DEF 14A: Winmark Corporation to Hold Annual Shareholder Meeting on April 24, 2024; Proposes Board Member Elections and Stock Option Plan Amendment

Sentiment:

Proxy Statement 6 March 2024 12:33 PM

Winmark Corporation's upcoming annual meeting will address director elections, an amendment to the stock option plan, executive compensation, and auditor ratification.

Summary

Winmark Corporation will hold its Annual Meeting of Shareholders on April 24, 2024, at its corporate offices in Minneapolis.
Shareholders of record as of March 4, 2024, are entitled to vote.
The meeting will address setting the number of board members at seven and electing seven directors for a one-year term.
A key proposal involves amending the 2020 Stock Option Plan to increase available shares by 100,000.
Shareholders will also consider an advisory vote on executive compensation and ratify the appointment of Grant Thornton LLP as the independent auditor for the 2024 fiscal year.
The proxy statement and annual report are available online at www.winmarkcorporation.com.
The Board of Directors recommends voting FOR all proposals.
The company is voluntarily including some disclosures not required by a Smaller Reporting Company.

Sentiment

Score: 7

Explanation: The document is primarily factual and procedural, outlining the agenda for the annual shareholder meeting. The tone is professional and informative, with a positive outlook on the company's governance and compensation practices.

Positives

The company has a Lead Director who presides over meetings of independent directors and is an additional resource to the Board with respect to governance and financial matters.
The Board of Directors is comprised of a majority of independent directors.
The company has a formal written related party transaction statement of policy.
The company has adopted a clawback policy.
The company has a hedging policy that prohibits directors and officers from engaging in hedging or similar derivative transactions with respect to Winmark securities.

Negatives

One of the independent director nominees has a tenure in excess of fifteen years, which is outside the Board's term limit guidelines, although the Board believes their experience is beneficial for the company's transition.
The company's CEO also serves as Chair of the Board, which could potentially lead to conflicts of interest.

Risks

If shareholders fail to cast their vote, particularly those holding shares in street name, their votes will not be counted for Proposals 1, 2, 3, and 4.
The advisory vote on executive compensation is non-binding, meaning the Board is not obligated to act on the outcome.
Future grants of options under the 2020 Plan are subject to the discretion of the Committee, making future benefits uncertain.
The company acknowledges that the simplicity of our executive compensation plan makes us different than many public companies.

Future Outlook

The Board of Directors expects the 2025 Annual Meeting of Shareholders to be held on or about April 23, 2025, with proxy materials mailed around March 19, 2025.

Management Comments

Brett D. Heffes, Chair of the Board and Chief Executive Officer, stated that the notice is given to shareholders regarding the Annual Meeting.
The Board of Directors believes that granting stock options to employees, officers, directors, consultants and advisors is an effective means to promote the future growth and development of the Company.

Industry Context

The document provides insight into Winmark's corporate governance practices, executive compensation structure, and shareholder engagement, which are all important aspects of maintaining investor confidence and aligning management's interests with those of shareholders. The company's compensation philosophy, which emphasizes long-term equity ownership, is a notable feature that distinguishes it from some other public companies.

Comparison to Industry Standards

The document mentions that Winmark benchmarks NEO compensation against a peer group of companies including Regis Corporation, The RealReal, Inc., Big 5 Sporting Goods Corporation, Dine Brands Global, Inc., Sleep Number Corporation, Savers Value Village, Inc., The Childrens Place, Inc., European Wax Center, Inc., ThredUp, Inc., and Urban Outfitters, Inc.
The company acknowledges that its executive compensation plan is simpler than those of many public companies.
The company's CEO to median employee pay ratio of 18.9 to 1 is lower than the average for S&P 500 companies.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Board of Directors	Mark L. Wilson	N/A	April 24, 2024	Will not be standing for re-election at our Annual Meeting.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Amendment to 2020 Stock Option Plan	Increase the shares of Common Stock reserved and available for issuance by 100,000 shares.	Upon shareholder approval	Aims to promote the success of the Company by facilitating the employment and retention of competent personnel and by furnishing incentive to officers, directors, employees, consultants and advisors.
Board Transition and Succession Planning	During 2020, the Board of Directors began a thoughtful process toward Board transition and succession planning.	2020	Since that time, three of our long-tenured Board members have chosen to not stand for re-election, and we have added four new Board members.
Term Limit Guidelines for Independent Directors	During 2022 the Board adopted term limit guidelines for independent directors, such that the Board will generally not recommend for re-election any independent director that has completed fifteen years of service as a member of the Board on or prior to the date of the election as to which the recommendation relates, except in certain extenuating circumstances.	2022	One of the independent director nominees set forth in Proposal #2 above has a tenure in excess of fifteen years. The Board of Directors believes that, in order to ensure the smoothest transition possible for the Company and its Shareholders and the benefit to the Shareholders from this nominees experience, this nominee be re-elected to the Board.

Related Party Transactions

There were no reportable related party transactions in fiscal 2023.

Stakeholder Impact

Shareholders are asked to vote on key proposals that will impact the company's governance and executive compensation.
Employees, officers, directors, consultants and advisors are eligible to receive stock options under the 2020 Plan, which aims to align their interests with those of the company and its shareholders.

Next Steps

Shareholders should review the proxy materials and vote on the proposals.
The company will hold its Annual Meeting of Shareholders on April 24, 2024.
The company will file a Registration Statement covering the additional shares of common stock authorized for issuance under the 2020 Plan with the Securities and Exchange Commission pursuant to the Securities Act of 1933.
The Winmark Corporation 2025 Annual Meeting of Shareholders is expected to be held on or about April 23, 2025.

Key Dates

Date	Description
March 4, 2024	Record date for determining shareholders entitled to vote at the Annual Meeting.
March 6, 2024	Date of the notice of the Annual Meeting of Shareholders.
March 20, 2024	Approximate date proxy statement and accompanying form of proxy are first being mailed to shareholders.
April 24, 2024	Date of the Annual Meeting of Shareholders.
November 19, 2024	Deadline for shareholders to submit proposals for inclusion in the 2025 proxy statement.
February 2, 2025	Deadline after which Winmark Corporation receives notice of a shareholder proposal, the proposal will be considered untimely.
March 19, 2025	Expected mailing date of proxy materials for the 2025 Annual Meeting of Shareholders.
April 23, 2025	Expected date of the 2025 Annual Meeting of Shareholders.

Keywords

Annual Meeting, Shareholders, Board of Directors, Stock Option Plan, Executive Compensation, Grant Thornton, Proxy Statement, Directors, Audit Committee, Compensation Committee, Winmark

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