UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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| T | Definitive Proxy Statement |
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Stage Stores, Inc.
(Name of Registrant as Specified In Its Charter)
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STAGE STORES, INC.
BEALLS GOODY’SGOODY'S PALAIS ROYAL PEEBLES STAGE STEELE'S
Notice of 2010
2013 Annual Meeting
and
Proxy Statement
This Page Intentionally Left Blank.Blank
STAGE STORES, INC.
BEALLS GOODY’SGOODY'S PALAIS ROYAL PEEBLES STAGE STEELE'S
10201 Main Street
Houston, Texas 77025
Dear Shareholder:
On behalf of the Board of Directors, it is my pleasure to invite you to attend the 20102013 Annual Meeting of Shareholders of Stage Stores, Inc. on Thursday, June 10, 2010,13, 2013, at 1:00 p.m. local time, in Houston, Texas. Information about the Annual Meeting is presented in the following pages.
The Annual Meeting will begin with a discussion and vote on the matters set forth in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement, followed by a discussion on any other business matters that are properly brought before the meeting.
Your vote is very important. We encourage you to read the Proxy Statement and vote your shares as soon as possible. Whether or not you plan to attend, you can be sure your shares are represented at the Annual Meeting by promptly completing, signing, dating and returning your Proxy Card in the enclosed envelope or by submitting your vote and proxy by telephone or by the Internet.
If you will need special assistance at the Annual Meeting because of a disability, please contact Bob Aronson, Vice President, Investor Relations, at (800) 579-2302.
Thank you for your continued support of Stage Stores, Inc. We look forward to seeing you on June 1013th.
Sincerely,
Chairman of the Board
i
EVERY SHAREHOLDER’SSHAREHOLDER'S VOTE IS IMPORTANT. PLEASE
COMPLETE, SIGN, DATE AND RETURN YOUR PROXY
CARD, OR SUBMIT YOUR VOTE AND PROXY BY
TELEPHONE OR BY THE INTERNET, AS SOON AS POSSIBLEPOSSIBLE.
STAGE STORES, INC.
BEALLS GOODY’SGOODY'S PALAIS ROYAL PEEBLES STAGE STEELE'S
To the Shareholders:
The 20102013 Annual Meeting of Shareholders of Stage Stores, Inc. (the “Company”"Company") will be held at the offices of the Company, 10201 Main Street, Houston, Texas 77025 on Thursday, June 10, 2010,13, 2013, at 1:00 p.m. local time. If you need directions to attend the Annual Meeting, they can be found on our website, www.stagestoresinc.com, under “Investor Relations”"Investor Relations". The shareholders will vote on the following matters:
| 1. | Election of |
| 2. | Advisory Resolution to Approve Executive Compensation, |
| Ratification of the |
| Such other matters as may properly come before the Annual Meeting or any adjournment thereof. |
The Board of Directors has fixed the close of business on April 12, 201018, 2013 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors
Edward J. Record
Chief Operating Officer
and Secretary
May 3, 2013
 | |
IMPORTANT VOTING INFORMATION If you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority under NYSE rules to vote your shares on Item 3 (Ratification of the those matters. More Information Is Available If you have any questions about the proxy voting process, please contact the broker, bank or other financial institution where you hold your shares. The Securities and Exchange Commission ("SEC") also has a website (www.sec.gov/spotlight/proxymatters.shtml) with more information about your rights as a shareholder. Additionally, you may contact our Investor Relations Department at www.stagestoresinc.com/investor-relations. |
MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 10, 2010.13, 2013
The Company’s 2010Company's 2013 Proxy Statement, 20092012 Annual Report and 20092012 Annual Report on Form 10-K are available to review at http://bnymellon.mobular.net/bnymellon/ssiwww.envisionreports.com/SSI. for shareholders of record and at www.edocumentview.com/SSIfor beneficial owners.
In accordance with the Company’sCompany's security procedures, all persons attending the Annual Meeting must present either their E-Notice, or the Admission Ticket found on their Proxy Card (if they requested and received a Proxy Card), or a brokerage statement or other proof of ownership of Stage Stores stock as of the Record Date, and picture identification. If you are a shareholder of record and plan to attend the meeting in person, please bring your E-Notice or your Admission Ticket with you to the meeting. For security purposes, briefcases, bags, purses, backpacks and other containers will be subject to search at the door.
This Proxy Statement is furnished in connection with the solicitation of proxies by Stage Stores, Inc. (the “Company”"Company", “we”"we", “our”"our" or “us”"us") on behalf of the Board of Directors (the “Board”"Board") for the 20102013 Annual Meeting of Shareholders (the “Annual Meeting”"Annual Meeting"), which will be held at the principal executive offices of the Company, 10201 Main Street, Houston, Texas 77025, on Thursday, June 10, 2010,13, 2013, at 1:00 p.m. local time. This Proxy Statement and Proxy Card are first being made available to the shareholders on or about April 30, 2010.May 3, 2013. The proxy will be voted at the Annual Meeting if the signer of the Proxy Card or the shareholder submitting their vote and pro xyproxy by mail, by telephone or by the Internet was a shareholder of record on April 12, 201018, 2013 (the “Record Date”"Record Date").
The holders of our common stock are entitled to one vote per share on all matters to be voted upon by the shareholders. On the Record Date, there were 38,449,491 32,657,988 shares of our common stock, par value $0.01, outstanding and entitled to vote at the Annual Meeting. In addition, on the Record Date, holders of 298 shares of unvested Restricted Stock are entitled to vote at the Annual Meeting. A list of the shareholders entitled to vote at the Annual Meeting will be available for inspection at the Annual Meeting for purposes relating to the Annual Meeting.
You can ensure that your shares are voted at the Annual Meeting by submitting your instructions by completing, signing, dating and returning your Proxy Card in the envelope provided (if you requested a paper copy of the Proxy Card) or by submitting your vote and proxy by telephone or by the Internet. Submitting your instructions by Proxy Card, by telephone, or by the Internet will not affect your right to attend the Annual Meeting and vote. A shareholder who gives a proxy may revoke it at any time before it is exercised by voting in person at the Annual Meeting, by delivering a subsequent proxy, or by notifying the InspectorsInspector of Election in writing of such revocation.
The representation in person or by proxy of a majority of the outstanding shares of our common stock entitled to a vote at the Annual Meeting is necessary to provide a quorum for the transaction of business at the Annual Meeting. Shares can only be voted if the shareholder is present in person or is represented by a properly signed Proxy Card or by a vote and proxy submitted by telephone or by the Internet. Each shareholder’sshareholder's vote is very important. Whether or not you plan to attend the Annual Meeting in person, please sign and promptly return the Proxy Card (if you requested a paper copy of the Proxy Card) or submit your vote and proxy by telephone or by the Internet. All signed and returned Proxy Card sCards and votes and proxies submitted by telephone or by the Internet will be counted towards establishing a quorum for the Annual Meeting, regardless of how the shares are voted.
A shareholder of record on the Record Date may vote in any of the following four ways:
| · | by |
| · | by the Internet at |
| · | by completing and mailing a Proxy Card (if you requested a paper copy of the Proxy Card); or |
| · | by written ballot at the Annual Meeting. |
If you vote by mail, by the Internet or by telephone, your vote must be received by 11:59 p.m. Eastern Time on Wednesday, June 9th,12, 2013, the day before the Annual Meeting. Your shares will be voted as you indicate. If you return or otherwise complete your Proxy Card, but you do not indicate your voting preferences, the proxies will vote your shares FOR Items 1 (election(Election of Directors), 2 (Advisory Resolution to Approve Executive Compensation) and 2 (ratification3 (Ratification of selectionthe Selection of Deloitte & Touche LLP)LLP as Independent Registered Public
Accounting Firm for Fiscal 2013), and in their discretion for Item 34 (such other matters as may properly come before the Annual Meeting or any adjournment thereof).
If your shares are held in a brokerage account (this is called “street name”"street name"), you should follow the voting directions provided by the broker. You may complete and mail a voting instruction card to the broker or, in most cases, submit voting instructions by mail, by telephone or by the Internet. Your shares should be voted by the broker as you have directed.
If your shares are held in street name and you wish to have your shares voted for the electionItems 1 (Election of Directors,Directors) and 2 (Advisory Resolution to Approve Executive Compensation), you must either (i) instruct your broker how to vote your shares, (ii) vote your shares by phone or the Internet, or (iii) bring a brokerage statement, written proxy from your broker, or other proof of ownership of Stage Storesthe Company's common stock as of the Record Date with you to the Annual Meeting.
We will pass out written ballots to any shareholder entitled to vote at the Annual Meeting.
For additional information concerning the manner of proxy solicitation and voting, please see “Additional Information”"Additional Information" on page 5973 of this Proxy Statement.
New Directors
Lisa R. Kranc. On September 20, 2012, Lisa R. Kranc was appointed a Director by the Board of Directors.
Former Directors
Andrew Hall. On March 28, 2012, Andrew Hall resigned as oura Director and as the Company's President and Chief Executive Officer from September 2000 to November 2008pursue other interests. As he is a Named Executive Officer and who has also served as the Chairman of our Board since August 2001, will be retiring from the Board after the conclusion of our Annual Meeting. Based upon his extensive years of experience in the retail industry and his long term service with our Company, Mr. Scarborough not only played the lead role in our successful reorganization efforts, but he was instrumental in growing the reach of our small market business model. Thanks to his efforts and strategic vision, our Company is strong and is well positioned for the future. We thank him for his years of service, and his contributions to our Company, and wish him all of the best in his well deserved retirement.
In General
At the Annual Meeting, sixten Directors are to be elected to hold office until the 20112014 Annual Meeting and until their successors have been elected and have qualified. Information concerning the sixten nominees is set forth below. All of the nominees are currently Directors. The Board has determined that the following fivenine Director nominees are Independent Directors, as independence is defined by the New York Stock Exchange:NYSE: Alan J. Barocas, Michael L. Glazer,Diane M. Ellis, Gabrielle E. Greene, Earl J. Hesterberg, Lisa R. Kranc, William J. Montgoris, C. Clayton Reasor, David Y. Schwartz and Cheryl Nido Turpin. Mr. Hall,Ralph P. Scozzafava. Michael L. Glazer, the sixthtenth Director nominee, is not an Independent Director asbecause he is our President and Chief Executive Officer. The Board’sBoard's Corporate Governance and Nominating Committee recommended those current Directors for re-election. The Board knows of no reason w hywhy any nominee may be unable to serve as a Director. If any nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such other person as the Board may nominate.
Board Composition
Nominees for Director are selected on the basis of broad experience, diversity (differences of viewpoint, professional experience, education, skill and other individual qualities and attributes that contribute to the Board’sBoard's heterogeneity), wisdom, integrity, the ability to make independent analytical inquiries, an understanding of the Company’sCompany's business environment, and a willingness to devote adequate time to Board duties.
Below we identify and describe the specific experience, qualifications, attributes or skills (collectively, “Director Qualifications”"Director Qualifications") our Directors bring to the Board that are important in light of our business. The specific Directors’Director Qualifications that the Corporate Governance and Nominating Committee and the Board considered in each Director’sDirector's re-nomination follow their individual biographies.
| · | Leadership experience. We believe that Directors with experience in significant leadership positions over an extended period, especially Chief Executive Officer |
| · | Finance experience. We believe that an understanding of finance and financial reporting processes is important for our Directors. The Company measures its operating and strategic performance by reference to financial targets. In addition, accurate financial reporting and vigorous auditing are critical to our success. We seek to have at least |
| · | Industry experience. We seek to have Directors with experience as executives, directors, consultants, professionals or other capacities in the retail industry. |
| · | Investor relations experience. As a public company, we seek to have Directors with experience in the development, implementation and articulation of corporate and marketing strategy, with commercial, financial and communications experience and with experience working directly with investment analysts, institutional investors and the broad financial community. |
| · | Marketing experience. As a retailer, marketing is critical to our success. Therefore, marketing expertise, both at the store level and at the eCommerce level, is very important to us. |
| · | Real estate experience. As of |
| · | Strategic planning experience. As a retailer, strategic planning is critical to our success. Therefore, extensive experience in strategic planning as a result of various executive leadership roles is very important to us. |
The following information pertains to each nominee’snominee's (i) age as of April 12, 2010,18, 2013, (ii) principal occupations for at least the past five years, and (iii) directorships in other public companies at any time during the past five years.
| Name | Age | Positions Currently Held | ||
| Alan J. Barocas | Director, Chairman of the Corporate Governance and Nominating Committee | |||
| Diane M. Ellis | 55 | Director | ||
| Michael L. Glazer | Director | |||
| Gabrielle E. Greene | 52 | Director | ||
| Earl J. Hesterberg | 59 | Director, Chairman of the Compensation Committee | ||
| Director | ||||
| William J. Montgoris | ||||
| C. Clayton Reasor | 56 | Director | ||
| David Y. Schwartz | Director, Chairman of the Audit Committee | |||
| Director |
Mr. Barocas has been a Director since January 2007. Since May 2006,January 1, 2011, he has been Senior Executive Vice President of Leasing at General Growth Properties, Inc. located in Chicago. From May 2006 to January 1, 2011, Mr. Barocas was the principal of Alan J. Barocas and Associates, a real estate consulting firm. From June
1981 to April 2006, Mr. Barocashe was employed by GAP, Inc. His last position with GAP, Inc. was Senior Vice President of Real Estate. He is a past Trustee of the International Council of Shopping Centers (ICSC).
Director Qualifications:
| · | Leadership and Industry experience: current Senior Executive Vice President of a large public company engaged in commercial real estate (General Growth); former Senior Vice President of Real Estate of a large public company in the retail |
| · | Real estate experience: more than thirty years of real estate experience, twenty-five of which were with a large public company in the retail industry (GAP) |
Ms. Ellis has been a Director since September 2012. Since September, 2007, shehas been President and Chief Operating Officer of Brooks Brothers Group, Inc., headquartered in New York, New York. From October, 2001 to August, 2007, Ms. Ellis served as the Founding Partner of Lighthouse Retail Group, headquartered in Pittsfield, Massachusetts.
Director Qualifications:
| · | Leadership and Industry experience: current President and Chief Operating Officer of a privately held company (Brooks Brothers Group, Inc.), which, having been founded in 1818, is the oldest retailer in the United States and is known for classic men's and women's clothing and apparel. Responsible for all company revenue/operations in the following areas: retail/factory stores North America, human resources, supply chain, information technology, eCommerce, legal, finance, communications, and distribution/logistics production |
| · | Strategic Planning and Marketing experience: responsible for strategic planning and allocation; overall knowledge of retail strategy and marketing/eCommerce experience at Brooks Brothers Group, Inc. Experience in Strategic Planning Consulting at Lighthouse Retail Group and PriceWaterhouseCoopersLLC, as Managing Director in the Retail Strategy Practice |
Mr. Glazer has been a Director since August 2001. Since October 2009, he hasHe became our President and Chief Executive Officer on an interim basis on March 28, 2012 and on a permanent basis on April 19, 2012. Prior to joining the Company as President and Chief Executive Officer, Mr. Glazer served as the President and CEO of Mattress Giant Corporation, located in Addison, Texas.Texas, a position that he held from October 2009. From August 2005 to October 2009, Mr. Glazerhe served as Managing Director of Team Neu, located in Pittsfield, Massachusetts. From May 1996 to August 2005, heMr. Glazer served as President and Chief Executive Officer of KB Toys, Inc. KB Toys, Inc. filed a petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on January 14, 2004 and emerged from Chapter 11 in August 2005. From April 1995 to January 1999, Mr. Glazerhe also served as President of Big Lots. Lots, which owned KB Toys, Inc. From March 1990 to January 1995, he served as President of the Bombay Company. Mr. Glazer is alsoserved as a Director of CPI Corporation.Corporation from December 2008 to July 2012. He also formerly served on the boards of Brookstone and Big Lots.
Director Qualifications:
| · | Leadership experience: current President and CEO of the Company; former President and CEO of a privately held company in the retail industry with 1,000 |
| · | Industry experience: |
Ms. Greene has been a Director since September 2010. From January, 2012 until February, 2013, she served as interim CEO of Johnson Products Company, a privately held company headquartered in Dallas, Texas. On February 4, 2013, Johnson Products Company merged with another private equity-backed company in the industry, Dr. Miracles, to form DRM/JP Brands, headquartered in New York City. Since February 4, 2013, Ms. Greene has served as interim CEO of DRM/JP Brands. Since 2005, she has been a General Partner of Rustic Canyon/Fontis Partners, a later-stage private equity fund investing in high growth segments of emerging domestic markets, headquartered in Pasadena, California. From 2002 to 2005, Ms. Greene was the Chief Financial Officer of Gluecode Software, Inc. headquartered in El Segundo, California. From 2000 to 2002, she was the Chief Financial Officer of Crown Services Company headquartered in Fresno, California. From 1998 to 2000, Ms. Greene was a
General Partner of Black Enterprise/Greenwich Street Growth Fund headquartered in New York, New York. She also serves on the Board of Directors of Whole Foods Market, Inc., a NASDAQ listed company that pioneered the supermarket concept in health foods retailing. From September 2006 to May 2008, Ms. Greene served on the Board of Directors of Bright Horizons Family Solutions Inc., a then NASDAQ listed leading provider of workplace services for employers and families headquartered in Watertown, Massachusetts.
Director Qualifications:
| · | Leadership and Audit Committee experience: Significant retail board experience; serves on the board of a public company in the retail sector (Whole Foods); served on the board of another public company (Bright Horizons); significant Audit Committee experience, having served on that committee for the entirety of her board service at Bright Horizons; serves on the Audit Committee of Whole Foods and has chaired that committee for the past four years |
| · | Finance experience: Extensive financial experience; former CFO of two companies, one in the retail industry (Gluecode Software) and one in the service industry (Crown Services); extensive experience in finance and investment analysis as a private equity investor |
Mr. HallHesterberg joinedhas been a Director since July 2010. Since April 2005, he has been the CompanyPresident, CEO and a Director of Group 1 Automotive, Inc., a NYSE company headquartered in February 2006Houston, Texas. From October 2004 to April 2005, Mr. Hesterberg served as Group Vice President, North America Marketing, Sales and Chief Operating OfficerService for Ford Motor Company. From July 1999 to September 2004, he served as Vice President, Marketing, Sales and assumedService for Ford of Europe, and from 1999 until 2005, he served on the positionsupervisory board of Ford Werke AG. Mr. Hesterberg has also served as President and Chief Executive Officer of Gulf States Toyota, an independent national distributor of new Toyota vehicles, parts and accessories. He has also held various senior sales, marketing, general management, and parts and service positions with Nissan Motor Corporation in November 2008. He becameU.S.A. and Nissan Europe, both of which are wholly-owned by Nissan Motor Co., Ltd., a global provider of automotive products and services.
| · | Leadership experience: current President, CEO and a Director of a NYSE company in the automotive retail industry with approximately 10,700 employees (Group I Automotive); former Executive Vice President and corporate officer of a NYSE listed global automotive manufacturer (Ford Motor Co.). Former CEO of a private company (Gulf States Toyota) |
| · | Strategic Planning experience: responsible for product and market strategy for Nissan Motor Corporation in the United States and responsible for consumer research, market segmentation and pricing strategy for Ford Motor Company in the United States and Europe |
| · | Industry and Marketing experience: 38 years of sales, marketing and service experience in the automotive retail industry and the automotive aftermarket industry. Responsible for all marketing functions for Nissan Motor Corporation and Ford Motor Company in both North America and Europe |
Ms. Kranc has been a Director since September 2012. From August, 2001 to her retirement in March 2008. Mr. Hall was employed by Foley’s,December 2012, sheserved asSenior Vice President, Marketing and a Houston-based divisionMember of May Department Stores,the Executive Committee of AutoZone, Inc., from June 2002headquartered in Memphis, Tennessee. From September, 1997 to February 2006. While at Foley’s, Mr. HallApril, 2001, Ms. Kranc served as Chief Financial Officer (June 2002 to April 2003) and as Chairman (May 2003 to February 2006).Vice President, Marketing for Hannaford Bros. Inc., headquartered in Scarborough, Maine.
Director Qualifications:
| · | Leadership experience: former Senior Vice President, Marketing and a Member of the Executive Committee of a NYSE company that is the leading retailer and leading distributor of automotive replacement parts and accessories in the United States (AutoZone, Inc.) |
| · | Industry and |
Mr. Montgoris has been a Director since June 2004. He retired from The Bear Stearns Companies, Inc. in June 1999. During theFrom 1987 to 1999, period, Mr. Montgoris served in the following positions with Bear Stearns: Chief Operating Officer (1996 to 1999), Chief Operating Officer and Chief Financial Officer (1993 to 1996) and Chief Financial Officer (1987 to 1993). Mr. Montgoris is also a director of Carter’s,Carter's, Inc. and OfficeMax Incorporated.
From June 1999 to March 2009, he served as a director of the Reserve Fund, a family of money market mutual funds.
Director Qualifications:
| · | Leadership, Industry and Committee experience: former COO of a leading global investment banking, securities trading and brokerage |
| · | Finance experience: accounting background; Certified Public Accountant; former CFO of a leading global investment banking, securities trading and brokerage firm (Bear Stearns) |
Mr. Reasor has been a Director since June 2012. Since May 1, 2012, hehas been Senior Vice President, Investor Relations, Strategic Development, Public Affairs and Public Policy of Phillips 66 headquartered in Houston, Texas. From April 1, 2009 to April 30, 2012, Mr. Reasor served as Vice President, Investor Relations and Public Affairs of ConocoPhillips, a NYSE company that is also headquartered in Houston. From June 1, 2005 to March 31, 2009, he served as President, US Marketing of ConocoPhillips. Mr. Reasor began his career with Phillips Petroleum in 1979.
| · | Investor relations experience: significant experience in the development, implementation and articulation of corporate and marketing strategy; has developed commercial, financial and communications experience in domestic and international facilities; strong background working directly with investment analysts, institutional investors and the broad financial community |
| · | Leadership experience: current Senior Vice President of an advantaged downstream energy company (Phillips 66). Former Vice President of a NYSE listed international exploration and production company (ConocoPhillips) |
Mr. Schwartz has been a Director since July 2007. Since June 1997, Mr. Schwartz has been a business advisor and consultant to various companies principally in the retail, distribution and services industries. Prior to that, Mr. Schwartz spent thirty-five years with Arthur Andersen, LLP, from which he retired as a Senior Partner in June 1997. While at Arthur Andersen, he served clients in various industries, primarily retailing, distribution and communications. Mr. Schwartz is also a director of Walgreen Co., Foot Locker, Inc. He retired as a director of Walgreen Co, in January, 2013 and True Value Company.
Company in April, 2011. Mr. Schwartz will be retiring from the Foot Locker Board in May, 2013.
Director Qualifications:
| · | Leadership, Industry and Audit Committee experience: member of the Board of Directors, |
| · | Finance experience: Certified Public Accountant; former partner with Arthur Andersen (partner in charge of Retail Industry Program and Managing Partner of the Chicago |
Director Qualifications:
| · | Leadership |
| · | Strategic planning:strong background in operations and consumer goods, with extensive experience in |
Your Board of Directors recommends a vote FOR each nominee for Director.
Our business is managed under the direction of our Board. Our Board currently consists of eightten Directors. Members of our Board are kept informed of our business through discussions with our Chief Executive OfficerCEO and other officers, by reviewing materials provided to them, by visiting our offices, stores and distribution centers, and by participating in meetings of the Board and its Committees.
Board Leadership Structure. Andy Hall, our Chief Executive Officer,Our CEO does not serve as the Chairman of our Board. We believe that this leadership structure is appropriate for the Company because while it allows the Chief Executive OfficerCEO to speak for and lead the Company and communicate with other members of senior management, it provides for effective oversight by our Board, all of whose members are independent with the exception of Messrs. Hall and Scarborough,Mr. Glazer, and all of whom are highly qualified and experienced and other than Messrs. Hall and Scarborough, exercise a strong independent oversight function. This ove rsightoversight function is enhanced by the fact that all of the Board’sBoard's standing committees—Audit,committees (Audit, Compensation, and Corporate Governance and Nominating—Nominating) are comprised entirely of independentIndependent Directors. Further, as set forth below in “Information Relating to the Board of Directors and Committees—Lead Independent Director”, the Board has designated one of the independent Directors as Lead Independent Director.
The Board’sBoard's Role in Risk Oversight. The Board’sBoard's role in the risk oversight of the Company is administered directly and through its standing committees as follows:
| · | The Audit Committee has primary responsibility for financial oversight. In that regard, the Audit |
| Company's internal audit function and independent auditors. The Audit Committee acts independently as authorized and assists the Board in fulfilling its oversight responsibilities by reviewing certain financial information that is provided to the Board and others, the internal control structure, the audit process, and the adherence to applicable laws and regulations. Considering the size and complexity of the Company, the Committee must apply reasonable materiality standards to all of its activities. In addition, the Audit Committee has certain responsibilities with respect to our compliance program. For additional information, please see |
| · | The Compensation Committee considers the risks associated with our compensation policies and practices for all employees, including non-executive officers, to ensure that they do not create risks that are reasonably likely to have a material adverse affect on the Company. For additional information, please see |
| · | The Corporate Governance and Nominating Committee assists the Board in fulfilling its corporate governance and oversight responsibilities by reviewing corporate governance issues that may be brought before the Board, by exercising oversight over the |
| · | The Board is kept abreast of its Committees' risk oversight and other activities via reports of each Committee Chairman to the full Board. These reports are presented at every regular Board meeting and include discussions of Committee agenda topics, including matters involving risk oversight. |
| · | Members of management who supervise the day-to-day risk management responsibilities periodically provide reports to the Board as a whole and to the Committees if requested. |
The Board considers specific risk topics, including risks associated with our strategic plan, our capital structure and our development activities. In addition, the Board receives detailed regular reports from the members of our senior management team, which consists of the heads of our principal business and corporate functions—that include discussions of the risks and exposures involved in their respective areas of responsibility. These reports are provided in connection with regular Board meetings and are discussed, as necessary, at Board meetings. Further, the Board is routinely informed of developments affecting the Company that could affect our risk profile or other aspects of our business.
Director Independence. SixNine of our eightten Directors are Independent Directors, as independence is defined by the New York Stock Exchange (“NYSE”). TwoNYSE. One of our Directors areis not an Independent DirectorsDirector by virtue of the fact that they arehe is our former Chief Executive Officer and current consultant (Jim Scarborough) and our current President and Chief Executive Officer (Andy Hall)CEO (Michael Glazer). All members of the Board’sBoard's Audit, Compensation, and Corporate Governance and Nominating Committees are Independent Directors. Members of the Audit Committee m ustmust also satisfy, and they do satisfy, a separate SEC independence requirement, which provides that they may not accept directly or indirectly any consulting, advisory or other compensatory fee from us or any of our subsidiaries other than their Directors’Directors' compensation.
Corporate Governance Guidelines. The Board has adopted written Corporate Governance Guidelines (the “Governance Guidelines”"Governance Guidelines") to assist it in the exercise of its corporate governance responsibilities. The purpose of the Governance Guidelines is to provide a structure within which our Directors and our management can monitor the effectiveness of policy and decision making both at the Board and management level, with a view to enhancing shareholder value over the long term. The Governance Guidelines are available on our website at www.stagestoresinc.com. They can be accessed by clicking “Investor Relations”,"Investor Relations," then “Corporate Governance”,"Corporate Governance," and then “Corporate"Corporate Governance Guidelines.”
Code of Ethics for Senior Officers. In order to promote ethical conduct in the practice of financial management throughout the Company, the Board has adopted a Code of Ethics for Senior Officers (the “Code”"Code"). We believe that in addition to the CEO, the Chief ExecutiveOperating Officer, the Chief Financial Officer and the Controller each holds an important and elevated role in corporate governance. The Code is designed to deter wrongdoing and provides principles to which our principal executive officer, principal financial officer, principal accounting offic erofficer or controller, or persons performing similar functions are expected to adhere and advocate. These principles embody rules regarding individual and peer responsibilities, as well as responsibilities to the shareholders, the public and others who have a stake in our continued success. The Code is available on our website at www.stagestoresinc.com. It can be accessed by clicking “Investor Relations”,"Investor Relations," then “Corporate Governance”,"Corporate Governance," and then “Code"Code of Ethics for Senior Officers.”" We intend to disclose future amendments to certain provisions of the Code, or waivers of such provisions granted to Directors and executive officers, if any, on our website within four business days following the date of such amendment or waiver or as otherwise may be required by the SEC.
Code of Ethics and Business Conduct. The Board has also adopted a Code of Ethics and Business Conduct (the “Code"Code of Ethics”Ethics"), which is the basic set of policies and procedures governing the behavior of all Directors, executive officers, and other employees of the Company (each employee an “Associate”"Associate" and collectively the “Associates”"Associates") in conformance with Section 303A.10 of the NYSE Listed Company Manual. It is our policy to adhere to the highest standards of business ethics in all our business activities. When Assoc iatesAssociates are engaged in any activity concerning the Company, our customers, competitors, suppliers, other Associates, shareholders or the general public, they must maintain standards of uncompromising integrity and conduct themselves in a professional manner with a positive, supportive attitude about the Company. The Code of Ethics is available on our website at www.stagestoresinc.com. It can be accessed by clicking “Investor Relations”,"Investor Relations," then “Corporate Governance”,"Corporate Governance," and then “Code"Code of Ethics and Business Conduct.”" We intend to disclose future amendments to certain provisions of the Code of Ethics, or waivers of such provisions granted to Directors and executive officers, if any, on our website within four business days following the date of such amendment or waiver or as otherwise may be required by the NYSE or the SEC.
Non-Accounting Complaints. We have established procedures to enable anyone who has a concern about a violation of the Code of Ethics or any other Company policy to report that concern through normal Company channels or anonymously. An Anonymous Ethics Hotline is maintained by an independent third party and is available 24 hours a day, 7 days a week.
Accounting Complaints. The Audit Committee has established procedures for (i) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, or auditing matters, and (ii) the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. These procedures, which are incorporated into the Code of Ethics, (i) set forth a statement about our commitment to comply with the laws; (ii) encourage employees to inform us of conduct amounting to a v iolationviolation of the applicable standards; (iii) describe prohibited conduct; (iv) set forth compliance procedures that employees can easily use, including making anonymous complaints; and (v) provide assurances that there will be no retaliation for reporting suspected violations.
Policy on Poison Pills. The term “Poison Pill”"Poison Pill" refers to a type of shareholder rights plan that some companies adopt to provide an opportunity for negotiation during a hostile takeover attempt. The Board has not adopted a Poison Pill. However, as we are a Nevada corporation, our Articles of Incorporation provide that we have expressly elected to be governed by Chapter 78 of the Nevada Revised Statutes (“NRS”("NRS") with respect to the acquisition of a controlling interest in the Company. NRS 78 provides that a person who se eksseeks to acquire a “Controlling Interest”"Controlling Interest" (20% or greater) in a Nevada corporation will only obtain such voting rights in the shares acquired (the “Control Shares”"Control Shares") as are granted by a vote of the holders of a majority of the remaining voting power of the Company at a special or annual meeting of the shareholders. In addition, NRS 78 provides that the Company may redeem not less than all of the Control Shares at the average price of the Control Shares if the Control Shares are not granted full voting rights by the shareholders.
Board Meetings. The Board held four regular meetings and oneseven special meetingmeetings during the 2009 fiscal year.our 2012 Fiscal Year. During the 2009 fiscal year,our 2012 Fiscal Year, no current Director attended fewer than 75% of the aggregate of the total number of meetings of the Board and of meetings held by committees of the Board on which he or she was a member during the time he or she was a Director. In addition to regularly scheduled meetings, a number of Directors were involved in numerous informal meetings with management, offering valuable advice and suggestions on a broad range of corporate matters.
Executive Sessions (Meetings of Independent Directors). As described in the Governance Guidelines, the Independent Directors meet in regularly scheduled executive sessions without employees and non-independentnon-Independent Directors present. The Chairman of the Board presides at all executive sessions.
Annual Meeting. It is the Board’sBoard's policy that Directors should attend our annual meeting of the shareholders absent exceptional cause. Last year, all Directors attended the annual meeting of shareholders.shareholders except for Diane Ellis, Lisa Kranc and Clayton Reasor, who were not Directors at the time.
The Board has the following standing committees: Corporate Governance and Nominating, Audit and Compensation. Each committee operates under a written charter that is periodically reviewed by the respective committee and the Corporate Governance and Nominating Committee. The following table provides information concerning the independence of our Directors and the current membership of each committee.
DIRECTOR INDEPENDENCE AND COMMITTEE MEMBERSHIP
Director | Board | Corporate Governance and Nominating Committee | Audit Committee | Compensation Committee | |
| Mr. Barocas (I) | X | X(C) | X | ||
| Ms. Ellis (I) | X | X | X | ||
| Mr. Glazer | X | ||||
| X | X | X (ACFE) | |||
| Mr. Hesterberg (I) | X | X | X (C) | ||
| X | X | X | |||
| Mr. Montgoris (I) | X (C) | X (ACFE) | |||
| X | X | X | |||
| Mr. Schwartz (I) | X | X | X (C)(ACFE) | ||
| X | X (ACFE) | X |
| (I) | The |
| (C) | The |
| (ACFE) | The |
In General. The members of the Corporate Governance and Nominating Committee are William MontgorisAlan Barocas (Chairman), Alan Barocas, Michael Glazer, Sharon Mosse,Gabrielle Greene, Earl Hesterberg, Lisa Kranc, Clayton Reasor and David Schwartz, and Cheryl Nido Turpin, all of whom are Independent Directors. The Committee’sCommittee's primary purposes are (i) to develop, recommend to the Board, maintain and review the Governance Guidelines and propose changes to the Governance Guidelines as corporate governance developments warrant, (ii) to consider any Director candidates recommended by shareholders, (iii) to identify, recruit and recommend potential candidates for nomination as Directors to the Board consistent with criteria approved by the Board, and to nominate Directors for membership on Board committees, (iv) to evaluate the overall performance of the Board, the committees of the Board, the Directors and management, and (v) to report annually to the Board on the status of the Chief Executive Officer’sOfficer's succession plan. The Committee assists the Board in fulfilling its corporate governance and oversight responsibilities by reviewing corporate governance issues that may be brought before the Board, by exercising oversight over the Governance Guidelines, by recommending qualified individuals for nomination as Directors and reviewing their performance, and by reviewing applicable laws and regulations related to corporate governance matters. Annually, the Committee evaluates the overall performance of the Board and the Governance Guidelines. Periodically, the Committee reviews the compensation paid to the Directors.& #160; An annual performance evaluation of the Corporate Governance and Nominating Committee is conducted by the Board and the members of the Committee. The Committee met sixfour times during the 2009 fiscal year.our 2012 Fiscal Year.
Committee Meetings; Reports to the Board. The Corporate Governance and Nominating Committee meets as frequently as circumstances require, but in any event a minimum of four times per year. Meetings are led by the Chairman or by his or her designee should the Chairman be unable to attend. The Chairman, in consultation with Committee members, determines the frequency and length of Committee meetings. The Committee may ask members of management or others to attend meetings and may provide pertinent information to them, as the Committee deems necessary. The Committee reports to the Board as frequently as circumstances require, but in any event a minimum of four times each year.
Corporate Governance and Nominating Committee Charter. The Corporate Governance and Nominating Committee’sCommittee's Charter is posted on our website at www.stagestoresinc.com. It can be accessed by clicking “Investor Relations”"Investor Relations", then “Corporate Governance”"Corporate Governance", and then “CG"CG&NC Charter”.Charter."
Evaluation of the Chairman, the Board, Board Committees and Individual Directors. The Corporate Governance and Nominating Committee is responsible for establishing the evaluation criteria and implementing the process for the annual evaluation of the Chairman, the Board, the Board Committees and the individual Directors. Each Director annually evaluates the Chairman, the Board, the Board Committees and the other Directors. With respect to the Chairman, the Board and the Board Committees, the evaluations are of their overall performance as a whole and t hethe Committee considers specific areas in which the Directors believe a better contribution could be made. The results of the evaluations of the Chairman, the Board and the Board Committees are reported to the entire Board by the Lead Independent Director.Chairman. With respect to the evaluation of individual Directors, the purpose of the evaluation is to increase the corporate governance effectiveness of the Board, not to target individual Directors. The results of the individual Director evaluations are communicated to the respective Directors by the Lead Independent DirectorChairman or his designee and, in the case of the Lead Independent Director,Chairman, by outside counsel.
Evaluation of the Guidelines, Committee Charters, Corporate Governance Policies and Related Party Transactions. With input from the other Directors, the Corporate Governance and Nominating Committee reports annually to the Board on its evaluation of the Governance Guidelines, the Committee charters, any other corporate governance policies, and any related party transactions (transactions involving the Company and any executive officer, Director, employee or their affiliates and immediate family members).
Director Qualifications; Process for Identifying and Evaluating Nominees. Nominees for Director must possess the following minimum qualifications: broad experience, diversity (differences of viewpoint, professional experience, education, skill and other individual qualities and attributes that contribute to the Board’sBoard's heterogeneity), wisdom, integrity, the ability to make independent analytical inquiries, an understanding of our business
environment, and a willingness to devote adequate time to Board duties. The Corporate Governance and Nominating Committee is responsible for assessing the appropriate balance of skills and qualifications required of Directors. In identifying and evaluating nominees for Director, including nominees recommended by shareholders, the Corporate Governance and Nominating Committee will implement such processes as it deems appropriate including, in its sole discretion, retaining a third party or third parties to identify or evaluate or assist in identifying or evaluating potential nominees. However, at a minimum, each nominee for Director must (i) meet the minimum qualifications set forth above, (ii) have at least one interview with the Corporate Governance and Nominatin gNominating Committee and with any other Board member who requests an interview, and (iii) complete and sign a Director and Executive Officer Questionnaire in a form deemed appropriate by the Board prior to his or her nomination to the Board. Each Director must no less than annually complete and sign a Director and Executive Officer Questionnaire in a form deemed appropriate by the Board. In the event any information contained on a Director’sDirector's most recent Director and Executive Officer Questionnaire becomes incomplete or inaccurate, it is the responsibility of the Director to provide complete and accurate information to the Corporate Governance and Nominating Committee within thirty days. When formulating its Director recommendations, the Committee will also consider any advice and recommendations offered by our Chief Executive OfficerCEO and any other members of the Board.
Diversity. The Board endeavors to have a Board representing a range of experience in business and in other areas that are relevant to the Company’sCompany's activities. The goal of the Corporate Governance and Nominating Committee is to achieve a Board that, as a whole, provides effective oversight of the management and business of the Company through, among other things, diversity (differences of viewpoint, professional experience, education, skill and other individual qualities and attributes that contribute to the Board’sBoard's heterogeneity). This policy with respect to the consideration of diversity in identifying Director no mineesnominees is implemented, and its effectiveness assessed, annually by both the Board and the Corporate Governance and Nominating Committee as part of the Director nomination process.
Consideration of Shareholder Nominees. When formulating its Director recommendations, the Corporate Governance and Nominating Committee will also consider any written recommendations received from our shareholders identifying the nominee and stating his or her qualifications. The Committee evaluates all nominees for Director in the same manner regardless of the source of the recommendation. For the Annual Meeting of Shareholders in 2011,2014, recommendations for Director nominees must be submitted in writing by December 31, 2010 Friday, January 3, 2014 to the Corporate Governance and Nominating Committee, c/o Edward J. Record, Secretary, Stage Stores, Inc., 10201 Main Street, Houston, Texas 77025, and must include the names of such nominees, together with their qualifications for service as a Director of the Company.
Succession Planning. The Governance Guidelines require (i) the Corporate Governance and Nominating Committee to make an annual report to the Board on emergency as well as expected Chief Executive OfficerCEO succession planning and (ii) the Chief Executive OfficerCEO to prepare, on a continuing basis, a short-term succession plan which delineates a temporary delegation of authority to certain officers of the Company, if all or a portion of the executive officers of the Company should unexpectedly become unable to perform their duties. The short-term succession plan will be in effect until the Board has the opportunity to consider the s ituationsituation and take action, when necessary.
Consultants. The Corporate Governance and Nominating Committee has the authority to retain, from time to time and at our expense, search firms and other consultants to assist it in identifying and recruiting potential directors for nomination, in evaluating director compensation, and to otherwise carry out its responsibilities and duties and to approve the search firm or other consultant’sconsultant's fees and other retention terms.
Engagement of Compensation Consultant-Director Compensation. The Corporate Governance and Nominating Committee (i) has the authority to retain, from time to time and at our expense, a professional compensation consulting firm to review our Director compensation program, and (ii) has selected and engaged Hay Group, a leading human resource and compensation consulting firm, as its independent consultant to advise it on Director compensation. Likewise, the decision to retain a consultant is at the sole discretion of the Corporate Governance and Nominating Committee and the consultant works at the direction of the Corporate Governance and Nominating Committee. Since 2005, Hay Group a leading human resource and compensation consulting firm, has been engaged from time to time by both the Corporate Governance and Nominating Committee and management for professional compensation consulting with respect to compensation of our Directors.
Compensation of Directors; Role of Compensation Consultant in Determining or Recommending the Amount or Form of Director Compensation. It is the responsibility of our Corporate Governance and Nominating Committee to recommend to our Board alternative forms of Director compensation. Our management reports at least once a year to the Corporate Governance and Nominating Committee on the status of our Director compensation in relation to the compensation of directors of our Peer Group. With the assistance of Hay Group as its compensation consultant, the Corporate Governance and Nominating Committee periodically evaluates Director compensation to ensure that our Directors are compensated in a manner consistent with tho sethose of our Peer Group. Changes in Director compensation, if any, are recommended by the Corporate Governance and Nominating Committee, but must be approved by our Board after a full discussion.
The nature and role of Hay Group’sGroup's assignment with respect to Director compensation and its interaction with the Chairman of the Corporate Governance and Nominating Committee is essentially the same as it is with the Compensation Committee in the case of executive officer compensation. However, Hay Group only attends meetings of the Corporate Governance and Nominating Committee that involve Director compensation, which is generally one meeting a year.
In General. The members of the Audit Committee are David Schwartz (Chairman), Alan BarocasDiane Ellis, Gabrielle Greene, William Montgoris and William Montgoris,Ralph Scozzafava, all of whom are Independent Directors. The Committee’sCommittee's primary purposes are to (1)(i) assist Board oversight of (a) the integrity of the Company’sCompany's financial statements, (b) the Company’sCompany's compliance with legal and regulatory requirements, (c) the Company’sCompany's independent auditor’sauditor's qualifications and independence, and (d) the performance of the Company’sCompany's internal audit function and independent auditors;auditors, and (2) prepar e(ii) prepare an audit committee reportAudit Committee Report as required by the SEC to be included in the Company’sCompany's annual proxy statement. The Committee’sCommittee's primary responsibilities and duties are (i) to monitor the integrity of our financial process and systems of internal controls regarding finance, accounting and legal compliance, (ii) to select, retain, terminate, determine compensation and oversee the work of our independent registered public accounting firm, (iii) to ensure the independence and monitor the performance of the our independent registered public accounting firm and
the performance of our internal auditing department, (iv) to provide an avenue of communication between our independent registered public accounting firm and our internal auditing department, and (v) to provide an avenue of communication among theour independent registered public accounting firm, our management, our internal auditing department and the Board. An annual performance evaluation of the Audit Committee is conducted by the Board an dand the members of the Committee. The Committee met ten times during the 2009 fiscal year.
our 2012 Fiscal Year.
Committee Meetings; Reports to the Board. The Audit Committee meets as frequently as circumstances require, but in any event a minimum of four times per year. Meetings are led by the Chairman or by his or her designee should the Chairman be unable to attend. The Chairman, in consultation with Committee members, determines the frequency and length of Committee meetings. The Committee may ask members of management or others to attend meetings and may provide pertinent information to them, as the Committee deems necessary. Most meetings allow time for an executive session in which the Committee and others specifically requested by the Committee (such as representatives of the Company's independent registered public accounting firm) have an opportunity to directly discuss all accounting issues without the presence of management. The Committee reports to the Board as frequently as circumstances require, but in any event a minimum of four times each year.
Authority to Engage Advisors and to Conduct Independent Investigations. The Audit Committee has the authority to engage, at the Company’sCompany's expense, independent counsel and other advisersadvisors it determines necessary to carry out its duties. The Committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities and duties, and it has direct access to our independent registered public accounting firm as well as anyone in the Company.
Audit Committee Charter. The Audit Committee’sCommittee's Charter is available on our website at www.stagestoresinc.com. It can be accessed by clicking “Investor Relations”,"Investor Relations," then “Corporate Governance”,"Corporate Governance," and then “Audit"Audit Committee Charter.”"
Audit Committee Financial Expert. The Board has determined that Ms. Greene and Messrs. Montgoris, Schwartz and SchwartzScozzafava are Audit Committee Financial Experts, as that term is defined by the SEC.
Audit Committee Report. The Audit Committee Report is on page 57 70 of this Proxy Statement.
In General. The members of our Compensation Committee are Michael GlazerEarl Hesterberg (Chairman), William Montgoris, Sharon MosseAlan Barocas, Diane Ellis, Lisa Kranc, Clayton Reasor and Cheryl Nido Turpin,Ralph Scozzafava, all of whom are Independent Directors. Our Board has entrusted the Compensation Committee with overall responsibility for establishing, implementing and monitoring our executive compensation program. The primary purpose of the Compensation Committee is to administer the cash salary, bonus and other incentive compensation programs for the current and future Executive Officersexecutive officers of the Company, as the term Executive Officer is defined in the Committee’s Charter.Company. In addition, the Committee’s purposesCommittee's responsibilities include the following: (i) review and approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO's perfor mance in light ofperformance against those goals and objectives and, either as a committee or together with the other Independent Directors, determine and approve the CEO's compensation level based on this evaluation, (ii) make recommendations to the Board with respect to non-CEO executive officer compensation and incentive-compensation and equity-based plans that are subject to Board approval, and (iii) prepare a Compensation Committee Report and/or such other disclosure as may be required by applicable SEC rules or regulations.
An annual performance evaluation of the Compensation Committee is conducted by the Board and the members of the Committee. The Committee met sixfive times during the 2009 fiscal year.
our 2012 Fiscal Year.
The Compensation Committee meets as frequently as circumstances require, but typically meets at leastin any event a minimum of four times per year. EachMeetings are led by the Chairman or by his or her designee should the Chairman be unable to attend. The Chairman, in consultation with Committee members, determines the frequency and length of Committee meetings. The Committee may ask members of management or others to attend meetings and may provide pertinent information to them, as the Committee deems necessary. At least one meeting per year held in-person allows time for an executive session in which the Committee and others specifically requested by the Committee (such as outside consultants) have an opportunity to directly discuss all executive compensation issues without the presence of management. The Committee reports to the Board as frequently as circumstances require, but in any event a minimum of four times each year.
Compensation Committee Charter. The Compensation Committee's Charter is available on our website at www.stagestoresinc.com. It can be accessed by clicking "Investor Relations," then "Corporate Governance," and then "Compensation Committee Charter."
Compensation Committee Report. The Compensation Committee Report is on page 44 of this Proxy Statement.
Compensation and Compensation Principles. For a discussion of executive officer compensation and compensation principles, please see "Compensation of Directors and Executive Officers-Compensation Discussion and Analysis" and the compensation tables and narrative discussions that follow beginning on page 21 of this Proxy Statement.
Processes and Procedures for Executive Officer Compensation; Committee Meetings. In addition to the purposes set forth in "Compensation Committee-In General", above, the primary responsibilities and duties of the Compensation Committee are as follows: (i) review and evaluate the performance and approve the compensation of our executive officers, (ii) review and approve the terms and conditions of written employment, separation and retirement agreements for our executive officers, (iii) provide oversight of all cash compensation, equity compensation, benefits and perquisites for the entire officer population, (iv) review and monitor equity incentive plans as well as any pension, profit sharing and benefit plans, (v) oversee the Company's compensation policies and practices for all employees, including non-executive officers, so that they do not create risks that are reasonably likely to have a material adverse affect on the Company, and (vi) oversee the Board's annual performance evaluation of our CEO using a process consistent with that set forth in the Governance Guidelines.
The Compensation Committee reviews compensation analyses prepared by an independent compensation consultant and by management and assesses program design and recommendations for individual executives against these strategies.benchmarking purposes. The Committee determinesrecommends our Chief Executive Officer’sCEO's compensation andto the Board, reviews and discusses rec ommendationsrecommendations for other senior executives with our Chief Executive OfficerCEO and approvesrecommends final pay packages.packages to the Board. The Committee also reviews overall program design and total costs compared to approved strategies.
The Compensation Committee believes that having the input of management is important to the overall effectiveness of our executive compensation program. Our Chief Executive OfficerCEO and our Executive Vice President, Human Resources (“("EVP Human Resources”Resources") are the primary representatives of management who interact with the Committee. The Committee seeks input from our Chief Executive OfficerCEO and our EVP Human Resources regarding the performance of our executive team and individual compensation levels (within parameters approved by the Committee) and also seeks recommendations on various executive compensation awards (e.g., new hire equity grants). In addition, our Chief Executive OfficerCEO and our EVP Human Resources regul arlyregularly attend Committee meetings (except for executive sessions) to participate in the presentation of materials and discussion of management’smanagement's point of view regarding compensation issues.
Our Chief Executive OfficerCEO is not permitted to be present during deliberations and voting regarding his or her compensation. While our Chief Executive OfficerCEO may be present during deliberations and voting on the compensation of other executive officers, our Chief Executive OfficerCEO may not vote on theirhis or her compensation.
Company's shareholders to any single employee in any single calendar year other than executive management.
Authority to EngageEngagement of Compensation Consultant-ExecutiveConsultants-Executive Officer Compensation. The Compensation Committee hasmay, in its sole discretion, retain or obtain the authority to retain, from time to time and at the Company’s expense,advice of a professional compensation consulting firmconsultant to review our executive officer compensation program. program, including, but not limited to, a review of our "performance based" compensation programs in light of Section 162(m) of the Internal Revenue Code. For a discussion of Section 162(m), please see "Tax, Accounting and Other Implications-Deductibility of Executive Compensation" on page 43 of this Proxy Statement.
The Committee has selectedis directly responsible for the appointment, compensation and engaged Hay Group as its independentoversight of the work of any compensation consultant to advise it on executive compensation.retained by the Committee. The decision to retain a compensation consultant is at the sole discretion of the Committee and the compensation consultant works at the direction of the Committee. The Company must provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to any compensation consultant retained by the Committee.
The Committee has selected and retained Hay Group as its independent compensation consultant to advise it on executive compensation. Since 2005, Hay Group has been engaged from time to time by both the Committee and manage mentmanagement for professional compensation consulting with respect to compensation of the Company’sCompany's executive officers.
Review of Compensation Consultant Arrangements. In September 2011, the Compensation Committee and the Board reviewed the then existing compensation consultant arrangements. A general discussion was held concerning whether the Board, by and through the Compensation Committee with respect to executive officer compensation and related matters (e.g., comparator data, the Compensation Discussion and Analysis in the Company's proxy statements and interactions with proxy advisory companies) and by and through the Corporate Governance and Nominating Committee with respect to Director compensation, on the one hand, and the Company, by and through management with respect to the compensation of other officers, on the other hand, should retain the services of separate compensation consultants and, if so, who those compensation consultants should be. The Board reviewed management's approach to hiring its compensation consultant as well as the roles, responsibilities, requirements (including timing) and the costs of compensation consultants.
Based upon the recommendation of the Compensation Committee, the Board determined and directed that the Board, by and through the Compensation Committee with respect to executive officer compensation and related matters, such as those described in the previous paragraph, and by and through the Corporate Governance and Nominating Committee with respect to Director compensation, on the one hand, and the Company, by and through management with respect to the compensation of other officers, on the other hand, should retain the services of separate compensation consultants and that (i) the Board and its Committees should retain the services of Hay Group and (ii) the Company should retain the services of another compensation consultant as needed. However, the Board determined that the Company should continue to participate in the Hay Group annual compensation survey, as it has for many years, since Hay Group may need this information in its work for the Board and for Board committees.
Role of Compensation Consultant in Determining or Recommending the Amount or Form of Executive Officer Compensation. On an annual basis, Hay Group prepares competitive pay analyses regarding both our peer group of companies, as identified on page 2127 of this Proxy Statement (the “Peer Group”"Peer Group"), and the broader market; it provides information on our performance compared to the Peer Group and to our performance group of companies, as identified on page 2128 of this Proxy Statement (the “Performance Group”"Performance Group"); and it advisesprovides input to the Compensation Committee on the level and design of compensation programs for our executive officers.
The Chairman of the Compensation Committee works directly with Hay Group to determine the scope of the work needed to assist the Committee in its decision making processes. For example, Hay Group meets with the Committee to review issues and gain input on plan design and alternatives. In this process, Hay Group meets with the members of the Committee, our Chief Executive Officer and our other senior management to facilitate the development of our executive compensation strategy and approach to determining compensation levels.
When requested, Hay Group attends Committee and Board meetings and the Committee’sCommittee's executive sessions to present and discuss market data and program design alternatives, and to provide advice and counsel regarding decisions facing the Committee. Occasionally, Hay Group also meets individually with the Chairman of the Committee prior to Board meetings to discuss findings and issues. In addition, with the agreement and approval of the Committee, Hay Group works with our management team on broad-based compensation design and issues and links them to our overall executive compensation strategy. Aggregate
Independence of Compensation Consultant; Conflicts of Interest. The Compensation Committee assessed the independence of Hay Group pursuant to SEC Rules and concluded that no conflict of interest exists that would prevent Hay Group from independently representing the Committee. The aggregate fees paid by the Company to Hay Group during the 2009 fiscal yearFiscal 2012 did not exceed $120,000.
Compensation Committee Interlocks and Insider Participation. None of our “performance based”Directors are employed at a company whose compensation programs in lightcommittee includes any of Section 162(m) of the Internal Revenue Code, and to approve the consulting firm’s fees and other retention terms. For a discussion of Section 162(m), see “Tax, Accounting and Other Implications-Deductibility of Executive Compensation” later in this Proxy Statement.our executive officers.
In General. Shareholders and other interested parties may send written communications to the Board and, if applicable, to the Chairman and other individual Directors, including the Independent Directors, by mail, facsimile or courier to our principal executive offices. All correspondence that we receive will be relayed to the Board or, if applicable, to the Chairman or other individual Director. Communications should be addressed in care of Edward Record, Secretary, Stage Stores, Inc., 10201 Main Street, Houston, Texas 77025, or sent by facsimile to Mr. Record at (713) 669-2709.
Deadline for Shareholder Proposals for Inclusion in Next Year’sYear's Proxy Statement. Shareholder proposals intended to be presented at the 20112014 Annual Meeting of Shareholders and included in our proxy statement and form of proxy relating to that meeting pursuant to Rule 14a-8(e) under the Securities Exchange Act of 1934 must be received in writing by us at our principal executive offices by December 31, 2010.Friday, January 3, 2014. Proposals should be addressed to Edward Record, Secretary, Stage Stores, Inc., 10201 Main Street, Houston, Texas 77025.
Other Shareholder Proposals for Presentation at Next Year’sYear's Annual Meeting. For any shareholder proposal that is not submitted to us for inclusion in next year’syear's proxy statement, but is instead sought to be presented by the shareholder directly at the 20112014 Annual Meeting, Rule 14a-4(c) under the Securities Exchange Act of 1934 permits management to vote proxies in its discretion if we: (1)(i) receive written notice of the proposal before the close of business on Wednesday, March 16, 2011,19, 2014, and advise shareholders in the 20112014 Proxy Statement about the nature of the matter and how management intends to vote on the matter, or (2)(ii) do no tnot receive written notice of the proposal before the close of business on Wednesday, March 16, 2011.19, 2014. Notices of intention to present proposals at the 20112014 Annual Meeting should be addressed to Edward Record, Secretary, Stage Stores, Inc., 10201 Main Street, Houston, Texas 77025.
Security Ownership of Certain Beneficial Owners
The following table provides information regarding beneficial ownership of our common stock by any person or entity known by us to be the beneficial owner of more than five percent (5%) of our outstanding common stock as of April 12, 2010.18, 2013. As of April 12, 2010,18, 2013, there were 38,449,491 32,657,988 shares of our common stock outstanding.
Name and Address | Number of Shares Beneficially Owned | Percent of Class | |||
| Wellington Management Company, LLP | 3,738,000 | 9.7% | (1) | ||
| 75 State Street | |||||
| Boston, MA 02109 | |||||
| BlackRock, Inc. | 3,011,775 | 7.8% | (2) | ||
55 East 52nd Street | |||||
| New York, NY 10022 | |||||
| Dimensional Fund Advisors LP | 2,998,629 | 7.8% | (3) | ||
| Building One | |||||
| 6300 Bee Cave Road | |||||
| Austin, TX 78746 | |||||
| Keeley Asset Management Corp. | 2,022,180 | 5.3% | (4) | ||
| 401 South LaSalle Street, Suite 1201 | |||||
| Chicago, IL 60605 |
| Name and Address | Number of Shares Beneficially Owned | Percent of Class | ||||
| Dimensional Fund Advisors LP | 2,791,873 | 8.5% | (1) | |||
| Palisades West, Building One | ||||||
| 6300 Bee Cave Road | ||||||
| Austin, TX 78746 | ||||||
| BlackRock, Inc. | 2,320,095 | 7.1% | (2) | |||
| 40 East 52nd Street | ||||||
| New York, NY 10022 | ||||||
| Wellington Management Company, LLP | 2,124,150 | 6.5% | (3) | |||
| 280 Congress Street | ||||||
| Boston, MA 02210 | ||||||
| The Vanguard Group, Inc. | 1,991,049 | 6.1% | (4) | |||
| 100 Vanguard Blvd. | ||||||
| Malvern, PA 19355 | ||||||
| S.A.C Capital Advisors, L.P. | 1,695,256 | 5.2% | (5) | |||
| 72 Cummings Point Road | ||||||
| Stamford, CT 06902 |
__________________________
| (1) | The information is based on the Schedule 13G/A filed with the SEC on February |
The information is based on the Schedule 13G/A filed with the SEC on February 8, |
| (3) | The information is based on the Schedule 13G/A filed with the SEC on February 14, 2013 by Wellington Management Company, LLP reporting on beneficial ownership as of December 31, 2012. According to the filing, the reporting person has shared voting power with respect to 1,571,975 shares and shared investment (dispositive) power with respect to 2,124,150 shares. |
| (4) | The information is based on the Schedule 13G/A filed with the SEC on February 12, |
| (5) | The information is based on the Schedule 13G filed with the SEC on March 27, 2013 by S.A.C. Capital Advisors, L.P. reporting on beneficial ownership as of March 26, 2013. According to the filing, the reporting person has shared voting power with respect to 1,695,256 shares and shared investment (dispositive) power with respect to 1,695,256 shares. |
Security Ownership of Management
The following table provides information regarding the beneficial ownership of our common stock by each currently employed Named Executive Officer listed in the 20092012 Summary Compensation Table and each of our Directors, as well as the number of shares beneficially owned by all of our Directors and executive officers as a group as of April 12, 2010.18, 2013, unless otherwise indicated by footnote. Other than in the case of Mr. Glazer, as footnoted, none of the shares are pledged as security. As of April 12, 2010,18, 2013, there were 38,449,491 32,657,988 shares of our common stock outstanding. The table also provides information about stock options exercisable within 60 days and Deferred Stock Units ("DSUs") credited to the accounts of eac heach Director and Named Executive Officer under various compensation plans. Unless otherwise indicated by footnote, individuals have sole voting and investment (dispositive) power.
| Name | Common Stock | Restricted Stock (1) | Stock Options Exercisable Within 60 Days | Deferred Stock Units (2) | Percent of Class | ||||||
| Andrew T. Hall | 77,318 | 30,000 | 280,500 | - | 1.0 | % | |||||
| Edward J. Record | 25,924 | 35,000 | 108,750 | - | (3) | ||||||
| Richard A. Maloney | - | 55,000 | 36,250 | - | (3) | ||||||
| Ernest R. Cruse | 9,275 | - | - | - | (3) | ||||||
| Ron D. Lucas | 37,982 | - | 194,764 | - | (3) | ||||||
| Alan J. Barocas | 12,726 | 21,556 | - | - | (3) | ||||||
| Michael L. Glazer | 67,573 | (4) | 20,913 | 16,875 | - | (3) | |||||
| William J. Montgoris | 11,482 | 20,913 | 50,625 | - | (3) | ||||||
| Sharon B. Mosse | 5,224 | 20,913 | 50,625 | 9,503 | (3) | ||||||
| James R. Scarborough | 75,700 | - | 387,460 | - | 1.2 | % | |||||
| David Y. Schwartz | - | 15,513 | 5,129 | 10,549 | (3) | ||||||
| Cheryl N. Turpin | - | 3,387 | - | - | (3) | ||||||
| All Directors and Executive Officers as a group (15 persons) | 334,711 | 228,195 | 1,211,216 | 20,052 | 5.4 | % | |||||
| Name | Common Stock | Restricted Stock (1) | Stock Options/SARS Exercisable Within 60 Days | Deferred Stock Units (2) | Percent of Class | ||||||
| Michael L. Glazer (3) | 113,093 | 125,733 | 11,250 | - | (4) | ||||||
| Oded Shein | 3,235 | 24,800 | 15,000 | - | (4) | ||||||
| Edward J. Record | 106,253 | 46,600 | 276,125 | - | 1.3 | % | |||||
| Steven P. Lawrence | - | 68,000 | - | - | (4) | ||||||
| Michael M. Searles | - | 41,150 | - | - | (4) | ||||||
| Alan J. Barocas | 37,884 | 6,094 | - | - | (4) | ||||||
| Diane M. Ellis | - | 3,474 | - | - | (4) | ||||||
| Gabrielle E. Greene | 9,020 | 8,137 | - | - | (4) | ||||||
| Earl J. Hesterberg | 14,281 | 8,398 | - | - | (4) | ||||||
| Lisa R. Kranc | - | 3,371 | - | ||||||||
| William J. Montgoris | 40,693 | 13,071 | 45,000 | - | (4) | ||||||
| C. Clayton Reasor | - | 5,931 | - | ||||||||
| David Y. Schwartz | 31,388 | 6,094 | 10,258 | 11,172 | (4) | ||||||
| Ralph P. Scozzafava | 1,118 | 8,653 | - | - | (4) | ||||||
All Directors and Executive Officers as a group (18 persons) | 458,242 | 433,514 | 456,483 | 11,172 | 4.1 | % | |||||
_____________________________
| (1) | Reflects unvested Restricted |
| (2) |
| (3) | 103,760 shares are pledged as security in a margin account |
| Ownership is less than one percent of our outstanding common stock. |
Hedging by Employees and Directors; Anti-Hedging Policy
In General. Section 955 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, amends Section 14 of the Exchange Act by adding a new Section 14(j) Disclosure of Hedging by Employees and Directors that directs the SEC to issue rules requiring that publicly-traded companies disclose in their proxy statements whether any employee or director, or any designee of an employee or a director, is permitted to purchase financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds) that are designed to hedge or offset any decrease in the market value of equity securities:
| · | held, directly or indirectly, by the employee or director. |
As of the date of this Proxy Statement, the SEC has not issued rules with respect to new Section 14(j).
Anti-Hedging Policy. In response to new Section 14(j) and subject to amendment once the SEC has issued rules in this regard, the Board has adopted an Anti-Hedging Policy which provides that any employee or Director of the Company, or any designee of an employee or a Director of the Company, shall not be permitted to purchase financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds) that are designed to hedge or offset any decrease in the market value of the Company's equity securities:
| · | granted to the employees or Directors by the Company as part of the compensation of the employee or Director; or |
| · | held, directly or indirectly, by the employee or Director. |
Transactions with Related Persons
Alan Barocas. Effective January 1, 2011, Alan Barocas, one of our Directors, accepted the position of Senior Executive Vice President of Leasing at General Growth Properties, Inc. ("General Growth"), which is based in Chicago, Illinois. Because in the ordinary course of business the Company leased three of its 864 store locations from General Growth at February 2, 2013, because General Growth may manage other store locations leased by the Company and because Mr. Barocas is now an employee of General Growth, we conducted an independence analysis to determine whether Mr. Barocas remains an Independent Director, as defined in the Governance Guidelines. We reviewed information with respect to payments made by the Company to General Growth in each of the last three years ($1.1 million in 2010. $0.8 million in 2011 and $0.5 million in 2012); we spoke with Mr. Barocas; and we reviewed General Growth's 2012 Form 10-K with respect to General Growth's consolidated gross revenues (in excess of $2.4 billion in 2010, $2.4 billion in 2011 and $2.5 billion in 2012). As a result, the Board concluded that Mr. Barocas continues to meet the NYSE definition of Independent Director. The Board also concluded that Mr. Barocas did not have a direct or indirect material interest in the Company's leasing of store locations from General Growth during Fiscal 2012. The Board has directed that Mr. Barocas and management report to the Corporate Governance and Nominating Committee and the Board, on no less than a quarterly basis, as to whether the service of Mr. Barocas, as both a Director of the Company and an employee of General Growth, is such that (i) he is no longer an Independent Director and (ii) he may have a direct or indirect material interest in the Company's leasing of store locations from General Growth during Fiscal 2013.
Richard Maloney.On November 3, 2008,January 30, 2012, Richard Maloney, then our Chief Merchandising Officer, resigned from the Company to pursue other interests. On February 21, 2012, we entered into a ConsultingSeparation Agreement with James Scarborough, who retiredMr. Maloney. The approximate value of the transaction is $1,431,000. We filed a copy of the Separation Agreement as Exhibit 10.1 to our Form 10-Q for the period ended April 28, 2012, which we filed with the SEC on June 7, 2012.
Andrew Hall. On March 28, 2012, Andrew Hall, then our President and Chief Executive Officer, as of that date. The term ofresigned from the Consulting Agreement began on November 3, 2008 and will end onCompany to pursue other interests. Effective June 10, 2010 (the “Term”), unless earlier terminated or extended by mutual agreement of the parties. We will pay Mr. Scarborough a retainer of $350,000 per Term year during the Term of the Consulting Agreement for an aggregate total of approximately $564,000. As Mr. Scarborough was a Named Executive Officer at the time and is currently our Chairman of the Board, we filed the Consulting Agreement as an Exhibit to our Annual Report on Form 10-K for the fiscal year ended January 3 1, 2009. The Consulting Agreement is incorporated herein by reference.
Other than those transactions described above andto the extent they involve a direct or indirect material interest, those transactions related to their employment, in the case of executive officers, and those transactions related to their service on our Board, in the case of non-employee Directors, there were no transactions, since the beginning of our last fiscal year, or any currently proposed transaction, in which we were or will be made a participant and in which any Director, nominee for Director or executive officer, or any immediate family member of a Director, nominee for Director or executive officer had or will have a direct or indirect material interest.
Review, Approval or Ratification of Transactions with Related Persons
In General. Article X. Related Party, Other Material Transactions and Loans of the Governance Guidelines (“("Governance Guideline Article X”X") and our written Related Party and Material Transactions Policy (the “Policy”) contain our policies and procedures for the review, approval or ratification of any transaction required to be reported in this Proxy Statement. They provide as follows:
| (i) | pay any money to a |
| (ii) | assign or lease any property belonging to any of the Companies to a Related Party, or |
| (iii) | allow any Related Party to use any property belonging to any of the Companies, |
if the aggregate fair market value of any monies paid to the Related Party and the property assigned or leased to or used by the Related Party exceeds Five Thousand Dollars ($5,000), without the express, prior, written approval of the Company’sCompany's Board of Directors. The term “Related Party”"Related Party" includes:
| (i) | any person who is an officer or director of any of the Companies (each, an |
| (ii) | any person who is a child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of a director, executive officer or nominee for director, and any person (other than a tenant or employee) sharing the household of such director, executive officer or nominee for director (each, an |
| (iii) | any entity for which an Insider or Immediate Family Member is an attorney, broker, commissioned sales agent, director, manager, officer, partner or profits participant; and |
| (iv) | any entity in which an Insider or Immediate Family Member has beneficial ownership of five percent (5%) or more of the voting securities of the entity. |
Other Material Transactions. No officer, director, or employee of the Company or any of its affiliate or subsidiary companies (collectively, the “Companies”"Companies") shall enter into any agreement, arrangement or contract with any person or entity or authorize any transaction which the Company may be required to disclose to the Securities and Exchange Commission unless the agreement, arrangement, contract or transaction previously has been approved by the Company’sCompany's Board of Directors.
Audit Committee Approval. Notwithstanding anything to the contrary, if required by the Securities and Exchange Commission, New York Stock Exchange, or other regulatory authority, any transaction between the Company and a Related Party, regardless of the amount involved, shall be approved by the Audit Committee.”
"
No Loans to Directors, Executive Officers and Their Immediate Family Members. Governance Guideline Article X provides that the Company shall not, directly or indirectly, including through any subsidiary, extend or maintain credit, arrange for or guarantee the extension of credit, or renew an extension of credit, in the form of a personal loan to or for any Director, executive officer, or Immediate Family Member of any Director or executive
officer. As used in the Governance Guidelines and this Proxy Statement, “executive officer”"executive officer" means our President, Chief Operating Officer, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice president in charge of a principal business unit, division or function (such as marketing, merchandising, administration or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for us, in all cases including officers of our subsidiaries if they perform policy-making functions for us.
Executive Summary
Financial and Operational Highlights. The Company's strategy for its fiscal year ended February 2, 2013 ("Fiscal 2012") was to build on its 2011 achievements and to pursue meaningful sales and earnings growth. Reflecting the successful implementation of its business strategy, the Company achieved the following results in Fiscal 2012:
| · | Total sales for the year increased 8.9% to $1.65 billion, the highest in the Company's history. |
| · | Comparable store sales increased 5.7%, the highest since 2001. |
| · | Gross profit margin was 27.9% (50 basis points better than Fiscal 2011). |
| · | Selling general and administrative expense was 50 basis points better than Fiscal 2011. |
| · | Earnings per diluted share was $1.19 versus $0.92 in Fiscal 2011, an increase of 29%. Excluding one-time adjustments, earnings per share was $1.33 (a 45% increase), the highest earnings per share in the Company's history. |
| · | Direct-To-Consumer sales increased by $9.1 million to $23.1 million, an increase of 65% over Fiscal 2011. |
| · | In its second full year, the Company's eCommerce platform, which is part of its Direct-to-Consumer sales, produced sales of $17.0 million, an increase of $8.7 million (104%) from Fiscal 2011. |
| · | For the one-year period ended February 2, 2013, the Company had a total shareholder return ("TSR") of 51.46%, including the reinvestment of dividends. Over the three-year period ended February 2, 2013, annualized TSR was 83.15%, including the reinvestment of dividends. |
| · | The Company opened 25 traditional stores and 31 Steele's stores during 2012 and had a net increase of 51 stores, growing from 813 stores in 40 states to 864 stores in 40 states. |
| · | The management team was strengthened with the addition of Michael Glazer, as President and CEO, Steve Lawrence, as Chief Merchandising Officer, and Bill Gentner, as Chief Marketing Officer, and with the promotion of Russ Lundy to Executive Vice President, Stores. |
Changes to Executive Compensation Program During Fiscal 2012. In March 2012, the Compensation Committee conducted an annual review of the Company's executive compensation program to ensure that it supported the key objectives and principles set forth in "Compensation Objectives and Principles" on page 24 of this Proxy Statement. Other than adding a "Mission Based Goals" parameter to the FY 2012 Senior Executive Incentive Bonus Plan, it was determined that no significant changes were needed.
Resignation of Andrew Hall; Appointment of Michael Glazer. On March 28, 2012, Andrew Hall resigned as President and Chief Executive Officer to pursue other interests. On that day, Michael Glazer was appointed President and Chief Executive Officer on an interim basis, and assumed these roles permanently on April 19, 2012.
Overview of 2012 Compensation. The Company's executive compensation program demonstrates strong alignment between pay and performance. Base salaries are generally at or below the median of our Peer Group, while incentive compensation provides the opportunity for above median pay if the Company exceeds its targeted performance levels.
| · | Base Salaries. Based on the Fiscal 2011 performance of the Company and competitive market data, base salary increases were granted effective April 1, 2012 to our then employed Named Executive Officers as follows: |
| o | As Mr. Glazer became our President and Chief Executive Officer on an interim basis on March 28, 2012 at a base salary of $850,000, which was the same as Mr. Hall's base salary prior to his resignation. Mr. Glazer's base salary was not adjusted when he became our President and Chief Executive Officer on a permanent basis. |
| o | Mr. Shein's base salary was increased from $350,000 to $355,000, a 1.43% increase. |
| o | Mr. Record's base salary was increased from $572,000 to $585,000, a 2.27% increase. |
| o | Mr. Searles' base salary remained at $450,000. |
Mr. Lawrence joined the Company on April 30, 2012, with a base salary of $560,000.
Details are shown in the table on page 32 of this Proxy Statement.
| · | Annual Incentives. Our 2012 Senior Executive Incentive Bonus Plan consisted of the following three parameters: (i) Company profitability, as expressed in Pre-Tax Earnings measured against a Board approved target (sixty percent (60%) of award opportunity), (ii) relative revenue growth performance, measured in Comparable Store Sales versus a Board approved Performance Group (twenty percent (20%) of award opportunity) and (iii) Mission Based Goals, which was designed to support the accomplishment of Company goals (twenty percent (20%) of award opportunity). |
| o | Target. For Fiscal 2012, Pre-Tax Earnings had to be at least $53.6 million, an increase of 13.4% over Fiscal 2011, for the target payout to be earned. The Comparable Store Sales component pays at the target level if the Company's ranking for total year-end comparable store sales change is at the fiftieth percentile (or middle mark) among the Performance Group. |
| o | Results. Actual performance for Fiscal 2012 was as follows: Pre-Tax Earnings of $60.4 million, an increase of $13.1 million (27.7%) over Fiscal 2011, and a 5.7% increase in Comparable Store Sales (as compared to a 0.5% increase in Fiscal 2011). Based on this performance and the overall achievement of Mission Based Goals, annual incentive bonuses were paid to all of our Named Executive Officers for Fiscal 2012, including Andrew Hall, but on a pro rata basis. |
| · | Long-term Incentives. For Fiscal 2012, the Company's long-term incentive program for its executive officers consisted primarily of Performance Shares and Restricted Stock to reward sustained, multi-year performance. The use of stock appreciation rights and stock options was discontinued except in extraordinary circumstances. |
| o | Performance Shares measure Company total shareholder return over a three-year period versus the Performance Group. For the 2009-2011 performance cycle (paid in 2012), 37.5% of the target number of shares was earned. For the 2010-2012 performance cycle (paid in 2013), 135.7% of the target number of shares was earned. |
| o | Restricted Stock is used from time-to-time, typically for promotions and new hires. Restricted Stock will generally vest over a four year period (i.e., 25% per year). |
| · | Ownership Guidelines. We have a Stock Ownership and Retention Policy for Senior Management. Please see "Stock Ownership by Executive Officers" on page 43 of this Proxy Statement. |
| · | No Hedging. We have an Anti-Hedging Policy. Please see "Hedging by Employees and Directors; Anti-Hedging Policy" on page 19 of this Proxy Statement. |
| · | No Gross-Ups. Our Named Executive Officers are not entitled to gross-up payments with respect to their compensation. |
| · | No Repricing Absent Shareholder Approval. It is the policy of our Board that we should not reprice or swap stock options or stock appreciation rights granted to our executive officers, Directors and employees without shareholder approval. |
| · | Limited Perquisites. The compensation philosophy for our executive officers is more heavily weighted toward annual and long-term performance-based compensation than toward benefits and perquisites. |
| · | Clawback Policy. We have a Compensation Recovery Policy (a "Clawback Policy") for our executive officers. Please see "Compensation Recovery Policy ("Clawback Policy") on page 25 of this Proxy Statement. |
| · | Performance Group Revisions. Our Board adopted a revised Performance Group for Fiscal 2012 to measure our relative performance with respect to comparable store sales for purposes of the Senior Executive Incentive Bonus Plan and our total shareholder return for the purpose of awarding Performance Shares. The revised Performance Group more appropriately reflects the current relevant retail market environment. Please see "Adoption of Revised Performance Group" on page 27 of this Proxy Statement. |
| · | Results of 2012 Say-on-Pay Vote. At the 2012 Annual Meeting of Shareholders, approximately 99% of the votes cast by the shareholders voted, on an advisory basis, to approve the compensation paid to our Named Executive Officers in Fiscal 2011. |
Our Fiscal 20092012 Named Executive Officers
Fiscal 2012:
| · | our Chief Executive |
| · | our former Chief Executive Officer, |
| · | our Chief |
| · |
These individuals are as follows and are collectively referred to in this Proxy Statement as our “Named"Named Executive Officers”Officers":
FISCAL 2012 NAMED EXECUTIVE OFFICERS
Title | ||
| President and Chief Executive Officer | ||
| Former President and Chief | ||
| Oded Shein | Executive Vice President, Chief Financial Officer | |
| Chief Operating Officer | ||
| Steven P. Lawrence | Chief Merchandising Officer | |
This CD&A should be read in conjunction with the compensation tables beginning on page 3645 of this Proxy Statement.
Overview of Compensation Program
The Compensation Committee of our Board (for purposes of this CD&A, the “Committee”"Committee") administers the base salary, bonus, long-term incentive and other compensation and benefits programs with regard to our Named Executive Officers as well as our other executive officers. Its primary responsibilities and duties are set forth in “Information"Information Relating to the Board of Directors and Committees-Compensation Committee-Processes and Procedures for Executive Officer Compensation.”Compensation" on page 14 of this Proxy Statement. The Committee ensures that the total compensation paid to our Named Executive Officers is fair, reasonable and competitive in relation to our Peer Group.competitive. The Committee’sCommittee's recommendations for the total compensation of our Named Executive Offic ersOfficers are subject to the approval of our Board.
Compensation Objectives and Principles
Objectives. The objectives of our compensation program are as follows:
| · | to enable us to recruit, motivate and retain the executive talent required to successfully manage and grow our business and to achieve our short and long-term business objectives; |
| · | to maximize the long-term commitment of our executive officers to our success by providing compensation elements that align their interests |
| · | to reward our executive officers upon the achievement of short-term and long-term business objectives and enhanced shareholder value. |
Principles.The principles of our compensation program are as follows:
| · | Compensation arrangements shall emphasize pay-for-performance and encourage retention of those executive officers who enhance our performance; |
| · | Compensation arrangements shall maintain an appropriate balance between base salary and annual and long-term incentive compensation; |
| · | Cash incentive compensation plans for our executive officers shall link pay to achievement of goals set in advance by the Committee; |
| · | The Committee shall set annual and long-term performance goals for our |
| · | Compensation arrangements shall align the interests of our executive officers with those of shareholders; |
| · | In the event minimum thresholds for annual and long-term performance goals are not met, incentive compensation related to those goals shall not be |
| · | It is the policy of our Board that we should not reprice or swap stock options or stock appreciation rights granted to our executive officers, Directors and employees without shareholder approval; |
| · | The Committee shall meet at least once each year in executive session, without our |
| · | Our |
| · | The compensation of our |
| · | In approving compensation, the recent compensation history of the executive officer, including special or unusual compensation payments, and all forms of compensation to which the executive officer may be entitled, shall be taken into consideration using tally sheets or other comparable tools the Committee deems appropriate. |
Key Considerations in Setting Compensation
In General
Based on the foregoing objectives and principles, the Committee has structured our compensation programs to motivate our Named Executive Officers to achieve the business goals set by our Board and to reward them for achieving those goals. The following is a summary of key considerations affecting the setting of compensation for our Named Executive Officers by the Committee. We describe in the section entitled “Committee"Committee Actions in Fiscal 2009
2012 Concerning Named Executive Officer Compensation”Compensation" beginning on page 2632 of this Proxy Statement additional considerations that the Committee evaluated in establishing Fiscal 20092012 compensation in the context of our performance and the economic environment at the time.
Emphasis on Future Pay Opportunity Versus Current Pay
The Committee strives to provide an appropriate mix of different compensation elements, including finding a balance amongbetween current versus long-term compensation and cash versus equity incentive compensation. Cash payments primarily reward more recent performance and equity awards encourage our Named Executive Officers to continue to deliver results over a longer period of time and serve as a retention tool. The Committee believes that Named Executive Officer compensation should be appropriately weighted on both long-term and short-term Company perfo rmanceperformance and operating results.
Discretion and Judgment
With the exception of our Senior Executive Incentive Bonus Plan and performance share awards, both of which depend on achieving specific quantitative performance objectives and Mission Based Goals in the case of the 2012 Senior Executive Incentive Bonus Plan, the Committee does not use formulas in determining the amount and mix of compensation. Thus, the Committee evaluates a broad range of both quantitative and qualitative factors, including reliability in delivering financial and growth targets, performance in the context of the economic environment relative to other companies, a track record of integrity, good judgment, the vision and ability to create further growth and the ability to lead others. In addition to such results, performance and objectives, the Committee may take into account any extraordinary, unusual or non-recurring items realized or incurred by the Company during the fiscal year deemed appropriate by the Committee in determining any incentive compensation. For annual equity incentive awards, the Committee primarily considers a Named Executive Officer’sOfficer's potential for future successful performance and leadership as part of the executive management team, taking into account past performance as a key indicator. In any event, the Committee exercises its discretion and judgment.
Significance of Our ResultsOverall Corporate Performance
The Committee primarily evaluates our Chief Executive OfficerCEO and the other Named Executive Officer’sOfficers' contributions to our overall performance rather than focusing only on their individual function. The Committee believes that each Named Executive Officer shares the responsibility to support our goals and performance as key members of our leadership team. While this compensation philosophy influences all of the Committee’sCommittee's compensation decisions, it has the biggest impact on annual equity incentive awards.
Compensation Policies and Practices as they Relate to the Company’sCompany's Risk Management
The Committee, the Board and management do not believe that there are any significant risks arising from the Company’sCompany's compensation policies and practices for the Company’sCompany's employees, including non-executive officers, that are reasonably likely to have a material adverse effect on the Company. Our compensation programs emphasize pay-for-performance, are balanced and are focused on the long term. Under this structure, the highest amount of compensation can be achieved through consistent superior performance over sustained periods of time. In addition, a significant percentage of compensation is tied to our long-term performance. This provides strong incentives to manage the Company for the long term, while avoiding excessive risk taking in th ethe short term. Goals and objectives reflect a balanced mix of quantitative and qualitative performance measures to avoid excessive weight on a single performance measure. Likewise, the elements of compensation are balanced among current cash payments and equity awards. With limited exceptions, the Committee retains discretion to adjust compensation for quality of performance and adherence to our values. The Committee, the Board and senior management monitor the Company’sCompany's compensation policies and practices on an ongoing basis to determine whether the Company’sCompany's risk management objectives are being met with respect to incentivizing the Company’sCompany's employees. The annual incentive is primarily linked toheavily weighted toward profitable growth (as opposed to sales) and the Company has a Compensation Recovery Policy as(a "Clawback Policy") that is described in the next paragraph.
Compensation Recovery Policy ("Clawback Policy")
Our Board has adopted a Compensation Recovery Policy (a "Clawback Policy") for Executive Officers.our executive officers. If our Board determines that an executive officer (an Executive Vice President or above) has engaged in fraudulent or intentional misconduct, the Board may take a range of actions to remedy the misconduct, prevent its recurrence, and impose such discipline on the wrongdoers as would be appropriate. Discipline would vary depending on the
facts and circumstances, and may include, without limit, (i) termination of employment, (ii) initiating an action for breach of fiduciary duty, and (iii) if the misconduct resulted in a material inaccuracy in our financial statements or performance metrics, which affect the executive officer’sofficer's compensation, seeki ngseeking reimbursement of any portion of any bonus or other incentive-based or equity-based compensation paid or awarded to the executive that is greater than would have been paid or awarded if calculated based on the accurate financial statements or performance metrics. These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities.
The Compensation Recovery Policy provides that notwithstanding anything in it to the contrary, in the event that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws of the United States, the Company will recover from any current or former executive officer of the Company who received incentive-based compensation (including stock options, stock appreciation rights or any other type of equity awards awarded as compensation) during the 3-year period preceding the date on which the Company is required to prepare an accounting restatement, based on the erroneous data, the excess of what would have been paid to the executive officer under the accounting restatement.
Once the SEC has issued final rules as required by Dodd-Frank, the Compensation Recovery Policy will be reviewed for compliance with those rules.
No Gross-Up Payments
Our Named Executive Officers are not entitled to gross-up payments with respect to their compensation.
No Repricing Absent Shareholder Approval
It is the policy of our Board that we should not reprice or swap stock options or stock appreciation rights granted to our executive officers, Directors and employees without shareholder approval.
Results of and Response to the Most Recent Say-On-Pay Vote and Frequency of Say-On-Pay Vote
Most Recent Say-On-Pay Vote. At the 2012 Annual Meeting of Shareholders, approximately 99% of the votes cast by the shareholders voted, on an advisory basis, to approve the compensation paid to the Company's Named Executive Officers in Fiscal 2011 as disclosed in the 2012 Proxy Statement pursuant to Item 402 of SEC Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion (the "2012 Say-On-Pay Vote"). The Committee and the Board believe that the 2012 Say-On-Pay Vote confirmed shareholder support for the Company's executive compensation policies and decisions. As a result, our Fiscal 2012 executive compensation policies and decision making approach remained consistent with those in Fiscal 2011, with the exception that the Committee added a "Mission Based Goals" parameter to the 2012 Senior Executive Incentive Bonus Plan.
Most Recent Frequency ofSay-On-Pay Vote. At the 2011 Annual Meeting of Shareholders, a majority of the votes cast by the shareholders voted, on an advisory basis, to hold an advisory vote to approve executive compensation annually. In line with this recommendation by the shareholders, the Board decided that it will include an advisory shareholder vote on executive compensation in its proxy materials annually until the next required advisory vote on the frequency of shareholder votes on executive compensation, which will occur no later than our 2017 Annual Meeting of Shareholders.
Role of Executive Officers in Compensation Decisions
The Committee believes that having the input of our management is important to the overall effectiveness of our executive officer compensation program. Our Chief Executive OfficerCEO and EVP Human Resources regularly attend Committee meetings (except for executive sessions) to participate in the presentation of materials and discussion of management’smanagement's point of view regarding compensation issues. Our Chief Executive OfficerCEO annually reviews and evaluates the performance of each Named Executive Officer (other than himself, as his own, whichperformance is reviewed and evaluated by the Committee). The conclusions reached and recommendations based on these reviews, including related base salary adjustments and annual incentive award amounts, are presented to the Committ ee.Committee for review and approval. The Committee can exercise its discretion in modifying any recommended adjustments orthese recommendations for compensation awards to our executive officers.
26
Use of Tally Sheets
In addition to the recommendations of our Chief Executive Officer,CEO, the Committee reviews tally sheets, which are prepared for each of our currently employed Named Executive Officers by our Human Resources Department. The tally sheets present the Committee with specific dollar amounts for all elements of compensation, showing each Named Executive Officer’sOfficer's annual total compensation, the individual’sindividual's accumulated and outstanding compensation and the benefits to which the Named Executive Officer would be entitled upon various termination events.
The Committee uses the tally sheets to compare our overall executive compensation to the overall executive compensation of our Peer Group to ensure that our compensation is reasonable and competitive. The Committee also uses the tally sheets to evaluate past performance of our Named Executive Officers to determine if our compensation strategy achieved our goals in the past and to align executive compensation with our near and long-term goals.
Benchmarking Overall Compensation; Our 2009Fiscal 2012 Peer Group
In making overall compensation decisions, the Committee compares each element of total compensation to data from Hay Group’s published surveyGroup's annual Retail Industry Total Remuneration Survey (the "Hay Group Survey") as well as a peer group of publicly-traded apparel companies listed below (collectively, the “Peer Group”"Peer Group"). The Committee initially developed the Peer Group in August 2005 in order to benchmark executive compensation at peer companies and to assess the Company’sCompany's performance relative to the Peer Group. The Peer Group is representative of companies that we compete with for business and talent and our annual sales fall within the range of the companies in the Peer Group. The Peer Group is reviewed annually and updated as needed for certain business reasons, such as merg ers,mergers, acquisitions, etc. In general, the criteria for selecting the companies in the Peer Group are as follows:
| · | U.S. based, publicly traded companies in the retail |
| · | annual sales generally between one-half and two times our annual |
| · | primarily do business in apparel and/or |
| · | companies from which key talent may be recruited. |
All of the companies in the Peer Group meet a majority of those criteria. The members of the Peer Group are as follows:
| Abercrombie & Fitch Co. | |||||
| American Eagle Outfitters, Inc. | Pacific Sunwear of California, Inc. | ||||
| Stein Mart, Inc. | |||||
| The Talbots, Inc. | |||||
| The Cato Corporation | |||||
| Hot Topic, Inc. | Urban Outfitters, Inc. | ||||
| The Men's Wearhouse, Inc. | |||||
The Peer Group provides direct incumbent information on a job title match basis (e.g., Chief Executive Officer,CEO, Chief Operating Officer, Chief Financial Officer) for key competitors. Hay Group’s annual Retail Industry Total Remuneration Survey (the “HayIn addition to reviewing the Peer Group Survey”) is used to provide an additional benchmark for our Named Executive Officers’ base salaries and annual variable pay target levels (both cash and equity). Theanalysis, the Committee considers data from fashion retailers in the Hay Group Survey, which provides compensation data on the broader retail marketplace (covering approximately 100 retail organizations, a majority ofmarket with which are specialty stores). It provideswe compete for executive talent including market data by job, controlling for differences in responsibility and revenue size.
Benchmarking Incentive-Based Compensation; Our Fiscal 2012 Performance Group
Adoption of Revised Performance Group
In their January 2012 meetings and based upon the overall compensationrecommendation of our Named Executive Officers, it usesmanagement, the companiesCommittee and the Board adopted a revised Performance Group comprised of all of the Department Stores (7 in total) and all of the Apparel Stores (18 in total) contained in the Dow Jones Apparel1500 Retail Index.
The Dow Jones 1500 Retail Index (the “Index”"Retail Index"), a separate group of apparel retailers as identified below and collectively referred to herein as our “Performance Group”, to measure our relative performance with respect to comparable store sales for purposes of the Senior Executive Incentive Bonus Plan and our total shareholder return for the purpose of awarding performance shares. The Committee selected the Index in 2007 as our Performance Group because it is representative of companies that we compete with for business, talent and investor ca pital.
DOW JONES 1500 DEPARTMENT STORE AND APPAREL INDEX
Department Store Group | Apparel Store Group | ||||
| Dillard's, Inc. | Abercrombie & Fitch Co. | ||||
| Aeropostale, Inc. | |||||
| American Eagle Outfitters, Inc. | |||||
| Macy's, Inc. | |||||
| Nordstrom, Inc. | |||||
| Ascena Retail Group, Inc. (Dress Barn) | Limited Brands, inc. | ||||
| The Buckle, Inc. | |||||
| The Cato Corporation | |||||
| Chico's FAS, Inc. | |||||
| The TJX Companies, Inc. | |||||
| The Children's Place Retail Stores, Inc. | |||||
Urban Outfitters, | |||||
Compensation Elements
In General
All of the compensation and benefits programs for our Named Executive Officers described below meet our primary purpose to recruit and retain the executive talent required to successfully manage and grow our business and to achieve our short and long-term business objectives. Beyond that, different elements are designed for different purposes. The elements of compensation for our Named Executive Officers are as follows:
| · | Base salary, perquisites and other benefits, which are designed to attract and retain executives over time; |
| · | Annual incentive (bonus) compensation, which is designed to focus executives on the business objectives established by our Board for a particular year; |
| · | Long-term incentive compensation, which consists of stock appreciation rights |
| · | Termination and change in control compensation and benefits, which are designed to facilitate our ability to attract and retain executives as we compete for talented employees in a marketplace where those types of compensatory protections are commonly offered. Termination compensation and benefits are designed to ease an |
The Committee establishes the amount and mix of base salary and variable compensation by referencing Peer Group practices for each element. The Committee does not have any specific formula for this determination. It considers factors relating to each Named Executive Officer’sOfficer's individual position and performance includingversus objectives, professional history and experience, relevant skill set, and scope of duties. In considering the total package of compensation, the Committee also considers the internal relationship of pay across all executive positions. Total compensation packages as well as each element of compensation (i.e., base salary, annual incentive
(bonus) compensation, long-term incentive compensation a ndand perquisites and other benefits) are intended to provide a competitive compensation package as compared to similarly-situated executives in similar positions at competitive companies in our Peer Group.
industry.
Base Salary
The Committee views a competitive base salary as an important component to attract and retain executive talent. Base salaries also serve as the foundation for the annual senior executive incentive (bonus) plan, which expresses the bonus opportunity as a percent of base salary. Base salary is not intended as the primary method of rewarding performance.
The Committee considers both internal equity and external competitiveness in determining the base salary of our Named Executive Officers. After consideringreceiving input from our Chief Executive Officer regarding the performance of the other Named Executive Officers, the Committee uses its judgment regarding individual performance, market competitiveness, length of service, job responsibilities and other factors to determine the appropriate base salary for each Named Executive Officer.
Annual Incentive (Bonus) Compensation
Annual incentive (bonus) compensation for our Named Executive Officers is determined each year according to a Senior Executive Incentive Bonus Plan (the “Bonus Plan”"Bonus Plan"). The current2012 Senior Executive Incentive Bonus Plan establishes an annual cash bonus amount and is paid based on the following twothree weighted parameters:
Parameter | Weight |
| Company Pre-Tax Earnings Relative to Target | |
| Comparable Store Sales Relative to Performance Group | |
| Mission Based Goals | 20% |
In Marchthe spring of each year, the Committee evaluates our annual strategic plan to determine if these financial parameters are appropriate to measure achievement of our objectives and to motivate our executive officers. Based on discussions with our Chief Executive Officer andCEO, our Chief Operating Officer and our Chief Financial Officer, the Committee recommends, and the Board approves, the financial parameters to be included in the Bonus Plan.Plan for a given year. This final approval typically occurs at the Committee’s March meeting.Committee and the Board's spring meetings. An incentive matrix establishes threshold (minimum), target and maximum performance levels for each parameterthe Pre-Tax Earnings and Comparable Store Sales parameters based on the level of perceived difficulty in achieving our financial plan. The incentive matrix clearly outli nesoutlines a minimum level of performance below which no bonus will be paid and the relationship between the twothree parameters (e.g.(i.e., Pre-Tax Earnings Relative to Target, and Comparable Store Sales Relative to Performance Group)Group and Mission Based Goals) that will generate payouts.
Annual incentive compensation targets for each Named Executive Officer under the Bonus Plan are expressed as a percentage of each Named Executive Officer’sOfficer's base salary with the target percentage increasing with job scope and complexity. The Committee can exercise discretion to reduce or increase the amount of any awards under the Bonus Plan. For additional information on our 20092012 Senior Executive Incentive Bonus Plan, and the formula used to calculate annual bonus amounts, and bonuses awarded under that plan, please see “Committee"Committee Actions in Fiscal 20092012 Concerning Named Executive Officer Compensation-AnnualCompensation-Establishment of 2012 Senior Executive Incentive (Bonus) Compensation Paid in 2009 Under the 2008 Bonus Plan”Plan" beginning on page 2733 of this Proxy Statement and "Committee Actions in 2013 Concerning Named Executive Officer Compensation-2012 Bonus Plan Awards" on page 41 of this Proxy Statement.
At its Marchspring meeting, the Committee also reviews our stated financial results for the recently completed fiscal year, certifies the calculation of proposed bonus amounts and reports them to the full Board.
Long-Term Incentive Compensation
In General. The Committee considers long-term incentive compensation (“LTI”("LTI") critical to the alignment of executive compensation with the creation of shareholder value. Our long-term equity incentive compensation awards are currently granted pursuant to our Amended and Restated 2001 Equity Incentive Plan (the “2001 Plan”"2001 Plan"), which was approved by our shareholders at our 2004 Annual Meeting, and our Second Amended and Restated 2008 Equity Incentive Plan (the “2008 Plan”"2008 Plan"), which was approved by our shareholders at our 20092011 Annual Meeting.
At its Marchspring meeting, the Committee reviews the portfolio of long-term incentive vehicles, the targeted award size and the performance measures associated with any awards. The Committee also reviews recommendations provided by management and Hay Group regarding LTI design. Our Board’sBoard's practice ishas been to make annual grants of equity awards, including Restricted Stock, Performance Shares, stock options SARs, restrictedand stock and performance shares,appreciation rights (SARs) upon the recommendation of the Committee at that time. For Fiscal 2012, the Company's long-term incentive program for its executive officers consisted primarily of Performance Shares and Restricted Stock and the use of SARs and stock options was discontinued except in extraordinary circumstances.
The Committee believes that the use of multiple equity vehicles balances a focus on equity-driven growth with the retention and performance aspects of restricted stock.Restricted Stock. The grant date is the same date that our Board approves the awards. The equity award is priced at the closing price on the NYSE of our common stock on that date (the “Fair"Fair Market Value”Value"). From time to time, our Board will consider making grants under other special circumstances, such as when recruiting new executive talent, upon the promotion of an executive and to retain key individuals. Any and all other grants (other than the March grants) are effective as of the date of the event (e.g., new hire or promotion date) and are priced at the Fair Market Value of our common stock on that date.
Restricted Stock. Restricted Stock Options. Stock options represent the right to purchaseis a share of our common stock at a fixed price (the exercise price) for a specified period of time (the option term). The exercise price isthat has vesting restrictions tied to continued employment. Restricted Stock provides executive officers with the Fair Market Valueopportunity to earn full value shares of our common stockstock. The Committee views Restricted Stock as an excellent mechanism to align executive interests with those of shareholders by supporting increased share ownership for key executives. Restricted Stock is also an effective employee retention tool based on the datevesting schedule which occurs over a period of grant. The executive officer benefits only if our stock value appreciates fromseveral years. Depending on the grant date through the exercise date. In 2009, we did not grant stock options to any executive officers, but we have granted them in past years.
Performance Shares. As with Restricted Stock, Performance Shares provide executive officers with the opportunity to earn full value shares of our stock. However, a three-year performance cycle (the "Performance Cycle") is established at the beginning of each grant and the amount of the award is determined by our performance on total shareholder return relative to the Performance Group over the Performance Cycle. If an executive officer's employment is terminated for any reason other than death, retirement or disability before the end of the Performance Cycle, the Performance Share award is forfeited. If an executive officer's employment is terminated due to death, retirement or disability during the Performance Cycle, he or she will receive the target number of shares set forth in his or her Performance Share Award Agreement within thirty days of the triggering event. In the event of a Change in Control, the Target Number of Performance Shares will immediately vest and will be payable to the executive officer within thirty days of the Change in Control. The Committee views Performance Shares as that terma critical link between management compensation accumulation and the creation of shareholder value.
Stock Appreciation Rights ("SARs"). Although beginning in Fiscal 2012 the use of SARs was discontinued except in extraordinary circumstances, the following narrative is definedprovided because some of our Named Executive Officers hold SARS granted them prior to Fiscal 2012 as indicated in the "2012 Outstanding Equity Awards at Fiscal Year-End Table" beginning on page 49 of this Proxy Statement, the "2012 Option Exercises and Stock Vested Table" beginning on page 52 of this Proxy Statement all stock options will immediately vestand as referenced in "Potential Payments Upon Termination or Change In Control" beginning on page 54 of this Proxy Statement
SARs have a seven-year term and vest either (i) one-fourth (25%) on each of the first, second, third and fourth anniversaries of the date of the grant, or (ii) one-half (50%) on the second year and one-fourth (25%) on each of the third and fourth anniversaries of the date of the grant. If an executive officer dies, unvested SARs will immediately
30 vest and the executive officer's estate will have one year from the date of death to exercise all SARs. If an executive officer's employment is terminated by reason of retirement or disability (retirement as determined by our Board), unvested SARs will immediately vest and he or she will normally have one year from the date of termination to exercise all SARs. Upon the termination of an executive officer's employment for reason other than death, retirement or disability, the executive officer will have sixty days from the date of termination to exercise all vested SARs. |
Benefits and Perquisites
The Committee supports a compensation philosophy for our Named Executive Officersexecutive officers that is more heavily weighted toward annual and long-term performance-based compensation rather than toward benefits and perquisites.
The perquisites and other benefits we provide our Named Executive Officers are summarized in the 20092012 Summary Compensation Table, the 20092012 All Other Compensation Table and the 20092012 Nonqualified Deferred Compensation Table, including footnotes.footnotes, in this Proxy Statement. In addition, we provide our executive officers with core benefits available to all full-time employees (e.g., coverage for medical, dental, prescription drugs, basic life insurance and long-term disability coverage) as well as a supplemental Executive Officer Medical Plan. The supplemental Executive Officer Medical Plan is an insured plan which provides current officers at the Executive Vice President level and above reimbursement for medical and dental out of pocket expenses that are not covered by the underlying medical plan. Typical payments are for deductibles, co-pays and similar expenses.
Retirement Plans
Termination and Change Inin Control Arrangements
In General. Pursuantto theiremployment agreements, our Named Executive Officers are entitled to compensation and other benefits if their employment terminates or if there is a Change in Control, as described beginning on page 44 54of this Proxy Statementunder & #8220;Potential"Potential Payments upon Termination or Change In Control”in Control". TerminationTermination and Change in Control compensation and other benefits are established at the time a Named Executive Officer signs an employment agreement.
Termination. Our Named Executive Officers are entitled to compensation and other benefits in an amount the Committee believes is appropriate, taking into account the time it is expected to take a terminated employee to find another job. Compensation and other benefits upon termination are intended to ease the consequences to an employee of an unexpected termination of employment. We benefit in that the employment agreements contain restrictive covenants that continue for a period of time following termination.
Change in Control-In General. The Committee and our Board recognize the importance to us and our shareholders of avoiding the distraction and loss of key management personnel that may occur in connection with any rumored, threatened or actual Change in Control of the Company. To that end, the Committee and our Board believe that properly designed Change in Control provisions in our Named Executive Officer’sOfficer's employment agreements protect shareholder interests by enhancing executive focus during rumored or actual Change in Control activity through:
| · | incentives to remain with us despite uncertainties while a transaction is under consideration or |
| · | assurances of severance and other benefits in the event of |
| · | immediate vesting of equity elements of total compensation after a Change in Control. |
To diminish the potential distraction due to personal uncertainties and risks that inevitably arise when a Change in Control is rumored, threatened or pending, the Committee and our Board have provided our Named Executive Officers with what the Committee and our Board determined to be competitive Change in Control compensation and benefit provisions in their employment agreements. The employment agreements of our Named Executive Officers provide for specific enhanced payments and benefits in the event of a Change in Control.
Change in Control-Double Trigger. The enhanced termination benefits payable in connection with a Change in Control require a “double trigger”"double trigger" which means that (a)(i) if a Change in Control occurs, and (b)(ii) during the period beginning three (3)six (6) months before the Change in Control and ending twenty-four (24) months after the Change in Control, (at any time in the case of Mr. Maloney and Mr. Lucas), (i)(a) an executive officer’sofficer's employment agreement is terminated by us or our successor without good cause, or (ii)(b) the executive officer’sofficer's employment agreement is terminated by the executive officer with good reason, the executive officer will be eligible for the Change in Control compensation and benefits. A double trigger was selected in order to enhance the likelihood that an executive officer will remain with us after a Change in Control, since the executive officer will not receive the change in control compensation payments and benefits if he or she voluntarily resigns after the Change in Control event. Thus, the executive officer is protected from actual or constructive dismissal for twenty-four months after a Change in Control, while any new controlling party or group is better able to retain the services of a key corporate asset.
Committee Actions in Fiscal 20092012 Concerning Named Executive Officer Compensation
In General
At its March 20092012 meeting, the Committee reviewed the market data and analyses provided by Hay Group and determined that our overall compensation program is reasonably competitive and consistent with the Committee’sCommittee's compensation objectives. In determining compensation for our Named Executive Officers for Fiscal 2009,2012, the Committee considered many factors, including:
| · | our |
| · | assessment of the individual executive |
| · | the nature and scope of the executive |
| · | desired competitive positioning of compensation; and |
| · |
| retention needs. |
The Committee also considered the compensation practices and performances of our Peer Group and our Performance Group.
Executive | 2008 Base Salary | 2009 Base Salary | Base Salary Increase |
| Mr. Hall | $650,000 | $750,000 | 0% (1) |
| Mr. Record | $460,000 | $460,000 | 0% |
| Mr. Maloney | $475,000 | $475,000 | 0% |
| Mr. Cruse | $375,000 | $375,000 | 0% |
| Mr. Lucas | $345,000 | $345,000 | 0% |
| Executive | Performance Shares at Target (1) | SARs (2) | |||
| Mr. Hall | 30,000 | 100,000 | |||
| Mr. Record | 15,000 | 45,000 | |||
| Mr. Maloney | 15,000 | 45,000 | |||
| Mr. Cruse | 10,000 | 30,000 | |||
| Mr. Lucas | 6,000 | 18,000 |
| Percentile Ranking of Performance Group | Performance Shares Earned * | |
| 100% | 200% | |
| 75% | 150% | |
| 50% | 100% | |
| 25% | 25% | |
| <25% | 0% |
| Executive (1) | Target Shares (Split Adjusted) | Performance Attainment % | Payout Shares Earned |
| Mr. Cruse | 7,500 | 111.2 | 8,340 |
| Mr. Lucas | 4,500 | 111.2 | 5,004 |
Base Salaries
Based on Mr. Hall’stheir performance during the 2009 fiscal year, in the case of Mr. Hall, and the input of Mr. Hall, in his capacity as our Chief Executive Officer, with respect to the individual performance of the other Named Executive Officers during the 2009 fiscal year,Fiscal 2011, and with input from Hay Group with respect to market salary data of our Peer Group, the Committee recommended, and the Board approved, the following base salaries for theour Named Executive Officers for fiscal 2010. Unless otherwise indicated,Fiscal 2012. The base salaries were adjusted effective April 1, 2010.2012.
FISCAL 2012 BASE SALARIES
Executive/Title | 2009 Base Salary | 2010 Base Salary | Base Salary Increase |
| Mr. Hall | $750,000 | $800,000 | 6.7% |
| Mr. Record (1) | $460,000 | $550,000 | 19.6% |
| Mr. Maloney (2) | $475,000 | $550,000 | 15.8% |
| Mr. Cruse (3) | $375,000 | N/A | N/A |
| Mr. Lucas | $345,000 | $357,100 | 3.5% |
Executive | 2011 Base Salary | 2012 Base Salary | Base Salary Increase |
| Mr. Glazer (1) | N/A | $850,000 | N/A |
| Mr. Hall (2) | $850,000 | N/A | N/A |
| Mr. Shein | $350,000 | $355,000 | 1.43% |
| Mr. Record | $572,000 | $585,000 | 2.27% |
| Mr. Lawrence (3) | N/A | $560,000 | N/A |
| Mr. Searles | $450,000 | $450,000 | N/A |
| (1) | As Mr. Glazer became our President and Chief Executive Officer on an interim basis on March 28, 2012 at a base salary of $850,000, which was the same as Mr. Hall's base salary prior to his resignation. Mr. Glazer's base salary was not adjusted thereafter. |
| Mr. |
| (3) | Mr. Lawrence joined the Company on |
The Committee believes that the salaries of our Named Executive Officers are competitive though the Hay Group Survey (the "Survey") indicates some to be below the Survey median. There is a wide range of companies in terms of revenue and market capitalization in the Survey. Additionally, job responsibilities sometimes vary from company to company despite similar job titles.
Establishment of 2012 Senior Executive Incentive Bonus Plan
At its March 2012 meeting, the Committee recommended, and the Board approved, the parameters for the 2012 Senior Executive Incentive Bonus Plan (the "2012 Bonus Plan") and approved the annual cash incentive opportunities for the Named Executive Officers for Fiscal 2012 as set forth in the table below. The methodology and measurement parameters for the 2012 Bonus Plan were changed from the 2011 Bonus Plan in that (i) the weighting of the Pre-Tax Earnings Parameter was decreased from 66 2/3% under the 2011 Bonus Plan to 60% under the 2012 Bonus Plan (ii) the weighting of the Comparable Store Sales Parameter was decreased from 33 1/3% under the 2011 Bonus Plan to 20% under the 2012 Bonus Plan and (iii) a new parameter (Mission Based Goals) was added with a weighting of 20%.
2012 BONUS PLAN PARAMETERS
While the methodology and measurement parameters for the 2012 Bonus Plan were unchanged from the 2011 Bonus Plan except for the weighting described above and the addition of a Mission Based Goals parameter, the Pre-Tax Earnings Target Level was decreased from $71,200,000 under the 2011 Bonus Plan to $53,600,000 under the 2012 Bonus Plan (an increase of 13.4% over actual Fiscal 2011 Pre-Tax Earnings) to provide a realistic target based on Fiscal 2011 actual performance and market conditions. The 2012 Bonus Plan design is as follows:
Pre-Tax Earnings Parameter
This parameter of the bonus formula is weighted to determine sixty percent (60%) of the year-end bonus amount earned. Actual bonus payment will be prorated for Pre-Tax Earnings results between the Maximum and Threshold levels.
Fiscal 2012 Pre-Tax Earnings | ||
| Minimum (Threshold) bonus amount will be paid at | $50,900,000 | 5% Below Target |
| Target bonus amount will be paid by achieving Fiscal 2012 Pre-Tax Earnings at an increase of 13.4% vs. actual Fiscal 2011 Pre-Tax Earnings. | $53,600,000 | Target Level |
| Maximum bonus amount will be paid at 2 times Target by achieving Fiscal 2012 Pre-Tax Earnings at 110% of Target Level, an increase of 24.8% vs. actual Fiscal 2011Pre-Tax Earnings. | $59,000,000 | 10% Above Target |
Comparable Store Sales Parameter
This parameter of the bonus formula is weighted to determine twenty percent (20%) of the year-end bonus amount earned. Measurement is based on fiscal year-end comparable store sales percent change, compared to our Performance Group. Notwithstanding, in order to earn any portion of the Comparable Store Sales bonus payment, the Company must achieve 75% of the 2012 Pre-Tax Earnings Target level ($53,600,000). Actual bonus payment will be prorated for results between the Maximum and Threshold levels.
| Threshold bonus amount (1/4 of Target) will be paid if our ranking of total year-end comparable store sales change is at the twenty-fifth percentile among our Performance Group, provided that 2012 Pre-Tax Earnings are $40,200,000 or higher. |
| Target amount will be paid if our ranking for total year-end comparable store sales change is at the fiftieth percentile (or middle mark) among our Performance Group. |
| Maximum amount (2 times Target) will be paid if our ranking of total year-end comparable store sales change is at the one-hundredth percentile (or highest rank) among our Performance Group. |
Mission Based Goals Parameter
Each senior executive officer established (jointly with our CEO and/or our COO) four to six specific objectives ("Mission Based Goals") related to their area of responsibility which supports the Company's Fiscal 2012 Financial Plan. In most cases, the majority of the Mission Based Goals were based on Fiscal 2012 financial results (e.g., total sales, comparable store sales, earnings, gross profit, SG&A expenses) and therefore the measurement of their achievement is quantifiable. Some Mission Based Goals were based on Fiscal 2012 operational results (e.g., net store growth, expansion of Steele's, expansion of eCommerce) and therefore the measurement of their achievement is also objective. A limited number of Mission Based Goals require a degree of management judgment to determine if they were achieved. These Mission Based Goals were reviewed by the CEO and the Committee to determine actual achievement. This parameter is weighted twenty percent (20%) of each executive's Target bonus amount.
Potential 2012 Bonus Plan Awards
Depending on our Pre-Tax Earnings, our ranking among our Performance Group with respect to total year-end Comparable Store Sales, and the extent to which they achieve their Mission Based Goals, our Named Executive Officers had the opportunity to earn bonuses under the 2012 Bonus Plan as follows, with actual bonus payment to be prorated for results between the Maximum and Threshold levels:
POTENTIAL 2012 BONUS PLAN AWARDS
Executive | Base Salary($) | Bonus Range % (1) (Threshold/Target/Maximum) | Bonus Range $ (2) (Threshold/Target/Maximum) | |||||||
| Mr. Glazer | 850,000 | 45% - 100% - 200% | $382,500 - $850,000 - $1,700,000 | |||||||
| Mr. Hall (3) | 850,000 | 9.4% - 20.8% - 41.5% | $79,900 - $176,800 - $352,750 | |||||||
| Mr. Shein | 355,000 | 22.5% - 50% - 100% | $79,875 - $177,500 - $355,000 | |||||||
| Mr. Record | 585,000 | 31.5% - 70% - 140% | $184,275 - $409,500 - $819,000 | |||||||
| Mr. Lawrence | 560,000 | 31.5% - 70% - 140% | $176,400 - $392,000 - $784,000 | |||||||
| Mr. Searles | 450,000 | 27% - 60% - 120% | $121,500 - $270,000 - $540,000 | |||||||
_________________________
| (1) | Percentage of base salary. |
| (2) | Amount to be paid depends upon the extent to which the Company achieves Fiscal 2012 Pre-Tax Earnings and Comparable Store Sales parameters established by the Board and the executive officer achieves the Mission Based Goals established by the executive officer (jointly with our CEO and/or our COO). Actual bonus payments will be prorated for Fiscal 2012 Pre-Tax Earnings and Comparable Store Sales results between the Threshold and Maximum levels. |
| (3) | Mr. |
Executive | Bonus Award | % of 2009 Base Salary |
| Mr. Hall | $408,000 | 54.4% |
| Mr. Record | $203,300 | 44.2% |
| Mr. Maloney | $193,800 | 40.8% |
| Mr. Cruse | $127,500 | 34.0% |
| Mr. Lucas | $117,300 | 34.0% |
Plan.
Long-Term Incentive Compensation Awards
At its March 2012 meeting, the Committee (i) reviewed the final Total Shareholder Return ("TSR") results for the three year performance cycle that ended on January 28, 2012 for the March 2009 Performance Based Restricted Share Grants for Senior Executives, (ii) discussed the attainment level based on our TSR results versus our Performance Group, (iii) reviewed the current standing and attainment levels for LTI grants made in March 2010 and March 2011 based on the TSR matrix of our Performance Group, (iv) discussed individual LTI grants for senior management executives recommended by management, (v) reviewed estimated shares needed for 2012 awards, and (vi) reviewed shares available for future grants. To determine the size of each equity award, the
Committee reviewed market data, prior years' long-term equity incentive (“LTI”("LTI") decisions, the performance of the Named Executive Officers and recommendations from Hay Group.
Based upon the recommendation of the Committee and the approval of the Board, the following LTI awards were granted to the Named Executive Officers on March 28, 2012, or as otherwise indicated by footnote, in consideration of their 20092011 performance andand/or as incentive for their future performance:
2012 LTI AWARDS
| Executive | Performance Shares (1) | Stock Appreciation Rights (2) |
| Mr. Hall | 25,000 | 100,000 |
| Mr. Record | 20,000 | (3) |
| Mr. Maloney | 20,000 | (3) |
| Mr. Lucas | 6,000 | 18,000 |
Executive | Target Performance Shares (55%)(1) | Restricted Stock (45%)(2) |
| Mr. Glazer (3) | 73,333 | 93,333 |
| Mr. Hall (4) | N/A | N/A |
| Mr. Shein | 10,000 | 8,200 |
| Mr. Record | 20,800 | 17,000 |
| Mr. Lawrence (5) | 36,667 | 50,000 |
| Mr. Searles | 10,000 | 8,200 |
| (1) | The Performance Shares cliff vest after a three-year measurement performance cycle (the |
| Percentile Ranking of Performance Group | Performance Shares Earned * | |
| 100% | 200% | |
| 75% | 150% | |
| 50% | 100% | |
| 25% | 25% | |
| < 25% | 0% |
| * As a percentage of Target Performance Shares shown in the 2012 LTI Awards table above. |
| (2) | The Restricted Stock |
| (3) | On April 19, 2012, the first day of his employment as President and |
| (4) | Mr. Hall resigned on March 28, 2012. Therefore, he was not granted any equity awards. |
| (5) | On April 30, 2012, the first day of his employment as Chief Merchandising Officer, Mr. Lawrence was granted 50,000 shares of Restricted Stock. 30,000 shares of Restricted Stock will vest on a pro rata basis over four years (i.e., 25% per year) from the date of grant. 20,000 additional shares of Restricted Stock will also vest on a pro rata basis over four years (i.e., 25% per year) from the date of grant and are associated with a 2-year non-compete agreement. |
Performance Shares Earned in 2012 Upon Completion of the 2009 Performance Cycle
As the performance criteria for the three-year Performance Cycle that began on the first day of our 2009 Fiscal Year (February 1, 2009) and ended on the last day of our 2011 Fiscal Year (January 28, 2012) (the "2009 Performance Cycle") were met, the Named Executive Officers who were granted Performance Shares at the beginning of the 2009 Performance Cycle were issued shares of our common stock at 37.5% attainment of the Target Shares as follows:
Target Shares | Payout | ||||||||
Executive (1) | Target # Shares | Target $ Shares (2) | Performance Attainment | # Shares Earned | $ Shares Earned (3) | ||||
| Mr. Hall | 30,000 | $381,900 | 37.5% | 11,250 | $185,512 | ||||
| Mr. Record | 15,000 | $190,950 | 37.5% | 5,625 | $92,756 | ||||
____________________________
| (1) | Messrs, Glazer, Shein, Lawrence and Searles were not employed by the Company at the beginning of the 2009 Performance Cycle; therefore, they were not entitled to receive Performance Shares as a result of the completion of the 2009 Performance Cycle. |
| (2) | Based on the fair value ($12.73) of the shares on the grant date. |
| (3) | Based on the average of the high and low market price ($16.49) of our common stock on the date of issuance. |
Significant Events Related to the Employment of our Named Executive Officers
Resignation of Andrew Hall
On March 28, 2012, Andrew Hall resigned as President and Chief Executive Officer of the Company to pursue other interests. Mr. Hall joined the Company in February 2006 as President and Chief Operating Officer and assumed the position of President and Chief Executive Officer in November 2008. Please see "Transactions with several perquisites, including automobile allowances, estate planning allowances and cell phone allowances, as reflected in the All Other Compensation column in the 2009 Summary Compensation TableRelated Persons-Andrew Hall" on page 36 and in the 2009 All Other Compensation Table on page 3719 of this Proxy Statement. These perquisites have historically been offered
Appointment of Michael Glazer as President and Chief Executive Officer
On March 28, 2012, Mr. Glazer, then a meansDirector of providing additional compensationthe Company, was appointed to the Namedposition of President and Chief Executive Officers throughOfficer on an interim basis. On April 19, 2012, he was appointed to the availabilityposition of benefits that provide convenience in lightPresident and Chief Executive Officer on a permanent basis. Mr. Glazer remains a Director.
Appointment of Steven Lawrence as Chief Merchandising Officer
On April 23, 2012, Steven Lawrence was appointed Chief Merchandising Officer.
Entry Into Employment Agreements
On June 12, 2012, we entered into an Employment Agreement with Mr. Glazer. On July 23, 2012, we entered into an Employment Agreement with Mr. Lawrence. A brief description of the extraordinary demandsterms and conditions of the Employment Agreements is found under "Executive Officer Employment Agreements" on our executive officers’ time. Atpage 42 of this Proxy Statement.
Discontinuation of SARS; Emphasis on Restricted Stock and Performance Shares
In their March 2010January 2012 meetings, the Committee and the Board reviewed our policiesdecided to discontinue the use of SARs from the equity plan mix except in extraordinary circumstances. The Committee and the Board's target structure will be to award 45% of a given equity grant in Restricted Stock with a four year pro rata vesting (i.e., 25% per year) and the remaining 55% in Performance Shares based on the Performance Group then in place. The Committee's compensation consultant will be asked to collect competitive stock grant (dollar value) information to guide the Committee and the Board with respect to perquisites to consider whether the perquisitesmagnitude of the equity award that should be maintainedgranted to the Named Executive Officers.
Senior Executive Incentive Bonus Plan; Mission Based Goals
In their January 2012 meetings, the Committee and whether,the Board decided that, unlike in Fiscal 2011 and to what extent, it mayprior years, in Fiscal 2012 the Named Executive Officers and other key senior executives would be appropriatetasked with specific business goals ("Mission Based Goals"), which will account for us to discontinue particular perquisites or to require repaymenta portion of their bonus opportunity within the Senior Executive Incentive Bonus Plan. Historically, a cash bonus under a Senior Executive Incentive Bonus Plan was awarded based only on the achievement of the cost of perquisites.full year Pre-Tax Earnings Targets and Comparable Store Sales. The Committee and the Board believe these parameters are important and that they should remain for at least half of the cash bonus earnings opportunity for the Named Executive Officers and other members of senior management. However, the Committee and the Board also believe that they can focus our executive officers and other members of senior management on accomplishing key business objectives within the given fiscal year which can support increased profits and shareholder return over a period of years.
Adoption of Revised Performance Group
In January 2012, our Board adopted a revised Performance Group for Fiscal 2012 to measure the Company's relative performance with respect to comparable store sales for purposes of the Senior Executive Incentive Bonus Plan and the Company's total shareholder return for the purpose of awarding Performance Shares. Please see "Key Considerations in Setting Compensation-Adoption of Revised Performance Group" on page 27 of this Proxy Statement.
South Hill Consolidation
On February 8, 2013, our Board committed the Company to consolidate its South Hill, Virginia regional operations ("South Hill") into its Houston, Texas corporate headquarters effective February 11, 2013 (the "South Hill Consolidation"). The South Hill Consolidation and subsequent South Hill office closure is expected to be completed by the middle of 2013 and will result in the elimination of approximately 180 South Hill-based positions, including that of Mr. Searles, who, due to the nature of his current position as President and Chief Operating Officer of the South Hill Division, will not be offered a position at the Company's Houston headquarters. Mr. Searles will receive a severance package, outplacement counseling services and other benefits. Please see "Potential Payments Upon Termination or Change in Control-Payments made Upon Termination Without Good Cause or by the Executive For Good Reason" on page 55 of this Proxy Statement.
Committee Actions in Fiscal 2013 Concerning Named Executive Officer Compensation
Fiscal 2012 Overview
Strategy. The Company's strategy for Fiscal 2012 was to build on its Fiscal 2011 achievements and strategic initiatives and to pursue meaningful sales and earnings growth. Reflecting the successful implementation of its business strategy, the Company achieved the following results in Fiscal 2012:
Financial Results
| · | Total sales for the year increased 8.9% to $1.65 billion, the highest in the Company's history. |
| · | Comparable store sales increased 5.7%, the highest since 2001. |
| · | Gross profit margin was 27.9% (50 basis points better than Fiscal 2011). |
| · | Selling, general and administrative expense was 50 basis points better than Fiscal 2011. |
| · | Earnings per diluted share was $1.19 versus $0.92 in Fiscal 2011, an increase of 29%. Excluding one-time adjustments, earnings per share was $1.33 (a 45% increase), the highest earnings per share in the Company's history. |
| · | Direct-To-Consumer sales increased by $9.1 million to $23.1 million, an increase of 65% over Fiscal 2011. |
| · | In its second full year, the Company's eCommerce platform, which is part of Direct-to-Consumer sales, produced sales of $17.0 million, an increase of $8.7 million (104%) from Fiscal 2011. |
| · | The Company operated throughout the year as a financially sound company. As of year end, the Company had $6.0 million in borrowings on its $250.0 million senior secured revolving credit facility and had cash, net of debt, of approximately $5.6 million. |
| · | For the one-year period ended February 2, 2013, the Company had a total shareholder return ("TSR") of 51.46%, including the reinvestment of dividends. Over the three-year period ended February 2, 2013, annualized TSR was 83.15%, including the reinvestment of dividends. |
Operational Results
| · | The Company opened 25 traditional stores and 31 Steele's stores and had a net increase of 51 stores, growing from 813 stores in 40 states to 864 stores in 40 states. |
| · | The Company added 11 Estee Lauder and 8 Clinique counters throughout the year, which helped drive a comparable store sales increase of 6.8% in cosmetics. |
| · | The Company expanded its eCommerce business in 2012 and increased the number of offerings on its eCommerce website. |
| · | The Company strengthened its management team with the addition of Michael Glazer, as President and CEO, Steve Lawrence, as Chief Merchandising Officer, and Bill Gentner, as Chief Marketing Officer, and with the promotion of Russ Lundy to Executive Vice President, Stores. |
| · | The Company entered into an Amended and Restated Private Label Credit Card Plan Agreement. |
CEO Fiscal 2012 Performance and Compensation
The Committee focuses much of its time on CEO and senior executive compensation to assure that it reflects operating and financial performance and demonstrates our commitment to enforcing a strong pay for performance philosophy.
Mr. Glazer and the management team responded to the economic and market conditions in Fiscal 2012 by agreeing to and successfully implementing, a top-line growth focused business strategy. Mr. Glazer, in part through his significant retail experience and expertise and his understanding of the Company by virtue of his service as a Director since 2001, has added tremendous value to the Company. As a result, the Company achieved the results set forth in "Fiscal 2012 Overview", above.
Mr. Glazer's Mission Based Goals and the extent to which he met those Mission Based Goals are reflected in the following table:
Mission Based Goal | Result |
| Achieve specified same store sales growth | Exceeded maximum goal |
| Achieve specified gross margin rate | Exceeded target goal |
| Further develop management placement and succession planning | Exceeded maximum goal |
| Achieve specified unit growth in the department store model | Achieved threshold goal |
Cultivate and foster the development of the Steele's off price model and achieve Steele's specified new unit growth | Exceeded target goal |
The Committee believes that Mr. Glazer performed very well in Fiscal 2012 by executing the Company's Fiscal 2012 strategy and by delivering a very strong financial and operational performance. As a result of Mr. Glazer's performance in Fiscal 2012 and as an incentive for future performance,
| · | he earned and was paid a bonus of $1,488,945 under our 2012 Bonus Plan; |
| · | his base salary was increased from $850,000 to $950,000 effective April 1, 2013; |
| · | he was granted 39,600 Performance Shares and 32,400 shares of Restricted Stock on April 4, 2013; and |
| · | his target bonus percentage (100%) under the 2013 Senior Executive Incentive Bonus Plan is the same as it was under 2012 Bonus Plan. |
Other Named Executive Officers Fiscal 2012 Performance and Compensation
Andrew Hall. Although Mr. Hall resigned on March 28, 2012, pursuant to the terms of his Separation Agreement he was eligible to participate in the 2012 Senior Executive Bonus Plan, but on a pro rata basis (i.e., 11 weeks out of 53 weeks). In April of 2013, he was paid a bonus of $316,489.
Oded Shein. As Chief Financial Officer, Mr. Shein's responsibilities were to oversee the Company's finance functions, which include accounting, tax, treasury, financial planning and analysis, private label credit card program, loss prevention and investor relations. He was instrumental in the Company's fiscal management and the achievement of growth objectives. His financial expertise has added tremendous value to the Company.
Mr. Shein's Mission Based Goals and the extent to which he met those Mission Based Goals are reflected in the following table:
Mission Based Goal | Result |
| Achieve specified same store sales growth | Exceeded maximum goal |
Continue to manage and strengthen the balance sheet and cash flow to support Company objectives | Did not meet threshold goal |
| Manage investor relations process and expand analyst coverage | Achieved maximum goal |
| Manage SG&A expenses within targeted levels | Did not meet threshold goal |
| Manage a successful private label credit card re-bid | Exceeded maximum goal |
The Committee believes that Mr. Shein performed very well in Fiscal 2012. As a result of Mr. Shein's performance in Fiscal 2012 and as an incentive for future performance,
| · | he earned and was paid a bonus of $308,318 under our 2012 Bonus Plan; |
| · | his base salary was increased from $355,000 to $370,000 effective April 1, 2013; |
| · | he was granted 7,700 Performance Shares and 6,300 shares of Restricted Stock on April 4, 2013; and |
| · | his target bonus percentage (50%) under the 2013 Senior Executive Incentive Bonus Plan is the same as it was under the 2012 Bonus Plan. |
Edward Record. As Chief Operating Officer, Mr. Record's responsibilities were to (i) oversee real estate and store construction and (ii) oversee the Company's finance, information technology, internal audit, logistics, risk management and legal functions. He was instrumental in the Company's achievement of growth objectives including the increase of 51 net new stores in Fiscal 2012. He was also instrumental in the continued growth of the Company's eCommerce platform and the expansion of Steele's in Fiscal 2012.
Mr. Record's Mission Based Goals and the extent to which he met those Mission Based Goals are reflected in the following table:
Mission Based Goal | Result |
| Achieve specified same store sales growth | Exceeded maximum goal |
| Develop succession plans for key executives | Exceeded maximum goal |
Achieve specified unit growth in the department store model and the Steele's off price model | Achieved threshold goal for department stores Exceeded target goal for Steele's store. |
| Achieve specified sales in eCommerce | Exceeded target goal |
| Manage a successful private label credit card re-bid | Exceeded maximum goal |
The Committee believes that Mr. Record performed very well in Fiscal 2012. As a result of Mr. Record's performance in Fiscal 2011 and as an incentive for future performance,
| · | he earned and was paid a bonus of $732,186 under our 2012 Bonus Plan; |
| · | his base salary was increased from $585,000 to $620,000 effective April 1, 2013; |
| · | he was granted 22,000 Performance Shares and 18,000 shares of Restricted Stock on April 4, 2013; and |
| · | his target bonus percentage (70%) under the 2013 Senior Executive Incentive Bonus Plan is the same as it was under 2012 Bonus Plan. |
Steven Lawrence. As Chief Merchandising Officer, Mr. Lawrence's responsibilities were to oversee all of the Company's merchandising strategies. He was instrumental in driving our comparable sales increase of 5.7%, exceeding our planned margin rate and bringing new brands into our store that our customers desired. Mr. Lawrence's merchandising expertise has added tremendous value to the Company.
Mr. Lawrence's Mission Based Goals and the extent to which he met those Mission Based Goals are reflected in the following table:
Mission Based Goal | Result |
| Achieve specified same store sales growth | Exceeded maximum goal |
| Achieve specified new store sales pro forma | Did not achieve threshold goal |
| Develop succession plans for key executives | Exceeded maximum goal |
| Achieve specified sales in eCommerce | Exceeded target goal |
| Achieve specified gross margin rate | Exceeded target goal |
The Committee believes that Mr. Lawrence performed very well in Fiscal 2012. As a result of Mr. Lawrence's performance in Fiscal 2012 and as an incentive for future performance,
| · | he earned and was paid a bonus of $690,704 under our 2012 Bonus Plan; |
| · | his base salary was increased from $560,000 to $620,000 effective April 1, 2013; |
| · | he was granted 22,000 Performance Shares and 18,000 shares of Restricted Stock on April 4, 2013; and |
| · | his target bonus percentage (70%) under the 2013 Senior Executive Incentive Bonus Plan is the same as it was under the 2012 Bonus Plan. |
Michael Searles. As President and Chief Operating Officer, South Hill Division, Mr. Searles' responsibilities were to oversee all of the operations of the Company's South Hill Division. He was instrumental in the South Hill Division's comparable sales, eCommerce sales, and gross margin rate results.
Mr. Searles' Mission Based Goals and the extent to which he met those Mission Based Goals are reflected in the following table:
Mission Based Goal | Result |
| Achieve specified same store sales growth | Exceeded maximum goal |
| Achieve specified new store sales pro forma | Did not achieve threshold goal |
| Achieve specified sales in eCommerce | Achieved threshold goal |
| Achieve specified gross margin rate | Achieved maximum goal |
| Develop succession plans for key executives | Exceeded maximum goal |
The Committee believes that Mr. Searles performed very well in Fiscal 2012. As a result of Mr. Searles' performance in Fiscal 2012,
| · | he earned and was paid a bonus of $478,440 under our 2012 Bonus Plan; and |
| · | his target bonus percentage (60%) under the 2013 Senior Executive Incentive Bonus Plan is the same as it was under the 2012 Bonus Plan. |
Due to the South Hill Consolidation and the fact that Mr. Searles will not be offered a position at the Company's Houston headquarters, his base salary was not increased and he was not granted Performance Shares and Restricted Stock.
At their April 2013 meetings, the Compensation Committee and the Board took the following actions with respect to the compensation of the Company's Named Executive Officers:
Base Salaries
Based on their performance during Fiscal 2012, with input from Hay Group with respect to market salary data of our Peer Group and based upon the Company's performance in Fiscal 2012, the Committee recommended to our Board, and our Board approved, the following base salaries for our currently employed Named Executive Officers in Fiscal 2013. The base salaries were adjusted effective April 1, 2013.
FISCAL 2013 BASE SALARIES
Executive | 2012 Base Salary | 2013 Base Salary | Base Salary Increase |
| Mr. Glazer | $850,000 | $950,000 | 11.8% |
| Mr. Shein | $355,000 | $370,000 | 4.2% |
| Mr. Record | $585,000 | $620,000 | 6.0% |
| Mr. Lawrence | $560,000 | $620,000 | 10.7% |
| Mr. Searles | $450,000 | $450,000 | 0% |
Based on Hay Group's analysis, it was determined that the perquisites webase salaries of our currently provide ouremployed Named Executive Officers are reasonable, competitivebelow the median of our Peer Group.
2012 Bonus Plan Awards
As our Fiscal 2012 Pre-Tax Earnings ($60.4 million) were 113% of our Fiscal 2012 Financial Plan ($53.6 million), as our ranking of total year-end comparable store sales change was at the 70th percentile, and consistent withas all of our overall executive compensation program.currently employed Named Executive Officers achieved their Mission Based Goals, in the aggregate, the following bonuses were awarded on April 4, 2013, for performance under the 2012 Bonus Plan, at 174%-179% of Target Bonus Levels:
FISCAL 2012 BONUS PLAN AWARDS
Executive | Bonus Award | % of 2012 Base Salary |
| Mr. Glazer | $1,488,945 | 175.2% |
| Mr. Shein | $308,318 | 86.9% |
| Mr. Record | $732,186 | 125.2% |
| Mr. Lawrence | $690,704 | 123.3% |
| Mr. Searles | $478,440 | 106.3% |
Although Mr. Hall resigned on March 28, 2012, pursuant to the terms of his Separation Agreement he was eligible to participate in the 2012 Bonus Plan, but on a pro rata basis (i.e., 11 weeks out of 53 weeks). He was paid a bonus of $316,489, which was 179.4% of his pro rata base salary.
Long-Term Incentive Compensation Awards
The following long-term equity incentive ("LTI") awards were granted to our currently employed Named Executive Officers on April 4, 2013 in consideration of their 2012 performance and in recognition of their critical role in the future success and long-term growth of the Company:
2013 LTI AWARDS
Executive | Performance Shares (55%)(1) | Restricted Stock (45%) (2) |
| Mr. Glazer | 39,600 | 32,400 |
| Mr. Shein | 7,700 | 6,300 |
| Mr. Record | 22,000 | 18,000 |
| Mr. Lawrence | 22,000 | 18,000 |
| Mr. Searles | N/A | N/A |
| (1) | The Performance Shares cliff vest after a three-year measurement performance cycle (the "Performance Cycle") which began on the first day of the Company's 2013 Fiscal Year (February 3, 2013) and ends on the last day of the Company's 2015 Fiscal Year (January 30, 2016). The number of Performance Shares earned will be based on the Company's total shareholder return relative to the Fiscal 2013 Performance Group. The number of shares reflected in the table above are the "Target Shares," which means the number of shares of the Company's common stock the Named Executive Officer will earn (and receive) at the end of the Performance Cycle if the Company's results are in the middle (fiftieth percentile) of the Fiscal 2013 Performance Group. |
| (2) | The Restricted Stock will vest on a pro rata basis over four years (i.e., 25% per year). |
Executive Officer Employment Agreements
We filed copies of the Section 409A Change in Control definition and defining disability as set forth in the statute, and (ii) for title, base salary and other updating as needed. The current Employment Agreements have been filed with the SECof Messrs, Glazer and are listedLawrence as Exhibits to our Annual Report on Form 10-K for Fiscal 2009. They can be reviewed on the SEC’s EDGAR
Stock Ownership by Executive Officers
Our Board believes that an officer who has reached the level of Executive Vice President or above should be a shareholder and should have a financial stake in the Company. On March 29, 2011, the Board adopted a Stock Ownership and Retention Policy for Senior Management (the "Policy"). Among the provisions of the Policy are the following:
1. Target Ownership Level. On and afterthe later of (i) the fifth anniversary of his or her appointment as an Executive Vice President or higher of the Company, or (ii) March 29, 2016 (i.e., the fifth anniversary of the effective date of the Policy)(in either case, the "Target Date"), each executive officer of the Company must have developed and must hereafter maintain a stock ownership position in the Company (the "Target Ownership Level") with a minimum value (the "Value") as follows:
| · | A Target Ownership Level for the CEO having a Value equal to three times his or her base salary; and |
| · | A Target Ownership Level for all other Executive Vice Presidents or higher having a Value equal to one times his or her base salary. |
2. Eligible Stock. In determining whether the executive officer has achieved his or her Target Ownership Level, the executive officer may include the Value of any Stock owned outright or beneficially owned (e.g., trusts) and shares held in qualified and nonqualified benefit plans, in any event acquired by him or her (i) in open market purchases, (ii) from vested Restricted Stock, (iii) from net shares held following the exercise of Stock Options and Stock Appreciation Rights, (iv) from earned Performance Shares, and (v) from the purchase of Stock in any deferred compensation plan. The executive officer may also include the share value equivalents of gains on vested but unexercised Stock Options and Stock Appreciation Rights. Individual and joint holdings of Stock with an executive officer's spouse shall count toward achieving the Target Ownership Level.
3. Determination of Stock Value. For purposes of assessing compliance with the Policy, the "Value" of Stock means the greater of (i) the then current fair market value (as defined below) of such Stock held of record by an executive officer and his or her spouse, or (ii) the value of the Stock at the time of acquisition. The Compensation Committee may, in its sole discretion, determine the value of Stock other than those referenced in Section 2 above. For purposes of this paragraph, "fair market value" will mean the closing price of the Stock on the New York Stock Exchange for such date or, if there was no trading of the Stock on such date, for the next preceding date on which they are signed and thereby become effective.there was such trading.
4.Financial Hardship. In the event of a Financial Hardship (e.g., illness, tuition, mortgage), an executive officer, with the prior written consent of the Compensation Committee, may sell Company stock acquired by him or her(such approval would not include any shares of Company stock in any Company sponsored deferred compensation plan) which was acquired to satisfy the Target Ownership Level requirement of this Policy.
The Compensation Committee monitors annual progress toward achieving the Target Ownership Levels set forth in the Policy.
Tax, Accounting and Other Implications
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a $1 million limit on the amount that a public company may deduct for compensation paid to a company’s chief executive officerthe company's CEO or any of the company’scompany's three other most highly compensated executive officers (other than the CEO)Chief Financial Officer) who are employed as of the end of the year. This limitation does not apply to compensation that meets the requirements under Section 162(m) for “qualifying performance-based”"qualifying performance-based" compensation (i.e., compensation paid only if the individual’sindividual's performance meets pre-established objective goals based on performance criteria approved by the shareholders.) The Committee’sCommittee's policy is to design compensation progra msprograms that further our best interests and those of our shareholders and that preserve the tax deductibility of compensation expenses.
Incentive bonuses paid to executive officers under our Senior Executive Incentive Bonus Plan and awards granted under our 2001 Plan and our 2008 Plan are designed to qualify as performance-based compensation. The Committee also believes, however, that it must maintain the flexibility to take actions that it deems to be in our best interests but which may not qualify for tax deductibility under Section 162(m). In this regard, if the amount of base
salary for any of our executive officers exceeds $1 million, which is not currently anticipated to be the case, any amounts over $1 million will not be deductible for federal income tax purposes.
As required under the tax rules, the Company must obtain shareholder approval of the material terms of the performance goals for qualifying performance-based compensation every five years. We last requested and received shareholder approval in 2008.at the 2012 Annual Meeting. Therefore, we are not seekingwill seek shareholder approval atagain on or before the 20102017 Annual Meeting.
Committee Considerations
The Committee considered (i) the impact of the $1 million limit on the deductibility of non-performance based compensation imposed by Code Section 162(m), (ii) the accounting treatment of various types of equity-based compensation under Financial Accounting Standards Board (“FASB”("FASB") Accounting Standards Codification (“ASC”("ASC") Topic 718, and (iii) the non-deductibility of excess parachute tax payments under Code Section 280G (and the related excise tax imposed on covered employees under Code Section 4999) in its design of executive compensation programs. In addition, the Committee considered other tax and accounting provisions in developing the compensation programs for our Named Executive Officers. These included the special rules applicable to non-qualified deferred compensation arrangements under Code Section 409A as well as the overall income tax rules applicable to various forms of compensation. While the Committee strives to compensate our Named Executive Officers in a manner that produces favorable tax and accounting treatment, its main objective is to develop fair, equitable and equitablecompetitive compensation arrangements that appropriately motivate, reward and retain those executives.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with our management. Based on that review and discussion, the Compensation Committee recommended to our Board that the Compensation Discussion and Analysis be included in the Company’sCompany's Annual Report on Form 10-K for 20092012 and in this Proxy Statement.
This Compensation Committee Report is provided by the following Independent Directors, who constitute all of the members of the Compensation Committee:
Earl J. Hesterberg (Chairman)
Alan J. Barocas
Diane M. Ellis
Lisa R. Kranc
C. Clayton Reasor
Ralph P. Scozzafava
The following table summarizes the compensation of our Named Executive Officers for our three fiscal years ended February 2, 2008 (“2013 ("Fiscal 2007”2012"), January 31, 2009 (“28, 2012 ("Fiscal 2008”2011"), and January 30, 2010 (“29, 2011 ("Fiscal 2009”2010"), with the exception of Messrs. CruseMr. Glazer and Lucas,Mr. Lawrence, who were not Named Executive Officersemployed by the Company in Fiscal 20072010 and Fiscal 2011, and Mr. Maloney,Searles, who was not a Named Executive Officeremployed by the Company in Fiscal 2007 and Fiscal 2008.2010.
| Named and Principal Position | Fiscal Year | Bonus ($) (1) | Stock Awards ($) (2) | Option Awards ($) (3) | Non-Equity Incentive Plan Compensation ($) (4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) (5) | Total ($) (6) | |||||||||||
| Salary ($) | |||||||||||||||||||
| Andrew T. Hall | 2009 | 750,000 | - | 381,900 | 402,000 | 408,000 | 34,176 | 119,744 | 2,095,820 | ||||||||||
| President and | 2008 | 675,000 | (7) | - | 849,880 | 656,740 | - | (70,936) | 101,642 | 2,212,326 | |||||||||
| Chief Executive Officer | 2007 | 634,615 | 79,625 | 529,740 | 352,000 | - | 13,279 | 118,358 | 1,727,617 | ||||||||||
| Edward J. Record | 2009 | 460,000 | - | 190,950 | 180,900 | 203,300 | 85,191 | 182,570 | 1,302,911 | ||||||||||
| Chief Operating Officer and | 2008 | 460,000 | - | 367,950 | 229,050 | - | (66,905) | 163,078 | 1,153,173 | ||||||||||
| Chief Financial Officer | 2007 | 386,154 | 52,325 | 598,800 | 614,000 | - | (2,154) | 119,599 | 1,768,724 | ||||||||||
| Richard A. Maloney | 2009 | 475,000 | - | 190,950 | 180,900 | 193,800 | 53 | 156,276 | 1,196,979 | ||||||||||
| Chief Merchandising Officer | |||||||||||||||||||
| Ernest R. Cruse | 2009 | 375,000 | - | 127,300 | 120,600 | 127,500 | 221,872 | 63,496 | 1,035,768 | ||||||||||
| Executive Vice President, | 2008 | 375,000 | - | 245,300 | 152,700 | - | (219,830) | 67,081 | 620,251 | ||||||||||
| Store Operations | |||||||||||||||||||
| Ron D. Lucas | 2009 | 345,000 | - | 76,380 | 72,360 | 117,300 | 489,208 | 66,239 | 1,166,487 | ||||||||||
| Executive Vice President, | 2008 | 345,000 | - | 147,180 | 91,620 | - | (535,046) | 64,503 | 113,257 | ||||||||||
| Human Resources | |||||||||||||||||||
| Named and Principal Position | Fiscal Year | Salary ($) | Bonus ($) (1) | Stock Awards ($) (2) | Option Awards ($) (3) | Non-Equity Incentive Plan Compensation ($) (4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) (5) | Total ($) | |||||||||
| Michael L. Glazer (6) | 2012 | 709,423 | - | 2,638,923 | - | 1,488,945 | 10,515 | 95,108 | 4,942,914 | |||||||||
| President and | 2011 | - | - | 102,562 | - | - | - | - | 102,562 | |||||||||
| Chief Executive Officer | 2010 | - | - | 102,563 | - | - | - | - | 102,563 | |||||||||
| Andrew T. Hall (6) | 2012 | 176,538 | - | - | - | 316,489 | 244,893 | 30,770 | 768,690 | |||||||||
| Former President and | 2011 | 841,346 | - | 2,207,765 | 595,265 | - | (3,519) | 175,667 | 3,816,524 | |||||||||
| Chief Executive Officer | 2010 | 791,346 | - | 496,250 | 719,000 | 630,000 | 89,709 | 150,398 | 2,876,703 | |||||||||
| Oded Shein | 2012 | 354,135 | - | 326,728 | - | 308,318 | 19,161 | 62,417 | 1,070,759 | |||||||||
| Executive Vice President, | 2011 | 350,000 | - | 161,309 | - | - | (1,086) | 142,365 | 652,588 | |||||||||
| Chief Financial Officer | 2010 | 20,192 | 200,000 | 163,100 | 222,600 | - | (16) | 22,780 | 628,656 | |||||||||
| Edward J. Record | 2012 | 582,750 | - | 678,668 | - | 732,186 | 159,792 | 83,703 | 2,237,099 | |||||||||
| Chief Operating Officer | 2011 | 568,192 | - | 981,331 | 193,353 | - | (17,156) | 116,508 | 1,842,228 | |||||||||
| 2010 | 540,442 | - | 720,500 | 587,000 | 336,875 | 90,659 | 102,774 | 2,378,250 | ||||||||||
| Steven P. Lawrence (6) | 2012 | 420,000 | - | 1,378,039 | - | 690,704 | 5,055 | 116,896 | 2,610,694 | |||||||||
| Chief Merchandising Officer | 2011 | - | - | - | - | - | - | - | - | |||||||||
| 2010 | - | - | - | - | - | - | - | - | ||||||||||
| Michael M. Searles (6) | 2012 | 450,000 | - | 326,728 | - | 478,440 | 12,939 | 95,691 | 1,363,798 | |||||||||
| President and Chief Operating Officer, | 2011 | 173,077 | 25,000 | 554,400 | - | - | - | 50,263 | 802,740 | |||||||||
| South Hill Division | 2010 | - | - | - | - | - | - | - | - |
| (1) |
| (2) | The amounts shown in this column reflect the grant date fair value for performance stock and restricted stock for the Named Executive Officers with respect to the fiscal year in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note |
45
headquarters, which is expected to be completed during the Company's 2013 Fiscal year, Mr. Includes the fair market value of a grant of 33,333 shares of Restricted Stock ($506,662) in |
| (3) | The amounts shown in this column reflect the grant date fair value for |
(4) | Non-Equity Incentive Plan Compensation (performance based cash bonus) amounts include any amounts deferred under the Executive Deferred Compensation Plan. Amounts reflect performance based bonuses earned during the fiscal year covered (and paid during the subsequent fiscal year) under the applicable Senior Executive Incentive Bonus Plan. |
| (5) | All other compensation includes deferred compensation matching contributions, auto allowances, estate planning allowances, insurance premiums and other compensation, as set forth in the |
| (6) |
| · | Mr. Glazer joined the |
| · | Mr. Hall resigned from the |
| · | Mr. Lawrence joined the |
| · | Mr. Searles joined the Company on September 12, 2011, at a base salary of $450,000. |
The following table provides information concerning the compensation of our Named Executive Officers found in the “All"All Other Compensation”Compensation" column of the 20092012 Summary Compensation Table on page 36.45 of this Proxy Statement.
| Name | Fiscal Year | Deferred Compensation Matching Contributions ($) | Auto Allowances ($) | Estate Planning Allowances ($) | Life Insurance Premiums ($) | Health Insurance Premiums ($) | Relocation Expense Reimburse- ments ($) | Tax Reimburse- ments ($) | Cell Phone Allowances ($) | Total ($) | ||||||||||
| Michael L. Glazer | 2012 | 67,060 | 9,231 | - | 6,869 | 8,110 | 2,439 | 1,399 | - | 95,108 | ||||||||||
| Andrew T. Hall | 2012 | 16,769 | 2,769 | 787 | 732 | 9,713 | - | - | - | 30,770 | ||||||||||
| 2011 | 149,336 | 12,000 | 1,395 | 2,919 | 9,777 | - | - | 240 | 175,667 | |||||||||||
| 2010 | 122,233 | 12,000 | 2,078 | 3,105 | 9,422 | - | - | 1,560 | 150,398 | |||||||||||
| Oded Shein | 2012 | 37,625 | 12,000 | - | 2,676 | 10,116 | - | - | - | 62,417 | ||||||||||
| 2011 | 37,038 | 12,000 | - | 2,446 | 8,757 | 52,190 | 29,934 | - | 142,365 | |||||||||||
| 2010 | 22,088 | 692 | - | - | - | - | - | - | 22,780 | |||||||||||
| Edward J. Record | 2012 | 60,465 | 12,000 | - | 1,337 | 9,901 | - | - | - | 83,703 | ||||||||||
| 2011 | 92,698 | 12,000 | 600 | 1,301 | 9,669 | - | - | 240 | 116,508 | |||||||||||
| 2010 | 77,284 | 12,000 | 1,298 | 1,210 | 9,422 | - | - | 1,560 | 102,774 | |||||||||||
| Steven P. Lawrence | 2012 | 42,462 | 8,769 | 7,027 | 987 | 3,525 | 34,397 | 19,729 | - | 116,896 | ||||||||||
| Michael M. Searles | 2012 | 46,965 | 12,000 | 5,000 | 6,740 | 7,653 | 10,174 | 7,159 | - | 95,691 | ||||||||||
| 2011 | 20,415 | 4,615 | - | 1,296 | 1,455 | 13,015 | 9,467 | - | 50,263 | |||||||||||
| Name | Fiscal Year | Deferred Compensation Matching Contributions ($) | Auto Allowances ($) | Estate Planning Allowances ($) | Life Insurance Premiums ($) | Health Insurance Premiums ($) | Relocation Expense Reimburse-ments ($) | Tax Reimburse-ments ($) | Cell Phone Allowances ($) | Total ($) | ||||||||||
| Andrew T. Hall | 2009 | 93,236 | 12,000 | 2,003 | 2,070 | 8,875 | - | - | 1,560 | 119,744 | ||||||||||
| 2008 | 77,654 | 12,000 | - | 2,070 | 8,358 | - | - | 1,560 | 101,642 | |||||||||||
| 2007 | 94,755 | 12,000 | - | 2,028 | 8,015 | - | - | 1,560 | 118,358 | |||||||||||
| Edward J. Record | 2009 | 48,244 | 12,000 | 1,338 | 1,041 | 8,875 | 69,595 | 39,917 | 1,560 | 182,570 | ||||||||||
| 2008 | 53,424 | 12,000 | 2,006 | 1,036 | 8,358 | 53,823 | 30,871 | 1,560 | 163,078 | |||||||||||
| 2007 | 40,049 | 8,769 | - | 506 | 4,430 | 44,653 | 20,052 | 1,140 | 119,599 | |||||||||||
| Richard A. Maloney | 2009 | 52,032 | 12,000 | 3,742 | 7,107 | 6,755 | 43,743 | 29,337 | 1,560 | 156,276 | ||||||||||
| Ernest R. Cruse | 2009 | 39,879 | 12,000 | 780 | 3,602 | 6,755 | - | - | 480 | 63,496 | ||||||||||
| 2008 | 42,774 | 12,000 | 771 | 3,612 | 6,364 | - | - | 1,560 | 67,081 | |||||||||||
| Ron D. Lucas | 2009 | 38,758 | 12,000 | 2,112 | 5,054 | 6,755 | - | - | 1,560 | 66,239 | ||||||||||
| 2008 | 39,511 | 12,000 | - | 5,068 | 6,364 | - | - | 1,560 | 64,503 |
The following table provides information concerning each grant of an award made to a Named Executive Officer in Fiscal 20092012 under any plan. Definitions of Performance Shares and Restricted Stock and SARs as used in the footnotes to this table are found in the CD&A beginning on page 1730 of this Proxy Statement.
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards (1) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Options Awards: Number of Securities Underlying Options (#) (2) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | ||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||
| Andrew T. Hall | 3/27/2009 | - | - | - | 7,500 | 30,000 | 60,000 | - | - | - | - | ||||||
| 3/27/2009 | - | - | - | - | - | - | - | 100,000 | 9.77 | 402,000 | |||||||
| Edward J. Record | 3/27/2009 | - | - | - | 3,750 | 15,000 | 30,000 | - | - | - | - | ||||||
| 3/27/2009 | - | - | - | - | - | - | - | 45,000 | 9.77 | 180,900 | |||||||
| Richard A. Maloney | 3/27/2009 | - | - | - | 3,750 | 15,000 | 30,000 | - | - | - | - | ||||||
| 3/27/2009 | - | - | - | - | - | - | - | 45,000 | 9.77 | 180,900 | |||||||
| Ernest R. Cruse | 3/27/2009 | - | - | - | 2,500 | 10,000 | 20,000 | - | - | - | - | ||||||
| 3/27/2009 | - | - | - | - | - | - | - | 30,000 | 9.77 | 120,600 | |||||||
| Ron D. Lucas | 3/27/2009 | - | - | - | 1,500 | 6,000 | 12,000 | - | - | - | - | ||||||
| 3/27/2009 | - | - | - | - | - | - | - | 18,000 | 9.77 | 72,360 | |||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | Grant Date Fair Value of Stock and Option Awards ($) (4) | ||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||
| Michael L. Glazer | 382,500 | 850,000 | 1,700,000 | - | - | - | - | - | |||||
| 4/19/2012 | - | - | - | 18,333 | 73,333 | 146,666 | - | 1,220,261 | |||||
| 4/19/2012 | - | - | - | - | - | - | 93,333 | 1,418,662 | |||||
| Andrew T. Hall | 79,900 | 176,800 | 352,750 | - | - | - | |||||||
| Oded Shein | 79,875 | 177,500 | 355,000 | - | - | - | - | - | |||||
| 3/28/2012 | - | - | - | 2,500 | 10,000 | 20,000 | - | 191,100 | |||||
| 3/28/2012 | - | - | - | - | - | - | 8,200 | 135,628 | |||||
| Edward J. Record | 184,275 | 409,500 | 819,000 | - | - | - | - | - | |||||
| 3/28/2012 | - | - | - | 5,200 | 20,800 | 41,600 | - | 397,488 | |||||
| 3/28/2012 | - | - | - | - | - | - | 17,000 | 281,180 | |||||
| Steven P. Lawrence | 176,400 | 392,000 | 784,000 | - | - | - | - | - | |||||
| 4/30/2012 | - | - | - | 9,167 | 36,667 | 73,334 | - | 614,539 | |||||
| 4/30/2012 | - | - | - | - | - | - | 50,000 | 763,500 | |||||
| Michael M. Searles | 121,500 | 270,000 | 540,000 | - | - | - | - | - | |||||
| 3/28/2012 | - | - | - | 2,500 | 10,000 | 20,000 | - | 191,100 | |||||
| 3/28/2012 | - | - | - | - | - | - | 8,200 | 135,628 | |||||
| (1) |
(2) These columns reflect Performance Shares that vest over time in an amount depending on performance criteria. The Performance Shares will vest after a three-year Performance Cycle based on the Company's total shareholder return relative to the Performance Group, as described in the CD&A. As a result of his resignation, Mr. Hall was not granted Performance Shares in Fiscal 2012.
The "Target" number of shares refers to the number of shares of our common stock the Named Executive Officer can earn (and receive) at the end of the Performance Cycle if the results are at the fiftieth percentile of the Performance Group.
The "Maximum" number of shares refers to the number of shares of our common stock the Named Executive Officer can earn (and receive) at the end of the Performance Cycle if the results are at the one hundredth percentile of the Performance Group, which is twice the Target number of shares.
(3) This column reflects Restricted Stock. Restricted stock vests ratably over a four-year period (i.e., 25% per year). As a result of his resignation, Mr. Hall is employed as President and Chief Executive Officer; Mr. Record is employed as Chief Operating Officer and Chief Financial Officer; Mr. Maloney is employed as Chief Merchandising Officer; and Mr. Lucas is employed as Executive Vice President, Human Resources.was not granted any stock awards in Fiscal 2012.
(4) The Agreements provide for a Base Salary and annual incentive (bonus) compensation. & #160;The Agreements also provide for perquisites such as an automobile allowance and a financial planning allowance and the Executive’s participation in all other bonus and benefit plans available to executive officersgrant date fair value of the Company. Provisionsperformance-based awards reflected in this column (the "Performance Shares") is the payout based on the probable outcome of the Agreements related to termination and Changeperformance criteria, determined as of the grant date. As a result of his resignation, Mr. Hall was not granted any Performance Shares in Control are discussed in “Potential Payments on Termination or Change In Control” beginning on page 44 of this Proxy Statement.
The following table provides information, on an award by award basis, concerning unexercised options,SARs, unvested restricted stock, that has not vested, and equity incentive planperformance share awards for each Named Executive Officer outstanding as of the end of Fiscal 2009.2012. As a result of his resignation, Mr. Hall forfeited all awards that had not vested as of April 12, 2012. Market value is computed using the closing market price of our common stock on January 29, 2010,February 1, 2013, the last trading day prior to the end of our last completed fiscal year ($12.92)22.96).
| Options/SARs Awards | Stock Awards | |||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options/SARs Exercisable (#) | Number of Securities Underlying Unexercised Options/SARs Unexercisable (#) (1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options /SARs (#) | Option/ SARs Exercise Price ($/Sh) | Option/ SARs Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (2) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plans Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) (3) | Equity Incentive Plans Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) | |||||||||
| Michael L. Glazer | 5,625 | - | - | 9.86 | 5/29/2013 | - | - | - | - | |||||||||
| 5,625 | - | - | 16.67 | 6/3/2014 | - | - | - | - | ||||||||||
| - | - | - | - | - | 93,333 | 2,142,926 | 73,333 | 1,683,726 | ||||||||||
| Oded Shein | 15,000 | 15,000 | - | 16.31 | 1/10/2018 | - | - | - | - | |||||||||
| - | - | - | - | - | 21,725 | 498,806 | 12,900 | 296,184 | ||||||||||
| Edward J. Record | 100,000 | - | - | 19.96 | 5/14/2014 | - | - | - | - | |||||||||
| 45,000 | - | - | 15.87 | 3/28/2015 | - | - | - | - | ||||||||||
| 33,750 | 11,250 | - | 9.77 | 3/27/2016 | - | - | - | - | ||||||||||
| 50,000 | 50,000 | - | 12.94 | 2/15/2017 | - | - | - | - | ||||||||||
| 5,562 | 16,688 | - | 18.84 | 3/29/2018 | - | - | - | - | ||||||||||
| - | - | - | - | - | 70,775 | 1,624,994 | 48,050 | 1,103,228 | ||||||||||
| Steven P. Lawrence | - | - | - | - | - | 50,000 | 1,148,000 | 36,667 | 841,874 | |||||||||
| Michael M. Searles | - | - | - | - | - | 43,200 | 991,872 | 10,000 | 229,600 | |||||||||
| Options/SARs Awards | Stock Awards | |||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options/SARs Exercisable (#) | Number of Securities Underlying Unexercised Options/SARs Unexercisable (#) (1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options /SARs(#) | Option/ SARs Exercise Price ($/sh) | Option/ SARs Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (2) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plans Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) (3) | Equity Incentive Plans Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) | |||||||||
| Andrew T. Hall | 112,500 | 37,500 | - | 18.74 | 2/20/2013 | - | - | - | - | |||||||||
| 25,000 | 25,000 | - | 22.96 | 3/28/2014 | - | - | - | - | ||||||||||
| 21,500 | 64,500 | - | 15.87 | 3/28/2015 | - | - | - | - | ||||||||||
| 25,000 | 75,000 | - | 7.07 | 11/3/2015 | - | - | - | - | ||||||||||
| - | 100,000 | - | 9.77 | 3/27/2016 | - | - | - | - | ||||||||||
| - | - | - | - | - | 30,000 | 387,600 | 56,000 | 723,520 | ||||||||||
| Edward J. Record | 50,000 | 50,000 | - | 19.96 | 5/14/2017 | - | - | - | - | |||||||||
| 11,250 | 33,750 | - | 15.87 | 3/28/2015 | - | - | - | - | ||||||||||
| - | 45,000 | - | 9.77 | 3/27/2016 | - | - | - | - | ||||||||||
| - | - | - | - | - | 10,000 | 129,200 | 30,000 | 387,600 | ||||||||||
| Richard A. Maloney | 25,000 | 75,000 | - | 11.03 | 10/6/2015 | - | - | - | - | |||||||||
| - | 45,000 | - | 9.77 | 3/27/2016 | - | - | - | - | ||||||||||
| - | - | - | - | - | 30,000 | 387,600 | 15,000 | 193,800 | ||||||||||
| Ernest R. Cruse (4) | 10,926 | - | - | 17.01 | 3/30/2012 | - | - | - | - | |||||||||
| 16,875 | 5,625 | - | 19.18 | 3/17/2013 | - | - | - | - | ||||||||||
| 11,250 | 11,250 | - | 22.96 | 3/28/2014 | - | - | - | - | ||||||||||
| 7,500 | 22,500 | - | 15.87 | 3/28/2015 | - | - | - | - | ||||||||||
| - | 30,000 | - | 9.77 | 3/27/2016 | - | - | - | - | ||||||||||
| - | - | - | - | - | - | - | 20,000 | 258,400 | ||||||||||
| Ron D. Lucas | 28,125 | - | - | 6.11 | 8/24/2011 | - | - | - | - | |||||||||
| 9,375 | - | - | 6.67 | 8/24/2011 | - | - | - | - | ||||||||||
| 112,500 | - | - | 7.22 | 8/24/2011 | - | - | - | - | ||||||||||
| 10,264 | - | - | 17.01 | 3/30/2012 | - | - | - | - | ||||||||||
| 9,000 | 3,000 | - | 19.18 | 3/17/2013 | - | - | - | - | ||||||||||
| 6,000 | 6,000 | - | 22.96 | 3/28/2014 | - | - | - | - | ||||||||||
| 4,500 | 13,500 | - | 15.87 | 3/28/2015 | - | - | - | - | ||||||||||
| - | 18,000 | - | 9.77 | 3/27/2016 | - | - | - | - | ||||||||||
| - | - | - | - | - | - | - | 12,000 | 155,040 | ||||||||||
49
(1) |
| Name | Vesting Date | |||||
| | 1/ | |||
| | 1/ | |||
| Edward J. Record | | |||
| | ||||
| 5,563 | 3/29/2013 | |||
| 25,000 | 2/15/2014 | |||
| 5,562 | 3/29/2014 | |||
| 5,563 | 3/29/2015 |
| (2) | The future vesting dates of Restricted Stock are as follows: |
| Name | Number of Restricted Stock (#) | Vesting Date | ||
| 23,333 | 4/19/2014 | |||
| 23,333 | 4/19/2015 | |||
| 23,334 | 4/19/2016 | |||
| 1,175 | 3/29/2013 | |||
| 10,000 | 1/10/2014 | |||
| 2,050 | 3/28/ | |||
| 1,175 | 3/29/2014 | |||
| 2,050 | 3/28/2015 | |||
| 1,175 | 3/29/2015 | |||
| 2,050 | 3/28/2016 | |||
| 4,250 | 3/28/2013 | |||
| 2,925 | 3/29/ | |||
| 10,000 | 4/11/2013 | |||
| 4,250 | 3/28/2014 | |||
| 2,925 | 3/29/2014 | |||
| 10,000 | 4/11/2014 | |||
| 4,250 | 3/28/2015 | |||
| 2,925 | 3/29/2015 | |||
| 4,250 | 3/28/2016 | |||
| | ||||
| Steven P. Lawrence | 12,500 | 4/30/2013 | ||
| 12,500 | 4/30/2014 | |||
| 12,500 | 4/30/2015 | |||
| 12,500 | 4/30/2016 | |||
| Michael M. Searles | 2,050 | 3/28/2013 | ||
| 5,000 | 9/12/2013 | |||
| 2,050 | 3/28/2014 | |||
| 25,000 | 9/12/2014 | |||
| 2,050 | 3/28/2015 | |||
| 5,000 | 9/12/2015 | |||
| 2,050 | 3/28/2016 |
(3) Reflects Target amount of Performance Shares, which cliff vest after a three-year Performance Cycle based on our total shareholder return relative to the Performance Group, as described in the CD&A. The performance cycle measurement dates of these Performance Shares are as follows:
| Name | Number of Performance Shares (#) | Performance Cycle Measurement Date | ||
| Michael L. Glazer | 73,333 | 1/ | ||
| Oded Shein | 2,900 | 2/1/2014 | ||
| 10,000 | 1/31/2015 | |||
| Edward J. Record | 20,000 | 2/2/2013 | ||
| 7,250 | 2/1/2014 | |||
| 20,800 | 1/31/2015 | |||
| Steven P. Lawrence | 36,667 | 1/31/2015 | ||
| Michael M. Searles | 10,000 | 1/31/2015 |
The following table provides information concerning each exerciseexercises of stock options, stock appreciation rights and similar instruments, and eachSARs, vesting of stock, including restricted stock restricted stock units and similar instruments,performance share awards earned during Fiscal 20092012 for each of our Named Executive Officers on an aggregated basis.
| Options Awards | Stock Awards | Options/SARs Awards | Stock Awards | |||||||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) (2) | Value Realized on Vesting ($) (1) | ||||||||
| Michael L. Glazer | - | - | 14,908 | 244,335 | ||||||||||||
| Andrew T. Hall | - | - | - | - | 286,000 | 1,297,982 | 36,917 | 575,186 | ||||||||
| Oded Shein | - | - | 1,175 | 19,170 | ||||||||||||
| Edward J. Record | - | - | 10,000 | (2) | 109,300 | - | - | 18,550 | 286,178 | |||||||
| Richard A. Maloney | - | - | - | - | ||||||||||||
| Steven P. Lawrence | - | - | - | - | ||||||||||||
| Ernest R. Cruse | - | - | 8,340 | (3) | 82,483 | |||||||||||
| Ron D. Lucas | - | - | 5,004 | (3) | 49,490 | |||||||||||
| Michael M. Searles | - | - | 5,000 | 109,225 | ||||||||||||
| (1) | Based on the average of the high and low market price of our common stock on the date of issuance. |
| (2) | Reflects |
| Name | Plan Name | Number of Years Credited Service (1) | Present Value of Accumulated Benefit (2) | Payments During Last Fiscal Year |
| Mr. Cruse | Stage Plan | 33 | $288,351 | - |
| Mr. Lucas | Stage Plan | 14 | $83,018 | - |
The following table provides Fiscal 20092012 information with respect to each defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified to a Named Executive Officer.
| Name | Executive Contributions in Last Fiscal Year ($) (1) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawls/ Distributions ($) | Aggregate Balance at Last FYE ($) | Executive Contributions in Last Fiscal Year ($) (1) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | ||||||||||
| Michael L. Glazer | 67,060 | 67,060 | 10,515 | - | 144,636 | |||||||||||||||
| Andrew T. Hall | 93,236 | 93,236 | 34,176 | - | 623,604 | 16,769 | 16,769 | 244,893 | 1,531,363 | - | ||||||||||
| Oded Shein | 41,388 | 37,625 | 19,161 | - | 215,610 | |||||||||||||||
| Edward J. Record | 83,685 | 48,244 | 85,191 | - | 364,591 | 158,143 | 60,465 | 159,792 | - | 1,326,504 | ||||||||||
| Richard A. Maloney | 52,032 | 52,032 | 53 | - | 147,557 | |||||||||||||||
| Steven P. Lawrence | 42,462 | 42,462 | 5,055 | - | 89,979 | |||||||||||||||
| Ernest R. Cruse | 39,879 | 39,879 | 172,513 | - | 1,348,975 | |||||||||||||||
| Ron D. Lucas | 151,565 | 38,758 | 477,395 | - | 1,944,719 | |||||||||||||||
| Michael M. Searles | 46,965 | 46,965 | 12,939 | - | 149,797 | |||||||||||||||
Retirement Benefits
Deferred Compensation Plan
We provide a deferred compensation plan (the “Deferred"Deferred Compensation Plan”Plan") that provides executives and certain officers with the opportunity to participate in an unfunded, deferred compensation program that is not qualified under the Internal Revenue Code of 1986, as amended (the “Code”"Code"). Generally the Code and the Employee Retirement Income Security Act of 1974, as amended, restrict contributions to a 401(k) plan by highly compensated employees. The Deferred Compensation Plan is intended to allow participants to defer income on a pre-tax basis. Under the Deferred Compensation Plan, participants may defer up to 50% of their base salary and up to 100% of their bonus and earn a rate of return based on actual investments chosen by each participant. We have established a grantor trust for the purposespurpose of holding assets to provide benefits to the participants. We will match 100% of each participant’sparticipant's contributions, up to 10% of the sum of their base salary and bonus.
The Named Executive Officers have the opportunity to allocate the investment of the funds in their Participant Employee Account among fourteenthirty-three investment options, including a Company Stock Investment Option. In the case of the Company Stock Investment Option, the Deferred Compensation Plan provides the opportunity for increased pre-tax shareholding.
401(k) Savings Plan
We have a contributory 401(k) savings plan (the “401(k) Plan”"401(k) Plan") covering substantially all qualifying employees. Under the 401(k) Plan, participants may contribute up to 25% of their qualifying earnings, subject to certain restrictions. We currently match 50% of each participant’sparticipant's contributions, up to 6% of each participant’sparticipant's compensation under the 401(k) Plan. We may make discretionary bi-weekly matching contributions during the year.
Frozen Defined Benefit Plan
We sponsor a defined benefit plan, which covers substantially all employees who had met eligibility requirements and were enrolled prior to June 30, 1998 (the “Stage Plan”"Stage Plan"). The Stage Plan was frozen effective June 30, 1998. OfNone of our Named Executive Officers only Messrs. Cruse and Lucas are participants in the Stage Plan. Please see the 2009 Pension Benefits Table on page 42 of this Proxy Statement for additional information concerning the Stage Plan.
In General
The tables below reflect the amount of compensation to be paid to each of our Named Executive Officers other than Mr. Cruse, in the event of termination of that executive’sexecutive's employment under different circumstances. Since he retired on March 1, 2010, information with respectcircumstances pursuant to Mr. Cruse is not provided in the tables. However,terms of their Employment Agreements. Specific information concerning the retirementresignation of Mr. CruseHall is found under “Transactions"Transactions with Related Persons”Persons-Andrew Hall" on page 1519 of this Proxy Statement and “Significant 2010under "Significant Events Related to the Employment of ourOur Named Executive Officers”Officers-Resignation of Andrew Hall" on page 3036 of this Proxy Statement.
Generally, under the post-termination arrangements described below, other than pursuant to a termination without Good Cause or by the executive for Good Reason, as defined on page 52,62 or pursuant to a Change in Control,, as defined on page 52,62, a Named Executive Officer who terminates his employment, or whose employment is terminated, is entitled to receive solely those amounts earned by the Named Executive Officer through the date of termination.
The amount of compensation payable to each Named Executive Officer upon (i) termination without Good Cause or by the executive for Good Reason, (ii) termination without Good Cause or by the executive for Good Reason after a Change in Control, (iii) termination by the Company for Good Cause or by the executive without Good Reason, (iv) retirement, (v) death or (vi) disability, is shown below. The amounts shown assume that the termination was effective as of January 30, 2010, and thus include amounts earned through that date and are estimates of the amounts that would be paid out to the executives upon their termination. The dollar value of stock-based compensation is calculated using the closing share price of our common stock on Friday, January 29, 2010, the last trading day prior to the end of Fiscal 2009, which was $12.92.February 2, 2013. The actual amounts to be paid out can only be determined at the time of the Named Executive Officer’sOfficer's separation from the Company.
Payments Made Upon Termination
Depending upon the manner in which a Named Executive Officer’sOfficer's employment terminates, he may be entitled to receive the following payments and benefits:
| · | any base salary and fringe benefits earned and unpaid through the date of termination; |
| · | severance pay equal to a multiple of the |
| · | any incentive (performance) bonus for the fiscal year in which the termination occurs pro-rated through the date of termination provided the Board determines, in good faith, that the executive would have been entitled to receive a performance bonus for the fiscal year in which the termination occurred; |
| · | continuation of medical and dental |
| · | payment for outplacement services up to a specified maximum amount; |
| · |
| payment for financial/estate planning |
| · | amounts accrued and vested through the Deferred Compensation Plan; and |
| · | vesting of outstanding stock options, SARs, |
The Named Executive Officers will not receive any compensation for any unused vacation days and upon termination of employment for any reason, any unused vacation days will be forfeited.
Payments Made Upon Termination Without Good Cause or by the Executive For Good Reason
The following table shows the amounts payable to each of our currently employed Named Executive Officers assuming that we terminated him without Good Cause or that he terminated his employment agreement for Good Reason on January 30, 2010.February 2, 2013.
| Name | Severance | Incentive Bonus ($) | Fringe Benefits ($) (1) | Max Outplacement ($) | Gross-Up ($) | Max Financial Planning ($) | Pension and Deferred Compensation ($) | Stock Options, SARs, Restricted Stock and Performance Shares ($) |
| Mr. Hall | $2.0 million | Amount earned and prorated through date of termination | $27,639 | Provided for up to 1 year with $15,000 maximum | None | None | (2) | All unvested Stock Options, SARs and Performance Shares are forfeited |
| Mr. Record | $1.1 million | Amount earned and prorated through date of termination | $18,426 | Provided for up to 1 year with $15,000 maximum | None | None | (2) | All unvested Stock Options, SARs and Performance Shares are forfeited |
| Mr. Maloney | $0.7 million | Amount earned and prorated through date of termination | $16,205 | None | None | None | (2) | All unvested Stock Options, SARs and Performance Shares are forfeited |
| Mr. Lucas | $0.5 million | Amount earned and prorated through date of termination | $16,205 | Provided for up to 1 year with $15,000 maximum | None | None | (2) | All unvested Stock Options, SARs and Performance Shares are forfeited |
| Name | Severance | Incentive Bonus ($) | Fringe Benefits ($) (1) | Max Outplacement ($) | Max Financial Planning ($) | Pension and Deferred Compensation ($) | Stock Options, SARs, Restricted Stock and Performance Shares ($) |
| Mr. Glazer | $1.7 million | Amount earned and prorated through date of termination | $34,540 | Provided for up to 1 year with $15,000 maximum | None | (2) | Immediate vesting of all Restricted Shares and pro-rated vesting of Performance Shares. |
| Mr. Shein | $0.5 million | Amount earned and prorated through date of termination | $23,026 | Provided for up to 1 year with $15,000 maximum | None | (2) | All unvested awards are forfeited. |
| Mr. Lawrence | $1.4 million | Amount earned and prorated through date of termination | $28,381 | Provided for up to 1 year with $15,000 maximum | None | (2) | All unvested awards are forfeited. |
| Mr. Record | $1.5 million | Amount earned and prorated through date of termination | $34,217 | Provided for up to 1 year with $15,000 maximum | None | (2) | All unvested awards are forfeited. |
| Mr. Searles | $0.7 million | Amount earned and prorated through date of termination | $20,535 | Provided for up to 1 year with $15,000 maximum | None | (2) | All unvested awards are forfeited. |
| (1) | The amount shown reflects the estimated premiums to be paid by the Company on behalf of the Named Executive Officer for medical, vision and dental |
| (2) | Please see the |
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Payments Made Upon Termination Without Good Cause or by the Executive For Good Reason After a Change In Control
The following table shows the amounts payable to each of our currently employed Named Executive Officers assuming that we terminated him without Good Cause or that he terminated his employment agreement for Good Reason on January 30, 2010 as a result ofFebruary 2, 2013 after a Change In Control.
Payments that a Named Executive Officer would be entitled to receive under a Change in Control are not considered by the Compensation Committee when making annual compensation decisions for the Named Executive Officers and do not factor into decisions made by the Company regarding other compensation elements. Rather, these provisions in the employment agreements are intended to help provide us with continuity of management and continued focus on the business by senior management in the event of a Change In Control.
| Name | Severance | Incentive Bonus ($) | Fringe Benefits ($) (1) | Max Outplacement ($) | Max Financial Planning ($) | Pension and Deferred Compensation ($) | Stock Options, SARs, Restricted Stock and Performance Shares ($) |
| Mr. Glazer | $5.1 million | Amount earned and prorated through date of termination | $69,580 | Provided for up to 1 year with $15,000 maximum | Provided for up to 3 years with $10,000 annual maximum | (2) | Unvested Stock Options, SARs and Restricted Stock automatically vest; all Performance Shares are vested at target level and are payable to the Executive within 30 days of the effective date of the Change in Control. |
| Mr. Shein | $1.1 million | Amount earned and prorated through date of termination | $46,053 | Provided for up to 1 year with $15,000 maximum | Provided for 2 years with $5,000 annual maximum | (2) | Unvested Stock Options, SARs and Restricted Stock automatically vest; all Performance Shares are vested at target level and are payable to the Executive within 30 days of the effective date of the Change in Control. |
| Mr. Lawrence | $2.9 million | Amount earned and prorated through date of termination | $56,763 | Provided for up to 1 year with $15,000 maximum | Provided for 3 years with $10,000 annual maximum | (2) | Unvested Stock Options, SARs and Restricted Stock automatically vest; all Performance Shares are vested at target level and are payable to the Executive within 30 days of the effective date of the Change in Control. |
| Mr. Record | $3.0 million | Amount earned and prorated through date of termination | $68,435 | Provided for up to 1 year with $15,000 maximum | Provided for 3 years with $7,500 annual maximum | (2) | Unvested Stock Options, SARs and Restricted Stock automatically vest; all Performance Shares are vested at target level and are payable to the Executive within 30 days of the effective date of the Change in Control. |
| Mr. Searles | $1.4 million | Amount earned and prorated through date of termination | $40,867 | Provided for up to 1 year with $15,000 maximum | Provided for 2 years with $5,000 annual maximum | (2) | Unvested Stock Options, SARs and Restricted Stock automatically vest; all Performance Shares are vested at target level and are payable to the Executive within 30 days of the effective date of the Change in Control. |
| Name | Severance | Incentive Bonus ($) | Fringe Benefits ($) (1) | Max Outplacement ($) | Gross-Up ($) | Max Financial Planning ($) | Pension and Deferred Compensation ($) | Stock Options, SARs, Restricted Stock and Performance Shares ($) |
| Mr. Hall | $4.0 million | Amount earned and prorated through date of termination | $55,277 | Provided for up to 2 years with $15,000 annual maximum | Gross up payments made to reimburse Executive's excise related taxes | Provided for up to 3 years with $10,000 annual maximum | (2) | Unvested Stock Options and SARs automatically vest; all Performance Shares are vested at target level and are payable to the Executive within 30 days of the effective date of the Change in Control |
| Mr. Record | $2.3 million | Amount earned and prorated through date of termination | $55,277 | Provided for up to 1 year with $15,000 maximum | Gross up payments made to reimburse Executive's excise related taxes | Provided for 3 years with $7,500 annual maximum | (2) | Unvested Stock Options and SARs automatically vest; all Performance Shares are vested at target level and are payable to the Executive within 30 days of the effective date of the Change in Control |
| �� | ||||||||
| Mr. Maloney | $1.5 million | Amount earned and prorated through date of termination | $16,205 | None | Gross up payments made to reimburse Executive's excise related taxes | None | (2) | Unvested Stock Options and SARs automatically vest; all Performance Shares are vested at target level and are payable to the Executive within 30 days of the effective date of the Change in Control |
| Mr. Lucas | $1.0 million | Amount earned and prorated through date of termination | $16,205 | Provided for up to 1 year with $15,000 maximum | Gross up payments made to reimburse Executive's excise related taxes | Provided for 1 year with $5,000 annual maximum | (2) | Unvested Stock Options and SARs automatically vest; all Performance Shares are vested at target level and are payable to the Executive within 30 days of the effective date of the Change in Control |
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| (1) | The amount shown reflects the estimated premiums to be paid by the Company on behalf of the Named Executive Officer for medical, vision and dental |
| (2) | Please see the |
Payments Made Upon Termination by the Company for Good Cause or by the Executive without Good Reason
The following table shows the amounts payable to each of our currently employed Named Executive Officers assuming that we terminated him for Good Cause or that he terminated his employment without Good Reason on January 30, 2010.
February 2, 2013.
| Name | Severance | Incentive Bonus ($) | Fringe Benefits ($) | Max Outplacement ($) | Max Financial Planning ($) | Pension and Deferred Compensation ($) | Stock Options, SARs, Restricted Stock and Performance Shares ($) | |
| Mr. | None | None | None | None | None | (1) | All unvested | |
| Mr. Shein | None | None | None | None | None | (1) | All unvested awards are forfeited. | |
| Mr. Lawrence | None | None | None | None | None | (1) | All unvested awards are forfeited. | |
| Mr. Record | None | None | None | None | None | (1) | All unvested | |
| Mr. | None | None | None | None | None | (1) | All unvested | |
__________________________
| (1) | Please see the |
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Payments Made Upon Retirement
The following table shows the amounts payable to each of our currently employed Named Executive Officers assuming that he retired as of January 30, 2010.February 2, 2013.
| Name | Severance | Incentive Bonus ($) | Fringe Benefits ($) | Max Outplacement ($) | Max Financial Planning ($) | Pension and Deferred Compensation ($) | Stock Options, SARs, Restricted Stock and Performance Shares ($) | |
| Mr. | None | None | None | None | None | (1) | Unvested Stock Options, SARs and | |
| Mr. | None | None | None | None | None | (1) | Unvested Stock Options, SARs and | |
| Mr. | None | None | None | None | None | (1) | Unvested Stock Options, SARs and | |
| Mr. | None | None | None | None | None | (1) | Unvested Stock Options, SARs and |
| Mr. | None | None | None | None | None | (1) | Unvested Stock Options, SARs and | |
| (1) | Please see the 2012 Nonqualified Deferred Compensation Table for these amounts. |
Payments Made Upon Death
The following table shows the amounts payable to each of our Named Executive Officers assuming that his employment was terminated as a result of death as of February 2, 2013.
| Name | Severance | Incentive Bonus ($) | Fringe Benefits ($) | Max Outplacement ($) | Max Financial Planning ($) | Pension and Deferred Compensation ($) | Stock Options, SARs, Restricted Stock and Performance Shares ($) | |
| Mr. | None | None | None | None | None | (1) | Unvested Stock Options, SARs and | |
| Mr. | None | None | None | None | None | (1) | Unvested Stock Options, SARs and | |
| Mr. | None | None | None | None | None | (1) | Unvested Stock Options, SARs and | |
| Mr. Record | None | None | None | None | None | (1) | Unvested Stock Options, SARs and Restricted Stock fully vest and are exercisable within one year from termination date; all Performance Shares are vested at target level and are payable to the Executive. | |
| Mr. Searles | None | None | None | None | None | (1) | Unvested Stock Options, SARs and Restricted Stock fully vest and are exercisable within one year from termination date; all Performance Shares are vested at target level and are payable to the Executive. | |
________________________
| (1) | Please see the |
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