Beginning at the first annual meeting of stockholders following the earlier of (i) the fifth anniversary of our initial public offering and (ii) a fiscal year end at which Advent, our significant stockholder, holds less than 50% of the voting power of our common stock necessary to elect our directors (the “Sunset”), the directors whose terms expire at such annual meeting and any subsequent annual meeting will be elected to hold office for a one-year term expiring at the next annual meeting of stockholders and until such director’s successor is elected and qualified. The Board will be fully declassified following the third annual meeting after the Sunset with all directors standing for election for one-year terms.
DIRECTOR INDEPENDENCE
We are a “controlled company” under the corporate governance rules of the Nasdaq and, therefore, we are not required to have a majority of independent directors serving on our Board. However, our Board is currently composed entirely of independent directors other than Mr. Lachman, our Founder, President and CEO, and Mr. Graves, co-founder of Noosa Yoghurt. Specifically, our Board has affirmatively determined that each of Mr. Johnson, Mr. Abuaita, Mr. Case, Ms. Mathur, Mr. Roberts, Ms. Sheppard and Ms. Singh qualifies as independent in accordance with the Nasdaq corporate governance rules. In considering the independence of Mr. Case, Ms. Mathur and Mr. Roberts, our Governance Committee considered that each of them was an employee of Advent, our significant stockholder. In considering the independence of Mr. Johnson, our Governance Committee considered his service as an operating partner of Advent.
As a “controlled company” we also are not required to have a Compensation Committee or a Governance Committee composed entirely of independent directors. However, our Compensation Committee and Governance Committee are composed of entirely independent directors. Under Rule 10A-3 of the Exchange Act and Nasdaq listing rules, our Audit Committee is required to be composed of at least three members, each of whom must be independent within one year of listing. During a portion of fiscal 2022, Mr. Roberts served on our Audit Committee. Our Board determined that Mr. Roberts, based on his affiliation with Advent at such time, did not qualify as independent for purposes of serving on the Audit Committee under the applicable rules. Mr. Roberts resigned as an interim member of the Audit Committee on August 18, 2022, in connection with the appointment of Mr. Abuaita as a new independent director, at which time we had an Audit Committee composed entirely of directors who are independent for such purposes within one year of listing, as required. We are currently in compliance with the applicable audit committee rules and have three independent directors on our Audit Committee. See “Board and Committee Meetings—Audit Committee” below.
DIRECTOR CANDIDATES
Each year, at the Annual Meeting, the Board proposes a slate of director nominees. Stockholders may also recommend candidates for election to the Board, as described below. The Board has delegated the process of screening potential director candidates to the Governance Committee. The Governance Committee is responsible for periodically reviewing with the Board the appropriate criteria that directors are required to fulfill (including experience, qualifications, attributes, skills and other characteristics) in the context of the Board’s current composition and needs in light of the Company’s circumstances.
In identifying and screening director candidates, the Governance Committee considers whether the candidates fulfill the criteria for directors approved by the Board, including integrity, objectivity, independence, sound judgment, leadership, courage and diversity of experience (for example, in relation to finance and accounting, strategy, risk management, industry expertise, human capital experience, policy-making, etc.). In addition, the Company recognizes and embraces the benefits of having a diverse Board. In evaluating the Board’s composition, the Governance Committee will consider diversity among other relevant considerations, including, but not limited to, diversity of gender, age, race, ethnicity, cultural and educational background, professional experience, skills, knowledge and length of service.
The Governance Committee values the input of stockholders in identifying director candidates. The Governance Committee considers recommendations for Board candidates submitted by stockholders using substantially the same criteria it applies to recommendations from the committee, directors and members of management.