DEF 14A: Leslies, Inc. Seeks Shareholder Approval for Director Removal and Officer Liability Amendments

Leslies, Inc. is asking shareholders to vote on proposals to amend its corporate charter, including allowing for the removal of directors with or without cause and limiting the liability of certain company officers.

Summary

• Leslies, Inc. is holding its Annual Meeting of Shareholders on March 12, 2025, to vote on several key proposals.
• The proposals include the election of three Class I directors and one Class II director, ratification of Ernst & Young LLP as the independent registered public accounting firm, and a non-binding advisory vote on executive compensation.
• A significant proposal involves amending the company's certificate of incorporation to allow shareholders to remove directors with or without cause, effective as of the 2027 Annual Meeting.
• Another proposed amendment seeks to limit the liability of certain company officers, aligning with recent changes in Delaware law.
• The board recommends voting FOR all director nominees, the ratification of Ernst & Young, the approval of executive compensation, and both proposed amendments to the certificate of incorporation.

Sentiment

Score: 6

Explanation: The document is primarily informational, outlining proposals for shareholder vote. While there are some positive aspects, such as the alignment of executive interests with shareholders, the negative performance against incentive plan metrics and the CEO pay ratio temper the overall sentiment.

Positives

• The proposed amendments to the certificate of incorporation align with Delaware law and could enhance the company's ability to attract and retain qualified officers and directors.
• The virtual format of the annual meeting provides expanded access and improved communication for shareholders.
• The company has a clawback policy in place to recoup compensation in the event of financial restatements due to material noncompliance with reporting requirements.
• The company prohibits hedging and pledging of company stock by executive officers and directors, aligning their interests with shareholders.
• The company has stock ownership guidelines for NEOs and non-employee directors to align their interests with the long-term interests of shareholders.

Negatives

• The company's performance against incentive plan metrics for fiscal year 2024 was below the thresholds, resulting in no cash bonuses for NEOs and forfeiture of PSUs.
• The company's Adjusted EBITDA performance of $108.7 million was significantly below the target of $180.0 million for bonus payouts.
• The company's CEO pay ratio is estimated to be 60 to 1, which may be a concern for some shareholders.

Risks

• Failure to attract, train, retain, and motivate qualified personnel could impact the company's future success.
• Cybersecurity threats and data breaches pose a risk to the company's operations and customer data.
• Changes in consumer preferences and economic conditions could impact the company's financial performance.
• Litigation and regulatory matters could result in significant costs and liabilities.
• Supply chain disruptions and inflationary pressures could impact the company's profitability.

Future Outlook

The document includes forward-looking statements regarding the company's environmental and sustainability plans and goals, which are subject to risks and uncertainties.

Management Comments

• On behalf of the Board of Directors, it is our pleasure to invite you to attend the 2025 Annual Meeting of Shareholders of Leslies, Inc.
• On behalf of our Board of Directors, we would like to thank you for your continued interest and investment in Leslies.

Industry Context

Leslies operates in the $15 billion United States pool and spa care industry, holding a market-leading share of approximately 15% of residential aftermarket product spend as of 2023.

Comparison to Industry Standards

• The peer group used to inform compensation decisions for fiscal year 2024 was comprised of: Boot Barn Holdings, Inc., Johnson Outdoors Inc, The AZEK Company, Inc., Container Store Group, Inc., MarineMax, Inc., Topgolf Callaway Brands Corp., Crocs, Inc., Monro, Inc., Trex Company, Floor & Dcor, National Vision Holdings, Inc., YETI Holdings, Inc., Haverty Furniture Companies, Inc, Ollies Bargain Outlet Holdings, Inc.
• At the time the peer group was approved (May 2023), our market capitalization and trailing four quarters revenues were just below the median of the peer group.

Management Changes

Corporate Governance

Related Party Transactions

• Stephen Ortega, son of former Chairman Steven Ortega, is employed by the Company and earned approximately $134,000 in compensation during fiscal year 2024.

Stakeholder Impact

• Shareholders: The proposed amendments to the certificate of incorporation could impact shareholder rights and the company's governance structure.
• Employees: The company's compensation policies and benefits programs impact employee morale and retention.
• Customers: The company's sustainability efforts and product safety measures impact customer satisfaction and brand reputation.
• Officers: The proposed Exculpation Amendment could impact the officers.

Next Steps

• Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will file the Proposed Restated Certificate with the Secretary of State of the State of Delaware promptly following the Annual Meeting, reflecting the amendments approved by shareholders.
• The Board will continue to review and modify compensation arrangements for executive officers as appropriate.
• The company will continue to monitor and implement strategies to improve its environmental, social, and governance performance.

Key Dates

Keywords

Annual Meeting, Proxy Statement, Board of Directors, Director Election, Executive Compensation, Ernst & Young, Certificate of Incorporation, Removal Amendment, Exculpation Amendment, Corporate Governance, Shareholders