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Time and Date:
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| | Thursday, June 18, 2020 at 9:00 a.m. Mountain Daylight Time | |
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Place:
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| | The Company’s headquarters at 923 S. Bridgeway Place, Eagle, Idaho 83616 | |
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Record Date:
|
| | April 24, 2020 (the “Record Date”) | |
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Items to be Voted On:
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| |
1.
To elect one Class III director, to serve until the third annual meeting next succeeding his election and until their successor is elected and qualified (Proposal One);
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2.
To ratify the selection of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020 (Proposal Two); and
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3.
To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.
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| How to Vote: | | |
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS ANNUAL MEETING. EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, WE HOPE THAT YOU WILL PROMPTLY VOTE AND SUBMIT YOUR PROXY BY TELEPHONE, MAIL OR VIA THE INTERNET, AS DESCRIBED IN THE PROXY STATEMENT. THIS WILL NOT LIMIT YOUR RIGHTS TO ATTEND OR VOTE AT THE ANNUAL MEETING.
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING TO BE HELD ON JUNE 18, 2020. |
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| We are furnishing proxy materials to our stockholders primarily via the Internet, instead of mailing printed copies of those materials to each stockholder. By doing so, we save costs and reduce the environmental impact of our Annual Meeting. We will mail a Notice of Internet Availability of Proxy Materials to certain of our stockholders. This Notice contains instructions about how to access our proxy materials and vote online or vote by telephone. If you would like to receive a paper copy of our proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials. If you previously chose to receive our proxy materials electronically, you will continue to receive access to these materials via e-mail unless you elect otherwise. | |
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PROPOSAL ONE
ELECTION OF DIRECTOR |
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| SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | | | | | 23 | | |
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| CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | | | | | 26 | | |
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PROPOSAL TWO
RATIFICATION OF THE APPOINTMENT OF THE COMPANY’S INDEPENDENT AUDITORS |
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| INFORMATION ABOUT THE ANNUAL MEETING AND VOTING | | | | | 30 | | |
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| STOCKHOLDER PROPOSALS FOR 2021 ANNUAL MEETING OF STOCKHOLDERS | | | | | 34 | | |
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| APPENDIX A RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | | | | | A-1 | | |
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Date and Time
|
| | Thursday, June 18, 2020 at 9:00 a.m. Mountain Daylight Time | |
|
Location
|
| | PetIQ’s corporate headquarters, 923 S. Bridgeway Place, Eagle, Idaho 83616 | |
|
Record Date
|
| | April 24, 2020 | |
|
Shares Outstanding as
of the Record Date |
| | 28,379,173 shares of Common Stock outstanding, comprised of 24,329,515 shares of Class A Common Stock (the “Class A Common Stock”) and 4,049,658 shares of Class B Common Stock (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”). Our Class A Common Stock and Class B Common Stock vote together on each of the matters set forth in this Proxy Statement. | |
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Voting
|
| | You are entitled to one (1) vote for each share of Common Stock you own, on each matter to be voted upon at the Annual Meeting of the Stockholders (the “Annual Meeting”). | |
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Proposal
|
| |
Board Recommendation
|
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| Election of director (page 4 ) | | |
FOR
|
|
| Ratification of Selection of Independent Registered Public Accounting Firm (page 29 ) | | |
FOR
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|
| | | | | | | | | | | | |
Board Committees
(2)
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| ||||||
|
Name
|
| |
Director
Class (1) |
| |
Director
Since |
| |
Independent
|
| |
Compensation
|
| |
Audit
|
| |
Nominating
and Corporate Governance |
|
| McCord Christensen | | |
III
|
| |
2017
|
| | | | | | | | | | | | |
| Larry Bird | | |
II
|
| |
2018
|
| |
X
|
| | | | |
X
|
| | | |
| James Clarke | | |
I
|
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2017
|
| |
X
|
| |
X
|
| | | | |
C
|
|
| Mark First | | |
II
|
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2017
|
| |
X
|
| |
C
|
| | | | |
X
|
|
| Scott Huff | | |
II
|
| |
2019
|
| |
X
|
| | | | | | | | | |
| Ronald Kennedy | | |
I
|
| |
2017
|
| |
X
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| |
X
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| |
X
|
| | | |
| Gary Michael | | |
III
|
| |
2017
|
| |
X
|
| |
X
|
| |
C
|
| | | |
| Will Santana | | |
I
|
| |
2018
|
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MCCORD CHRISTENSEN
Chief Executive Officer and Chairman
Class III Director since: 2017
Age: 47
Board Committees:
None |
| |
Mr. Christensen co-founded PetIQ in 2010 and has served as our Chief Executive Officer since our inception and as Chairman of our Board since our IPO. In addition to his leadership responsibilities as Chairman and CEO, Mr. Christensen’s expertise in retail and consumer products has enabled PetIQ to deliver targeted and well-executed commercial programs and products across the retail industry. Prior to founding PetIQ, Mr. Christensen gained extensive retail and management experience working at Albertson’s and as an executive in consumer product companies selling to leading U.S. retailers. Mr. Christensen holds a Bachelor of Science in Finance from Boise State University. We believe Mr. Christensen’s qualifications to serve as a director of our Company include his role of Chief Executive Officer of the Company, his experience in the consumer and retail industries, his expertise in corporate strategy and development, his demonstrated business acumen and his extensive experience identifying, consummating and integrating acquisitions.
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| |
The Board recommends that stockholders vote “FOR” the election of the director nominee.
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| |
|
Name
|
| |
Position
|
|
| McCord Christensen | | | Chief Executive Officer and Chairman | |
| Susan Sholtis | | | President | |
| John Newland | | | Chief Financial Officer | |
| Michael Smith | | | Executive Vice President, Products | |
| R. Michael Herrman | | | General Counsel and Secretary | |
| Larry Bird | | | Director | |
| James Clarke | | | Director | |
| Mark First | | | Lead Independent Director | |
| Scott Huff | | | Director | |
| Ronald Kennedy | | | Director | |
| Will Santana | | | Director | |
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LARRY BIRD
Director
Independent
Class II Director since: 2018
Age: 65
Board Committees:
Audit |
| |
Mr. Bird has served as a director and as a member of the Company’s Audit Committee since March 2018. Mr. Bird served as Senior Audit Partner at Deloitte & Touche LLP until his retirement in June 2017. As a Deloitte Audit Partner since 1989, Mr. Bird was actively engaged as the Lead Audit Partner responsible for planning and supervising audits for larger private companies and PCAOB Integrated Audits for publicly held companies spanning a variety of industries. Mr. Bird earned a Bachelor of Business Administration from the Idaho State University College of Business. We believe that Mr. Bird’s qualifications to serve as a director of our Company include his extensive financial acumen and detailed experience as Lead Audit Partner in a variety of industries.
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|
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JAMES N. CLARKE
Director
Independent
Class I Director since: 2017
Age: 47
Board Committees:
Compensation Nominating and Corporate Governance (Chair) |
| |
Mr. Clarke has served as a director since our IPO. Prior to our IPO, Mr. Clarke served as a member of PetIQ Holdings, LLC’s board of managers from 2012 until July 2017, serving as the board of managers’ chairman from 2012 until 2015. From 2011 until the formation of PetIQ Holdings, LLC in 2012, Mr. Clarke served as the chairman of PetIQ, LLC. Mr. Clarke is Chief Executive Officer and Managing Partner of Clarke Capital Partners, a growth equity and alternatives-focused family office, where he has served since 2011. Mr. Clarke is a director of several privately owned companies and non-profit organizations. Mr. Clarke is a Governor-appointed Trustee and Foundation Chair at Utah Valley University and also serves as the Chairman of the board of managers of Curza Global, LLC, a small-molecule drug development company focused on infectious diseases and oncology. Mr. Clarke is an alumnus of Brigham Young University and holds a Master of Management from the University of Oxford. We believe Mr. Clarke’s qualifications to serve as a director of our Company include his business experience, particularly as it relates to corporate strategy and investment matters, as well as his familiarity with PetIQ’s business and the industry in which we operate.
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MARK FIRST
Director
Independent
Class II Director since: 2017
Age: 55
Board Committees:
Compensation (Chair) Nominating and Corporate Governance |
| |
Mr. First has served as our Lead Independent Director since our IPO. Prior to our IPO, Mr. First served as a member of PetIQ Holdings, LLC’s board of managers from 2012 until July 2017. Mr. First is a Managing Director of Eos Management, L.P., an affiliate of ECP Helios Partners IV, L.P. and Eos Partners, L.P. (the “Eos Funds”), where he has been employed since March 1994. Mr. First was previously an investment banker with Morgan Stanley & Co. Incorporated from August 1991 until March 1994. Mr. First is a director of several privately owned companies and has been a director of Addus HomeCare, Inc. (NASDAQ: ADUS) since 2009. Mr. First holds a Bachelor of Science from The Wharton School of the University of Pennsylvania and a Master of Business Administration from Harvard Business School. We believe Mr. First’s qualifications to serve as a director of our Company include his experience as a director of other public companies and his experience in business, corporate strategy, acquiring and integrating business and investment matters.
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SCOTT HUFF
Director
Independent
Class II Director since: 2019
Age: 48
Board Committees:
None |
| |
Mr. Huff has served as a director since August 2019. Mr. Huff currently is the owner of a retail consulting firm, Amplify Retail Consulting LLC, which he started in June 2017. He previously served as Executive Vice President of the Consumables and Health & Wellness divisions at Walmart Stores, Inc. until his retirement in June 2017. Mr. Huff joined Walmart Stores, Inc. in 1994 and served in a variety of roles, including as Merchandise Manager, Divisional Merchandise Manager, Vice President and Regional Vice President. Mr. Huff earned a Bachelor of Science in Marketing from Missouri State University. Mr. Huff’s qualifications to serve as a director include his retail experience and knowledge of the pet health and wellness sector.
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RONALD KENNEDY
Director
Independent
Class I Director since: 2017
Age: 73
Board Committees:
Compensation Audit |
| |
Mr. Kennedy has served as a director since our IPO. Prior to our IPO, Mr. Kennedy served as a member of PetIQ Holdings, LLC’s board of managers from May 2012 until July 2017. From 2010 until the formation of PetIQ Holdings, LLC in 2012, Mr. Kennedy served as a director of PetIQ, LLC. Mr. Kennedy is the owner of the investment firm Kennedy Ventures and a founder of Western Benefit Solutions, an employee benefits consulting firm, which he sold in 2010. He was a board member of Ameriben, Inc., a human resource consulting and benefits administration service company until 2014. Mr. Kennedy holds a Bachelor of Science in Business Administration from Brigham Young University and a Master of Business Administration from Arizona State University. We believe Mr. Kennedy’s qualifications to serve as a director of our Company include his experience in corporate strategy, investment matters and corporate leadership.
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WILL SANTANA
Director
Class I Director since: 2018
Age: 47
Board Committees:
None |
| |
Mr. Santana has served as a director since our acquisition of VIP in January 2018 (the “VIP Acquisition” and the agreement pursuant to which the VIP Acquisition was completed, the “Purchase Agreement”). Mr. Santana was appointed to the Board pursuant to the terms of the Purchase Agreement. Prior to joining the Company, Mr. Santana served as the Chief Executive Officer of VIP since founding the company in 1997. We believe Mr. Santana’s qualifications to serve as a director of our Company include his experience in the veterinary health business.
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JOHN NEWLAND
Chief Financial Officer
Age: 56
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| |
Mr. Newland has served as our Chief Financial Officer since 2014 and as our Corporate Secretary from 2015 until March 2019. Prior to joining PetIQ, Mr. Newland gained extensive retail and consumer products experience working for Albertson’s, Inc. and SuperValu, Inc. in a range of finance roles. Mr. Newland is a retired fighter pilot and Commander in the Idaho Air National Guard, where he served from 1985 to 2013. Mr. Newland holds a Bachelor of Science degree in corporate finance from the University of Idaho and is a graduate of the United States Air Force Air War College.
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|
|
SUSAN SHOLTIS
President
Age: 53
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| |
Ms. Sholtis has served as President since October 2018. She previously served as a director from March 2018 to October 2018. Prior to her appointment as President, Ms. Sholtis served as Global Marketing Head in the Health Division at Reckitt Benckiser since 2017. From 2016 to 2017, Ms. Sholtis served as Head of North America Commercial Operations at Merial and was responsible for transitioning North America operations to Merial’s new owner, Boehringer Ingelheim. Prior to that, from 2006 to 2016, Ms. Sholtis served in a number of positions at Mead Johnson Nutrition, most recently as Head of Global Marketing. Ms. Sholtis earned a Bachelor’s degree from Butler University and a Masters of Business Administration from Emory University.
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|
|
MICHAEL SMITH
Executive Vice President, Products
Age: 42
|
| |
Mr. Smith has served as Executive Vice President, Products since July 2019. Prior to joining the PetIQ, Mr. Smith served in various leadership roles within the Pet and Personal Care categories for Walmart, Inc., since January 2015, most recently as Senior Buying Manager — Pets from February 2017 until May 2019. He previously worked as a Director for Colgate Palmolive October 2013 to January 2015. Prior to that, he served in various roles with Walmart, Procter & Gamble and Energizer. Mr. Smith earned a Bachelor of Science in Business Administration from the University of Arkansas.
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|
|
R. MICHAEL HERRMAN
General Counsel and Secretary
Age: 51
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| |
Mr. Herrman has served as General Counsel since February 2019. He previously worked as the Executive Director and the Head of Legal for Boehringer Ingelheim’s Animal Health business in Latin America from 2017 to 2019 and as the Executive Director and the Head of Legal for Boehringer Ingelheim’s Animal Health business in the United States from 2007 to 2017. Beginning in 2003, Mr. Herrman served in a number of positions at Boehringer Ingelheim and gained extensive experience in both the human pharmaceuticals business, and specifically the animal health business and industry, including as Executive Director, Executive Division Counsel and as a Director and Senior Counsel of Legal Operations. Mr. Herrman earned a Bachelor’s degree from the University of Connecticut, as well as a Master’s degree from S.I. Newhouse School of Public Communications and a law degree from Syracuse University College of Law. Prior to that, Mr. Herrman served in the United States Army.
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|
| | | |
Board Committees
(1)
|
| ||||||
|
Name
|
| |
Compensation
|
| |
Audit
|
| |
Nominating and
Corporate Governance |
|
| McCord Christensen | | | | | | | | | | |
| Larry Bird | | | | | |
X
|
| | | |
| James Clarke | | |
X
|
| | | | |
C
|
|
| Mark First | | |
C
|
| | | | |
X
|
|
| Scott Huff | | | | | | | | | | |
| Ronald Kennedy | | |
X
|
| |
X
|
| | | |
| Gary Michael | | |
X
|
| |
C
|
| | | |
| Will Santana | | | | | | | | | | |
Audit Committee
|
| |
Compensation Committee
|
| |
Nominating and Corporate
Governance Committee |
|
The Board has delegated to the Audit Committee oversight of our risk management processes. The Audit Committee also performs central oversight with respect to financial and compliance risks. | | | The Compensation Committee oversees risks associated with the Company’s compensation policies and practices. | | | The Nominating and Corporate Governance Committee oversees risks associated with corporate governance and board management. | |
|
Name
|
| |
Fees Earned or
Paid in Cash ($) |
| |
Stock Awards
($) (1) |
| |
All Other
Compensation ($) |
| |
Total
($) |
| ||||||||||||
| Mark First (2) | | | | | 44,985 | | | | | | 20,012 | | | | | | — | | | | | | 64,997 | | |
| Gary Michael | | | | | 41,750 | | | | | | 20,012 | | | | | | — | | | | | | 61,762 | | |
| James Clarke | | | | | 38,438 | | | | | | 20,012 | | | | | | — | | | | | | 58,450 | | |
| Ronald Kennedy | | | | | 33,000 | | | | | | 20,012 | | | | | | — | | | | | | 53,012 | | |
| Larry Bird | | | | | 33,000 | | | | | | 20,012 | | | | | | — | | | | | | 53,012 | | |
| Scott Huff (3) | | | | | 18,709 | | | | | | 50,005 | | | | | | — | | | | | | 68,714 | | |
|
Name and
Principal Position |
| |
Year
|
| |
Salary
($) |
| |
Bonus
($) (1) |
| |
Option
Awards ($) (2) |
| |
Stock
Awards ($) (3) |
| |
All Other
Compensation ($) (4) |
| |
Total
($) |
| |||||||||||||||||||||
| McCord Christensen | | | | | 2019 | | | | | | 516,026 | | | | | | 747,337 | | | | | | 409,649 | | | | | | 225,001 | | | | | | — | | | | | | 1,898,013 | | |
|
Chief Executive Officer
|
| | | | 2018 | | | | | | 491,440 | | | | | | 500,000 | | | | | | 1,476,000 | | | | | | — | | | | | | — | | | | | | 2,467,440 | | |
| John Newland | | | | | 2019 | | | | | | 387,019 | | | | | | 560,502 | | | | | | 204,830 | | | | | | 112,501 | | | | | | 8,400 | | | | | | 1,273,252 | | |
|
Chief Financial Officer
|
| | | | 2018 | | | | | | 371,434 | | | | | | 375,000 | | | | | | 738,862 | | | | | | — | | | | | | — | | | | | | 1,485,296 | | |
| Michael Smith (5) | | | | | 2019 | | | | | | 216,154 | | | | | | 733,949 | | | | | | 996,714 | | | | | | 409,566 | | | | | | 20,852 | | | | | | 2,376,312 | | |
| Executive Vice President, Product Division | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Name
|
| |
2019 Base Salary Rate ($)
(Effective January 1, 2019) |
| |
2020 Base Salary Rate ($)
(Effective January 1, 2020) |
| ||||||
| McCord Christensen | | | | | 515,000 | | | | | | 800,000 | | |
| John Newland | | | | | 386,250 | | | | | | 425,000 | | |
| Michael Smith | | | | | 400,000 | | | | | | 415,000 | | |
| | | |
Option Awards
|
| |
Stock Awards
|
| ||||||||||||||||||||||||||||||||||||||||||
|
Name
|
| |
Number of
Securities Underlying Unexercised Options (#) Exercisable (1) |
| |
Number of
Securities Underlying Unexercised Options (#) Unexercisable (1) |
| |
Option
Exercise Price ($) |
| |
Option
Expiration Date |
| |
Number of
Shares or Units of Stock That Have Not Vested (#) (2) |
| |
Market
Value of Shares or Units of Stock That Have Not Vested ($) (3) |
| |
Equity
Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) |
| |
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) |
| ||||||||||||||||||||||||
|
McCord Christensen
|
| | | | — | | | | | | 37,865 | | | | | | 27.73 | | | | | | 3/13/2029 | | | | | | 8,114 | | | | | | 203,256 | | | | | | — | | | | | | — | | |
| | | | | | 37,500 | | | | | | 112,500 | | | | | | 24.97 | | | | | | 3/15/2028 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | 102,702 | | | | | | 102,703 | | | | | | 16.00 | | | | | | 7/20/2027 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| John Newland | | | | | — | | | | | | 18,933 | | | | | | 27.73 | | | | | | 3/13/2029 | | | | | | 4,057 | | | | | | 101,628 | | | | | | — | | | | | | — | | |
| | | | | | 18,750 | | | | | | 56,250 | | | | | | 24.97 | | | | | | 3/15/2028 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | 71,778 | | | | | | 71,776 | | | | | | 16.00 | | | | | | 7/20/2027 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Michael Smith | | | | | — | | | | | | 100,000 | | | | | | 26.76 | | | | | | 5/30/2029 | | | | | | 15,508 | | | | | | 388,475 | | | | | | — | | | | | | — | | |
| | | |
Number of Securities
to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) (#) |
| |
Weighted Average
Exercise Price of Outstanding Options, Warrants and Rights (b) ($) (1) |
| |
Number of Securities
Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) (#) |
| |||||||||
| Equity compensation plans approved by stockholders (2) | | | | | 1,773,872 | | | | | $ | 25.48 | | | | | | 2,017,445 | | |
| Equity compensation plans not approved by stockholders (3) | | | | | 431,925 | | | | | $ | 21.37 | | | | | | — | | |
| Total | | | | | 2,072,414 | | | | | $ | 24.62 | | | | | | 2,017,445 | | |
| | | |
Shares of Class A
Common Stock Beneficially Owned |
| |
Shares of Class B
Common Stock Beneficially Owned |
| |
Combined
Voting Power |
| |||||||||||||||||||||
| | | |
Number
|
| |
Percentage
|
| |
Number
|
| |
Percentage
|
| ||||||||||||||||||
| 5% Stockholders | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Clarke Capital Entities (1) | | | | | — | | | | | | — | | | | | | 424,725 | | | | | | 10.5 % | | | | | | 1.5 % | | |
| Eos Funds (2) | | | | | 3,472,687 | | | | | | 14.3 % | | | | | | — | | | | | | — | | | | | | 12.2 % | | |
| Ivy Investment Management Company (3) | | | | | 1,809,780 | | | | | | 7.4 % | | | | | | — | | | | | | — | | | | | | 6.4 % | | |
| Alger Associates, Inc. (4) | | | | | 2,974,153 | | | | | | 12.2 % | | | | | | — | | | | | | — | | | | | | 10.5 % | | |
| Wasatch Advisors, Inc. (5) | | | | | 1,686,236 | | | | | | 6.9 % | | | | | | — | | | | | | — | | | | | | 5.9 % | | |
| BlackRock, Inc. (6) | | | | | 1,658,202 | | | | | | 6.8 % | | | | | | — | | | | | | — | | | | | | 5.8 % | | |
| Named Executive Officers and Directors | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Larry Bird (7) | | | | | 3,126 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
| McCord Christensen (8) | | | | | 1,534 | | | | | | * | | | | | | 214,027 | | | | | | 5.3 % | | | | | | * | | |
| James Clarke (1)(7)(9) | | | | | 37,342 | | | | | | * | | | | | | 1,793,680 | | | | | | 44.3 % | | | | | | 6.5 % | | |
| Mark First (7) | | | | | 3,474,479 | | | | | | 14.3 % | | | | | | — | | | | | | — | | | | | | 12.2 % | | |
| Scott Huff | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Ronald Kennedy (7)(10) | | | | | 130,747 | | | | | | * | | | | | | 169,956 | | | | | | 4.2 % | | | | | | 1.10 % | | |
| Gary Michael (7) | | | | | 1,792 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
| John Newland | | | | | 95,329 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
| Will Santana (11) | | | | | 101,566 | | | | | | * | | | | | | 711.433 % | | | | | | 17.6 % | | | | | | 2.8 % | | |
| Michael Smith (12) | | | | | 3,877 | | | | | | * | | | | | | — | | | | | | — | | | | | | * | | |
|
Total Executive Officers and Directors as a Group
(12 Persons) |
| | | | 3,955,579 | | | | | | 16.3 % | | | | | | 2,889,096 | | | | | | 71.3 % | | | | | | 24.1 % | | |
| | | |
2019
|
| |
2018
|
| ||||||
| Audit Fees (1) | | | | $ | 1,761,838 | | | | | $ | 1,754,400 | | |
| Audit-Related Fees (2) | | | | $ | 1,097,777 | | | | | $ | — | | |
| Tax Fees (3) | | | | $ | 13,000 | | | | | $ | 8,800 | | |
| Other (4) | | | | $ | — | | | | | $ | — | | |
| Total Fees | | | | $ | 2,872,615 | | | | | $ | 1,763,200 | | |
|
Record Date
|
| | If you were a stockholder of record on April 24, 2020, you are entitled to vote at the Annual Meeting. As of that date, there were 28,379,173 shares of the Company’s Common Stock outstanding, comprised of 24,329,515 shares of Class A Common Stock and 4,049,658 shares of Class B Common Stock. Our Class A Common Stock and Class B Common Stock vote together on each of the matters set forth in this Proxy Statement. You are entitled to one (1) vote for each share of Common Stock you own, on each matter to be voted upon at the Annual Meeting. | |
|
Quorum
|
| | A majority of shares of Common Stock outstanding on the record date must be present in person or by proxy. | |
|
Matters to be Voted on
at the Annual Meeting |
| |
1.
To elect one Class III director, to serve until the third annual meeting next succeeding his election and until his successor is elected and qualified (Proposal One);
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|
| | | |
2.
To ratify the selection of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020 (Proposal Two); and
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|
| | | |
3.
To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.
|
|
| | | | As of the date of this Proxy Statement, we do not know of any other matters to be presented at the Annual Meeting. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment. | |
|
Board Voting Recommendations
|
| |
The Board recommends that you vote:
1.
FOR
the election of the Class III director named in this Proxy Statement; and
|
|
| | | |
2.
FOR
the ratification of the selection of KPMG LLP as our independent registered public accounting firm for the year ended December 31, 2020.
|
|
|
How to Vote
|
| |
Only votes cast in person at the Annual Meeting or received by proxy prior to the Annual Meeting will be counted at the Annual Meeting. The Board asks you to appoint McCord Christensen and John Newland as your proxy holders to vote your shares at the Annual Meeting. Giving us your proxy means you authorize us to vote your shares at the Annual Meeting in the manner you direct. If your shares are held in your name, you can vote by proxy in three convenient ways:
•
By Internet
: Go to www.proxyvote.com and follow the instructions.
•
By Telephone
: Call toll-free 1-800-690-6903 and follow the instructions.
•
By Mail
: If you requested a printed copy of the Proxy Statement, complete, sign, date, and return your proxy card in the envelope provided.
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|
| | | |
Telephone and Internet voting facilities for stockholders of record will be available twenty-four (24) hours a day and will close at 12:00 a.m. Mountain Daylight Time on June 17, 2020. If your proxy is properly returned, the shares it represents will be voted at the Annual Meeting in accordance with your instructions. If you execute and return your proxy but do not give specific instructions, your shares will be voted as follows:
1.
FOR
the election of the Class III director named in this Proxy Statement; and
2.
FOR
the ratification of the selection of KPMG LLP as our independent registered public accounting firm for the year ended December 31, 2020.
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|
| | | | The Board does not intend to bring any matters before the Annual Meeting except those indicated in the Notice. If any other matters properly come before the Annual Meeting, however, the persons named in the enclosed proxy, or their duly constituted substitutes acting at the Annual Meeting, will be authorized to vote or otherwise act thereon in accordance with their judgment on such matters. | |
|
Internet Availability
|
| | As permitted by the SEC rules, PetIQ is making this Proxy Statement and its Annual Report available to its stockholders electronically via the Internet. On or about May 4, 2020, we will mail our stockholders a Notice, which contains instructions on how to vote, access this Proxy Statement and our Annual Report online, and how to request paper copies of the materials. If you receive a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review all of the important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet. If you receive a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained in the Notice. | |
|
Multiple Notices
|
| | You may receive more than one Notice, more than one e-mail or multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate Notice, a separate e-mail or a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you may receive more than one Notice, more than one e-mail or more than one proxy card. To vote all of your shares by proxy, you must complete, sign, date and return each proxy card and voting instruction card that you receive and vote over the Internet the shares represented by each Notice that you receive (unless you have requested and received a proxy card or voting instruction card for the shares represented by one or more of those Notices). | |
|
How Shares Are Held
|
| | Shareholders of record have their shares registered directly in their name with PetIQ’s transfer agent, Computershare Trust Company, N.A.. Beneficial holders (or shares held in street name) have their shares held in an account at a brokerage firm, bank, broker-dealer or other similar organization. | |
|
Voting at the
Annual Meeting |
| | We encourage stockholders to vote in advance of the Annual Meeting, even if they plan to attend. Stockholders can vote in person during the Annual Meeting. Stockholders of record who attend the Annual Meeting in person may obtain a ballot from the inspector of election. Beneficial holders who attend the Annual Meeting in person must obtain a proxy from their broker, bank, broker-dealer or other nominee prior to the date of the Annual Meeting and present it to the inspector of election with their ballot. Voting in person during the meeting will replace any previous votes. | |
|
Admission to the
Annual Meeting |
| | Attendance at the Annual Meeting or any adjournment or postponement thereof will be limited to record and beneficial stockholders as of the record date (April 24, 2020), individuals holding a valid proxy from a record holder and other persons authorized by the Company. If you are a stockholder of record, your name will be verified against the list of stockholders of record prior to your admittance to the Annual Meeting or any adjournment or postponement thereof. You should be prepared to present photo identification for admission. If you hold your shares in a street name, you will need to provide proof of beneficial ownership on the record date, such as a brokerage account statement showing that you owned stock as of the record date, a copy of a voting instruction form provided by your broker, bank, broker-dealer or other nominee, or other similar evidence of ownership as of the record date, as well as your photo identification, for admission. If you do not provide photo identification or comply with the other procedures described above, you will not be admitted to the Annual Meeting or any adjournment or postponement thereof. For security reasons, you and your bags may be subject to search prior to your admittance to the Annual Meeting. | |
|
Routine and
Non-Routine Matters |
| | Proposal One, the election of a Class III director, is considered a non-routine matter under applicable rules. A broker or other nominee cannot vote without instructions on non-routine matters, and therefore broker non-votes may exist in connection with Proposal One. Proposal Two, the ratification of the appointment of KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2020, is considered a routine matter under applicable rules. A broker or other nominee may generally vote on routine matters, and therefore no broker non-votes are expected to exist in connection with Proposal Two. | |
|
Voting Instructions
|
| | All shares represented by valid proxies received prior to the Annual Meeting will be voted and, where a stockholder specifies by means of the proxy a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the stockholder’s instructions. If you are a stockholder of record and you indicate when voting on the Internet or by telephone that you wish to vote as recommended by the Board or you sign and return a proxy card without giving specific voting instructions, then the proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting. If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.” In tabulating the voting results for any particular proposal, shares that constitute broker non-votes are not considered votes cast on that proposal. Thus, other than being counted for the purpose of determining a quorum, broker non-votes will not affect the outcome of any matter being voted on at the Annual Meeting or any postponement or adjournment of the Annual Meeting. | |
|
Votes Required;
Effect of Broker Non-Votes and Abstentions |
| |
Each holder of shares of our Common Stock outstanding on the record date is entitled to one vote for each share of Common Stock held as of the record date.
With respect to Proposal One, directors are elected by a plurality of the voting power of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting. Therefore, the director nominee receiving the highest number of affirmative votes of the shares of Common Stock present in person or represented by proxy at the meeting and entitled to be voted for them will be elected as a director to serve until the 2023 annual meeting of stockholders. Stockholders may not cumulate votes. Votes to withhold and broker non-votes will have no effect on the outcome of the vote for Proposal One.
Proposal Two, the ratification of KPMG as our independent registered public accounting firm for the year ending December 31, 2020, requires the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the Annual Meeting. Abstentions are treated as shares present and entitled to vote for purposes of such proposal and, therefore, will count for purposes of determining a quorum but will have the same effect as a vote “AGAINST” the proposal. Proposal Two is a routine matter and no broker non-votes are expected to exist in connection with Proposal Two.
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Changing your Vote
|
| | Stockholders of record may revoke their proxy at any time prior to the Annual Meeting by submitting a later-dated vote in person at the Annual Meeting, via the Internet, by telephone, by mail, or by delivering instructions to our Corporate Secretary before the Annual Meeting. If you hold shares through a broker, bank or other nominee, you may revoke any prior voting instructions by contacting that firm. | |
|
Inspector of Election
|
| | A representative from Broadridge Financial Solutions, Inc. will serve as the inspector of election. | |
|
Voting Results
|
| | We will announce the results of the Annual Meeting in a filing with the SEC on Form 8-K, which we are required to file with the SEC within four business days following the Annual Meeting. | |
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Cost of Solicitation
|
| | We will bear the cost of soliciting proxies, including preparing, printing and mailing this Proxy Statement. Proxies may be solicited personally, by mail, via the Internet or by telephone by certain of our directors, officers, employees or representatives. Our directors and employees will not be paid any additional compensation for soliciting proxies. We will reimburse brokerage houses, banks, custodians and other nominees and fiduciaries for out-of-pocket expenses incurred in forwarding our proxy solicitation materials. | |
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Householding
|
| |
Under the rules adopted by the SEC, we may deliver a single set of proxy materials to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one set of proxy materials to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the proxy materials, as requested, to any stockholder at the shared address to which a single copy of these documents was delivered. If you prefer to receive separate copies of the Notice, Proxy Statement or Annual Report, contact Broadridge Financial Solutions, Inc. by calling 800-540-7095 or writing in at 51 Mercedes Way, Edgewood, New York 11717, Attention: Householding Department.
In addition, if you currently are a stockholder who shares an address with another stockholder and would like to receive only one copy of future notices and proxy materials for your household, you may notify your broker if your shares are held in a brokerage account or you may notify us if you hold registered shares. Registered stockholders may notify us by contacting Broadridge Financial Solutions, Inc. at the above telephone number or address or sending a written request to PetIQ, Inc., 923 S. Bridgeway Place, Eagle, Idaho 83616, Attention: Investor Relations.
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|
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We are an Emerging
Growth Company |
| | We are an “emerging growth company” as defined in the JOBS Act. For as long as we are an emerging growth company, we will not be required to provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, or obtain stockholder approval of any golden parachute payments not previously approved. In addition, because we are an emerging growth company, we are not required to include a Compensation Discussion and Analysis section in this Proxy Statement and have elected to comply with the scaled-down executive compensation disclosure requirements applicable to emerging growth companies. We could be an emerging growth company through December 31, 2022, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur at the end of the fiscal year during which the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period. Under Section 107(b) of the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we are subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. | |
| | | |
For the years ended
|
| |||||||||||||||||||||
| | | |
December 31,
2019 |
| |
December 31,
2018 |
| |
December 31,
2017 |
| |
December 31,
2016 |
| ||||||||||||
|
Net (loss) income
|
| | | $ | (14,302 ) | | | | | $ | 87 | | | | | $ | 7,817 | | | | | $ | (3,395 ) | | |
|
Plus:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Tax (benefit) expense
|
| | | | (3,309 ) | | | | | | (661 ) | | | | | | 3,970 | | | | | | — | | |
|
Depreciation
|
| | | | 9,139 | | | | | | 6,657 | | | | | | 2,348 | | | | | | 1,915 | | |
|
Amortization
|
| | | | 5,994 | | | | | | 5,210 | | | | | | 1,052 | | | | | | 1,067 | | |
|
Interest
|
| | | | 14,495 | | | | | | 8,022 | | | | | | 1,563 | | | | | | 3,058 | | |
| EBITDA | | | | $ | 12,017 | | | | | $ | 19,315 | | | | | $ | 16,750 | | | | | $ | 2,645 | | |
|
Acquisition costs
(1)
|
| | | | 6,147 | | | | | | 3,787 | | | | | | 1,965 | | | | | | — | | |
|
Management fees
(2)
|
| | | | — | | | | | | — | | | | | | 610 | | | | | | 864 | | |
|
Costs associated with becoming a public company
|
| | | | — | | | | | | — | | | | | | 2,710 | | | | | | 2,180 | | |
|
Supplier Receivable recovery
(3)
|
| | | | — | | | | | | — | | | | | | (175 ) | | | | | | — | | |
|
Stock based compensation expense
|
| | | | 7,335 | | | | | | 3,812 | | | | | | 447 | | | | | | — | | |
|
Purchase accounting adjustment to inventory
|
| | | | 4,805 | | | | | | 2,149 | | | | | | — | | | | | | — | | |
|
Non same-store revenue
(4)
|
| | | | (8,088 ) | | | | | | (3,967 ) | | | | | | — | | | | | | — | | |
|
Non same-store costs
(4)
|
| | | | 19,553 | | | | | | 10,345 | | | | | | — | | | | | | — | | |
|
Fair value adjustment of contingent note
(5)
|
| | | | 7,320 | | | | | | 3,280 | | | | | | — | | | | | | — | | |
|
Integration costs and costs of discontinued clinics
|
| | | | 3,788 | | | | | | 998 | | | | | | — | | | | | | — | | |
|
Clinic launch expenses
(6)
|
| | | | 767 | | | | | | 1,380 | | | | | | — | | | | | | — | | |
|
Non-recurring royalty settlement
(7)
|
| | | | — | | | | | | 440 | | | | | | — | | | | | | — | | |
|
SKU rationalization
(8)
|
| | | | 6,482 | | | | | | — | | | | | | — | | | | | | — | | |
|
Litigation expenses
|
| | | | 529 | | | | | | — | | | | | | — | | | | | | 3,262 | | |
|
Loss on debt extinguishment
|
| | | | — | | | | | | — | | | | | | — | | | | | | 1,681 | | |
|
Adjusted EBITDA
|
| | | $ | 60,675 | | | | | $ | 41,539 | | | | | $ | 22,307 | | | | | $ | 10,632 | | |
|