Shareholders of GNC Holdings Inc. on Monday approved pay increases and bonuses for the company's named executives—despite the company's ongoing financial crisis.
GNC conducted the annual meeting via the internet and released the results Tuesday in a filing with the Securities and Exchange Commission. The meeting was open only to stockholders.
The compensation approval, known as "say-on-pay," isn't binding on the board of directors. Shareholders overwhelmingly approved the proposal with 74.7% of the vote.
The proposed compensation is determined by the board's compensation committee and based on compensation for executives in similar positions at comparable companies.
Executives' compensation is designed to align with company performance to create long-term value for stockholders; attract and retain results-oriented employees; and build a long-term growth mentality among key employees, according to the company's letter to stockholders explaining the proxy materials in advance of the annual meeting.
The compensation program that was voted on included six executives: Kenneth A. Martindale, chairman and chief executive officer; Tricia K. Tolivar, executive vice president and chief financial officer; Ryan L. Ostrom, chief brand officer; Carl A. Seletz, chief global officer; Guru P. Ramanathan, former senior vice president and chief innovation officer; and Steven Piano, senior vice president and chief human resources officer.
Ostrom joined GNC on July 1, so he is not eligible for all the bonuses that are available to executives who were employed for the entire year. Ramanathan resigned from GNC on Nov. 1 and continued as a consultant through April 30.
Total compensation—including base salary, bonuses, stock awards, cash awards and other compensation such as insurance—for fiscal 2019 was reported in the SEC filing:
- Martindale—$7.1 million
- Tolivar—$2.1 million
- Ostrom—$1.3 million
- Seletz—$1.2 million
The compensation committee generally sets the base salaries of the executives, with Martindale's set at $975,000; Tolivar's at $530,400, a 2% increase from 2018, as an adjustment to match benchmark salaries; and Ostrom, $430,000 for the half-year he has worked at GNC.
Seletz, who was promoted to chief global officer on May 19, 2019, receives a base pay of $450,000. His $52,000 increase from fiscal 2018 is due to his annual 2% increase and a 10.85% increase that came with his promotion.
Ramanathan received a 2% increase in base salary to reach benchmark salaries. Piano's base salary of $397,351 is a 1.88% increase from fiscal 2018 to reach benchmark salaries, prorated to reflect his hiring date.
In addition to base salary, the executives also receive stock and restricted cash bonuses based on the company's financial results as measured by adjusted EBITDA, strategic revenue (from international and e-commerce sales) and external comparable sales. The bonuses are calculated on each quarter's financial results, but they are not paid until the end of the fiscal year.
The executives saw their bonuses shrink throughout fiscal 2019 and did not earn bonuses for the fourth quarter. Ostrom received $129,000 in bonuses in quarters three and four to compensate him for a bonus he did not receive from his previous company.
Tolivar received two awards—one in February 2019 for $250,000; another in February 2020 for $1 million—to recognize her work and expanded role in refinancing the company's debt and creating the joint-venture operation in China and the partnership with International Vitamin Corporation.
Stockholders re-elected all 11 members of the board of directors to one-year terms: Hsing Chow, Alan D. Feldman, Michael F. Hines, Amy B. Lane, Rachel Lau, Philip E. Mallott, Kenneth A. Martindale, Michele S. Meyer, Robert F. Moran, Alan Wan and Yong Kai Wong.
All the directors received between 80% and 90% positive votes.