UNFI CEO Steve Spinner defended the company's executive compensation packages and its acquisition of rival distributor Supervalu during Wednesday's annual shareholder meeting.
The International Brotherhood of Teamsters recently criticized both moves in letters to UNFI stockholders. The union encouraged shareholders to vote against the compensation package, although the board of directors would not be bound by the election results.
The Teamsters argued that the executives should not be receiving bonuses when the company's cap market value and stock price have rapidly declined during the past 16 months. UNFI announced in July 2018 that it would purchase Supervalu; the deal closed just three months later.
Despite the Teamsters' appeal, shareholders elected the slate of nominated directors and approved the executive compensation plan, as well as two other questions.
After voting closed, Spinner and director James Heffernan addressed those issues.
Heffernan, who chairs UNFI's Compensation Committee, explained the board decided to award Spinner a 43% target bonus,.
The 43%—which is equal to 65% of his $1.75 million salary or $759,556—is in line with the other executives' target goals, but their bonuses are tied to different percentages of their salaries.
"Given the extensive heavy work done in 2019, the committee also determined that to adjust the payout to zero was excessively punitive," Heffernan said.
Spinner also discussed UNFI's equity plan, which gives certain executives stock options. The compensation plan supports the company's business plan, which requires attracting, retaining and motivating leaders of exceptional talent, he said.
"Our ability to compete effectively in the marketplace depends on the knowledge, credibility and integrity of our leaders," Spinner said. The program, which is balance for short-term and long-term growth, holds the company's leadership accountable for their decisions, he added.
UNFI's future depended on expansion
Market conditions required UNFI to acquire a national distributor, Spinner told shareholders. The distributor's business of selling natural products and services to retailers had matured, he said.
"Better for you products had become mainstream; our customer base needed diversification; and ultimately, we knew that scaled services and a wider variety of products would continue to differentiate UNFI as the supplier of choice," Spinner said.
He acknowledged, though, that the integration has been difficult. "2019 was a humbling year," Spinner said.