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Middleby Corp. – ‘DEF 14A’ for 5/10/21

On:  Wednesday, 3/31/21, at 4:06pm ET   ·   For:  5/10/21   ·   Accession #:  1308179-21-124   ·   File #:  1-09973

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/31/21  Middleby Corp.                    DEF 14A     5/10/21    2:4.6M                                   Labrador Co./FA

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Middleby Corp - DEF 14A                             HTML    559K 
 2: DEF 14A     Courtesy PDF of Proxy Statement --                   PDF    579K 
                lmidd2021_def14a                                                 

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 (Amendment No. __)

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This is Middleby

With a rich history of more than a century for many of our brands, The Middleby Corporation is a world leader in three business segments: commercial cooking, industrial baking and processing and residential appliances.

Middleby is proud to be built on trusted, long-standing relationships with customers, suppliers, stockholders and employees. We also pride ourselves in consistently delivering new award-winning innovation to the marketplaces we serve. Trends change, and we do as well, in order to best serve the ever-evolving needs of our customers.

Middleby is well-known for disrupting our industry with advanced innovation and new processes across all of our business platforms. These innovations deliver speed, labor reduction, energy savings, food safety, employee safety and green operating benefits to our customers.

		Foodservice and Beverage   Middleby is a world leader in innovative solutions for commercial foodservice. We develop and manufacture advanced cooking, warming, beverage and cooling equipment, along with innovative cloud technology to enhance operations for commercial foodservice operators. Middleby brands can be found in a wide array of foodservice businesses in quick service, fast casual, pizza, ghost kitchen, casual and fine dining, grocery and convenience stores, institutional commissary and stadiums.
		Residential   Middleby is a global leader in premium, residential kitchen and outdoor cooking appliances. Our brands are well known and well respected by consumers around the world. Our in-home products are not only technologically advanced; they also are sought after for their classic and contemporary kitchen design.
		Food Processing & Bakery   Middleby develops innovative, industry-leading solutions for industrial protein processing, high-volume baking, and other specialty areas where automated and large scale food production is required. With a broad offering of highly respected brands and advanced technologies, Middleby has the ability to fully integrate a wide array of solutions delivering efficiency, flexibility, quality and consistency.

2021 PROXY STATEMENT	3

TABLE OF

CONTENTS

2021 PROXY STATEMENT	4

Proxy Summary

THIS SUMMARY HIGHLIGHTS CERTAIN INFORMATION FROM THIS PROXY STATEMENT, BUT DOES NOT CONTAIN ALL THE INFORMATION THAT YOU SHOULD CONSIDER. PLEASE READ THE ENTIRE PROXY STATEMENT BEFORE VOTING YOUR SHARES. FOR MORE COMPLETE INFORMATION REGARDING MIDDLEBY’S 2020 PERFORMANCE, PLEASE REVIEW OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 2, 2021.

	WHEN		WHERE		RECORD DATE
	Monday, May 10, 2021, at 10:30 a.m. (CDT)		Virtual Meeting www.virtualshareholdermeeting.com/ MIDD2021		March 19, 2021

Meeting Agenda

The matters we will act upon at the Annual Meeting are:

Proposal		Board voting recommendation			Where to find more information
	Elect seven directors for a one-year term		FOR all nominees		Page 13
	Approve, on an advisory basis, the compensation of Middleby’s named executive officers		FOR		Page 27
	Approve the adoption of the Company’s 2021 Long-Term Incentive Plan		FOR		Page 48
	Ratify the selection of Ernst & Young LLP as Middleby’s independent registered public accounting firm for fiscal year 2021		FOR		Page 55

2021 PROXY STATEMENT	5

Director Nominees

Name		Occupation		Age		Director since		Independent		Committees
Sarah Palisi Chapin		Principal of Chapin Creative, LLC		59		2013				•  Nominating and Governance (chair) •  Compensation
Timothy J. FitzGerald		Chief Executive Officer of The Middleby Corporation		51		2019
Cathy L. McCarthy		President and Chief Executive Officer of Cross Tack, Inc.		73		2015				•  Audit (chair)* •  Nominating and Governance
John R. Miller III		Retired Chairman and Chief Executive Officer of EOP, Inc.		80		1978				•  Compensation (chair) •  Nominating and Governance
Robert A. Nerbonne		Former CEO and President of multiple commercial foodservice equipment companies; Retired Executive Vice President of Cooper-Atkins Corporation		63		2019				•  Nominating and Governance
Gordon O’Brien Chairman of the Board		Chief Investment Officer and Chief Financial Officer at Re:Build Manufacturing, LLC		55		2005				•  Audit* •  Compensation
Nassem Ziyad		Chief Operating Officer of Ziyad Brothers Importing		55		2017				•  Audit

*Audit Committee Financial Expert

*Two Board members self-identify as two or more ethnicities which is reflected in the chart above. One Board member self-identifies as Asian and Latinx and a second Board member self-identifies as Asian and Caucasian.

2021 PROXY STATEMENT	6

2020 Performance

Middleby Segments

The following graphics show how our business revenue is distributed in terms of segments and geography.

Adjusted EPS and Free Cash Flow are not prepared in accordance with generally accepted accounting principles in the United States (GAAP). For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and insight into how these non-GAAP measures are considered by management, please see Annex A.

2021 PROXY STATEMENT	7

Transformative Strategic Growth Initiatives

2021 PROXY STATEMENT	8

Strategic Developments

Transformative Growth Strategy

Building on our progress over the last few years, we completed six acquisitions adding eight brands to the Middleby commercial foodservice portfolio in 2020, further enhancing product offerings, expanding market opportunities, and adding to our technology capabilities.

Middleby’s Continued M&A Focus

Middleby has completed 20+ transactions since the beginning of 2018, investing in key technology initiatives and trends, while enhancing our capabilities across all three business segments.

Improved Capital Structure

We executed a strategic financing transformation to refinance our existing credit facility and issue a convertible note to investors. This significantly improved Middleby’s capital structure and ensured our access to adequate liquidity for the future.

2021 PROXY STATEMENT	9

COVID-19 Response

The swift actions we implemented in response to the COVID-19 pandemic to protect our employees, ensure uninterrupted service to our customers, and aggressively adjust our business and cost structure continue to be essential to the business. We are investing in technologies to ensure the safety of our employees, our customers, and their customers.

Our COVID-19 response also included the following actions.

2021 PROXY STATEMENT	10

Compensation Highlights

Our executive compensation program strikes a balance of fixed and variable elements with short- and long-term elements. As shown below, in fiscal year 2020, 54% of target compensation for our Chief Executive Officer and 36% of target compensation (on average) for our other Named Executive Officers, was performance-based and at risk.

As discussed in the Compensation Discussion and Analysis, fiscal year 2020 was an unusual year. First, the Compensation Committee did not ratify an annual incentive bonus plan for our Named Executive Officers to conserve cash and provide valuable flexibility to navigate the early stages of the pandemic. Typically, the annual incentive is a 100% performance based benefit that constitutes approximately 30% of total direct compensation for our Named Executive Officers. In addition, David Brewer did not receive a long-term equity incentive award in connection with the Company’s strategic plan. The combination of these unique factors significantly reduced the compensation of our Named Executive Officers and, accordingly, the percentage of at-risk incentive compensation paid to our Named Executive Officers decreased in fiscal year 2020. Typically, at-risk compensation for the Chief Executive Officer is targeted at 75% and at 65% for the other Named Executive Officers.

Further, our CEO and NEOs all waived a significant portion of their fiscal year 2020 base salaries in exchange for a time-based restricted stock grant. Middleby’s non-employee directors all contributed to these collective efforts by waiving a portion of their fiscal year 2020 board fees and additional chairperson retainers. For more information, see “Governance—Director Compensation,” which begins on page 22, and “Compensation Discussion and Analysis,” which begins on page 28.

Given these unique circumstances, it is useful to compare target compensation with compensation actually realized by our CEO and other NEOs. Realized compensation is the measure of the actual value of compensation received with respect to the reporting year by our CEO and other NEOs.

2021 PROXY STATEMENT	11

Corporate Governance Highlights

We believe that robust corporate governance is critical for making prudent decisions in the long-term interests of stockholders. Below are key elements of our corporate governance practices.

What We Do			What We Don’t Do
	Majority vote standard for uncontested director elections			No golden parachute tax gross-ups for executive officers
	Six out of seven directors are independent			No poison pill in place
	Completely independent Board committees			No stock option repricing without stockholder approval
	Separate Chairman and CEO roles [NEW]			No excessive perquisites for executive officers
	Independent Chairman			No dividends paid or accumulated on unvested RSUs [NEW]
	Annual Stockholder Engagement Program [NEW]
	Independent reviews by the Board and Audit Committee of the Company’s strategy, business, and the related key risks and mitigation activities
	Executive sessions at every in-person or virtual Board and committee meeting without management present
	Clawback Policy applicable to all executive officers and other covered officers [NEW]
	Confidential, multilingual Ethics and Compliance Hotline [NEW]
	The Compensation Committee is advised by an independent compensation consultant
	Our Insider Trading Compliance Program expressly prohibits hedging, pledging and short selling Company stock
	Comprehensive Sustainability Report refreshed on periodic basis [NEW]
	Annual Board skillset evaluation
	Corporate Governance Guidelines [NEW]
	Annual Board and committee self-evaluations [NEW]
	Stock ownership guidelines for executive officers

Stockholder Engagement Highlights

We are committed to our annual stockholder engagement program, which enables us to directly discuss and obtain feedback regarding topics of concern or interest to our stockholders. In the fourth quarter of 2020, the Company engaged with stockholders to understand their views regarding executive compensation matters, COVID-19-related business and compensation actions, ESG practices, and corporate governance initiatives. For this outreach initiative, we contacted Middleby’s top 25 stockholders, representing approximately 82% of our total shares outstanding. Ultimately, a team from Middleby including the Chairman of the Board and the Chief Financial Officer conducted meetings with stockholders representing approximately 43% of our total outstanding shares. These discussions are summarized under “Governance—Stockholder Engagement” and “Compensation Discussion and Analysis—Engagement Following the Say-on-Pay Vote.”

2021 PROXY STATEMENT	12

Proposal No. 1

Election of Directors

The Board has nominated the seven current directors to serve as directors until the 2022 Annual Meeting of Stockholders and until their successors are duly elected and qualified or until their earlier death, resignation, or removal. Each of the nominees has consented to serve as a director if elected. The Board knows of no reason why any nominee would be unavailable to serve, but, in the event of any such unavailability, the proxies received will be voted for any substitute nominees the Board recommends.

How We Select Directors

The Nominating and Corporate Governance Committee (“NCGC”) periodically reviews the overall composition of the Board and recommends, if necessary, measures to ensure the Board reflects an appropriate balance of knowledge, experience, skills, expertise, and diversity. This process unfolds in two phases:

2021 PROXY STATEMENT	13

The following matrix shows the diversity of relevant skills and experience among our nominees.

	Chapin	FitzGerald	McCarthy	Miller	Nerbonne	Obrien	Ziyad
Finance and Accounting
Experience with financial reporting, capital structure, and complex financial transactions
Environmental, Social and Governance
Governance experience gained through board service or senior executive professional experience
Human Capital Management
Experience directly managing a large number of employees, oversight of social issues, including diversity and inclusion, and expertise in compensation
Mergers, Acquisitions & Divestitures
Experience with significant corporate transactions
Risk Management
Experience identifying, managing and mitigating corporate risks
Leadership Experience
Senior executive experience exhibiting strong critical thinking, verbal communication skills, and a diverse set of views and thought processes
Global/Multi-Divisional Experience
Experience managing a diverse set of operating domestic and international divisions owned by a common parent
Industry Experience
Senior management experience in manufacturing, distribution, sales, marketing or other operational roles in the industries in which we compete

The NCGC’s policy is to consider any candidate recommended by stockholders by evaluating the needs of the Board and the qualifications of the candidate. The NCGC may establish formal procedures regarding stockholder submission of candidates in the future.

2021 PROXY STATEMENT

14

Director Nominees

2021 PROXY STATEMENT

15

2021 PROXY STATEMENT

16

The Board has a policy that requires any director who does not obtain a majority of votes cast in an uncontested election to promptly tender a resignation. The NCGC will consider any such resignation and recommend appropriate action to the Board. The Board is required to take formal action on the NCGC’s recommendation no later than 90 days following the date of the stockholders’ meeting at which the election of directors occurred. The Board will consider the information, factors, and alternatives reviewed by the NCGC and such additional information, factors, and alternatives as the Board deems relevant. Within four business days after the Board makes a decision regarding a director resignation, the Company will publicly disclose that decision in a Form 8-K filed with the Securities and Exchange Commission (“SEC”), including an explanation of the process by which the decision was made and, if applicable, the Board’s reason(s) for rejecting the tendered resignation.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” EACH OF THE ABOVE NAMED NOMINEES AS A DIRECTOR OF THE COMPANY

2021 PROXY STATEMENT

17

Governance

This section summarizes the Board’s responsibilities and significant policies. For more complete information, see Middleby’s Corporate Governance Guidelines, which are available on our website, www.middleby.com, under “Investors—Corporate Governance.”

Board Leadership Structure

The Board oversees management’s performance to ensure that Middleby operates in an effective, efficient, and ethical manner in order to produce value for our stockholders. To achieve this goal, the Board monitors both the performance of the Company (in relation to goals, strategy, and competitors) and the performance of the Chief Executive Officer, and offers constructive advice and feedback.

Our Corporate Governance Guidelines require the offices of the Chairman of the Board and the Chief Executive Officer to be separate. We believe having an independent director serve as Chairman of the Board best serves the Company and our stockholders, as this leadership structure provides a broader depth of experience that informs strategy, strengthens the Board’s integrity and independence, and reduces potential conflicts in the areas of performance evaluation, executive compensation, succession planning, and the recruitment of new directors.

Currently the Board is led by Gordon O’Brien, who has been Middleby’s independent Chairman since February 2019. Mr. O’Brien previously served as Lead Independent Director of the Board for nine years. In his capacity as independent Chairman of the Board, Mr. O’Brien is able to focus on and tangibly oversee Middleby’s senior management (including the CEO), Board leadership, and governance-related matters, while Mr. FitzGerald, our CEO, is able to exclusively focus on the Company’s strategy, day-to-day operations, and financial organizational health. Mr. O’Brien’s long-term relationship with Middleby and extensive knowledge of the Company’s operating structure and culture provides him with a broad and deep perspective that informs his judgment.

Independence

A majority of Middleby’s directors must be “independent” as such term is defined under NASDAQ listing standards. The Board reviews annually the relationships that each director has with the Company (either directly or as a partner, stockholder, or officer of an organization that has a relationship with the Company). The Board has determined that every director except Mr. FitzGerald, our CEO, is independent.

Risk Oversight

The Board has responsibility for oversight of risk management. The Board and its committees regularly review information regarding Middleby’s credit, liquidity, and operations and other reports that are designed to inform the Board and its committees about how we identify, assess, and manage critical risks and our risk mitigation strategies.

The Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation plans, Board of Directors compensation, and executive incentive plan design.

The Audit Committee oversees management of financial risks, financial reporting, disclosure requirements, internal controls over financial reporting, credit and liquidity matters, and our operational infrastructure.

The Nominating and Corporate Governance Committee is responsible for evaluating risk associated with director and management succession planning, overseeing our ESG reporting, and evaluating the Company’s environmental, social and governance policies.

Management advises the Board about material risks as part of its broader responsibility to keep the Board well informed on all matters of significance to the Company. The Board believes its current leadership structure facilitates this clear delineation of responsibility with respect to risk management. Additionally, maintaining an independent Board with an independent Chairman promotes open discussion and assessment of the Company’s ability to manage risk.

2021 PROXY STATEMENT

18

Annual Board Evaluation and Skillset Assessment

The NCGC coordinates an annual evaluation and skillset assessment of the Board as a whole and of each Board committee. The assessment includes a review of any areas in which the Board or management believe the Board can make a better contribution to the Company. The NCGC discusses the results of the evaluation and skillset assessment with the full Board and each individual committee. In addition, the results are used to evaluate and determine the characteristics and critical skills required of prospective candidates for election to the Board and to make recommendations with respect to assignments of directors to various committees and leadership positions.

Stockholder Engagement

We believe it is important for our governance process to have meaningful engagement with our stockholders and to understand their perspectives in corporate governance, executive compensation, and other issues that are important to them.

We value opportunities to proactively engage directly with our stockholders on topics of concern or interest, and use that feedback directly to inform our business decision-making process. The Company regularly shares information with stockholders via quarterly earnings releases, investor presentations posted on Middleby’s website, and attendance at investor conferences, trade shows, and other industry events.

Beginning in 2019, the Company began to annually engage in an open dialogue with stockholders to ensure leadership was hearing stockholder perspectives regarding our executive compensation practices, ESG practices, and other topics of stockholder interest. We strive to reach out to holders of at least 75% of the Company’s common stock and to have meetings with holders of at least 25% of the Company’s common stock. These meetings are typically scheduled for the fourth quarter of the year to inform decision-making and priorities for the upcoming fiscal year. Meetings are usually attended by the Chairman of the Board, the CFO, the Chief Risk and Administration Officer and the Associate General Counsel.

In the fourth quarter of 2020, the Company engaged with stockholders to discuss changes to the Company’s executive compensation programs in response to prior stockholder feedback, COVID-19-related business and compensation actions, and ESG initiatives. For this outreach program, we contacted Middleby’s top 25 stockholders, representing approximately 82% of our total shares outstanding, and conducted meetings with stockholders representing approximately 43% of our total outstanding shares.

Among other things, we discussed the evolution of our ESG practices consistent with the growth of the Company and the expectations of our stakeholders. Our investors expressed appreciation that Middleby is developing its ESG reporting and has progressed to building upon year-to-year comparisons, and provided thoughtful and helpful recommendations on reporting frameworks and more robust disclosure. Stockholders also expressed their support of the decisive actions taken by the Board and management to respond to the pandemic, conserve capital, and position the Company appropriately for the future. The compensation-related matters we discussed are summarized under “Compensation Discussion and Analysis—Engagement Following the Say-on-Pay Vote.”

Our engagement efforts gave us valuable insight that has helped to inform our business practices and strategic decision-making. We will continue our stockholder engagement program annually with the goal of evolving our practices to best meet the needs of the Company and our stakeholders.

Director Onboarding and Continuing Education

The Company provides new directors with an orientation program to familiarize them with our business; strategic plans; significant financial, accounting, and risk-management issues; compliance programs; conflicts policies; Code of Ethics; Corporate Governance Guidelines; principal officers; and internal auditors and independent auditors. Board members who have not been associated with a publicly traded company previously also are required to attend public company director education selected by the NCGC.

Every director is expected to participate in continuing educational programs in order to maintain the necessary level of expertise to function as a director. The NCGC requires all standing Board members to maintain membership with the National Association of Corporate Directors (“NACD”) and annually arranges for Board members to attend NACD training programs and other corporate governance training initiatives. The Company pays all reasonable expenses relating to continuing director education.

Succession Planning

The Board is responsible for succession planning for the Chief Executive Officer and other executive officers. The Board of Directors and the Chief Executive Officer meet in a private session two times each fiscal year to discuss succession planning, a review of the executive management team, executive development initiatives, and other executive matters. The Chairperson of the NCGC acts as the Chairperson and maintains minutes of these succession planning meetings.

2021 PROXY STATEMENT

19

Board Meetings

The Board held two in-person meetings and nineteen virtual meetings during the fiscal year ended January 2, 2021. Each director attended every Board and applicable committee meeting. Executive sessions of the independent directors are held in conjunction with regularly scheduled meetings of the Board and otherwise as deemed necessary. The independent directors met in executive session four times.

Directors are expected to physically or virtually attend the annual meeting of stockholders. All of the directors virtually attended the 2020 Annual Meeting of Stockholders.

The independent directors are required, unless waived by the Board, to attend an annual strategic review meeting in the third or fourth quarter each year.

Members of senior management who are not directors may be invited to participate in Board meetings or other Board functions when appropriate. The Board encourages the Chief Executive Officer to bring members of management from time to time into Board meetings to provide insight into items being discussed by the Board, to make presentations to the Board on particular matters, and to ensure the Board has an opportunity to interact with managers who have significant potential.

Committees of the Board

Middleby’s Board currently has an Audit Committee, established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”), a Compensation Committee, and a Nominating and Corporate Governance Committee. The charters for these three committees are available on our website, www.middleby.com, on the “Investors—Corporate Governance” page. All three committees are composed entirely of independent directors.

2021 PROXY STATEMENT

20

Nominating and Corporate Governance Committee

Service on Other Boards

We do not have a policy limiting the number of other public company boards of directors upon which a director may sit. However, the NCGC considers the number of other public company boards and comparable governing bodies on which a prospective nominee or a director is a member. In addition, we expect directors to be fully committed to devoting as much time as necessary to fulfilling their Board responsibilities, both in terms of preparation for, and attendance and participation at, meetings.

Directors must provide prior written notice to the Chairperson of the NCGC before accepting a seat on the board of a public or private entity.

In recognition of the enhanced time commitment associated with membership on a public company’s audit committee, the Board has adopted a policy that no member of the Audit Committee may serve simultaneously on the audit committees of more than two other public companies.

Age and Term Limits

We believe the Board operates most effectively with a mix of incumbent directors who have a deep understanding of Middleby and new directors who offer fresh perspectives. The Board does not currently have term limits or a mandatory retirement age. However, the NCGC reviews all directors annually before deciding on our nominees. The Board believes its strong corporate governance practices, including annual structured Board evaluations, foster engaged and dynamic oversight of Middleby’s business.

Stockholder Communications With the Board

Stockholders may contact the Board of Directors about bona fide issues or questions concerning the Company by sending an email to legal@middleby.com or by writing to the Corporate Secretary at the Company’s principal executive offices at 1400 Toastmaster Drive, Elgin, Illinois, 60120. Any matter intended for the Board of Directors, or for any individual member or members of the Board of Directors, should be directed to the email or physical address noted above, with a request to forward the communication to the intended recipient(s). In general, any stockholder communication about bona fide issues concerning the Company delivered to the Corporate Secretary will be forwarded in accordance with the stockholder’s instructions.

Related Party Transactions

There have been no material reportable related person transactions since the beginning of fiscal year 2020. The Audit Committee is responsible for reviewing, and approving related person transactions. In fulfilling this responsibility, the Audit Committee considers whether the transaction would be on fair and reasonable terms no less favorable to the Company than those that would be available in a comparable transaction in arm’s-length dealings with an unrelated third party.

2021 PROXY STATEMENT

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Governance Documents

Middleby has adopted a Code of Ethics that applies to all directors, officers, and employees. We have also adopted Corporate Governance Guidelines, which, in conjunction with our Restated Certificate of Incorporation, as amended, Fourth Amended and Restated Bylaws (“Bylaws”) and charters of the Board’s committees, constitute the framework of our corporate governance. The Code of Ethics and Corporate Governance Guidelines, as well as the charters for our committees, are available on our website, www.middleby.com, under “Investors—Corporate Governance.” We will post any amendment to, or waiver from, the Code of Ethics, on our website.

The following additional documents are available on our website, www.middleby.com, under “Investors—Corporate Governance”:

Director Compensation

The Company believes that having highly qualified non-employee directors is critical to our success. Non-employee directors represent the interests of our stockholders, and they contribute their experience and wisdom to guide our Company, our strategy, and our management. The Board believes that compensation for directors should reflect the work required in both their ongoing oversight and governance role and their continuous focus on driving long-term performance and stockholder value.

The Compensation Committee, consisting solely of independent directors, is responsible for reviewing director compensation and considering any changes to how directors are compensated. The full Board reviews the Compensation Committee’s recommendations and approves director compensation arrangements.

In February 2019 and again in November 2019, the Compensation Committee engaged Aon plc (“Aon”), an independent compensation consultant, to conduct a director compensation assessment using the same peer group that was used to assess executive compensation. The Board compensation assessment analyzed peer company director compensation levels and practices, evaluated the competitiveness of the Company’s director compensation program from multiple perspectives relative to the peer group, and described recent market trends in director compensation. Based on Aon’s analysis and the Company’s long-term performance, the Compensation Committee increased certain Board retainers and changed the annual grant of restricted stock from a fixed number of shares to a fixed initial grant value.

Non-employee director compensation for fiscal year 2020 consisted of cash and equity components. The following table shows the intended compensation structure. However, in April 2020, in conjunction with the Company’s actions in response to the COVID-19 pandemic, all of the directors elected to waive 50% of their unpaid 2020 annual board fees and additional chairperson retainers.

Directors do not receive meeting fees.

2021 PROXY STATEMENT

22

Director Compensation for Fiscal Year 2020

The following table sets the annual and long-term compensation for services to the Company performed by the non-employee directors during fiscal year 2020. Mr. FitzGerald’s compensation is discussed in the Compensation Discussion and Analysis section of this Proxy Statement. He did not receive any additional compensation for his service as a director.

2021 PROXY STATEMENT	23

Sustainability

In 2019, we released Middleby’s inaugural Sustainability Report, highlighting our global corporate citizenship efforts around the key environmental, social, and governance areas that are important to the Company’s investors, customers, employees, and other stakeholders. The Sustainability Report summarizes Middleby’s longstanding focus on product innovation and operational best practices to achieve our overall goals of preventing pollution, conserving energy, and minimizing waste. The Sustainability Report also summarizes our objectives and philosophy regarding human capital, ethics, diversity, employee advancement, employee safety, and giving back to the community. We intend to publish an updated Sustainability Report in 2021 to demonstrate our commitment to continued environmental, social, and governance initiatives.

Here are some highlights of our recent environmental, social, and governance initiatives. For complete information, please see our most recent Sustainability Report, which is available on our website, www.middleby.com, under “Investors—Corporate Governance.”

Environmental Priorities and Management Process

Middleby’s environmental priorities are focused on reducing environmental impact to air, water, and land across our footprint and specifically with respect to our customers; improving data analysis and benchmarking to identify opportunities for improvement; identifying and implementing cost-effective and innovative solutions to reduce energy usage; and encouraging more environmentally friendly business practices within our business units. Our management process uses consistent data collection and benchmarking to identify risks, plan management strategies, implement solutions, measure success rates, and adjust systems for continuous improvement across our environmental management activities.

Data collection and reporting in 2018 were conducted in alignment with the framework used by the Sustainability Accounting Standards Board (SASB) in developing their standards. For purposes of reporting, we selected aspects of the environment that we have control of and can make a meaningful impact on. The three key aspects measured in 2020 at our operations are Energy Consumption, Greenhouse Gas (GHG) Emissions, and Waste Management. These aspects are considered to meet the SASB requirements: they are of interest to investors, are relevant across the industry, have a potential to affect corporate value, reflect stakeholder consensus, and are actionable by Middleby.

Human Capital

We believe Middleby’s success is a direct result of the people we employ around the world. When our employees have the best environment, they can be their best. We strive to create a culture that encourages and celebrates collaboration, creativity, and confidence. Ultimately, we want a workplace that enables employees to develop their individual paths toward their career goals and encourages a long-term working relationship with us.

We encourage our employees to present new ideas and empower them to move their ideas forward. We believe that giving our employees autonomy fosters an environment of inclusion and empowerment, and encourages them to recognize that they play a part in Middleby’s success.

Employee Safety

Middleby actively promotes a safe workplace for all of our employees around the world because a culture of safety reduces the risk of injury to employees, decreases expenses, and increases production. Each of our manufacturing locations maintains an active safety committee that frequently reviews and assesses the conditions of the local work environment. We invest in safety training, share best practices, and review claim activity to continually minimize employee workplace injuries. We understand that our ongoing efforts to promote a safe environment today will drive long-term sustained improvement to workplace safety across the Company in the future.

Due to the hard work of all Middleby employees, our Recordable Case Rate (work-related injuries per 100 full-time employees) has steadily declined from 7.2 in 2016 to 4.0 in 2019. Similarly, our Lost Time Incident Rate has declined from 1.95 in 2016 to 0.74 in 2019.

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Diversity

Middleby embraces the diversity of our team members and is committed to providing a safe and productive work environment and multiple, ongoing opportunities for career advancement. We recognize that our diverse workforce enables Middleby to attract the best talent, which makes us better aligned with our customers and able to more creatively and efficiently develop new products. As a global corporation, we embrace and celebrate our differences and endeavor to cultivate an environment where diversity and inclusion are a core value. With this principle firmly in place, Middleby encourages employees to bring their best to work every day.

In fiscal year 2020, we advanced our diversity and inclusion initiatives in several meaningful ways. We recently formed a

Diversity and Inclusion Committee to raise awareness and provide tools to our senior management to improve our diversity and inclusion benchmarks. Senior management is actively encouraging increased representation of both underrepresented people of color and different genders throughout our workforce. We also believe it is important to consider diversity of race, ethnicity, age, gender, cultural background, education, and professional experiences in evaluating Board candidates. Accordingly, our Board approved new Corporate Governance Guidelines which provide that when evaluating candidates for nomination as new directors, the Nominating and Corporate Governance Committee will consider (and will ask any search firm that it engages to provide) a set of candidates that includes both underrepresented people of color and different genders. We are committed to continuing to advance upon our diversity and inclusion initiatives.

Community

Middleby recognizes that giving back to the communities we serve will greatly contribute to our long-term prosperity and help improve our communities for the future. We focus our contributions and volunteering on areas we can impact in a meaningful way. Given our decentralized structure, each operating location has the authority and flexibility to direct its own unique philanthropic activities to local causes.

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Executive Officers

The following is a summary of the professional experience of the Company’s executive officers as of December 31, 2020:

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Proposal No. 2

Advisory Vote on Executive Compensation

Every year we give our stockholders the opportunity to vote on a non-binding, advisory basis, to approve the compensation of our Named Executive Officers. This proposal is commonly referred to as “Say on Pay.” We are asking stockholders to vote FOR the adoption of the following resolution:

“Resolved, the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K of the Securities Exchange Act of 1934, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

This vote is advisory and therefore not binding on the Company, the Compensation Committee or the Board. However, the Board and the Compensation Committee value the opinion of Middleby stockholders. If there is any significant vote against Middleby’s Named Executive Officer compensation, the Board will consider the reasons for such a vote, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.

As outlined in the Compensation Discussion and Analysis (“CD&A”) section that follows, our compensation program is designed to maximize strategic Company goals based on the following objectives:

The Compensation Committee and the Board believe that the policies and procedures articulated in the CD&A are effective in achieving these goals and that the compensation of the Named Executive Officers reported in this Proxy Statement has contributed to the Company’s long-term success. The Company encourages stockholders to review the executive compensation disclosure in the CD&A and executive compensation tables for complete details of how our executive compensation policies and procedures operate and are designed to achieve the Company’s compensation objectives.

Vote Required for Approval; Board Recommendation

The vote of a majority of votes cast at the Meeting, at which a quorum is present, is necessary for advisory approval of this proposal. Although this vote is advisory in nature and does not require any action by the Company or the Compensation Committee, the Company strongly encourages all stockholders to vote on this matter.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION AS DISCLOSED IN THIS PROXY STATEMENT.

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Executive Compensation

Compensation Discussion and Analysis

The following Compensation Discussion and Analysis (“CD&A”) describes the material elements of compensation for the Company’s fiscal year 2020 “Named Executive Officers,” or NEOs, identified below.

Executive Summary

We seek to closely align the interests of our Named Executive Officers with the interests of our stockholders. As described in this CD&A, our compensation program features a pay for performance design that rewards our Named Executive Officers for achieving short-term and long-term financial goals.

2020 Highlights and Performance

During the first quarter of 2020, Middleby was on track to produce strong returns for our stockholders. Then, during the last three weeks of the first quarter, the pandemic started to adversely impact our business as authorities implemented measures to contain the spread of COVID-19, including quarantines, “shelter-in-place” and “stay-at-home” orders and business curtailments. As a result, Middleby’s Earnings Per Share (“EPS”) and Total Shareholder Return (“TSR”) on a one-year (FYE 2020) basis compared to our peer group median declined. However, Middleby’s Named Executive Officers rapidly recognized the risk to our business and immediately focused on protecting our employees, ensuring uninterrupted service to our customers, and aggressively adjusting our business and cost structure. For more information, see “COVID-19 Response.”

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LONG TERM HISTORY OF CREATING STOCKHOLDER VALUE

Highlights of 2020 Compensation Program

Middleby’s Compensation Committee made significant changes to the 2020 compensation program for our Named Executive Officers—both to manage the effects of the COVID-19 pandemic and in response to meaningful stockholder engagement. As discussed below, such changes included (1) converting a significant portion of our NEOs’ respective base salaries into time-based equity grants, (2) not awarding annual cash bonuses, as determined by the Compensation Committee for fiscal year 2020 to our NEOs, and (3) issuing new long-term equity incentive awards that incorporate new performance metrics and a holding period to address stockholder concerns.

The following chart summarizes the elements of direct compensation paid to our Named Executive Officers in fiscal year 2020.

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Stockholder Engagement Following the Say on Pay Vote

We are committed to seeking and considering stockholder feedback in designing and managing our executive compensation program. At the 2020 Annual Meeting, support for the Say on Pay proposal was 56%. The Compensation Committee and the Board recognized that this vote signaled material stockholder concerns with the compensation program for our NEOs. In response, we enhanced our annual stockholder engagement to better understand those concerns and to reconsider our executive compensation program design and make other appropriate changes as needed. This year, we proactively engaged with our stockholders regarding executive compensation and other corporate governance matters throughout the year, as discussed further in “Governance—Stockholder Engagement.”

The Company engaged with stockholders during the fourth quarter of 2020 to discuss a variety of matters, including the Say on Pay vote, COVID-19-related compensation actions, and proposed changes to the 2021 LTI grant process. We contacted our top 25 stockholders, representing approximately 82% of our total shares outstanding, and senior leaders, including our Chairman of the Board, held meetings with stockholders representing approximately 43% of our total outstanding shares. Compensation-related feedback from these meetings was communicated to our Compensation Committee and to our full Board, and discussed with management as appropriate.

Our compensation program has been developed in response to, and as a product of, past discussions with our stockholders. Our stockholders had five significant suggestions regarding our long-term equity incentive program, and the Compensation Committee considered and ultimately acted upon all five.

What we heard		How we responded
The performance metrics and performance periods for the long-term equity incentive program and the short-term cash incentive program had significant overlap, which stockholders did not think was appropriate.		Long-term grants of performance-based equity will now cliff vest, to the extent earned, only at the end of a three-year (two-year for fiscal year 2020) performance period. The long- and short-term incentive plans now have distinct performance periods and vesting metrics.
Our performance-based long term equity awards had opportunities for annual vesting during the performance period, which stockholders believed was inconsistent with the objective of a long-term incentive award.		Performance-based equity grants will now cliff vest, to the extent earned, only at the end of a three-year (two-year for fiscal year 2020) performance period, with no opportunity for interim or “make-up” vesting.
Stockholders believe our long-term equity incentive program should incorporate a capital efficiency performance metric.		Performance-based equity awards are now subject to a capital efficiency metric, Enterprise Value Growth (Less Net Debt) per share, in addition to Adjusted EPS and the TSR modifier.
Stockholders believe our long-term equity incentive program should incorporate relative TSR as a performance metric.		Performance-based equity awards are now potentially impacted by as much as 25% positive or negative, depending on the Company’s relative Total Shareholder Return (“TSR”) for the performance period as compared to TSR for our peer group.
Stockholders were supportive of our ongoing practice of imposing restrictions on the transfer of executives’ vested equity awards.		Time-based equity awards will vest in annual increments, but vested shares must be held until the associated performance shares vest (or fail to vest, based on performance).

Stockholders did not raise any other material suggestions or concerns, and they were generally supportive of our proposed changes to the compensation structure. Stockholders also expressed their approval of the decisive actions taken by the Board and management to respond to the pandemic, conserve capital, and position the Company appropriately for the future. In addition, stockholders approved of the Company’s approach in terms of increased governance disclosures and planned issuance of updated 2021 ESG report.

Compensation Objectives and Philosophy

The Company’s compensation and benefits programs are influenced by our business culture and are designed to maximize strategic Company goals. The objectives of our compensation program are described below.

Attract and Retain Executive Talent — The Company offers compensation packages that aim to attract and retain qualified executive talent and deliver increasing rewards for extraordinary performance.

Link Executive Compensation with Operating Performance — The Compensation Committee structures a portion of the compensation for our Named Executive Officers and senior management to vary based on the Company’s financial and operating performance in order to drive a sustained increase in stockholder value. In a typical year, a significant portion of an executive’s annual compensation is at risk and linked to the achievement of corporate goals that are tailored to the Company’s strategic plan.

Link Executive Equity Incentive Compensation with Stockholder Interests — Long-term equity incentive compensation granted to our Named Executive Officers in fiscal year 2020 was divided between performance-based (67%) and time-based restricted stock units (33%) to (i) align our Named Executive Officers’ interests with stockholder interests through the shared experience of stock ownership; (ii) tie performance goals and payouts directly to metrics that are critical drivers of

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financial and operational success, stockholder value creation, and strategic objectives; and (iii) include a time-based component that encourages executive retention and discourages excess risk-taking by executives.

Facilitate a High-Growth Company Strategy — The Company provides incentive compensation that rewards executives for strong growth in earnings, which is expected to generate strong stockholder return. Performance goals are generally consistent with the Company’s performance expectations, but are tiered to ensure that awards will increase when Middleby out-performs the market. Likewise, our incentive compensation programs are designed to result in no payouts when Middleby underperforms threshold goals.

Parties Involved in Compensation Decisions

Role of the Compensation Committee

The Compensation Committee, consisting entirely of independent directors, is responsible for establishing, implementing, and monitoring adherence with the Company’s compensation program and providing input to the Board with respect to management development and succession planning. The role of the Compensation Committee is to oversee, on behalf of the Board and for the benefit of the Company and its stockholders, the Company’s compensation plans. For additional information on the members, structure, scope of authority, and operation of the Compensation Committee, see “Governance—Committees of the Board.”

The Compensation Committee evaluates the CEO’s performance and makes recommendations to the Board with respect to the CEO’s compensation based on this evaluation. The Compensation Committee also evaluates the other Named Executive Officers’ performance and, either as a committee or together with the other independent directors (as directed by the Board), determines and approves their compensation.

Role of the Compensation Committee’s Independent Compensation Consultant

The Compensation Committee has the power to retain independent compensation consultants, legal counsel, or other advisors as it may deem appropriate to assist it in the performance of its duties and responsibilities, without consulting or obtaining the approval of management. The Compensation Committee recognizes the importance of objective, independent expertise and advice in carrying out its responsibilities.

Since November 2017, the Compensation Committee has retained the Rewards Solutions practice of Aon as its independent consultant. Aon reports directly to, and is directly accountable to, the Compensation Committee, and the Compensation Committee has the sole authority to retain, terminate, and obtain Aon’s advice at the Company’s expense. The Compensation Committee selected Aon as consultants because of Aon’s public company compensation experience and governance understanding and access to market competitive data.

With Aon’s assistance, the Compensation Committee monitors market compensation practices and developments, as well as the appropriateness of the various components of Middleby’s executive pay program. The Compensation Committee believes that obtaining relevant market and benchmark data is very important because it provides helpful context and a solid reference point for making decisions. When making determinations about compensation for our executives, the Compensation Committee also considers corporate and individual performance, any shifts in the current or anticipated future domains and function of the executive officers, and the input of other directors who are not members of the Compensation Committee.

In the past, the Compensation Committee has worked with Aon to: assess our executive compensation philosophy, objectives and components; develop a peer group of companies for compensation comparison purposes; review considerations and market practices related to the design of cash and equity incentive plans and trends in the capital goods industry; review our equity compensation strategy; and review director compensation market practices. For fiscal year 2020 specifically, Aon assisted the Compensation Committee with evaluating the appropriateness of the peer group, providing CEO and NEO benchmark compensation data, designing our incentive plans, and following good compensation practices. While the Compensation Committee takes into consideration the review and recommendations of Aon when making decisions about the Company’s executive compensation program, ultimately the Compensation Committee makes its own independent decisions about compensation matters.

The Compensation Committee has assessed the independence of Aon pursuant to SEC and NASDAQ rules, considering each of the relevant factors with respect to a compensation consultant’s independence. The Compensation Committee also considered the nature and amount of work performed for the Compensation Committee and the fees paid for those services in relation to Aon’s total revenues. Aon provides no services to the Company other than its services to the Compensation Committee, has no other ties to management that could jeopardize its fully independent status, and has strong internal governance policies that help ensure it maintains its independence. Aon has conducted a review of its performance, and has prepared an independence letter for the Compensation Committee that provides assurances and confirmation of the consultant’s independent status under the standards. None of the Compensation Committee members and none of our executive officers or directors have any personal relationship with Aon.

Role of the CEO

The CEO annually reviews the performance of each executive officer other than himself. For each such executive, this review includes an analysis of actual operating performance versus pre-determined operating performance targets, measures taken to improve efficiency of operations within the executive’s area of responsibility, completion of special projects, and an assessment of the executive’s commitment to the Company’s core operating principles. Based on his review, the CEO develops a recommendation to the Compensation Committee for each executive’s annual base salary, annual incentive plan opportunity and payout, and the basis for long-term equity-based grants.

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The Compensation Committee uses the same methodology to establish the compensation package for the CEO.

Compensation Decision-Making Process

The Compensation Committee retained Aon to assess the appropriateness of the peer group and obtain market compensation data to inform CEO and other NEO compensation decisions with respect to base salary, short term annual incentives, and long term equity compensation programs for 2020 and future years. The Compensation Committee reviewed that compensation data, considering market best practices as well as the Company’s historical compensation program design in evaluating alternatives. The Compensation Committee also considers, when setting each executive’s compensation, the executive’s experience in his or her role, tenure with the Company, individual performance contributions and expected future performance contributions, and the Company’s critical retention needs.

This year, the Compensation Committee paid particular attention to the COVID-19 pandemic and its effects on Middleby’s business and on our customers. For example, the Compensation Committee determined it would be prudent to not make adjustments to base salaries for the CEO and other NEOs. In addition, the Compensation Committee did not approve awards under an annual incentive plan this year.

Market Factors in Setting Compensation

The Compensation Committee uses comparative compensation information from a relevant group of peer companies as one of several points of reference when setting the compensation of our CEO. The Committee typically reviews CEO compensation benchmarking data every two to three years.

In February 2019, the Compensation Committee developed the peer group, with Aon’s assistance. The peer group was chosen based primarily on revenue, market capitalization, industry, brand leadership, and international scope. The Compensation Committee considers data from the companies in the peer group to compare total compensation and individual compensation elements for our Named Executive Officers with compensation for officers in comparable positions. The Compensation Committee retains discretion in determining how it will use peer group data.

The Compensation Committee periodically reassesses the companies within the peer group and makes changes as appropriate, considering mergers and acquisitions, changes in Middleby’s business, and other factors. After review, the Compensation Committee confirmed the existing peer group remained appropriate as a reference for 2020 pay determinations. The 2020 peer group consisted of the following companies which is hereafter referred to as the “Peer Group”:

At the time the Peer Group was developed, Middleby was positioned near the median in terms of market capitalization and in slightly above the median in terms of revenue.

For fiscal year 2020 compensation purposes, Aon presented the Compensation Committee with data regarding compensation for our four named executive officer positions. Aon collected this information from 2019 compensation data from our peer group, a general industry survey (conducted by Aon for other purposes) of 628 companies, a capital goods industry survey (conducted by Aon for other purposes) of 150 capital goods companies with annual revenues between $1.9 billion and $7.4 billion, and the WTW Executive Survey (reflecting data from 116 high-technology companies). Aon compiled compensation data at the 25^th percentile, median, and 75^th percentile levels from each of these data sources, as well as consensus (i.e., average) compensation data, for base salaries, target annual cash incentive awards, target long-term equity awards, and total target direct compensation for individual executive officer positions. Using this data, the Compensation Committee confirmed that the 2020 compensation packages for our Named Executive Officers are at an appropriate level in comparison to the market.

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Fiscal Year 2020 Compensation Decisions

The Company’s compensation program is generally divided into three elements: base salary, annual cash incentive, and long term equity-based incentive. We use the mix of these elements to emphasize pay for performance and to recognize the different value brought by individual jobs within the Company. For example, our CEO has the greatest responsibility for the operation and performance of the business and, accordingly, the most potential upside in compensation, but he also has the most compensation at risk, depending on Middleby’s financial performance. As discussed in this Compensation Discussion and Analysis, fiscal year 2020 was an unusual year because annual cash incentive bonuses were not awarded under our bonus plan.

Base Salary

Base salary is fixed and provides some stable income since the other elements of our NEOs’ compensation are at significant risk. Annual base salary levels and any increases are budgeted based on the Company’s current business environment and the individual’s level of responsibility and merit within the Company.

For fiscal year 2020, the Compensation Committee did not approve any adjustments to base salaries and as a result, the base salaries for our NEOs were the same as in fiscal year 2019.

Effective April 9, 2020, in light of the disruption and uncertainty created by the COVID-19 pandemic and its anticipated impact on our operations, Messrs. FitzGerald and Brewer each waived 100 percent of their remaining fiscal year 2020 base salaries, and Messrs. Mittelman and Lindsay each waived 50 percent of their remaining fiscal year 2020 base salaries. In exchange for those waivers, each Named Executive Officer received a grant of Middleby restricted common stock having a grant date fair value equal to the amount of the NEO’s waived salary, with a vesting date of December 28, 2020.

Annual Performance-Based Incentive Program

The Company’s Value Creation Incentive Plan (“VCIP”) provides for annual performance-based cash compensation. Under the VCIP, the Compensation Committee can establish performance goals utilizing multiple metrics, with the flexibility to adjust metrics and goals to address changing business needs. The VCIP is intended to provide an incentive for strong performance and to motivate eligible employees toward the highest level of achievement and business results by tying their goals and interests to those of the Company and our stockholders.

COVID-19 began affecting the Company’s international operations beginning in February 2020—around the same time the Compensation Committee typically develops the performance goals for the Company’s annual cash-based incentive compensation program. The Company quickly pivoted Board and management resources to addressing the pandemic. In April 2020, the Compensation Committee and our NEOs collectively agreed not to devote resources to the 2020 annual cash-based incentive compensation program and instead focused all efforts on the Company’s response to changing business and operating conditions. Accordingly, the Compensation Committee did not approve a fiscal year 2020 annual cash-based incentive compensation program for our NEOs.

In addition, amounts earned by our NEOs as annual cash-based incentive compensation for fiscal year 2019 were paid in shares of Middleby common stock to conserve cash. These shares were awarded on March 25, 2020, after the completion of the Company’s fiscal year-end audit and after the Compensation Committee certified that the 2019 VCIP goals had been attained. The number of shares awarded to each NEO was determined by dividing the aggregate value of such NEO’s bonus payable for fiscal year 2019 performance by the closing price of our stock on March 25, 2020.

Equity-Based Incentive Compensation

Based on feedback from stockholders, in fiscal year 2020, the Compensation Committee made significant structural modifications to the Company’s Long Term Equity Incentive Awards (“LTI”) to add an enhanced capital efficiency performance metric, incorporate a TSR modifier, differentiate the performance periods and performance metrics for the long- and short-term incentive plans, and impose restrictions on the transfer of vested shares. The resulting LTI structure is consistent with leading governance practices, serves as an effective reference for senior managers when making decisions for their respective operations, and further aligns management with stockholder interests. The following table summarizes the legacy LTI program and the changes adopted for future years. Because fiscal year 2020 was a transitional year bridging the gap between the legacy and new program, the Compensation Committee granted fiscal year 2020 LTI awards with most of the features of our new program, but with a two-year performance and vesting period instead of three years.

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2020 Long-Term Equity Incentive Awards

In December 2020, the Compensation Committee approved LTI equity awards to our Named Executive Officers consisting of time-based RSUs (33.3% of target LTI value) and performance-based RSUs (66.7% of target LTI value). The time-based RSUs will vest, subject to each NEO’s continued employment, in equal increments, in March 2022 and March 2023. The performance period for the performance-based RSUs covers fiscal years 2021 and 2022, and vesting, if any, will be approved by the Compensation Committee in the first quarter of fiscal year 2023. The Compensation Committee adopted a two-year performance and vesting period for these grants to facilitate the transition to the new LTI grant structure and to sync with legacy unvested LTI awards. All future equity grants are expected to have a three-year performance and vesting period.

The Compensation Committee sets the grant date target value for LTI awards for our Named Executive Officers other than the CEO. Using market-based long-term equity grant values and incentive plan design information provided by the Compensation Committee’s independent compensation consultants as a guide, Mr. FitzGerald recommends to the Compensation Committee awards for our Named Executive Officers (other than himself) and members of senior management.

The Board established Mr. FitzGerald’s target LTI award based upon the recommendations of the Compensation Committee. In forming its recommendation, the Compensation Committee reviewed competitive compensation data for the Peer Group provided by Aon and considered other relevant factors. The Compensation Committee also considered the shortened performance period and adjusted the grant date fair value of the award accordingly.

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Target LTI awards for our Named Executive Officers are shown below.

Performance Targets for 2020 LTI Awards

The performance-based RSUs have two primary, equally weighted, metrics: Adjusted EPS and Enterprise Value Growth (Less Net Debt) per share.

Performance targets are set based on management’s multi-year forecast of Adjusted EPS and Enterprise Value Growth (Less Net Debt) per share performance. The maximum possible performance is 200% of target, based on our performance against these measures. We do not disclose the measures of Adjusted EPS and Enterprise Value Growth (Less Net Debt) per share due to the competitive harm that could result from this disclosure. Consistent with stockholder feedback, the performance targets for the performance period that spans fiscal years 2021 and 2022 reflect rigorous goals that anticipate much stronger growth than we experienced in fiscal year 2020 because of the negative impact of the pandemic.

Once awards are calculated based on Middleby’s performance for the two-year performance period (“Pre-TSR Vested Shares”), the Compensation Committee will calculate whether the TSR modifier applies. If Middleby’s TSR for the two-year performance period is in the top 25% of TSR for the Peer Group, the final grants to our Named Executive Officers will equal the number of Pre-TSR Vested Shares multiplied by 125%. Conversely, if Middleby’s TSR for the two-year performance period is in the bottom 25% of TSR for the Peer Group, the final grants to our Named Executive Officers will equal the number of Pre-TSR Vested Shares multiplied by 75%. Final awards will equal the number Pre-TSR Vested Shares if Middleby’s TSR falls in the middle of the Peer Group.

Time-Based RSUs

The time-based LTI awards vest ratably over two years, so long as the recipient is still employed by the Company. However, the shares underlying the vested RSUs may not be sold or otherwise transferred until the associated performance-based RSUs vest (or fail to vest based on performance).

Stock Ownership Guidelines

Company guidelines require our Named Executive Officers to own a prescribed amount of Middleby common stock, expressed as a multiple of their respective base salaries. The base salary multiples are set by the Compensation Committee at levels consistent with the individual’s level of responsibility within the Company. Unvested time-based equity counts toward an executive’s required holdings, but unvested performance-based equity does not. Any covered executives who have not yet met their stock ownership requirements are required to retain 50% of all net shares (post tax) that vest until the minimum share ownership requirement is achieved.

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As of December 31, 2020, all of our Named Executive Officers exceeded the minimum stock ownership requirements, as shown below.

Clawback Policy

The Company maintains a Clawback Policy, which requires reimbursement or forfeiture of all or a portion of any incentive compensation (which includes, without limitation, annual bonuses and other short- and long-term cash incentives, stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units) received by a current or former executive officer during the preceding three (3) completed fiscal years in the event that:

Additional Compensation Information

Derivatives Trading, Hedging and Pledging

Pursuant to our Insider Trading Compliance Program, all employees, officers, and directors are prohibited from engaging in any speculative transactions in Middleby stock, including engaging in short sales; transactions involving put options, call options, or other derivative securities; or any other forms of hedging transaction, such as collars or forward sale contracts, designed to decrease the risks associated with holding Middleby stock, except in certain circumstances that must be pre-cleared with the Company’s insider trading compliance officers.

Post-Employment Benefits

The Company provides very limited post-employment benefits, as described under “Potential Payments Upon Termination or Change in Control.”

Limited Perquisites

Our Named Executive Officers and senior executives receive only limited perquisites. Middleby does not offer our NEOs automobile allowances, club memberships, or other professional fee reimbursements.

Employment Agreements

To attract and retain highly skilled executives and to provide for certainty regarding rights and obligations, the Company has historically provided employment agreements to certain of its executive officers. For more information, see “Employment Agreement with Timothy J. FitzGerald.”

Risk Assessment Regarding Company Compensation Program

The Compensation Committee is committed to ensuring that none of Middleby’s compensation policies and practices—particularly the performance-based compensation—pose excessive risks. The Compensation Committee, together with the Chairperson of the Audit Committee and executive management, has considered the risks arising from the Company’s compensation policies and practices and concluded that those policies and practices are not reasonably likely to have a material adverse effect on the Company. In particular, the Compensation Committee determined that Middleby’s executive compensation program includes several “risk mitigating” elements, such as stock ownership requirements for our NEOs and other senior executives, substantial time-based components in the total compensation mix, the use of multiple performance metrics in our incentive plans, and limitations on the payouts that can be earned through the incentive plans.

Report of the Compensation Committee of the Board of Directors

The Compensation Committee, consisting entirely of independent directors, reviewed and discussed the above Compensation Discussion and Analysis with the Company’s management. Based on this review and discussion, the Compensation Committee recommends to the Company’s Board that the CD&A be included in these proxy materials.

The Compensation Committee:
John R. Miller III, Chairman,
Gordon O’Brien and Sarah Palisi Chapin

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Executive Compensation Tables

Summary Compensation Table for Fiscal Year 2020

The following table sets forth information concerning the annual and long-term compensation for services to the Company in all capacities received by the following individuals, who are were collectively referred to as the Company’s “Named Executive Officers” for fiscal year 2020: the Chief Executive Officer, the Chief Financial Officer, and the two other most highly compensated executive officers. The table covers compensation for fiscal years 2018, 2019, and 2020 to the extent the individuals listed were Named Executive Officers in those years.⁽¹⁾

The charts below illustrate the compensation actually realized by our CEO and other NEOs with respect to the 2020 fiscal year, relative to the compensation disclosures that are reflected in the Summary Compensation Table as required by applicable SEC rules (either with respect to the fiscal year 2020 or any prior fiscal years).

2020 CEO Realized Pay Comparison

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2020 Realized Pay includes the following:

Base Salary represents the fixed cash remuneration paid in fiscal year 2020

Non-Equity Incentive Plan Compensation represents the annual incentive bonus plan with respect to services performed in fiscal year-2020

Stock Awards represents the fair value of time-based restricted stock that vested in the first quarter of 2021 with respect to services performed in the 2020 fiscal year Salary Reduction Grant represents the value of stock grants that are equal to the amount of cash base salary that was waived by our CEO and our NEOs in April 2020 Appreciation of Salary Reduction Grant represents the difference in the fair value of the Salary Reduction Grant as of the December 28, 2020 vesting date and the amount of base salary that was waived

All Other Compensation is unchanged from the Summary Compensation Table The amount of base salary that our CEO and other NEOs realized in cash in fiscal year 2020 was only 27.6% and 38.7%, respectively, of the value disclosed in the Summary Compensation Table for 2020. The CEO and other NEOs waived a portion of their base salary in exchange for a restricted stock grant that vested on December 28, 2020 and is reflected in the Stock Awards row in the table above.

The amount of stock awards that our CEO and other NEOs realized in the 2020 fiscal year was only 19.28% and 44.58%, respectively, of the value disclosed in the Summary Compensation Table for such year. The reasons for this difference are (i) the CEO and other NEOs were granted restricted stock units on December 31, 2020 that are reflected in the Summary Compensation Table, but none of which was reflected in 2020 Realized Pay, and (ii) included in 2020 Realized Pay is a tranche of time-based restricted stock that vested on March 10, 2021, and is valued at the closing stock price on March 10, 2021 of $168.25 per share.

Our CEO’s and other NEOs’ total 2020 Realized Pay was approximately 49.67% and 95.61%, respectively, of the value disclosed in the Summary Compensation Table for fiscal year 2020. Further, we included the vesting of 1,250 shares of time-based restricted stock granted to Mr. Mittelman on July 16, 2018, of which 1,250 shares vested on July 16, 2020. This 2020 Realized Pay is not included in the Summary Compensation Table with respect to fiscal year 2020.

Employment Agreements with Named Executive Officers

The Company and MM have entered into employment agreements with Mr. FitzGerald as of the end of fiscal year 2020.

Timothy J. FitzGerald

The Company and MM entered into an amended and restated employment agreement with Mr. FitzGerald, at the time the Company’s Vice President and Chief Financial Officer, effective on March 21, 2013, which the parties amended on February 19, 2018. Mr. FitzGerald’s employment agreement expired on December 31, 2020. Under the agreement, Mr. FitzGerald receives an annual base salary, which is currently $975,000, and he is eligible to participate in and earn an annual bonus under the management incentive programs adopted by the Company from time to time, subject to the terms and conditions of such programs, based on Mr. FitzGerald’s achievement of performance targets established in the sole discretion of the Company. Mr. FitzGerald was appointed Chief Executive Officer of the Company and a member of the Board effective as of February 16, 2019, and the parties intend to enter into a new employment agreement to reflect such appointment.

The terms of the employment agreement relating to the termination of Mr. FitzGerald’s employment are discussed below under the heading “Potential Payments Upon Termination or Change in Control.”

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Grants of Plan-Based Awards in Fiscal Year 2020

The following table sets forth information concerning cash incentive opportunities and grants of restricted stock units made to our Named Executive Officers during fiscal year 2020. The grant date set forth below is the date that the Board granted the award.

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Outstanding Equity Awards at 2020 Fiscal Year End

The following table sets forth certain information concerning outstanding stock awards held by each of our Named Executive Officers under the LTIP at the end of fiscal year 2020.