DEF 14A: Marzetti Co. Sets 2025 Shareholder Meeting Agenda

The Marzetti Company announces its 2025 Annual Meeting of Shareholders, detailing director elections, executive compensation votes, and a new omnibus incentive plan.

Summary

• The Annual Meeting of Shareholders will be held virtually on November 19, 2025, at 1:00 p.m. Eastern Time.
• Shareholders will vote on the election of four directors, the non-binding approval of named executive officer compensation, the approval of The Marzetti Company 2025 Omnibus Incentive Plan, and the ratification of Deloitte & Touche LLP as the independent registered public accounting firm for the year ending June 30, 2026.
• Fiscal 2025 consolidated net sales increased 2.0% to $1.9 billion.
• Retail segment net sales reached a record $1,003.4 million, a 1.5% increase from the prior year, or 3.3% excluding exited product lines.
• Foodservice segment net sales increased 2.5% to a record $905.7 million, or 0.9% excluding temporary supply agreement sales.
• Fiscal 2025 operating income increased $21.0 million or 10.5% to $220.3 million.
• Net income and net income per common share (fully diluted) increased 5.5% and 5.4%, respectively.
• The company ended fiscal 2025 with a cash balance of $161.5 million and no debt.
• Return on beginning shareholders equity was 18.1%.
• Shareholders experienced an annual total shareholder return of 12.5% over the last three fiscal years (2023-2025), including record dividends of $103.5 million in fiscal 2025.
• Payouts for fiscal 2023 Performance Share Units (PSUs) were 186% of target for relative Total Shareholder Return (rTSR) and 135% of target for Net Sales Growth.
• The 2025 Omnibus Incentive Plan, which will replace the expiring 2015 Plan, reserves 1,500,000 shares for future awards.

Sentiment

Score: 8

Explanation: The company reported strong financial performance with increases in net sales, operating income, and net income, alongside a healthy cash balance and significant shareholder returns. Executive compensation payouts exceeded targets for long-term incentives, reflecting strong performance relative to peers. The proposed new incentive plan and continued strategic growth initiatives indicate a positive outlook, despite some minor headwinds in specific segments and a non-cash pension charge.

Positives

• Consolidated net sales increased 2.0% to $1.9 billion in fiscal 2025.
• Retail segment net sales reached a record $1,003.4 million, increasing 3.3% excluding exited product lines, driven by licensing programs and new gluten-free products.
• Foodservice segment net sales increased 2.5% to a record $905.7 million, driven by increased demand from national chain restaurant customers and branded product growth.
• Fiscal 2025 operating income increased $21.0 million or 10.5% to $220.3 million, primarily due to a $23.3 million increase in gross profit from cost savings, volume growth, and modest cost deflation.
• Net income and net income per common share (fully diluted) increased 5.5% and 5.4%, respectively.
• The company demonstrated continued financial strength with a year-end cash balance of $161.5 million and no debt.
• Return on beginning shareholders equity was 18.1%.
• Shareholders experienced an annual total shareholder return of 12.5% over the last three fiscal years (2023-2025), including record dividends of $103.5 million in fiscal 2025.
• The executive compensation program received strong shareholder support with 99.1% approval at the 2024 Annual Meeting.
• Fiscal 2023 rTSR PSUs resulted in a payout of 186% of target, significantly outperforming the S&P 1500 Packaged Foods & Meats Index.
• Fiscal 2023 Net Sales Growth PSUs resulted in a payout of 135% of target.
• Most Named Executive Officers (NEOs) have met or are on track to comply with share ownership guidelines.

Negatives

• Retail segment year-over-year comparisons were unfavorably impacted by prior-year sales attributed to perimeter-of-the-store bakery product lines exited in March 2024.
• Foodservice segment net sales were unfavorably impacted in the back half of fiscal 2025 by menu changes implemented by two national chain restaurant customers shifting focus to value offerings.
• Fiscal 2025 income before income taxes includes a $14.0 million noncash settlement charge resulting from the termination of all legacy pension plans.
• Selling, general and administrative (SG&A) expenses increased by $12.2 million, reflecting increased IT investment and incremental expenditures from the Atlanta plant acquisition.
• There were two untimely Section 16(a) reports filed for Tanya Berman and David A. Ciesinski during fiscal year ended June 30, 2025.

Risks

• The Board and its committees oversee risk management, including those related to incentive compensation programs and policies.
• The Nominating and Governance Committee monitors compliance with Corporate Governance Principles and reviews management of risks related to corporate social responsibility, including sustainability and the environment.
• The Enterprise Risk Management Committee (ERM Committee) is responsible for developing sound policies, procedures, and practices for managing major financial, litigation, enterprise, information security, technology, and cybersecurity risks.
• Compensation programs are assessed to ensure they do not encourage executive officers or other employees to take unnecessary or excessive risks that could threaten operating results, financial condition, or long-term shareholder value.

Future Outlook

The company plans to continue its three-pillar growth strategy: accelerate base business growth, simplify the supply chain to reduce costs and grow margins, and expand the core business with retail licensing and complementary mergers and acquisitions. The 2026 Annual Incentive Plan will continue with the same performance metric weightings, and the 2026 Long-Term Incentive Design will replace restricted stock with restricted stock units (RSUs).

Management Comments

• We continued the three-pillar growth strategy we believe will best increase long-term shareholder value: (1) accelerate our base business growth; (2) simplify our supply chain to reduce our costs and grow our margins; and (3) expand our core business with our Retail licensing program and complementary mergers and acquisitions.
• We believe the outcomes [of the 2025 AIP] fairly represent the financial performance of the Corporation and the achievements of our NEOs in achieving their personal performance goals and objectives.
• We believe the total target compensation for our NEOs for fiscal 2025 was in line with market compensation paid for executives holding similar positions in our 2025 Peer Group.

Industry Context

The company operates in the packaged foods industry, with its performance compared against the S&P 1500 Packaged Foods & Meats Index for relative total shareholder return. The company's strategic focus on retail licensing and mergers and acquisitions suggests a dynamic approach to growth within a competitive sector. The impact of national chain restaurant menu changes on Foodservice sales highlights sensitivity to customer strategies and market shifts towards value offerings.

Comparison to Industry Standards

• The company's net sales were at the 48th percentile of its 2025 Peer Group (B&G Foods, Cal-Maine Foods, Flowers Foods, J&J Snack Foods Corp., John B. Sanfilippo & Son, Inc., Lamb Weston Holdings, Inc., McCormick & Company, Incorporated, Post Holdings, Inc., Sovos Brands, Inc., SunOpta Inc., The Hain Celestial Group, Inc., The Simply Good Foods Company, Tootsie Roll Industries, Inc., Treehouse Foods, Inc., Utz Brands, Inc., WK Kellogg Co).
• Market cap was at the 79th percentile of the peer group.
• Total enterprise value was at the 75th percentile of the peer group.
• The company's rTSR of 45.14% for the 2023-2025 performance period was above the 75th percentile of the S&P 1500 Packaged Foods & Meats Index (15.75%), resulting in a 186% payout for rTSR PSUs.

Management Changes

Corporate Governance

Related Party Transactions

• John B. Gerlach, Jr., a Director, is the son of Dareth A. Gerlach, who is a beneficial owner of more than five percent of the Corporation's common stock.
• The Audit Committee reviews and approves or ratifies any transaction between the Corporation and a related person, considering the nature of the related person's interest, material terms, and significance to both the related person and the Corporation.

Stakeholder Impact

• Shareholders: Positive impact from increased net sales, operating income, net income, strong cash balance, and significant total shareholder return (12.5% over 3 years). The proposed Omnibus Incentive Plan aims to align executive compensation with shareholder value. Shareholders will vote on key governance and compensation matters.
• Employees: Approximately 150 employees, including 40 officers, would be eligible to participate in the proposed 2025 Omnibus Incentive Plan. Employees are eligible for 401(k) plans, health insurance, and group life insurance.
• Customers: Retail licensing programs (e.g., Texas Roadhouse, Chick-fil-A, Subway sauces) and new product introductions (e.g., gluten-free New York Bakery frozen garlic bread) indicate product innovation and expanded offerings.
• Management: Executive compensation is tied to financial and individual performance, with strong payouts for fiscal 2023 PSUs. New incentive plan and salary adjustments for fiscal 2026 aim to attract, retain, and motivate key executive talent.

Next Steps

• Shareholders will elect four directors for terms expiring in 2028 at the Annual Meeting on November 19, 2025.
• Shareholders will cast a non-binding vote on the compensation of the named executive officers at the Annual Meeting.
• Shareholders will vote on the approval of The Marzetti Company 2025 Omnibus Incentive Plan at the Annual Meeting.
• Shareholders will ratify the selection of Deloitte & Touche LLP as the independent registered public accounting firm for the year ending June 30, 2026, at the Annual Meeting.
• The Compensation Committee will continue to consider results from future shareholder advisory votes in its ongoing evaluation of executive compensation programs.
• The 2026 Annual Incentive Plan will continue with the same performance metric weightings as the 2025 AIP.
• The 2026 Long-Term Incentive Design will replace restricted stock with restricted stock units (RSUs).
• All nonemployee directors are anticipated to receive a grant of restricted stock units with a market value of approximately $135,000 at the time of the 2025 Annual Meeting.

Key Dates

Recommendation

The Marzetti Company demonstrates robust financial health with solid growth in net sales, operating income, and net income for fiscal 2025. The company maintains a strong balance sheet with $161.5 million in cash and no debt, indicating financial stability and flexibility. Shareholder returns have been impressive, with a 12.5% annual total shareholder return over the last three fiscal years and record dividends. The executive compensation structure, which is heavily weighted towards performance-based equity, has proven effective, as evidenced by the significant payouts for the 2023 PSUs, reflecting outperformance against industry benchmarks. The proposed 2025 Omnibus Incentive Plan further reinforces a commitment to long-term shareholder value creation. While there are minor headwinds in specific segments, the overall strategic direction and financial performance suggest continued positive momentum, making it an attractive investment.

Keywords

Marzetti Company, Proxy Statement, Shareholder Meeting, Executive Compensation, Corporate Governance, Director Election, Omnibus Incentive Plan, Financial Performance, Net Sales, Operating Income, Total Shareholder Return, Packaged Foods, Foodservice, Retail, Risk Management, Deloitte & Touche