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ATCHISON, KS – MGP Ingredients Inc. (NASDAQ:MGPI), a distributor of distilled alcoholic beverages currently trading near its 52-week low, has updated its Short Term Incentive Plan (STIP), effective January 1, 2025. According to InvestingPro data, the company maintains strong fundamentals with a healthy financial score despite its stock declining over 62% in the past six months. The company's Human Resources and Compensation Committee approved the amended plan on February 12, 2025, which is designed to motivate and reward non-union employees and executive officers through incentive awards.
The STIP aims to provide cash bonuses based on the achievement of specific performance goals set annually. The incentive award target amounts for participants, except executive officers, will be determined by the company, while the Committee will decide on the participation and award targets for executive officers. This move comes as the company maintains solid financial health, with InvestingPro analysis showing sufficient cash flows to cover interest payments and liquid assets exceeding short-term obligations.
At least 80% of the collective bonuses, calculated based on the company's actual performance, will form a cash bonus pool that must be paid out to participants following the completion of each annual performance period. The Committee holds the authority to assess the achievement of the STIP performance goals and the corresponding cash bonuses to be distributed.
Employees must be with MGP Ingredients or its affiliates through the award payment date to be eligible for the bonuses. Exceptions include cases of termination due to death or disability, where a prorated or full award based on actual performance will be paid. Furthermore, in the event of a change in control followed by an employee's termination without cause, the employee may be entitled to receive any unpaid award from a completed performance period and a prorated award for the ongoing performance period, contingent upon a release of claims agreement.
The STIP is subject to the company's clawback policy, allowing the recovery of awards under certain circumstances. The detailed terms of the STIP are outlined in Exhibit 10.1 of the SEC filing, which serves as the source for this information. This revision reflects MGP Ingredients' commitment to aligning employee incentives with the company's performance goals. Trading at a P/E ratio of 6.67, InvestingPro analysis suggests the stock is currently undervalued, with 12 additional ProTips available to subscribers, including detailed insights on the company's valuation metrics and growth potential.
In other recent news, MGP Ingredients has seen a significant shift in its executive leadership. The company has appointed Brandon Gall, the current CFO, as Interim President and CEO, effective from January 1. Donn Lux will replace Karen Seaberg as Chairman of the Board, overseeing the search for a permanent CEO. These changes follow the departure of President and CEO David Bratcher.
Truist Securities has maintained a Buy rating on MGP Ingredients shares, with a steady price target of $75.00. In contrast, TD Cowen has revised the price target for the company down to $45.00 from $50.00, while retaining a Hold rating on the stock. Both firms have noted the challenges faced by MGP Ingredients, with Truist Securities expressing optimism for a return to profitable growth around late 2025.
MGP Ingredients has reaffirmed its financial guidance for the fiscal year 2024, expecting capital expenditures to total $72 million, a decrease from the previously forecasted $78 million. Despite the leadership changes and industry challenges, the company's strategic objective to shift towards a primarily branded business model remains intact. These are some of the recent developments within MGP Ingredients.
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