DEF: Hain Celestial Reports Challenging FY25, Misses Targets

Hain Celestial Group announces a challenging fiscal year 2025 with missed financial targets, resulting in no executive incentive payouts, and outlines key proposals for its upcoming 2025 Annual Meeting.

Summary

• The 2025 Annual Meeting of Stockholders will be held virtually on Thursday, October 30, 2025, at 12:30 p.m. Eastern Time.
• Stockholders will vote on the election of seven director nominees, an advisory vote on named executive officer (NEO) compensation for fiscal year ended June 30, 2025, ratification of Ernst & Young LLP as independent accountants for fiscal year ending June 30, 2026, and approval of an amendment to the 2022 Long Term Incentive and Stock Award Plan.
• Fiscal year 2025 financial highlights include Organic Net Sales of $1,443.6 million and Adjusted EBITDA of $113.8 million.
• The company experienced a challenging fiscal year, leading to a 0% payout under the Annual Incentive Plan for NEOs due to not meeting threshold goals for adjusted EBITDA and organic net sales.
• No performance share units (PSUs) vested under the 2022-2024 or 2023-2025 long-term incentive programs as threshold targets were not achieved.
• Alison E. Lewis was appointed Interim President and Chief Executive Officer effective May 7, 2025, following the termination of Wendy P. Davidson without cause.
• Chad D. Marquardt, former President, North America, was terminated without cause effective August 1, 2025.
• The proposed amendment to the 2022 Long Term Incentive and Stock Award Plan seeks to increase the number of shares available for issuance by 3,000,000, from 12,950,000 to 15,950,000 shares.

Sentiment

Score: 3

Explanation: The company reported significant financial underperformance for fiscal year 2025, including a substantial net loss and failure to meet key Adjusted EBITDA and Organic Net Sales targets. This led to a 0% payout for executive annual incentives and no vesting of long-term performance share units. Recent changes in top management (CEO and President, North America, terminations) further indicate operational and leadership challenges. While a turnaround strategy is outlined, the immediate financial results are deeply concerning and suggest a difficult period ahead.

Positives

• The company maintains a strong commitment to effective corporate governance, including annual Board and Committee self-evaluations and regular executive sessions.
• Robust compensation best practices are in place, such as double-trigger change-in-control vesting, no excise tax reimbursements, clawback policies for cash and equity incentive compensation, and strict stock ownership guidelines for directors and executive officers.
• The Board features independent leadership, with the roles of Chair and CEO separated since 2018, and demonstrates ongoing refreshment (100% over eight years, 57% over six years, 29% over two years) and diversity.
• Stockholder rights are robust, including the ability to act by written consent, call special meetings, annual election of directors, majority voting in uncontested elections, proxy access, and a single class of common stock with no supermajority voting provisions.
• The company's Impact strategy focuses on healthier products, a healthier planet, and healthier people, with highlights including 84 metric tons of plastic avoided annually, 2 Certified B Corps, a B CDP Climate Score (highest since 2016), 81% food waste diverted from landfill in North America, 66% renewable electricity procured globally, and 1.8 million lbs of global food and personal care product donations.
• All directors are currently in compliance with the director stock ownership guidelines.

Negatives

• Fiscal year 2025 was a challenging year, and the company did not meet its financial objectives.
• The total Company payout percentage under the Annual Incentive Plan for fiscal year 2025 was 0% due to adjusted EBITDA and organic net sales performance not meeting respective threshold goals.
• No performance share units vested under the 2022-2024 or 2023-2025 long-term incentive programs, as threshold targets were not achieved.
• Wendy P. Davidson, former President and CEO, was terminated without cause effective May 6, 2025.
• Chad D. Marquardt, former President, North America, was terminated without cause effective August 1, 2025.
• The company reported a net loss of $(530,841) thousand for fiscal year 2025.

Risks

• Future performance, results of operations, and financial condition are subject to risks, uncertainties, and assumptions.
• Increasing market competition for products poses a challenge.
• Supply chain pressures continue to impact operations.
• The evolving business strategy carries inherent execution risks.
• Enterprise risks include overall financial risks, risks to global operations, information security and cybersecurity, company strategy, corporate governance, executive compensation, impact and corporate reputation, public policy, people, talent and culture, and employee and product safety.
• Cybersecurity risk management is an ongoing concern, with details referenced in the Annual Report on Form 10-K.
• The proposed amendment to the 2022 Long Term Incentive and Stock Award Plan, if approved, would increase the total potential dilution rate by 3.32% to approximately 14.44%.

Future Outlook

The company acknowledges that the path to sustainable growth will take time but is swiftly taking action to improve its trajectory, deliver cash, and pay down debt to strengthen its financial health. It expects to continue utilizing equity-based compensation to attract, retain, and motivate employees, directors, consultants, and service providers. The company is also developing a 2025 Impact Report to update stakeholders on progress against its Impact goals. The next advisory vote on the frequency of Say on Pay is expected at the 2029 annual meeting of stockholders.

Management Comments

• We believe that holding a virtual meeting again this year is in the best interest of the Company and all of its stakeholders and will allow for stockholder participation using our online tools.
• On behalf of the Company and the members of the Board of Directors, we thank you for your investment and confidence in Hain as a leading better-for-you company. We would like to thank our Hain team members for their continued dedication and commitment to Hain.
• Following a challenging fiscal year, we are creating greater financial flexibility by rapidly resetting our cost structure to better align with our current business.
• We are implementing a stronger regional operating model that prioritizes speed, simplicity, and impact over global infrastructure.
• Our focused turnaround strategy is anchored on five actions to win in the marketplace and drive growth: Streamlining the portfolio, Driving productivity and working capital efficiency, Accelerating brand renovation and innovation, Strengthening digital capabilities, Implementing strategic revenue growth management & pricing.
• Though the path to sustainable growth will take time, we are swiftly taking action to improve our trajectory while delivering cash and paying down debt, strengthening our financial health.
• We are a global health and wellness company whose purpose is to inspire healthier living for people, communities, and the planet through better-for-you brands.
• We believe a majority of the compensation for our NEOs should be dependent on the success of our Company so that the interests of our NEOs are aligned with the long-term interests of our stockholders.
• The Compensation Committee believes that this result demonstrates our commitment to link pay and performance and align the interests of our NEOs with the long-term interests of our stockholders.

Industry Context

The company operates in the competitive global better-for-you food and beverage industry, facing challenges such as increasing market competition and supply chain pressures, which are common across the consumer packaged goods sector. Its strategic focus on streamlining its portfolio, driving productivity, accelerating innovation, strengthening digital capabilities, and implementing strategic revenue growth management aligns with broader industry trends for companies seeking to adapt and grow in a dynamic market. The emphasis on an 'Impact strategy' (ESG) also reflects a growing trend among consumers and investors for sustainable and socially responsible business practices within the food and beverage sector. The compensation peer group includes other established food and personal care companies, indicating a competitive landscape for talent and market positioning.

Comparison to Industry Standards

• The compensation peer group for benchmarking executive pay includes B&G Foods, Inc., The Marzetti Company (formerly Lancaster Colony Corporation), BellRing Brands, Inc., Post Holdings, Inc., Edgewell Personal Care Company, The Simply Good Foods Company, Flowers Foods, Inc., TreeHouse Foods, Inc., J&J Snack Foods Corp., and Utz Brands, Inc.
• Relative Total Shareholder Return (TSR) for performance share units is benchmarked against the S&P Food & Beverage Select Industry Index.
• The company's 3-year average burn rate of 1.36% is presented as an appropriate level for attracting, rewarding, and retaining employees.
• The company achieved its highest B CDP Climate Score since it began reporting in 2016, indicating an improvement in environmental performance relative to its own historical standards.
• The company reported its first world-class incident rating with a Total Recordable Incident Rate below 1.00 for workplace safety globally.

Management Changes

Corporate Governance

Legal Proceedings

• The company incurred certain litigation expenses, net, related to a securities class action, baby food litigation, and an SEC investigation, which were adjusted for in the Adjusted EBITDA calculation for fiscal year 2025.

Related Party Transactions

• There have been no disclosable related party transactions since the beginning of fiscal year 2025.

Stakeholder Impact

• **Shareholders**: Directly impacted by the company's significant financial underperformance in FY2025, including a net loss and missed targets, which led to no executive annual incentive payouts and no vesting of long-term performance share units. They have the opportunity to vote on key governance matters, including director elections, executive compensation, and an equity plan amendment, at the virtual 2025 Annual Meeting. The proposed increase in shares for the Long Term Incentive Plan could lead to further dilution.
• **Employees**: Affected by the challenging fiscal year and the company's turnaround strategy, which involves resetting the cost structure. While the company aims to attract and retain talent through equity awards, the lack of payouts for FY2025 performance may impact morale. The company's focus on talent management, culture, and workplace safety (achieving a 'world-class incident rating') is positive for employee well-being.
• **Customers/Consumers**: The company's strategic focus on 'better-for-you brands,' 'brand renovation and innovation,' 'digital capabilities,' and 'strategic revenue growth management & pricing' aims to improve product offerings and market engagement. The Impact strategy emphasizes 'healthier products' and 'healthier people,' which could resonate positively with consumers.
• **Suppliers/Creditors**: The company's efforts to 'deliver cash and pay down debt' and 'strengthen financial health' are positive for creditors. The focus on 'driving productivity and working capital efficiency' may impact relationships with suppliers.
• **Management**: Directly impacted by the 0% payout under the Annual Incentive Plan and no vesting of PSUs for FY2025 performance. The recent terminations of the CEO and President, North America, indicate significant leadership changes and the pressure to execute the turnaround strategy. The Board's active engagement in CEO succession planning and oversight of talent management is crucial for management stability.

Next Steps

• Stockholders will vote on the election of seven director nominees at the 2025 Annual Meeting.
• Stockholders will cast an advisory vote on named executive officer compensation for fiscal year 2025.
• Stockholders will vote on the ratification of Ernst & Young LLP as independent accountants for fiscal year ending June 30, 2026.
• Stockholders will vote on the approval of an amendment to The Hain Celestial Group, Inc. 2022 Long Term Incentive and Stock Award Plan.
• The company will continue to implement its five-action turnaround strategy focused on streamlining the portfolio, driving productivity, accelerating brand renovation and innovation, strengthening digital capabilities, and implementing strategic revenue growth management & pricing.
• If the amendment to the 2022 Long Term Incentive and Stock Award Plan is approved, the company intends to register the Additional Share Pool on a Form S-8 Registration Statement.
• The company is developing a 2025 Impact Report to update key stakeholders on material progress against its Impact goals.
• The next advisory vote on the frequency of the Say on Pay vote is expected to occur at the annual meeting of stockholders in 2029.

Key Dates

Recommendation

The company reported a challenging fiscal year 2025 with significant financial underperformance, including a net loss of $(530.8) million, and failure to meet adjusted EBITDA and organic net sales targets. This resulted in a 0% payout for the Annual Incentive Plan and no vesting of performance share units under long-term incentive programs, indicating a severe lack of performance. Recent terminations of the CEO and President, North America, further highlight operational and leadership challenges. While a turnaround strategy is outlined, the immediate financial results are deeply concerning and suggest a difficult period ahead, warranting a cautious or negative stance on the stock.

Keywords

Hain Celestial, Proxy Statement, Corporate Governance, Executive Compensation, Long Term Incentive Plan, Director Election, Financial Performance, Organic Net Sales, Adjusted EBITDA, Consumer Packaged Goods, Health and Wellness, Sustainability, Risk Management, Shareholder Meeting, CEO Transition