DEF 14A: Seneca Foods Corporation Announces 2024 Annual Meeting of Shareholders

Seneca Foods Corporation will hold its 2024 Annual Meeting of Shareholders on August 8, 2024, to elect directors and ratify the appointment of its independent accounting firm.

Summary

• Seneca Foods Corporation will hold its 2024 Annual Meeting of Shareholders on August 8, 2024, at its Janesville, WI offices.
• Shareholders of record as of June 14, 2024, are entitled to vote.
• The meeting will include the election of three directors to serve until the 2027 Annual Meeting and a non-binding advisory vote to ratify the appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for the fiscal year ending March 31, 2025.
• The Board of Directors recommends voting FOR the election of the director nominees and FOR the ratification of Deloitte & Touche LLP.
• The company's Board of Directors consists of nine members.
• The Board has determined that five of the nine directors are independent under NASDAQ listing standards.
• Executive compensation includes base salary, participation in the Executive Profit Sharing Bonus Plan, equity-based incentive awards, and retirement programs.
• For fiscal year 2024, the company's Annual Adjusted Earnings exceeded the 200% or more bonus target for a 50% bonus payment under the Executive Profit Sharing Bonus Plan.
• The CEO's annual total compensation for fiscal year 2024 was $1,195,063, and the median employee's annual total compensation was $81,938, resulting in a CEO pay ratio of 15:1.
• A small percentage (approximately 1% in fiscal years 2024, 2023 and 2022) of vegetables supplied to the Company are grown by My-T Acres, Inc.
• Peter R. Call, a Director, is the President of My-T Acres, Inc., which supplied the Company approximately $3.0 million, $3.1 million, and $2.9 million pursuant to a raw vegetable grower contract in fiscal years 2024, 2023, 2022, respectively.
• The company made charitable contributions to the Seneca Foods Foundation in the amount of $1.0 million, $0.5 million and $1.0 million for each of fiscal years 2024, 2023, and 2022, respectively.
• Effective November 7, 2023, Deloitte & Touche LLP was engaged as the company's independent registered public accounting firm, replacing Plante Moran, P.C.

Sentiment

Score: 7

Explanation: The document is a standard proxy statement, which is generally neutral in tone. The company is performing well enough to pay out bonuses, but there are some governance concerns.

Positives

• The company has a compensation program designed to attract and retain qualified executives.
• The company's executive compensation program is designed to align executives' interests with those of shareholders.
• The company has a strong history of shareholder support for its executive compensation practices.
• The Audit Committee is composed of independent directors.
• The company has a process for shareholders to communicate with the Board of Directors.

Negatives

• One director, Peter R. Call, is not considered independent due to the company's purchases from My-T Acres, Inc., exceeding the NASDAQ threshold.
• The company previously reported a material weakness in its internal control over financial reporting as of March 31, 2023.

Risks

• The packaged fruit and vegetable business is highly competitive.
• The company's principal customers are major food chains and food distributors with strong negotiating power.
• The company's success depends on supplying quality products with an efficient cost structure.
• Section 162(m) of the Internal Revenue Code limits the federal tax deductions that may be claimed by a public company for compensation paid to certain individuals to $1 million.

Future Outlook

The company intends to continue to review internal pay equity and may adopt a formal policy in the future if it deems such a policy to be appropriate.

Management Comments

• Our philosophy for the compensation of all of our employees, including the named executive officers, is to value the contribution of our employees and share profits through broad-based incentive arrangements designed to reward performance and motivate collective achievement of strategic objectives that will contribute to our Company's success.
• The compensation committee believes that our stockholders interests are best served by not restricting the compensation committees discretion in structuring compensation programs, and thus the compensation committee intends to maintain flexibility to pay compensation that is not deductible when the best interests of our company make that advisable.

Industry Context

The packaged fruit and vegetable business is highly competitive, and the principal customers are major food chains and food distributors with strong negotiating power as to price and other terms.

Comparison to Industry Standards

• Many of Seneca Foods' competitors are family-owned businesses operating in rural areas, where compensation rates and salary expectations are below urban levels.
• The compensation level of Seneca Foods' executive officers is generally in the upper end of executive compensation in these localities, but below the compensation levels for comparable positions in most public companies with sales comparable to those of the Company.

Related Party Transactions

• A small percentage (approximately 1% in fiscal years 2024, 2023 and 2022) of vegetables supplied to the Company are grown by My-T Acres, Inc.
• Peter R. Call, a Director, is the President of My-T Acres, Inc., which supplied the Company approximately $3.0 million, $3.1 million, and $2.9 million pursuant to a raw vegetable grower contract in fiscal years 2024, 2023, 2022, respectively.
• The company made charitable contributions to the Seneca Foods Foundation in the amount of $1.0 million, $0.5 million and $1.0 million for each of fiscal years 2024, 2023, and 2022, respectively.
• The Foundation is a nonprofit entity that supports charitable activities by making grants to unrelated organizations or institutions and is managed by current employees of the Company.
• The Company maintains a liability for retirement arrangements to beneficiaries that have family relationships to two of the Companys current Directors.
• As of March 31, 2024 and 2023, the liability for these benefits totaled $1.0 million and $1.0 million, respectively.
• Payments are made monthly over the beneficiarys lifetime.
• Additionally, Mr. Kaysers payments under his supplemental retirement agreement with the Company commenced during fiscal year 2023 as outlined in the Form 8-K filed by the Company on September 1, 2020.
• During fiscal year 2024, the Company had the following four employment relationships.
• Aaron Wadell, brother-in-law of Donald J. Stuart, a Director of the Company, was employed as Vice President of e-Business for the Company.
• Jesse Hayes and Charles Hayes, sons of Paul L. Palmby, an Executive Officer of the Company, were employed as Vice President of Foodservice Sales for the Company and Safety and Environmental Manager for the Company's Janesville, Wisconsin location, respectively.
• Patrick Nelson, son of Timothy R. Nelson, an Executive Officer of the Company, was employed as Director of Technical Services and Contract Manufacturing for the Company.
• For each of the aforementioned employees the total fiscal year 2024 compensation (base salary, bonus, and benefits) exceeded the reporting threshold of $120,000 but did not exceed $322,000.

Stakeholder Impact

• Shareholders are asked to vote on key decisions regarding the company's governance and financial oversight.
• Employees are impacted by the company's compensation policies and benefit plans.
• The company's relationships with suppliers, such as My-T Acres, Inc., are disclosed.
• The company's charitable contributions to the Seneca Foods Foundation benefit various organizations and institutions.

Next Steps

• Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will hold its Annual Meeting of Shareholders on August 8, 2024.
• The Audit Committee will consider the results of the shareholder vote on ratification of the independent registered public accounting firm.

Key Dates

Keywords

Annual Meeting, Shareholders, Proxy Statement, Directors, Executive Compensation, Deloitte & Touche LLP, Audit Committee, Seneca Foods