PYXUS INTERNATIONAL, INC.

PROXY STATEMENT

TABLE OF CONTENTS

 

Proxy Voting Options			ii
Frequently Asked Questions			1
Governance of the Company			5
Shareholder Access to Governance Documents			5
Communications to the Board of Directors			5
Code of Business Conduct			5
Corporate Governance Guidelines			5
Determination of Independence of Directors			5
Board Leadership Structure			6
The Board’s Role in Risk Oversight			6
Governance and Nominating Committee Process			7
Director Conflicts of Interest			7
Shareholder Nominations – 2020 Annual Meeting			7
Shareholder Proposals – 2020 Annual Meeting			8
Board of Directors			8
Proposal One - Election of Directors ( Item 1 on the proxy card)			8
Director Biographies			9
Director Qualifications			11
Board Diversity			12
Independence			12
Non-Executive Director Stock Ownership Guidelines			12
Board Committees and Membership			13
Board Meetings			14
Compensation of Directors			14
Ownership of Equity Securities			16
Stock Ownership of Management			16
Policies Prohibiting Hedging and Pledging Activities			17
Stock Ownership of Certain Beneficial Owners			17
Section  16(a) Beneficial Ownership Reporting Compliance			18
Related Party Transactions			18
Audit Matters			19
Audit Committee Members and Meetings			19
Financial Literacy and Expertise			19
Other Audit Committee Service			19
Audit Committee Functions			19
Report of the Audit Committee			19
Policy for Pre-Approval of Audit and Non-Audit Services			20
Independent Auditors			20
Audit and Non-Audit Fees			20
Proposal Two - Ratification of Deloitte  & Touche as Independent Auditors (Item 2 on the proxy card)			21
Proposal Three - Advisory Vote on the Compensation of the Company’s Named Executive Officers (Item 3 on the proxy card)			21
Executive Compensation			22
Compensation Discussion and Analysis			22
Report of the Executive Compensation Committee			30
Executive Compensation Tables			31
Summary Compensation Table			31
Grants of Plan-Based Awards Table			33
Outstanding Equity Awards at Fiscal Year-End Table			34

 

i

Option Exercises and Stock Vested Table			35
Nonqualified Deferred Compensation Table			36
Pension Benefits Table			37
Plan Summary/ Provisions			37
Potential Payments Upon Termination or Change-in-Control			38
Employment Agreement			39
CEO Pay Ratio			40
Proposal Four— Approval of Amendment and Restatement of the 2016 Incentive Plan (Item 4 on the proxy card)			41
Other Matters			49
Annual Report			49
Appendix A—Amended and Restated Pyxus International, Inc. 2016 Incentive Plan			A-i

PROXY VOTING OPTIONS

Your vote is important!

Whether or not you expect to attend the annual meeting, we urge you to vote your shares. At this year’s annual meeting, you may vote in person at the annual meeting, or you may vote by phone, via the Internet, or by signing, dating, and returning the enclosed proxy card or voting instruction form at your earliest convenience. Your prompt vote will ensure the presence of a quorum at the meeting and will save Pyxus the expense of additional solicitation. If you vote now and later decide to change your vote or to vote your shares at the meeting, you may do so by following instructions found elsewhere in this proxy statement.

The fastest and most convenient way to vote your shares is by the Internet or telephone, using the instructions on this page. Internet and telephone votes are immediately confirmed and tabulated, and reduce postage and proxy tabulation costs.

If you prefer to vote by mail, please return the enclosed proxy card or voting instruction form in the addressed, prepaid envelope we have provided. Do not return the paper ballot if you vote via the Internet or by telephone.

For Registered Shareholders To Vote by Internet - www.voteproxy.com

Internet voting is available 24 hours a day, 7 days a week until 11:59 PM Eastern Daylight Time on August 14, 2019.

Instructions :

 

1.	Read this Proxy Statement.

 

2.	Go to the following website: www.voteproxy.com and follow the on-screen instructions, or scan the QR code with your smartphone.

 

3.	Have your proxy card or voting instruction form in hand and follow the instructions.

For Registered Shareholders To Vote by Telephone - Dial 1-800-PROXIES (1-800-776-9437) in the United States or +1-718-921-8500 from foreign countries from any touch-tone telephone. Voting by phone is available 24 hours a day, 7 days a week until 11:59 PM Eastern Daylight Time on August 14, 2019.

Instructions:

 

1.	Read this Proxy Statement.

 

2.	Call toll-free 1-800-PROXIES (1-800-776-9437) in the United States, or +1-718-921-8500 from foreign countries.

 

3.	Have your proxy card or voting instruction form in hand and follow the instructions.

 

ii

FREQUENTLY ASKED QUESTIONS

 

1.	Who is soliciting my proxy?

The Board of Directors is soliciting your proxy for the annual meeting of shareholders to be held on Thursday, August 15, 2019, in order to provide you the opportunity to vote on all matters scheduled to come before the meeting, whether or not you attend the meeting in person.

 

2.	Who pays for the solicitation of proxies?

Pyxus bears the cost of soliciting proxies, and will reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for expenses reasonably incurred by them in sending proxy materials to the beneficial owners of stock. The Company may utilize employees to solicit proxies by mail, in person or by telephone. The Company has engaged Georgeson, Inc., to assist in the solicitation of proxies and provide informational support for a service fee and the reimbursement of customary disbursements that together are not expected to exceed $10,000 in the aggregate.

 

3.	Who is entitled to vote?

You may vote if you owned shares of Pyxus common stock on June 14, 2019, the date established by the Board for determining shareholders entitled to vote at the annual meeting. On that date there were 9,109,113 shares of common stock outstanding and entitled to vote, with each such share having the right to one vote.

 

4.	What is the difference between holding shares as a registered shareholder and holding the shares in street name?

If your shares are owned directly in your name with our transfer agent, American Stock Transfer & Trust Company (“American Stock Transfer”), you are considered a registered shareholder with respect to those shares.

If your shares are held in a brokerage account or by a bank, you hold the shares in street name.

 

5.	How do I vote my shares?

Even if you plan to attend the annual meeting, you are encouraged to vote your shares by proxy.

If you are a registered shareholder, you have four options for voting your shares:

 

•

over the Internet at the internet address referenced on page (ii) of this proxy statement, and shown on the enclosed proxy card;

 

•

by telephone through the number(s) referenced on page (ii) of this proxy statement, and shown on the enclosed proxy card;

 

•

by completing, signing, dating and returning the enclosed proxy card by mail; or

 

•

in person at the annual meeting.

If you hold your shares in street name, your ability to vote by Internet or telephone depends on the voting process of the bank, broker or other nominee through which you hold the shares. Please follow their directions carefully. If you want to vote at the annual meeting, you must request a legal proxy from your bank, broker or other nominee and present that proxy, together with proof of your identity, for admittance to the meeting.

 

6.	Will my shares be voted if I do not return my proxy card or instruction form, or vote by telephone or over the Internet?

If you are a registered shareholder or if you hold restricted stock, your shares will not be voted unless you vote your shares using the four options for voting listed above.

If your shares are held in street name, your shares may be voted even if you do not vote by internet, by telephone or by providing voting instructions on your proxy card. Brokerage firms have the authority under the New York Stock Exchange (“NYSE”) rules to vote shares on behalf of their customers on certain “routine” matters if you do not provide the brokerage firm with voting instructions. The ratification of the selection of independent auditors is considered a routine matter for which brokerage firms may vote shares without voting instructions from the customer. The election of director nominees, the advisory vote to approve the compensation of executive officers, and the approval of the proposed amendment and restatement of the Company’s 2016 Incentive Plan are not considered “routine” under NYSE rules. When a proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is called a “broker non-vote.” Broker non-votes will

 

- 1 -

not be counted as votes cast on any matter presented for a shareholder vote at the annual meeting. It is important therefore that you provide appropriate voting instructions to your brokerage firm with respect to your vote on these matters .

 

7.	What does it mean if I receive more than one proxy card or instruction form?

It means that you have multiple accounts with our transfer agent and/or banks or brokers. Please vote all of the shares. For assistance consolidating your accounts to the extent possible, you may contact our transfer agent, American Stock Transfer, at 1-866-627-2656.

 

8.	Can I change my vote after returning my proxy card or instruction form, or voting by telephone or over the Internet?

If you are a registered shareholder you may change your vote in one of two ways:

 

•

by voting on a later date by telephone or over the Internet (only your last telephone or Internet vote is counted); or

 

•

by delivering a later dated proxy card to our Secretary, either prior to or at the meeting; or by voting your shares in person at the meeting. In order to vote your shares at the annual meeting, you must specifically revoke a previously submitted proxy.

If you hold your shares in nominee or “street name” through a bank or broker, you should contact your bank, broker or other nominee to find out how to revoke your proxy and change your vote.

All signed proxies that have not been revoked will be voted at the meeting.

 

9.	How many votes are needed to hold the meeting?

A quorum of shareholders is necessary to hold a valid meeting. The holders of record as of the June 14, 2019 record date, present in person or by proxy at the meeting, of a majority of the shares entitled to vote constitute a quorum. Once a share is represented for any purpose at the meeting, it is considered present for quorum purposes for the remainder of the meeting. Abstentions and “broker non-votes” will be counted in determining the existence of a quorum. A quorum is necessary to conduct business at the annual meeting.

If a quorum is not present, the meeting may be adjourned from time to time without any further notice other than announcement at the meeting.

 

10.	What items of business will be conducted at the meeting?

 

•

The election of four directors for a three-year term expiring in 2022, one director for a two-year term expiring in 2021, and one director for a one-year term expiring in 2020; or, in each case, until the election of their respective successors.

 

•

The ratification of the selection of Deloitte & Touche LLP as the Company’s independent auditors for the fiscal year ending March 31, 2020.

 

•

The adoption of a resolution approving, on an advisory basis, the compensation paid to the Company’s named executive officers as disclosed in this proxy statement.

 

•

The approval of the proposed amendment and restatement of the Company’s 2016 Incentive Plan, including to increase the number of shares reserved for issuance thereunder by 900,000.

 

•

Any other business properly brought before the meeting.

 

11.	How many votes are needed to elect the nominees for director?

The election of each nominee for director requires a plurality of the votes cast by shareholders entitled to vote at the meeting. Because directors are elected by a plurality, abstentions, withheld votes and broker non-votes will have no effect on their election.

However, pursuant to the Company’s Corporate Governance Guidelines, any person (including an incumbent Director) nominated for election as a Director who is elected by a plurality of votes cast for his or her election, but who does not receive a majority of the votes cast for his or her election, must promptly tender his or her resignation following certification of the shareholder vote. Thereafter, the Board, acting on the recommendation of the Governance and Nominating Committee, must determine within 90 days after the certification of the shareholder vote whether to accept the resignation.

 

- 2 -

12.	How many votes are needed to ratify the selection of Deloitte & Touche LLP as the Company’s independent auditors?

The selection of Deloitte & Touche, LLP as the Company’s independent auditors will be ratified if the votes cast “FOR” exceed the votes cast “AGAINST.” Abstentions and broker non-votes will not be included in the vote totals for the ratification of the selection of Deloitte & Touche LLP as the Company’s independent auditors.

 

13.	What are the voting choices when casting the advisory vote on the compensation of the Company’s named executive officers and what is the effect of the vote?

When voting on the compensation of the Company’s named executive officers, shareholders may:

 

•

vote in favor of the compensation of the Company’s named executive officers;

 

•

vote against the compensation of the Company’s named executive officers; or

 

•

abstain from voting.

The resolution approving, on an advisory basis, the compensation of the Company’s named executive officers will be adopted if the votes cast “FOR” the resolution exceed the votes cast “AGAINST” the resolution. This vote is not binding upon the Company, the Board or the Executive Compensation Committee. Nevertheless, the Executive Compensation Committee values the opinions expressed by shareholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for named executive officers.

 

14.	How many votes are needed to approve the proposed amendment and restatement of the Company’s 2016 Incentive Plan?

The approval of the proposed amendment and restatement of the Company’s 2016 Incentive Plan, including to increase the number of shares reserved for issuance thereunder by 900,000, requires the affirmative vote of a majority of the shares of common stock cast on this proposal. Because approval of this proposal by a majority of the votes cast is required by the NYSE, which considers abstentions to be votes cast for this purpose, abstentions will have the same effect as a vote against the proposal to approve the proposed amendment and restatement of the Company’s 2016 Incentive Plan.

 

15.	What are the Board’s recommendations on the matters to be presented for a shareholder vote?

The Board recommends that shareholders vote:

 

•

“ FOR ” the election as directors of the six nominees named in this proxy statement;

 

•

“ FOR ” ratification of the appointment of Deloitte & Touche LLP as the Company’s independent auditors for the fiscal year ending March 31, 2020;

 

•

“ FOR ” adoption of a resolution approving, on an advisory basis, the compensation paid to the Company’s named executive officers as disclosed in this proxy statement; and

 

•

“ FOR ” the proposed amendment and restatement of the Company’s 2016 Incentive Plan, including to increase the number of shares reserved for issuance thereunder by 900,000.

If you return a valid proxy card or respond by telephone or Internet in the manner described above and do not include instructions on how you want to vote, your shares will be voted in accordance with the Board’s recommendations on the matters listed above and in accordance with the discretion of the proxy holders on any other matter that properly comes before the annual meeting.

 

16.	How will proxies be voted on other matters that are properly brought before the meeting?

The Company is not aware of any other business to be presented at the meeting. However, if any other matter is properly brought before the meeting, the proxies received will be voted on those items in accordance with the discretion of the proxy holders.

 

- 3 -

17.	Can I access these proxy materials on the Internet?

This proxy statement and our 2019 annual report to shareholders are available at http://www.astproxyportal.com/ast/20132/ .

 

18.	Will the directors be present at the meeting?

It is Pyxus’s policy that directors attend the annual meetings of shareholders and we currently expect all of our directors to attend the 2019 annual meeting.

 

19.	What is required to attend the meeting?

The annual meeting is a private business meeting. Attendance at the annual meeting will be limited to our shareholders as of the record date of June 14, 2019 and to guests of the Company. A shareholder who owned shares registered in his or her name as of June 14, 2019 must present proper identification at the registration desk for admittance to the annual meeting.

If you are a shareholder and plan to attend the annual meeting and your shares are held in street name (for example, if your shares are held through an account maintained by a bank or securities broker), you must present evidence of your stock ownership as of June 14, 2019 in order to be admitted to the annual meeting. You can obtain this evidence from your bank or brokerage firm. If your shares are held in street name as of June 14, 2019 and you intend to vote your shares at the annual meeting, you must also request a legal proxy from your bank, broker or other nominee and present that proxy at the annual meeting registration desk. Further, if you are a shareholder that intends to have a representative attend the annual meeting on your behalf, you must additionally provide such representative with a legal proxy, and such proxy must be presented at the annual meeting registration desk. We encourage (i) shareholders who plan to attend the annual meeting and whose shares are held in street name as of June 14, 2019, and (ii) shareholders who plan to have a representative attend on their behalf, to contact the Company in advance by writing to Office of the Secretary, Pyxus International, Inc., 8001 Aerial Center Parkway, Morrisville, North Carolina 27560, providing the information described above. Following such process in advance will help expedite admittance to the annual meeting on the date of the meeting. Whether you are a registered shareholder, your shares are held in street name, or you are a duly authorized proxy holder for a shareholder, proper identification will be required to obtain admittance to the annual meeting.

To assist with logistical planning for the annual meeting, the Company requests that shareholders planning on attending the annual meeting in person check the box so indicating on the accompanying proxy card or voting instruction form.

 

20.	Will shareholders have an opportunity to ask questions at the meeting?

Yes. Following action on the items to be presented to the shareholders for a vote at the meeting, Company representatives will be available to answer shareholder questions.

 

21.	Will there be rules for the conduct of the meeting?

In accordance with the Company’s Amended and Restated Bylaws and Virginia corporation law, our Chairman of the Board has the right and authority to determine and maintain the rules, regulations and procedures for the conduct of the annual meeting, including, but not limited to, maintaining order and the safety of those in attendance, dismissing business not properly submitted, opening and closing the polls for voting and limiting time allowed for discussion of the business at the meeting. Failure to abide by the meeting rules may result in expulsion from the meeting. A copy of the meeting rules will be provided to all shareholders and guests properly attending the annual meeting and will be available at the registration desk.

 

22.	How can I find out the final voting results for the annual meeting?

The Company will publish final voting results in a report on Form 8-K to be filed with the Securities and Exchange Commission (the “SEC”) within four business days after the annual meeting. The Form 8-K will be accessible through the “Company Filing Search” page under the “Filings” tab on the SEC’s website at www.sec.gov and through the Company’s website, www.pyxus.com .

 

- 4 -

GOVERNANCE OF THE COMPANY

The Board fosters and encourages an environment of strong corporate governance, including disclosure controls and procedures, internal controls, fiscal accountability, high ethical standards and compliance with applicable policies, laws and regulations. Re-examining Company practices and setting new standards is an ongoing process as the area of corporate governance continues to evolve. Therefore, the Board has charged the Governance and Nominating Committee to periodically review and recommend appropriate changes to the Board’s governance practices and policies.

Shareholder Access to Governance Documents

Website

The Company’s governance-related documents are available on its website at www.pyxus.com . Available documents include the Company’s Corporate Governance Guidelines, Code of Business Conduct and charters of the Audit, Executive Compensation and Governance and Nominating Committees. When changes are made to any of these documents, updated copies are posted on the website as soon as practical thereafter.

Written Request

Copies of the Company’s governance documents are also available, free of charge, by written request addressed to: Corporate Secretary, Pyxus International, Inc., 8001 Aerial Center Parkway, P. O. Box 2009, Morrisville, North Carolina 27560.

Communications to the Board of Directors

Shareholders and interested parties may communicate with the Board of Directors, any committee of the Board, the Lead Independent Director or any individual director, as appropriate. Communications must be made in writing to the Corporate Secretary, Pyxus International, Inc., 8001 Aerial Center Parkway, P. O. Box 2009, Morrisville, North Carolina 27560. The Secretary will determine in his good faith judgment which communications to relay to the applicable directors.

See the paragraphs entitled “ Shareholder Nominations – 2020 Annual Meeting ” and “ Shareholder Proposals – 2020 Annual Meeting ,” for guidelines specific to those types of communications with the Board.

Code of Business Conduct

Pyxus has a Code of Business Conduct that clearly defines the Company’s expectations for legal and ethical behavior on the part of every Pyxus director, officer, employee and agent. The Code of Business Conduct also governs Pyxus’s principal executive officer, principal financial officer and principal accounting officer. It is designed to deter wrongdoing and promote honest and ethical business conduct in all aspects of the Company’s affairs. Any waiver of the Code of Business Conduct for any director or executive officer would require approval by the Board of Directors and would be disclosed immediately thereafter to shareholders via the Company’s website, www.pyxus.com .

Corporate Governance Guidelines

The Pyxus Corporate Governance Guidelines, in conjunction with the charters of key Board committees, inform shareholders, employees, customers and other constituents of the Board’s principles as a governing body. The Guidelines are reviewed at least annually by the Board.

Determination of Independence of Directors

For a director to be deemed “independent,” the Board of Directors of Pyxus must affirmatively determine that the director has no material relationship with Pyxus either directly or as a partner, shareholder or officer of an organization that has a relationship with Pyxus. In making this determination, the Board applies the following standards:

 

•

A director who is an employee, or whose immediate family member is an executive officer of Pyxus, is not independent until three years after the end of such employment relationship. Employment as an interim Chairman or Chief Executive Officer will not disqualify a director from being considered independent following such employment.

 

- 5 -

•

A director who receives (or whose immediate family member receives) more than $120,000 per year in direct compensation from Pyxus is not independent until three years after he or she ceases to receive more than $120,000 per year in such compensation (excluding director and committee fees and pensions or other forms of deferred compensation for prior service, provided such compensation is not contingent in any way on continued service). Compensation received by a director for former service as an interim Chairman or Chief Executive Officer will not count toward the $120,000 limitation.

 

•

A director who is a current partner or employee of (or whose immediate family member is a current partner of) Pyxus’s internal or external auditor is not independent.

 

•

A director who has an immediate family member who is an employee of Pyxus’s internal or external auditor and who personally works on the Company’s current audit is not independent.

 

•

A director who (or whose immediate family member) was within the past three years a partner or employee of Pyxus’s internal or external auditor and personally worked on the Company’s audit during that time is not independent.

 

•

A director who is employed (or whose immediate family member is employed) as an executive officer of another company where any of Pyxus’s present executives serve on that company’s compensation committee is not independent until three years after the end of such service or employment relationship.

 

•

A director who is an employee (or whose immediate family member is an executive officer) of a company that makes payments to, or receives payments from, Pyxus for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues is not independent until three years after falling below such threshold.

Board Leadership Structure

The Bylaws of the Company provide that the Board shall designate a Chairman of the Board from its membership. The Chairman shall preside at all meetings of the shareholders, the Board of Directors and the Executive Committee, and shall have such other powers as may be conferred upon him or her by the Board. The Board’s decision to either separate the position of Chairman and the office of Chief Executive Officer, or to have the same individual serve in both capacities, is based on then current circumstances. At present, the Chief Executive Officer also serves as Chairman. The Board believes that the currently unified position of Chairman and CEO currently serves the Company well because the CEO’s expertise and proximity to the daily affairs of the Company enhances the Board’s oversight function and facilitates open and timely communication between the Board and management; however, the Board recognizes that there may be circumstances that would lead it to conclude that these positions should be separated and believes that it is in the best interests of the Company for the Board to, from time to time, examine whether these positions should be separated. Pyxus’s Chairman and CEO is not a member of any standing Board committee other than the Executive Committee.

The Governance and Nominating Committee annually recommends a Lead Independent Director for approval by the Board. The role of the Lead Independent Director is to preside at executive sessions of the non-management directors, act as the liaison between the non-management directors and the Chairman and CEO, and consult with the Chairman and CEO on Board agendas as necessary. There is no mandatory rotation or term limit associated with the role of Lead Independent Director. Jeffrey A. Eckmann currently serves as Lead Independent Director.

The Company’s Corporate Governance Guidelines provide that if the Chairman also serves as CEO, Board members should raise any issues regarding the performance or compensation of the CEO with the Chairman of the Executive Compensation Committee and all other issues should be raised with the Lead Independent Director.

The Board’s Role in Risk Oversight

Our Company faces a variety of risks, including credit, liquidity, operational, regulatory, environmental and others regularly disclosed in our public filings. The Board believes that an effective risk management system is necessary to (1) identify material risks that the Company faces, (2) communicate necessary information with respect to such risks to senior management and, as appropriate, the Board or its committees, (3) implement appropriate and responsive risk management strategies consistent with the Company’s risk profile, and (4) integrate risk management into the Company’s decision making.

The Board has delegated to the Audit Committee the primary responsibility for overseeing risk management. The Audit Committee is comprised solely of independent directors and, pursuant to its charter, periodically discusses

 

- 6 -

policies with management with respect to risk assessment and risk management and assesses the steps management has taken to minimize such risks to the Company. The Audit Committee makes periodic reports to the Board regarding the Company’s risks and regarding its analyses and conclusions as to the adequacy of the Company’s risk management processes.

The Board encourages management to promote a culture that incorporates risk management into our Company’s strategy and business operations. The Company maintains an active Compliance Program; at least quarterly the Company’s Global Disclosure Committee conducts a thorough and detailed review of risks, including potential risks, which are systematically reported and tracked through resolution; and, finally, the Company’s senior management actively oversees the processes by which risk assessment and risk management are undertaken.

Governance and Nominating Committee Process

Pyxus’s Board of Directors has a Governance and Nominating Committee composed entirely of independent directors and governed by a charter. As stated in the charter, it is the responsibility of the Committee to identify and evaluate potential candidates to serve on the Board. Candidates may be identified through a variety of means, including professional or personal contacts of directors, shareholder recommendations or a third-party firm engaged in the recruitment of directors.

Candidates are assessed by the Committee in view of the responsibilities, qualifications and independence requirements set forth in the Corporate Governance Guidelines. Candidate assessment begins with a review of the candidate’s background, education, experience and other qualifications. Candidates viewed favorably by the Committee then meet, either individually or collectively, with the Chairman of the Board, the Chairman of the Governance and Nominating Committee and other directors as appropriate, prior to being recommended for election to the Board.

An invitation to join the Board of Directors is extended only after a candidate’s qualifications have been reviewed by the Committee, the Committee has formally recommended the candidate to the Board for approval, and the Board has approved the candidate’s election by a majority vote. Invitations are extended on behalf of the Board by the Chairman.

Director Conflicts of Interest

The Pyxus Corporate Governance Guidelines provide that if an actual or potential conflict of interest arises for a director, the director is required to promptly inform the Chief Executive Officer and the Lead Independent Director. If a significant conflict exists and cannot be resolved, the Corporate Governance Guidelines call for the director to resign. The Corporate Governance Guidelines call for all directors to recuse themselves from any discussion or decision affecting their personal, business or professional interests.

Shareholder Nominations – 2020 Annual Meeting

Any shareholder entitled to vote in the election of directors generally may nominate at a meeting one or more persons for election as a director if written notice of such nomination or nominations is delivered or mailed to the Secretary of the Corporation in accordance with the Company’s Bylaws, which state that such notification must include:

 

•

the name, age and address of each proposed nominee;

 

•

the principal occupation of each proposed nominee;

 

•

the nominee’s qualifications to serve as a director;

 

•

the name and address of the notifying shareholders;

 

•

the number of shares owned by the notifying shareholder;

 

•

a description of agreements or arrangements between the notifying shareholder and any other person(s) in connection with director nominations;

 

•

a description of agreements or arrangements entered into by the notifying shareholder with the intent to mitigate loss, manage risk or benefit from changes in the stock price or increase or decrease the voting power of the notifying shareholder; and

 

•

a representation that the notifying shareholder is a holder of record of shares of capital stock entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to make the nomination(s).

 

- 7 -

As required by the Company’s Bylaws, nominations for the 2020 annual meeting must be received by the Secretary of the Company not later than April 17, 2020. The notice must be updated following the later of the record date or the first public announcement of the record date for the meeting to reflect changes to certain of this information. The Secretary will deliver all such notices to the Governance and Nominating Committee which will consider such candidates. The Governance and Nominating Committee shall thereafter make its recommendation to the Board of Directors, and the Board of Directors shall in turn make its determination with respect to whether such candidate should be nominated for election as a director.

Shareholder Proposals – 2020 Annual Meeting

To be considered for inclusion in the Company’s proxy statement for the 2020 annual meeting, shareholder proposals must be submitted in writing to the Secretary of the Corporation by March 17, 2020 and must be submitted in accordance with Rule 14a-8 of the Securities Exchange Act of 1934, the laws of the Commonwealth of Virginia and the Bylaws of the Company.

Pursuant to the Bylaws of the Company, in order for any business to be brought before the 2020 annual meeting by a shareholder, the proposal must be received by the Secretary of the Company not later than April 17, 2020. As to each matter the shareholder proposes to bring before the 2020 annual meeting, the notice must include:

 

•

a brief description of the business desired to be brought before the 2020 annual meeting and the reasons for conducting such business at the 2020 annual meeting;

 

•

the name and record address of the shareholder proposing the business;

 

•

the number of shares beneficially owned by the shareholder;

 

•

any material interest the shareholder has in such business;

 

•

a description of agreements or arrangements between the notifying shareholder and any other person(s) in connection with the proposal of business;

 

•

a description of agreements or arrangements entered into by the notifying shareholder with the intent to mitigate loss, manage risk or benefit from changes in the stock price or increase or decrease the voting power of the shareholder;

 

•

a representation that the notifying shareholder is a holder of record of shares of capital stock entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to propose the business.

The notice must be updated following the later of the record date or the first public announcement of the record date for the meeting to reflect changes to certain of this information.

BOARD OF DIRECTORS

PROPOSAL ONE

ELECTION OF DIRECTORS

The Company’s Bylaws currently provide that the Board of Directors consists of eleven directors, divided into three classes as nearly equal in number as possible. Typically, each class of directors serves for three years and one class is elected at each annual meeting. However, in connection with the increase in the size of the Board of Directors to eleven directors, the requirement under Virginia corporate law and the Company’s bylaws that the terms of the three directors first elected to the Board after the 2018 annual meeting expire at the 2019 annual meeting, and in order to rebalance the membership of the Board among the existing classes of directors, four directors (Jeffrey A. Eckmann, Joyce L. Fitzpatrick, Donna H. Grier, and John D. Rice) have been nominated for election at the 2019 annual meeting to serve three-year terms as Class I directors, one director (Nathan A. Richardson) has been nominated for election at the 2019 annual meeting to serve a two-year term as a Class III director, and one director (Daniel A. Castle) has been nominated for election at the 2019 annual meeting to serve a one-year term as a Class II director. Each of these six nominees is currently a director of Pyxus, with a term of office scheduled to expire at the 2019 annual meeting. The Governance and Nominating Committee has recommended to the Board of Directors and the Board of Directors has approved each of the nominees for election to the Board of Directors. The Board has determined that each of the nominees is independent from management. All nominees have consented to serve if elected.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES LISTED ABOVE.

 

- 8 -

Director Biographies

The following information is furnished with respect to the nominees for election as directors at the 2019 annual meeting, and the directors whose term of office will continue after the 2019 annual meeting:

Class I

Nominees for the Term Expiring in 2022

Jeffrey A. Eckmann – Age 66, Director since 2013

Retired since April 2008. Group President of Reynolds American, Inc., a manufacturer of consumer tobacco products, from October 2006 to April 2008, Executive Vice President – Strategy and Business Development of Reynolds American, Inc., from January 2006 to October 2006, and Executive Vice President – Strategy, Integration, Information Technology and Business Development of Reynolds American, Inc., from September 2004 to January 2006. Senior Vice President and Chief Financial Officer of Brown & Williamson Tobacco Corporation, a manufacturer of consumer tobacco products, from January 2001 to August 2004.

Joyce L. Fitzpatrick – Age 64, Director since 2012

President of Fitzpatrick Communications, Inc., a public relations firm concentrating in corporate and crisis communications, litigation support, issue management, media relations and public affairs, since 2002. Prior thereto, Ms. Fitzpatrick was a Senior Vice President at Ruder-Finn, Inc., a multinational public relations firm.

Donna H. Grier - Age 61, Director since 2018

Retired since June 2019. Vice President and Treasurer of E.I. DuPont de Nemours & Company, a Fortune 100 diversified agricultural and manufacturing company from February 2012 through May 2019. Prior thereto, Ms. Grier served in numerous roles across DuPont including Vice President, General Auditor & Chief Ethics and Compliance Officer; Finance Director and CFO of DuPont’s Safety & Protection division; Finance Director and CFO of DuPont Europe; Regional Controller for South America; and Financial Leader for various business units.

John D. Rice – Age 65, Director since 2013

Retired since June 2012. Vice Chairman of Archer-Daniels-Midland Company, a Fortune 30 agribusiness, from November 2010 to June 2012. During his 36-year career with Archer-Daniels-Midland, Mr. Rice held numerous senior positions, including the roles of Executive Vice President – Commercial and Production from August 2007 to October 2010, Executive Vice President – Global Risk Management and Marketing from February 2005 to August 2007, and Senior Vice President – Corn Processing, Global BioProducts and Food from February 2000 to February 2005.

Class III

Nominee For The Term Expiring In 2021

Nathan A. Richardson – Age 48, Director since 2019

Co-founder and Chief Executive Officer of Trade It, Inc., a provider of API infrastructure and network technology to financial institutions, since December 2014. Previously, Mr. Richardson served as an advisor and consultant to Bloomberg Media, a global online news and data company, from November 2013 to March 2014, and as President of AOL Live, a live online video channel, from September 2013 to November 2013.

Class II

Nominee For The Term Expiring In 2020

Daniel A. Castle – Age 41, Director since 2019

Founder and Managing Partner of Castle Brand Group, LLC, a brand consulting firm, since February 2018. Previously, Mr. Castle served as Managing Director of Corporate Development for Sequential Brands Group, Inc., a global consumer brands promotion, marketing and licensing company where he focused on growing the Martha Stewart brand, from September 2016 through February 2018; Managing Director of Saban Brands, a lifestyle and entertainment brands company, from June 2014 through February 2016; and as Vice President Business Development – International of Iconix Brand Group, a global brand management company, from August 2011 through April 2014.

 

- 9 -

Class III

Directors with a Term Expiring in 2021

Mark W. Kehaya – Age 51, Director since 2005

A founding partner of Meriturn Partners, LLC, an investment firm specializing in restructurings and turnarounds of middle-market companies, since January 2002. Mr. Kehaya has served as Chairman of AMV Holdings, LLC (f/k/a MadVapes Holdings, LLC), an owner and operator of retail vape shops and manufacturer and wholesaler of related products, since August 2015. Previously, Mr. Kehaya served as Pyxus’s Interim Chief Executive Officer from December 14, 2010 through February 28, 2013; as President, Chief Executive Officer and Chief Operating Officer of Eturn Communications, Inc., a software solutions provider, from November 2000 to October 2001; and from April 1993 until March 2000, was employed by Standard Commercial Corporation (“Standard Commercial”), serving variously as Assistant to the President, Finance Director of the Tobacco Division, Vice President - Planning, and as Chief Executive Officer of Standard Commercial’s tobacco processing facility in St. Petersburg, Russia.

Martin R. Wade, III – Age 70, Director since 2001

Director of Payless Shoesource, Inc., a retailer of footwear and accessories, since August 2017, and Chairman and Interim Chief Executive Officer of Payless from August 2017 to February 2019; President and Chief Executive Officer of Broadcaster, Inc. (formerly International Microcomputer Software Inc.), a company engaged in the internet service provider and applications businesses, since September 2006; Chief Executive Officer of International Microcomputer Software Inc., from September 2001 to September 2006; and Partner in Residence with Catalyst Acquisition Group, an investment firm focusing on the acquisition and restructuring of distressed companies in the United States and internationally, since September 2007. Director, President and Chief Executive Officer of Digital Creative Development Corporation (“DCDC”), a developer of entertainment content companies focusing on broadband content delivery and providing Internet-related business-to-business services, from May 2001 to August 2001, and Director and Executive Vice President of DCDC from June 2000 to April 2001. Managing Director of Prudential Securities, Inc., a global securities firm, from May 1998 to June 2000.

Class II

Directors with a Term Expiring in 2020

C. Richard Green, Jr. – Age 75, Director since 2003

Retired since April 2002. Non-Executive Director of ITC Limited, a company in India engaged in operating hotels, agricultural exports and manufacturing cigarettes and paperboard, from July 1999 to April 2008. Regional Director of British American Tobacco, a multinational tobacco company, from January 1999 to April 2002.

Nigel G. Howard – Age 73, Director since 2005

Retired since December 2003. Non-Executive Chairman of Zotefoams PLC, a manufacturer of industrial foams, from January 2007 through March 2016, and Non-Executive Director of Zotefoams from January 2006 to December 2006. Deputy Chief Executive of The Morgan Crucible Company plc, a designer, developer and supplier of products made from carbon, ceramic and magnetic materials, from September 2002 to December 2003, and Director of The Morgan Crucible Company from September 1992 to December 2003. Deputy Chairman, Assam Carbon Products, Ltd., India, March 1977 to August 2005. Mr. Howard does not currently serve on the board of directors of any other public company, but within the last five years served as a director of Zotefoams PLC.

J. Pieter Sikkel - Age 55, Director since 2011

President and Chief Executive Officer of Pyxus since March 1, 2013, having previously served as President from December 14, 2010 through February 28, 2013, as Executive Vice President – Business Strategy and Relationship Management from April 2007 through December 13, 2010, and as Regional Director of Asia from May 2005 until April 2007. Employed by Standard Commercial from January 1983 until May 2005, serving as Regional Director of Asia from March 1999 until May 2005, Country Manager of China from June 1991 until March 1999, and prior thereto in various positions in South Korea, the Philippines and Thailand.

 

- 10 -

Director Qualifications

The Company’s Corporate Governance Guidelines require that our directors have diverse professional backgrounds, combine a broad spectrum of experience and expertise, and possess a reputation for the highest personal and professional ethics, integrity and values. The Governance and Nominating Committee is responsible for identifying specific skills and characteristics that may be sought in light of the current make-up of the Board and its anticipated needs going forward, and considers factors including experience in areas relevant to the strategy and operations of the Company’s businesses, the ability to actively participate in and contribute to the deliberations of the Board, international business experience, the capacity and desire to represent the balanced, best interest of the shareholders, the ability to exercise independent judgment and decision making, the time available to devote to the responsibilities of a director and the Board’s diversity of background, personal and professional experience, gender and ethnicity. Determination of whether an individual meets these qualifications is made in the business judgment of the Board. The Corporate Governance Guidelines provide that individuals will not be nominated for election to the Board after reaching seventy-five years of age.

The Company believes that the Board meets the foregoing criteria and that, additionally, its members as a whole encompass a range of talent, skill, diversity and expertise enabling it to provide sound guidance with respect to the Company’s operations and interests. Potential candidates for membership on the Company’s Board are reviewed in the context of the current composition of the Board and the evolving needs of the Company. It is the Company’s policy to have a majority of directors qualify as “Independent” under the listing requirements of the New York Stock Exchange and the Company’s own Corporate Governance Guidelines. The Governance and Nominating Committee identifies candidates for election to the Board of Directors; reviews their skills, characteristics and experience; and recommends nominees for director to the Board for approval.

Each of the nominees for election as a director at the 2019 annual meeting and each of the Company’s current directors who will continue in office after the 2019 annual meeting hold or has held senior executive positions in large, complex organizations. In these positions they have also gained experience in core management skills such as strategic and financial planning, financial reporting, corporate governance, risk management and leadership development.

Several of our directors have direct experience in the tobacco industry in addition to their service as a director of our Company or one of its corporate predecessors. Mr. Kehaya, prior to his service as the Company’s Interim Chief Executive Officer between December 2010 and February 2013, served in various management capacities for one of our corporate predecessors, including managing a tobacco processing facility in St. Petersburg, Russia; and has financial experience as a partner at Meriturn Partners, LLC and operating experience as Chief Executive Officer and Chief Operating Officer of Eturn Communications. Mr. Green has significant management experience in the tobacco industry, having served for many years as an executive of British American Tobacco and as a director of ITC Limited (India). Mr. Eckmann served in multiple executive capacities with both Reynolds American and Brown & Williamson, and also has substantial accounting and financial experience as the former Chief Financial Officer of Brown & Williamson. Mr. Sikkel has extensive tobacco industry experience, having served for over twenty-five years in management positions in the Company and one of our corporate predecessors.

Other directors have considerable managerial and other experience as executives in a broad range of industries. Mr. Wade has substantial managerial and operating experience as Chief Executive Officer of several firms and financial experience as a managing director of Prudential Securities. Mr. Rice has an extensive background in the operation and management of a multinational agribusiness, with multiple executive positions, including Vice Chairman, over his 36-year career with Archer-Daniels-Midland. Mr. Howard has significant managerial and international business experience developed as an executive of Morgan Crucible Company PLC and Assam Carbon Products, Ltd., India. Ms. Fitzpatrick combines executive experience as the president of a corporate communications firm for the past 17 years, and as an officer of a multinational public relations firm before that, with a depth of expertise and public relations experience developed over a more than 30-year career of providing strategic advice to corporations, universities and non-profit organizations. Ms. Grier has deep financial, accounting and international business experience developed over a more than 37-year career with E.I. DuPont de Nemours & Company, in which she served in several executive positions, including most recently as Vice President – Treasurer. Mr. Castle provides the Board with branding, marketing and global licensing expertise, and through his roles as an executive in several branding and consumer goods companies, has extensive experience in the areas of business development and strategic partnerships for start-ups and eco-responsible direct-to-consumer brands. Mr. Richardson has an extensive background in financial technology, e-commerce, and digital marketing, together with significant entrepreneurial and international business experience, developed as Chief Executive Officer of Trade It, Inc., President of AOL Live, and prior to September 2013, in executive capacities in various online shopping and entertainment, financial information and media companies.

 

- 11 -

In connection with his service as a partner at Meriturn Partners, LLC, an investment firm specializing in restructurings and turnarounds of middle-market companies, Mr. Kehaya served as interim Chief Executive Officer of Prime Tanning Co., Inc., between March 2009 and December 2009, until a permanent replacement could be found. On November 16, 2010, Prime Tanning Co., Inc. filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Maine.

On February 18, 2019, Payless Shoesource, Inc. filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Eastern District of Missouri. Mr. Wade has served on the board of directors of Payless Shoesource, Inc. since August 2017, when it emerged from Chapter 11 proceedings commenced earlier that year, and served as its Chairman and Interim President from August 2017 to February 2019.

The Governance and Nominating Committee and the Board believe that each of the nominees and the continuing directors has other key attributes that are important to an effective board: integrity and demonstrated high ethical standards; sound judgment; analytical skills; the ability to engage management and each other in a constructive and collaborative fashion; diversity of origin, background, experience and thought; and the commitment to devote significant time and energy to service on the Board and its Committees. Consideration of the specific experiences, qualifications and skills of the directors as listed above, as well as the common attributes listed in this paragraph, led to the conclusion that each of the nominees and continuing directors should serve as a director of the Company.

Board Diversity

Historically, the Board has implemented and assessed the effectiveness of its guideline to achieve diversity in professional backgrounds by reviewing and evaluating information detailing the positions held by incumbent directors and proposed director candidates, as well as the industries in which they work or had worked in the past. The Company’s Corporate Governance Guidelines provide that diversity of gender and ethnicity are factors that the Governance and Nominating Committee may consider in recommending nominees for election to the Board. These factors were considered by the Governance and Nominating Committee in making its recommendation that each of Mss. Grier and Fitzpatrick, and Messrs. Castle, Eckmann, Rice, and Richardson be nominated for re-election to the Board. By the inclusion of these provisions to the Corporate Governance Guidelines, the Board encourages consideration of these factors, but does not anticipate that consideration of such matters of diversity would, of itself, result in the displacement of qualified incumbent directors. Instead, the Board anticipates that these factors have the most impact in the evaluation of new candidates joining the Board. The Board believes that, in addition to other aspects of diversity, Ms. Fitzpatrick and Ms. Grier contribute to the Board’s diversity on the basis of gender and Mr. Richardson contributes to the Board’s diversity on the basis of sexual orientation.

Independence

The Board has affirmatively determined that the directors and nominees listed herein, with the exception of Mr. Sikkel who is currently President and Chief Executive Officer of the Company, are independent as that term is defined under the Corporate Governance Standards of the New York Stock Exchange.

Non-Executive Director Stock Ownership Guidelines

The Board of Directors has adopted amended stock ownership guidelines pursuant to which each non-executive director has five years after the individual becomes a director to accumulate ownership of Pyxus common stock having a market value that equals or exceeds three (3) times the then-current annual base cash retainer (excluding committee fees and equity grants) payable to non-executive directors for their service on the Board. Shares held by immediate family members residing in the same household, shares of restricted stock (whether vested or unvested), and shares held in trust for the benefit of the director count toward the threshold established under such stock ownership guidelines. Once a director complies with these stock ownership guidelines, the director is deemed to continue to be in compliance unless and until the director sells or otherwise disposes of shares, except for any sale to satisfy the tax liability incurred in connection with the acquisition of shares. Under the guidelines, if a non-executive director is not in compliance with the required ownership levels, the director may not dispose of any shares acquired (other than to satisfy the tax liability incurred in connection with the acquisition of the shares). Ms. Fitzpatrick and Messrs. Eckmann, Green, Howard, Kehaya, Rice and Wade were in compliance with the guidelines on June 14, 2019, the date of the last annual evaluation. Ms. Grier, who was first elected to the Board of Directors in 2018, and Messrs. Castle and Richardson, who were first elected to the Board of Directors in 2019, are not yet required to maintain the share ownership specified by the guidelines.

 

- 12 -

Board Committees and Membership

The Board has standing Audit, Executive, Executive Compensation, Governance and Nominating, and Social Responsibility and Corporate Affairs Committees. With the exception of the Executive Committee, each committee operates under a charter approved by the Board. Such charters, containing descriptions of the committees’ responsibilities, are available on our website, www.pyxus.com . All members of the Audit, Executive Compensation and Governance and Nominating Committees meet the requirements for independence set forth by the New York Stock Exchange in Section 303A.02 of the Listed Company Manual. Further, the Board has determined that each member of the Audit Committee meets the additional requirements for independence set forth by the New York Stock Exchange in Section 303A.07 of the Listed Company Manual, and that each member of the Executive Compensation Committee meets the additional requirements for independence set forth by the New York Stock Exchange in Section 303A.05 of the Listed Company Manual.

The following table indicates the current membership of, and number of meetings held during fiscal year 2019 by, each standing committee of the Board.

 

Committee Membership

Audit

Executive

Executive Compensation

Governance and Nominating

Social Responsibility and Corporate Affairs

Mr. Castle

X

Mr. Eckmann

X

*

X

X

Ms. Fitzpatrick

X

X

*

Mr. Green

X

X

X

Ms. Grier

X

Mr. Howard

X

*

X

Mr. Kehaya

X

X

Mr. Rice

X

X

*

Mr. Richardson

X

Mr. Sikkel

X

*

Mr. Wade

X

FY2019

Meetings

13

1

5

6

5

*Chairman

The Audit Committee currently consists of Mr. Eckmann (Chairman), Ms. Grier, Mr. Rice and Mr. Wade. This Committee’s principal responsibilities include overseeing accounting policies, auditing and reporting practices; selecting, overseeing, evaluating, compensating and replacing independent auditors; overseeing the internal audit function; evaluating the adequacy and effectiveness of internal controls and risk management policies; overseeing compliance with legal and regulatory requirements; providing for the receipt, retention and treatment of complaints regarding internal accounting controls or auditing matters; and preparing a committee report for inclusion in the annual proxy statement.

The Executive Committee currently consists of Mr. Sikkel (Chairman), Mr. Eckmann, Mr. Green, and Mr. Kehaya. This Committee meets on call and has the authority to act on behalf of the Board when the full Board is not in session.

The Executive Compensation Committee currently consists of Mr. Howard (Chairman), Mr. Eckmann and Mr. Green. This Committee’s principal responsibilities include reviewing and approving incentive compensation and equity-based plans consistent with shareholder-approved plans; where appropriate, making recommendations to the Board with respect to new incentive compensation plans and equity-based plans for Board or shareholder approval; reviewing and approving salaries and incentive awards for executive officers; reviewing and approving corporate goals and objectives relevant to the compensation of the Chief Executive Officer; evaluating CEO performance; recommending to the independent directors the compensation of the CEO, including base salary and incentive awards; and preparing a committee report on executive compensation for inclusion in the annual proxy statement.

The Governance and Nominating Committee currently consists of Mr. Rice (Chairman), Ms. Fitzpatrick, Mr. Green and Mr. Howard. This Committee’s principal responsibilities include analyzing the structure, size and composition of the Board; developing and monitoring director selection criteria; identifying, recruiting, evaluating and

 

- 13 -

recommending to the Board qualified nominees for election to the Board of Directors at the Annual Meeting of Shareholders; reviewing and recommending to the Board Corporate Governance Guidelines; overseeing the adoption and periodic review of committee charters; overseeing the Company’s Compliance Program; recommending to the Board, when appropriate, the removal of a director; recommending to the Board directors to serve as Chairman, Lead Independent Director, committee chairs and committee members; recommending to the Board the retirement policy and remuneration of non-employee directors; providing for Board and committee self-evaluations; and reporting to the Board its conclusions regarding the Board’s effectiveness and performance.

The Social Responsibility and Corporate Affairs Committee currently consists of Ms. Fitzpatrick (Chairman), Mr. Castle, Mr. Kehaya, and Mr. Richardson. The Committee’s principal responsibilities include monitoring the Company’s strategy regarding, and management of, issues relating to good corporate citizenship, environmental sustainability, human rights and labor practices, health and safety and other emerging social issues (collectively, “Corporate Social Responsibility Issues”); reviewing global regulatory and public policy issues affecting the Company and the Company’s positions thereon; monitoring the Company’s relationships with key stakeholders; monitoring plans for the production of, and review, the Company’s Sustainability Report and related issue-specific reports; reviewing the Company’s progress against key sustainability goals, targets and commitments; and reviewing and making recommendations to the Board regarding shareholder proposals relating to Corporate Social Responsibility Issues.

Board Meetings

Pyxus’s non-management directors, all of whom are independent as that term is defined by the Corporate Governance Standards of the New York Stock Exchange, meet regularly in executive session. In accordance with Pyxus’s Corporate Governance Guidelines, the Lead Independent Director presides at executive sessions of non-management directors. Mr. Eckmann has served as Lead Independent Director since the 2018 annual meeting of shareholders. The Board typically determines the Lead Independent Director at the first meeting of the Board of Directors following the annual shareholders meeting in conjunction with committee assignments.

During fiscal year 2019, there were eight meetings of the Board of Directors, and no director attended fewer than 75% of the aggregate of all meetings of the Board of Directors and the committees on which he or she served during his or her term of service. All current directors attended the 2018 annual meeting, other than Ms. Grier and Messrs. Castle and Richardson who were first elected to the Board after the 2018 annual meeting.

Compensation of Directors

Directors who are employees of the Company are not compensated for their services as director. The following table represents the fiscal year 2019 compensation for all directors other than Mr. Sikkel, and includes compensation paid to Carl L. Hausmann, who retired from service as a director upon the commencement of the 2018 annual meeting of shareholders. Compensation information for Mr. Sikkel is disclosed herein under the section entitled “ Executive Compensation Tables .”

 

Director Compensation
Name		Fees Earned or Paid in Cash				Stock Awards  (3)				Change in Pension Value and Nonqualified Deferred Compensation Earnings				Total
Daniel A. Castle (1)		$	10,000			$	9,795				—			$	19,795
Jeffrey A. Eckmann (1)		$	113,287			$	69,148				—			$	182,435
Joyce L. Fitzpatrick (1)		$	83,750			$	69,148				—			$	152,898
C. Richard Green, Jr. (1)		$	97,840			$	69,148				—			$	166,988
Donna H. Grier (1)		$	30,245			$	28,651				—			$	58,896
Carl L. Hausmann (1)		$	30,029			$	22,918				—			$	52,947
Nigel G. Howard (1)		$	89,050			$	69,148				—			$	158,198
Mark W. Kehaya (2)		$	92,947			$	73,674				—			$	166,621
John D. Rice (1)		$	92,937			$	69,148				—			$	162,085
Nathan A. Richardson (1)		$	10,000			$	9,795				—			$	19,795
Martin R. Wade, III (1)		$	83,250			$	69,148				—			$	152,398

 

- 14 -

(1)	Independent directors received fees, paid quarterly, based on the following annual retainer schedule:

 

Type of Service		Annual Retainer
Board Member		$	67,500
Lead Independent Director		$	20,000
Audit Committee Member		$	12,000
Audit Committee Chairman		$	10,000
Executive Committee Member		$	3,000
Executive Committee Chairman		$	5,000
Executive Compensation Committee Member		$	12,000
Executive Compensation Committee Chairman		$	7,500
Governance & Nominating Committee Member		$	7,500
Governance & Nominating Committee Chairman		$	5,000
Social Responsibility & Corporate Affairs Committee Member		$	7,500
Social Responsibility & Corporate Affairs Committee Chairman		$	5,000
Special Committee Member		$	7,500
Special Committee Chairman		$	5,000

Effective with the quarterly payment made on December 31, 2018, the base annual retainer for independent directors increased from $60,000 to $67,500. Ms. Grier, who joined the Board in November 2018, and Messrs. Castle and Richardson, who joined the Board in February 2019, each received prorated retainers for the fiscal year ending on March 31, 2019.

In addition to the standing committees, in 2015 the Board established a special committee, composed of Mr. Green, Mr. Eckmann and Mr. Rice, to monitor and periodically report to the Board with respect to an investigation regarding discrepancies in accounts receivable and inventory at the Company’s Kenyan subsidiary, and any other matters that may arise in the course of such investigation. This special committee was disbanded in November 2018 following the resolution of matters related to the investigation.

 

(2)

During the period April 1, 2018 through August 15, 2018, Mr. Kehaya served as non-executive Chairman, and in such capacity received as his exclusive cash compensation an annual retainer in the amount of $120,000, prorated for the relevant period. From and after August 15, 2018 through the end of the 2019 fiscal year, Mr. Kehaya received prorated cash compensation consistent with that received by other non-executive members of the Board.

 

(3)

Pursuant to the 2016 Incentive Plan approved by the shareholders on August 11, 2016 (the “Incentive Plan”), (i) beginning with the September 30, 2016 grant and each quarterly grant thereafter until December 31, 2018, the Board approved non-employee director equity compensation to provide for quarterly grants of common stock equal in value to $17,500 for each non-employee director, excluding Mr. Kehaya, and for Mr. Kehaya, in his capacity as Non-Executive Chairman of the Board, equal in value to $26,500, in each case determined in reference to the greater of the 15 days’ average closing share price as of the last trading day preceding the grant or a deemed value of $20.00 per share; and (ii) beginning with the December 31, 2018 grant and each quarterly grant thereafter, the Board approved the modification of non-employee director equity compensation to provide for quarterly grants of common stock equal in value to $21,250 for each non-employee director other than the non-executive Chairman of the Board, and for non-executive Chairman of the Board (if any), equal in value to $31,875, in each case determined in reference to the greater of the 15 days’ average closing share price as of the last trading day preceding the grant. Mr. Hausmann received a prorated grant for the quarter in which he retired. Ms. Grier and Messrs. Castle and Richardson, each received prorated grants for the quarter in which they joined the Board. The values shown for the common stock reflect the grant date fair value of awards determined in accordance with ASC Topic 718. For a discussion of the assumptions used in the valuation of these awards, see Note 11 of Notes to Consolidated Financial Statements included in Pyxus’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

 

- 15 -

OWNERSHIP OF EQUITY SECURITIES

Stock Ownership of Management

The following table provides information as of May 1, 2019, with respect to the direct and indirect ownership of common stock by (1) each director and nominee for director; (2) each of the Company’s named executive officers; and (3) all directors, nominees and executive officers of the Company as a group. On May 1, 2019, there were 9,095,872 shares of Pyxus common stock outstanding, which number does not include shares owned by wholly-owned subsidiaries of the Company which are not entitled to vote their shares or to receive any dividends with respect to such shares.

 

Name of Beneficial Owner		Number of Shares with Sole Voting and Investment Power (1)				Number of Shares with Shared Voting and Investment Power (2)				Number of Shares Beneficially Owned (1) (2)				Percent of Class  (1)  (2)
Daniel A. Castle			410				—				410				*
Jose Maria Costa Garcia			35,596				—				35,596				*
Jeffrey A. Eckmann			17,160				3,000				20,160				*
Joyce L. Fitzpatrick			19,020				—				19,020				*
C. Richard Green, Jr.			26,990				1,500				28,490				*
Donna H. Grier			2,010				—				2,010				*
Nigel G. Howard			26,512				—				26,512				*
Laura D. Jones			3,799				—				3,799				*
Mark W. Kehaya (3)			81,620				481,525				563,145				6.2	%
Bryan T. Mazur			0				—				0				*
William L. O’Quinn, Jr.			32,963				—				32,963				*
Tracy G. Purvis			3,798				—				3,798				*
John D. Rice			17,160				—				17,160				*
Nathan A. Richardson			410				—				410				*
J. Pieter Sikkel			132,411				—				132,411				1.4	%
Joel L. Thomas			21,548				—				21,548				*
Martin R. Wade, III			25,370				—				25,370				*
Executive Officers, Directors and
Nominees for Director as a Group
(includes 17 people total)			446,777				486,025				932,802				10.0	%

 

*	Less than 1%.

(1)

Includes shares of common stock that may be acquired upon exercise of options that are currently exercisable or will become exercisable within sixty days of May 1, 2018, as follows: Mr. Castle, 0 shares; Mr. Costa Garcia, 20,000 shares; Mr. Eckmann, 0 shares; Ms. Fitzpatrick, 0 shares; Mr. Green, 0 shares; Ms. Grier, 0 shares; Mr. Howard, 0 shares; Ms. Jones, 0 shares; Mr. Kehaya, 50,000 shares; Mr. Mazur, 0 shares; Mr. O’Quinn, 20,000 shares; Ms. Purvis, 0 shares; Mr. Rice, 0 shares; Mr. Richardson, 0 shares; Mr. Sikkel, 100,000 shares; Mr. Thomas, 8,000 shares; Mr. Wade, 0 shares; and the executive officers, directors and nominees as a group, 198,000 shares.

This number also includes shares owned by minor child(ren) of the reporting person, or held in a trust or other estate planning vehicle over which the reporting person is understood to have sole voting and investment power.

(2)	Includes shares owned by the spouse of the reporting person, either directly, jointly with the reporting person or as custodian for the minor child(ren) of the reporting person.

(3)

For Mr. Kehaya, the amount shown includes, in addition to the 50,000 shares subject to presently exercisable options described in note (1) above: (1) 32,356 shares held directly by Mr. Kehaya over which he has sole voting and dispositive power; (2) 181,404 shares held jointly with Mr. Kehaya’s spouse over which Mr. Kehaya has shared voting and dispositive power; (3) an aggregate of 1,848 shares held by Mr. Kehaya’s spouse as custodian for his children that Mr. Kehaya may be deemed to beneficially own; (4) 395 shares owned indirectly through a 401(k) plan; and (5) 298,273 shares held by various trusts of which Mr. Kehaya is a co-trustee and over which he has shared voting and dispositive power; but excludes 1,131 shares that are subject to recovery in escheatment proceedings in the State of North Carolina.

 

- 16 -

Policies Prohibiting Hedging and Pledging Activities

The Company has adopted policies prohibiting directors and executive officers from engaging in any hedging or monetization transactions with respect to the Company’s securities, including, but not limited to, through the use of financial instruments such as exchange funds, prepaid variable forwards, equity swaps, puts, calls, collars, forwards and other derivative instruments, or through the establishment of a short position in the Company’s securities. In addition, the Company has adopted policies prohibiting directors and executive officers from pledging any Company stock, including without limitation, through the holding of the Company’s securities in margin accounts.

Stock Ownership of Certain Beneficial Owners

The following table sets forth the only persons known to the Company to be the beneficial owner of more than five percent of the outstanding shares of common stock of the Company as of the dates set forth in the footnotes to the table.

 

Name and Address of Beneficial Owner		Number of Shares Beneficially Owned				Percent of  Class (1)
AQR Capital Management, LLC, et al. (2)			815,017				9.0	%
Two Greenwich Plaza
Greenwich, Connecticut 06830
Dimensional Fund Advisors LP (3)			743,794				8.2	%
Building One, 6300 Bee Cave Road
Austin, Texas, 78746
Donald Smith & Co., Inc., et al. (4)			649,087				7.1	%
152 West 57 th Street
New York, New York 10019
BlackRock, Inc. (5)			628,299				6.9	%
55 East 52nd Street
New York, New York 10055
Mark W. Kehaya (6)			563,145				6.2	%
234 Fayetteville Street Mall, Sixth Floor
Raleigh, North Carolina 27601

 

(1)	All percentages are based on 9,095,872 shares of our common stock outstanding on May 1, 2019, which number does not include shares owned by wholly-owned subsidiaries of the Company which are not entitled to vote their shares or to receive any dividends with respect to such shares.

(2)

Based solely on a Schedule 13G jointly filed by AQR Capital Management, LLC and AQR Capital Management Holdings, LLC on February 14, 2019, reporting information as of December 31, 2018, that indicates that AQR Capital Management, LLC is a wholly owned subsidiary of AQR Capital Management Holdings, LLC, and that each of AQR Capital Management, LLC and AQR Capital Management Holdings, LLC has shared power to vote or direct the vote, and shared power to dispose or direct the disposition of, 815,017 shares.

(3)

Based solely on a Schedule 13G/A filed by Dimensional Fund Advisors LP on February 8 2019, reporting information as of December 31, 2018, that indicates that such person beneficially owned 743,794 shares and had sole voting power with respect to 715,735 shares and sole dispositive power over 7743,794 shares. Such Schedule 13G/A reports that: Dimensional Fund Advisors LP is an investment adviser registered under Section 203 of the Investment Advisors Act of 1940 and furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Dimensional Funds”); in certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser or sub-adviser to certain Dimensional Funds; in its role as investment advisor, sub-adviser and/or manager, Dimensional Fund Advisors LP or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over the securities of the Company that are owned by the Dimensional Funds, and may be deemed to be the beneficial owner of the shares of the Company held by the Dimensional Funds; however, all securities reported in such Schedule 13G/A were owned by the Dimensional Funds; Dimensional disclaims beneficial ownership of such securities; and its filing of such Schedule 13G/A shall not be construed as an admission that it or any of its affiliates is the beneficial owner of any securities covered by such Schedule 13G/A for any other purposes than Section 13(d) of the Securities Exchange Act of 1934.

 

- 17 -

(4)

Based solely on a Schedule 13G jointly filed by Donald Smith & Co., Inc., Donald Smith Long/Short Equities Fund, L.P., Jon Hartsel and John Piermont on February 8, 2019, reporting information as of December 31, 2018, that indicates that Donald Smith & Co., Inc. had sole power to vote 642,738 shares and sole dispositive power over 649,087 shares, Donald Smith Long/Short Equities Fund, L.P. had sole voting power with respect to 1,399 shares and sole dispositive power over 649,087 shares, Jon Hartsel had sole power to vote 200 shares and sole dispositive power over 649,087 shares, and John Piermont had sole voting power with respect to 1,550 shares and sole dispositive power over 649,087 shares.

(5)

Based solely on a Schedule 13G filed by BlackRock, Inc. on February 8, 2019, reporting information as of December 31, 2018 that indicates that BlackRock, Inc. has sole voting power over 615,850 shares and sole dispositive power over 628,299 shares. The Schedule 13G was filed by Blackrock, Inc. as a parent holding company with respect to the following subsidiaries: BlackRock Advisors, LLC, BlackRock Fund Advisors, BlackRock Institutional Trust Company, National Association, BlackRock Financial Management, Inc. and BlackRock Investment Management, LLC.

(6)

For Mr. Kehaya, the amount shown is as of May 1, 2018 and includes: (1) 32,356 shares held directly by Mr. Kehaya over which he has sole voting and dispositive power; (2) 181,404 shares held jointly with Mr. Kehaya’s spouse over which Mr. Kehaya has shared voting and dispositive power; (3) an aggregate of 1,848 shares held by Mr. Kehaya’s spouse as custodian for his children that Mr. Kehaya may be deemed to beneficially own; (4) 395 shares owned indirectly through a 401(k) plan; (5) 50,000 shares subject to presently exercisable options held by Mr. Kehaya; (6) 298,273 shares held by various trusts of which Mr. Kehaya is a co-trustee and over which he has shared voting and dispositive power; but excludes 1,131 shares that are subject to recovery in escheatment proceedings in the State of North Carolina.

Section 16(a) Beneficial Ownership Reporting Compliance

The Company believes that during the fiscal year ended March 31, 2019, all reports for the Company’s executive officers and directors that were required to be filed under Section 16(a) of the Securities Exchange Act of 1934 were filed on a timely basis, except as set forth below. Due to administrative error, (i) a Form 4 for each of William L. O’Quinn, Jr., J. Pieter Sikkel and Joel L. Thomas, reporting the vesting of Restricted Stock Units on February 23, 2019, was not filed until February 27, 2019, (ii) a Form 4 for each of Laura D. Jones, Tracy G. Purvis, William L. O’Quinn, Jr., J. Pieter Sikkel and Joel L. Thomas reporting the vesting of Restricted Stock Units on March 22, 2019, was not filed until April 3, 2019, and (iii) a Form 4 for Donna H. Grier reporting the grant of common shares on March 31, 2019, was not filed until April 5, 2019.

RELATED PARTY TRANSACTIONS

The Company annually collects written questionnaires from its officers and directors and engages in an internal process intended to identify transactions involving the Company and its officers or directors, including those required to be disclosed pursuant to the proxy statement rules of the Securities and Exchange Commission. Based on the information collected, the Company’s Chief Legal Officer initially determines whether any identified transactions are required to be disclosed under the relevant rules. Information regarding any qualifying transaction(s) is presented to the Audit Committee, which pursuant to its charter makes a determination as to whether to approve or ratify such transaction(s). The transaction disclosed below was approved and ratified by the Audit Committee pursuant to these procedures.

During the fiscal year ended March 31, 2019, the Company purchased tobacco from Msamba Estate Limited for approximately $947,300. Msamba Estate Limited, a commercial tobacco grower in Malawi which has been selling tobacco to the Company and its predecessors since 2001, is owned by the brother of Graham J. Kayes. Mr. Kayes, who served as Executive Vice President - Business Relationship Management and Leaf until September 2018, and now serves as Executive Vice President – Business Relationship Management and Leaf of the Company’s subsidiary Alliance One International, LLC, did not have any involvement in the sales transactions between the Company and Msamba Estate Limited. The price paid to Msamba Estate Limited for the tobacco was at the same price paid to other Malawi growers for the same grades and types of tobacco. Msamba Estate Limited is under contract to sell tobacco to the Company during the current crop; however, the exact amount of any such sales will not be known until purchasing concludes in Malawi later this year.

 

- 18 -

AUDIT MATTERS

Audit Committee Members and Meetings

Pyxus’s Board of Directors has an Audit Committee that is composed of Mr. Eckmann (Chairman), Ms. Grier, and Messrs. Rice and Wade. The Committee met thirteen times during fiscal year 2019.

Financial Literacy and Expertise

The Board, upon recommendation of the Governance and Nominating Committee, has determined that each member of the Audit Committee is financially literate as that term is interpreted by the Board in its business judgment. The Board has further determined that each of Ms. Grier and Messrs. Eckmann, Rice and Wade meet the requirements of an audit committee financial expert, as that term is defined by the SEC in Item 407 of Regulation S-K. As stated above, Ms. Grier and Messrs. Eckmann, Rice and Wade have been determined to be independent from management in accordance with the categorical standards described above and the NYSE listed company guidelines.

Other Audit Committee Service

The Company currently does not limit the number of audit committees on which its Audit Committee members may serve. However, the Audit Committee charter approved by the Board stipulates that, if an Audit Committee member simultaneously serves on the audit committee of more than three public companies, the Board must determine that such simultaneous service would not impair the ability of the director to effectively serve on the Company’s Audit Committee and disclose such determination in the annual proxy statement. None of the Audit Committee members currently serves on more than three audit committees of public companies.

Audit Committee Functions

The primary function of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities with respect to the Company’s accounting and financial reporting practices, and the quality and integrity of the Company’s financial reports. This includes the oversight of Pyxus’s financial statements provided to any governmental or regulatory body, the public or other users; the effectiveness of Pyxus’s internal control process; and Pyxus’s engagement of independent auditors. The Committee’s functions are described more fully in the section entitled “ Board Committees and Membership .”

Report of the Audit Committee

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities the Committee reviewed with management the audited financial statements in the Annual Report, including a discussion of the quality, not just the acceptability, of the accounting principles; the reasonableness of significant judgments; and the clarity of disclosures in the financial statements.

The Committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Committee including, but not limited to, the standards under Public Company Accounting Oversight Board Rule 3526, and the Committee has discussed any items required to be communicated to it by the independent auditors in accordance with regulations promulgated by the Securities and Exchange Commission and the Public Company Accounting Oversight Board and standards established by the American Institute of Certified Public Accountants and the Independence Standards Board.

The Committee has received from the independent auditors a letter describing any relationships with the Company that may bear on their independence and has discussed with the independent auditors the auditors’ independence from the Company and its management. The Committee has pre-approved all fiscal year 2019 audit and permissible non-audit services provided by the independent auditors and the fees for those services. As part of this process, the Committee has reviewed the audit fees of the independent auditors. It has also reviewed non-audit services and fees to assure compliance with regulations prohibiting the independent auditors from performing specified services that might impair their independence as well as compliance with the Company’s and the Committee’s policies.

 

- 19 -

The Committee discussed with the Company’s internal and independent auditors the overall scope and plans for their respective audits. The Committee meets with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting.

In reliance on the reviews and discussions referred to above, the Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2019 for filing with the Securities and Exchange Commission.

Audit Committee:

Jeffrey A. Eckmann, Chairman

Donna H. Grier

John D. Rice

Martin R. Wade, III

Policy for Pre-Approval of Audit and Non-Audit Services

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services to be provided by the independent auditors. These services include audit services, audit-related services, tax services and other services. Pre-approval is detailed as to the particular service or category of service and is subject to a specific budget. The Audit Committee requires the independent auditors and management to report at Audit Committee meetings throughout the year on the actual fees charged for each category of service.

During the year, circumstances may arise when it may become necessary to engage the independent auditors for additional services not contemplated in the original pre-approval. In those instances the Audit Committee requires specific pre-approval before engagement. The Audit Committee has delegated pre-approval authority to the Chairman of the Audit Committee for those instances when pre-approval is needed prior to a scheduled Audit Committee meeting. The Chairman of the Audit Committee must report on such pre-approvals at the next scheduled Audit Committee meeting.

Independent Auditors

Deloitte & Touche LLP (“Deloitte & Touche”), audited the Company’s accounts for the fiscal years ended March 31, 2019 and March 31, 2018; and, as more fully described below in Proposal Two, has been selected by the Audit Committee to serve as Pyxus’s independent auditors for the fiscal year ending March 31, 2020 . Deloitte & Touche has served as the Company’s independent auditors since 2006.

Audit and Non-Audit Fees

Set forth below are the fees billed to the Company by Deloitte & Touche in connection with services rendered during the fiscal years ended March 31, 2018 and March 31, 2019:

 

		FY2018				FY2019
Audit Fees (1)		$	5,470,055			$	5,652,324
Audit-Related Fees (2)			39,094			$	1,608,850
Tax Fees (3)			14,000			$	19,000
All Other Fees (4)			—				—
Total		$	5,523,149			$	7,280,174

 

(1)

Audit Fee s. Audit Fees consist of professional services rendered in the audit of the Company’s annual financial statements, review of the Company’s quarterly financial statements, as well as work that generally only the independent auditor can reasonably be expected to provide, such as comfort letters, statutory audits, attest services, consents and assistance with reporting requirements.

(2)

Audit-Related Fees. Audit-Related Fees consist of assurance and related services performed by the independent auditor that are reasonably related to the performance of the audit or review of financial statements and may include, among others, employee benefit plan audits, due diligence related to mergers and acquisitions, internal control reviews and consultation regarding financial accounting and reporting standards.

 

- 20 -

(3)	Tax Fees. Tax Fees consist of services performed by the independent auditor for tax compliance, tax planning and tax advice.

(4)	All Other Fees . There were no fees billed or services rendered by Deloitte & Touche during fiscal years 2018 and 2019 other than those described above.

PROPOSAL TWO

RATIFICATION OF DELOITTE & TOUCHE AS INDEPENDENT AUDITORS

The Audit Committee has selected the firm of Deloitte & Touche to serve as the Company’s independent auditors for the fiscal year ending March 31, 2020, and has directed that management submit the selection of independent auditors to the shareholders for ratification at the Annual Meeting. Representatives of Deloitte & Touche are expected to attend the shareholder meeting, will have an opportunity to make a statement if they so desire, and will also be available to respond to appropriate questions.

Shareholder ratification of the selection of Deloitte & Touche as the Company’s independent auditors is not required by the Company’s bylaws or otherwise. However, we are submitting the selection of Deloitte & Touche to the shareholders for ratification as a matter of good corporate practice. If the appointment of Deloitte & Touche is not ratified by the shareholders, the Audit Committee will reconsider whether or not to retain Deloitte & Touche. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such a change would be in the best interests of the Company and its shareholders.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING MARCH 31, 2020.

PROPOSAL THREE

ADVISORY VOTE ON THE

COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the Company is required to provide shareholders with the opportunity to cast an advisory vote on compensation to our Named Executive Officers as reported in this proxy statement (sometimes referred to as “say on pay”). Accordingly, the following resolution will be presented to the shareholders at the annual meeting:

“Resolved, that the shareholders hereby approve, on an advisory basis, the compensation paid to the Company’s named executive officers as disclosed, pursuant to Item 402 of Regulation S-K of the Securities and Exchange Commission, in the Company’s proxy statement for the 2019 annual meeting of shareholders.”

This advisory vote is nonbinding on the Company; however, the Board and the Executive Compensation Committee, which is comprised of independent directors, will take into account the outcome of the vote when considering future executive compensation decisions.

The Board and the Executive Compensation Committee believe that our executive compensation policies, procedures and decisions made with respect to our named executive officers are based on our pay for performance philosophy, and are focused on achieving the Company’s goals and enhancing shareholder value. We have concluded that the compensation paid or awarded to each executive officer for the most recent fiscal year was reasonable and appropriate. Shareholders are encouraged to read the section entitled “ Executive Compensation—Compensation Discussion and Analysis ,” the accompanying compensation tables, and the related narrative disclosure included in this proxy statement.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ADOPTION OF THE RESOLUTION APPROVING, ON AN ADVISORY BASIS, OF THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.

 

- 21 -