EX-97 11 calm2024x10kex97.htm EX-97 calm2024x10kex97
 
Exhibit 97
 
CAL-MAINE FOODS, INC.
Incentive-Based Compensation Recovery Policy
The Board of Directors
 
(the “
Board
”) of Cal-Maine Foods,
 
Inc. (the “
Company
”) has determined that
 
it is
in
 
the
 
best
 
interests
 
of
 
the
 
Company
 
and
 
its
 
stockholders
 
to
 
adopt
 
this
 
Incentive-Based
 
Compensation
Recovery Policy (this “
Policy
”), which provides for the recovery of certain incentive compensation in
 
the
event of an Accounting Restatement (as defined below). This Policy is designed to comply with, and shall
be interpreted to be consistent with, Section 10D of the Securities Exchange Act of 1934, as amended (the
“
Exchange Act
”), Rule
 
10D-1 promulgated
 
under the
 
Exchange Act
 
(“
Rule 10D-1
”) and
 
Listing Rule
 
5608
(the “
Listing Standards
” of The Nasdaq
 
Stock Market (“
NASDAQ
”).
 
As required by SEC Rule
 
10D-1,
the Listing Standards require
 
the Company to adopt
 
a compensation recovery
 
policy as set forth
 
in the rule,
comply with the policy and provide related disclosures
 
required by the Listing Standards and in applicable
filings with the U.S.
 
Securities and Exchange Commission (“
SEC
”) in order for
 
the Company’s
 
common
stock to remain listed on NASDAQ. Capitalized terms not otherwise defined herein have the meanings
 
set
forth in Section 2 hereof.
1.
Administration
Except as specifically
 
set forth herein,
 
this Policy shall
 
be administered by
 
the Compensation Committee
of the Board (the “
Committee
”). The Committee is authorized to interpret and construe this Policy and to
make
 
all
 
determinations
 
necessary,
 
appropriate
 
or
 
advisable
 
to
 
administer,
 
and
 
cause
 
the
 
Company
 
to
comply with, this Policy, without further action by the Board. Any
 
determinations made by the Committee
shall be
 
final and
 
binding on
 
all affected
 
individuals and
 
need not
 
be uniform
 
with respect
 
to each
 
individual
covered by the Policy. The Committee
 
is authorized to consult
 
with the full Board,
 
the Audit Committee of
the Board,
 
or any
 
other committee
 
of the
 
Board if
 
and to
 
the extent
 
it deems
 
necessary or
 
appropriate to
administer, and cause the Company to comply with, this Policy.
 
2.
Definitions
As used in this Policy, the following definitions shall apply:
(a)
“
Accounting
 
Restatement
”
 
means
 
an
 
accounting
 
restatement
 
of
 
the
 
Company’s
 
financial
statements
 
due
 
to
 
the
 
material
 
noncompliance
 
of
 
the
 
Company
 
with
 
any
 
financial
 
reporting
requirement under the securities
 
laws, including any required
 
accounting restatement to correct
an
 
error
 
in
 
previously
 
issued
 
financial
 
statements
 
(i)
 
that
 
is
 
material
 
to
 
the
 
previously-issued
financial statements (commonly referred to as
 
a “Big R” restatement), or (ii) that
 
would result in
a material misstatement if
 
the error were corrected
 
in the current period or
 
left uncorrected in the
current period (commonly referred to as a “little r” restatement).
 
Exhibit 97
 
(b)
“
Clawback Period
” means,
 
with respect
 
to any
 
Accounting Restatement,
 
the three
 
completed
fiscal
 
years
 
of
 
the
 
Company
 
immediately
 
preceding
 
the
 
Restatement
 
Date
 
and
 
any
 
transition
period (that results from a change in the Company’s fiscal year) of less than nine months within
or immediately following those three completed fiscal years.
(c)
“
Code
” means the U.S. Internal Revenue Code of 1986, as amended. Any reference to a section
of the Code or regulation thereunder includes such section or regulation, any valid regulation or
other official
 
guidance promulgated
 
under such
 
section, and
 
any comparable
 
provision of
 
any
future
 
legislation
 
or
 
regulation
 
amending,
 
supplementing,
 
or
 
superseding
 
such
 
section
 
or
regulation.
 
(d)
“
Committee
” has the meaning set forth in Section 1 hereof.
(e)
“
Covered
 
Executives
”
 
means
 
the
 
Company’s
 
current
 
and
 
former
 
executive
 
officers,
 
as
determined by the Board in accordance with the
 
definition of executive officer set forth
 
in Rule
10D-1 and the Listing Standards.
(f)
“
Effective Date
” means October 2, 2023.
(g)
“
Erroneously Awarded Compensation
” has the meaning set forth in Section 4 of this Policy.
(h)
“
Financial
 
Reporting
 
Measures
”
 
means
 
measures
 
that
 
are
 
determined
 
and
 
presented
 
in
accordance with the
 
accounting principles
 
used in preparing
 
the Company’s financial statements,
and all
 
other measures that
 
are derived wholly
 
or in
 
part from such
 
measures.
 
Stock price and
total stockholder return (and any measures that are derived wholly or in part from stock price or
total
 
stockholder
 
return)
 
shall,
 
for
 
purposes
 
of
 
this
 
Policy,
 
be
 
considered
 
Financial
 
Reporting
Measures.
 
For the
 
avoidance of
 
doubt, a
 
Financial Reporting
 
Measure need
 
not
 
be presented
within the Company’s financial statements or included in a filing with the SEC.
(i)
“
Incentive-Based Compensation
”
 
means
 
any
 
compensation that
 
is
 
granted,
 
earned or
 
vested
based wholly or in part upon the attainment of a Financial Reporting
 
Measure.
 
(j)
“
Restatement Date
” shall mean the earlier to
 
occur of (i) the date the Board,
 
a committee of the
Board or the officer or officers of the Company authorized to take such action if Board action is
not required, concludes,
 
or reasonably should
 
have concluded, that
 
the Company is
 
required to
prepare an Accounting Restatement, or (ii) the date a court, regulator or other legally authorized
body directs the Company
 
to prepare an Accounting
 
Restatement, in each
 
case regardless of if
 
or
when the restated financial statements are publicly disseminated or filed with
 
the SEC.
3.
Covered Executives; Incentive-Based Compensation
This Policy applies to all Incentive-Based Compensation
 
received by a person: (a) on or after
 
the Effective
Date (even if approved,
 
awarded, granted or paid
 
prior to the Effective
 
Date); (b) after beginning
 
service as
a Covered Executive;
 
(c) who served
 
as a Covered
 
Executive at any
 
time during the
 
performance period for
 
Exhibit 97
 
such Incentive-Based Compensation; (d)
 
while the Company
 
had a class
 
of securities listed
 
on a national
securities exchange or a national securities association; and (e) during
 
the Clawback Period.
 
For purposes of this Policy,
 
Incentive-Based Compensation is deemed “received” in the Company’s fiscal
period
 
during
 
which
 
the
 
Financial
 
Reporting
 
Measure
 
specified
 
in
 
the
 
Incentive-Based
 
Compensation
award is attained, even
 
if the payment or
 
grant of the Incentive-Based
 
Compensation occurs after the end
of that period.
 
For the avoidance
 
of doubt, Incentive-Based
 
Compensation that
 
is subject to
 
both a Financial
Reporting Measure
 
vesting condition
 
and a
 
service-based vesting
 
condition shall
 
be considered
 
received
when
 
the
 
relevant
 
Financial Reporting
 
Measure
 
is
 
achieved,
 
even
 
if
 
the
 
Incentive-Based Compensation
continues to be subject to the service-based vesting condition.
4.
Required
 
Recovery of
 
Erroneously Awarded
 
Compensation in
 
the Event
 
of an
 
Accounting
Restatement
In the event of an Accounting Restatement, the Company must
 
recover, reasonably promptly, Erroneously
Awarded Compensation, in amounts determined pursuant to this Policy and in accordance with Rule 10D-
1 and the Listing Standards, as follows:
(a)
For purposes of this Policy, “
Erroneously Awarded Compensation
” means, in the event of an
Accounting Restatement,
 
the amount
 
of Incentive-Based
 
Compensation received
 
that exceeds
 
the
amount of Incentive-Based Compensation that
 
otherwise would have been
 
received had it been
determined based
 
on the
 
restated amounts
 
in such
 
Accounting Restatement,
 
computed without
regard to any taxes paid by the relevant Covered Executive.
 
(i)
With
 
respect to
 
Incentive-Based Compensation based
 
on stock
 
price or
 
total stockholder
return,
 
where
 
the
 
amount
 
of
 
Erroneously
 
Awarded
 
Compensation
 
is
 
not
 
subject
 
to
mathematical recalculation directly from the information in an Accounting
 
Restatement:
 
A.
the
 
amount
 
of
 
Erroneously
 
Awarded
 
Compensation
 
will
 
instead
 
be
 
based
 
on
 
a
reasonable estimate of
 
the effect
 
of the
 
Accounting Restatement on
 
the stock
 
price
or
 
total
 
stockholder
 
return
 
upon
 
which
 
the
 
Incentive-Based
 
Compensation
 
was
received; and
 
B.
the Company must maintain
 
documentation of the determination of
 
that reasonable
estimate and provide such documentation to NASDAQ.
 
(ii)
With respect to
 
any compensation
 
plans or
 
programs that
 
take into
 
account Incentive-Based
Compensation,
 
the
 
amount
 
of
 
Erroneously
 
Awarded
 
Compensation
 
subject
 
to
 
recovery
hereunder includes, but
 
is not
 
limited to,
 
the amount contributed
 
to any
 
notional account
based
 
on Erroneously
 
Awarded
 
Compensation and
 
any earnings
 
accrued to
 
date on
 
that
notional amount.
(b)
After an
 
Accounting Restatement,
 
the Committee
 
shall promptly
 
determine the
 
amount of
 
any
Erroneously Awarded
 
Compensation received
 
by
 
each
 
Covered Executive
 
and shall
 
promptly
 
Exhibit 97
 
provide written
 
notice to
 
each Covered
 
Executive by email,
 
certified mail
 
or overnight mail
 
of
the amount of any
 
Erroneously Awarded Compensation and a
 
demand for repayment
 
or return of
such compensation.
(c)
The
 
Committee
 
shall
 
have
 
discretion
 
to
 
determine
 
the
 
appropriate
 
means
 
of
 
recovering
Erroneously
 
Awarded
 
Compensation
 
based
 
on
 
the
 
particular
 
facts
 
and
 
circumstances.
 
Notwithstanding
 
the
 
foregoing,
 
except
 
as
 
set
 
forth
 
in
 
Section
 
5
 
below,
 
in
 
no
 
event
 
may
 
the
Company accept an amount that is less than the amount of Erroneously Awarded Compensation
in satisfaction of a Covered Executive’s obligations hereunder.
(d)
To
 
the
 
extent
 
that
 
the
 
Covered
 
Executive
 
has
 
already
 
reimbursed
 
the
 
Company
 
for
 
any
Erroneously Awarded Compensation,
 
the Committee
 
may credit
 
such reimbursed
 
amount against
the amount of Erroneously Awarded Compensation that is subject to recovery under this Policy.
(e)
To the extent that a Covered Executive fails to repay all Erroneously Awarded Compensation to
the Company when
 
due, the
 
Company shall
 
take all reasonable
 
and appropriate
 
actions to
 
recover
such
 
Erroneously
 
Awarded
 
Compensation
 
from
 
the
 
applicable
 
Covered
 
Executive.
 
The
applicable
 
Covered
 
Executive
 
shall
 
be
 
required
 
to
 
reimburse
 
the
 
Company
 
for
 
any
 
and
 
all
expenses
 
reasonably
 
incurred
 
(including
 
legal
 
fees)
 
by
 
the
 
Company
 
in
 
recovering
 
such
Erroneously
 
Awarded
 
Compensation in
 
accordance with
 
the
 
immediately preceding
 
sentence.
Such
 
recovery
 
and
 
reimbursement
 
may
 
include
 
offsetting
 
such
 
Erroneously
 
Awarded
Compensation and
 
expenses against
 
any amounts
 
due from
 
the Company
 
or its
 
subsidiaries to
the Covered Executive.
(f)
Recovery under this
 
Policy with respect
 
to a Covered
 
Executive shall not
 
require any finding
 
that
such Covered Executive engaged
 
in misconduct or was
 
responsible for any error that
 
caused or
contributed to the Accounting Restatement.
(g)
Any action
 
by the
 
Company to
 
recover Erroneously
 
Awarded
 
Compensation under
 
this Policy
from a Covered
 
Executive shall
 
not, whether
 
alone or
 
in combination
 
with any
 
other action,
 
event
or condition,
 
be deemed
 
(i) “good
 
reason” for
 
resignation or
 
to serve
 
as a
 
basis for
 
a claim
 
of
constructive
 
termination
 
under
 
any
 
benefits
 
or
 
compensation
 
arrangement
 
applicable
 
to
 
such
Covered Executive, or
 
(ii) to constitute
 
a breach of
 
a contract or
 
other arrangement to
 
which such
Covered Executive is party.
5.
Method of Recovery
The
 
Committee
 
shall
 
determine,
 
in
 
its
 
sole
 
discretion,
 
the
 
timing
 
and
 
method
 
for
 
promptly
 
recovering
Erroneously
 
Awarded
 
Compensation
 
hereunder,
 
which
 
may
 
include
 
without
 
limitation
 
(a)
 
seeking
reimbursement of all
 
or part of
 
any cash or
 
equity-based award, (b)
 
cancelling prior cash
 
or equity-based
awards, whether vested
 
or unvested or
 
paid or unpaid,
 
(c) cancelling or
 
offsetting against base
 
salary and/or
any
 
planned
 
future
 
cash
 
or
 
equity-based
 
awards,
 
(d)
 
forfeiture
 
of
 
deferred
 
compensation,
 
subject
 
to
compliance
 
with
 
Section
 
409A
 
of
 
the
 
Code,
 
and
 
(e)
 
any
 
other
 
method
 
that
 
does
 
not
 
contravene
 
any
applicable law, including without limitation Section 409A of the Code.
 
The
 
Company
 
is
 
authorized
 
and
 
directed
 
pursuant
 
to
 
this
 
Policy
 
to
 
recover
 
Erroneously
 
Awarded
Compensation in compliance with this Policy unless the Committee or, in the absence of the Committee,
 
a
 
Exhibit 97
 
majority
 
of
 
the
 
independent
 
directors
 
serving
 
on
 
the
 
Board,
 
has
 
determined in
 
good
 
faith
 
that
 
recovery
would be impracticable
 
solely for one
 
or more of
 
the following
 
limited reasons,
 
and subject
 
to the following
procedural and disclosure requirements:
●
The direct expense paid to a third party to assist in
 
enforcing the Policy would exceed the amount
to
 
be
 
recovered.
 
Before
 
concluding
 
that
 
it
 
would
 
be
 
impracticable
 
to
 
recover
 
any
 
amount
 
of
Erroneously Awarded
 
Compensation based
 
on the
 
expense of
 
enforcement, the
 
Committee must
make
 
reasonable attempts
 
to
 
recover such
 
Erroneously Awarded
 
Compensation, document
 
such
reasonable attempts to recover and provide that documentation to
 
NASDAQ;
●
Recovery would
 
violate home
 
country law
 
where that
 
law was
 
adopted prior
 
to November
 
28, 2022.
Before concluding that it would be
 
impracticable to recover any amount of
 
Erroneously Awarded
Compensation based on violation of home country law, the Committee must satisfy the applicable
opinion and disclosure requirements of Rule 10D-1 and the Listing
 
Standards; or
●
Recovery would likely cause an otherwise
 
tax-qualified retirement plan, under which benefits are
broadly
 
available
 
to
 
employees
 
of
 
the
 
Company,
 
to
 
fail
 
to
 
meet
 
the
 
requirements
 
of
 
26
 
U.S.C.
§401(a)(13) or 26 U.S.C. §411(a) and regulations thereunder.
6.
No
 
Indemnification
 
of
 
Covered
 
Executives
 
Against
 
Loss
 
of
 
Erroneously
 
Awarded
Compensation
Notwithstanding the
 
terms of
 
any indemnification
 
or insurance
 
policy,
 
any contractual
 
arrangement with
any
 
Covered
 
Executive
 
or
 
any
 
provision
 
of
 
the
 
Company’s
 
or
 
any
 
of
 
its
 
subsidiaries’
 
governing
 
or
organizational documents
 
(such as
 
articles of
 
incorporation, certificates
 
of incorporation,
 
by-laws or
 
similar
document) that provides or
 
may be interpreted to
 
provide to the contrary, the Company
 
shall not indemnify
any
 
Covered
 
Executives
 
against
 
the
 
loss
 
of
 
any
 
Erroneously
 
Awarded
 
Compensation,
 
including
 
any
payment or
 
reimbursement for the
 
cost of
 
third-party insurance purchased
 
by any Covered
 
Executives to
fund potential clawback obligations under this Policy.
7.
Committee Indemnification
Any members of the
 
Committee, and any other members
 
of the Board who
 
assist in the administration
 
of
this Policy, shall not
 
be personally liable for any action, determination or interpretation made with respect
to
 
this
 
Policy
 
and
 
shall
 
be fully
 
indemnified
 
by
 
the
 
Company
 
to
 
the
 
fullest
 
extent
 
permitted
 
under
 
any
articles
 
of
 
incorporation,
 
certificate
 
of
 
incorporation,
 
bylaw,
 
similar
 
organizational
 
document,
 
contract,
policy or law applicable to the Company with respect to any such action,
 
determination or interpretation.
 
 
 
Exhibit 97
 
8.
Effective Date
This Policy shall be effective
 
as of the Effective Date.
 
Subject to applicable
 
law, the Committee may affect
recovery under this Policy from any amount of compensation
 
approved, awarded, granted, payable or paid
to the Covered Executive prior to, on or after the Effective Date.
9.
Other Recovery Rights; Company Claims
The Board intends that this
 
Policy shall be applied to
 
the fullest extent of the law. Any right of
 
recovery by
the Company under this Policy
 
is in addition to, and not
 
in lieu of, any other remedies
 
or rights of recovery
that may be available to the
 
Company under applicable law,
 
including Section 304 of the Sarbanes-Oxley
Act of 2002, government regulation, or stock exchange listing requirement or pursuant to the terms of any
similar policy in any
 
employment agreement, equity award agreement, or
 
other agreement, policy or plan
of the
 
Company and any
 
other legal or
 
equitable remedies available
 
to the
 
Company,
 
including those set
forth
 
in
 
any
 
corporate
 
governance
 
guidelines
 
that
 
may
 
be
 
adopted
 
or
 
amended
 
by
 
the
 
Board.
Notwithstanding the foregoing, unless otherwise required
 
by applicable law, any amounts recovered under
any other such recovery,
 
recoupment or clawback rights that would be
 
recoverable under this Policy shall
count toward any required recovery under this Policy and vice versa.
Nothing contained in
 
this Policy, and no recoupment
 
or recovery as
 
contemplated by this
 
Policy, shall limit
any claims,
 
damages or
 
other legal
 
or equitable
 
remedies the
 
Company or
 
any of
 
its affiliates
 
may have
against
 
a
 
Covered
 
Executive
 
arising
 
out
 
of
 
or
 
resulting
 
from
 
any
 
actions
 
or
 
omissions
 
by
 
the
 
Covered
Executive.
10.
Amendment
The Board may amend, modify, supplement, rescind or replace all
 
or any portion of this Policy at any
 
time
and from time
 
to time in
 
its discretion, and
 
shall amend this
 
Policy as it
 
deems necessary to
 
comply with
applicable law
 
or
 
any rules
 
or
 
standards adopted
 
by NASDAQ
 
or
 
other national
 
securities exchange
 
on
which the Company’s securities are listed.
11.
Acknowledgement of Binding Effect
As a condition to continued employment, each
 
Covered Executive shall sign and deliver to
 
the Company,
within
 
60
 
calendar
 
days
 
following
 
the
 
later
 
of
 
(i)
 
the
 
Effective
 
Date
 
of
 
this
 
Policy
 
or
 
(ii) the
 
date
 
the
individual
 
becomes
 
a
 
Covered
 
Executive,
 
the
 
Acknowledgement
 
Form
 
attached
 
hereto
 
as
Exhibit
 
A
,
pursuant
 
to
 
which
 
the
 
Covered
 
Executive
 
agrees
 
to
 
be
 
bound
 
by,
 
and
 
to
 
comply
 
with,
 
the
 
terms
 
and
conditions
 
of
 
this
 
Policy.
 
This
 
Policy
 
is
 
binding
 
upon
 
all
 
Covered
 
Executives,
 
even
 
if
 
such
 
Covered
Executive fails to execute or deliver the attached Acknowledgment Form
 
to the Company.
 
Exhibit 97
 
12.
Severability
 
The provisions in this
 
Policy are intended to
 
be applied to the
 
fullest extent of the
 
law.
 
To
 
the extent that
any provision
 
of this
 
Policy is
 
found to
 
be unenforceable
 
or invalid
 
under any
 
applicable law, such
 
provision
shall be applied
 
to the maximum
 
extent permitted, and
 
shall automatically be
 
deemed amended in
 
a manner
consistent with
 
its objectives
 
to the
 
extent necessary
 
to conform
 
to any
 
limitations required
 
under applicable
law.
13.
Successors
This Policy shall be binding and enforceable against all
 
Covered Executives and their beneficiaries, heirs,
executors, administrators or other legal representatives.
14.
Governing Law; Jurisdiction and Forum; Waiver of Jury Trial
(a)
This Policy shall be governed
 
by, and construed and enforced in accordance
 
with, Section 10 of
the Exchange Act, Rule 10D-1 and the Listing Standards, and to
 
the extent applicable, the laws
of the State of Delaware.
 
(b)
The Company
 
and each
 
Covered Executive:
 
(i) submits
 
to the
 
personal jurisdiction
 
of the
 
federal
district court with
 
jurisdiction over
 
the location of
 
the Company’s headquarters
 
and, if that
 
court
lacks
 
jurisdiction,
 
the
 
state
 
court
 
with
 
jurisdiction
 
over
 
the
 
location
 
of
 
the
 
Company’s
headquarters, and the
 
relevant appellate courts,
 
in the event
 
any dispute arises
 
out of this
 
Policy;
(ii)
 
agrees
 
that
 
it,
 
he
 
or
 
she
 
will
 
not
 
attempt
 
to
 
deny
 
or
 
defeat
 
such
 
personal
 
jurisdiction
 
by
motion or other request for leave from any such court; and (iii) agrees that it, he or she will not
bring any proceeding relating
 
to this Policy
 
in any court
 
other than the court
 
designated in the
preceding clause (i).
(c)
The Company and each Covered Executive: (i) waives
 
trial by jury in any action, proceeding, or
counterclaim arising
 
out of
 
or in
 
any way
 
connected with
 
this Policy
 
or the
 
administration thereof,
and (ii) agrees
 
to refrain from
 
seeking a jury
 
trial in any
 
lawsuit, proceeding, counterclaim
 
or any
other litigation procedure based upon, or arising out of, this Policy.
15.
Required Policy-Related Filings and Disclosures
A copy
 
of
 
this Policy
 
and any
 
amendments thereto
 
will be
 
filed
 
as an
 
exhibit to
 
the
 
Company’s
 
annual
report on Form 10-K filed
 
with the SEC.
 
In addition, the Company
 
shall file all disclosures with
 
respect to
this Policy
 
in accordance
 
with the
 
requirements of
 
the federal
 
securities laws,
 
including disclosures
 
required
by the SEC.
 
ADOPTED BY THE BOARD OF DIRECTORS NOVEMBER 30, 2023.