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DEF 14A
ACETO CORP filed this Form DEF 14A on 10/20/2017
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Our peer group was reviewed with FW Cook in fiscal 2017 and at that time, it was decided to change our peer group to a new peer group consisting of 15 companies selected by us to reflect our current business strategy of focusing more on the end market pharmaceutical space. These companies included in the new peer group reflect Aceto’s business strategy, placing greater emphasis on companies whose primary business is tied to health care. The selection criteria to evaluate the peer group companies included comparable business content/model, company size, business characteristics and executive talent. During the fiscal year, our consultant conducted a benchmarking review consisting of a competitive review of executive compensation levels for certain executive officers, including our named executive officers. The analysis focused on target compensation in order to provide market competitive comparisons for setting executive compensation opportunities. The Compensation Committee’s benchmarking criteria for these purposes included comparisons of executive base salary compensation, performance awards, long term incentive compensation, total cash compensation (base salary plus annual performance awards), and total direct compensation (total cash compensation plus long-term incentive compensation) of our peer group. Based upon the results of the study, it was determined that Aceto’s executive officers are generally positioned approximately 15% below market levels for base salary and approximately 12% below the market median for target bonus percentage. For long-term incentives, the Company’s executive officers were positioned approximately 15% above the market median. Aceto’s target total direct compensation positioning approximates the market overall median, reflective of generally below-market target total cash combined with above market long-term incentives. For executive compensation planning and benchmark analysis purposes, the financial details of the peer group companies are listed below in the table.

 

As shown below, the Company ranked in the upper half of the peer group in terms of revenues, slightly below the 50th percentile for profitability and near the bottom for equity market capitalization and number of employees.

 

   Fiscal   Equity   Fiscal Year   Fiscal Year 
   Year End   Market Cap.   End Operating   End # of 
Company Name  Sales   6/30/2017   Income (1)   Employees 
(in thousands, except # of employees)                
Akorn, Inc.  $1,117,000   $4,185,000   $372,000    2,388 
Albany Molecular Research, Inc.   570,000    923,000    8,000    3,085 
American Vanguard Corporation   312,000    514,000    21,000    395 
Amphastar Pharmaceuticals, Inc.   255,000    817,000    16,000    1,541 
ANI Pharmaceuticals, Inc.   129,000    545,000    34,000    143 
Cambrex Corporation   490,000    1,946,000    130,000    1,295 
Depomed, Inc.   456,000    670,000    24,000    490 
Impax Laboratories, Inc.   824,000    1,187,000    91,000    1,495 
Innophos Holdings, Inc.   725,000    854,000    81,000    1,319 
Lannett Company, Inc.   637,000    760,000    190,000    1,126 
Lawson Products, Inc.   277,000    196,000    1,000    1,590 
Prestige Brands Holdings, Inc.   882,000    2,797,000    279,000    530 
Quaker Chemical Corporation   747,000    1,930,000    84,000    2,020 
Sagent Pharmaceuticals, Inc.   318,000    N/A(2)   9,000    440 
USANA Health Sciences, Inc.   1,006,000    1,572,000    139,000    1,788 
Aceto Corporation   638,000    465,000    44,000    286 
% Rank   60%   7%   47%   7%

 

(1) Operating income is adjusted to exclude one-time merger-related expenses.

(2) Market cap data is unavailable as the company was acquired by Nichi-Iko Pharmaceutical Co., Ltd. in August, 2016

 

Base Salary

 

We provide our named executive officers with base salary to provide them with a fixed base amount of compensation for services rendered during a fiscal year. We believe this is consistent with competitive practices and will help assure our retention of qualified leadership in those positions. We intend to maintain base salaries at competitive levels in the marketplace for comparable executive ability and experience, taking into consideration changes from time to time in the consumer price index and whether competitive adjustments are necessary to promote retention. Consideration also is given in each case to the historical results achieved by each executive and the Company during each executive’s tenure, to whether each executive is enhancing the team oriented nature of the executive group, the potential of each executive to achieve future success, and the scope of responsibilities and experience of each executive. In addition, evaluations are made regarding the competencies of each named executive officer that are considered essential to our success.

 

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