance provisions provided protection from market volatility and helped ensure business continuity and organizational stability while our Board and management pursued long-term strategic goals and stockholder value creation.

While these governance provisions were critical to our success as a young public company, our Board recognized that some of these protections provided by our governance structure should be gradually phased out as we reach maturity. Concurrent with setting Freshpet’s strategic 2025 long-term plan, the Board has solicited valuable stockholder feedback to receive direct input as to how to best evolve Freshpet’s corporate governance.

In response, the Board has implemented a number of corporate governance updates aimed at allowing our Board and management to still focus primarily on the creation of sustainable value for our stockholders while also being responsive to our stockholders, employees and the communities in which we do business. Supporting that philosophy, we have adopted many leading corporate governance practices over the past several years, including the below.

 

 

We believe that corporate responsibility promotes the long-term interests of our stockholders and strengthens Board and management accountability, and Freshpet’s credo articulates our culture and commitment to best serve our pets, employees, customers, communities, and stockholders. Corporate responsibility at Freshpet is implemented from the most senior levels down to every one of our employees because we believe that how responsibly we run our business is intrinsically tied to achieving operational excellence.

Our Board’s primary duty of overseeing our corporate strategy includes the Board’s oversight of how ESG issues may impact the long-term interests of our stockholders and other stakeholders.

As part of overseeing our corporate strategy and our enterprise risk management program, our Board, acting through the Nominating, Governance and Sustainability Committee, monitors our ESG (including sustainability) practices. The Committee's responsibilities include oversight of our ESG activities, including ongoing carbon, water, and environmental matters, and particularly so with respect to facilities. We believe that environmentally and socially responsible operating practices go hand in hand with generating value for our stockholders. To further support our efforts in this area, we created a Sustainability Leadership Team, consisting of internal resources from critical functional groups and external advisors to address ESG factors that impact our business. Our Sustainability Leadership Team evaluated potential ESG opportunities relevant to our Company based on the views held by our stockholders and aspects of ESG frameworks including those established by the Carbon Disclosure Project (“CDP”) and Sustainability Accounting Standards Board (“SASB”). We recently released this year’s sustainability report, which is our most comprehensive yet, in July 2023. You can access a copy of the report at investors.freshpet.com/investors/corporate-governance/governance-highlights.

Commensurate with our materiality-focused ESG approach, our priority is developing a business that is focused on sustainability and the triple bottom line. We think of sustainability broadly, and as defined by our triple bottom line across three areas:

1.   Performing across key business metrics.

2.   Having a positive impact on society.

3.   Minimizing our impact on the environment.

At Freshpet, our mission is to create the very best foods that nourish the bond between pets and their parents, helping us both live longer, healthier, and happier lives. Achieving success while caring for our team members, our communities, and our planet is not only the right thing to do, it helps ensure the long-term sustainability of the Company. This ambitious mission drives us every day and was built into the Company by our founders from the very beginning. We call it “Nourishing Pets, People and Planet.”

For over a decade, we have been dedicated to our sustainability initiatives and have made significant progress moving to minimize our environmental impact on the world as we fulfill our mission to provide healthy fresh food for pets and pet parents. We are not perfect, but view ourselves as an industry leader in pet nutrition, sustainability, and growth.

In August 2021, we began publishing an annual sustainability report on our website (the “sustainability report”), and we published our most recent annual sustainability report in July 2023. Neither Freshpet’s website nor any sustainability report is a part of this Proxy Statement. Our website and sustainability reports provide further information on our sustainability efforts, including additional details on our efforts to Nourish Pets, People and Planet, such as:

Our goal is to make Freshpet the most sustainable pet food company in the world. Our commitment to nourishing Pets, People and Planet continues to expand with the following efforts undertaken since 2020:

In addition to the initiatives outlined above, we have added a strong corporate governance plan, centered with a diverse and independent Board. For more information on these initiatives, please see “—Freshpet’s Commitment to Good Corporate Governance: 2020 to 2025 Roadmap” on page [•] of this Proxy Statement. We began sharing our current structure and long-term governance plan in 2020, and we plan to continue to highlight our progress and future plans.

Our sustainability report includes full details on all of Freshpet’s sustainability efforts.

At Freshpet, our vision is to create a happier, healthier world where pets, people and the planet thrive. Our purpose, combined with a focus on delivering on our commitments, allows us to offer a differentiated value proposition to our employees – a place where you can do good and do well at the same time. We know that our people are our enduring advantage and we are obsessed in our mission to ensure that all people who touch Freshpet are better in some way. We strive to be the place where people love to work and we encourage everyone to grow, have fun and deliver on our vision. Our overall people strategy is designed to attract, develop and retain the best qualified employees to meet our business goals on an ongoing basis and to execute our growth strategy.

We do this through practices that promote inclusion, provide development opportunities for employees across the organization and provide competitive rewards and benefits. We also believe that having an engaged, diverse and committed workforce not only enhances our culture but also drives our business success.

As of December 31, 2022, Freshpet had employed 1,004 team members, an increase of approximately 26% from one year earlier, based across our three locations of Bethlehem, Pennsylvania, Secaucus, New Jersey and Ennis, Texas. In Europe, Freshpet has also employed seven employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement.

Our workforce consists of approximately 680 hourly production employees, 217 salaried and managerial employees in manufacturing, and 114 salaried and managerial employees in other functions, such as Marketing, Finance, Sales, Consumer Care, and other support and distribution roles.

In 2022, Freshpet achieved an engagement score of 78% with a total participation rate of 66%. Our Net Promoter score was 8.0. While this represents a 0.3 point decline from our previous survey (2020), we believe that the positive score continues to demonstrate our employees’ positive perception about the future of Freshpet and strong belief in our vision.

At Freshpet, our programs are designed to reward and support employees through competitive pay, creative incentive programs and generous benefits. We strive to ensure that our benefit offerings meet the evolving needs of our diverse workforce across all of our locations. In 2021, labor shortages driven by factors relating to the pandemic forced us to rethink our approach to attracting and retaining the right talent in the business. Freshpet rolled out a wage increase program that was closely tied to skills development and career progression. We wanted to ensure that our entry wages remained competitive, but also provided a clear path for career growth and progression. The program was designed to ensure that we build the right processing and packaging skills in our Freshpet Kitchens, while providing an accelerated path to higher wages and wealth creation through incremental stock grants. We believe that our approach to human capital management and workforce planning has become a competitive advantage for the Company, with clear improvements in the caliber of our new hires and the enhancements to our training which has resulted in reduced labor turnover and improvements in our safety standards, costs and quality. In 2022 the percentage of employees with tenure less than six months with the Company decreased by 41% from the prior year and retention of hourly employees with tenure greater than one year increased by 49%. This outstanding result has contributed significantly to the stability within the production workforce and impacted employee morale and productivity. In 2022 Freshpet also temporarily relocated and trained 114 hires from our Ennis facility to our Pennsylvania plant, providing them with the opportunity to work on the production lines and learn how to make the products while Ennis was under construction. This has enabled the Company to fast track the employee training and get employees ready ahead of a traditional start-up schedule. All of these improvements have led to a stronger, highly-skilled and engaged workforce.

To further strengthen the employer value proposition, Freshpet continues to evolve its benefits programs taking into consideration the changing needs of our employees.

To promote a strong culture of safety and prioritize keeping a safe working environment, we employ comprehensive health, safety and environment management policies and standards throughout the organization. In addition, we strive to continuously improve our work processes, tools, and metrics to reduce workplace injuries and enhance safety.

Since Freshpet's founding, safety has been ingrained in our culture. We have invested heavily in maintaining a safe and healthy workplace for our employees and take a proactive approach to ensuring that the work environment supports our “safety first” mission. The safety of our team members is a core value of our operation and will guide us to our goal of becoming a leader in team member safety. We continue to provide the services of bilingual on-site industrial athletic trainers who work with our team on health-related issues. This has become a popular and heavily-utilized resource for our team for both work-related and non-work-related issues.

In late 2022, we committed to a new “Safety Excellence” program that will drive employee engagement in the safety improvement process. This program formally kicked off in January of 2023 and has already resulted in significant improvements, as we have experienced the longest stretch without a lost-time injury since 2018, when we had significantly fewer team members.

The Freshpet team continues to monitor and evaluate injury rates, safety observations and near-misses, and takes proactive steps to ensure safety is paramount in all our planning. All of these efforts have led to a near 30% reduction in total reported incidents between 2021 and 2022.

We believe that a diverse workforce is critical to our success, and our goal is to create a culture where we provide equal and fair opportunities for all of our employees. Our values are reflected in our diverse workforce, and we believe that our competitive advantage lies in our diversity of thought, creativity in solving systemic problems, and strengthening our partnerships with pet-caring organizations and the communities in which we live. All employees have access to opportunities that enable them to contribute and grow. Our focus on diversity helps us connect with our consumers, attract and develop employees who are eager to leverage multiple perspectives to solve complex challenges, and innovate to allow Freshpet to remain competitive.

Our staff across all of our Freshpet locations reflect a diverse mix of approximately 54% white, 32% Hispanic, 9% African American, and 5% other ethnicities. Women represent 29% of our total employee population. At the Board level, of the nine non-executive members of the Board, three are women. One of the members of the Board is African American.

Freshpet offers a comprehensive collection of benefits designed to make Freshpet competitive within the talent pools from which it recruits. All Freshpet employees are eligible for the same benefits regardless of title. In order to incentivize and engage our workforce, Freshpet provides:

We also allow each employee to take home one package of Freshpet each day to feed their pet or the pet of someone close to them.

Freshpet aggressively recruits talent to fill our rapidly growing manufacturing operations. We have three full-time recruiters on staff who screen potential new hires and conduct their on-boarding training. We advertise on social media, billboards, and radio and use a variety of job referral services to attract the skilled labor we require.

To fill the increasing managerial roles arising from Freshpet’s growth, we also use third-party recruiters who are experts on what makes Freshpet unique and have a deep understanding of our culture and requirements. These recruiters have successfully helped us to fill a wide range of roles with a focus on increasing the diversity of our managerial ranks.

At the executive level, the Compensation Committee, together with the CEO and Senior Vice President of Human Resources, regularly reviews senior management talent, including readiness to take on additional leadership roles and developmental opportunities needed to prepare leaders for greater responsibilities. Plans are focused on

developing our mid-level next generation of talent into future leaders, and we have invested in their development and retention. We are committed to offering job-specific training and general leadership development programs, as well as tuition reimbursement to all of our employees to promote continued professional growth.

We adopted a written General Code of Ethics (“General Code”) which applies to all of our directors, officers and other employees, including our principal executive officer, principal financial officer, and controller. In addition, we adopted a written Code of Ethics for Executive Officers and Principal Accounting Personnel (“Code of Ethics”) which applies to our principal executive officer, principal financial officer, controller, and other designated members of our management. Copies of each code are available on our corporate website at www.freshpet.com. The information contained on our website does not constitute a part of this Proxy Statement. We will provide any person, without charge, upon request, a copy of our General Code or Code of Ethics. Such requests should be made in writing to the attention of our Corporate Secretary at the following address: Freshpet, Inc., 400 Plaza Drive, 1st Floor, Secaucus, NJ 07094.

Freshpet has a zero-tolerance policy for bribery and corruption. The Board established a robust Whistleblower Policy to set optimal procedures with regard to reports of concerns made by employees and other parties, and to protect whistleblowers against harassment or retaliation. The Whistleblower line is monitored directly by our CEO and Senior Vice President of Human Resources and is reported to the Audit Committee quarterly.

Freshpet received four inquiries on the Whistleblower line in 2022 from callers based within our manufacturing Kitchens. The inquiries related to hourly employee shift concerns and were investigated internally or by an independent labor attorney. Remedial actions were taken to address the employee concerns and all inquiries have been closed.

 

 

Set forth below is the name, age (as of August 11, 2023), position, class, and tenure information for our directors and director nominees:

Our Board currently consists of 10 members and is divided into three classes with staggered terms. At each annual general meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the designated end of their term. The current division of our Board into three classes with staggered terms may delay or prevent a change of our management or a change in control. Following stockholder approval at our 2021 Annual Meeting, we amended our Certificate of Incorporation to provide that our Board be fully declassified by our 2025 Annual Meeting, with each director to be elected on an annual basis thereafter. As such, the four Class III directors who are elected at this year’s Annual Meeting will serve a term expiring in 2025. For additional information, please see “Commitment to Good Corporate Governance” on page [•] of this Proxy Statement.

Mr. Biegger, Mr. Brewster and Ms. Kelley are the Class I directors, and their terms will expire in 2024. Mr. George, Mr. Steeneck and Dr. Coben are the Class II directors, and their terms will expire in 2025. Mr. West, Ms. Priest, Ms. Beck and Mr. Cyr are the Class III directors, and their current terms will expire at the Annual Meeting. We believe that each of the members of our Board, except Mr. Cyr, is independent consistent with the rules of the Nasdaq Stock Market LLC (“Nasdaq”).

The authorized number of directors may be changed by resolution of the Board. Vacancies on the Board can be filled by resolution of the Board. Upon Mr. Norris’ retirement from the Board on July 21, 2023, Mr. West was appointed to serve as a Class III director, and will stand for election with the other Class III directors at the Annual Meeting. Upon Mr. Norris’ retirement, the Board appointed Mr. George to serve as Chair of the Board.

Our Board met twelve times during 2022. Under the Company’s Corporate Governance Guidelines, adopted effective as of December 21, 2021, Board members are expected to attend all meetings of the Board and committees on which they serve. Each director serving on the Board in 2022 attended at least 75% of the total meetings of the Board and of committees on which he or she served during the time he or she was on the Board in 2022. All of the members of our Board serving at the time attended our 2022 Annual Meeting. Our Corporate Governance Guidelines are available on our corporate website at www.freshpet.com. Our website is not part of this Proxy Statement.

Our Board has three standing committees: an Audit Committee; a Nominating, Governance and Sustainability Committee; and a Compensation Committee. The Board also has an Operations Oversight Committee, which meets on an ad hoc basis. Each of the committees reports to the Board as they deem appropriate, and as the Board may request. The composition, duties and responsibilities of these committees are set forth below. Pursuant to our Bylaws, our Board may establish other committees, as it deems appropriate, to assist it with its responsibilities.

The Audit Committee is responsible for, among other matters: (1) appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm; (2) discussing with our independent registered public accounting firm their independence from management; (3) reviewing with our independent registered public accounting firm the scope and results of their audit and the audit fee; (4) approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm, including taking into consideration whether the independent auditor’s provision of any non-audit services to us is compatible with maintaining the independent auditor’s independence; (5) overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual consolidated financial statements that we file with the SEC; (6) reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls and compliance with legal and regulatory requirements; (7) establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters; (8) reviewing and approving related person transactions; (9) annually reviewing the Audit Committee charter and the Audit Committee’s performance; and (10) handling such other matters that are specifically delegated to the Audit Committee by our Board from time to time.

Our Audit Committee consists of Mr. Steeneck (chair), Mr. Biegger and Mr. West. Our Board has affirmatively determined that Mr. Steeneck, Mr. Biegger and Mr. West meet the definition of “independent directors” for

purposes of serving on an Audit Committee under applicable SEC and Nasdaq rules. In addition, Mr. Steeneck qualifies as our “audit committee financial expert,” as such term is defined in Item 407 of Regulation S-K. The Audit Committee met four times during 2022.

Our Board has adopted a written charter for the Audit Committee, which is available on our corporate website at www.freshpet.com. Our website is not part of this Proxy Statement.

The Nominating, Governance and Sustainability Committee is responsible for developing and recommending to the Board criteria for identifying and evaluating candidates for directorships and making recommendations to the Board regarding candidates for election or re-election to the Board at each annual meeting of stockholders. In addition, the Nominating, Governance and Sustainability Committee is responsible for overseeing our Corporate Governance Guidelines and reporting and making recommendations to the Board concerning corporate governance matters. The Nominating, Governance and Sustainability Committee is also responsible for regularly reviewing and making recommendations to the Board concerning the structure, composition and function of the Board and its committees.

In considering candidates to serve as directors, the Nominating, Governance and Sustainability Committee considers a number of factors, including:

When formulating its Board membership recommendations, the Nominating, Governance and Sustainability Committee considers advice and recommendations from stockholders, management and others as it deems appropriate, including a leadership search firm, Spencer Stuart, which was retained by the Nominating, Governance and Sustainability Committee on November 23, 2022 to assist in identifying and evaluating potential candidates. Although we do not have a formal policy regarding Board diversity, when evaluating candidates for nomination as a director, the Nominating, Governance and Sustainability Committee does consider diversity in its many forms, including among others, experience, skills, ethnicity, race and gender. We believe a diverse Board, as so defined, provides for different points of view and robust debate and enhances the effectiveness of the Board. Upon identifying a potential candidate for the Board, members of the Nominating, Governance and Sustainability Committee will interview the candidate, and based upon that interview, reference checks and committee discussions, make a recommendation regarding such candidate to the full Board.

The Nominating, Governance and Sustainability Committee evaluates director candidates recommended by a stockholder according to the same criteria as a candidate identified by the Nominating, Governance and Sustainability Committee. Other than JANA’s notice of nomination received May 25, 2023, to date, the Company has not received a recommendation for a director candidate from our stockholders that follows the process below.

Stockholders may recommend candidates at any time, but to be considered by the Nominating, Governance and Sustainability Committee for inclusion in the Company’s proxy statement for the 2024 Annual Meeting, recommendations must be submitted to the attention of the Chair of the Nominating, Governance and Sustainability Committee not earlier than the close of business on [•], 2024 nor later than the close of business on [•], 2024 (assuming the Company does not change the date of the 2024 Annual Meeting by more than 30 days before or 60 days after the anniversary of the 2023 Annual Meeting). A stockholder recommendation must contain:

Stockholder submissions recommending director candidates for consideration must be sent to the Company’s corporate offices, located at 400 Plaza Drive, 1st Floor, Secaucus, NJ 07094, Attention: Corporate Secretary.

Our Nominating, Governance and Sustainability Committee consists of Ms. Kelley (Chair), Dr. Coben and Mr. George. Our Board has affirmatively determined that Ms. Kelley, Dr. Coben and Mr. George meet the definition of “independent directors” for purposes of serving on a Nominating, Governance and Sustainability Committee under applicable SEC and Nasdaq rules. Our Nominating, Governance and Sustainability Committee met three times during 2022.

Our Board has adopted a written charter for the Nominating, Governance and Sustainability Committee, which is available on our corporate website at www.freshpet.com. The information contained on our website does not constitute a part of this Proxy Statement.

The Compensation Committee is responsible for, among other matters: (1) reviewing key employee compensation goals, policies, plans and programs; (2) reviewing and approving the compensation of our directors, Chief Executive Officer and other executive officers; (3) reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and (4) administering our stock plans and other incentive compensation plans. The Compensation Committee may delegate its responsibilities to a subcommittee formed by the Compensation Committee. The Compensation Committee, in its sole discretion, may also engage legal, accounting, or other consultants or experts, including compensation consultants, to assist in carrying out its responsibilities.

Our Compensation Committee consists of Mr. Brewster (Chair), Ms. Beck and Ms. Priest. Our Board has affirmatively determined that Mr. Brewster, Ms. Beck and Ms. Priest meet the definition of “independent directors” for purposes of serving on a Compensation Committee under applicable SEC and Nasdaq rules. Our Compensation Committee met five times during 2022.

Our Board has adopted a written charter for the Compensation Committee, which is available on our corporate website at www.freshpet.com. Our website is not part of this Proxy Statement.

The Operations Oversight Committee is responsible for, among other things: increasing the Board’s focus on the Company’s operations and assuring that adequate resources are available and utilized to improve operational efficiencies in the Company’s manufacturing and supply chain execution, as well as working with senior management to expedite and capture these opportunities.

Our Operations Oversight Committee consists of Mr. Biegger (Chair), Mr. George, Ms. Priest and Mr. Steeneck. Because the Operations Oversight Committee was only formed in December 2022, it did not meet during 2022.

Our Board has adopted a written charter for the Operations Oversight Committee, which is available on our corporate website at www.freshpet.com. Our website is not part of this Proxy Statement.

Our Board is responsible for overseeing our risk management process. The Board focuses on our general risk management strategy and the most significant risks facing us and ensures that appropriate risk mitigation strategies are implemented by management. The Board is also apprised of risk management matters in connection with its general oversight and approval of corporate matters and significant transactions.

Our Board does not have a standing risk management committee, but rather administers this oversight function directly through our Board as a whole, as well as through various standing committees of our Board that address risks inherent in their respective areas of oversight. In particular, our Board is responsible for monitoring and assessing strategic risk exposure, our Audit Committee is responsible for overseeing our major financial risk exposures and the steps our management has taken to monitor and control these exposures and our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage unnecessary risk-taking. In addition, our Audit Committee oversees the performance of our internal audit function and considers and approves or disapproves any related party transactions.

Our management is responsible for day-to-day risk management. This oversight includes identifying, evaluating and addressing potential risks that may exist at the enterprise, strategic, financial, operational, compliance and reporting levels.

We believe good governance at all levels is necessary to drive corporate responsibility, and that our corporate governance is more effective when we consider environmental and social issues as a part of corporate strategy, key risks, and our operations. As a part of this endeavor, the Board oversees the management team fulfilling responsibilities relating to sustainability and corporate social responsibility, particularly those that may affect the stakeholders and stockholders of our Company, and the communities in which we operate. Our Board and its committees play a critical role in oversight of our corporate culture and hold management accountable for its maintenance of high ethical standards, governance practices and compliance programs to protect our business, employees and reputation.

The positions of Chair of the Board and Chief Executive Officer are presently separated. We believe that separating these positions allows our Chief Executive Officer to focus on our day-to-day business, while allowing the Chair of the Board to lead the Board in its fundamental role of providing advice to and independent oversight of management. Our Board recognizes the time, effort and energy that the Chief Executive Officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our Chair. While our Bylaws and Corporate Governance Guidelines do not require that our Chair and Chief Executive Officer positions be separate, our Board believes that having separate positions is the appropriate leadership structure for us at this time and demonstrates our commitment to good corporate governance.

None of the members of the Compensation Committee is, or has ever been, an executive officer or employee of the Company, nor did they have any relationships requiring disclosure by the Company under Item 404 of Regulation S-K. During 2022, none of our executive officers served as a director or as a member of a compensation committee (or other committee serving an equivalent function) of any other entity that has an executive officer serving as a director on our Board, or as a member of the Compensation Committee.

We adopted a written General Code of Ethics (“General Code”) which applies to all of our directors, officers and other employees, including our principal executive officer, principal financial officer and controller. In addition, we adopted a written Code of Ethics for Executive Officers and Principal Accounting Personnel (“Code of Ethics”) which applies to our principal executive officer, principal financial officer, controller and other designated members of our management. Copies of each code are available on our corporate website at www.freshpet.com. The information contained on our website does not constitute a part of this Proxy Statement. We will provide any person, without charge, upon request, a copy of our General Code or Code of Ethics. Such requests should be made in writing to the attention of our Corporate Secretary at the following address: Freshpet, Inc., 400 Plaza Drive, 1st Floor, Secaucus, NJ 07094.

Stock ownership guidelines are in place for our non-employee directors to encourage significant ownership of our Common Stock by our non-employee directors and to further align the personal interests of our non-employee directors with the interests of our stockholders. Non-employee directors are expected to own Common Stock valued at an amount at least three times the cash retainer, as calculated for each calendar year on the first trading day of each calendar year.

There are no family relationships among any of our directors and executive officers.

Set forth below is the name, age (as of August 11, 2023), position and a description of the business experience of each of our executive officers (business experience for Mr. Cyr, who is both a director and executive officer, can be found in the section entitled “—Board of Directors”).

President, Chief Operating Officer & Co-Founder

Scott Morris is a co-founder of Freshpet and has served as our Chief Operating Officer since July 2015 and President since March 2016. Mr. Morris served as our Chief Marketing Officer from January 2014 to July 2015 and Senior Vice President of Sales and Marketing from 2010 to 2013. Mr. Morris is involved in all aspects of Company development and day-to-day operations. Prior to joining Freshpet, Mr. Morris was Vice President of Marketing at The Meow Mix Company from 2002 to 2006. Previously, Mr. Morris worked at Ralston Purina from 1990 to 2002, holding various leadership positions in Sales and Marketing, most recently Pet Food Group Director. Mr. Morris also works as an advisor and investor in several small startup consumer packaged goods companies with strong social missions and a focus to improve food and the world. Additionally, in 2020, Mr. Morris co-founded Hive Brands, an eco-friendly commerce platform for sustainable food and household goods.

Chief Financial Officer

Todd Cunfer has served as Chief Financial Officer since December 2022. Prior to that time, Mr. Cunfer served as the Chief Financial Officer of The Simply Good Foods Company (NASDAQ: SMPL), a nutritional snack foods company, from August 2017 to October 2022, where he also served as Vice President of Finance from July 2017 until October 2022. Prior to joining that company, Mr. Cunfer previously worked for The Hershey Company (NYSE: HSY) for more than 20 years, where his experience encompassed financial planning and analysis, capital structure, supply chain management, strategic operations and mergers and acquisitions. At The Hershey Company, Mr. Cunfer served in a variety of senior executive finance roles, including as Vice President, International Finance from March 2017 until July 2017, Vice President, Global Supply Chain Finance from February 2015 to March 2017, Vice President, North America Finance from February 2013 to February 2015, and Vice President, U.S. Finance from December 2010 to February 2013.

EVP, Secretary & Treasurer

Stephen Macchiaverna has served as Executive Vice President, Secretary and Treasurer since September 2020. Prior to that time, Mr. Macchiaverna served as Senior Vice President, Controller & Secretary, from October 2006. Prior to joining Freshpet, Mr. Macchiaverna was the Controller for The Meow Mix Company from its inception in 2002 through its sale and transition to Del Monte Foods in 2006. From 1999 to 2001, Mr. Macchiaverna was the

Vice President of Finance and Treasurer of Virgin Drinks USA, Inc. Mr. Macchiaverna began his consumer packaged goods career with First Brands Corporation, where he worked from 1986 to 1999, most recently as Divisional Controller for all domestic subsidiaries. Mr. Macchiaverna has over 30 years’ experience in consumer packaged goods financial management.

Co-Founder, Managing Director of Europe

Cathal Walsh is a co-founder of Freshpet and has served as Managing Director of Europe, previously titled Senior Vice President of Cooler Operations, since January 2011 and previously served as our Chief Operating Officer from October 2006 to January 2011. Prior to founding Freshpet, Mr. Walsh was Zone Marketing Manager at Nestlé Worldwide from 2000 to 2005 and was Marketing Manager at Nestlé Pet Care from 1996 to 2000. Mr. Walsh has over 25 years’ experience in packaged goods marketing, sales and management, including in international food markets.

SVP, Human Resources

Thembeka “Thembi” Machaba joined Freshpet in August 2020 as Senior Vice President of Human Resources. Ms. Machaba has over 20 years’ experience in the Manufacturing, Food & Beverage industries. Prior to joining Freshpet, Ms. Machaba was a Vice President of Global Human Resources and Organization Development at Molson Coors, a multinational beverage brewing company, from January 2019 to August 2020 and Senior Director of Global Human Resources from October 2016 to December 2018. Ms. Machaba held various roles within Human Resources at MillerCoors, the North American Business unit of Molson Coors from August 2012 to October 2016. Prior to moving to the United States, Ms. Machaba served in a number of senior Human Resource roles in SABMiller, a global brewing company in South Africa beginning in 2003 to 2011. Prior to joining SABMiller, Ms. Machaba worked in a training role at AFROX, a chemical manufacturing company in South Africa. Prior to that Ms. Machaba worked at Unilever SA in various Human Resources roles.

VP of Finance, Controller

Ivan Garcia has served as Vice President of Finance since April 2017 and Controller since September 2020, having previously served as Director of Financial Reporting and Budgeting from June 2015 to March 2017 and Manager of Financial Reporting from February 2014 to May 2015. Prior to joining Freshpet, Mr. Garcia held progressive roles at KPMG, including Manager of Audit, from September 2007 to January 2014, where he served both public and private clients mainly in the consumer and industrial market segments.

Stock ownership guidelines are in place for our senior executive officers (or “Covered Persons”)—including our NEOs—to encourage significant ownership of our Common Stock by our senior executives and to further align the personal interests of our senior executives with the interests of our stockholders. These stock ownership guidelines require (i) our CEO to own Common Stock valued at four times annual base pay, (ii) our NEOs, other than our CEO, to own Common Stock valued at three times annual base pay, and (iii) our other senior executive officers to own Common Stock valued at up to two times annual base pay, based on seniority.

Covered Persons are required to achieve their respective levels of stock ownership within the later of five years of the date they enter the listed positions or the date the stock ownership guidelines were adopted. If a Covered Person is not in compliance with the stock ownership guidelines, the Covered Person will be required to retain at least 50% of the Covered Person’s vested stock options and vested stock units granted pursuant to a stock incentive plan of the Company. If the Covered Person falls below the stock ownership guidelines solely as a result of a decline in the value of our Common Stock, the Covered Person will have a period of 12 months within which to increase such Covered Person’s stock ownership to meet the stock ownership guidelines. Notwithstanding the terms of the stock ownership guidelines, Covered Persons may sell or otherwise dispose of shares of our Common Stock to (a) pay the exercise price of Company stock options in a net-share stock option transaction; and (b) satisfy any applicable tax withholding obligations due in connection with the exercise of options or the vesting or payment of any restricted stock units. If the stock ownership guidelines place a hardship on a Covered Person, the Compensation Committee is empowered to develop an alternative stock ownership guideline for a Covered Person that reflects both the intention of the stock ownership guidelines and the personal circumstances of the Covered Person.

 

 

This CD&A describes the material elements of compensation awarded to, earned by, or paid to each of our named executive officers (“NEOs”). This CD&A also describes Freshpet’s philosophy behind and objectives for executive compensation, as well as the manner in which the Company awards, and our NEOs earn, such compensation. Finally, this CD&A is intended to supplement the data presented in the Summary Compensation Table and other compensation tables that follow the CD&A.

The following table lists our NEOs for 2022, which is the group consisting of each individual who served as our Chief Executive Officer or Chief Financial Officer during 2022, and our three other most highly compensated executive officers who were serving as executive officers on December 31, 2022.

On September 7, 2022, Freshpet Chief Financial Officer Heather Pomerantz’s employment ended with the Company amicably. The Company is treating the separation as a termination without cause and Ms. Pomerantz was provided with a severance package, including, amongst other items, 12 months of salary continuation as well as eligibility to continue health insurance under COBRA. Please see “2022 Summary Compensation Table” on page [•] of this Proxy Statement for additional disclosure on Ms. Pomerantz’s severance arrangements.

On September 8, 2022, Freshpet Vice Chairman and former Chief Financial Officer Richard Kassar began serving as Interim Chief Financial Officer. Mr. Kassar served in this position until November 30, 2022, at which time Mr. Kassar resumed his role as Vice Chairman of the Company.

On December 1, 2022, Freshpet appointed Todd Cunfer as Chief Financial Officer, bringing with him over 25 years of experience in financial planning and analysis, capital structure, treasury, supply chain management, commercial operations and merger and acquisition activity in the consumer packaged goods industry.

Freshpet also announced five additional leadership changes in 2022:

All of these changes are designed to strengthen organizational capability and better position Freshpet to stay ahead of anticipated rapid growth.

Our philosophy is to align our executive compensation with the interests of our stockholders by basing our fundamental compensation decisions on financial objectives that our Board believes have a significant impact on long-term stockholder value. An important goal of our executive compensation program is to support our ability to hire and retain talented and experienced executives who are motivated to achieve or exceed our short-term and long-term corporate goals. Our executive compensation program is designed to reinforce a strong pay-for-performance orientation and to serve the following purposes:

Underpinning our compensation philosophy is the belief that Freshpet is a growth company with the potential to have a significant impact on the pet food industry. We believe that achieving that potential should result in value creation for our stockholders. Thus, we believe that management’s incentives, our annual goals, and our longer-term goals set by the Compensation Committee of the Board (the “Compensation Committee”) and the Board should be designed to reflect that growth orientation.

The Compensation Committee has numerous tools at its disposal to help Freshpet accomplish its short- and long-term performance goals. The Committee generally chooses to utilize those tools as follows in its administration and oversight of our executive compensation program.

The Compensation Committee selects a peer group for compensation comparison purposes that includes a blend of comparably-sized companies in similar industries, including pet-related companies—our most likely sources of talent to support our growth. The Committee also adds to this peer group companies experiencing significant growth to help ensure that our compensation practices are competitive with and relevant to the circumstances found in growth-oriented companies.

The Company considers peer group data for overall compensation and for specific elements of compensation.

Please see “Compensation Discussion and Analysis (CD&A) — Peer Group”.

We award a significant portion of executive compensation in the form of equity awards, as we believe this is an effective way to help management focus on our long-term goals while also aligning stockholder and management interests. A meaningful portion of our executive compensation consists of stock option awards, which have no value to the recipient unless our stock price rises following the date of the grant.

In 2020, the Company set new long-term goals and issued significant multi-year grants to the current leadership and the leading candidates to be the next generation of leadership within the Company. The 2020 program included aggressive growth goals, and the Company believes that delivery of those goals would generate significant long-term value creation for the Company and its investors. For the NEOs, the equity grants were 75% performance-based (with 50% of such performance-based options vesting based on achieving certain Adjusted EBITDA performance-based conditions and 50% vesting based on net sales performance-based conditions) and 25% time-based (with vesting occurring in annual installments over a four-year period of 20%, 40%, 60%, 100%) and replaced all annual grants for the next four years for those individuals. In light of the awards made in 2020, no additional equity grants were made in 2021 or 2022 to NEOs who participated in the 2020 multi-year grant program.

We strongly believe that teamwork among our workforce is essential to help us achieve our long-term growth potential. Thus, all bonus-eligible employees—including our NEOs—are compensated using the same financial performance metrics. In 2022 we implemented new ESG goals only for our NEOs in order to promote retention and workplace satisfaction among all employees. We believe that this creates an “all-for-one and one-for-all” mentality within Freshpet that allows individual employees to make the right choices for the Company without regard to their impact on the achievement of less important functional or personal goals.

We set what we believe to be aggressive net sales growth and profitability targets for management each year and our annual incentive plan formula places equal value on the achievement of those net sales growth targets and profitability goals. We believe that this design incentivizes our management to drive sales growth in concert with profit growth.

In its compensation review process, the Compensation Committee considers whether the Company’s executive compensation program is aligned with the interests of the Company’s stockholders. As part of its review of the Company’s executive compensation program, the Compensation Committee considered the approval by approximately 96% of the votes cast for the Company’s Say-on-Pay vote at our 2022 Annual Meeting of Stockholders. The Compensation Committee determined that the Company’s executive compensation philosophies and objectives and compensation elements continued to be appropriate. However, the Committee did add a new ESG goal to the short-term incentive program based on stockholder feedback.

The various components of our compensation program are related but distinct and are designed to emphasize “pay for performance,” with a significant portion of total compensation at-risk, tied to our long-term and short-term financial and strategic goals. Our compensation philosophy is designed to foster entrepreneurship at all levels of the organization and is focused on employee value and retention by making long-term, equity-based incentive opportunities a substantial component of our executive compensation. The level for each compensation component is based in part, but not exclusively, on internal equity and consistency, experience, and responsibilities, and other relevant considerations such as rewarding extraordinary performance. The Compensation Committee has not adopted any formal or informal policies or guidelines for allocating compensation between long-term and currently paid compensation, between cash and non-cash compensation, or among different forms of non-cash compensation.

While fiscal year 2022 presented challenges to businesses around the globe, including Freshpet, the Board and management team focused on responding decisively to manage the business impacts of the COVID-19 pandemic, including follow-on supply chain issues, while maintaining our philosophy of pay-for-performance in the midst of significant and unprecedented challenges. In August 2022, Freshpet initiated and advanced its operational improvement plan to drive margin expansion. The plan is focused on improvements across logistics, commodities, and quality in addition to other operational areas. Progress against the plan thus far includes improvement in fill rate, logistics costs efficiencies and lower disposal levels. The broader plan, which contains both the addition of talent and improvements in operations, will help to build upon Freshet’s consistent track record of delivering industry-leading growth and help improve efficiencies, productivity, and profitability.

The Compensation Committee and management view the annual Say-on-Pay vote as an important guidepost when considering stockholder perspective. In October 2022, at our last annual meeting of stockholders, our Say-on-Pay proposal was approved by approximately 97.2% of the votes cast by our stockholders, an increase of approximately 20% from the 77% approval of September 2021’s Say-on-Pay proposal.

Our Compensation Committee and management remain committed to addressing stockholder concerns on Freshpet’s executive compensation program and continually strengthening our pay-for-performance correlation, as well as the overall design of our executive compensation program. We believe that this philosophy drives the right behaviors for sustainable success, aligns with best practices in corporate governance and reflects the best interests of our stockholders and stakeholders.

From 2019 through 2022, the Compensation Committee retained Korn Ferry (“KF”) to advise on compensation practices for our executive officers, including each NEO. Specifically, KF was engaged to review our compensation peer group and our compensation structure for our executive officers, develop and recommend targets for our executive compensation program by analyzing the compensation structures of our peer group companies and market trends, and provide advice to the Compensation Committee on our executive compensation structure and program based on KF’s analysis. KF was also engaged to separately review the compensation arrangements applicable to employees at the director level and above, and the non-employee, independent directors of the Board. The Compensation Committee, in consultation with KF, decided to continue in 2022 the executive compensation structure suggested by KF in 2018, as the Compensation Committee determined that the program remained effective in achieving our objectives of retaining talented and experienced executives who are motivated to achieve or exceed our short-term and long-term corporate goals.

The Compensation Committee, in consultation with KF, considered several factors in selecting an industry-specific compensation peer group. Considerations generally included the following:

Based on the foregoing considerations, the Compensation Committee determined that our compensation peer group for 2022 would consist of the following entities:

In early 2022, a significant amount of research was conducted by Korn Ferry to identify additional companies that would be meaningful peers for Freshpet for the purpose of evaluating Freshpet’s executive compensation program. Companies reviewed included food, consumer packaged goods, and retail in particular, as these are the closest aligned businesses to Freshpet. Four additional companies were added to the existing group: Tattooed Chef, Inc., Central Garden & Pet Company, YETI Holdings, Inc., and Lancaster Colony Corporation. With these additions, the total number of peer group benchmark companies is 17.

We target the total compensation amount for each of our NEOs (based on position) to be competitive with similarly situated executives within our compensation peer group (bearing in mind that we pay a significant portion of our compensation in the form of long-term, performance-based equity awards). We deliberately target a higher percentile within the benchmark peer group for strategically important roles. We believe that this targeting philosophy will help us to achieve an important goal of our executive compensation program, which is to hire and retain talented and experienced executives who are motivated to achieve or exceed our short-term and long-term goals. We also believe that this compensation structure will help us to achieve our objectives of aligning our NEOs’ interests with the interests of our stockholders and encouraging our successful NEOs to remain with us for the long term.

We used three primary elements of compensation in our executive compensation program in 2022: base salary, annual incentive awards, and long-term equity compensation. Annual incentive awards and long-term equity compensation represent the performance-based elements of our compensation program. The performance goals tied to these compensation elements are flexible in application and can be tailored to meet our specific objectives. The amount of a specific individual’s annual incentive award for a performance period is intended to reflect that individual’s relative contribution to the Company in achieving or exceeding our annual goals, and the amount of an individual’s long-term incentive compensation is intended to reflect the individual’s expected contribution to the Company over longer performance periods.

We pay our NEOs a base salary based on the experience, skills, knowledge, and responsibilities required of each executive officer. We believe base salaries are an important element in our overall compensation program because base salaries provide a fixed element of compensation that reflects job responsibilities and value to us. None of our NEOs are currently party to any agreement or arrangement that provides for automatic or scheduled increases in base salary. Base salaries for our NEOs are determined by the Compensation Committee.

The following table sets forth each NEO’s annual base salary rate for 2022:

The Board initially adopted our current annual incentive plan—in which our NEOs participate—in 2016. Awards under the plan, which are calculated as a percentage of base salary, are designed to motivate our employees to achieve our annual goals based on our strategic, financial, and operating performance objectives. For 2022, the annual target awards as a percentage of base salary were the following:

In 2022, Freshpet executives adopted an ESG goal as part of the annual incentive program, with a focus on employee retention, with 10% of their total annual incentive award committed to the achievement of this goal.

The operating goal components of our 2022 annual incentive program were based 45% on Adjusted EBITDA and 45% on net sales, with the remaining 10% based on ESG. For each performance metric, the Company then established performance targets and minimum performance thresholds, with a maximum payout of no more than 250% of target for any NEO. Performance above and below each performance metric target results in increases or decreases in the bonuses earned based on pre-determined factors that are based on the economic value added or lost by stockholders due to the over/under performance. To encourage teamwork, the Compensation Committee determines a single Company performance result as an aggregate percentage of the target Company performance metrics. The resulting percentage is then multiplied against each eligible employee’s target bonus amount to determine annual incentive compensation.

As noted above, our 2022 targets were as follows: $66 million of Adjusted EBITDA and $600 million of net sales. On a pre-bonus basis, and after adjusting to recognize a previously reported change in the calculation of Adjusted EBITDA, the Company delivered as follows: $50.2 million of Adjusted EBITDA and $595.3 million of net sales. Adjusted EBITDA is not a financial measure prepared in accordance with U.S. generally accepted accounting principles (or “GAAP”). This metric is explained in more detail in the section “Non-GAAP Financial Measures” in “Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our Annual Report, where it is reconciled to the closest GAAP measure, as well as in “Appendix B: Non-GAAP Financial Measures” beginning on page B-1 of this Proxy Statement.

The Compensation Committee believes that employee retention is both consistent with the Company’s social purpose of enriching the lives of our workforce (largely employees performing hourly labor) and an essential strategy necessary to support a fast-growing company. The ESG goal for 2022 was therefore focused on employee retention, with three specific measures:

The combination of all three goals would result in the overall ESG bonus target of 10%. For 2022, the ESG goal achievement was 84% as shown in the table below.

Actions taken to achieve this goal inherently strengthen the communities in which we operate by enhancing the lives of our production workforce and their families by increasing economic opportunity and enhancing skill development. Those actions include higher wages, long-term equity participation, skills training, and employee benefits that strengthen families (e.g., 18-week maternity leave and 12-week paternity leave, five weeks of vacation, tuition reimbursement). We believe that this program has contributed significantly to the improved performance of our production operations – particularly towards the end of 2022 and into 2023 – demonstrating the long-lasting impact of this goal and its sustainability.

The targets and resulting achievement for these three ESG measures were as follows:

For 2022, based on the foregoing operating and ESG goals, we paid annual incentive awards to each NEO as follows:

Although we do not have a formal policy covering the grant of equity compensation awards to our executive officers, we believe that equity compensation provides our executive officers with a strong link to our long-term performance, creates an ownership culture, and helps to align the interests of our executive officers and our stockholders. Further, we believe that stock option awards with time-based vesting features promote executive retention, as they incentivize our executive officers to remain employed with us for the applicable vesting period. Accordingly, the Compensation Committee (or alternatively, the Board) periodically reviews the equity compensation of our NEOs and from time to time may grant awards as it deems appropriate.

We grant equity awards under our 2014 Omnibus Incentive Plan (or “2014 Plan”), which allows for awards of tax-qualified incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, other stock-based awards, and other cash-based awards to our directors, officers, employees, consultants, and advisors. Each of our NEOs is eligible to participate in our 2014 Plan.

The Compensation Committee (or alternatively, the Board) determines the size and vesting terms of all awards made under our 2014 Plan and administers all other aspects of the plan. In 2022, the Compensation Committee took into account a number of factors when making awards under our 2014 Plan, including, among others, the eligible employee’s expected contribution to the long-term success of the Company and information gathered by the Compensation Committee regarding compensation paid to similarly situated executives at companies in our compensation peer group, as well as the amounts of outstanding stock options that each NEO held at such time. In light of the stock options granted to our NEO’s in 2020, as described below, no additional stock option grants were granted in 2022 to those NEOs who participated in the 2020 program.

In 2020, we granted certain officers stock options to purchase shares of our Common Stock under our 2014 Plan, 50% of which are scheduled to vest and become exercisable in equal installments on each of the first three anniversaries of the grant date and 50% of which are scheduled to vest and become exercisable annually according to the achievement of Adjusted EBITDA performance-based conditions (and in each case subject to the NEO’s continued employment with us). Upon a termination by the Company other than for “cause” or by the NEO for “good reason,” within two years following a “change in control” (as each is defined in the applicable award agreements), the time-vesting options will accelerate and vest.

In 2020, we also granted Mr. Walsh 59,932 stock options to purchase shares of our Common Stock under our 2014 Plan, 39,932 of which vest and become exercisable in equal installments on each of the first three anniversaries of the grant date and 20,000 of which are scheduled to vest and become exercisable following the achievement of certain annual net sales goals in the 2023 calendar year (and in each case subject to Mr. Walsh’s continued employment with us). Mr. Walsh did not participate in the multi-year grant described above.

In December 2020, we made multi-year grants of stock options under our 2014 Plan to certain officers. These grants were designed to align the most senior management of the Company with the long-term goals established by the Company in early 2020, and cover a four-year performance period ending December 31, 2024. The Committee will not make any additional grants to these individuals during this performance period, so none of these individuals received a grant in 2021 or 2022. For the NEOs, the grants are 75% performance-based and 25% time-based, with the performance targets set in excess of the long-term goals communicated to investors. While we are not disclosing the specific goals for competitive reasons, the goals are set at or in excess of public statements. Actual goals will be disclosed upon the conclusion of the four-year performance period. Upon a termination by the Company other than for “cause” or by the NEO for “good reason” (each as defined in the applicable award agreements), within two years following a “change in control” (as defined in the applicable award agreements), the time-vesting options will accelerate and vest and the performance-vesting options will accelerate and vest in part or in full based on actual Company performance through the change in control. Upon termination by the Company other than for “cause” not in connection with a “change in control,” the performance-vesting options will accelerate on a prorated basis based on number of days employed during the performance period, based on actual Company performance through the end of the performance period.

In 2022, we granted Mr. Walsh an equity award of $156,235 in restricted stock units (or “RSUs”), which are scheduled to vest in three equal annual installments beginning March 14, 2023, with accelerated vesting in full upon termination due to death or “disability,” “involuntary termination without cause,” or “voluntary resignation with good reason” (each as defined in Mr. Walsh’s award agreement).

For additional information, please see “—Executive Compensation Tables—2022 Outstanding Equity Awards at Fiscal Year-End.”

In addition to base salary and annual and long-term performance-based compensation, our NEOs are also eligible for the following benefits on a similar basis as our other eligible employees:

We maintain a 401(k) retirement savings plan (or “401(k) Plan”) under which all of our employees (including our NEOs) are eligible to participate beginning on the first day of the month after their employment with us begins. The 401(k) Plan includes a deferral feature under which a participant may elect to defer his or her compensation by up to the statutorily prescribed IRS limits. Currently, we also match participant contributions to the 401(k) Plan up to 4% of the participant’s annual eligible earnings. We believe that providing a vehicle for retirement savings through our 401(k) Plan, and making matching contributions, adds to the overall desirability of our executive compensation program and further incentivizes our NEOs in accordance with our compensation policies.

Other than the 401(k) Plan, we do not maintain any pension plans or non-qualified deferred compensation plans for the benefit of our employees or other service providers.

The Company is party to an employment agreement with each of Messrs. Cyr, Morris, Cunfer and Walsh. For Messrs. Cyr, Morris and Walsh, each agreement provides for an initial term of one year and for automatic one-year extensions beginning on the expiration of the initial term. Any automatic extension may be cancelled upon at least 90 days’ prior written notice from the respective NEO or the Company. Under their agreements, and following past adjustments made in connection with the Board’s annual review, Messrs. Cyr, Morris, Cunfer and Walsh are entitled to receive annual base salaries of $620,000, $510,000, $500,000, and $312,500, respectively, subject to annual review by the Board. Further, Messrs. Cyr, Morris, Cunfer and Walsh have the opportunity to earn annual target bonuses equal to at least 95%, 60%, 60% and 40%, respectively, of their base salaries. Each executive is also entitled to participate in the Company’s employee and fringe benefit plans as may be in effect from time to time on the same basis as other employees of the Company generally. The Company is also party to an offer letter with Ms. Machaba, which is described further below.

The Company entered into an employment agreement with Mr. Cyr in July 2016. In the event of a termination of Mr. Cyr’s employment by the Company without “cause,” or by Mr. Cyr for “good reason” (each as defined in his employment agreement), he is generally eligible to receive, subject to his timely execution and non-revocation of a general release of claims against the Company: (i) an amount equal to (A) one and one-half times the sum of his (x) base salary and (y) target bonus, for a period of 18 months, payable in equal monthly payments in accordance with the Company’s normal payroll practice; and (ii) Company payment of premiums (at active employee rates) for continuation of group health coverage for him and his eligible dependents for 18 months. In the event of a termination of Mr. Cyr’s employment due to “permanent disability” (as defined in his employment agreement), he is generally eligible to receive, subject to his timely execution and non-revocation of a general release of claims against the Company, Company payment of premiums (at active employee rates) for continuation of group health coverage for him and his eligible dependents for 18 months.

Mr. Cyr’s employment agreement contains a cutback provision for “parachute payments” under Internal Revenue Code (or “Code”) Section 280G, under which he may be subject to a cutback of certain change-in-control payments in order to avoid any excise tax or loss of deduction under Code Section 280G, if the cutback would result (after factoring any potential excise taxes under Section 280G) in a larger after-tax payment to Mr. Cyr.

Mr. Cyr’s employment agreement contains the following restrictive covenants: (i) a non-compete covenant that prohibits him from competing against the Company for 24 months after employment; (ii) non-solicit covenants that prohibit him from actively soliciting the Company’s employees, customers, or suppliers during employment and for 24 months after employment; and (iii) a perpetual confidentiality covenant that protects the Company’s proprietary information, developments, and other intellectual property.

The Company entered into employment agreements with Messrs. Morris and Walsh in October 2014, and with Mr. Cunfer in December 2022. Under the agreements, in the event of a termination of the NEO by the Company without “cause,” by the NEO for “good reason,” or due to “permanent disability” (each as defined in the respective employment agreements), each NEO is generally eligible to receive, subject to his timely execution and non-revocation of a general release of claims against the Company: (i) an amount equal to 12 months of the NEO’s base salary in accordance with the Company’s normal payroll practice; (ii) Company payment of premiums (at active employee rates) for continuation of group health coverage for the NEO and his eligible dependents for 12 months; and (iii) only in the event of a termination by the Company without “cause” or by the NEO for “good reason” after June 30th during any year in which the employment agreement is effective, a pro-rated annual incentive award based on actual performance for the year in which termination occurs.

Each of the employment agreements with Messrs. Morris and Walsh contains a cutback provision for “parachute payments” under Code Section 280G, under which the NEO may be subject to a cutback of certain change-in-control payments in order to avoid any excise tax or loss of deduction under Code Section 280G, if the cutback would result (after factoring any potential excise taxes under Section 280G) in a larger after-tax payment to the NEO.

Each of the employment agreements with Messrs. Morris, Cunfer and Walsh contains the following restrictive covenants: (i) a non-compete covenant that prohibits the NEO from competing against the Company for 12 months after employment; (ii) non-solicit covenants that prohibit the NEO from actively soliciting the Company’s employees, customers, or suppliers during employment and for 12 months after employment; and (iii) a perpetual confidentiality covenant that protects the Company’s proprietary information, developments, and other intellectual property.

The Company entered into an offer letter with Ms. Machaba in August 2020. The offer letter required that Ms. Machaba enter into the Company’s confidentiality and no-hire agreement, which includes customary confidentiality and non-solicitation provisions that extend for 12 months after termination or resignation of employment with the Company. On April 17, 2023, Thembeka Machaba was given a one-time cash award with a target value of $456,250, subject to time- and performance-vesting conditions. The grant was made during a period of increased employee turnover and increased demand for executive talent. It was essential to future operations that Freshpet keep the skill set and talents Ms. Machaba brings. This award is intended to preserve Ms. Machaba’s employment with the Company for a minimum of two years. Given this, 50 percent of this award will cliff vest on March 15, 2025. The remaining 50 percent of the award vests subject to adjusted EBITDA and net sales achievement, the goals for which are not disclosed due to the potential for competitive harm.

In December 2022, we granted our CFO, Mr. Cunfer, an inducement grant of stock options in accordance with Nasdaq rules. Mr. Cunfer’s inducement grant consisted of 40,120 time-vesting options and 22,381 restricted stock units.

We consider it improper and inappropriate for our directors, officers, and other employees at or above the Vice President level to engage in any transactions that hedge or offset, or are designed to hedge or offset, any decrease in the value of our securities. As such, we have implemented a policy that prohibits our directors, officers, and other employees at or above the Vice President level from engaging in any speculative or hedging transactions or any other transactions that are designed to offset any decrease in the value of our securities.

We consider the accounting impact reflected in our financial statements when establishing the amounts and forms of executive compensation. The forms of compensation that we select are intended to be cost-efficient. We account for all awards settled in equity in accordance with the Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718, under which the fair value of the grant, net of estimated forfeitures, is expensed over the service/vesting period based on the number of options, shares, or units, as applicable, that vest. The estimated payout amount of performance awards, along with any changes in that estimate, is recognized over the performance period under “liability” accounting. Our ultimate expense for performance awards will equal the value earned by/paid to the award recipients.

As a publicly traded company, we are subject to SEC rules regarding risk assessment. Those rules require a publicly traded company to determine whether any of its existing compensation plans, programs, or arrangements create risks that are reasonably likely to have a material adverse effect on the Company. We do not believe that our compensation plans, programs, or arrangements create risks that are reasonably likely to have a material adverse effect on Freshpet.

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth above. Based on this review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and our Annual Report.

 

The following table sets forth the compensation for 2022 for each NEO. Compensation information for 2021 and 2020 is presented for individuals who were also our NEOs in those years.