Hawkins (HWKN) DEF 14ADefinitive proxy

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held August 2, 2023

To our Shareholders:

The Annual Meeting of Shareholders of Hawkins, Inc. will be held on Wednesday, August 2, 2023, at 8:00 a.m., Central Time. The meeting will be completely virtual, incorporating technology designed to increase efficiency and provide greater opportunity for shareholder participation. In addition to on-line attendance, shareholders will have an opportunity to hear all portions of the official meeting, submit written questions during the meeting, vote on-line during the open poll portion of the meeting, and listen to live responses to shareholder questions immediately following the formal meeting.

1. To elect eight directors.

2. To ratify the appointment of Grant Thornton LLP to serve as our independent registered public accounting firm for the fiscal year ending March 31, 2024.

3. To approve, by a non-binding advisory vote, the compensation of our executive officers as disclosed in the attached proxy statement, or a “say-on-pay” vote.

4. To advise in a non-binding vote to recommend the frequency of future say-on-pay votes, or a "say when-on-pay" vote.

5. To transact such other business as may properly come before the meeting or any adjournment thereof.

Voting                                                        

The Board of Directors has fixed the close of business on June 7, 2023 as the record date for determining the shareholders entitled to vote at the meeting. Accordingly, only shareholders of record at the close of business on that date will be entitled to vote. Our transfer books will not be closed.

2381 Rosegate

Roseville, Minnesota 55113

June 20, 2023

We expect to mail to our shareholders a Notice of Internet Availability of Proxy Materials (the "Notice") on or about June 20, 2023. You may not receive a printed copy of our proxy statement, annual report or a proxy card. Instead, the Notice or another voting instruction form from your broker or nominee (a "VIF") will instruct you as to how you may access and review our proxy statement and annual report electronically. The Notice or VIF will also provide instructions on how to vote online or by telephone or request a full set of printed materials and a physical proxy card for voting by mail. This proxy statement and our annual report can be accessed directly at the Internet address https://materials.proxyvote.com/420261 or at www.proxyvote.com using the 16-digit control number located on your proxy card.

SOLICITATION

The cost of soliciting proxies and of the notices of the meeting, including the preparation, assembly and mailing of proxies and this proxy statement, will be borne by us. In addition to the use of the mail, proxies may be solicited personally or by telephone, mail or electronic mail by our directors, officers and regular employees. Furthermore, arrangements may be made with brokers, banks and similar organizations to send proxies and proxy materials to beneficial owners for voting instructions. We will reimburse such organizations for their reasonable expenses incurred.

Our Board is soliciting your proxy to vote at the meeting because you were a shareholder of Hawkins, Inc. as of June 7, 2023, or the “record date,” and are entitled to vote. This proxy statement summarizes information you need to know to cast a vote at the meeting.

You are voting on four items:

If you are a shareholder of record, there are four ways to vote:

(1) You will need the 16-digit control number included on your proxy card, Notice, or other instructions that accompanied your proxy materials to vote on-line or to join the online Annual Meeting

If your shares are held in a brokerage account or by another nominee, your shares are said to be held in “street name” and you are considered the beneficial owner of the shares. Technically, the bank or broker is the shareholder of record with respect to those shares. Your bank or broker will collect the voting instructions from all their respective customers who hold our shares, including you, and then submit those votes to us.

If you return a properly executed proxy card without instructions, the persons named as proxy holders will vote your shares in accordance with the recommendations of the Board.

We do not know of any other matters that will be brought before the shareholders for a vote at the Annual Meeting. If any other matters properly come before the Annual Meeting calling for a vote of shareholders, proxies in the enclosed form returned to us will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holders.

Only shareholders of record at the close of business on the record date of June 7, 2023 are entitled to receive notice of and participate in the Annual Meeting. If you were a shareholder of record on that date, you will be entitled to vote all of the shares you held on that date.

You will have one vote for each share of our common stock you owned as of the close of business on the record date.

On the record date there were 21,065,618 outstanding shares of our common stock, each of which is entitled to one vote at the Annual Meeting. There is no cumulative voting for directors.

The holders of a majority of the aggregate voting power of our common stock outstanding and entitled to vote on the record date, must be present in person, or by proxy, at the Annual Meeting to constitute a quorum necessary to conduct the meeting.

Abstentions will be counted as present for purposes of determining the existence of a quorum at the meeting. However, shares of a shareholder who abstains or does not otherwise vote online at the Annual Meeting or by proxy will not be counted for purposes of establishing a quorum.

If a broker submits a proxy which indicates that the broker does not have discretionary authority as to certain shares to vote on proposals at the Annual Meeting, such “broker non-votes” will be counted for purposes of determining the presence of a quorum at the Annual Meeting, but will not be considered as present in person or by proxy and entitled to vote for purposes of determining the approval or disapproval of any proposal that requires the affirmative vote of the holders of a majority of the number of shares of common stock present in person or by proxy at the Annual Meeting and entitled to vote.

We urge you to vote in advance even if you plan to attend the virtual Annual Meeting so that we will know as soon as possible that a quorum has been achieved.

non-vote) will have no effect on the voting for the election of directors.

Any proxy given pursuant to this solicitation and received in time for the Annual Meeting will be voted in accordance with the instructions in that proxy unless the proxy is properly revoked prior to the meeting. Any shareholder giving a proxy may revoke it prior to its exercise at the meeting by: (1) delivering a written notice expressly revoking the proxy to our Secretary at our principal executive offices, (2) signing and forwarding to us at our principal executive offices a later dated proxy, or (3) attending the Annual Meeting via the Internet and voting during the Annual Meeting.

The Board has fixed at eight the number of directors to be elected at the Annual Meeting. Our Amended and Restated By-Laws (our "By-Laws") provide for a Board of not fewer than three and not more than eleven directors. Our Board currently consists of eight directors.

Our Board has nominated James A. Faulconbridge, Patrick H. Hawkins, Mary J. Schumacher, Jeffrey E. Spethmann, Daniel J. Stauber, Yi "Faith" Tang, James T. Thompson and Jeffrey L. Wright for election to the Board, each to hold office for the ensuing year and until his or her successor is duly elected and qualified.

Our directors have served as our directors continuously since the years indicated below. The following information, including the principal occupation or employment of each director nominee, has been furnished to us by the respective director nominees.

There are no family relationships among any of our directors, executive officers, or director nominees.

The following provides certain additional information regarding each director nominee.

Mr. Hawkins hold a bachelor's degree in chemistry from the University of Saint Thomas. His vast experience with our company has given him an intimate knowledge of our company and its business and a deep passion for our continued success.

Our Board has determined that, of the director nominees, each of Messrs. Faulconbridge, Spethmann, Thompson and Wright, and Mmes. Schumacher and Tang, are “Independent Directors” as that term is defined under the applicable listing standards of The Nasdaq Stock Market LLC (“Nasdaq”). Accordingly, a majority of our Board is independent.

Our Board held five meetings during the fiscal year ended April 2, 2023 (“fiscal 2023”). All directors attended at least 75% of the meetings of our Board and the committees on which they served. All directors attended our Annual Meeting of Shareholders virtually in 2022. Our Board encourages, but does not require, director attendance at annual meetings of shareholders.

Our Board does not have a policy regarding the separation of the roles of Chief Executive Officer and Chair of the Board, as the Board believes it is in the best interests of the company to make that determination based on the position and direction of the company and the membership of the Board. The positions of Chief Executive Officer and Chair of the Board are not currently held by the same person. This structure allows us to more fully utilize the skills of Mr. Thompson and ensures a greater active participation of the directors in setting agendas and establishing Board priorities and procedures.

I: Independent Director

C: Chair

M: Member

The Governance and Nominating Committee considers candidates for our Board in accordance with our By-Laws, Governance and Nominating Committee Charter and Principles of Corporate Governance, a copy of which is available at our website (www.hawkinsinc.com). Any shareholder seeking to make a director nomination should send the director candidate’s name, credentials and contact information, a signed statement consenting to his or her nomination and agreeing, if elected, to serve as a director, a completed director nominee questionnaire (available from our Secretary upon request) and the other information required by our By-Laws, to our Secretary no later than 90 days prior to the first anniversary of the preceding year’s annual meeting. The proposing shareholder should also include his or her contact information and evidence that the person submitting the nomination is a shareholder of the company.

The Governance and Nominating Committee will evaluate candidates (nominated by shareholders or otherwise) in accordance with the criteria set forth in our By-Laws, Governance and Nominating Committee Charter and Principles of Corporate Governance. Under our Principles of Corporate Governance, we maintain minimum qualifications that the Board, as a group, must meet, including governance, business and professional experience, industry awareness and knowledge and stakeholder awareness. Each director must also have high standards of personal ethics and a commitment to the mission and integrity of the company and be willing and able to devote the necessary time and energy to fulfilling the Board’s responsibility of oversight of the company and its management. In evaluating individual candidates, the Governance and Nominating Committee will consider financial literacy, knowledge of our industry or other background relevant to our needs, status as a stakeholder in our company, “independence” for purposes of compliance with Internal Revenue Service and SEC rules and Nasdaq listing standards, and willingness, ability and availability for service. The Governance and Nominating Committee may engage an outside search firm to assist in identifying and screening new director candidates and coordinating the selection process. The company does not have a formal policy with regard to the consideration of diversity in identifying director nominees, but the Governance and Nominating Committee strives to nominate directors with a variety of complementary skills so that, as a group, the Board will possess the appropriate talent, skills, and expertise to oversee the company’s businesses.

The company’s management is responsible for identifying the various risks facing the company, formulating risk management policies and procedures, and managing the company’s risk exposures on a day-to-day basis. The Board is responsible for monitoring the company’s risk management processes by informing itself concerning the company’s material risks and evaluating whether management has reasonable controls in place to address the material risks. The Board is not responsible,

however, for identifying or managing the company’s various risks. The Audit Committee is primarily responsible for monitoring management’s responsibility in the area of financial risk oversight, and financial risk management is a factor the Board and its Governance and Nominating Committee consider when determining which directors serve on the Audit Committee. Accordingly, management reported to the Board and its Audit Committee on various risk management matters during fiscal 2023. The Audit Committee, in turn, reports on the matters discussed at the committee level to the full Board. The Audit Committee and the Board focus on the material risks facing the company, including operational, market, liquidity, legal and regulatory risks, to assess whether management has reasonable controls in place to address these risks. The Board believes this allocation of responsibility provides an effective and efficient approach for addressing risk management.

Each of our directors, officers, other employees and their designees are prohibited from (i) purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our equity securities and (ii) otherwise engaging in transactions that hedge or offset, or are designed to hedge of offset, any decrease in the market value of our equity securities. Notwithstanding the foregoing, portfolio diversification transactions and investments in broad-based index funds is generally permitted. The prohibition applies to securities granted to the covered persons as part of compensation for their service to the company plus any other Company securities held by them, whether directly or indirectly.

Our policies also prohibit executive officers and directors from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.

Shareholders can contact the full Board, the independent directors as a group or any of the individual directors by writing to our Secretary at 2381 Rosegate, Roseville, Minnesota 55113. All communications will be compiled by the Secretary and submitted to the addressees on a periodic basis.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE COMMITMENT

We are committed to strong environmental, social and governance ("ESG") principles. We recognize that the way we do business impacts our results. Accordingly, we promote and support business practices that are environmentally sustainable, socially responsible, and aligned with strong corporate governance practices. Our Environmental, Social and Governance Report, available on our website (www.hawkinsinc.com), highlights our commitment to ESG principles.

We work to improve the quality of people's lives--from employees, to customers, to the communities where we operate. Recent initiatives have focused on:

At the Board level, our Governance and Nominating Committee oversees sustainability and social responsibility. At the management level, our Executive Vice President and Chief Financial Officer and General Counsel, who report directly to our Chief Executive Officer, have general oversight responsibility with respect to matters of sustainability and social responsibility.

The Audit Committee of the Board of Directors has appointed Grant Thornton LLP ("Grant Thornton") as our independent registered public accounting firm for the fiscal year ending March 31, 2024. Grant Thornton has served as our independent registered public accounting firm since fiscal 2020. Although the ratification of the appointment of an independent registered public accounting firm is not required to be submitted to a vote of stockholders, our Board of Directors has decided, as a good governance practice, to ask our stockholders to ratify this appointment. If our stockholders do not ratify the appointment of Grant Thornton, the Audit Committee will consider the shareholder vote in the course of selecting an independent registered public accounting firm for the following year.

The Audit Committee has (i) reviewed and discussed our audited financial statements for fiscal 2023 with both our management and Grant Thornton LLP (“Grant Thornton”); (ii) discussed with Grant Thornton the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC; (iii) received from Grant Thornton the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence and discussed with Grant Thornton its independence; and (iv) considered whether the non-audit services provided by Grant Thornton are compatible with maintaining the independence of Grant Thornton.

Based on the review and discussions described above, the Audit Committee recommended to our Board that our audited financial statements be included in our Annual Report on Form 10-K for fiscal 2023 for filing with the SEC.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S FEES

The following table shows the aggregate fees charged to us by Grant Thornton for services rendered for fiscal 2023 and fiscal 2022. The Audit Committee pre-approved 100% of the services described below.

The Audit Committee’s current practice on pre-approval of services performed by our independent registered public accounting firm is to approve annually all audit services, as well as the nature and extent of specific types of audit-related, tax and other non-audit services to be provided by the independent registered public accounting firm during the year. The Audit Committee reviews each non-audit service to be provided and assesses the impact of the service on the auditors’ independence. As the need arises, other specific permitted services are pre-approved on a case-by-case basis during the year. The Audit Committee has delegated to its chair pre-approval authority between meetings of the Audit Committee. Any

pre-approvals made by the chair must be reported to the Audit Committee.

Representatives of Grant Thornton are expected to attend the Annual Meeting and will have the opportunity to make a statement if they desire to do so. They are expected to be available to respond to appropriate questions.

The following discussion and analysis describes our compensation objectives and policies and the compensation awarded to the following executive officers (our “named executive officers”) during fiscal 2023:

Overview

Our executive compensation program is designed to attract and retain executives who will lead our company to achieve long-term success and growth in shareholder value. Consistent with that goal, our executive compensation program is based on company, business unit and individual performance to align the interests of our executive officers with those of our shareholders and is used to encourage our executive officers to stay with the company. Our executive compensation program currently includes a mix of elements that rewards current results as well as motivates long-term performance through an appropriate balance of base pay and performance-based variable compensation. Our performance-based variable compensation consists of a short-term component that provides incentives relative to superior current business results as well as personal performance, and a long-term incentive plan that motivates long-term performance and aligns business objectives with the interests of our shareholders. During fiscal 2023, the compensation committee did not make any significant changes to its executive compensation policies or to the structure of our executive compensation program, having taken into account, among other things, the fact that the holders of over 96% of the shares voted at our last annual meeting of shareholders approved, on an advisory basis, the compensation of our named executive officers as disclosed in the proxy statement for that annual meeting.

For all named executive officers except for Mr. Mangine, the sole performance measure for fiscal 2023 for purposes of both the non-equity and equity-based incentive arrangements was income before income taxes, adjusted to remove the impact of the gain on the sale of our bleach packaging assets and an additional adjustment related to the impact of higher interest rates. Because actual performance exceeded the target performance level but was under the maximum performance level, our named executive officers received payouts of 151% of the targeted payout level under the corporate performance measure of our annual non-equity incentive compensation arrangement. In addition, all of the named executive officers, including Mr. Mangine, earned 121% of the targeted number of shares of restricted stock issuable in settlement of the performance-based restricted stock units granted for fiscal 2023, as described below.

Determining Executive Compensation for Fiscal 2023

The Compensation Committee does not benchmark the total compensation or any individual element of compensation for our executives. It also does not apply a mechanical formula or target a specific amount relative to comparative data for any individual nor does it target a specific amount or relative weight for any component of compensation. Rather, the Compensation Committee members review and consider broad-based third-party survey data to understand current compensation practices, levels and structures and thereby inform its compensation decisions, but not to establish specific compensation parameters based on such data. In fiscal 2023, the broad-based survey data reviewed by the Compensation Committee was collected by independent compensation consultant McLagan, a compensation consulting business owned by AON; McLagan also provided the Compensation Committee with independent advice on industry practices. AON provided no other services to the company in fiscal 2023. The Compensation Committee did not use the information provided to it by McLagan in a formulaic manner, but instead used the information to inform its judgment regarding the appropriate levels and components of total compensation for the company’s executive officers. The Compensation Committee considered all elements of compensation together and utilized the members’ experience and judgment in determining the total compensation opportunity and mix of compensation elements appropriate for each executive officer in light of our compensation objectives.

The Compensation Committee viewed the information provided by McLagan as one of a number of tools available to the Committee in assessing executive compensation. The Compensation Committee also regularly consults with our Chief Executive Officer, who makes recommendations to the Compensation Committee regarding compensation of our executive officers other than the Chief Executive Officer. Our Chief Executive Officer participates in some of the Compensation Committee’s deliberations regarding compensation for our other executive officers, although all determinations are made by the Compensation Committee. Our Chief Executive Officer is not present during voting or deliberations relating to his own compensation.

Elements of Named Executive Officer Compensation

The following table outlines the key components of our compensation program for our named executive officers (excluding health and similar broad-based benefits generally available to all employees).

The following shows the relative value of the various compensation components at target for fiscal 2023 (base salary, performance-based equity incentive compensation and performance-based cash incentive compensation).

In addition to the above elements, our executive compensation program for the last fiscal year also included contributions to long-term benefit plans and other benefits, which are discussed in greater detail below.

Base Salary

We provide base salaries to our named executive officers to compensate them for fulfilling their primary responsibilities and to provide financial stability. The Compensation Committee annually reviews, and adjusts as appropriate, base salaries for our executive officers. In May 2022, the Compensation Committee approved the following increases to the base salary of our named executive officers, with the increases effective in June 2022: Mr. Hawkins to $615,000, an increase of 19%; Mr. Oldenkamp to $452,000, an increase of 10%; Mr. Erstad to $325,000, an increase of 9%, Mr. Grahek to $355,000, an increase of 9%; and Mr. Mangine to $325,000, an increase of 16%. Each increase in base salary was due to labor market dynamics.

Annual Non-Equity Incentive Compensation

Annual non-equity incentive compensation is a key component of our executive compensation strategy. The purpose of annual non-equity incentive compensation is to provide cash compensation that is variable based on the achievement of performance goals established by the Compensation Committee. Our executive officers do not have a contractual right to receive a fixed incentive compensation payment for any fiscal year.

Our non-equity incentive arrangement (described below) provides for no payout to executive officers unless a specified portion of the target is achieved and allows for a significantly increased payout if the target is exceeded. The cash incentive payments are determined and paid following the completion of our annual audit.

For fiscal 2023, the Compensation Committee designated financial performance goals, including a corporate pre-tax income performance measure and, for each named executive officer in charge of a business unit (which in fiscal 2023 included only our Vice President - Industrial), an operational measure of business unit profitability, as well as objectives for determining whether a cash incentive payment would be paid under the arrangement and in what amount.

The Compensation Committee established the payment opportunities for each of the named executive officers based on the relative scope of his responsibilities and resulting ability to impact the company’s performance.

The Compensation Committee determined that 100% of the annual cash incentive payment opportunities for our Chief Executive Officer, Chief Financial Officer, General Counsel and Vice President - Operations for fiscal 2023 should be based upon corporate performance against the pre-tax income goal to reflect their significant company-wide responsibilities and resulting ability to impact the overall success of the company.

The Compensation Committee determined that 50% of the annual cash incentive payment opportunity for our Vice President - Industrial for fiscal 2023 should be based upon company-wide performance and 50% should be based upon the profitability of his business unit to reflect his dual roles as leader of his business unit and as a member of the company’s overall executive management team.

The Compensation Committee set these target performance levels to ensure that a substantial portion of each named executive officer’s cash compensation is tied to corporate and business unit performance, as appropriate, and to provide our named executive officers with a performance-based opportunity to achieve market-competitive total compensation. The Compensation Committee determined that income before income taxes was the best measure of overall corporate financial performance and that the operational profitability measure described above was the best measures of business unit financial performance.

Because our income before income taxes was greater than the target level but below the maximum level of performance for the 2023 fiscal year, our named executive officers received 151% of the targeted payout under the corporate financial measure for fiscal 2023. Because business unit operational profitability performance for the Industrial Group was greater than the target level but below the maximum level of performance, Mr. Mangine received 184% of his targeted payout under the business unit financial measure.

While the Compensation Committee has discretion to adjust the final payouts under the annual non-equity incentive compensation program, it has not typically done so, and did not do so for fiscal 2023.

Our equity incentive compensation program is designed to:

For fiscal 2023, as had been the case in prior years, the equity incentive award program consisted of grants of performance-based restricted stock units that would vest based on company performance during the current fiscal year and would be settled in shares of restricted stock that would vest after two more years of service. The Compensation Committee determined, with the assistance of McLagan, to continue granting performance-based restricted stock units to our named executive officers so that a significant portion of each named executive officer’s compensation would be performance-based.

For fiscal 2023, the target number of shares to be issued to each named executive officer pursuant to his or her performance-based restricted stock unit award was based on a percentage of the executive’s base salary and converted into a target number of shares based on the closing price of a share of our common stock on the date of grant. The resulting awards, made by the Compensation Committee in May 2022, provided that each named executive officer would receive up to a maximum number of shares of restricted stock based on our performance during the fiscal year against the same pre-tax income target used in the annual non-equity incentive program described above.

The actual number of restricted stock units that would vest and be settled on a one-for-one basis in shares of restricted stock was based on a sliding scale for the relevant income above or below the target level, and was subject to minimum threshold and maximum settlement amounts. For fiscal 2023, the target was set at $73.5 million, the same level as our target used for our non-equity incentive plan arrangement described above. Our actual performance was $79.5 million, reflecting our actual income before income taxes and adjusting for the gain recorded on the sale of the consumer bleach packaging assets. If our actual results were less than 80% of the target in fiscal 2023, then no restricted stock units would vest and be settled in shares of restricted stock. If our actual results were between 80% and 100% of the target in fiscal 2023, then a number of restricted stock units would have vested and been settled in restricted stock based on a sliding scale between 50% and 100% of the target number of restricted stock units. If our actual results were between 100% and 120% of the target in fiscal 2023, then a number of restricted stock units would have vested and been settled in restricted stock based on a sliding scale between 100% and 150% of the target number of restricted stock units. Because our actual results were greater than the target level but below the maximum level of performance for the 2023 fiscal year, the named executive officers each received restricted stock equal to approximately 121% of the target number of restricted stock units.

In the event of a “fundamental change” (as defined below) involving the company, each performance-based restricted stock unit award will vest immediately at 100% of its target if the Compensation Committee determines that the fundamental change will not result in the continuation of the performance-based restricted stock unit award. Any outstanding shares of restricted stock issued in settlement of vested performance-based restricted stock unit awards will also immediately vest under the same circumstances. If a performance-based restricted stock unit award is continued after a fundamental change, but, in connection with the fundamental change, an executive is terminated without cause or resigns for good reason during the applicable performance period or prior to the final vesting of the restricted stock, then the performance-based restricted stock unit award or any restricted stock issued in settlement of vested performance-based restricted stock unit awards will vest in the same manner. We believe that these triggers in our performance-based restricted stock unit award notices in connection with a fundamental change strike an appropriate balance between company and shareholder concerns about executive retention in the event of a fundamental change and an executive’s legitimate concerns regarding termination or diminution of duties as a result of a fundamental change or a change in control. In our 2019 Equity Incentive Plan, “fundamental change” generally includes any one of the following, unless otherwise provided in an award agreement:

“Corporate transaction” means any dissolution or liquidation of the company, sale of substantially all of its assets, merger or consolidation involving the company, or statutory share exchange involving company stock. Similarly, “continuing director” means an individual who is, as of the effective date of the 2019 Equity Incentive Plan, a director of the company, or who becomes a director after such effective date and whose initial election, or nomination for election by the company’s

shareholders, was approved by at least a majority of the then continuing directors, but excluding anyone whose initial assumption of office occurs as a result of an actual or threatened election contest solicitation of proxies or consents by a person other than our Board.

Severance Arrangements

Our Compensation Committee has adopted an Executive Severance Plan covering our Chief Executive Officer and certain other key employees, including all of our named executive officers. We believe that the benefits provided by the Executive Severance Plan help attract executive talent and create an environment that provides for adequate business transition, stability and knowledge transfer during times of uncertainty or change. The terms of our Executive Severance Plan are described in greater detail under the heading "Potential Payments Upon Termination or Change in Control."

Contribution to Retirement Plans

All of our named executive officers participate in the matching component of our Profit Sharing Plan, which is available to the majority of our other non-bargaining unit employees. Our eligible named executive officers also participate in our nonqualified deferred compensation plan covering employees who were hired on or before April 1, 2012 and are classified as “highly compensated employees” as determined by the Internal Revenue Service (“IRS”). Messrs. Hawkins, Erstad and Mangine are the only named executive officers eligible to participate in the non-qualified deferred compensation plan. Named executive officers hired after April 1, 2012 are not eligible to participate in the nonqualified deferred compensation plan but instead may be eligible to participate in the profit sharing component under the Hawkins, Inc. Employee Stock Ownership Plan and Trust ("ESOP"), which we refer to as the "Profit Sharing Plan" and the ESOP. Mr. Oldenkamp and Mr. Grahek are the only named executive officers eligible to participate in the Profit Sharing Plan and ESOP. All of the retirement plans other than the nonqualified deferred compensation plan are qualified under Section 401(a) of the Internal Revenue Code.

Under the qualified retirement plans, our named executive officers who are eligible participate on the same terms as all other eligible employees, with the annual compensation that was used to determine plan benefits capped at the federal tax law limit of $305,000 for fiscal 2023. This limit will be adjusted in future years under federal tax law for cost-of-living increases.

Under our Profit Sharing Plan, we contributed a percentage of each eligible participant’s compensation to an account maintained for the participant under the plan. For fiscal 2023, we made contributions to the Profit Sharing Plan for each of Mr. Oldenkamp and Mr. Grahek equal to 2.5% of their compensation in the plan year, subject to the cap on the plan benefits, resulting in a contribution of $7,625 to each of them. Under the matching component of the Profit Sharing Plan, employee contributions are matched by the company up to a maximum of five percent of the participant’s eligible earnings, subject to IRS limitations. Participant accounts are credited with the appropriate gains or losses resulting from employee-directed investments made by the plan. During fiscal 2023, we made matching contributions of approximately $15,000 on behalf of each named executive officer.

Under our ESOP, we may contribute a percentage of each eligible participant’s compensation to the plan, subject to the cap on the plan benefits, which is then credited to individual accounts maintained for participants under the plan. Contributions are made at the discretion of our Board. For fiscal 2023, we made contributions to this plan for each of Mr. Oldenkamp and Mr. Grahek equal to 2.5% of their eligible compensation in the plan year, resulting in a contribution of $7,625 to each of them. Participant accounts are credited with the appropriate gains or losses resulting from the investments made by the plan.

The nonqualified deferred compensation plan is structured to comply with Section 409A. Under the plan, there is no participant deferral of income. All contributions to the plan are made by the company, and are fully vested immediately. Distributions under the plan begin six months after termination of employment, and are made in one lump sum, or in installment payments over three or five years, as chosen by the participant prior to their entry into the plan. Participant accounts are credited with the appropriate gains or losses resulting from the participant-directed investments made under the plan. Participants may change their investment selections on a daily basis. Under the plan, for fiscal 2023 we made contributions to this plan equal to 10% of each participant’s eligible compensation in the plan year, subject to the cap of $30,500 on the plan benefits, resulting in a contribution of $30,500 on behalf of each of Messrs. Hawkins, Erstad and Mangine.

The Compensation Committee believes that we must offer a competitive benefits program to attract and retain our executive officers. During fiscal 2023, we provided medical and other health and welfare benefits to our executive officers that are generally available to our other employees. 

The only perquisite we offer to our executive officers is the personal use of a company car.

Tax Considerations

Section 162(m) of the Internal Revenue Code (the "Code") disallows a tax deduction to public companies for compensation of more than $1 million paid in any taxable year to each “covered employee,” which includes any person who served as chief executive officer or chief financial officer at any time, as well as any person who was ever identified as a covered employee in 2017 or any subsequent year. To the extent the total compensation of any covered employee exceeds $1 million in a taxable year, the amount in excess of $1 million is not deductible for taxes. While Section 162(m) exempted qualifying performance-based compensation with respect to taxable years beginning on or before December 31, 2017, since that time all compensation to covered employees has been subject to the $1 million deduction limit.

Section 280G of the Code disallows a tax deduction with respect to excess parachute payments to certain executives of companies which undergo a change in control. In addition, Code Section 4999 imposes a 20% excise tax on the individual with respect to the excess parachute payment. Parachute payments are compensation linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans including stock options and other equity-based compensation. Excess parachute payments are parachute payments that exceed a threshold determined under Code Section 280G based on the executive’s prior compensation. As discussed below, we do not provide tax gross-ups on income that is deemed made in connection with a change in control.

Section 409A of the Code also affects the payments of certain types of deferred compensation to key employees and includes requirements relating to when payments under such arrangements can be made, acceleration of benefits, and timing of elections under such arrangements. Failure to satisfy these requirements will generally lead to an acceleration of the timing for including deferred compensation in an employee’s income, as well as certain penalties and interest. Our nonqualified deferred compensation arrangements are designed to meet the requirements of Section 409A.

Risks Arising from Compensation Policies and Practices

Our management annually conducts an evaluation of the risks arising from our company-wide compensation policies and practices with respect to employees. Management prepared an analysis of our compensation policies and practices and concluded that they do not create risks that are reasonably likely to have a material adverse effect on our company. In connection with its risk oversight role, our Compensation Committee reviewed and agreed with management’s analysis and conclusions.

The Company intends to adopt a revised clawback policy regarding accounting restatements in accordance with the SEC’s adoption of new rules to implement Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 once final listing standards are implemented by Nasdaq.

The Compensation Committee has discussed and reviewed the Compensation Discussion and Analysis with management. Based upon this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in our Annual Report on

Form 10-K.

None of the named executive officers have employment agreements with us.

The following table sets forth information concerning grants of plan-based awards to our named executive officers during fiscal 2023.

 

Each of the “Equity Incentive Plan Awards” shown in the table entitled “Grants of Plan-Based Awards” was granted under our 2019 Equity Incentive Plan. The material terms of the 2023 equity and non-equity incentive awards are described under “Executive Compensation—Compensation Discussion and Analysis.”

The following table sets forth certain information concerning outstanding equity awards held by our named executive officers as of April 2, 2023 which have been issued under our 2019 Equity Incentive Plan.

The nonqualified deferred compensation plan is structured to comply with Section 409A. Under the plan, there is no participant deferral of income. All contributions to the plan are made by the company and are fully vested immediately. Distributions under the plan begin six months after termination of employment, and are made in one lump sum, or in installment payments over three or five years, as chosen by the participant prior to their entry into the plan. Participant accounts are credited with the appropriate gains or losses resulting from the participant-directed investments made under the plan. Participants may change their investment selections on a daily basis. Under the plan, for fiscal 2023 we made contributions to this plan equal to 10% of each participant’s eligible compensation in the plan year, resulting in a contribution of $30,500 on behalf of each eligible named executive officer.

The following table provides information concerning nonqualified deferred compensation for each of our eligible named executive officers for fiscal 2023. Contributions to this plan were made after the end of fiscal 2023, and thus the aggregate balance at fiscal 2023 year end shown below does not include fiscal 2023 contributions yet to be made.

Our Compensation Committee has adopted an Executive Severance Plan covering our Chief Executive Officer and certain other key employees, including all of our named executive officers. Executives covered by the plan are eligible to receive specified payments and benefits if their employment is terminated (1) by us without “cause” at any time or (2) by them for “good reason” within a period beginning 30 days before and continuing until two years after a “change in control” as described below. In addition, award agreements for our equity incentive awards provide for accelerated vesting and

exercisability of such awards in connection with an individual’s termination of employment due to death or disability, or under certain circumstances in connection with a “fundamental change” (as defined in the “Compensation Discussion and Analysis” above) involving the company, as described below.

Potential Payments under Executive Severance Plan

Under the terms of the Executive Severance Plan, the Compensation Committee is responsible for assigning each executive to one of four tiers, which determines the duration of salary continuation for which an executive may be eligible. Mr. Hawkins has been assigned to Tier 1, Mr. Oldenkamp, Mr. Grahek and Mr. Mangine have been assigned to Tier 3 and Mr. Erstad has been assigned to Tier 4. Tiers 1 and 2 provide for a salary continuation period of 18 months in the case of a termination without cause not due to change in control and 24 months in the case of a termination (without cause or for good reason) due to change in control. Tiers 3 and 4 provide for a salary continuation period of 12 months in the case of termination without cause not due to change in control and 18 months in the case of termination (without cause or for good reason) due to change in control.

Under the Executive Severance Plan, “cause” means:

The payments and benefits that would be paid to an executive under the Executive Severance Plan as a result of a termination of employment without cause not due to a change in control include (1) base salary for the salary continuation period associated with the executive’s tier, (2) COBRA continuation coverage for medical and dental benefits for a maximum of 18 months (with the executive to be charged the active employee rate for coverage), and (3) the reasonable costs of outplacement services for a maximum of one year.

The additional payments and benefits that would be paid to an executive under the Executive Severance Plan as a result of a qualifying termination of employment in connection with a “change in control” (as defined below) include (1) six additional months of salary continuation, (2) a benefit equal to the annual bonus that would have been received (measured at target) if the executive had remained employed and eligible to receive such bonus for the entire salary continuation period, and (3) a benefit equal to the additional benefit, if any, that would have been received under the profit sharing plan or the nonqualified deferred compensation plan, depending on participant eligibility, if the executive had remained employed and eligible for the plan for the entire salary continuation period, plus the 401(k) employer matching contributions that would have been received for the salary continuation period if the executive had made 401(k) contributions at least at the rate that would have entitled the executive to the maximum employer matching contributions permitted under the Profit Sharing Plan.

Under the Executive Severance Plan, “change in control” means:

An executive must enter into an agreement with the company that contains covenants against competition, disclosure and solicitation, and a release of claims to qualify for payments and benefits under the Executive Severance Plan.

Under the Executive Severance Plan, a “termination due to change in control” means a termination for good reason or a termination without cause that happens during the 30-day period preceding or the two-year period beginning on the date of a change in control. A “termination for good reason” means a termination of employment by the executive provided the executive has given us written notice of the existence of a condition constituting a “good reason” within 90 days of its first occurrence and we have failed to remedy the condition within 30 days thereafter and the termination occurs not later than the expiration of the two-year period following the initial existence of the condition constituting “good reason.” “Good reason” means any of the following conditions arising without the consent of the executive:

Potential Accelerated Vesting of Equity Awards

In addition, in connection with a fundamental change involving the company, the Compensation Committee may generally, in its discretion, (1) accelerate the vesting of outstanding unvested stock options, (2) make appropriate provision to protect any stock option in a manner that equitably preserves the compensation element of the stock option at the time of the fundamental change, or (3) cancel the stock option in exchange for a lump sum payment of cash equal to the amount, if any, by which the then current “fair market value” of the shares subject to the option exceeds the aggregate exercise price of the shares covered by the stock option. “Fair market value” per share means the cash plus the fair market value, as determined in good faith by the Compensation Committee, of the non-cash consideration to be received per share by the shareholders of the company upon the occurrence of the fundamental change; the calculation of any consideration to be received by shareholders following the fundamental change will be based on present value.

The following table presents the amounts that would have been received by each named executive officer under the Executive Severance Plan if a termination of the officer’s employment had taken place on the last business day of our most recently completed fiscal year under the following circumstances: termination without cause not in connection with a change in control; death or disability; or termination without cause or for good reason in connection with a change in control.

We are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Patrick H. Hawkins, our Chief Executive Officer (our “CEO”). For fiscal 2023, our last completed fiscal year, the annual total compensation of our CEO was $2,223,282 as reported in the Summary Compensation Table above, and the annual total compensation of our median employee was $95,417. This comparison results in a CEO pay ratio of 23 to 1. This pay ratio estimate has been calculated in a manner consistent with Item 402(u) of Regulation S-K.

To identify the median employee and determine the annual total compensation of our median employee, the methodology and the material assumptions, adjustments, and estimates that we used are described below.

During fiscal 2023, each non-employee director earned an annual retainer of $50,000 and an additional annual retainer of $8,000 for each committee on which they serve. Supplemental annual retainers were earned by our Chair of the Board ($70,000) and the chairs of our Audit Committee ($13,000), Compensation Committee ($9,000) and Governance and Nominating Committee ($7,000).

The Compensation Committee oversees our director compensation grants, under which each director, other than the Chief Executive Officer, receives a grant of restricted stock with a value of $70,000 on the date of our annual meeting of shareholders at which the director is elected or reelected to the Board by our shareholders. The restricted stock vests one year from the date of issuance, subject to acceleration in the event of the director’s death or disability. For service during fiscal 2023, each applicable director was granted 1,795 shares of restricted stock on August 4, 2022, and these shares are scheduled to vest in their entirety on August 4, 2023, one year from their date of issuance.

All decisions regarding compensation of our executive officers during fiscal 2023 were made by the Compensation Committee of our Board. During fiscal 2023, the following directors served on the Compensation Committee: Mary J. Schumacher, Yi "Faith" Tang, James T. Thompson and Jeffrey L. Wright. None of our executive officers participates in any Board or committee vote setting his or her annual salary or non-equity cash incentive payments. None of the members of the Compensation Committee is a current or former officer or employee of our company, and there were no interlocking relationships, as defined by the SEC, involving our executive officers, our directors, and other entities with which our directors or executive officers are associated.

The following graphical comparisons provide descriptions of the relationships between certain figures included in the Pay Versus Performance Table for each of fiscal 2023, 2022 and 2021, including comparisons between (i) the compensation actually paid to the PEO and the average compensation actually paid to our non-PEO NEOs and (ii) each of the following performance measures set forth in the Pay Versus Performance Table - Total Shareholder Return, Net Income and Pretax Income. Pretax Income is the only corporate performance measure that is used to determine incentive plan payouts for our NEOs.

The following tables list the most important financial performance measures we used to link Compensation Actually Paid to the NEOs for fiscal 2023 to our performance.

(1) The operational performance measure includes gross profit as a component

The following table provides information about shares that may be issued under the Hawkins, Inc. 2019 Equity Incentive Plan (the “2019 Plan”) or the Employee Stock Purchase Plan as of April 2, 2023.

Section 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own more than ten percent of our common stock to file initial reports of ownership and reports of changes in ownership of our common stock with the SEC. Executive officers, directors and persons who beneficially own more than ten percent of our common stock are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of such reports filed electronically with the SEC and/or written representations from our executive officers and directors, all Section 16(a) filing requirements applicable to our executive officers and directors have been satisfied.

In accordance with Section 14A of the Exchange Act, and Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the company is seeking a non-binding advisory vote from its shareholders to approve the compensation of our named executive officers as described in this proxy statement under “Executive Compensation” and “Compensation Discussion and Analysis.”

This proposal gives our shareholders the opportunity to express their views on the compensation provided to our named executive officers. Because your vote is advisory, it will not be binding upon the Company. However, the Compensation Committee will take into account the outcome of the vote when making future named executive officer compensation decisions.

Our executive compensation program for our named executive officers has been designed to attract and retain executives who will lead our company to achieve long-term success and growth in shareholder value. Consistent with that goal, our named executive officer compensation is based on company, business unit and individual performance and the alignment of the interests of our named executive officers with those of our shareholders and is used to encourage our named executive officers to stay with the company. Our program currently includes a mix of compensation elements that rewards current results as well as motivates long-term performance through an appropriate balance of base pay and performance-based variable compensation. To incent appropriate performance, our performance-based variable compensation consists of a short-term variable pay component that rewards executives for both current business results as well as personal performance, and a long-term incentive plan that motivates long-term performance and aligns business results with the interests of our shareholders.

At our August 2022 annual meeting of shareholders, approximately 97% of the advisory votes cast “for” or “against” the corresponding proposal were cast in support of the compensation of our named executive officers. The Compensation Committee and the other members of our Board believe that this vote reflected our shareholders’ strong support of the compensation decisions made by the Committee for our named executive officers for fiscal 2022. Based on these results, the Committee concluded that our named executive officer compensation program achieved the goals of our compensation philosophy and, therefore, reaffirmed the elements of our named executive officer compensation program for fiscal 2023.

We are presenting this proposal, which gives you as a shareholder the opportunity to approve our named executive officer compensation as disclosed in this proxy statement by voting for or against the following resolution:

The Company seeks a non-binding advisory vote from its shareholders to recommend the frequency of the non-binding advisory vote to approve the compensation of our named executive officers as described in the Compensation Discussion and Analysis section and the tabular disclosure regarding named executive officer compensation (together with the accompanying narrative disclosure) in our proxy statements for annual meetings of shareholders.

This proposal gives our shareholders the opportunity to express their views as to whether the non-binding advisory vote on our executive officer compensation practices should occur every one, two, or three years. Because your vote is advisory, it will not be binding upon the Board of Directors. However, the Board will take into account the outcome of the vote when deciding the frequency of the non-binding advisory approval of our future executive officer compensation decisions.

At our annual meeting of shareholders held in 2017, our shareholders expressed a preference for holding a nonbinding advisory vote to approve our executive compensation annually. In light of that preference, our Board of Directors determined that it would include a nonbinding advisory vote to approve our executive compensation in our company’s proxy materials every year until the next required advisory vote on the frequency of shareholder votes to approve named executive officer compensation.

The Board of Directors recommends that shareholders vote “1 YEAR” on this proposal, which will support continuing our company’s existing practice of holding a nonbinding advisory vote to approve executive compensation annually. Our Board reviewed the alternatives to determine the approach that will best serve our Company and our shareholders. Our Board has determined that an advisory vote on executive compensation held annually would be the best approach for Hawkins because it encourages ongoing engagement with shareholders on all matters that are important to them, including any shareholder concerns about executive compensation for a particular fiscal year.

In the future our Board of Directors may determine that a more or less frequent advisory vote is appropriate, either in response to the vote of our shareholders on this proposal or for other reasons. While the Board believes its recommendation is appropriate at this time, the shareholders are not voting to approve or disapprove its recommendation, but are instead asked to provide an advisory vote on whether the non-binding advisory vote on the approval of our executive officer compensation practices should be held every one, two or three years. The option among those choices that obtains a plurality of votes cast by the shares present or represented by proxy and entitled to vote at the Annual Meeting will represent the preference of our shareholders.

Our management does not know of any other business that will be presented for consideration at the Annual Meeting. If, however, any other business does properly come before the Annual Meeting, proxies will be voted in accordance with the judgment of the person or persons acting under them as to what is in the best interests of our company.

In order for shareholders to give timely notice of nominations for directors for inclusion on a universal proxy card in connection with the annual meeting to be held in 2024, notice must be submitted by the same deadline as disclosed above under the advance notice provisions of our By-laws and must include the information in the notice required by our By-laws and by Rules 14a-19(b)(2) and 14a-19(b)(3) under the Exchange Act.

Our Annual Report on Form 10-K for fiscal 2023, including financial statements, is being furnished with this proxy statement. Shareholders who wish to obtain an additional copy of our Annual Report on Form 10-K for fiscal 2023 may do so without charge by writing to: Hawkins, Inc., 2381 Rosegate, Roseville, Minnesota 55113, Attention: Secretary. Our Annual Report on Form 10-K, as well as other company reports, are also available on the SEC’s website (www.sec.gov).

We have adopted a procedure approved by the SEC called “householding,” by which certain shareholders who have the same address and appear to be members of the same family receive only one copy of our annual report and proxy statement. Each shareholder participating in householding continues to receive a separate proxy card. Householding reduces both the environmental impact of our annual meetings and our mailing and printing expenses.

If you would like to change your householding election, request that a single copy of the proxy materials be sent to your address, or request a separate copy of the proxy materials, please contact Broadridge Financial Solutions, Inc., by calling (866) 540-7095 or by writing to Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York 11717. We will promptly deliver the notice of internet availability or proxy materials to you upon receipt of your request. If you hold your shares in street name, please contact your bank, broker, or other record holder to request information about householding.